8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 30, 2004

Capital Environmental Resource Inc.

(Exact name of registrant as specified in its charter)

Ontario, Canada	000-25955	Not Applicable
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1122 International Blvd., Suite 601 Burlington Ontario, Canada		L7L 6Z8
(Address of principal executive offices)		(Zip Code)

Registrants’ telephone number, including area code: (905) 319-1237

N/A

(Former name or former address, if changed since last report.)

Item 2. Acquisition or Disposition of Assets.

Acquisition of Florida Recycling Services, Inc. (“Florida Recycling”)

     In November 2003, Capital Environmental Resource Inc. (“Capital”, “we”, “us”, or “our”) through its wholly owned subsidiary, Waste Services, Inc. (“Waste Services”) entered into a definitive agreement to acquire Florida Recycling from its stockholders for a purchase price of $98.5 million in cash, working capital of approximately $2.2 million subject to further adjustment, and the issuance of 9,250,000 common shares. On April 30, 2004 we completed the Florida Recycling acquisition. Florida Recycling’s operations are based in central Florida, primarily serving the Orlando, Daytona, Fort Myers and Tampa metropolitan areas. The consideration paid was based on negotiations between us and the stockholders of Florida Recycling. Larry Henk, who was a 3% shareholder of Florida Recycling, is our President and Chief Operating Officer.

New Financing Transactions

     We financed the acquisition of Florida Recycling and repaid our previously existing senior credit facilities with a majority of the net proceeds from (1) borrowings under the new senior secured credit facilities of Waste Services, (2) an offering of senior subordinated notes of Waste Services, and (3) the private placement of common shares of Capital. Information relating to these financing transactions is as follows:

New Senior Secured Credit Facilities

     On April 30, 2004, Waste Services entered into the new senior secured credit facilities (the “Credit Facilities”) with a syndicate of lenders. The Credit Facilities consist of a five-year revolving credit facility in the amount of $60.0 million, a portion of which will be available to Capital and its Canadian subsidiaries, and a seven-year term loan facility in the amount of $100.0 million. The Credit Facilities bear interest at a spread over base rate or Eurodollar loans, as defined, at our option. The Credit Facilities are secured by substantially all of Waste Services’ assets and the assets of its U.S. restricted subsidiaries as well as the shares of capital stock of its U.S. restricted subsidiaries held by Waste Services. Prior to the migration transaction, whereby Waste Services will become the parent company of our corporate group (the “Migration Transaction”), the Credit Facilities will be guaranteed by Waste Services’ current parent, Capital, and Capital’s Canadian subsidiaries and secured by substantially all of their assets (including shares of capital stock of Waste Services). After the completion of the Migration Transaction, Capital and its Canadian subsidiaries will become Waste Services’ foreign subsidiaries and will no longer guarantee or pledge all of their assets except that their guarantees and pledges will continue in support of the portion of the revolving credit facility available to Capital and its Canadian subsidiaries. Furthermore, 65% of the common shares of Waste Services’ first tier non-U.S. subsidiaries will be pledged to secure obligations under the Credit Facilities.

     The Credit Facilities contain certain financial and other covenants that restrict our ability to, among other things, make capital expenditures, incur indebtedness, incur liens, dispose of property, repay debt, pay dividends, repurchase shares, and make certain acquisitions. Our financial covenants include (i) minimum consolidated interest coverage, (ii) maximum total leverage, and (iii) maximum senior secured leverage.

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New Senior Subordinated Notes

     On April 30, 2004, Waste Services completed a private offering of 9 1/2% Senior Subordinated Notes (“Subordinated Notes”) due 2014 for gross proceeds of $160.0 million. The Subordinated Notes mature on April 15, 2014. Interest on the Subordinated Notes is payable semiannually commencing October 15, 2004. The Subordinated Notes are redeemable, in whole or in part, at Waste Services’ option, on or after April 15, 2009, at a redemption price of 104.750% of the principal amount, declining rateably in annual increments to par on or after April 15, 2012, together with accrued interest to the redemption date. In addition, prior to April 15, 2007, Waste Services may redeem up to 35% of the aggregate principal amount of the Subordinated Notes with the proceeds of certain equity offerings, at a redemption price equal to 109.50% of the principal amount. Upon a change of control of Waste Services, as such term is defined in the Indenture, Waste Services is required to offer to repurchase all the Subordinated Notes at 100% of the principal amount, together with accrued interest and liquidated damages, if any, and obtain the consent of its senior lenders to such payment or repay its indebtedness under its Senior Credit Facilities.

     The Subordinated Notes are unsecured and are subordinate to Waste Services’ existing and future senior secured indebtedness, including its Credit Facilities, structurally subordinate to existing and future indebtedness of its non-guarantor subsidiaries, rank equally with any unsecured senior indebtedness and senior to its existing and future subordinated indebtedness.

     The Subordinated Notes contain certain covenants that, in certain circumstances and subject to certain limitations and qualifications, restrict, among other things (i) the incurrence of additional debt; (ii) the payment of dividends and repurchases of stock; (iii) the issuance of preferred stock and the issuance of stock of our subsidiaries; (iv) certain investments; (v) the repurchase of Waste Services preferred stock; (vi) transactions with affiliates; and (vii) certain sales of assets.

     Waste Services’ obligations with respect to the Subordinated Notes, including principal, interest, premium, if any, and liquidated damages, if any, are fully and unconditionally guaranteed on an unsecured, senior subordinated basis by all of Waste Services’ existing and future domestic restricted subsidiaries. Pending completion of the Migration Transaction, Waste Services’ obligations with respect to the Subordinated Notes will also be guaranteed by its current parent, Capital, and each of Capital’s Canadian subsidiaries. After completion of the Migration Transaction, Capital and its Canadian subsidiaries will become Waste Services’ foreign subsidiaries and will no longer guarantee the Subordinated Notes.

     We also entered into a Registration Rights Agreement with the initial purchasers of the Subordinated Notes in which we agreed to (i) file a registration statement with respect to the Subordinated Notes within 120 days of the closing date of the issuance of the notes, or the issuance date, pursuant to which we will exchange the Subordinated Notes for registered notes of Waste Services with terms identical to the Subordinated Notes; (ii) have such registration statement declared effective within 210 days of the issuance date, (iii) maintain the effectiveness of such registration statement for minimum periods specified in the agreement, and (iv) file a shelf registration statement in the circumstances and within the time periods specified in the agreement. If we do not comply with these obligations, we will be required to pay liquidated damages, in cash, in an amount equal to $0.05 per week per $1,000 in principal amount of the unregistered Subordinated Notes for each week that the default continues, for the first 90-days following default. Thereafter, the amount of liquidated damages will increase by an additional $0.05 per week per $1,000 in principal amount of unregistered Subordinated Notes for each subsequent 90-day period until all defaults have been cured, to a maximum of $0.50 per week per $1,000 in principal amount of unregistered Subordinated Notes outstanding. Liquidated damages, if any, are payable at the same time as interest payments due under the Subordinated Notes.

Equity Placement

     On April 30, 2004, we raised approximately $50.7 million, after deducting expenses of approximately $2.9 million, from the sale of 13,400,000 common shares of Capital and warrants to purchase 1,340,000 common shares of Capital in private placement transactions to certain investors. Sanders Morris Harris Inc. acted as placement agent for the issuance and was paid a placement agent fee of approximately $2.7 million. Don A. Sanders, one of our directors, is a principal of Sanders Morris Harris Inc. We also entered into an agreement with the investors in the private placement in which we agreed to file a registration statement for the 13,400,000 common shares and the 1,340,000 common shares issuable upon exercise of the warrants and have that registration statement declared effective within 120 days of April 30, 2004. If we do not comply with these registration requirements, we will be required to pay liquidated damages of 1% of the value, as defined in the registration rights agreement, of the unregistered common shares for each month that the common shares are unregistered. Because these damages would be payable in cash, until the common shares are registered the proceeds from the equity placement will be classified outside of shareholders’ equity until the common shares are registered.

Acquisition of Assets from Allied Waste Industries, Inc. (“Allied”)

     As previously announced, in November 2003, Waste Services entered into an agreement to acquire the assets of Allied’s northern and central Florida operations (the “Allied Assets”) for a purchase price of approximately $120.0 million subject to an adjustment for working capital. To date, we have acquired all of the Allied Assets except for certain assets in the Jacksonville metropolitan area, which we expect to acquire in May 2004 upon receipt of required transfer consents and approvals. The primary metropolitan areas currently served by the Allied Assets are Tampa, Sarasota and Jacksonville, Florida.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

      (a) Financial Statements of Businesses Acquired

      The combined financial statements of the North Central Florida District of Allied Waste Industries, Inc. as of December 31, 2003 and December 31, 2002 and for each of the three years in the period ended December 31, 2003, together with the report of PricewatehouseCoopers, LLP, independent auditors, are incorporated herein by reference from Exhibit 99.1 to this Current Report.

      The consolidated financial statements of Florida Recycling Services, Inc. of Illinois and its subsidiary for the years ended December 31, 2003, 2002 and 2001, together with the audit report of Shepard, Schwartz & Harris, LLP, independent auditors, are incorporated herein by reference from Exhibit 99.2 to this Current Report.

      (b) Pro Forma Financial Information.

      The unaudited pro forma condensed consolidated financial statements of Capital as of and for the year ended December 31, 2003 are incorporated herein by reference from Exhibit 99.3 to this Current Report.

      (c) Exhibits.

4.1	Amended Certificate of Designations of Waste Services, Inc.
4.2	Seventh Amendment to Rights Agreement dated as of April 30, 2004, to Rights Agreement dated as of September 2, 1999, between Capital Environmental Resource Inc. and American Stock Transfer Company, as Rights Agent.
4.3	Indenture regarding 9 1/2% Senior Subordinated Notes among Waste Services, Inc., the Guarantors and Wells Fargo Bank, National Association, as trustee, dated as of April 30, 2004.
4.4	Form of Warrant to Purchase Common Shares by and between Capital Environmental Resource Inc. and certain investors.
10.1	Form of Subscription Agreement dated as of April 30, 2004, between Capital Environmental Resource Inc. and certain investors.
10.2	Form of Registration Rights Agreement dated as of April 30, 2004, among the Company and certain investors.
10.3	9 1/2% Senior Subordinated Notes Registration Rights Agreement dated April 30, 2004.
10.4	Amended and Restated Credit Agreement dated as of April 30, 2004 among Capital Environmental Resource Inc., Waste Services, Inc., the several lenders from time to time parties thereto, Lehman Brothers Inc., as Arranger, CIBC World Markets Corp., as Syndication Agent, Bank of America, N.A., as Documentation Agent, Canadian Imperial Bank of Commerce, as Canadian Agent, and Lehman Commercial Paper Inc., as Administrative Agent.
10.5	Amended and Restated Stock Purchase Agreement dated as of March 11, 2004 by and among Waste Services, Inc., certain affiliates of Waste Services, Inc., Capital Environmental Resource Inc., Florida Recycling Services, Inc. and certain affiliates thereof.
23.1	Consent of Allied Waste Industries, Inc.’s Auditor — PricewaterhouseCoopers, LLP, Phoenix, Arizona.
23.2	Consent of Florida Recycling Services, Inc.’s Auditor — Shepard, Schwartz & Harris, LLP.
99.1	Combined financial statements of the North Central Florida District of Allied Waste Industries, Inc. as of December 31, 2003 and December 31, 2002 and for each of the three years in the period ended December 31, 2003, together with the report of PricewaterhouseCoopers, LLP, independent auditors.
99.2	Consolidated financial statements of Florida Recycling Services, Inc. of Illinois and Subsidiary for the years ended December 31, 2003, 2002 and 2001, together with the audit report of Shepard, Schwartz & Harris, LLP, independent auditors.
99.3	Pro forma condensed consolidated statements of Capital as of and for the year ended December 31, 2003.

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 10, 2004	CAPITAL ENVIRONMENTAL RESOURCE INC. (Registrant)
	By: /s/ Ronald L. Rubin
	Name: Ronald L. Rubin Title: Executive Vice President, and Chief Financial Officer

EXHIBIT INDEX

4.1	Amended Certificate of Designations of Waste Services, Inc.
4.2	Seventh Amendment to Rights Agreement dated as of April 30, 2004, to Rights Agreement dated as of September 2, 1999, between Capital Environmental Resource Inc. and American Stock Transfer Company, as Rights Agent.
4.3	Indenture regarding 9 1/2% Senior Subordinated Notes among Waste Services, Inc., the Guarantors and Wells Fargo Bank, National Association, as trustee, dated as of April 30, 2004.
4.4	Form of Warrant to Purchase Common Shares by and between Capital Environmental Resource Inc. and certain investors.
10.1	Form of Subscription Agreement dated as of April 30, 2004, between Capital Environmental Resource Inc. and certain investors.
10.2	Form of Registration Rights Agreement dated as of April 30, 2004, among the Company and certain investors.
10.3	9 1/2% Senior Subordinated Notes Registration Rights Agreement dated April 30, 2004.
10.4	Amended and Restated Credit Agreement dated as of April 30, 2004 among Capital Environmental Resource Inc., Waste Services, Inc., the several lenders from time to time parties thereto, Lehman Brothers Inc., as Arranger, CIBC World Markets Corp., as Syndication Agent, Bank of America, N.A., as Documentation Agent, Canadian Imperial Bank of Commerce, as Canadian Agent, and Lehman Commercial Paper Inc., as Administrative Agent.
10.5	Amended and Restated Stock Purchase Agreement dated as of March 11, 2004 by and among Waste Services, Inc., certain affiliates of Waste Services, Inc., Capital Environmental Resource Inc., Florida Recycling Services, Inc. and certain affiliates thereof.
23.1	Consent of Allied Waste Industries, Inc.’s Auditor — PricewaterhouseCoopers, LLP, Phoenix, Arizona.
23.2	Consent of Florida Recycling Services, Inc.’s Auditor — Shepard, Schwartz & Harris, LLP.
99.1	Combined financial statements of the North Central Florida District of Allied Waste Industries, Inc. as of December 31, 2003 and December 31, 2002 and for each of the three years in the period ended December 31, 2003, together with the report of PricewaterhouseCoopers, LLP, independent auditors.
99.2	Consolidated financial statements of Florida Recycling Services, Inc. of Illinois and Subsidiary for the years ended December 31, 2003, 2002 and 2001, together with the audit report of Shepard, Schwartz & Harris, LLP, independent auditors.
99.3	Pro forma condensed consolidated statements of Capital as of and for the year ended December 31, 2003.

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EX-4.1

                                                                     EXHIBIT 4.1

                                     AMENDED
                           CERTIFICATE OF DESIGNATIONS

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

             ORIGINAL CERTIFICATE OF DESIGNATIONS FILED MAY 6, 2003

                              WASTE SERVICES, INC.

                       AMENDED CERTIFICATE OF DESIGNATIONS
                           OF THE POWERS, PREFERENCES
            AND OTHER SPECIAL RIGHTS OF THE SERIES A PREFERRED STOCK
                             AND THE QUALIFICATIONS,
                      LIMITATIONS AND RESTRICTIONS THEREOF

                         Pursuant to Section 242 of the
                General Corporation Law of the State of Delaware

      Waste Services, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to the authority vested in the board of directors of the
Corporation (the "Board of Directors") by its Certificate of Incorporation,
(hereinafter referred to as the "Certificate of Incorporation"), and pursuant to
the provisions of Section 242 of the General Corporation Law of the State of
Delaware, the Board of Directors has duly approved and adopted the following
resolution (the "Resolution"):

      WHEREAS, pursuant to the authority vested in the Board of Directors by the
Certificate of Incorporation, the Board of Directors previously created,
authorized and provided for the issue of Preferred Stock, par value $0.01 per
share, with an initial base amount of $1,000.00 per share (the "Base Amount"),
consisting of 100,000 shares;

      WHEREAS, the Board of Directors and holders of more than 50% of the
outstanding shares of Preferred Stock have approved an amendment and restatement
of the powers, preferences, and other special rights and the qualifications,
limitations and restrictions of the Preferred Stock;

      RESOLVED, that, all of the amended powers, preferences, and other special
rights and the qualifications, limitations and restrictions of the Preferred
Stock are as set forth in the Certificate of Incorporation and in this
Resolution as follows:



      1.    Designation and Amount. There is hereby created out of the
authorized and unissued shares of preferred stock of the Corporation a class of
preferred stock designated as the "Series A Preferred Stock" and hereinafter
called the "Preferred Stock". The number of shares constituting such class shall
equal 100,000.

      2.    Dividends.

            (a)   Base Dividends. The holders of Preferred Stock shall be
entitled to receive out of funds legally available therefor cumulative cash
dividends at the rate of 17.75% per annum of the sum of (i) the Base Amount (as
such Base Amount shall be appropriately adjusted for any stock dividend, stock
split, reclassification, recapitalization, consolidation or similar event
affecting the Preferred Stock) plus (ii) all accumulated and unpaid dividends
(as of the relevant compounding date) plus (iii) the Incremental Amount (as
defined in Section 5(d)), if any. The Preferred Stock dividends shall be
compounded quarterly and accrue quarterly in arrears, based on the actual number
of days elapsed in such period, from and including the Issue Date to and
including the first to occur of (i) the date on which the Liquidation Preference
is paid to the holder of such Preferred Stock in connection with the liquidation
of the Corporation or the redemption of such Preferred Stock or (ii) the date on
which such Preferred Stock is otherwise acquired by the Corporation or no longer
outstanding. The Board of Directors may fix a record date for the determination
of holders of Preferred Stock entitled to receive payment of a dividend declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof (in accordance with the terms of this Section 2).
Such dividends will accrue whether or not they have been declared and whether or
not there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends. The Corporation shall not pay dividends
on or make any other distribution on Junior Stock (other than any dividend or
distribution payable solely in Junior Stock) until all accrued but unpaid
dividends on the Preferred Stock have been declared and fully paid or
irrevocably set apart for payment. If at any time the Corporation pays less than
the total amount of dividends then accrued with respect to the Preferred Stock,
such payment shall be distributed pro rata among the holders thereof based on
the aggregate accrued but unpaid dividends on the shares of Preferred Stock held
by each such holder.

            (b)   Additional Dividends. After all accrued but unpaid dividends
on the Preferred Stock have been declared and paid or set apart pursuant to
Section 2(a), if the Board of Directors shall elect to declare additional
dividends on the Common Stock (whether payable in cash, securities or other
property) other than dividends payable solely in shares of Common Stock, such
additional dividends shall be paid in equal amounts per share on all shares of
the Preferred Stock and the Common Stock, but with all holders of Preferred
Stock treated (for purposes of this determination) as if they held

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a number of shares of Common Stock equal to the Liquidation Preference divided
by the Applicable Amount.

            (c)   Withholding. The Corporation shall be authorized to deduct and
withhold any withholding taxes actually imposed under the Internal Revenue Code
of 1986, as amended, or any applicable provision of state, local or foreign tax
law, and any amounts so deducted and withheld shall be treated as distributed by
the Corporation to the holders of the Preferred Stock in accordance with the
terms hereof, provided, however, that (i) no such withholding or deduction shall
be made in respect of any shares of Preferred Stock unless the Corporation
provides written notice to the holder of such shares at least 10 days prior to
such deduction and withholding and (ii) no such withholding or deduction shall
be made to the extent the holder of such shares demonstrates, in a manner
reasonably satisfactory to the Corporation, that no such deduction and
withholding is required or that deduction and withholding is permitted at a
reduced rate.

      3.    Liquidation Preference. Upon any liquidation, dissolution or winding
up of the affairs of the Corporation (a "Liquidation Event"), no distribution
shall be made to the holders of any Junior Stock unless, prior to the first such
distribution, the holders of the Preferred Stock shall have received
consideration of an amount per share equal to the greater of (i) the Liquidation
Preference per share on the date of payment, or (ii) the amount the holders of
Preferred Stock would receive if they held a number of shares of Common Stock
equal to the Liquidation Preference divided by the Applicable Amount. If the
assets distributable in any such event to the holders of the Preferred Stock are
insufficient to permit the payment to such holders of the full Liquidation
Preference to which they may be entitled, such assets shall be distributed
ratably among the holders of the Preferred Stock and all Parity Stock in
proportion to the full Liquidation Preference of the Preferred Stock and the
liquidation preference of such Parity Stock that each such holder would
otherwise be entitled to receive. For the avoidance of doubt, neither a Company
Sale nor a Change of Control shall be deemed to be a Liquidation Event for
purposes of this Section 3.

      4.    Redemption.

            (a)   Final Redemption. On the date that is the twelfth anniversary
of the Original Issue Date of the shares of Preferred Stock (the "Final
Redemption Date"), the Corporation shall redeem for cash out of funds legally
available therefor all of the Preferred Stock held by each holder for a price
per share equal to the Liquidation Preference.

            (b)   Optional Redemption. Until the third anniversary of any Issue
Date, subject to the limitations set forth in Section 6.15 of the Subscription
Agreement

                                       3



and applicable law, the Corporation may at its option (except as otherwise
provided in Section 5(c)) redeem for cash out of funds legally available
therefor all or a portion of the Preferred Stock held by each holder for a price
per share equal to the Liquidation Preference (any such partial redemption to be
effected pro rata according to the number of shares held by each holder of
Preferred Stock); provided, however, that for purposes of this sentence, the
Liquidation Preference shall be calculated using the third anniversary of such
Issue Date as the relevant date of determination and assuming no cash dividends
were paid (other than cash dividends that were actually declared and paid).
After the third anniversary of any Issue Date and prior to the occurrence of a
Change of Control, the Corporation may redeem for cash out of funds legally
available therefor all or a portion of the Preferred Stock held by each holder
for a price per share equal to the Liquidation Preference (any such partial
redemption to be effected pro rata according to the number of shares held by
each holder of Preferred Stock). Notwithstanding anything herein to the
contrary, the Corporation shall not redeem less than all of the Preferred Stock
pursuant to this Section 4(b) if as a result of any such redemption less than
5,000 shares of Preferred Stock would be outstanding.

            (c)   Change of Control Offer to Redeem. Upon the occurrence of a
Change of Control, the Corporation shall (unless the Corporation prior to or
contemporaneously with such Change of Control redeems all of the Preferred Stock
pursuant to Section 4(b) hereof) make an offer to redeem for cash out of funds
legally available therefor all of the Preferred Stock held by each holder for a
price per share equal to the Liquidation Preference multiplied by 101.0%.

            (d)   Mechanics of Redemption. In the case of a redemption pursuant
to Section 4(a) or (b), the Corporation shall give written notice to each holder
of Preferred Stock at least 20 days and no more than 60 days prior to the
scheduled Redemption Date, stating that it will redeem Preferred Stock as
provided herein, such notice to be addressed to each holder of Preferred Stock
at the address as it appears on the stock transfer books of the Corporation and
to specify the Redemption Date and the number of shares to be redeemed. In the
case of a redemption pursuant to Section 4(c), the Corporation shall, to the
extent practicable, give written notice to each holder of Preferred Stock at
least 20 days and no more than 60 days prior to the Change of Control, stating
that it will redeem Preferred Stock as provided herein if the holders of the
Preferred Stock elect to have their Preferred Stock redeemed as provided herein,
such notice to be addressed to each holder of Preferred Stock at the address as
it appears on the stock transfer books of the Corporation and to specify the
Redemption Date and the number of shares to be redeemed. Any notice of
redemption by the Corporation under Section 4(b) or 4(c) may be contingent upon
a Change of Control. Each holder of outstanding shares of Preferred Stock may
elect to have its shares redeemed upon a Change of Control in accordance with
Section 4(c) above if the election of such holder is delivered to the
Corporation (and not revoked) in the 20 day period following the giving

                                       4



of the notice by the Corporation described in the immediately preceding
sentence. On or after the Redemption Date, unless postponed or waived as
provided below, each holder of Preferred Stock shall surrender a certificate or
certificates representing the number of shares of the Preferred Stock to be
redeemed as stated in the notice provided by the Corporation. Notwithstanding
the foregoing, in the case of a redemption pursuant to Section 4(a) above, upon
written request from the Corporation, the holders of a Majority of the Preferred
Stock to which any Final Redemption Date applies shall have the right to
postpone such Final Redemption Date or waive (on a pro rata basis ) the
obligation of the Corporation to redeem all or part of the Preferred Stock on
such Final Redemption Date, by written notice given to the Corporation.

            (e)   Available Funds. For the purpose of determining whether funds
are legally available for a redemption of Preferred Stock as provided herein,
the Corporation shall value its assets in accordance with applicable law and
shall revalue its assets at a higher amount to the extent reasonable and
appropriate if permitted by such applicable law for such purpose. If on any
Redemption Date funds of the Corporation legally available therefor shall be
insufficient to redeem all the Preferred Stock required to be redeemed as
provided herein, funds to the extent legally available shall be used for such
purpose and the Corporation shall effect such redemption pro rata according to
the number of shares held by each holder of Preferred Stock. The redemption
requirements provided hereby shall be continuous, so that if on any Redemption
Date such requirements shall not be fully discharged, without further action by
any holder of Preferred Stock funds legally available shall be applied therefor
until such requirements are fully discharged.

      5.    Voting; Company Sale.

            (a)   Directors. Subject to Section 8, the holders of the Preferred
Stock who are Kelso Parties or their Affiliates shall have the exclusive right,
voting together as a single class without regard to series, to elect two
directors of the Corporation as follows: (i) one director for so long as 5,000
or more shares of Preferred Stock are owned by the Kelso Parties or their
Affiliates and (ii) a second director for so long as 25,000 or more shares of
Preferred Stock are owned by the Kelso Parties or their Affiliates. The holders
of the Preferred Stock, voting together as a single class without regard to
series, shall cause the first and the second director, as applicable, to resign
from the Board of Directors if, subsequent to their respective appointments, the
number of shares of Preferred Stock owned by the Kelso Parties or their
Affiliates falls below 25,000 in the case of the second director, or 5,000 in
the case of the first director.

            (b)   Approvals. Without the consent of the holders of a Majority of
the Preferred Stock, voting separately as a single class without regard to
series, in person or

                                       5



by proxy, either in writing without a meeting or at a special or annual meeting
of stockholders, the Corporation shall not, and shall not permit any Subsidiary
to:

            (i)   alter or change the powers, rights or preferences of the
Preferred Stock; increase or decrease the number of authorized shares or the par
value of the Preferred Stock; reclassify any Junior Stock or Parity Stock into
Senior Stock; authorize, create or issue any class or series of Senior Stock
(including Acquired Senior Stock), or any securities directly or indirectly
convertible into or exchangeable for any Senior Stock; or amend or repeal any
provision of, or add any provision to, the Corporation's Certificate of
Incorporation or By-Laws in a manner that could reasonably be expected to affect
adversely the powers, rights or preferences of the Preferred Stock, provided,
however, that the issuance of any Parity Stock or Junior Stock, without
otherwise altering or modifying the terms of the Preferred Stock, will not be
deemed to affect adversely the powers, rights or preferences of the Preferred
Stock;

            (ii)  except in connection with the Migration, apply any of the
Corporation's assets to the redemption, retirement, purchase, repurchase or
other acquisition, directly or indirectly, through subsidiaries or otherwise, of
any capital stock or Options or Convertible Securities in excess of $100,000 in
any 12 month period;

            (iii) create, incur, assume, guarantee or otherwise become directly
or indirectly liable for Indebtedness (including Acquired Indebtedness), after
the Original Issue Date, other than Permitted Indebtedness, if at such time or
as a result thereof the Debt Leverage Ratio exceeds or would exceed 4.00:1;
provided, however, from and after such time as consolidated EBITDA for the
preceding four fiscal quarters exceeds $75 million for at least two consecutive
quarters, such Debt Leverage Ratio shall automatically increase to 4.50:1;

            (iv)  authorize, create, issue, assume, guarantee or otherwise
become directly or indirectly liable for or obligated in respect of Parity Stock
(including Acquired Parity Stock) or any securities directly or indirectly
convertible into or exchangeable for any Parity Stock, after the Original Issue
Date, other than Permitted Parity Stock, if at such time or as a result thereof
the Preferred Leverage Ratio exceeds or would exceed 5.50:1; provided, however,
from and after such time as consolidated EBITDA for the preceding four fiscal
quarters exceeds $75 million for at least two consecutive quarters, such
Preferred Leverage Ratio shall automatically increase to 6.50:1; provided,
further, that to the extent (i) EBITDA is being calculated on a pro forma basis
for a proposed acquisition for purposes of the immediately preceding proviso,
(ii) the Corporation can demonstrate that financial data is not reasonably
available and cannot reasonably be obtained for more than the preceding four
fiscal quarters with respect to the pro forma portion of such EBITDA, and (iii)
the requisite financial data is available for the preceding four fiscal quarters
to calculate the pro forma portion of such EBITDA (such

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four quarters of the pro rata portion, the "Applicable Pro Forma EBITDA"), then
the Applicable Pro Forma EBITDA may be added to the EBITDA otherwise calculated
for purposes of the immediately preceding proviso and the test set forth in the
immediately preceding proviso shall be applied for one quarter rather than two
consecutive quarters;

            (v)   enter into any transaction or series of related transactions
with any Affiliate of the Corporation other than a Wholly-Owned Subsidiary
involving payments by or to the Corporation or any of its Affiliates in excess
of $100,000 in any 12 month period, other than employment agreements, grants of
stock options or other equity compensation or other employee benefits, in each
case in the ordinary course of business, and other than the transactions
described on the attachment entitled "Schedule A", which is attached hereto;

            (vi)  enter into any other line of business other than businesses
substantially similar or related to the Corporation's and its Subsidiaries'
existing businesses; or

            (vii) liquidate, dissolve or wind up, voluntarily or involuntarily,
or appoint a liquidator, trustee or receiver for, the Corporation.

            (c)   Company Sale. Subject to Section 8, if the Preferred Stock has
not been fully redeemed by the sixth anniversary of the Original Issue Date, in
order to generate the funds required to redeem the Preferred Stock, the holders
of a Majority of the Preferred Stock shall have the right to request that the
Board of Directors initiate a Sale Process. If a Company Sale has not occurred
between the Original Issue Date and the sixth anniversary of the Original Issue
Date, holders of a Majority of the Preferred Stock may, at any time following
such sixth anniversary of the Original Issue Date, notify the Corporation in
writing that they wish the Corporation to initiate a Sale Process (such notice,
a "Sale Notice"). After receipt of a Sale Notice, the Board of Directors and the
Corporation shall initiate a Sale Process as soon as practicable. The Board of
Directors and the Corporation shall, subject to applicable securities laws and
confidentiality obligations, consult regularly and in good faith with the Kelso
Parties regarding the status of the Sale Process, but the Kelso Parties shall
have no right to participate in or otherwise approve any aspect of the Sale
Process other than participating in the Sale Process as a potential purchaser to
the extent permitted by the Board of Directors. The Corporation shall use its
reasonable best efforts to consummate a Company Sale and redeem all outstanding
Preferred Stock pursuant to Section 4(b) by a date 8 months subsequent to the
date on which a Sale Notice was delivered to the Corporation (such subsequent
date, the "Sale Date"). Holders of a Majority of the Preferred Stock may waive,
delay or extend the obligations set forth in this Section 5(c) in writing. The
Corporation shall not be required to consummate a Company Sale if and only to
the extent that, the Board of Directors of the Corporation determines in good

                                       7



faith (after consultation with outside legal counsel) that consummation of a
Company Sale, in light of the circumstances existing at such time and the terms
of this Certificate of Designations, would be inconsistent with its fiduciary
duties under applicable law; provided, however, that this sentence shall not be
deemed to limit in any way the Corporation's other obligations set forth in this
Section 5(c); provided, further, however, that, for the avoidance of doubt, any
failure to consummate a Company Sale and redeem all outstanding Preferred Stock
in accordance with the terms of this Section 5(c) pursuant to the "fiduciary
out" set forth in this sentence or for any other reason shall constitute a
failure to comply with the Corporation's material obligations for purposes of
Section 5(d) and shall give rise to the payment obligations set forth therein.
Notwithstanding the foregoing and anything to the contrary in Section 5(d)(i)
below, if the Board of Directors conducts the Sale Process and thereafter
determines in good faith that any Company Sale resulting from such Sale Process
would not yield proceeds sufficient to repay all outstanding Notes and all
indebtedness under the Amended and Restated Credit Agreement as in effect on the
date hereof (it being agreed that the required amount of sufficient proceeds
shall not be greater than $320 million), the Board of Directors may delay the
Sale Date to the earliest to occur of (a) the final maturity of such Notes, (b)
the date on which such Notes and such indebtedness under the Amended and
Restated Credit Agreement as in effect on the date hereof are repaid,
repurchased, redeemed, defeased, discharged or otherwise satisfied, or (c) a
Company Sale.

            (d)   Damages.

            (i)   Notwithstanding anything herein to the contrary (including,
without limitation, Section 4(b)), if the Corporation does not for any reason
comply with any of its material obligations set forth in Section 5(c), upon
written notice from holders of a Majority of the Preferred Stock, the
Corporation shall be obligated to pay, and all outstanding Preferred Stock shall
become due and payable on the first anniversary of the Sale Date (the "Sale
Redemption Date") for, an amount equal to the Liquidation Preference per share
as of the date of payment multiplied by 1.20 (the "Increased Amount"). Such
amount shall become due and payable upon delivery of such notice by wire
transfer of immediately available funds to accounts indicated in written
instructions from the respective holders of the Preferred Stock.

            (ii)  Notwithstanding anything herein to the contrary (including,
without limitation, Section 4(b)), if the Corporation does not for any reason
comply with any of its material obligations set forth in Sections 5(a) or (b)
and does not cure any such failure to comply within 30 days of delivery of
written notice from holders of a Majority of the Preferred Stock, the
Liquidation Preference per share shall be increased by an amount equal to the
Liquidation Preference per share immediately prior to such adjustment multiplied
by .20 (the amount of such increase in the Liquidation Preference, the
"Incremental Amount"). For the avoidance of doubt, the Corporation may redeem

                                       8



any shares of Preferred Stock pursuant to Section 4(b) hereof at any time prior
to the Sale Redemption Date without any premium thereon except to the extent set
forth in Section 4(b).

            (iii) Notwithstanding anything herein to the contrary (including,
without limitation, Section 4(b)), if the Company Sale is delayed pursuant to
the last sentence of Section 5(c) above, the Corporation shall be obligated to
pay, and all outstanding Preferred Stock shall become due and payable at the
Increased Amount on the first anniversary of the date on which the Sale Date
would have occurred but for the last sentence of Section 5(c); provided,
however, that the Corporation shall not be required to pay such amount until
such delayed Sale Date, at which time the Increased Amount shall be paid by wire
transfer of immediately available funds to accounts indicated in written
instructions from the respective holders of the Preferred Stock.

            (e)   Compliance Certificates; Notice of Default. Within 45 days
following the end of each fiscal year (and if the Corporation has incurred or
otherwise become obligated with respect to any Indebtedness other than
borrowings in the ordinary course of business consistent with past practice
under a revolving credit facility or issued or otherwise become obligated with
respect to any Parity Stock during any fiscal quarter, within 45 days following
the end of such fiscal quarter), the Corporation shall deliver to the holders of
a Majority of the Preferred Stock a certificate, signed by the Chief Financial
Officer and the principal accounting officer of the Corporation, in form
reasonably satisfactory to the holders of a Majority of the Preferred Stock,
stating that since the Original Issue Date there has been no breach or default
of, or failure to perform any of the Corporation's obligations under, this
Certificate of Designations, together with all calculations, in reasonable
detail, necessary to make such determination (including, without limitation,
calculations regarding compliance with Sections 5(b)(iii) and (iv)). The
Corporation shall deliver to the holders of a Majority of the Preferred Stock
written notice of any breach or default of, or failure to perform any of the
Corporation's obligations under, this Certificate of Designations within 3
business days of the date on which an officer of the Corporation obtains
knowledge thereof.

            (f)   Migration Failure. Notwithstanding anything herein to the
contrary, if the Migration has not been consummated on or before the Migration
Outside Date (as defined in the Subscription Agreement), other than as a result
of an Excusing Event (as defined in the Subscription Agreement), the dividend
rate applicable to the Preferred Stock then in effect shall be increased by
1.00% to 18.75% from and after such date, and shall thereafter be similarly
increased by an additional 1.00% on the last day of each month thereafter during
which such Migration shall not have been consummated; provided, however, that in
no event shall the dividend rate be increased by more than 12%; provided,
further, that the dividend rate shall be reduced to 17.75% for all periods from
and after the date of reduction upon the consummation of the Migration. For the

                                       9



avoidance of doubt, any dividends accrued during any period that the dividend
rate shall have been increased pursuant to the immediately preceding sentence
shall not thereafter be reduced regardless of whether the dividend rate shall be
reduced pursuant to the last proviso of the immediately preceding sentence. A
Majority of the Preferred Stock may waive, delay or extend the obligations set
forth in this Section 5(f) in writing.

      6.    No Reissuance of Preferred Stock. No share or shares of Preferred
Stock acquired by the Corporation by reason of redemption, purchase, conversion
or otherwise shall be reissued, and, upon such event, all such shares shall
resume the status of authorized but unissued shares of preferred stock.

      7.    Register. The Corporation shall keep a register of the holders of
shares of Preferred Stock.

      8.    Transfer. The Kelso Parties shall not transfer any shares of
Preferred Stock other than to an Affiliate of a Kelso Party or to the
Corporation: (i) unless the Corporation provides its prior written consent, not
to be unreasonably withheld or delayed; and (ii) until the third anniversary of
the Original Issue Date, if, as a result of such transfer, the Kelso Parties
would hold in the aggregate less than a Majority of the Preferred Stock,
provided, however, that the Corporation may waive the transfer restriction in
this clause (ii) in writing. No holder of Preferred Stock other than the Kelso
Parties shall have the right, unless the Corporation otherwise agrees in
writing, to appoint directors pursuant to Section 5(a) or to participate in any
request that the Corporation initiate a Sale Process pursuant to Section 5(c);
provided, however, that if any such holder of Preferred Stock that is not a
Kelso Party is not entitled to the foregoing right to appoint directors pursuant
to this sentence, the shares of Preferred Stock held by such holder shall be
entitled to vote on all matters together with the Common Stock on the basis of
one vote per share.

      9.    Amendment and Waiver. Upon written request of the Corporation, the
holders of a Majority of the Preferred Stock in their sole discretion may amend,
waive, delay or extend in writing any provision of this Certificate of
Designations to the extent permitted by applicable law. The foregoing rights to
amend, waive, delay or extend shall be in addition to any such rights otherwise
set forth in this Certificate of Designations or pursuant to applicable law.

      10.   Mergers, Consolidations. In case of any consolidation or merger of
the Corporation with or into another entity, the Corporation shall require the
surviving entity to assume all of the agreements and obligations of the
Corporation hereunder. This Section 10 shall similarly apply to successive
consolidations or mergers.

                                       10



      11.   Definitions. As used in this Certificate of Designations, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:

      "Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary, (ii) assumed in connection with the
acquisition of assets from such Person or (iii) existing at the time such Person
is merged, consolidated, amalgamated or otherwise combined with the Corporation.
Acquired Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person, the date the acquired Person becomes a
Subsidiary or the date of any such merger, consolidation, amalgamation or other
combination. Acquired Indebtedness shall exclude Indebtedness assumed by the
Corporation or any Subsidiary in connection with and as a direct result of the
Migration.

      "Acquired Parity Stock" means Parity Stock (i) existing at the time any
Person becomes a Subsidiary or (ii) existing at the time any Person is merged,
consolidated, amalgamated or otherwise combined with the Corporation. Acquired
Parity Stock shall be deemed to be issued on the date the acquired Person
becomes a Subsidiary or the date of any such merger, consolidation, amalgamation
or other combination.

      "Acquired Senior Stock" means Senior Stock (i) existing at the time any
Person becomes a Subsidiary or (ii) existing at the time any Person is merged,
consolidated, amalgamated or otherwise combined with the Corporation. Acquired
Senior Stock shall be deemed to be issued on the date the acquired Person
becomes a Subsidiary or the date of any such merger, consolidation, amalgamation
or other combination.

      "Affiliate" of a Person means a Person that directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first Person.

      "Amended and Restated Credit Agreement" means that certain Amended and
Restated Credit Agreement, dated as of April 30, 2004, and as amended, restated,
amended and restated, supplemented or otherwise modified from time to time,
between Capital Environmental Resource, Inc., the Corporation, the several banks
and other financial institutions or entities from time to time parties thereto,
Lehman Brothers Inc., as exclusive advisor, sole lead arranger and sole
bookrunner, and Lehman Commercial Paper Inc., as administrative agent, which
provides for aggregate term and revolving borrowings of $160 million and amends
and restates the Existing Bank Credit Agreement; provided, however, that the
amount of indebtedness under the Amended and Restated Credit Agreement that the
Board of Directors would need to consider in its determination regarding the
required amount of proceeds from any Company Sale

                                       11



pursuant to the last sentence of Section 5(c) shall be reduced by any actual
repayments of such indebtedness following the date hereof (other than repayments
of the revolving credit facility in the ordinary course of business that do not
involve any reduction of the commitments thereunder).

      "Applicable Amount" means $3.93; provided, however, that if the
Corporation subdivides, combines or reclassifies any class of Common Stock or
undertakes any similar event with respect to any Common Stock, the Applicable
Amount will be proportionately reduced or increased or adjusted on a
proportionate basis, it being understood that the intent of any such adjustment
would be to preserve the relative per share equivalency of the shares of Common
Stock and Preferred Stock that exists on the Original Issue Date for purposes of
computing the dividend rights under Section 2 hereof and the liquidation rights
under Section 3 hereof.

      "Bank Credit Facility" means a reasonably customary senior bank credit
facility (i) under which all of the lenders share pro rata in a first priority
lien in substantially all of the assets of the Corporation and its Subsidiaries
(provided, however, that the security interests reflected in the Amended and
Restated Credit Agreement as in effect on April 30, 2004 shall be deemed to be
consistent with the pro rata sharing requirement in this clause (i)), (ii) which
is comprised of a revolving credit facility, an amortizing term loan, additional
borrowings under a customary revolving credit facility (including under letter
of credit facilities, swing line facilities and bankers acceptance facilities)
and any combination of the foregoing, and (iii) which does not include, without
limitation, any Securities Offering; provided, however, that (a) participation
by one or more Persons that are not banks shall not by itself prevent any such
facility from being a Bank Credit Facility and (b) if customary bank promissory
notes are issued to the lenders under such facility such issuance shall not by
itself prevent such facility from being a Bank Credit Facility.

      "Change of Control" means any of the following events: (i) the merger or
consolidation of the Corporation with or into another Person or the merger or
consolidation of another Person with or into the Corporation, or the sale of all
or substantially all of the Corporation's assets to another Person, other than a
transaction following which (A) in the case of a merger or consolidation,
holders of the securities that represented 100% of the combined voting power of
the outstanding voting securities of the Corporation immediately prior to such
transaction and any series of related transactions own at least 51% of the
voting power of the outstanding securities generally entitled to vote of the
surviving person in such merger or consolidation immediately after such
transaction and any series of related transactions or (B) in the case of a sale
of assets transaction, the transferee Person becomes a Wholly-Owned Subsidiary
of either the Corporation, a Wholly-Owned Subsidiary of the Corporation, or a
combination of the Corporation and its Wholly-Owned Subsidiaries; (ii) the
acquisition by any Person or

                                       12



group of Persons, acting jointly or otherwise in concert, other than the
Permitted Holders, of legal or beneficial ownership of 30% or more of the
outstanding shares of Common Stock of the Corporation; or (iii) during any
12-month period, individuals who at the beginning of such period constituted the
Board of Directors, including directors appointed pursuant to Section 5(a),
(together with any new directors whose election by the Board of Directors or
whose nominations for election by the Corporation's stockholders were approved
by a vote of a majority of the directors who either were directors at the
beginning of such period or whose election or nomination was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors. Notwithstanding the foregoing, the Migration and the transactions
entered into in connection therewith shall not constitute or give rise to a
Change of Control.

      "Committed Amount" means $320,000,000, as such amount may be reduced from
time to time as provided in clause (ii) of the definition of Permitted
Indebtedness.

      "Common Stock" means the common stock, par value $0.01 per share, of the
Corporation together with any other class or series of common stock, whether
voting or non-voting, of the Corporation issued after the Original Issue Date.

      "Company Sale" means a sale, conveyance or other disposition of the
Corporation, whether by merger, consolidation, sale of all or substantially all
of the Corporation's assets or sale of capital stock, including any issuance or
transfer of capital stock of the Corporation to any Person. Notwithstanding the
foregoing, the Migration and the transactions entered into in connection
therewith shall not constitute or give rise to a Company Sale.

      "Convertible Securities" means any evidences of indebtedness, shares of
capital stock (other than Common Stock) or other securities convertible into or
exchangeable for, directly or indirectly, shares of Common Stock.

      "Debt Leverage Ratio" means, on any day, the ratio of (a) Indebtedness of
the Corporation and its Subsidiaries on a consolidated basis as of the date of
determination, to (b) EBITDA of the Corporation and its Subsidiaries on a
consolidated basis for the preceding four fiscal quarters most recently ended.
For the avoidance of doubt, Permitted Indebtedness shall not be excluded from
Indebtedness for purposes of calculating this Debt Leverage Ratio or otherwise.

      "Disqualified Stock" means any class of capital stock or series of
preferred stock that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable, in either case at the option of
the holder thereof) or otherwise (a) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (b) is or may become
redeemable or repurchaseable at the option of the holder thereof, in

                                       13



whole or in part (other than as a result of a Change of Control), or (c) is
convertible or exchangeable at the option of the holder thereof for Indebtedness
or Disqualified Stock, on or prior to, in the case of clause (a), (b) or (c),
the Final Redemption Date.

      "EBITDA" means, for any period, an amount calculated on a consolidated
basis for the Corporation and its Subsidiaries, equal to (a) the sum of net
income for such period determined in accordance with GAAP, plus the following to
the extent deducted in computing net income for such period: (i) the provision
for taxes based on income or profits or utilized in computing net loss, (ii)
interest expense, (iii) depreciation, (iv) amortization of intangibles, (v) any
extraordinary non-cash loss (vi) any loss in respect of foreign currency, (vii)
any loss from the sale of fixed assets and (vii) any non-cash charge for
management compensation expense, minus (b) (i) any extraordinary non-cash gain
(ii) any gain in respect of foreign currency, (iii) any gain from the sale of
fixed assets and (iv) any non-cash gain for management compensation expense, in
each case to the extent added in computing net income for such period. EBITDA
shall be calculated on a pro forma basis for acquisitions and divestitures in
accordance with GAAP and Regulation S-X promulgated by the Securities and
Exchange Commission, including cost savings to the extent permitted to be
included by GAAP and Regulation S-X. From the Original Issue Date until the date
12 months following the commencement of operations of the JED Landfill, EBITDA
shall be increased by the JED Landfill Adjustment.

      "Existing Bank Credit Agreement" means that certain Credit Agreement,
dated as of December 31, 2003, among Capital Environmental Resource, Inc., the
Corporation, Lehman Brothers Inc., as sole lead arranger and sole bookrunner,
CIBC Inc., as Syndication Agent and Lehman Commercial Paper Inc., as
Administrative Agent.

      "GAAP" means U.S. generally accepted accounting principles applied on a
consistent basis.

      "Indebtedness" means, with respect to any Person, at any date, without
duplication, (i) all obligations of such Person for borrowed money, including,
without limitation, all principal, interest, premiums, fees, expenses,
overdrafts and penalties with respect thereto, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of any
property or services, except trade payables incurred in the ordinary course of
business, (iv) all obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit or similar
instrument, (v) all obligations of such Person as lessee which are required to
be capitalized in accordance with GAAP and (vi) all Indebtedness of any other
Person of the type referred to in clauses (i) to (v) above directly or
indirectly guaranteed by such Person or secured by any assets of such Person.
Notwithstanding anything herein to the contrary, Indebtedness shall not include
(i) the Preferred Stock or any Junior Stock, Parity Stock or Senior Stock,

                                       14



(ii) Indebtedness of the Corporation to Wholly-Owned Subsidiaries of the
Corporation and Indebtedness of Wholly-Owned Subsidiaries of the Corporation to
the Corporation or to other Wholly-Owned Subsidiaries of the Corporation, (iii)
the obligations of the Corporation or any Subsidiary in respect of undrawn
letters of credit supporting post-closure obligations, or (iv) undrawn and
unfunded surety bonds or performance bonds, undrawn letters of credit supporting
such surety bonds or performance bonds and undrawn letters of credit supporting
municipal service contracts. In addition to the forgoing, but without
duplication, Indebtedness shall include for all purposes the Committed Amount,
whether or not such amount is outstanding.

      "Issue Date" means (i) the Original Issue Date for shares of Preferred
Stock that are issued on such date, and (ii) such later date on which shares of
Preferred Stock are issued after the Original Issue Date.

      "JED EBITDA" means the aggregate EBITDA generated by the operation of the
JED Landfill since the date of commencement of operations at the JED Landfill,
as determined by management of the Corporation and reasonably acceptable to
holders of a Majority of the Preferred Stock.

      "JED Landfill" means the Omni Landfill (as such term is defined in the
Subscription Agreement).

      "JED Landfill Adjustment" means an amount equal to the difference between
(A) the JED EBITDA, multiplied by a fraction equal to (i) 365 divided by (ii)
the number of days that at any relevant date of determination will have elapsed
since the JED Landfill commenced operations, less (B) the JED EBITDA.
Notwithstanding the foregoing, prior to March 31, 2004, for purposes of
determining whether the Corporation is permitted to issue Parity Stock without
obtaining the approval required pursuant to Section 5(b)(iv), JED Landfill
Adjustment means the greater of (i) the amount calculated pursuant to the first
sentence of this definition, and (ii) $12,000,000 or, if the transaction
specified in that certain letter, dated the Original Issue Date, from the
Corporation to KIA VI and KEP VI and referencing this defined term has been
consummated at such time, $17,000,000.

      "Junior Stock" means any class of capital stock or series of preferred
stock, whether presently outstanding or hereafter issued, other than Parity
Stock or Senior Stock.

      "Kelso Parties" means KIA VI, KEP VI and their respective Affiliates.

      "KEP VI" means KEP VI, LLC, a Delaware limited liability company.

                                       15



      "KIA VI" means Kelso Investment Associates VI, L.P., a Delaware limited
partnership.

      "Liquidation Preference" of any share of Preferred Stock means the sum of
$1,000 (as such amount shall be appropriately adjusted for any stock dividend,
stock split, reclassification, recapitalization, consolidation or similar event
affecting such Preferred Stock) plus the amount of any accrued but unpaid
dividends on such share as of any date of determination.

      "Majority of the Preferred Stock" means more than 50% of the outstanding
shares of Preferred Stock.

      "Migration" shall have the meaning given to such term in the Subscription
Agreement.

      "Notes" means up to $160,000,000 in aggregate principal amount of the
Corporation's 9 l/2% Senior Subordinated Notes due 2014 issued on April 30,
2004, and any notes issued in exchange therefor and any guarantees of the
foregoing (in each case, pursuant to the indenture governing such Notes as in
effect on April 30, 2004).

      "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

      "Options" means rights, options or warrants to subscribe for, purchase or
otherwise acquire, directly or indirectly, shares of Common Stock, including,
without limitation, Convertible Securities.

      "Original Issue Date" means the first date on which any share of Preferred
Stock is issued by the Corporation under this Certificate of Designations. For
the avoidance of doubt, Original Issue Date with respect to any shares of
Preferred Stock outstanding as of April 30, 2004 shall mean May 6, 2003.

      "Parity Stock" means any class of capital stock or series of preferred
stock hereafter created by the Board of Directors (i) that is not Disqualified
Stock and (ii) the terms of which expressly provide that such class or series
shall rank on a parity with the Preferred Stock as to the payment of dividends
or the distribution of assets.

      "Parity Stock Obligations" means the aggregate liquidation preference plus
all accrued and unpaid dividends, interest and other obligations of the
Corporation and its Subsidiaries pursuant to the terms of any Parity Stock.

                                       16



      "Permitted Holders" means (a) David Sutherland-Yoest (in this definition,
the "Primary Permitted Holder"); (b) the spouse of the Primary Permitted Holder
(including any widow or widower); (c) any lineal descendant of the Primary
Permitted Holder (treating for this purpose, any legally adopted descendant as a
lineal descendant); (d) the estate of any Person listed in clauses (a) to (c);
(e) any trust primarily for the benefit of the lineal descendants of the Primary
Permitted Holder, spouses of such lineal descendants, the Primary Permitted
Holder himself, or his spouse; (f) the Kelso Parties and their Affiliates; and
(g) any and all corporations during such time as they are directly or indirectly
controlled by any one or more of the foregoing.

      "Permitted Indebtedness" means: (i) Indebtedness incurred by the
Corporation and its Subsidiaries under the Amended and Restated Credit Agreement
(such agreement, as amended to the date hereof, and as the same may be amended,
restated, amended and restated, supplemented or otherwise modified from time to
time); provided, however, that if the Amended and Restated Credit Agreement is
amended, restated, supplemented or otherwise modified in a manner such that it
no longer meets the definition of a Bank Credit Facility, such amendment,
restatement, supplement or other modification shall be considered a refinancing
of the Amended and Restated Credit Agreement for purposes of subsection (ii) of
this definition and the proviso therein; (ii) Indebtedness to the extent
incurred by the Corporation and its Subsidiaries to refinance and replace the
Amended and Restated Credit Agreement; provided, however, that, to the extent
any Bank Credit Facility (including, without limitation, the Amended and
Restated Credit Agreement) is replaced by Indebtedness that is not incurred
under a Bank Credit Facility ("Non-Bank Indebtedness"), the amount of such
Non-Bank Indebtedness shall, for purposes of its initial incurrence, be
considered Permitted Indebtedness, but any refinancing of such Non-Bank
Indebtedness (and any refinancing thereof) shall not thereafter be considered
Permitted Indebtedness under this clause (ii) (and the Committed Amount shall
thereafter be reduced to the extent such Non-Bank Indebtedness is incurred to
replace or refinance Indebtedness under a Bank Credit Facility); (iii) the Notes
and Indebtedness to the extent incurred by the Corporation and its Subsidiaries
to refinance and replace the Notes (and any refinancing thereof); and (iv)
additional Indebtedness of the Corporation and its Subsidiaries in an aggregate
principal amount not to exceed $5.0 million at any one time outstanding.
Notwithstanding anything herein to the contrary, the amount of Permitted
Indebtedness under clauses (i), (ii) and (iii) shall not exceed, in the
aggregate, the Committed Amount.

      "Permitted Parity Stock" means Parity Stock to the extent applied to
redeem the Preferred Stock.

      "Person" means an individual, partnership, limited partnership, limited
liability company, unlimited liability company, corporation, trust,
unincorporated organization, government, governmental agency or governmental
subdivision or similar entity.

                                       17



      "Preferred Leverage Ratio" means, on any day, the ratio of (a)
Indebtedness plus Senior Stock Obligations plus Parity Stock Obligations of the
Corporation and its Subsidiaries on a consolidated basis as of the date of
determination, to (b) EBITDA of the Corporation and its Subsidiaries on a
consolidated basis for the preceding four fiscal quarters most recently ended.
For the avoidance of doubt, Permitted Indebtedness and Permitted Parity Stock
shall not be excluded from Indebtedness and Parity Stock Obligations,
respectively, for purposes of calculating this Preferred Leverage Ratio or
otherwise.

      "Redemption Date" means, with respect to any shares of Preferred Stock,
the date on which the Corporation redeems such shares of Preferred Stock.

      "Sale Process" means a process reasonably designed to solicit for the
benefit of the Corporation and all of its stockholders offers from third parties
who wish to acquire the Corporation or its assets in a transaction that would
constitute a Company Sale, it being understood that, notwithstanding anything
herein to the contrary, such process shall include the engagement of investment
bankers or other financial advisors and the provision of access to personnel and
information in a manner that is customary for such transactions, unless a
Majority of the Preferred Stock otherwise agrees.

      "Securities Offering" means any Indebtedness consisting of bonds,
debentures, notes (other than customary bank promissory notes under a Bank
Credit Facility) or other similar debt securities issued in a public offering or
a private placement.

      "Senior Debt" means Indebtedness (i) incurred under the Amended and
Restated Credit Agreement, (ii) represented by the Notes and (iii) any
refinancings of Indebtedness incurred pursuant to clauses (i) and (ii).

      "Senior Stock" means any class of capital stock or series of preferred
stock hereafter created by the Board of Directors (i) that is Disqualified Stock
or (ii) the terms of which expressly provide that such class or series shall
rank senior to the Preferred Stock as to the payment of dividends or the
distribution of assets.

      "Senior Stock Obligations" means the aggregate liquidation preference plus
all accrued and unpaid dividends, interest and other obligations of the
Corporation and its Subsidiaries pursuant to the terms of any Senior Stock.

      "Subscription Agreement" means the Preferred Subscription Agreement, dated
as of May 6, 2003, among the Corporation, Capital Environmental Resource Inc.,
KIA VI and KEP VI.

                                       18



      "Subsidiary" means (i) a corporation of which 50% or more of the combined
voting power of the outstanding voting capital stock is owned, directly or
indirectly, by the Corporation, by one or more Subsidiaries, or by the
Corporation and one or more Subsidiaries, (ii) a partnership of which the
Corporation, one or more Subsidiaries, or the Corporation and one or more
Subsidiaries, directly or indirectly, is the general partner and/or has the
power to direct the policies, management and affairs of such partnership or
(iii) any other Person in which the Corporation, one or more Subsidiaries, or
the Corporation and one or more Subsidiaries, directly or indirectly, has at
least a 50% interest and/or power to direct the policies, management and affairs
thereof.

      "U.S. Dollar Equivalent" means, as of the date of any determination, the
equivalent amount in U.S. Dollars based on the rate quoted by Bank of America or
the agent bank under a Bank Credit Facility of the Corporation at the time for
the purchase of U.S. Dollars in accordance with its customary procedures at
10:30 a.m. (New York time) on the date of determination.

      "Wholly-Owned Subsidiary" of a Person means any Subsidiary of such Person
of which securities or other ownership interests representing 100% of the equity
and 100% of the ordinary voting power (or 100% of the general partnership or
membership interests) are, at the time any determination is being made, owned by
such Person or one or more Wholly-Owned Subsidiaries of such Person or by such
Person and one or more Wholly-Owned Subsidiaries of such Person.

      12.   Subordination. In the event the Corporation becomes subject to a
case, proceeding or other action described in Sections 8(f)(i) or (ii) of the
Amended and Restated Credit Agreement as in effect on April 30, 2004 or in the
event of a Change of Control, then:

            (a)   (i) holders of Senior Debt will be entitled after such event
to receive payment in full in cash of all Obligations and other amounts owing in
respect of such Senior Debt before the holders of Preferred Stock will be
entitled to receive (after such event) any distribution or other payment,
whether in cash, securities or other property (collectively, a "Distribution",
it being understood and agreed that a Distribution shall not be deemed to
include any distribution of additional shares of Preferred Stock or of any other
equity securities that are subject to at least equivalent subordination
provisions as set forth herein or any accrual or increase in the dividend rate
or Liquidation Preference applicable to the Preferred Stock or the dividend rate
or liquidation preference applicable to such other equity securities) in respect
of the Preferred Stock; (ii) the Corporation may not acquire from any holder of
Preferred Stock any shares of Preferred Stock for cash or property after such
event until all Obligations and other amounts owing in respect of Senior Debt
have been paid in full in cash; and (iii) until all Obligations and other
amounts owing in respect of Senior Debt are paid in

                                       19



full in cash, any Distribution to which any holder of Preferred Stock would be
entitled in respect of the Preferred Stock but for this Section 12(a) after such
event will be made to the administrative agent for the benefit of the holders of
such Senior Debt (together with any other trustee, agent or representative
appointed by the holders of Senior Debt, the "Representative"), it being
understood and agreed that the Corporation shall, concurrently with such payment
to the Representative, acknowledge its ongoing obligations to the holders of the
Preferred Stock in respect of such payment;

            (b)   in the event of a Company Sale or in the event the Preferred
Stock becomes due and payable pursuant to Section 5(d)(i) hereof, the
Corporation shall not make any Distribution in respect of the Preferred Stock
and may not acquire from any holder of Preferred Stock any shares of Preferred
Stock for cash or other property unless such Distribution or such acquisition is
permitted under the governing documents of the Senior Debt at the time of the
proposed Distribution or acquisition (provided, that in such event the
obligation to make such Distribution or acquisition shall continue in force and
shall be satisfied as soon as it is no longer prohibited by the governing
documents of the Senior Debt), it being acknowledged, for the avoidance of
doubt, that the foregoing shall not prohibit or limit in any manner the
immediate increase in the Liquidation Preference applicable to the Preferred
Stock under Section 5(d)(i) hereof upon the occurrence of the events described
therein; and

            (c)   in the event that any holder of Preferred Stock receives any
Distribution in respect of the Preferred Stock at a time when such Distribution
is prohibited under Sections 12(a) or 12(b) hereof, such Distribution will be
held by such holder of Preferred Stock in trust for the benefit of, and will be
promptly paid over and delivered to, the Representative for the benefit of the
holders of Senior Debt, it being understood and agreed that the Corporation
shall be deemed, concurrently with such payment and delivery to the
Representative to have acknowledged its ongoing obligation to the holders of the
Preferred Stock in respect of such payment.

The provisions of this Section 12 shall not be amended or modified without the
prior written consent of the Representative who shall be entitled to enforce the
provisions of this section directly against the holders of the Preferred Stock.
Notwithstanding anything herein to the contrary, the Representative and the
holders of Senior Debt shall take reasonable efforts to enforce their rights and
collect their Indebtedness against Capital Environmental Resources Inc. and each
of its Subsidiaries and any other borrower under the Amended and Restated Credit
Agreement prior to or simultaneously with enforcing the rights set forth in this
Section 12 against the holders of the Preferred Stock. Each holder of Preferred
Stock shall, by accepting ownership of such Preferred Stock, agree to be bound
by the provisions of this Section 12.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                       20



IN WITNESS WHEREOF, the Corporation has caused this Amended Certificate of
Designations to be signed by the undersigned this 30th day of April, 2004.

                              WASTE SERVICES, INC.

                              By: /S/ IVAN R. CAIRNS
                                  -----------------------------------------
                              Name: Ivan R. Cairns
                              Title: Executive Vice President, General
                              Counsel and Secretary



         Schedule A - Section 5(b)(v) of the Certificate of Designations

                             Affiliate Transactions

Entering into the following transactions with the entities listed below, to the
extent that such entities are, or may become, Affiliates of the Corporation:

1.    The purchase of legal and other consultancy services from Durkin & Durkin
      by the Corporation in the ordinary course of business.

2.    To the extent approved by the Board of Directors of the Corporation,
      entering into contractual arrangements, including placement agent
      agreements, with Sanders, Morris Harris Inc. ("SMH") and the payment of
      fees to SMH by the Corporation, and the purchase of financial advisory and
      other consultancy services from SMH by the Corporation.

3.    To the extent approved by the Board of Directors of the Corporation,
      entering into arrangements referred to in that certain letter dated May 6,
      2003 from the Corporation to KIA VI and KEP VI and referencing this
      Schedule A.

EX-4.2

                                                                     Exhibit 4.2


                      SEVENTH AMENDMENT TO RIGHTS AGREEMENT

         SEVENTH AMENDMENT TO RIGHTS AGREEMENT, dated as of April 30, 2004
("Amendment"), to the rights agreement, dated as of September 2, 1999, as
amended on July 27, 2001, January 25, 2002, March 27, 2003, May 6, 2003, July 8,
2003 and September 17, 2003 (the "Rights Agreement"), between Capital
Environmental Resource Inc. (the "Company") and American Stock Transfer & Trust
Company (the "Rights Agent"). Any capitalized terms not otherwise defined herein
shall have the meaning ascribed to such term in the Rights Agreement.

         WHEREAS, the Board of Directors of the Company believes it to be in the
best interest of the Company and its shareholders to enter into a Common Share
Subscription Agreement (the "Sixth Subscription Agreement"), by and among the
Company and the investors named therein and dated April 30, 2004, which
agreement provides for, among other things, the subscriptions by such investors
for the Company's Common Shares (the "Shares"), and warrants (together with the
Warrants (as defined in the Third Amendment to Rights Agreement), the
"Warrants") to purchase Company Common Shares (the "Common Shares").

         WHEREAS, as a result of the foregoing, the Company desires that the
transactions contemplated by the Sixth Subscription Agreement, and the investors
listed therein be exempt from the provisions of the Rights Agreement;

         WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement;

         WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company
may supplement or amend any provision of the Rights Agreement in accordance with
the provisions of Section 27 thereof;

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereby agree as follows:

         Section 1.  AMENDMENTS TO SECTION 1 OF THE RIGHTS AGREEMENT.

         (a) The definition of "Acquiring Person" in Section 1 of the Rights
Agreement is hereby amended by deleting the last sentence thereof and adding the
following sentence in lieu thereof:

         "Notwithstanding anything in this Agreement to the contrary, no
Investor, Permitted Assignee, or Substitute Investor (as such terms are defined
in the Subscription Agreement dated July 27, 2001 by and among the Company and
the persons listed in Schedule A thereto (the "Subscription Agreement"), the
Subscription Agreement dated February 5, 2002 by and among the Company and the
persons listed in Schedule A thereto (the "Second Subscription Agreement"), the
Series 1 Preferred Subscription Agreement, dated March 27, 2003 by and among the
Company and the persons listed in




Schedule A thereto (the "Third Subscription Agreement")), the Series 1 Preferred
Subscription Agreement, dated July 8, 2003 by and among the Company and the
persons listed in Schedule A thereto (the "Fourth Subscription Agreement"), the
Series 1 Preferred Subscription Agreement, dated September 17, 2003 by and among
the Company and the persons listed in Schedule A thereto (the "Fifth
Subscription Agreement") or the Common Share Subscription Agreement, dated April
30, 2004 by and among the Company and the Investors listed on Annex A thereto
(the "Sixth Subscription Agreement") nor any of their Affiliates or Associates,
shall become an Acquiring Person, either individually or collectively, by virtue
of (A) the announcement of the transactions contemplated by the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement, or the
Sixth Subscription Agreement (B) the issuance and acquisition of Common Shares
pursuant to the Subscription Agreement or the Sixth Subscription Agreement, (C)
the issuance and acquisition of shares of the Company's Series 1 Preferred
Shares (the "Series 1 Preferred Shares") pursuant to the Second Subscription
Agreement, the Third Subscription Agreement, the Fourth Subscription Agreement
or the Fifth Subscription Agreement, (D) the issuance and acquisition of Common
Shares upon conversion of the Series 1 Preferred Shares issued and acquired
pursuant to the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement or the Fifth Subscription Agreement, (E) the
issuance and acquisition of Common Shares upon exercise of the Warrants, (F) the
execution and delivery of the Subscription Agreement, the Second Subscription
Agreement, the Third Subscription Agreement, the Fourth Subscription Agreement,
the Fifth Subscription Agreement or the Sixth Subscription Agreement, or (G) the
consummation of the transactions contemplated by the Subscription Agreement, the
Second Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement."

         (b) The definition of "Distribution Date" in Section 1 of the Rights
Agreement is hereby amended by deleting the last sentence thereof and adding the
following sentence in lieu thereof:

         "Notwithstanding anything in this Agreement to the contrary, neither
(A) the announcement of the transactions contemplated by the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, (B) the issuance and acquisition of Common Shares
pursuant to the Subscription Agreement or the Sixth Subscription Agreement, (C)
the issuance and acquisition of Series 1 Preferred Shares pursuant to the Second
Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement or the Fifth Subscription Agreement, (D) the issuance and
acquisition of Common Shares upon conversion of the Series 1 Preferred Shares
issued and acquired pursuant to the Second Subscription Agreement, the Third
Subscription Agreement, the Fourth Subscription Agreement or the Fifth
Subscription Agreement, (E) the issuance and acquisition of Common Shares upon
exercise of the Warrants, (F) the execution and delivery of the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription



                                      -2-


Agreement, the Fourth Subscription Agreement, the Fifth Subscription Agreement
or the Sixth Subscription Agreement, nor (G) the consummation of the
transactions contemplated by the Subscription Agreement, the Second Subscription
Agreement, the Third Subscription Agreement, the Fourth Subscription Agreement,
the Fifth Subscription Agreement or the Sixth Subscription Agreement, shall be
deemed to cause a Distribution Date."

         (c) The definition of "Permitted Offer" in Section 1 of the Rights
Agreement is hereby amended and restated in its entirety and replaced with the
following:

         "`Permitted Offer' shall mean (i) a tender offer or an exchange offer
for all outstanding Common Shares, (ii) an issuance of Common Shares or other
equity securities of the Company in connection with a merger, consolidation or
acquisition, in both cases at a price and on terms determined by at least a
majority of the members of the Board of Directors, and concurred in by a
majority of those members who are not officers or employees of the Company and
who are not, and are not representatives, Affiliates or Associates of, an
Acquiring Person or the person making the offer in the case of (i) or the entity
the Company is seeking to merge or consolidate with or acquire, as the case may
be, in the case of (ii), after receiving advice, in the case of either (i) or
(ii), from one or more investment banking firms, to be (a) at a price and on
terms that are fair to shareholders (taking into account all factors that such
members of the Board deem relevant including, without limitation, prices that
could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in the best
interests of the Company and its shareholders or (iii) the offer, issuance or
acquisition of (a) Common Shares pursuant to the terms and conditions of the
Subscription Agreement or the Sixth Subscription Agreement, (b) Series 1
Preferred Shares pursuant to the terms and conditions of the Second Subscription
Agreement, the Third Subscription Agreement, the Fourth Subscription Agreement
or the Fifth Subscription Agreement, (c) Common Shares upon conversion of Series
1 Preferred Shares issued or acquired pursuant to the terms and conditions of
the Second Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement or the Fifth Subscription Agreement, or (d) Common Shares
pursuant to the exercise of the Warrants."

         (d) The definition of "Share Acquisition Date" in Section 1 of the
Rights Agreement is hereby amended by deleting the last sentence thereof and
adding the following sentence in lieu thereof:

         "Notwithstanding anything in this Agreement to the contrary, neither
(A) the announcement of the transactions contemplated by the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, (B) the issuance and acquisition of Common Shares
pursuant to the Subscription Agreement or the Sixth Subscription Agreement, (C)
the issuance and acquisition of Series 1 Preferred Shares pursuant to the Second
Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement or the Fifth



                                      -3-


Subscription Agreement, (D) the issuance and acquisition of Common Shares upon
conversion of the Series 1 Preferred Shares issued and acquired pursuant to the
Second Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement or the Fifth Subscription Agreement, (E) the issuance and
acquisition of Common Shares upon exercise of the Warrants, (F) the execution
and delivery of the Subscription Agreement, the Second Subscription Agreement,
the Third Subscription Agreement, the Fourth Subscription Agreement, the Fifth
Subscription Agreement or the Sixth Subscription Agreement, nor (G) the
consummation of the transactions contemplated by the Subscription Agreement, the
Second Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, shall be deemed to cause a Share Acquisition Date."

         (e) The definition of "Triggering Event" in Section 1 of the Rights
Agreement is hereby amended by deleting the last sentence thereof and adding the
following sentence in lieu thereof:

         "Notwithstanding anything in this Agreement to the contrary, neither
(A) the announcement of the transactions contemplated by the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, (B) the issuance and acquisition of Common Shares
pursuant to the Subscription Agreement or the Sixth Subscription Agreement, (C)
the issuance and acquisition of Series 1 Preferred Shares pursuant to the Second
Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement or the Fifth Subscription Agreement, (D) the issuance and
acquisition of Common Shares upon conversion of the Series 1 Preferred Shares
issued and acquired pursuant the Second Subscription Agreement, the Third
Subscription Agreement, the Fourth Subscription Agreement or the Fifth
Subscription Agreement, (E) the issuance and acquisition of Common Shares upon
exercise of the Warrants, (F) the execution and delivery of the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, nor (G) the consummation of the transactions
contemplated by the Subscription Agreement, the Second Subscription Agreement,
the Third Subscription Agreement, the Fourth Subscription Agreement, the Fifth
Subscription Agreement or the Sixth Subscription Agreement, shall constitute a
Triggering Event."

         Section 2. AMENDMENT TO SECTION 11(A)(II) OF THE RIGHTS AGREEMENT.
Section 11(a)(ii) of the Rights Agreement is hereby amended by deleting the last
sentence thereof and adding the following sentence in lieu thereof:

         "Notwithstanding anything in this Agreement to the contrary, neither
(A) the announcement of the transactions contemplated by the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription



                                      -4-


Agreement, (B) the issuance and acquisition of Common Shares pursuant to the
Subscription Agreement or the Sixth Subscription Agreement, (C) the issuance and
acquisition of Series 1 Preferred Shares pursuant to the Second Subscription
Agreement, the Third Subscription Agreement, the Fourth Subscription Agreement
or the Fifth Subscription Agreement, (D) the issuance and acquisition of Common
Shares upon conversion of the Series 1 Preferred Shares issued and acquired
pursuant to the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement or the Fifth Subscription Agreement, (E) the
issuance and acquisition of Common Shares upon exercise of the Warrants, (F) the
execution and delivery of the Subscription Agreement, the Second Subscription
Agreement, the Third Subscription Agreement, the Fourth Subscription Agreement,
the Fifth Subscription Agreement or the Sixth Subscription Agreement, nor (G)
the consummation of the transactions contemplated by the Subscription Agreement,
the Second Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, shall constitute a Flip-In Event."

         Section 3. AMENDMENT TO SECTION 13(A) OF THE RIGHTS AGREEMENT. Section
13(a) of the Rights Agreement is hereby amended by deleting the last sentence
thereof and adding the following sentence in lieu thereof:

         "Notwithstanding anything in this Agreement to the contrary, neither
(A) the announcement of the transactions contemplated by the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, (B) the issuance and acquisition of Common Shares
pursuant to the Subscription Agreement or the Sixth Subscription Agreement, (C)
the issuance and acquisition of Series 1 Preferred Shares pursuant to the Second
Subscription Agreement, the Third Subscription Agreement, the Fourth
Subscription Agreement or the Fifth Subscription Agreement, (D) the issuance and
acquisition of Common Shares upon conversion of the Series 1 Preferred Shares
issued and acquired pursuant the Second Subscription Agreement, the Third
Subscription Agreement, the Fourth Subscription Agreement or the Fifth
Subscription Agreement, (E) the issuance and acquisition of Common Shares upon
exercise of the Warrants, (F) the execution and delivery of the Subscription
Agreement, the Second Subscription Agreement, the Third Subscription Agreement,
the Fourth Subscription Agreement, the Fifth Subscription Agreement or the Sixth
Subscription Agreement, nor (G) the consummation of the transactions
contemplated by the Subscription Agreement, the Second Subscription Agreement,
the Third Subscription Agreement, the Fourth Subscription Agreement, the Fifth
Subscription Agreement or the Sixth Subscription Agreement, shall constitute a
Flip-Over Event."

         Section 4. AMENDMENT TO SECTION 15 OF THE RIGHTS AGREEMENT. Section 15
of the Rights Agreement is hereby amended by deleting the last sentence thereof
and adding the following sentence in lieu thereof:



                                      -5-


         "Nothing in this Agreement shall be construed to give any holder of
Rights or any other Person any legal or equitable rights, remedy or claim under
this Agreement in connection with any transactions contemplated by the
Subscription Agreement, the Second Subscription Agreement, the Third
Subscription Agreement, the Fourth Subscription Agreement, the Fifth
Subscription Agreement or the Sixth Subscription Agreement."

         Section 5. DEFINITION. The term "Agreement", as used in the Rights
Agreement, shall be deemed to refer to the Rights Agreement, as amended hereby.

         Section 6. FULL FORCE AND EFFECT. Except as expressly amended hereby,
the Rights Agreement shall continue in full force and effect in accordance with
the provisions thereof on the date hereof.

         Section 7. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts to be made and performed entirely within such State.

         Section 8. COUNTERPARTS. This Amendment may be executed in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.

         Section 9. SEVERABILITY. If any term, provision, covenant or
restriction of this Amendment is held by a court of competent jurisdiction or
other authority to be invalid, illegal, or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment, and of the
Rights Agreement, shall remain in full force and effect and shall in no way be
effected.

                        [NEXT PAGE IS THE SIGNATURE PAGE]





                                      -6-


         IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to be duly executed as of the day and year first above written.


                                       CAPITAL ENVIRONMENTAL RESOURCE INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                       Name:  Ivan R. Cairns
                                       Title: Executive Vice President, General
                                              Counsel and Secretary



                                       AMERICAN STOCK TRANSFER & TRUST COMPANY



                                       By: /s/ Herbert J. Lemmer
                                           -------------------------------------
                                       Name: Herbert J. Lemmer
                                       Title: Vice President






                                      -7-

EX-4.3

                                                                     EXHIBIT 4.3

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






                              WASTE SERVICES, INC.,
                                    Company,


                      EACH OF THE GUARANTORS PARTY HERETO,


                                       and


                     WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                     Trustee

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

                                    INDENTURE

                           Dated as of April 30, 2004

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

                                  $160,000,000
                   9 1/2% Senior Subordinated Notes due 2014



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

                             CROSS-REFERENCE TABLE*



Trust Indenture
Act Section                                                                    Indenture Section
                                                                            
310(a)(1)...................................................................             7.10
     (a)(2).................................................................             7.10
     (a)(3).................................................................             N.A.
     (a)(4).................................................................             N.A.
     (a)(5).................................................................             7.10
     (b)....................................................................             7.10
     (c)....................................................................             N.A.
311(a)......................................................................             7.11
     (b)....................................................................             7.11
     (c)....................................................................             N.A.
312(a)......................................................................             2.05
     (b)....................................................................            13.03
     (c)....................................................................            13.03
313(a)......................................................................             7.06
     (b)(1).................................................................            10.03
     (b)(2).................................................................          7.06; 7.07
     (c)....................................................................         7.06; 13.02
     (d)....................................................................             7.06
314(a)......................................................................         4.03; 4.04;
                                                                                     13.02; 13.05
     (c)(1).................................................................            13.04
     (c)(2).................................................................            13.04
     (c)(3).................................................................             N.A.
     (d)....................................................................             N.A.
     (e)....................................................................            13.05
     (f)....................................................................             N.A.
315(a)......................................................................             7.01
     (b)....................................................................         7.05; 13.02
     (c)....................................................................             7.01
     (d)....................................................................             7.01
     (e)....................................................................             6.11
316(a) (last sentence)......................................................             2.09
     (a)(1)(A)..............................................................             6.05
     (a)(1)(B)..............................................................             6.04
     (a)(2).................................................................             N.A.
     (b)....................................................................             6.07
     (c)....................................................................             N.A.
317(a)(1)...................................................................             6.08
     (a)(2).................................................................             6.09
     (b)....................................................................             2.04
318(a)......................................................................            13.01
     (b)....................................................................             N.A.
     (c)....................................................................            13.01



N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.

                                TABLE OF CONTENTS



                                                                                                            Page
                                                                                                      
                                    ARTICLE 1
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01       Definitions.......................................................................         1
Section 1.02       Other Definitions.................................................................        22
Section 1.03       Incorporation by Reference of Trust Indenture Act.................................        22
Section 1.04       Rules of Construction.............................................................        23

                                    ARTICLE 2
                                    THE NOTES

Section 2.01       Form and Dating...................................................................        23
Section 2.02       Execution and Authentication......................................................        24
Section 2.03       Registrar and Paying Agent........................................................        25
Section 2.04       Paying Agent to Hold Money in Trust...............................................        25
Section 2.05       Holder Lists......................................................................        25
Section 2.06       Transfer and Exchange.............................................................        25
Section 2.07       Replacement Notes.................................................................        37
Section 2.08       Outstanding Notes.................................................................        38
Section 2.09       Treasury Notes....................................................................        38
Section 2.10       Temporary Notes...................................................................        38
Section 2.11       Cancellation......................................................................        38
Section 2.12       Defaulted Interest................................................................        39

                                    ARTICLE 3
                            REDEMPTION AND PREPAYMENT

Section 3.01       Notices to Trustee................................................................        39
Section 3.02       Selection of Notes to Be Redeemed or Purchased....................................        39
Section 3.03       Notice of Redemption..............................................................        40
Section 3.04       Effect of Notice of Redemption....................................................        40
Section 3.05       Deposit of Redemption or Purchase Price...........................................        41
Section 3.06       Notes Redeemed or Purchased in Part...............................................        41
Section 3.07       Optional Redemption...............................................................        41
Section 3.08       Mandatory Redemption..............................................................        42
Section 3.09       Offer to Purchase by Application of Excess Proceeds...............................        42

                                    ARTICLE 4
                                    COVENANTS

Section 4.01       Payment of Notes..................................................................        44
Section 4.02       Maintenance of Office or Agency...................................................        44
Section 4.03       Reports...........................................................................        44
Section 4.04       Compliance Certificate............................................................        45
Section 4.05       Taxes.............................................................................        46
Section 4.06       Stay, Extension and Usury Laws....................................................        46
Section 4.07       Restricted Payments...............................................................        46
Section 4.08       Dividend and Other Payment Restrictions Affecting Subsidiaries....................        49
Section 4.09       Incurrence of Indebtedness and Issuance of Preferred Stock........................        51
Section 4.10       Asset Sales.......................................................................        54


                                       i

                                                                                                      
Section 4.11       Transactions with Affiliates......................................................        55
Section 4.12       Liens.............................................................................        57
Section 4.13       Business Activities...............................................................        57
Section 4.14       Corporate Existence...............................................................        57
Section 4.15       Offer to Repurchase Upon Change of Control........................................        57
Section 4.16       No Layering of Debt...............................................................        59
Section 4.17       Limitation on Sale and Leaseback Transactions.....................................        59
Section 4.18       Payments for Consent..............................................................        59
Section 4.19       Additional Note Guarantees........................................................        60
Section 4.20       Designation of Restricted and Unrestricted Subsidiaries...........................        60
Section 4.21       Restrictions on Capital...........................................................        60
Section 4.22       Exemption for Migration...........................................................        61

                                    ARTICLE 5
                                   SUCCESSORS

Section 5.01       Merger, Consolidation, or Sale of Assets..........................................        61
Section 5.02       Successor Corporation Substituted.................................................        62

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

Section 6.01       Events of Default.................................................................        62
Section 6.02       Acceleration......................................................................        64
Section 6.03       Other Remedies....................................................................        64
Section 6.04       Waiver of Past Defaults...........................................................        65
Section 6.05       Control by Majority...............................................................        65
Section 6.06       Limitation on Suits...............................................................        65
Section 6.07       Rights of Holders of Notes to Receive Payment.....................................        65
Section 6.08       Collection Suit by Trustee........................................................        66
Section 6.09       Trustee May File Proofs of Claim..................................................        66
Section 6.10       Priorities........................................................................        66
Section 6.11       Undertaking for Costs.............................................................        67

                                    ARTICLE 7
                                     TRUSTEE

Section 7.01       Duties of Trustee.................................................................        67
Section 7.02       Rights of Trustee.................................................................        68
Section 7.03       Individual Rights of Trustee......................................................        68
Section 7.04       Trustee's Disclaimer..............................................................        68
Section 7.05       Notice of Defaults................................................................        69
Section 7.06       Reports by Trustee to Holders of the Notes........................................        69
Section 7.07       Compensation and Indemnity........................................................        69
Section 7.08       Replacement of Trustee............................................................        70
Section 7.09       Successor Trustee by Merger, etc..................................................        71
Section 7.10       Eligibility; Disqualification.....................................................        71
Section 7.11       Preferential Collection of Claims Against Company.................................        71

                                    ARTICLE 8
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01       Option to Effect Legal Defeasance or Covenant Defeasance..........................        71
Section 8.02       Legal Defeasance and Discharge....................................................        71
Section 8.03       Covenant Defeasance...............................................................        72




                                       ii

                                                                                                      
Section 8.04       Conditions to Legal or Covenant Defeasance........................................        72
Section 8.05       Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
                   Provisions........................................................................        73
Section 8.06       Repayment to Company..............................................................        74
Section 8.07       Reinstatement.....................................................................        74

                                    ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01       Without Consent of Holders of Notes...............................................        75
Section 9.02       With Consent of Holders of Notes..................................................        75
Section 9.03       Compliance with Trust Indenture Act...............................................        77
Section 9.04       Revocation and Effect of Consents.................................................        77
Section 9.05       Notation on or Exchange of Notes..................................................        77
Section 9.06       Trustee to Sign Amendments, etc...................................................        77

                                   ARTICLE 10
                                  SUBORDINATION

Section 10.01      Agreement to Subordinate..........................................................        78
Section 10.02      Liquidation; Dissolution; Bankruptcy..............................................        78
Section 10.03      Default on Designated Senior Debt.................................................        78
Section 10.04      Acceleration of Notes.............................................................        79
Section 10.05      When Distribution Must Be Paid Over...............................................        79
Section 10.06      Notice by Company.................................................................        79
Section 10.07      Subrogation.......................................................................        80
Section 10.08      Relative Rights...................................................................        80
Section 10.09      Subordination May Not Be Impaired by Company......................................        80
Section 10.10      Distribution or Notice to Representative..........................................        80
Section 10.11      Rights of Trustee and Paying Agent................................................        81
Section 10.12      Authorization to Effect Subordination.............................................        81
Section 10.13      Amendments........................................................................        81

                                   ARTICLE 11
                                 NOTE GUARANTEES

Section 11.01      Guarantee.........................................................................        81
Section 11.02      Subordination of Note Guarantee...................................................        82
Section 11.03      Limitation on Guarantor Liability.................................................        82
Section 11.04      Execution and Delivery of Note Guarantee..........................................        83
Section 11.05      Guarantors May Consolidate, etc., on Certain Terms................................        83
Section 11.06      Releases..........................................................................        84

                                   ARTICLE 12
                           SATISFACTION AND DISCHARGE

Section 12.01      Satisfaction and Discharge........................................................        84
Section 12.02      Application of Trust Money........................................................        85

                                   ARTICLE 13
                                  MISCELLANEOUS

Section 13.01      Trust Indenture Act Controls......................................................        86
Section 13.02      Notices...........................................................................        86
Section 13.03      Communication by Holders of Notes with Other Holders of Notes.....................        87
Section 13.04      Certificate and Opinion as to Conditions Precedent................................        87




                                      iii

                                                                                                      
Section 13.05      Statements Required in Certificate or Opinion.....................................        87
Section 13.06      Rules by Trustee and Agents.......................................................        88
Section 13.07      No Personal Liability of Directors, Officers, Employees and Stockholders..........        88
Section 13.08      Governing Law.....................................................................        88
Section 13.09      No Adverse Interpretation of Other Agreements.....................................        88
Section 13.10      Successors........................................................................        88
Section 13.11      Severability......................................................................        88
Section 13.12      Counterpart Originals.............................................................        88
Section 13.13      Table of Contents, Headings, etc..................................................        88

                                    EXHIBITS

Exhibit A1         FORM OF NOTE
Exhibit A2         FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B          FORM OF CERTIFICATE OF TRANSFER
Exhibit C          FORM OF CERTIFICATE OF EXCHANGE
Exhibit D          FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E          FORM OF NOTATION OF GUARANTEE
Exhibit F          FORM OF SUPPLEMENTAL INDENTURE




                                       iv

      INDENTURE, dated as of April 30, 2004, among Waste Services, Inc., a
Delaware corporation, the Guarantors (as defined) party hereto and Wells Fargo
Bank, National Association, as trustee.

      The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders (as
defined) of the 9 1/2% Senior Subordinated Notes due 2014 (the "Notes"):

                                   ARTICLE 1
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01 Definitions.

      "144A Global Note" means a Global Note substantially in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that shall be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.

      "Acquired Debt" means, with respect to any specified Person:

            (1) Indebtedness of any other Person existing at the time such other
      Person is merged with or into or became a Subsidiary of such specified
      Person, whether or not such Indebtedness is incurred in connection with,
      or in contemplation of, such other Person merging with or into, or
      becoming a Restricted Subsidiary of, such specified Person; and

            (2) Indebtedness secured by a Lien encumbering any asset acquired by
      such specified Person.

      "Additional Notes" means Notes (other than the Initial Notes) issued under
this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the
same series as the Initial Notes.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.

      "Agent" means any Registrar, co-registrar, Paying Agent or additional
paying agent.

      "Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

      "Asset Sale" means:

            (1) the sale, lease, conveyance or other disposition of any assets
      or rights; provided that the sale, lease, conveyance or other disposition
      of all or substantially all of the assets of the Company and its
      Restricted Subsidiaries taken as a whole shall be governed by Section 4.15
      and/or Section 5.01 hereof and not by Section 4.10 hereof; and


                                       1

            (2) (a) the issuance of Equity Interests in any of the Company's
      Restricted Subsidiaries or (b) the sale of Equity Interests in any of the
      Company's Subsidiaries or, prior to the Migration, the sale of Equity
      Interests in any of Capital's Foreign Subsidiaries.

      Notwithstanding the preceding, none of the following items shall be deemed
      to be an Asset Sale:

            (1) any single transaction or series of related transactions that
      involves assets having a Fair Market Value not to exceed $2.0 million;

            (2) a transfer of assets between or among the Company and/or its
      Restricted Subsidiaries;

            (3) any sale or issuance of Equity Interests by a Restricted
      Subsidiary of the Company to the Company or to a Restricted Subsidiary of
      the Company;

            (4) the sale or lease of products, services or accounts receivable
      (including any exchange or swap of fixed tangible assets) in the ordinary
      course of business and any sale or other disposition of damaged, worn-out
      or obsolete assets in the ordinary course of business;

            (5) the sale or other disposition of cash or Cash Equivalents;

            (6) a Restricted Payment that does not violate Section 4.07 hereof
      or a Permitted Investment;

            (7) the issuance and exchange of Equity Interests of Capital or the
      Company as part of, or in connection with, the Migration (including,
      without limitation, issuances of Equity Interests of the Company from time
      to time in exchange for Capital Stock issued by Capital in connection with
      the Migration that is exchangeable for common stock of the Company);

            (8) any transfer of assets as a result of a settlement of or payment
      in respect of any property or casualty insurance claim or condemnation
      proceeding relating to any asset of the Company or any of its Restricted
      Subsidiaries;

            (9) the release, surrender or waiver of contract, tort or other
      claims of any kind as a result of the settlement of any litigation or
      threatened litigation;

            (10) the granting or existence of Liens (and sales of assets
      resulting from a foreclosure upon such Liens) not prohibited by this
      Indenture; and

            (11) the licensing of intellectual property to third Persons on
      customary terms as determined by the Board of Directors in good faith.

      "Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP; provided,
however, that if such sale and leaseback transaction results in a Capital Lease
Obligation, the amount of Indebtedness represented thereby shall be determined
in accordance with the definition of "Capital Lease Obligation."


                                       2

      "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.

      "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.

      "Board of Directors" means:

            (1) with respect to a corporation, the board of directors of the
      corporation or any committee thereof duly authorized to act on behalf of
      such board;

            (2) with respect to a partnership, the Board of Directors of the
      general partner of the partnership;

            (3) with respect to a limited liability company, the managing member
      or members or any controlling committee of managing members thereof; and

            (4) with respect to any other Person, the board or committee of such
      Person serving a similar function.

      "Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.

      "Business Day" means any day other than a Legal Holiday.

      "Capital" means Capital Environmental Resource Inc.

      "Capital Lease Obligation" means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet prepared in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be prepaid by the lessee without payment of a
penalty.

      "Capital Stock" means:

            (1) in the case of a corporation, corporate stock;

            (2) in the case of an association or business entity, any and all
      shares, interests, participations, rights or other equivalents (however
      designated) of corporate stock;

            (3) in the case of a partnership or limited liability company,
      partnership interests (whether general or limited) or membership
      interests; and

            (4) any other interest or participation that confers on a Person the
      right to receive a share of the profits and losses of, or distributions of
      assets of, the issuing Person, but excluding from all of the foregoing any
      debt securities convertible into Capital Stock, whether or not such debt
      securities include any right of participation with Capital Stock.


                                       3

      "Cash Equivalents" means:

            (1) United States dollars and any other currency that is convertible
      into United States dollars without legal restrictions and that is used by
      the Company or any of its Restricted Subsidiaries in the ordinary course
      of business;

            (2) securities issued or directly and fully guaranteed or insured by
      the United States government or the government of Canada or any agency or
      instrumentality of the United States government or the government of
      Canada, as the case may be (provided that the full faith and credit of the
      United States or Canada, as the case may be, is pledged in support of
      those securities) having maturities of not more than one year from the
      date of acquisition;

            (3) certificates of deposit and eurodollar time deposits with
      maturities of six months or less from the date of acquisition, bankers'
      acceptances with maturities not exceeding six months, time deposits and
      overnight bank deposits, in each case, with any lender party to the Credit
      Agreement or with any commercial bank organized under the laws of the
      United States or any state thereof or that is a bank listed in Schedule I
      of the Bank Act (Canada) and having capital and surplus in excess of
      $500.0 million;

            (4) repurchase obligations with a term of not more than 30 days for
      underlying securities issued or fully guaranteed or insured by the United
      States of America or the government of Canada and entered into with any
      financial institution meeting the qualifications specified in clause (3)
      above;

            (5) commercial paper rated at least P-2 by Moody's Investors
      Service, Inc. or A-2 by Standard & Poor's Rating Services or R-1 by
      Dominion Bond Rating Service Limited, or carrying an equivalent rating by
      a nationally recognized rating agency (if all of the three named rating
      agencies cease publishing ratings of commercial paper issuers generally),
      and, in each case, maturing within six months after the date of
      acquisition;

            (6) securities with maturities of not more than one year from the
      date of acquisition issued or fully guaranteed by any state, province,
      commonwealth or territory of the United States or Canada, by any political
      subdivision or taxing authority of any such state, province, commonwealth
      or territory or by any foreign government, the securities of which state,
      province, commonwealth, territory, political subdivision, taxing authority
      or foreign government (as the case may be) are rated at least A by
      Standard & Poor's Ratings Services, A by Moody's Investors Service, Inc.
      or A by Dominion Bond Rating Service Limited;

            (7) securities with maturities of six months or less from the date
      of acquisition backed by standby letters of credit issued by any lender
      under the Credit Agreement or any commercial bank satisfying the
      requirements of clause (3) above; and

            (8) money market funds or similar funds at least 95% of the assets
      of which constitute Cash Equivalents of the kinds described in clauses (1)
      through (7) of this definition.

      "Change of Control" means the occurrence of any of the following:

            (1) the direct or indirect sale, lease, transfer, conveyance or
      other disposition (other than by way of merger or consolidation), in one
      or a series of related transactions, of all or substantially all of the
      properties or assets of the Company and its Subsidiaries taken as a whole
      to any "person" (as that term is used in Section 13(d) of the Exchange
      Act);


                                       4

            (2) the adoption of a plan relating to the liquidation or
      dissolution of the Company;

            (3) (a) prior to the Migration, (i) the consummation of any
      transaction (including, without limitation, any merger or consolidation),
      the result of which is that any "person" (as defined above) becomes the
      Beneficial Owner, directly or indirectly, of more than 50% of the Voting
      Stock of Capital, measured by voting power rather than number of shares or
      (ii) the Company ceases to be a Subsidiary of Capital or (b) subsequent to
      the Migration, the consummation of any transaction (including, without
      limitation, any merger or consolidation), the result of which is that any
      "person" (as defined above) becomes the Beneficial Owner, directly or
      indirectly, of more than 50% of the Voting Stock of the Company, measured
      by voting power rather than number of shares; or

            (4) after the Migration, the first day on which a majority of the
      members of the Board of Directors of the Company are not Continuing
      Directors.

      For the purposes of this definition, the Migration shall not constitute a
Change of Control.

      "Clearstream" means Clearstream Banking, S.A.

      "Company" means Waste Services, Inc. and any and all successors thereto.

      "Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus,
without duplication:

            (1) an amount equal to any extraordinary loss plus any net loss
      realized by such Person or any of its Restricted Subsidiaries in
      connection with an Asset Sale, to the extent such losses were deducted in
      computing such Consolidated Net Income; plus

            (2) provision for taxes based on income or profits of such Person
      and its Restricted Subsidiaries for such period, to the extent that such
      provision for taxes was deducted in computing such Consolidated Net
      Income; plus

            (3) the Fixed Charges of such Person and its Restricted Subsidiaries
      for such period, to the extent that such Fixed Charges were deducted in
      computing such Consolidated Net Income; plus

            (4) depreciation, amortization (including amortization of goodwill
      and other intangibles but excluding amortization of prepaid cash expenses
      that were paid in a prior period) and other non-cash expenses (excluding
      any such non-cash expense to the extent that it represents an accrual of
      or reserve for cash expenses in any future period or amortization of a
      prepaid cash expense that was paid in a prior period) of such Person and
      its Restricted Subsidiaries for such period to the extent that such
      depreciation, amortization and other non-cash expenses were deducted in
      computing such Consolidated Net Income; plus

            (5) unrealized non-cash losses resulting from foreign currency
      balance sheet adjustments required by GAAP to the extent such losses were
      deducted in computing such Consolidated Net Income; plus

            (6) any non-recurring costs and expenses of the Company and/or
      Capital and its Restricted Subsidiaries incurred in connection with the
      Migration; minus


                                       5

            (7) non-cash items increasing Consolidated Net Income for such
      period, other than the accrual of revenue in the ordinary course of
      business,

      in each case, on a consolidated basis and determined in accordance with
      GAAP.

      "Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:

            (1) the Net Income (or loss) of any Person that is not a Restricted
      Subsidiary or that is accounted for by the equity method of accounting
      shall be included only to the extent of the amount of dividends or similar
      distributions paid in cash to the specified Person or a Restricted
      Subsidiary of the Person;

            (2) the Net Income of any Restricted Subsidiary shall be excluded to
      the extent that the declaration or payment of dividends or similar
      distributions by that Restricted Subsidiary of that Net Income is not at
      the date of determination permitted without any prior governmental
      approval (that has not been obtained) or, directly or indirectly, by
      operation of the terms of its charter or any agreement, instrument,
      judgment, decree, order, statute, rule or governmental regulation
      applicable to that Restricted Subsidiary or its stockholders;

            (3) the cumulative effect of a change in accounting principles shall
      be excluded; and

            (4) notwithstanding clause (1) above, the Net Income of any
      Unrestricted Subsidiary shall be excluded, whether or not distributed to
      the specified Person or one of its Subsidiaries.

      "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who:

            (1) was a member of such Board of Directors on the date of the
      consummation of the Migration; or

            (2) was nominated for election or elected to such Board of Directors
      with the approval of a majority of the Continuing Directors who were
      members of such Board of Directors at the time of such nomination or
      election.

      "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.

      "Credit Agreement" means that Amended And Restated Credit Agreement, dated
as of the date of this Indenture, among Capital, the Company, the banks and
other financial institutions or entities from time to time parties thereto,
Lehman Brothers Inc., as exclusive advisor, sole lead arranger and sole
bookrunner, CIBC World Markets Corp., as syndication agent, and Lehman
Commercial Paper Inc., as administrative agent, providing for up to $160.0
million of revolving credit and term loan borrowings, and up to an additional
$50.0 million of borrowings (subject to satisfaction of certain conditions set
forth therein), including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and, in each case,
as amended, restated, modified, renewed, refunded, replaced (whether upon or
after termination or otherwise) or refinanced (including by means of sales of
debt securities to institutional investors and including any agreement to extend
the maturity thereof or adding additional borrowers or guarantors) in whole or
in part from time to time.


                                       6

      "Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case,
with banks or other institutional lenders or investors providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such banks, lenders or investors or to special purpose entities
formed to borrow from such entities against such receivables) or letters of
credit, in each case, as amended, restated, modified, renewed, refunded,
replaced (whether upon or after termination or otherwise) or refinanced
(including by means of sales of debt securities to institutional investors and
including any agreement to extend the maturity thereof or adding additional
borrowers or guarantors) in whole or in part from time to time.

      "Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.

      "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

      "Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibit A1 hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.

      "Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

      "Designated Senior Debt" means:

            (1) any Indebtedness outstanding under the Credit Facilities; and

            (2) after payment in full of all Obligations under the Credit
      Agreement, any other Senior Debt permitted under this Indenture the
      principal amount of which is $25.0 million or more and that has been
      designated by the Company as "Designated Senior Debt."

      "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case, at the option of the holder of the Capital Stock),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Capital Stock, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
Company (or, prior to the Migration, Capital) to repurchase such Capital Stock
upon the occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
or Capital, as the case may be, may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption complies
with Section 4.07 hereof. The amount of Disqualified Stock deemed to be
outstanding at any time for purposes of this Indenture shall be the maximum
amount that the Company and its Restricted Subsidiaries or Capital and its
Restricted Subsidiaries, as the case may be, may become obligated to pay upon
the maturity of, or pursuant to any mandatory redemption provisions of, such
Disqualified Stock, exclusive of accrued dividends.


                                       7

      "Domestic Subsidiary" means any Restricted Subsidiary of the Company that
was formed under the laws of the United States or any state of the United States
or the District of Columbia or that guarantees or otherwise provides direct
credit support for any Indebtedness of the Company.

      "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

      "Equity Offering" means public or private sale of Capital Stock (other
than Disqualified Stock) made for cash on a primary basis by the Company after
the date of this Indenture.

      "Euroclear" means Euroclear Bank, S.A./N.V., as operator of the Euroclear
system.

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

      "Exchange Notes" means the notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.

      "Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.

      "Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.

      "Existing Indebtedness" means Indebtedness of Capital, the Company and
their respective Subsidiaries (other than Indebtedness under the Credit
Agreement) in existence on the date of this Indenture, until such amounts are
repaid.

      "Fair Market Value" means the value that would be paid by a willing buyer
to an unaffiliated willing seller in a transaction not involving distress or
necessity of either party, determined in good faith by the Board of Directors of
the Company (unless otherwise provided in this Indenture).

      "Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the specified Person or any of its Restricted Subsidiaries incurs, assumes,
guarantees, repays, repurchases, redeems, defeases or otherwise discharges any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase, redemption, defeasance or other
discharge of Indebtedness, or such issuance, repurchase or redemption of
preferred stock, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of such reference period.

      In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

            (1) acquisitions that have been made by the specified Person or any
      of its Restricted Subsidiaries, including through mergers or
      consolidations, or any Person or any of its Restricted Subsidiaries
      acquired by the specified Person or any of its Restricted Subsidiaries,
      and including any related financing transactions and including increases
      in ownership of Restricted Subsidiaries, during the four-quarter reference
      period or subsequent to such reference period and on or prior to the
      Calculation Date shall be given pro forma effect (in accordance with
      Regulation


                                       8

      S-X under the Securities Act) as if they had occurred on the first day of
      the four-quarter reference period;

            (2) the Consolidated Cash Flow attributable to discontinued
      operations, as determined in accordance with GAAP, and operations or
      businesses (and ownership interests therein) disposed of prior to the
      Calculation Date, shall be excluded;

            (3) the Fixed Charges attributable to discontinued operations, as
      determined in accordance with GAAP, and operations or businesses (and
      ownership interests therein) disposed of prior to the Calculation Date,
      shall be excluded, but only to the extent that the obligations giving rise
      to such Fixed Charges shall not be obligations of the specified Person or
      any of its Restricted Subsidiaries following the Calculation Date;

            (4) any Person that is a Restricted Subsidiary of the Specified
      Person on the Calculation Date shall be deemed to have been a Restricted
      Subsidiary of the Specified Person at all times during such period;

            (5) any Person that is not a Restricted Subsidiary of the Specified
      Person on the Calculation Date shall be deemed not to have been a
      Restricted Subsidiary of the Specified Person at any time during such
      four-quarter period; and

            (6) if any Indebtedness bears a floating rate of interest, the
      interest expense on such Indebtedness shall be calculated as if the rate
      in effect on the Calculation Date had been the applicable rate for the
      entire period (taking into account any Hedging Obligation applicable to
      such Indebtedness if such Hedging Obligation has a remaining term as at
      the Calculation Date in excess of 12 months).

      "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

            (1) the consolidated interest expense (excluding Kelso Dividends) of
      such Person and its Restricted Subsidiaries for such period, whether paid
      or accrued, including, without limitation, amortization of debt issuance
      costs and original issue discount, non-cash interest payments, the
      interest component of any deferred payment obligations, the interest
      component of all payments associated with Capital Lease Obligations,
      imputed interest with respect to Attributable Debt, commissions, discounts
      and other fees and charges incurred in respect of letter of credit or
      bankers' acceptance financings, and net of the effect of all payments made
      or received pursuant to Hedging Obligations in respect of interest rates;
      plus

            (2) the consolidated interest expense (excluding Kelso Dividends) of
      such Person and its Restricted Subsidiaries that was capitalized during
      such period; plus

            (3) any interest on Indebtedness of another Person that is
      guaranteed by such Person or one of its Restricted Subsidiaries or secured
      by a Lien on assets of such Person or one of its Restricted Subsidiaries,
      whether or not such Guarantee or Lien is called upon; plus

            (4) the product of (a) all dividends on any series of preferred
      stock of such Person or any of its Restricted Subsidiaries, (other than
      Kelso Dividends and any other dividends on Equity Interests payable solely
      in Equity Interests of such Person (other than Disqualified Stock) or to
      such Person or a Restricted Subsidiary of such Person), times (b) a
      fraction, the numerator of which is one and the denominator of which is
      one minus the then current combined federal, state


                                       9

      and local statutory tax rate of such Person, expressed as a decimal, in
      each case, determined on a consolidated basis in accordance with GAAP.

      "Foreign Subsidiary" means any direct Subsidiary of Capital that is not a
Domestic Subsidiary and any Subsidiary of such direct Subsidiary.

      "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the opinions and pronouncements of
the Public Company Accounting Oversight Board and statements and pronouncements
of the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

      "Global Note Legend" means the legend set forth in Section 2.06(g)(2)
hereof, which is required to be placed on all Global Notes issued under this
Indenture.

      "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes deposited with or on
behalf of and registered in the name of the Depository or its nominee,
substantially in the form of Exhibit A1 hereto and that bears the Global Note
Legend and that has the "Schedule of Exchanges of Interests in the Global Note"
attached thereto, issued in accordance with Section 2.01, 2.06(b)(4), 2.06(d)(2)
or 2.06(f) hereof.

      "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

      "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).

      "Guarantors" means each of:

            (1) Capital and its Foreign Subsidiaries, in each case, prior to the
      Migration;

            (2) the current and future Domestic Subsidiaries of the Company; and

            (3) any other Subsidiary of the Company that executes a Note
      Guarantee in accordance with the provisions of this Indenture,

      and their respective successors and assigns, in each case, until the Note
Guarantee of such Person has been released in accordance with the provisions of
this Indenture.

      "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

            (1) interest rate swap agreements (whether from fixed to floating or
      from floating to fixed), interest rate cap agreements and interest rate
      collar agreements;


                                       10

            (2) other agreements or arrangements designed to manage interest
      rates or interest rate risk; and

            (3) other agreements or arrangements designed to protect such Person
      against fluctuations in currency exchange rates or commodity prices.

      "Holder" means a Person in whose name a Note is registered.

      "IAI Global Note" means a Global Note substantially in the form of Exhibit
A1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that shall be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

      "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),
whether or not contingent:

            (1) in respect of borrowed money;

            (2) evidenced by bonds, notes, debentures or similar instruments or
      letters of credit (or reimbursement agreements in respect thereof);

            (3) in respect of banker's acceptances;

            (4) representing Capital Lease Obligations or Attributable Debt in
      respect of sale and leaseback transactions;

            (5) representing the balance deferred and unpaid of the purchase
      price of any property or services due more than six months after such
      property is acquired or such services are completed; or

            (6) representing any Hedging Obligations,

      if and to the extent any of the preceding items (other than letters of
credit, Attributable Debt and Hedging Obligations) would appear as a liability
upon a balance sheet of the specified Person prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes all Indebtedness of others secured
by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included,
the Guarantee by the specified Person of any Indebtedness of any other Person.

      "Indenture" means this Indenture, as amended or supplemented from time to
time.

      "Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.

      "Initial Notes" means the first $160.0 million aggregate principal amount
of Notes issued under this Indenture on the date hereof.

      "Initial Purchasers" means Lehman Brothers Inc. and CIBC World Markets
Corp.

      "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.


                                       11

      "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Company's Investments in such Subsidiary that were not sold or
disposed of in an amount determined as provided in the final paragraph of
Section 4.07 hereof. Except as otherwise provided in this Indenture, the amount
of an Investment shall be determined at the time the Investment is made and
without giving effect to subsequent changes in value.

      "Kelso Dividends" means (a) dividends payable by the Company on Kelso
Preferred Stock pursuant to the Kelso Preferred Stock Documents (whether paid or
accrued and whether payable in the form of cash dividends or payments-in-kind)
and (b) any accretion of discount or amortization of financing costs related to
the Kelso Preferred Stock.

      "Kelso Preferred Stock" means the Series A Preferred Stock of the Company
issued, paid-in-kind or accruing pursuant to the terms of the Kelso Preferred
Stock Documents.

      "Kelso Preferred Stock Documents" means collectively (a) the Preferred
Subscription Agreement, dated as of May 6, 2003, among the Company, Capital,
Kelso Investment Associates VI, L.P. and KEP VI, LLC, as amended by Amendment
No. 1 to the Preferred Subscription Agreement, dated as of February 13, 2004,
(b) the Amended and Restated Certificate of Designations of the Powers,
Preferences and Other Special Rights of the Series A Preferred Stock and the
Qualifications, Limitations and Restrictions Thereof, as executed by the Company
on April 30, 2004, (c) the Registration Rights Agreement, dated as of May 6,
2003, among the Company, Capital, Kelso Investment Associates VI, L.P. and KEP
VI, LLC and (d) the Warrant Agreement, dated as of May 6, 2003, among the
Company, Capital, Kelso Investment Associates VI, L.P. and KEP VI, LLC, in each
case of clauses (a) through (d), as such agreements or instruments are in effect
on the date of this Indenture or as amended, modified or replaced by any
amendment, modification or replacement to such agreements or instruments (so
long as such amendment, modification or replacement is not disadvantageous to
the Holders of the Notes in any material respect).

      "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.

      "Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

      "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or


                                       12

agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction.

      "Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.

      "Migration" means the reorganization in which Capital and its Foreign
Subsidiaries shall become Subsidiaries of the Company by way of a plan of
arrangement under the Business Corporations Act (Ontario) and as approved by the
Ontario Superior Court of Justice.

      "Moody's" means Moody's Investors Service, Inc.

      "Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP but before any
reduction in respect of preferred stock dividends (whether paid or accrued and
whether payable in the form of cash dividends or payments-in-kind (including
Kelso Dividends)), excluding, however:

            (1) any gain (but not loss), together with any related provision for
      taxes on such gain (but not loss), realized in connection with: (a) any
      Asset Sale; or (b) the disposition of any securities by such Person or any
      of its Restricted Subsidiaries or the extinguishment of any Indebtedness
      of such Person or any of its Restricted Subsidiaries; and

            (2) any extraordinary gain (but not loss), together with any related
      provision for taxes on such extraordinary gain (but not loss).

      "Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, taxes paid or payable as a result of the
Asset Sale, in each case, after taking into account any available tax credits or
deductions and any tax sharing arrangements, and amounts required to be applied
to the repayment of Indebtedness, other than Senior Debt, secured by a Lien on
the asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.

      "Non-Recourse Debt" means Indebtedness:

            (1) as to which neither the Company nor any of its Restricted
      Subsidiaries (a) provides credit support of any kind (including any
      undertaking, agreement or instrument that would constitute Indebtedness),
      (b) is directly or indirectly liable as a guarantor or otherwise, or (c)
      constitutes the lender;

            (2) no default with respect to which (including any rights that the
      holders of the Indebtedness may have to take enforcement action against
      the relevant Unrestricted Subsidiary) would permit upon notice, lapse of
      time or both any holder of any other Indebtedness of the Company or any of
      its Restricted Subsidiaries to declare a default on such other
      Indebtedness or cause the payment of the Indebtedness to be accelerated or
      payable prior to its Stated Maturity; and


                                       13

            (3) as to which the lenders have been notified in writing that they
      shall not have any recourse to the stock or assets of the Company or any
      of its Restricted Subsidiaries.

      "Non-U.S. Person" means a Person who is not a U.S. Person.

      "Note Guarantee" means the Guarantee by each Guarantor of the Company's
obligations under this Indenture and the Notes, executed pursuant to the
provisions of this Indenture.

      "Notes" has the meaning assigned to it in the preamble to this Indenture.
The Initial Notes and the Additional Notes shall be treated as a single class
for all purposes under this Indenture, and unless the context otherwise
requires, all references to the Notes shall include the Initial Notes and any
Additional Notes.

      "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

      "Offering Memorandum" means the final Offering Memorandum of the Company
dated April 26, 2004 with respect to the Notes.

      "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary, any Assistant Secretary or any Vice-President of such Person.

      "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.

      "Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 13.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.

      "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

      "Permitted Business" means the business of Capital or the Company and the
Subsidiaries of either engaged in on the date of this Indenture and any other
activities that are similar, ancillary or reasonably related to such business.

      "Permitted Investments" means:

            (1) any Investment in the Company or in a Restricted Subsidiary of
      the Company;

            (2) any Investment in Cash Equivalents;

            (3) any Investment by the Company or any Restricted Subsidiary of
      the Company in a Person, if as a result of such Investment:

                  (a) such Person becomes a Restricted Subsidiary of the
            Company; or


                                       14

                  (b) such Person is merged, consolidated or amalgamated with or
            into, or transfers or conveys substantially all of its assets to, or
            is liquidated into, the Company or a Restricted Subsidiary of the
            Company;

            (4) any Investment made as a result of the receipt of non-cash
      consideration from (a) an Asset Sale that was made pursuant to and in
      compliance with Section 4.10 hereof or (b) any transaction not
      constituting an Asset Sale by reason of the $2.0 million threshold
      contained in the definition thereof,

            (5) any acquisition of assets or Capital Stock solely in exchange
      for the issuance of Equity Interests (other than Disqualified Stock) of
      the Company, or, prior to the Migration, Capital (to the extent such
      Equity Interests of Capital are converted into Equity Interests of the
      Company upon consummation of the Migration);

            (6) any Investments received in compromise or resolution of (a)
      obligations of trade creditors or customers that were incurred in the
      ordinary course of business of the Company or any of its Restricted
      Subsidiaries, including pursuant to any plan of reorganization or similar
      arrangement upon the bankruptcy or insolvency of any trade creditor or
      customer; or (b) litigation, arbitration or other disputes with Persons
      who are not Affiliates;

            (7) Investments represented by Hedging Obligations;

            (8) loans or advances to employees of the Company or any Restricted
      Subsidiary of the Company made in the ordinary course of business of the
      Company or the Restricted Subsidiary of the Company (including, without
      limitation, for travel, entertainment and relocation expenses) in an
      aggregate principal amount not to exceed $2.0 million at any one time
      outstanding;

            (9) repurchases of the Notes;

            (10) extensions of trade credit in the ordinary course;

            (11) Investments existing on the date of this Indenture and any
      renewal or replacement thereof on terms and conditions not materially less
      favorable than that being renewed or replaced;

            (12) Investments represented by accounts receivable created or
      acquired in the ordinary course of business; intercompany Indebtedness to
      the extent permitted by Section 4.09 hereof, Investments in prepaid
      expenses, negotiable instruments held for collection and lease, utility
      and workers' compensation, performance and other similar deposits made in
      the ordinary course of business and Investments to secure participation in
      government reimbursement programs; Investments by any qualified or
      nonqualified benefit plan established by the Company or its Restricted
      Subsidiaries made in accordance with the terms of such plan, or any
      Investments made by the Company or any Restricted Subsidiary in connection
      with the funding thereof;

            (13) Investments of a Person or any of its Subsidiaries existing at
      the time such Person becomes a Restricted Subsidiary or at the time such
      Person merges or consolidates with the Company or any of its Restricted
      Subsidiaries, in either case, in compliance with this Indenture; provided
      that such Investments were not made by such Person in connection with, or
      in anticipation or contemplation of, such Person becoming a Restricted
      Subsidiary or such merger or consolidation; and


                                       15

            (14) other Investments in any Person having an aggregate Fair Market
      Value (measured on the date each such Investment was made and without
      giving effect to subsequent changes in value), when taken together with
      all other Investments made pursuant to this clause (14) that are at the
      time outstanding not to exceed $15.0 million.

      "Permitted Junior Securities" means:

            (1) Equity Interests in the Company or any Guarantor; or

            (2) debt securities of the Company or any Guarantor that are
      subordinated to all Senior Debt and any debt securities issued in exchange
      for Senior Debt to substantially the same extent as, or to a greater
      extent than, the Notes and the Note Guarantees are subordinated to Senior
      Debt under this Indenture.

      "Permitted Liens" means:

            (1) Liens on assets of the Company or any of its Restricted
      Subsidiaries securing Senior Debt that was permitted by the terms of this
      Indenture to be incurred and other Obligations with respect thereto;

            (2) Liens in favor of the Company or the Guarantors;

            (3) Liens on property of a Person existing at the time such Person
      is merged with or into or consolidated with the Company or any Restricted
      Subsidiary of the Company; provided that such Liens were in existence
      prior to the contemplation of such merger or consolidation and do not
      extend to any assets other than those of the Person merged into or
      consolidated with the Company or the Restricted Subsidiary;

            (4) Liens on property (including Capital Stock) existing at the time
      of acquisition of the property by the Company or any Restricted Subsidiary
      of the Company; provided that such Liens were in existence prior to, and
      not incurred in contemplation of, such acquisition;

            (5) Liens to secure the performance of statutory obligations, surety
      or appeal bonds, completion guarantees, performance bonds, bids, leases,
      government contracts or other obligations of a like nature incurred in the
      ordinary course of business (including Liens securing letters of credit
      issued in the ordinary course of business in connection therewith);

            (6) Liens to secure Indebtedness (including Capital Lease
      Obligations) permitted by clause (4) of Section 4.09(b) hereof covering
      only the assets acquired with or financed by such Indebtedness;

            (7) Liens existing on the date of this Indenture;

            (8) Liens for taxes, assessments or governmental charges or claims
      that are not yet delinquent or that are being contested in good faith by
      appropriate proceedings promptly instituted and diligently concluded;
      provided that any reserve or other appropriate provision as is required in
      conformity with GAAP has been made therefor;

            (9) Liens imposed by law, such as carriers', warehousemen's,
      landlord's, materialman's, repairman's, mechanic's Liens or other like
      Liens, in each case, incurred in the ordinary course of business;


                                       16

            (10) survey exceptions, easements or reservations of, or rights of
      others for, licenses, rights-of-way, sewers, electric lines, telegraph and
      telephone lines and other similar purposes, or zoning or other
      restrictions as to the use of real property that were not incurred in
      connection with Indebtedness and that do not in the aggregate materially
      adversely affect the value of said properties or materially impair their
      use in the operation of the business of such Person;

            (11) Liens created for the benefit of (or to secure) the Notes or
      the Note Guarantees;

            (12) Liens to secure any Permitted Refinancing Indebtedness
      permitted to be incurred under this Indenture; provided, however, that:

                  (a) the new Lien shall be limited to all or part of the same
            property and assets that secured or, under the written agreements
            pursuant to which the original Lien arose, could secure the original
            Lien (plus improvements and accessions to, such property or proceeds
            or distributions thereof); and

                  (b) the Indebtedness secured by the new Lien is not increased
            to any amount greater than the sum of (x) the outstanding principal
            amount, or, if greater, committed amount, of the Permitted
            Referencing Indebtedness and (y) an amount necessary to pay any fees
            and expenses, including premiums, related to such renewal,
            refunding, refinancing, replacement, defeasance or discharge;

            (13) Liens arising from Uniform Commercial Code financing statement
      filings (or financing statement filings or the equivalent in other
      jurisdictions) by lessors regarding operating leases entered into by such
      lessors and the Company or any of its Restricted Subsidiaries in the
      ordinary course of business;

            (14) Liens on assets of Unrestricted Subsidiaries that secure
      Non-Recourse Debt of such Unrestricted Subsidiaries;

            (15) Liens incurred or deposits made in connection with workers'
      compensation, unemployment insurance or other social security legislation;

            (16) any interest or title of a lessor under any lease entered into
      in the ordinary course of business and covering only the assets so leased;

            (17) advance deposits made in connection with any Investment
      permitted under Section 4.07 hereof;

            (18) Liens on any landfill acquired after the date of this Indenture
      securing reasonable royalty or similar payments (determined by reference
      to volume or weight utilized) due to the seller of such landfill as a
      consequence of such acquisition;

            (19) judgment Liens not giving rise to an Event of Default;

            (20) Liens securing reimbursement obligations with respect to
      commercial letters of credit which encumber documents and other property
      relating to such letters of credit and products and proceeds thereof,


                                       17


            (21) Liens created or incurred on the assets of a captive
      self-insurance Subsidiary of the Company or any Restricted Subsidiary of
      the Company to secure its insurance obligations or satisfy applicable
      insurance law or regulatory requirements; and

            (22) Liens incurred by the Company or any Restricted Subsidiary of
      the Company securing obligations that do not exceed $10.0 million at any
      one time outstanding.

      "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, renew, refund, refinance, replace, defease
or discharge other Indebtedness of the Company or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided that:

            (1) the principal amount (or accreted value, if applicable) of such
      Permitted Refinancing Indebtedness does not exceed the principal amount
      (or accreted value, if applicable) of the Indebtedness extended, renewed,
      refunded, refinanced, replaced, defeased or discharged (plus all accrued
      interest on the Indebtedness and the amount of all fees and expenses, and
      premiums incurred in connection therewith);

            (2) such Permitted Refinancing Indebtedness has a final maturity
      date later than the final maturity date of, and has a Weighted Average
      Life to Maturity equal to or greater than the Weighted Average Life to
      Maturity of, the Indebtedness being extended, renewed, refunded,
      refinanced, replaced, defeased or discharged;

            (3) if the Indebtedness being extended, renewed, refunded,
      refinanced, replaced, defeased or discharged is subordinated in right of
      payment to the Notes, such Permitted Refinancing Indebtedness is
      subordinated in right of payment to, the Notes on terms at least as
      favorable to the Holders of Notes as those contained in the documentation
      governing the Indebtedness being extended, renewed, refunded, refinanced,
      replaced, defeased or discharged; and

            (4) such Indebtedness is incurred either by the Company or by the
      Restricted Subsidiary who is the obligor on the Indebtedness being
      extended, renewed, refunded, refinanced, replaced, defeased or discharged.

      "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

      "Private Placement Legend" means the legend set forth in Section
2.06(g)(1) hereof to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.

      "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

      "Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date of this Indenture, among the Company, the Guarantors and
the Initial Purchasers, as such agreement may be amended, modified or
supplemented from time to time and, with respect to any Additional Notes, one or
more registration rights agreements among the Company, the Guarantors and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.

      "Regulation S" means Regulation S promulgated under the Securities Act.


                                       18

      "Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.

      "Regulation S Permanent Global Note" means a permanent Global Note in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.

      "Regulation S Temporary Global Note" means a temporary Global Note in the
form of Exhibit A2 hereto deposited with or on behalf of and registered in the
name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903
of Regulation S.

      "Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.

      "Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.

      "Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.

      "Restricted Global Note" means a Global Note bearing the Private Placement
Legend.

      "Restricted Investment" means an Investment other than a Permitted
Investment.

      "Restricted Period" means the 40-day distribution compliance period as
defined in Regulation S.

      "Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

      "Rule 144" means Rule 144 promulgated under the Securities Act.

      "Rule 144A" means Rule 144A promulgated under the Securities Act.

      "Rule 903" means Rule 903 promulgated under the Securities Act.

      "Rule 904" means Rule 904 promulgated under the Securities Act.

      "SEC" means the Securities and Exchange Commission.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Senior Debt" means:

            (1) all Indebtedness of the Company, any Guarantor (other than
      Capital), Capital or any Foreign Subsidiary of Capital outstanding under
      Credit Facilities and all Hedging Obligations with respect thereto whether
      outstanding on the date of this Indenture or incurred thereafter;


                                       19

            (2) any other Indebtedness of the Company or any Guarantor permitted
      to be incurred under the terms of this Indenture, unless the instrument
      under which such Indebtedness is incurred expressly provides that it is on
      a parity with or subordinated in right of payment to the Notes or any Note
      Guarantee; and

            (3) all Obligations with respect to the items listed in the
      preceding clauses (1) and (2).

      Notwithstanding anything to the contrary in the preceding, Senior Debt
shall not include:

            (1) any liability for federal, state, local or other taxes owed or
      owing by the Company, any Guarantor (other than Capital), Capital or any
      Foreign Subsidiary of Capital;

            (2) any intercompany Indebtedness of (a) the Company or any of its
      Subsidiaries to the Company or any of its Affiliates or (b) prior to the
      Migration, Capital or any of its Subsidiaries to Capital or any of its
      Affiliates;

            (3) any trade payables;

            (4) the portion of any Indebtedness that is incurred in violation of
      this Indenture; provided that Indebtedness under a Credit Facility shall
      not cease to be Senior Debt under this clause (4) if the lenders obtained
      a certificate from an officer of the Company as of the date of the
      incurrence of such Indebtedness to the effect that such Indebtedness was
      permitted to be incurred under this Indenture; or

            (5) Indebtedness which is classified as non-recourse in accordance
      with GAAP or any unsecured claim arising in respect thereof by reason of
      the application of Section 1111(b)(1) of the United States Bankruptcy
      Code.

      "Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.

      "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
this Indenture.

      "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness as of the date of this Indenture, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

      "Subsidiary" means, with respect to any specified Person:

            (1) any corporation, association or other business entity of which
      more than 50% of the total voting power of shares of Capital Stock
      entitled (without regard to the occurrence of any contingency and after
      giving effect to any voting agreement or stockholders' agreement that
      effectively transfers voting power) to vote in the election of directors,
      managers or trustees of the corporation, association or other business
      entity is at the time owned or controlled, directly or indirectly, by that
      Person or one or more of the other Subsidiaries of that Person (or a
      combination thereof); and


                                       20

            (2) any partnership (a) the sole general partner or the managing
      general partner of which is such Person or a Subsidiary of such Person or
      (b) the only general partners of which are that Person or one or more
      Subsidiaries of that Person (or any combination thereof).

      "TIA" means the Trust Indenture Act of 1939, as amended.

      "Trustee" means Wells Fargo Bank, National Association until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.

      "Unrestricted Definitive Note" means a Definitive Note that does not bear
and is not required to bear the Private Placement Legend.

      "Unrestricted Global Note" means a Global Note that does not bear and is
not required to bear the Private Placement Legend.

      "Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a resolution of the Board of Directors, but only to the
extent that such Subsidiary:

            (1) has no Indebtedness other than Non-Recourse Debt;

            (2) except as permitted by Section 4.11 hereof is not party to any
      agreement, contract, arrangement or understanding with the Company or any
      Restricted Subsidiary of the Company unless the terms of any such
      agreement, contract, arrangement or understanding are no less favorable to
      the Company or such Restricted Subsidiary than those that might be
      obtained at the time from Persons who are not Affiliates of the Company;

            (3) is a Person with respect to which neither the Company nor any of
      its Restricted Subsidiaries has any direct or indirect obligation (a) to
      subscribe for additional Equity Interests or (b) to maintain or preserve
      such Person's financial condition or to cause such Person to achieve any
      specified levels of operating results; and

            (4) has not guaranteed or otherwise directly or indirectly provided
      credit support for any Indebtedness of the Company or any of its
      Restricted Subsidiaries.

      "U.S. Person" means a U.S. Person as defined in Rule 902(k) promulgated
under the Securities Act.

      "Voting Stock" of any specified Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.

      "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

            (1) the sum of the products obtained by multiplying (a) the amount
      of each then remaining installment, sinking fund, serial maturity or other
      required payments of principal, including payment at final maturity, in
      respect of the Indebtedness, by (b) the number of years (calculated to the
      nearest one-twelfth) that shall elapse between such date and the making of
      such payment; by


                                       21

            (2) the then outstanding principal amount of such Indebtedness.

Section 1.02 Other Definitions.



                                                                                             Defined in
     Term                                                                                      Section
     ----                                                                                      -------
                                                                                          
     "Affiliate Transaction".............................................................       4.11
     "Asset Sale Offer"..................................................................       3.09
     "Authentication Order"..............................................................       2.02
     "Change of Control Offer"...........................................................       4.15
     "Change of Control Payment".........................................................       4.15
     "Change of Control Payment Date"....................................................       4.15
     "Covenant Defeasance"...............................................................       8.03
     "DTC"...............................................................................       2.03
     "Event of Default"..................................................................       6.01
     "Excess Proceeds"...................................................................       4.10
     "incur".............................................................................       4.09
     "Legal Defeasance"..................................................................       8.02
     "Offer Amount"......................................................................       3.09
     "Offer Period"......................................................................       3.09
     "Paying Agent"......................................................................       2.03
     "Permitted Debt"....................................................................       4.09
     "Payment Blockage Notice"...........................................................       10.03
     "Payment Default" ..................................................................       6.01
     "Purchase Date".....................................................................       3.09
     "Registrar".........................................................................       2.03
     "Restricted Payments"...............................................................       4.07


Section 1.03 Incorporation by Reference of Trust Indenture Act.

      Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

      The following TIA terms used in this Indenture have the following
meanings:

      "indenture securities" means the Notes;

      "indenture securityholder" means a Holder of a Note;

      "indenture to be qualified" means this Indenture;

      "indenture trustee" or "institutional trustee" means the Trustee; and

      "obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.

      All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
and not otherwise defined herein shall have the meanings so assigned to them
thereby.


                                       22

Section 1.04 Rules of Construction.

      Unless the context otherwise requires:

            (1) a term has the meaning assigned to it;

            (2) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with GAAP;

            (3) "or" is not exclusive;

            (4) words in the singular include the plural, and in the plural
      include the singular;

            (5) "shall" shall be interpreted to express a command;

            (6) provisions apply to successive events and transactions; and

            (7) references to sections of or rules under the Securities Act
      shall be deemed to include substitute, replacement of successor sections
      or rules adopted by the SEC from time to time.

                                    ARTICLE 2
                                    THE NOTES

Section 2.01 Form and Dating.

      (a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibits A1 and A2 hereto. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.

      The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.

      (b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A1 or A2 hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A1 hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it represents the aggregate principal amount
of outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.

      (c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of

                                       23

the purchasers of the Notes represented thereby with the Trustee, as custodian,
at its New York office for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Clearstream, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of:

            (1) a written certificate from the Depositary, together with copies
      of certificates from Euroclear and Clearstream certifying that they have
      received certification of non-United States beneficial ownership of 100%
      of the aggregate principal amount of the Regulation S Temporary Global
      Note (except to the extent of any beneficial owners thereof who acquired
      an interest therein during the Restricted Period pursuant to another
      exemption from registration under the Securities Act and who shall take
      delivery of a beneficial ownership interest in a 144A Global Note or an
      IAI Global Note bearing a Private Placement Legend, all as contemplated by
      Section 2.06(b) hereof); and

            (2) an Officers' Certificate from the Company.

      Following the termination of the Restricted Period, beneficial interests
in the Regulation S Temporary Global Note shall be exchanged for beneficial
interests in the Regulation S Permanent Global Note pursuant to the Applicable
Procedures. Simultaneously with the authentication of the Regulation S Permanent
Global Note, the Trustee shall cancel the Regulation S Temporary Global Note.
The aggregate principal amount of the Regulation S Temporary Global Note and the
Regulation S Permanent Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.

            (3) Euroclear and Clearstream Procedures Applicable. The provisions
      of the "Operating Procedures of the Euroclear System" and "Terms and
      Conditions Governing Use of Euroclear" and the "General Terms and
      Conditions of Clearstream Banking" and "Customer Handbook" of Clearstream
      shall be applicable to transfers of beneficial interests in the Regulation
      S Temporary Global Note and the Regulation S Permanent Global Note that
      are held by Participants through Euroclear or Clearstream.

Section 2.02 Execution and Authentication.

      At least one Officer must sign the Notes for the Company by manual or
facsimile signature.

      If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.

      A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.

      The Trustee shall, upon receipt of a written order of the Company signed
by two Officers (an "Authentication Order"), authenticate Notes for original
issue that may be validly issued under this Indenture, including any Additional
Notes. The aggregate principal amount of Notes outstanding at any time may not
exceed the aggregate principal amount of Notes authorized for issuance by the
Company pursuant to one or more Authentication Orders, except as provided in
Section 2.07 hereof.

      The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference

                                       24

in this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.

Section 2.03 Registrar and Paying Agent.

      The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

      The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.

      The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.04 Paying Agent to Hold Money in Trust.

      The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.

Section 2.05 Holder Lists.

      The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).

Section 2.06 Transfer and Exchange.

      (a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a

                                       25

successor Depositary or a nominee of such successor Depositary. All Global Notes
shall be exchanged by the Company for Definitive Notes if:

            (1) the Company delivers to the Trustee notice from the Depositary
      that it is unwilling or unable to continue to act as Depositary or that it
      is no longer a clearing agency registered under the Exchange Act and, in
      either case, a successor Depositary is not appointed by the Company within
      120 days after the date of such notice from the Depositary;

            (2) the Company in its sole discretion determines that the Global
      Notes (in whole but not in part) should be exchanged for Definitive Notes
      and delivers a written notice to such effect to the Trustee; provided that
      in no event shall the Regulation S Temporary Global Note be exchanged by
      the Company for Definitive Notes prior to (A) the expiration of the
      Restricted Period and (B) the receipt by the Registrar of any certificates
      required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or

            (3) there has occurred and is continuing a Default or Event of
      Default with respect to the Notes.

      Upon the occurrence of any of the preceding events in (1), (2) or (3)
above, Definitive Notes shall be issued in such names as the Depositary shall
instruct the Trustee. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a); however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

      (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (1) or (2) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

            (1) Transfer of Beneficial Interests in the Same Global Note.
      Beneficial interests in any Restricted Global Note may be transferred to
      Persons who take delivery thereof in the form of a beneficial interest in
      the same Restricted Global Note in accordance with the transfer
      restrictions set forth in the Private Placement Legend; provided, however,
      that prior to the expiration of the Restricted Period, transfers of
      beneficial interests in the Regulation S Temporary Global Note may not be
      made to a U.S. Person or for the account or benefit of a U.S. Person
      (other than an Initial Purchaser). Beneficial interests in any
      Unrestricted Global Note may be transferred to Persons who take delivery
      thereof in the form of a beneficial interest in an Unrestricted Global
      Note. No written orders or instructions shall be required to be delivered
      to the Registrar to effect the transfers described in this Section
      2.06(b)(1).

            (2) All Other Transfers and Exchanges of Beneficial Interests in
      Global Notes. In connection with all transfers and exchanges of beneficial
      interests that are not subject to Section 2.06(b)(1) above, the transferor
      of such beneficial interest must deliver to the Registrar either:


                                       26

                  (A) both:

                        (i) a written order from a Participant or an Indirect
                  Participant given to the Depositary in accordance with the
                  Applicable Procedures directing the Depositary to credit or
                  cause to be credited a beneficial interest in another Global
                  Note in an amount equal to the beneficial interest to be
                  transferred or exchanged; and

                        (ii) instructions given in accordance with the
                  Applicable Procedures containing information regarding the
                  Participant account to be credited with such increase; or

                  (B) both:

                        (i) a written order from a Participant or an Indirect
                  Participant given to the Depositary in accordance with the
                  Applicable Procedures directing the Depositary to cause to be
                  issued a Definitive Note in an amount equal to the beneficial
                  interest to be transferred or exchanged; and

                        (ii) instructions given by the Depositary to the
                  Registrar containing information regarding the Person in whose
                  name such Definitive Note shall be registered to effect the
                  transfer or exchange referred to in (i) above;

                  provided that in no event shall Definitive Notes be issued
                  upon the transfer or exchange of beneficial interests in the
                  Regulation S Temporary Global Note prior to (A) the expiration
                  of the Restricted Period and (B) the receipt by the Registrar
                  of any certificates required pursuant to Rule 903 under the
                  Securities Act.

Upon consummation of an Exchange Offer by the Company in accordance with Section
2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall be deemed to
have been satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global Notes
contained in this Indenture and the Notes or otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the relevant
Global Note(s) pursuant to Section 2.06(h) hereof.

            (3) Transfer of Beneficial Interests to Another Restricted Global
      Note. A beneficial interest in any Restricted Global Note may be
      transferred to a Person who takes delivery thereof in the form of a
      beneficial interest in another Restricted Global Note if the transfer
      complies with the requirements of Section 2.06(b)(2) above and the
      Registrar receives the following:

                  (A) if the transferee shall take delivery in the form of a
            beneficial interest in the 144A Global Note, then the transferor
            must deliver a certificate in the form of Exhibit B hereto,
            including the certifications in item (1) thereof;

                  (B) if the transferee shall take delivery in the form of a
            beneficial interest in the Regulation S Temporary Global Note or the
            Regulation S Permanent Global Note, then the transferor must deliver
            a certificate in the form of Exhibit B hereto, including the
            certifications in item (2) thereof; and


                                       27

                  (C) if the transferee shall take delivery in the form of a
            beneficial interest in the IAI Global Note, then the transferor must
            deliver a certificate in the form of Exhibit B hereto, including the
            certifications, certificates and Opinion of Counsel required by item
            (3) thereof, if applicable.

            (4) Transfer and Exchange of Beneficial Interests in a Restricted
      Global Note for Beneficial Interests in an Unrestricted Global Note. A
      beneficial interest in any Restricted Global Note may be exchanged by any
      holder thereof for a beneficial interest in an Unrestricted Global Note or
      transferred to a Person who takes delivery thereof in the form of a
      beneficial interest in an Unrestricted Global Note if the exchange or
      transfer complies with the requirements of Section 2.06(b)(2) above and:

                  (A) such exchange or transfer is effected pursuant to the
            Exchange Offer in accordance with the Registration Rights Agreement
            and the holder of the beneficial interest to be transferred, in the
            case of an exchange, or the transferee, in the case of a transfer,
            certifies in the applicable Letter of Transmittal that it is not (i)
            a Broker-Dealer, (ii) a Person participating in the distribution of
            the Exchange Notes or (iii) a Person who is an affiliate (as defined
            in Rule 144) of the Company;

                  (B) such transfer is effected pursuant to the Shelf
            Registration Statement in accordance with the Registration Rights
            Agreement;

                  (C) such transfer is effected by a Broker-Dealer pursuant to
            the Exchange Offer Registration Statement in accordance with the
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                        (i) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a beneficial interest in an Unrestricted Global
                  Note, a certificate from such holder in the form of Exhibit C
                  hereto, including the certifications in item (1)(a) thereof;
                  or

                        (ii) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to transfer such beneficial
                  interest to a Person who shall take delivery thereof in the
                  form of a beneficial interest in an Unrestricted Global Note,
                  a certificate from such holder in the form of Exhibit B
                  hereto, including the certifications in item (4) thereof;

            and, in each such case set forth in this subparagraph (D), if the
            Registrar so requests or if the Applicable Procedures so require, an
            Opinion of Counsel in form reasonably acceptable to the Registrar to
            the effect that such exchange or transfer is in compliance with the
            Securities Act and that the restrictions on transfer contained
            herein and in the Private Placement Legend are no longer required in
            order to maintain compliance with the Securities Act.

      If any such transfer is effected pursuant to subparagraph (B), (C) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B), (C) or (D) above.


                                       28

      Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.

      (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

            (1) Beneficial Interests in Restricted Global Notes to Restricted
      Definitive Notes. If any holder of a beneficial interest in a Restricted
      Global Note proposes to exchange such beneficial interest for a Restricted
      Definitive Note or to transfer such beneficial interest to a Person who
      takes delivery thereof in the form of a Restricted Definitive Note, then,
      upon receipt by the Registrar of the following documentation:

                  (A) if the holder of such beneficial interest in a Restricted
            Global Note proposes to exchange such beneficial interest for a
            Restricted Definitive Note, a certificate from such holder in the
            form of Exhibit C hereto, including the certifications in item
            (2)(a) thereof;

                  (B) if such beneficial interest is being transferred to a QIB
            in accordance with Rule 144A, a certificate to the effect set forth
            in Exhibit B hereto, including the certifications in item (1)
            thereof;

                  (C) if such beneficial interest is being transferred to a
            Non-U.S. Person in an offshore transaction in accordance with Rule
            903 or Rule 904, a certificate to the effect set forth in Exhibit B
            hereto, including the certifications in item (2) thereof;

                  (D) if such beneficial interest is being transferred pursuant
            to an exemption from the registration requirements of the Securities
            Act in accordance with Rule 144, a certificate to the effect set
            forth in Exhibit B hereto, including the certifications in item
            (3)(a) thereof;

                  (E) if such beneficial interest is being transferred to an
            Institutional Accredited Investor in reliance on an exemption from
            the registration requirements of the Securities Act other than those
            listed in subparagraphs (B) through (D) above, a certificate to the
            effect set forth in Exhibit B hereto, including the certifications,
            certificates and Opinion of Counsel required by item (3) thereof, if
            applicable;

                  (F) if such beneficial interest is being transferred to the
            Company or any of its Subsidiaries, a certificate to the effect set
            forth in Exhibit B hereto, including the certifications in item
            (3)(b) thereof; or

                  (G) if such beneficial interest is being transferred pursuant
            to an effective registration statement under the Securities Act, a
            certificate to the effect set forth in Exhibit B hereto, including
            the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive

                                       29

Note issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.

            (2) Beneficial Interests in Regulation S Temporary Global Note to
      Definitive Notes. Notwithstanding Sections 2.06(c)(1)(A) and (C) hereof, a
      beneficial interest in the Regulation S Temporary Global Note may not be
      exchanged for a Definitive Note or transferred to a Person who takes
      delivery thereof in the form of a Definitive Note prior to (A) the
      expiration of the Restricted Period and (B) the receipt by the Registrar
      of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the
      Securities Act, except in the case of a transfer pursuant to an exemption
      from the registration requirements of the Securities Act other than Rule
      903 or Rule 904.

            (3) Beneficial Interests in Restricted Global Notes to Unrestricted
      Definitive Notes. A holder of a beneficial interest in a Restricted Global
      Note may exchange such beneficial interest for an Unrestricted Definitive
      Note or may transfer such beneficial interest to a Person who takes
      delivery thereof in the form of an Unrestricted Definitive Note only if:

                  (A) such exchange or transfer is effected pursuant to the
            Exchange Offer in accordance with the Registration Rights Agreement
            and the holder of such beneficial interest, in the case of an
            exchange, or the transferee, in the case of a transfer, certifies in
            the applicable Letter of Transmittal that it is not (i) a
            Broker-Dealer, (ii) a Person participating in the distribution of
            the Exchange Notes or (iii) a Person who is an affiliate (as defined
            in Rule 144) of the Company;

                  (B) such transfer is effected pursuant to the Shelf
            Registration Statement in accordance with the Registration Rights
            Agreement;

                  (C) such transfer is effected by a Broker-Dealer pursuant to
            the Exchange Offer Registration Statement in accordance with the
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                        (i) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for an Unrestricted Definitive Note, a certificate
                  from such holder in the form of Exhibit C hereto, including
                  the certifications in item (1)(b) thereof; or

                        (ii) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to transfer such beneficial
                  interest to a Person who shall take delivery thereof in the
                  form of an Unrestricted Definitive Note, a certificate from
                  such holder in the form of Exhibit B hereto, including the
                  certifications in item (4) thereof;

            and, in each such case set forth in this subparagraph (D), if the
            Registrar so requests or if the Applicable Procedures so require, an
            Opinion of Counsel in form reasonably acceptable to the Registrar to
            the effect that such exchange or transfer is in compliance with the
            Securities Act and that the restrictions on transfer contained
            herein and in the Private Placement Legend are no longer required in
            order to maintain compliance with the Securities Act.


                                       30

            (4) Beneficial Interests in Unrestricted Global Notes to
      Unrestricted Definitive Notes. If any holder of a beneficial interest in
      an Unrestricted Global Note proposes to exchange such beneficial interest
      for a Definitive Note or to transfer such beneficial interest to a Person
      who takes delivery thereof in the form of a Definitive Note, then, upon
      satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the
      Trustee shall cause the aggregate principal amount of the applicable
      Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
      and the Company shall execute and the Trustee shall authenticate and
      deliver to the Person designated in the instructions a Definitive Note in
      the appropriate principal amount. Any Definitive Note issued in exchange
      for a beneficial interest pursuant to this Section 2.06(c)(4) shall be
      registered in such name or names and in such authorized denomination or
      denominations as the holder of such beneficial interest requests through
      instructions to the Registrar from or through the Depositary and the
      Participant or Indirect Participant. The Trustee shall deliver such
      Definitive Notes to the Persons in whose names such Notes are so
      registered. Any Definitive Note issued in exchange for a beneficial
      interest pursuant to this Section 2.06(c)(4) shall not bear the Private
      Placement Legend.

      (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

            (1) Restricted Definitive Notes to Beneficial Interests in
      Restricted Global Notes. If any Holder of a Restricted Definitive Note
      proposes to exchange such Note for a beneficial interest in a Restricted
      Global Note or to transfer such Restricted Definitive Notes to a Person
      who takes delivery thereof in the form of a beneficial interest in a
      Restricted Global Note, then, upon receipt by the Registrar of the
      following documentation:

                  (A) if the Holder of such Restricted Definitive Note proposes
            to exchange such Note for a beneficial interest in a Restricted
            Global Note, a certificate from such Holder in the form of Exhibit C
            hereto, including the certifications in item (2)(b) thereof;

                  (B) if such Restricted Definitive Note is being transferred to
            a QIB in accordance with Rule 144A, a certificate to the effect set
            forth in Exhibit B hereto, including the certifications in item (1)
            thereof;

                  (C) if such Restricted Definitive Note is being transferred to
            a Non-U.S. Person in an offshore transaction in accordance with Rule
            903 or Rule 904, a certificate to the effect set forth in Exhibit B
            hereto, including the certifications in item (2) thereof;

                  (D) if such Restricted Definitive Note is being transferred
            pursuant to an exemption from the registration requirements of the
            Securities Act in accordance with Rule 144, a certificate to the
            effect set forth in Exhibit B hereto, including the certifications
            in item (3)(a) thereof;

                  (E) if such Restricted Definitive Note is being transferred to
            an Institutional Accredited Investor in reliance on an exemption
            from the registration requirements of the Securities Act other than
            those listed in subparagraphs (B) through (D) above, a certificate
            to the effect set forth in Exhibit B hereto, including the
            certifications, certificates and Opinion of Counsel required by item
            (3) thereof, if applicable;

                  (F) if such Restricted Definitive Note is being transferred to
            the Company or any of its Subsidiaries, a certificate to the effect
            set forth in Exhibit B hereto, including the certifications in item
            (3)(b) thereof; or


                                       31

                  (G) if such Restricted Definitive Note is being transferred
            pursuant to an effective registration statement under the Securities
            Act, a certificate to the effect set forth in Exhibit B hereto,
            including the certifications in item (3)(c) thereof,

            the Trustee shall cancel the Restricted Definitive Note, increase or
            cause to be increased the aggregate principal amount of, in the case
            of clause (A) above, the appropriate Restricted Global Note, in the
            case of clause (B) above, the 144A Global Note, in the case of
            clause (C) above, the Regulation S Global Note, and in all other
            cases, the IAI Global Note.

            (2) Restricted Definitive Notes to Beneficial Interests in
      Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
      exchange such Note for a beneficial interest in an Unrestricted Global
      Note or transfer such Restricted Definitive Note to a Person who takes
      delivery thereof in the form of a beneficial interest in an Unrestricted
      Global Note only if:

                  (A) such exchange or transfer is effected pursuant to the
            Exchange Offer in accordance with the Registration Rights Agreement
            and the Holder, in the case of an exchange, or the transferee, in
            the case of a transfer, certifies in the applicable Letter of
            Transmittal that it is not (i) a Broker-Dealer, (ii) a Person
            participating in the distribution of the Exchange Notes or (iii) a
            Person who is an affiliate (as defined in Rule 144) of the Company;

                  (B) such transfer is effected pursuant to the Shelf
            Registration Statement in accordance with the Registration Rights
            Agreement;

                  (C) such transfer is effected by a Broker-Dealer pursuant to
            the Exchange Offer Registration Statement in accordance with the
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                        (i) if the Holder of such Definitive Notes proposes to
                  exchange such Notes for a beneficial interest in the
                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit C hereto, including the certifications in
                  item (1)(c) thereof; or

                        (ii) if the Holder of such Definitive Notes proposes to
                  transfer such Notes to a Person who shall take delivery
                  thereof in the form of a beneficial interest in the
                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit B hereto, including the certifications in
                  item (4) thereof;

            and, in each such case set forth in this subparagraph (D), if the
            Registrar so requests or if the Applicable Procedures so require, an
            Opinion of Counsel in form reasonably acceptable to the Registrar to
            the effect that such exchange or transfer is in compliance with the
            Securities Act and that the restrictions on transfer contained
            herein and in the Private Placement Legend are no longer required in
            order to maintain compliance with the Securities Act.

            If any such transfer is effected pursuant to subparagraph (B), (C)
      or (D) above at a time when an Unrestricted Global Note has not yet been
      issued, the Company shall issue and, upon receipt of an Authentication
      Order in accordance with Section 2.02 hereof, the Trustee shall
      authenticate one or more Unrestricted Global Notes in an aggregate
      principal amount equal to the

                                       32


      aggregate principal amount of beneficial interests transferred pursuant to
      subparagraph (B), (C) or (D) above.

            Upon satisfaction of the conditions of any of the subparagraphs in
      this Section 2.06(d)(2), the Trustee shall cancel the Definitive Notes and
      increase or cause to be increased the aggregate principal amount of the
      Unrestricted Global Note (to the extent not issued pursuant to the
      immediately preceding paragraph).

            (3) Unrestricted Definitive Notes to Beneficial Interests in
      Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
      exchange such Note for a beneficial interest in an Unrestricted Global
      Note or transfer such Definitive Notes to a Person who takes delivery
      thereof in the form of a beneficial interest in an Unrestricted Global
      Note at any time. Upon receipt of a request for such an exchange or
      transfer, the Trustee shall cancel the applicable Unrestricted Definitive
      Note and increase or cause to be increased the aggregate principal amount
      of one of the Unrestricted Global Notes.

            If any such exchange or transfer from a Definitive Note to a
      beneficial interest is effected pursuant to subparagraphs (2)(B), (2)(D)
      or (3) above at a time when an Unrestricted Global Note has not yet been
      issued, the Company shall issue and, upon receipt of an Authentication
      Order in accordance with Section 2.02 hereof, the Trustee shall
      authenticate one or more Unrestricted Global Notes in an aggregate
      principal amount equal to the principal amount of Definitive Notes so
      transferred.

      (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder must present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
must provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

            (1) Restricted Definitive Notes to Restricted Definitive Notes. Any
      Restricted Definitive Note may be transferred to and registered in the
      name of Persons who take delivery thereof in the form of a Restricted
      Definitive Note if the Registrar receives the following:

                  (A) if the transfer shall be made pursuant to Rule 144A, then
            the transferor must deliver a certificate in the form of Exhibit B
            hereto, including the certifications in item (1) thereof;

                  (B) if the transfer shall be made pursuant to Rule 903 or Rule
            904, then the transferor must deliver a certificate in the form of
            Exhibit B hereto, including the certifications in item (2) thereof;
            and

                  (C) if the transfer shall be made pursuant to any other
            exemption from the registration requirements of the Securities Act,
            then the transferor must deliver a certificate in the form of
            Exhibit B hereto, including the certifications, certificates and
            Opinion of Counsel required by item (3) thereof, if applicable.

            (2) Restricted Definitive Notes to Unrestricted Definitive Notes.
      Any Restricted Definitive Note may be exchanged by the Holder thereof for
      an Unrestricted Definitive Note or

                                       33

      transferred to a Person or Persons who take delivery thereof in the form
      of an Unrestricted Definitive Note if:

                  (A) such exchange or transfer is effected pursuant to the
            Exchange Offer in accordance with the Registration Rights Agreement
            and the Holder, in the case of an exchange, or the transferee, in
            the case of a transfer, certifies in the applicable Letter of
            Transmittal that it is not (i) a Broker-Dealer, (ii) a Person
            participating in the distribution of the Exchange Notes or (iii) a
            Person who is an affiliate (as defined in Rule 144) of the Company;

                  (B) any such transfer is effected pursuant to the Shelf
            Registration Statement in accordance with the Registration Rights
            Agreement;

                  (C) any such transfer is effected by a Broker-Dealer pursuant
            to the Exchange Offer Registration Statement in accordance with the
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                        (i) if the Holder of such Restricted Definitive Notes
                  proposes to exchange such Notes for an Unrestricted Definitive
                  Note, a certificate from such Holder in the form of Exhibit C
                  hereto, including the certifications in item (1)(d) thereof;
                  or

                        (ii) if the Holder of such Restricted Definitive Notes
                  proposes to transfer such Notes to a Person who shall take
                  delivery thereof in the form of an Unrestricted Definitive
                  Note, a certificate from such Holder in the form of Exhibit B
                  hereto, including the certifications in item (4) thereof;

            and, in each such case set forth in this subparagraph (D), if the
            Registrar so requests, an Opinion of Counsel in form reasonably
            acceptable to the Registrar to the effect that such exchange or
            transfer is in compliance with the Securities Act and that the
            restrictions on transfer contained herein and in the Private
            Placement Legend are no longer required in order to maintain
            compliance with the Securities Act.

            (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
      A Holder of Unrestricted Definitive Notes may transfer such Notes to a
      Person who takes delivery thereof in the form of an Unrestricted
      Definitive Note. Upon receipt of a request to register such a transfer,
      the Registrar shall register the Unrestricted Definitive Notes pursuant to
      the instructions from the Holder thereof.

      (f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate:

            (1) one or more Unrestricted Global Notes in an aggregate principal
      amount equal to the principal amount of the beneficial interests in the
      Restricted Global Notes accepted for exchange in the Exchange Offer by
      Persons that certify in the applicable Letters of Transmittal that (A)
      they are not Broker-Dealers, (B) they are not participating in a
      distribution of the Exchange Notes and (C) they are not affiliates (as
      defined in Rule 144) of the Company; and


                                       34

            (2) Unrestricted Definitive Notes in an aggregate principal amount
      equal to the principal amount of the Restricted Definitive Notes accepted
      for exchange in the Exchange Offer by Persons that certify in the
      applicable Letters of Transmittal that (A) they are not Broker-Dealers,
      (B) they are not participating in a distribution of the Exchange Notes and
      (C) they are not affiliates (as defined in Rule 144) of the Company.

      Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Unrestricted Definitive Notes in the appropriate principal
amount.

      (g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.

            (1) Private Placement Legend.

                  (A) Except as permitted by subparagraph (B) below, each Global
            Note and each Definitive Note (and all Notes issued in exchange
            therefor or substitution thereof) shall bear the legend in
            substantially the following form:

"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(A)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES, AND THE HOLDER AGREES THAT IT SHALL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND."

                  (B) Notwithstanding the foregoing, any Global Note or
            Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3),
            (c)(4), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06
            (and all Notes issued in exchange therefor or substitution thereof)
            shall not bear the Private Placement Legend.

            (2) Global Note Legend. Each Global Note shall bear a legend in
      substantially the following form:

"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER

                                       35

ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."

            (3) Regulation S Temporary Global Note Legend. The Regulation S
      Temporary Global Note shall bear a Legend in substantially the following
      form:

"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."

      (h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who shall take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who shall take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

      (i) General Provisions Relating to Transfers and Exchanges.

            (1) To permit registrations of transfers and exchanges, the Company
      shall execute and the Trustee shall authenticate Global Notes and
      Definitive Notes upon receipt of an Authentication Order in accordance
      with Section 2.02 hereof or at the Registrar's request.


                                       36

            (2) No service charge shall be made to a Holder of a beneficial
      interest in a Global Note or to a Holder of a Definitive Note for any
      registration of transfer or exchange, but the Company may require payment
      of a sum sufficient to cover any transfer tax or similar governmental
      charge payable in connection therewith (other than any such transfer taxes
      or similar governmental charge payable upon exchange or transfer pursuant
      to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

            (3) The Registrar shall not be required to register the transfer of
      or exchange of any Note selected for redemption in whole or in part,
      except the unredeemed portion of any Note being redeemed in part.

            (4) All Global Notes and Definitive Notes issued upon any
      registration of transfer or exchange of Global Notes or Definitive Notes
      shall be the valid obligations of the Company, evidencing the same debt,
      and entitled to the same benefits under this Indenture, as the Global
      Notes or Definitive Notes surrendered upon such registration of transfer
      or exchange.

            (5) Neither the Registrar nor the Company shall be required:

                  (A) to issue, to register the transfer of or to exchange any
            Notes during a period beginning at the opening of business 15 days
            before the day of any selection of Notes for redemption under
            Section 3.02 hereof and ending at the close of business on the day
            of selection;

                  (B) to register the transfer of or to exchange any Note
            selected for redemption in whole or in part, except the unredeemed
            portion of any Note being redeemed in part; or

                  (C) to register the transfer of or to exchange a Note between
            a record date and the next succeeding interest payment date.

            (6) Prior to due presentment for the registration of a transfer of
      any Note, the Trustee, any Agent and the Company may deem and treat the
      Person in whose name any Note is registered as the absolute owner of such
      Note for the purpose of receiving payment of principal of and interest on
      such Notes and for all other purposes, and none of the Trustee, any Agent
      or the Company shall be affected by notice to the contrary.

            (7) The Trustee shall authenticate Global Notes and Definitive Notes
      in accordance with the provisions of Section 2.02 hereof.

            (8) All certifications, certificates and Opinions of Counsel
      required to be submitted to the Registrar pursuant to this Section 2.06 to
      effect a registration of transfer or exchange may be submitted by
      facsimile.

Section 2.07 Replacement Notes.

      If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.


                                       37

      Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

Section 2.08  Outstanding Notes.

      The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section 2.08
as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note; however, Notes held by the Company or a Subsidiary of the Company
shall not be deemed to be outstanding for purposes of Section 3.07(a) hereof.

      If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.

      If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.

      If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.

Section 2.09 Treasury Notes.

      In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Guarantor, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
Guarantor, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes that the Trustee knows are so
owned shall be so disregarded.

Section 2.10 Temporary Notes.

      Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.

      Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.

Section 2.11 Cancellation.

      The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes

                                       38

shall be delivered to the Company. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.

Section 2.12 Defaulted Interest.

      If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date; provided that no such special record date
may be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.

                                    ARTICLE 3
                            REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

      If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth:

            (1) the clause of this Indenture pursuant to which the redemption
      shall occur;

            (2) the redemption date;

            (3) the principal amount of Notes to be redeemed; and

            (4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

      If less than all of the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Trustee shall select Notes for redemption or
purchase on a pro rata basis except:

            (1) if the Notes are listed on any national securities exchange, in
      compliance with the requirements of the principal national securities
      exchange on which the Notes are listed; or

            (2) if otherwise required by law.

      In the event of partial redemption, the particular Notes to be redeemed or
purchased shall be selected, unless otherwise provided herein, not less than 30
nor more than 60 days prior to the redemption or purchase date by the Trustee
from the outstanding Notes not previously called for redemption or purchase.

      The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption or purchase and, in the case of any Note selected for
partial redemption or purchase, the principal amount thereof to be redeemed or
purchased. Notes and portions of Notes selected shall be in amounts of $1,000

                                       39

or whole multiples of $1,000; except that if all of the Notes of a Holder are to
be redeemed or purchased, the entire outstanding amount of Notes held by such
Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except
as provided in the preceding sentence, provisions of this Indenture that apply
to Notes called for redemption or purchase also apply to portions of Notes
called for redemption or purchase.

Section 3.03 Notice of Redemption.

      Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a redemption date if the notice
is issued in connection with a defeasance of the Notes or a satisfaction and
discharge of this Indenture pursuant to Articles 8 or 12, respectively, hereof.

      The notice shall identify the Notes to be redeemed (including the CUSIP
number) and shall state:

            (1) the redemption date;

            (2) the redemption price;

            (3) if any Note is being redeemed in part, the portion of the
      principal amount of such Note to be redeemed and that, after the
      redemption date upon surrender of such Note, a new Note or Notes in
      principal amount equal to the unredeemed portion shall be issued upon
      cancellation of the original Note;

            (4) the name and address of the Paying Agent;

            (5) that Notes called for redemption must be surrendered to the
      Paying Agent to collect the redemption price;

            (6) that, unless the Company defaults in making such redemption
      payment, interest on Notes called for redemption ceases to accrue on and
      after the redemption date;

            (7) the paragraph of the Notes and/or Section of this Indenture
      pursuant to which the Notes called for redemption are being redeemed; and

            (8) that no representation is made as to the correctness or accuracy
      of the CUSIP number, if any, listed in such notice or printed on the
      Notes.

      At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
has delivered to the Trustee, at least 45 days prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.

Section 3.04 Effect of Notice of Redemption.

      Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.


                                       40

Section 3.05 Deposit of Redemption or Purchase Price.

      One Business Day prior to the redemption or purchase date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption or purchase price of and accrued interest and Liquidated Damages,
if any, on all Notes to be redeemed or purchased on that date. The Trustee or
the Paying Agent shall promptly return to the Company any money deposited with
the Trustee or the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption or purchase price of, and accrued interest and
Liquidated Damages, if any, on, all Notes to be redeemed or purchased.

      If the Company complies with the provisions of the preceding paragraph, on
and after the redemption or purchase date, interest shall cease to accrue on the
Notes or the portions of Notes called for redemption or purchase. If a Note is
redeemed or purchased on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or purchase is
not so paid upon surrender for redemption or purchase because of the failure of
the Company to comply with the preceding paragraph, interest shall be paid on
the unpaid principal, from the redemption or purchase date until such principal
is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.

Section 3.06 Notes Redeemed or Purchased in Part.

      Upon surrender of a Note that is redeemed or purchased in part, the
Company shall issue and, upon receipt of an Authentication Order, the Trustee
shall authenticate for the Holder at the expense of the Company a new Note equal
in principal amount to the unredeemed or unpurchased portion of the Note
surrendered.

Section 3.07 Optional Redemption.

      (a) At any time prior to April 15, 2007, the Company may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Notes
(including Additional Notes, if any) issued under this Indenture at a redemption
price of 109.50% of the principal amount, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date, with the net cash proceeds
of one or more Equity Offerings of the Company; provided that:

            (1) at least 65% of the aggregate principal amount of Notes
      (including Additional Notes, if any) issued under this Indenture
      (excluding Notes held by the Company and its Subsidiaries) remains
      outstanding immediately after the occurrence of such redemption; and

            (2) the redemption occurs within 45 days of the date of the closing
      of any such Equity Offering.

      (b) Except pursuant to Section 3.07(a), the Notes shall not be redeemable
at the Company's option prior to April 15, 2009.

      (c) On or after April 15, 2009, the Company may redeem all or a part of
the Notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, on the Notes
redeemed, to the applicable redemption date, if redeemed during the twelve-month
period beginning on

                                       41

April 15 of the years indicated below, subject to the rights of Holders of Notes
on the relevant record date to receive interest on the relevant interest payment
date:



        YEAR                                                       PERCENTAGE
        ----                                                       ----------
                                                                
        2009.................................................       104.750%
        2010.................................................       103.167%
        2011.................................................       101.583%
        2012 and thereafter..................................       100.000%


      Unless the Company defaults in the payment of the redemption price,
interest shall cease to accrue on the Notes or portions thereof called for
redemption on the applicable redemption date.

      (d) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 hereof.

Section 3.08 Mandatory Redemption.

      The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.

Section 3.09 Offer to Purchase by Application of Excess Proceeds.

      In the event that, pursuant to Section 4.10 hereof, the Company is
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.

      The Asset Sale Offer shall be made to all Holders and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes (including Additional Notes) and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds at an offer price in cash equal to
100% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase. The Asset Sale
Offer shall remain open for a period of at least 20 Business Days following its
commencement and not more than 30 Business Days, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
three Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall apply all Excess Proceeds (the "Offer Amount") to the
purchase of Notes and such other pari passu Indebtedness (on a pro rata basis,
if applicable) or, if less than the Offer Amount has been tendered, all Notes
and other Indebtedness tendered in response to the Asset Sale Offer. Payment for
any Notes so purchased shall be made in the same manner as interest payments are
made.

      If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Asset Sale
Offer.

      Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The notice, which shall govern the terms of the Asset Sale Offer, shall
state:


                                       42

            (1) that the Asset Sale Offer is being made pursuant to this Section
      3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
      shall remain open;

            (2) the Offer Amount, the purchase price and the Purchase Date;

            (3) that any Note not tendered or accepted for payment shall
      continue to accrue interest;

            (4) that, unless the Company defaults in making such payment, any
      Note accepted for payment pursuant to the Asset Sale Offer shall cease to
      accrue interest after the Purchase Date;

            (5) that Holders electing to have a Note purchased pursuant to an
      Asset Sale Offer may elect to have Notes purchased in integral multiples
      of $1,000 only;

            (6) that Holders electing to have Notes purchased pursuant to any
      Asset Sale Offer shall be required to surrender the Note, with the form
      entitled "Option of Holder to Elect Purchase" attached to the Notes
      completed, or transfer by book-entry transfer, to the Company, a
      Depositary, if appointed by the Company, or a Paying Agent at the address
      specified in the notice at least three days before the Purchase Date;

            (7) that Holders shall be entitled to withdraw their election if the
      Company, the Depositary or the Paying Agent, as the case may be, receives,
      not later than the expiration of the Offer Period, a telegram, telex,
      facsimile transmission or letter setting forth the name of the Holder, the
      principal amount of the Note the Holder delivered for purchase and a
      statement that such Holder is withdrawing his election to have such Note
      purchased;

            (8) that, if the aggregate principal amount of Notes and other pari
      passu Indebtedness surrendered by holders thereof exceeds the Offer
      Amount, the Company shall select the Notes and other pari passu
      Indebtedness to be purchased on a pro rata basis based on the principal
      amount of Notes and such other pari passu Indebtedness surrendered (with
      such adjustments as may be deemed appropriate by the Company so that only
      Notes in denominations of $1,000, or integral multiples thereof, shall be
      purchased); and

            (9) that Holders whose Notes were purchased only in part shall be
      issued new Notes equal in principal amount to the unpurchased portion of
      the Notes surrendered (or transferred by book-entry transfer).

      On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver or cause to be delivered to the Trustee the Notes properly
accepted together with an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company, shall authenticate and mail or
deliver (or cause to be transferred by book entry) such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company shall publicly announce the results of the Asset
Sale Offer on the Purchase Date.


                                       43

      Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

                                    ARTICLE 4
                                    COVENANTS

Section 4.01 Payment of Notes.

      The Company shall pay or cause to be paid the principal of, premium, if
any, and interest and Liquidated Damages, if any, on, the Notes on the dates and
in the manner provided in the Notes. Principal, premium, if any, and interest
and Liquidated Damages, if any shall be considered paid on the date due if the
Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.

      The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and interest and
Liquidated Damages, if any, at the rate equal to 1% per annum in excess of the
then applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace period) at the same rate to the extent
lawful.

Section 4.02 Maintenance of Office or Agency.

      The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
fails to maintain any such required office or agency or fails to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.

      The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.

      The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.

Section 4.03 Reports.

      (a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes or cause the Trustee to furnish to the Holders of Notes, within the time
periods specified in the SEC's rules and regulations:


                                       44

            (1) (1) all quarterly and annual reports that would be required to
      be filed with the SEC on Forms 10-Q and 10-K if the Company were required
      to file such reports; and

            (2) (2) all current reports that would be required to be filed with
      the SEC on Form 8-K if the Company were required to file such reports.

      All such reports shall be prepared in all material respects in accordance
with all of the rules and regulations applicable to such reports. Each annual
report on Form 10-K shall include a report on the Company's consolidated
financial statements by the Company's certified independent accountants. In
addition, following the consummation of the Exchange Offer contemplated by the
Registration Rights Agreement, the Company shall file a copy of each of the
reports referred to in clauses (1) and (2) above with the SEC for public
availability within the time periods specified in the rules and regulations
applicable to such reports (unless the SEC shall not accept such a filing) and
shall post the reports on its website within those time periods. The Company
shall at all times comply with TIA Section 314(a).

      If, at any time after consummation of the Exchange Offer contemplated by
the Registration Rights Agreement, the Company is no longer subject to the
periodic reporting requirements of the Exchange Act for any reason, the Company
shall nevertheless continue filing the reports specified in the preceding
paragraphs of this Section 4.03 with the SEC within the time periods specified
above unless the SEC shall not accept such a filing. The Company shall not take
any action for the purpose of causing the SEC not to accept any such filings.
If, notwithstanding the foregoing, the SEC shall not accept the Company's
filings for any reason, the Company shall post the reports referred to in the
preceding paragraphs on its website within the time periods that would apply if
the Company were required to file those reports with the SEC.

      (b) If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraphs shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto, and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.

      (c) In addition, the Company and the Guarantors agree that, for so long as
any Notes remain outstanding, if at any time they are not required to file with
the SEC the reports required by the preceding paragraphs, they shall furnish to
the Holders of Notes and to securities analysts and prospective investors, upon
their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.

Section 4.04 Compliance Certificate.

      (a) The Company and each Guarantor (to the extent that such Guarantor is
so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and such Guarantor and their respective
Subsidiaries during the preceding fiscal year has been made under the
supervision of the relevant signing Officers with a view to determining whether
the Company or such Guarantor, as the case may be, has kept, observed, performed
and fulfilled its obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that to the best of his or her
knowledge the Company or such Guarantor, as the case may be, has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture (or, if a Default or Event of
Default has occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action the Company or such

                                       45

Guarantor, as the case may be, is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company or such Guarantor, as the
case may be, is taking or proposes to take with respect thereto.

      (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.

      (c) So long as any of the Notes are outstanding, the Company shall deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.

Section 4.05 Taxes.

      The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.

Section 4.06 Stay, Extension and Usury Laws.

      Each of the Company and the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.

Section 4.07 Restricted Payments.

      (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:

            (1) declare or pay any dividend or make any other payment or
      distribution on account of the Company's or any of its Restricted
      Subsidiaries' Equity Interests (including, without limitation, any payment
      in connection with any merger or consolidation involving the Company or
      any of its Restricted Subsidiaries) or to the direct or indirect holders
      of the Company's or any of its Restricted Subsidiaries' Equity Interests
      in their capacity as such (other than dividends or distributions payable
      in Equity Interests (other than Disqualified Stock) of the Company and


                                       46

      other than dividends or distributions payable to the Company or a
      Restricted Subsidiary of the Company);

            (2) purchase, redeem or otherwise acquire or retire for value
      (including, without limitation, in connection with any merger or
      consolidation involving the Company) any Equity Interests of the Company
      or any direct or indirect parent of the Company;

            (3) make any payment on or with respect to, or purchase, redeem,
      defease or otherwise acquire or retire for value any Indebtedness of the
      Company or any Guarantor that is contractually subordinated to the Notes
      or to any Note Guarantee (excluding any intercompany Indebtedness between
      or among the Company and any of its Restricted Subsidiaries), except a
      payment of interest or principal at the Stated Maturity thereof or any
      payment made with Equity Interests (other than Disqualified Stock) of the
      Company or, prior to the Migration, Capital (to the extent such Equity
      Interests of Capital are converted into Equity Interests of the Company
      upon consummation of the Migration); or

            (4) make any Restricted Investment

(all such payments and other actions set forth in these clauses (1) through (4)
above being collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:

            (1) no Default or Event of Default has occurred and is continuing or
      would occur as a consequence of such Restricted Payment;

            (2) the Company would, at the time of such Restricted Payment and
      after giving pro forma effect thereto as if such Restricted Payment had
      been made at the beginning of the applicable four-quarter period, have
      been permitted to incur at least $1.00 of additional Indebtedness pursuant
      to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a)
      hereof; and

            (3) such Restricted Payment, together with the aggregate amount of
      all other Restricted Payments made by the Company and its Restricted
      Subsidiaries since the date of this Indenture (excluding Restricted
      Payments permitted by clauses (2), (3), (5), (6), (7), (8), (9) and (10)
      of paragraph (b) of this Section 4.07), is less than the sum, without
      duplication, of:

                  (A) 50% of the Consolidated Net Income of Capital (prior to
            the Migration) or the Company (after the Migration), as the case may
            be, for the period (taken as one accounting period) from the
            beginning of the first fiscal quarter commencing after the date of
            this Indenture to the end of the most recently ended fiscal quarter
            of Capital (prior to the Migration) or the Company (after the
            Migration), as the case may be, for which internal financial
            statements are available at the time of such Restricted Payment (or,
            if such Consolidated Net Income for such period is a deficit, less
            100% of such deficit); plus

                  (B) 100% of the aggregate net cash proceeds, and the Fair
            Market Value of any property other than cash, received by the
            Company since the date of this Indenture as a contribution to its
            common equity capital or from the issue or sale of Equity Interests
            of the Company (other than Disqualified Stock) or from the issue or
            sale of convertible or exchangeable Disqualified Stock or
            convertible or exchangeable debt securities of the Company that have
            been converted into or exchanged for such Equity Interests (other


                                       47

            than Equity Interests (or Disqualified Stock or debt securities)
            sold to a Subsidiary of the Company or Capital and its
            Subsidiaries); plus

                  (C) prior to the Migration, 100% of the aggregate net cash
            proceeds, and the Fair Market Value of any property other than cash,
            received by Capital since the date of this Indenture from the issue
            or sale of Equity Interests of Capital (other than Disqualified
            Stock) or from the issue or sale of convertible or exchangeable
            Disqualified Stock or convertible or exchangeable debt securities of
            Capital that have been converted into or exchanged for such Equity
            Interests (other than Equity Interests (or Disqualified Stock or
            debt securities) sold to a Subsidiary of Capital), in each case to
            the extent such Equity Interests of Capital are converted into
            Equity Interests of the Company upon consummation of the Migration;
            plus

                  (D) to the extent that any Restricted Investment that was made
            after the date of this Indenture is sold for cash or otherwise
            liquidated or repaid for cash, the lesser of (i) the cash return of
            capital with respect to such Restricted Investment (less the cost of
            disposition, if any) and (ii) the initial amount of such Restricted
            Investment; plus

                  (E) to the extent that any Unrestricted Subsidiary of the
            Company designated as such after the date of this Indenture is
            redesignated as a Restricted Subsidiary of the Company after the
            date of this Indenture, the lesser of (i) the Fair Market Value of
            the Company's Investment in such Subsidiary as of the date of such
            redesignation and (ii) such Fair Market Value as of the date on
            which such Subsidiary was originally designated as an Unrestricted
            Subsidiary after the date of this Indenture; plus

                  (F) 50% of any dividends received by the Company or a
            Restricted Subsidiary of the Company that is a Guarantor after the
            date of this Indenture from an Unrestricted Subsidiary of the
            Company, to the extent that such dividends were not otherwise
            included in the Consolidated Net Income of the Company for such
            period.

      (b) The provisions of Section 4.07(a) hereof shall not prohibit:

            (1) the payment of any dividend or the consummation of any
      irrevocable redemption within 60 days after the date of declaration of the
      dividend or giving of the redemption notice, as the case may be, if at the
      date of declaration or notice, the dividend or redemption payment would
      have complied with the provisions of this Indenture;

            (2) the making of any Restricted Payment in exchange for, or out of
      the net cash proceeds of the substantially concurrent sale (other than to
      a Subsidiary of the Company or Capital and its Subsidiaries) of, Equity
      Interests (other than Disqualified Stock) of the Company or, prior to the
      Migration, Capital (to the extent such Equity Interests of Capital are
      converted into Equity Interests of the Company upon consummation of the
      Migration) or from the substantially concurrent contribution of common
      equity capital to the Company; provided that the amount of any such net
      cash proceeds that are utilized for any such Restricted Payment shall be
      excluded from clause (3)(B) or (C), as the case may be, of Section
      4.07(a);

            (3) the repurchase, redemption, defeasance or other acquisition or
      retirement for value of Indebtedness of the Company or any Guarantor that
      is contractually subordinated to the Notes or to any Note Guarantee with
      the net cash proceeds from a substantially concurrent incurrence of
      Permitted Refinancing Indebtedness;


                                       48

            (4) so long as no Default has occurred and is continuing or would be
      caused thereby, the repurchase, redemption or other acquisition or
      retirement for value of any Equity Interests of the Company or Restricted
      Subsidiary of the Company held by any current or former officer, director
      or employee of the Company or any of its Restricted Subsidiaries pursuant
      to any equity subscription agreement, stock option agreement,
      shareholders' agreement or similar agreement or upon death, disability or
      termination of employment; provided that the aggregate price paid for all
      such repurchased, redeemed, acquired or retired Equity Interests may not
      exceed $2.0 million in any twelve-month period (with amounts not used in
      any twelve-month period being carried forward to the subsequent
      twelve-month period up to a maximum of $5.0 million paid in any
      twelve-month period);

            (5) the repurchase of Equity Interests deemed to occur upon the
      exercise of stock options to the extent such Equity Interests represent a
      portion of the exercise price of those stock options;

            (6) the declaration and payment of regularly scheduled or accrued
      dividends to holders of any class or series of Disqualified Stock of the
      Company or any Restricted Subsidiary of the Company issued on or after the
      date of this Indenture in accordance with the Fixed Charge Coverage Ratio
      test set forth in Section 4.09 hereof;

            (7) the payment of any dividend by a Restricted Subsidiary of the
      Company to the holders of its Equity Interests on a pro rata basis;

            (8) the accrual of dividends or the payment of dividends in the form
      of payments-in-kind to the holders of Kelso Preferred Stock as required by
      the Kelso Preferred Stock Documents;

            (9) the repurchase, redemption or other acquisition or retirement by
      the Company and/or any Restricted Subsidiary of the Company of Equity
      Interests of Capital or the Company as part of the Migration; and

            (10) so long as no Default has occurred and is continuing or would
      be caused thereby, other Restricted Payments in an aggregate amount not to
      exceed $10.0 million since the date of this Indenture.

      The amount of all Restricted Payments (other than cash) shall be the Fair
Market Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair
Market Value of any assets or securities that are required to be valued by this
Section 4.07 shall be determined by the Board of Directors of the Company whose
resolution with respect thereto shall be delivered to the Trustee. The Board of
Directors' determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
Fair Market Value exceeds $10.0 million.

Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.

      (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to:

            (1) pay dividends or make any other distributions on its Capital
      Stock to the Company or any of its Restricted Subsidiaries, or with
      respect to any other interest or participation in, or

                                       49

      measured by, its profits, or pay any indebtedness owed to the Company or
      any of its Restricted Subsidiaries;

            (2) make loans or advances to the Company or any of its Restricted
      Subsidiaries; or

            (3) sell, lease or transfer any of its properties or assets to the
      Company or any of its Restricted Subsidiaries.

      (b) However, the preceding restrictions in Section 4.08(a) hereof shall
not apply to encumbrances or restrictions existing under or by reason of:

            (1) agreements governing Existing Indebtedness and Credit Facilities
      as in effect on the date of this Indenture and any amendments, extensions,
      restatements, modifications, renewals, supplements, refundings,
      replacements or refinancings of those agreements; provided that such
      amendments, extensions, restatements, modifications, renewals,
      supplements, refundings, replacements or refinancings are not materially
      more restrictive, taken as a whole, with respect to such dividend and
      other payment restrictions than those contained in those agreements on the
      date of this Indenture;

            (2) this Indenture, the Notes, the Exchange Notes and the Note
      Guarantees;

            (3) applicable law, rule, regulation or order;

            (4) any instrument governing Indebtedness or Capital Stock of a
      Person acquired by the Company or any of its Restricted Subsidiaries as in
      effect at the time of such acquisition (except to the extent such
      Indebtedness or Capital Stock was incurred in connection with or in
      contemplation of such acquisition), which encumbrance or restriction is
      not applicable to any Person, or the properties or assets of any Person,
      other than the Person, or the property or assets of the Person, so
      acquired; provided that, in the case of Indebtedness, such Indebtedness
      was permitted by the terms of this Indenture to be incurred;

            (5) customary non-assignment provisions in contracts and licenses
      entered into in the ordinary course of business;

            (6) purchase money obligations for property acquired in the ordinary
      course of business, leases, Capital Lease Obligations and sale and
      leaseback transactions that impose restrictions on the property purchased
      or leased of the nature described in clause (3) of Section 4.08(a);

            (7) any agreement for the sale or other disposition of all or
      substantially all of the Capital Stock or assets of a Restricted
      Subsidiary of the Company that restricts distributions by that Restricted
      Subsidiary pending the sale or other disposition;

            (8) Permitted Refinancing Indebtedness; provided that the
      restrictions contained in the agreements governing such Permitted
      Refinancing Indebtedness are not materially more restrictive, taken as a
      whole, than those contained in the agreements governing the Indebtedness
      being refinanced;

            (9) Liens permitted to be incurred under Section 4.12 hereof that
      limit the right of the debtor to dispose of the assets subject to such
      Liens;


                                       50

            (10) provisions limiting the disposition or distribution of assets
      or property in joint venture agreements, asset sale agreements,
      sale-leaseback agreements, stock sale agreements and other similar
      agreements, which limitation is applicable only to the assets that are the
      subject of such agreements;

            (11) restrictions on cash or other deposits or net worth imposed by
      customers under contracts entered into in the ordinary course of business;

            (12) customary net worth provisions contained in any real property
      leases; and

            (13) Indebtedness incurred after the date of this Indenture in
      accordance with the terms of this Indenture; provided that the
      restrictions contained in the agreements governing the new Indebtedness
      are, in the good faith judgment of the Board of Directors of the Company,
      not materially less favorable, taken as a whole, to the Holders of the
      Notes than those contained in the agreements governing Indebtedness that
      were in effect on the date of this Indenture.

Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.

      (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue Disqualified Stock, and the Guarantors (other than
Capital and its Foreign Subsidiaries) may incur Indebtedness (including Acquired
Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio for the most
recently ended four full fiscal quarters of Capital (prior to the Migration) or
the Company (after the Migration), as the case may be, for which internal
consolidated financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock or
such preferred stock is issued, as the case may be, would have been at least 2.0
to 1.0, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been incurred
or the Disqualified Stock or the preferred stock had been issued, as the case
may be, at the beginning of such four-quarter period.

      (b) The provisions of Section 4.09(a) hereof shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

            (1) the incurrence by the Company and any Guarantor (other than
      Capital and its Foreign Subsidiaries) of additional Indebtedness and
      letters of credit under Credit Facilities in an aggregate principal amount
      at any one time outstanding under this clause (1) (with letters of credit
      being deemed to have a principal amount equal to the maximum potential
      liability of the Company and its Restricted Subsidiaries thereunder) not
      to exceed $160.0 million less the aggregate amount of all Net Proceeds of
      Asset Sales applied by the Company or any of its Restricted Subsidiaries
      since the date of this Indenture to repay any term Indebtedness under a
      Credit Facility or to repay any revolving credit Indebtedness under a
      Credit Facility and effect a corresponding commitment reduction thereunder
      pursuant to Section 4.10 hereof (provided that up to $15.0 million in
      aggregate principal amount under the Credit Facilities may be incurred by
      Capital and its Foreign Subsidiaries);

            (2) the incurrence by the Company and its Restricted Subsidiaries of
      the Existing Indebtedness;


                                       51

            (3) the incurrence by the Company and the Guarantors of Indebtedness
      represented by the Notes and the related Note Guarantees to be issued on
      the date of this Indenture and the Exchange Notes and the related Note
      Guarantees to be issued pursuant to the Registration Rights Agreement;

            (4) the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness represented by Capital Lease Obligations,
      mortgage financings or purchase money obligations, in each case, incurred
      for the purpose of financing all or any part of the purchase price or cost
      of design, construction, installation or improvement of assets used in the
      business of the Company or any of its Restricted Subsidiaries and related
      financing costs, in an aggregate principal amount, including all
      refinancings incurred to renew, refund, refinance, replace, defease or
      discharge any Indebtedness incurred pursuant to this clause (4), not to
      exceed $15.0 million at any time outstanding;

            (5) the incurrence by the Company or any of its Restricted
      Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
      net proceeds of which are used to renew, refund, refinance, replace,
      defease or discharge any Indebtedness (other than intercompany
      Indebtedness) that was permitted by this Indenture to be incurred under
      Section 4.09(a) hereof or clauses (2), (3) and (5) of this Section
      4.09(b);

            (6) the incurrence by the Company or any of its Restricted
      Subsidiaries of intercompany Indebtedness between or among the Company and
      any of its Restricted Subsidiaries; provided, however, that:

                  (A) if the Company or any Guarantor is the obligor on such
            Indebtedness, such Indebtedness must be expressly subordinated to
            the prior payment in full in cash of all Obligations then due with
            respect to the Notes, in the case of the Company, or the Note
            Guarantee, in the case of a Guarantor; and

                  (B) (i) any subsequent issuance or transfer of Equity
            Interests that results in any such Indebtedness being held by a
            Person other than the Company or a Restricted Subsidiary of the
            Company and (ii) any sale or other transfer of any such Indebtedness
            to a Person that is not either the Company or a Restricted
            Subsidiary of the Company shall be deemed, in each case, to
            constitute an incurrence of such Indebtedness by the Company or such
            Restricted Subsidiary, as the case may be, that was not permitted by
            this clause (6);

            (7) the issuance by any of the Company's Restricted Subsidiaries to
      the Company or to any of its Restricted Subsidiaries of shares of
      preferred stock; provided, however, that:

                  (A) any subsequent issuance or transfer of Equity Interests
            that results in any such preferred stock being held by a Person
            other than the Company or a Restricted Subsidiary of the Company;
            and

                  (B) any sale or other transfer of any such preferred stock to
            a Person that is not either the Company or a Restricted Subsidiary
            of the Company shall be deemed, in each case, to constitute an
            issuance of such preferred stock by such Restricted Subsidiary that
            was not permitted by this clause (7);

            (8) the incurrence by the Company or any of its Restricted
      Subsidiaries of Hedging Obligations not entered into for speculative
      purposes;


                                       52

            (9) the guarantee by the Company or any of the Guarantors of
      Indebtedness of the Company or a Restricted Subsidiary of the Company that
      was permitted to be incurred by another provision of this Section 4.09(b);
      provided that if the Indebtedness being guaranteed is subordinated to or
      pari passu with the Notes, then the guarantee shall be subordinated or
      pari passu, as applicable, to the same extent as the Indebtedness
      guaranteed;

            (10) the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness in respect of workers' compensation claims
      and other statutory or regulatory obligations, self-insurance obligations,
      warranty or contractual service obligations, appeal bonds, bankers'
      acceptances, completion guarantees and performance and surety bonds, in
      each case, in the ordinary course of business (including reimbursement
      obligations under letters of credit issued in the ordinary course of
      business in connection with the foregoing);

            (11) the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness arising from the honoring by a bank or other
      financial institution of a check, draft or similar instrument
      inadvertently drawn against insufficient funds, so long as such
      Indebtedness is covered within five business days;

            (12) the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness to the extent the proceeds thereof are
      deposited to defease all outstanding Notes under Article 8 or Article 12
      hereof.

            (13) the incurrence by the Company or any of its Restricted
      Subsidiaries of Indebtedness arising from the agreements of the Company or
      a Restricted Subsidiary of the Company providing for indemnification,
      adjustment of purchase price or similar obligations, in each case,
      incurred or assumed in connection with the disposition of any business,
      assets or Capital Stock of a Restricted Subsidiary of the Company;
      provided that the maximum aggregate liability in respect of all such
      Indebtedness shall at no time exceed the gross proceeds actually received
      by the Company and its Restricted Subsidiaries in connection with such
      disposition;

            (14) the shares of Kelso Preferred Stock outstanding on the date
      hereof;

            (15) after the Migration, the guarantee by Capital or any Foreign
      Subsidiary of Capital of Indebtedness of Capital or any Foreign Subsidiary
      of Capital that was permitted to be incurred by another provision this
      Section 4.09(b); and

            (16) the incurrence by the Company or any of its Restricted
      Subsidiaries of additional Indebtedness in an aggregate principal amount
      (or accreted value, as applicable) at any time outstanding, including all
      refinancings incurred to renew, refund, refinance, replace, defease or
      discharge any Indebtedness incurred pursuant to this clause (16), not to
      exceed $30.0 million.

      For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (1) through (16) above,
or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company
shall be permitted to classify such item of Indebtedness on the date of its
incurrence, or later reclassify all or a portion of such item of Indebtedness,
in any manner that complies with this Section 4.09. Indebtedness under Credit
Facilities outstanding on the date on which Notes are first issued and
authenticated under this Indenture shall initially be deemed to have been
incurred on such date in reliance on the exception provided by clause (1) of the
definition of Permitted Debt. The accrual of interest, the accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, the
reclassification of preferred stock as

                                       53

Indebtedness due to a change in accounting principles, and the payment of
dividends on Disqualified Stock in the form of additional shares of the same
class of Disqualified Stock shall not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this Section
4.09; provided, in each such case, that the amount of any such accrual,
accretion or payment is included in Fixed Charges of the Company as accrued.
Notwithstanding any other provision of this Section 4.09, the maximum amount of
Indebtedness that the Company or any Restricted Subsidiary of the Company may
incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as
a result of fluctuations in exchange rates or currency values.

      The amount of any Indebtedness outstanding as of any date shall be:

            (1) the accreted value of the Indebtedness, in the case of any
      Indebtedness issued with original issue discount;

            (2) the principal amount of the Indebtedness, in the case of any
      other Indebtedness; and

            (3) in respect of Indebtedness of another Person secured by a Lien
      on the assets of the specified Person, the lesser of:

                  (A) the Fair Market Value of such assets at the date of
            determination; and

                  (B) the amount of the Indebtedness of the other Person.

Section 4.10 Asset Sales.

      (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

            (1) the Company (or such Restricted Subsidiary, as the case may be)
      receives consideration at the time of the Asset Sale at least equal to the
      Fair Market Value of the assets or Equity Interests issued or sold or
      otherwise disposed of; and

            (2) at least 75% of the consideration received in the Asset Sale by
      the Company or such Restricted Subsidiary is in the form of cash. Solely
      for purposes of this clause (2), each of the following shall be deemed to
      be cash:

                  (A) any liabilities, as shown on the most recent consolidated
            balance sheet of Capital (prior to the Migration) and the Company
            (following the Migration), of the Company or any Restricted
            Subsidiary of the Company (other than contingent liabilities and
            liabilities that are by their terms subordinated to the Notes or any
            Note Guarantee) that are assumed by the transferee of any such
            assets pursuant to a customary novation agreement that releases the
            Company or such Restricted Subsidiary from further liability;

                  (B) any securities, notes or other obligations received by the
            Company or any such Restricted Subsidiary from such transferee that
            are converted by the Company or such Restricted Subsidiary into cash
            within 90 days of receipt, to the extent of the cash received in
            that conversion; and

                  (C) any stock or assets of the kind referred to in clauses (2)
            or (4) of Section 4.10(b).


                                       54

      (b) Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company (or the applicable Restricted Subsidiary of the Company, as
the case may be) may apply such Net Proceeds at its option:

            (1) to repay Senior Debt and, if the Senior Debt repaid is revolving
      credit Indebtedness, to correspondingly reduce commitments with respect
      thereto;

            (2) to acquire all or substantially all of the assets of, or any
      Capital Stock of, another Permitted Business, if, after giving effect to
      any such acquisition of Capital Stock, the Permitted Business is or
      becomes a Restricted Subsidiary of the Company;

            (3) to make a capital expenditure; or

            (4) to acquire other assets that are not classified as current
      assets under GAAP and that are used or useful in a Permitted Business.

      Pending the final application of any Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest the Net
Proceeds in any manner that is not prohibited by this Indenture.

      Any Net Proceeds from Asset Sales that are not applied or invested as
provided in Section 4.10(b) shall constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, within ten days
thereof, the Company shall make an Asset Sale Offer to all Holders of Notes and
all holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets in accordance with
Section 3.09 hereof to purchase the maximum principal amount of Notes and such
other pari passu Indebtedness that may be purchased out of the Excess Proceeds.
The offer price in any Asset Sale Offer shall be equal to 100% of the principal
amount plus accrued and unpaid interest and Liquidated Damages, if any, to the
date of purchase, and shall be payable in cash. If any Excess Proceeds remain
after consummation of an Asset Sale Offer, the Company may use those Excess
Proceeds for any purpose not otherwise prohibited by this Indenture. If the
aggregate principal amount of Notes and other pari passu Indebtedness tendered
into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee
shall select the Notes and such other pari passu Indebtedness to be purchased on
a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.

      The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions in Sections 3.09 and 4.10 hereof, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the Asset Sale provisions of this Indenture by
virtue of such compliance.

Section 4.11 Transactions with Affiliates.

      (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Company (each, an "Affiliate Transaction"), unless:


                                       55

            (1) the Affiliate Transaction is on terms that are no less favorable
      to the Company or such Restricted Subsidiary than those that would have
      been obtained in a comparable transaction by the Company or such
      Restricted Subsidiary with an unrelated Person; and

            (2) the Company delivers to the Trustee:

                  (A) with respect to any Affiliate Transaction or series of
            related Affiliate Transactions involving aggregate consideration in
            excess of $5.0 million, a resolution of the Board of Directors of
            the Company set forth in an Officers' Certificate certifying that
            such Affiliate Transaction complies with this Section 4.11 and that
            such Affiliate Transaction has been approved by a majority of the
            disinterested members of the Board of Directors of the Company; and

                  (B) with respect to any Affiliate Transaction or series of
            related Affiliate Transactions involving aggregate consideration in
            excess of $10.0 million, an opinion as to the fairness to the
            Company or such Subsidiary of such Affiliate Transaction from a
            financial point of view issued by an accounting, appraisal or
            investment banking firm of national standing.

      (b) The following items shall not be deemed to be Affiliate Transactions
and, therefore, shall not be subject to the provisions of Section 4.11(a)
hereof:

            (1) any employment agreement, employee benefit plan, officer or
      director indemnification agreement or any similar arrangement entered into
      by the Company or any of its Restricted Subsidiaries in the ordinary
      course of business and payments pursuant thereto;

            (2) transactions between or among the Company and/or its Restricted
      Subsidiaries;

            (3) transactions with a Person (other than an Unrestricted
      Subsidiary of the Company) that is an Affiliate of the Company solely
      because the Company owns, directly or through a Restricted Subsidiary of
      the Company an Equity Interest in, or controls, such Person;

            (4) payment of reasonable directors' fees to Persons who are not
      otherwise Affiliates of the Company;

            (5) any issuance of Equity Interests (other than Disqualified Stock)
      of the Company to Affiliates of the Company;

            (6) Restricted Payments that do not violate the provisions of
      Section 4.07 hereof;

            (7) loans or advances to employees in the ordinary course of
      business not to exceed $2.0 million in the aggregate at any one time
      outstanding;

            (8) any transaction entered into or effected, and any payments made
      (whether in the form of cash or Equity Interests), as part of the
      Migration;

            (9) any transactions pursuant to, or contemplated by, the Kelso
      Preferred Stock Documents;


                                       56

            (10) any agreement or transaction relating to the creation or
      management of a captive insurance Subsidiary of the Company or any
      Restricted Subsidiary of the Company that provides insurance for
      self-insurance; and

            (11) transactions effected pursuant to any agreement described in
      the Offering Memorandum under the caption entitled "Certain Relationships
      and Related Transactions" as the same are in effect on the date of this
      Indenture or any amendment, modification or replacement to such agreement
      (so long as such amendment, modification or replacement is not
      disadvantageous to the Holders of the Notes in any material respect).

Section 4.12 Liens.

      The Company shall not and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) securing
Indebtedness, Attributable Debt or trade payables upon any of their property or
assets, now owned or hereafter acquired, unless all payments due under this
Indenture and the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are no longer secured
by a Lien.

Section 4.13 Business Activities.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.

Section 4.14 Corporate Existence.

      Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect:

            (1) its corporate existence, and the corporate, partnership or other
      existence of each of its Subsidiaries, in accordance with the respective
      organizational documents (as the same may be amended from time to time) of
      the Company or any such Subsidiary; and

            (2) the rights (charter and statutory), licenses and franchises of
      the Company and its Subsidiaries; provided, however, that the Company
      shall not be required to preserve any such right, license or franchise, or
      the corporate, partnership or other existence of any of its Subsidiaries,
      if the Board of Directors shall determine that the preservation thereof is
      no longer desirable in the conduct of the business of the Company and its
      Subsidiaries, taken as a whole, and that the loss thereof is not adverse
      in any material respect to the Holders of the Notes.

Section 4.15 Offer to Repurchase Upon Change of Control.

      (a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder to repurchase all or any part
(equal to $1,000 or an integral multiple of $1,000) of that Holder's Notes at a
purchase price in cash equal to 101% of the aggregate principal amount of Notes
repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on
the Notes repurchased to the date of purchase, subject to the rights of Holders
on the relevant record date to receive interest due on the relevant interest
payment date (the "Change of Control Payment"). Within ten days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and stating:


                                       57

            (1) that the Change of Control Offer is being made pursuant to this
      Section 4.15 and that all Notes tendered shall be accepted for payment;

            (2) the purchase price and the purchase date, which shall be no
      earlier than 30 days and no later than 60 days from the date such notice
      is mailed (the "Change of Control Payment Date");

            (3) that any Note not tendered shall continue to accrue interest;

            (4) that, unless the Company defaults in the payment of the Change
      of Control Payment, all Notes accepted for payment pursuant to the Change
      of Control Offer shall cease to accrue interest after the Change of
      Control Payment Date;

            (5) that Holders electing to have any Notes purchased pursuant to a
      Change of Control Offer shall be required to surrender the Notes, with the
      form entitled "Option of Holder to Elect Purchase" attached to the Notes
      completed, or transfer by book-entry transfer, to the Paying Agent at the
      address specified in the notice prior to the close of business on the
      third Business Day preceding the Change of Control Payment Date;

            (6) that Holders shall be entitled to withdraw their election if the
      Paying Agent receives, not later than the close of business on the second
      Business Day preceding the Change of Control Payment Date, a facsimile
      transmission or letter setting forth the name of the Holder, the principal
      amount of Notes delivered for purchase, and a statement that such Holder
      is withdrawing his election to have the Notes purchased; and

            (7) that Holders whose Notes are being purchased only in part shall
      be issued new Notes equal in principal amount to the unpurchased portion
      of the Notes surrendered, which unpurchased portion must be equal to
      $1,000 in principal amount or an integral multiple thereof.

      The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change in Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of Sections 3.09 or this 4.15 hereof, the Company shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.15 by virtue of such compliance.

      (b) On the Change of Control Payment Date, the Company shall, to the
extent lawful:

            (1) accept for payment all Notes or portions of Notes properly
      tendered pursuant to the Change of Control Offer;

            (2) deposit with the Paying Agent an amount equal to the Change of
      Control Payment in respect of all Notes or portions of Notes properly
      tendered; and

            (3) deliver or cause to be delivered to the Trustee the Notes
      properly accepted together with an Officers' Certificate stating the
      aggregate principal amount of Notes or portions of Notes being purchased
      by the Company.

      The Paying Agent shall promptly mail (but in any case not later than five
days after the Change of Control Payment Date) to each Holder of Notes properly
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book


                                       58

entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any, provided that each new Note shall be
in a principal amount of $1,000 or an integral multiple of $1,000. The Company
shall publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.

      Prior to complying with any of the provisions of this Section 4.15, but in
any event within 90 days following a Change of Control, the Company shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.15.

      (c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if (1) a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.15 and purchases all Notes properly tendered and not withdrawn under
the Change of Control Offer, or (2) notice of redemption has been given pursuant
to Section 3.07 hereof, unless and until there is a default in payment of the
applicable redemption price.

Section 4.16 No Layering of Debt.

      The Company shall not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is contractually subordinate or junior
in right of payment to any Senior Debt of the Company and senior in right of
payment to the Notes. No Guarantor shall incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is contractually
subordinate or junior in right of payment to the Senior Debt of such Guarantor
and senior in right of payment to such Guarantor's Note Guarantee. No such
Indebtedness shall be considered to be senior by virtue of being secured on a
first or junior priority basis.

Section 4.17 Limitation on Sale and Leaseback Transactions.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary of the Company may enter into a sale
and leaseback transaction if:

            (1) the Company or that Restricted Subsidiary, as applicable, could
      have (a) incurred Indebtedness in an amount equal to the Attributable Debt
      relating to such sale and leaseback transaction under Section 4.09 hereof
      and (b) incurred a Lien to secure such Indebtedness under Section 4.12
      hereof;

            (2) the gross cash proceeds of that sale and leaseback transaction
      are at least equal to the Fair Market Value of the property that is the
      subject of that sale and leaseback transaction; and

            (3) the transfer of assets in that sale and leaseback transaction is
      permitted by, and the Company applies the proceeds of such transaction in
      compliance with Section 4.10 hereof.

Section 4.18 Payments for Consent.

      The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of the Notes that


                                       59

consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.

Section 4.19 Additional Note Guarantees.

      If the Company or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary after the date of this Indenture, then that newly
acquired or created Domestic Subsidiary shall become a Guarantor and execute a
supplemental indenture in the form of Exhibit F hereto and deliver an opinion of
counsel reasonably satisfactory to the trustee within 10 business days of the
date on which it was acquired or created; provided, however, that the foregoing
shall not apply to Subsidiaries that have properly been designated as
Unrestricted Subsidiaries in accordance with this Indenture for so long as they
continue to constitute Unrestricted Subsidiaries. The form of such Note
Guarantee is attached as Exhibit E hereto.

Section 4.20 Designation of Restricted and Unrestricted Subsidiaries.

      The Board of Directors of the Company may designate any Restricted
Subsidiary of the Company to be an Unrestricted Subsidiary if that designation
would not cause a Default. If a Restricted Subsidiary of the Company is
designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary so designated shall be deemed to be an Investment made as of the
time of the designation and shall reduce the amount available for Restricted
Payments under Section 4.07 hereof or under one or more clauses of the
definition of Permitted Investments, as determined by the Company. That
designation shall only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors of the Company may redesignate
any Unrestricted Subsidiary of the Company to be a Restricted Subsidiary if that
redesignation would not cause a Default.

      Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of a resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the
Company; provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary, and such designation shall only be
permitted if (1) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the applicable four-quarter reference period; and (2) no Default or
Event of Default would be in existence following such designation.

Section 4.21 Restrictions on Capital

      Prior to the Migration, Capital shall not, and shall not permit any of its
Foreign Subsidiaries to, take any action that would violate any of the covenants
applicable to the Company and its Restricted Subsidiaries as if Capital and its
Foreign Subsidiaries were Restricted Subsidiaries of the Company, and Capital
and its Foreign Subsidiaries agree that, prior to the Migration, they shall each
be treated as, and shall each be deemed to be, a "Restricted Subsidiary" of the
Company as of the date of this Indenture for


                                       60

the purposes of the provisions under Section 4.10 (other than clause Section
4.10(a)(2)(A)) and the provisions of Article 4 (other than Section 4.20), unless
Capital and/or its Foreign Subsidiaries are expressly provided for in such
provisions.

Section 4.22 Exemption for Migration

      Nothing in this Indenture shall be construed in any manner that would
prohibit any transaction effected or consummated in connection with the
Migration.

                                    ARTICLE 5
                                   SUCCESSORS

Section 5.01 Merger, Consolidation, or Sale of Assets.

      The Company shall not, directly or indirectly (a) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (b) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person, unless:

            (1) either:

                  (A) the Company is the surviving corporation; or

                  (B) the Person formed by or surviving any such consolidation
            or merger (if other than the Company) or to which such sale,
            assignment, transfer, conveyance or other disposition has been made
            is a corporation organized or existing under the laws of the United
            States, any state of the United States or the District of Columbia;

            (2) the Person formed by or surviving any such consolidation or
      merger (if other than the Company) or the Person to which such sale,
      assignment, transfer, conveyance or other disposition has been made
      assumes all the obligations of the Company under the Notes, this Indenture
      and the Registration Rights Agreement pursuant to agreements reasonably
      satisfactory to the Trustee;

            (3) immediately after such transaction, no Default or Event of
      Default exists; and

            (4) the Company or the Person formed by or surviving any such
      consolidation or merger (if other than the Company), or to which such
      sale, assignment, transfer, conveyance or other disposition has been made
      would, on the date of such transaction after giving pro forma effect
      thereto and any related financing transactions as if the same had occurred
      at the beginning of the applicable four-quarter period, be permitted to
      incur at least $1.00 of additional Indebtedness pursuant to the Fixed
      Charge Coverage Ratio test set forth in Section 4.09(a) hereof.

      In addition, the Company shall not, directly or indirectly, lease all or
substantially all of the properties and assets of it and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to any other
Person.

      This Section 5.01 shall not apply to:



                                       61

            (1) a merger of the Company with an Affiliate solely for the purpose
      of reincorporating the Company in another jurisdiction;

            (2) any consolidation or merger, or any sale, assignment, transfer,
      conveyance, lease or other disposition of assets between or among the
      Company and its Restricted Subsidiaries; or

            (3) the Migration.

Section 5.02 Successor Corporation Substituted.

      Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
properties or assets of the Company in a transaction that is subject to, and
that complies with the provisions of, Section 5.01 hereof, the successor Person
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor Person and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all or substantially all of the Company's assets in a transaction
that is subject to, and that complies with the provisions of, Section 5.01
hereof.

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

      Each of the following is an "Event of Default":

            (1) default for 30 days in the payment when due of interest on, or
      Liquidated Damages, if any, with respect to, the Notes, whether or not
      prohibited by the subordination provisions of this Indenture;

            (2) default in the payment when due (at maturity, upon redemption or
      otherwise) of the principal of, or premium, if any, on, the Notes, whether
      or not prohibited by the subordination provisions of Article 10 hereof;

            (3) failure by the Company or any of its Restricted Subsidiaries to
      comply with the provisions of Sections 4.10, 4.15 or 5.01 hereof;

            (4) failure by the Company or any of its Restricted Subsidiaries for
      60 days after notice to the Company by the Trustee or the Holders of at
      least 25% in aggregate principal amount of the Notes then outstanding
      voting as a single class to comply with any of the other agreements in
      this Indenture;

            (5) default under any mortgage, indenture or instrument under which
      there may be issued or by which there may be secured or evidenced any
      Indebtedness for money borrowed by the Company or any of its Restricted
      Subsidiaries (or the payment of which is guaranteed by the


                                       62

      Company or any of its Restricted Subsidiaries), whether such Indebtedness
      or Guarantee now exists, or is created after the date of this Indenture,
      if that default:


                  (A) is caused by a failure to pay principal of such
            Indebtedness at the stated maturity thereof prior to the expiration
            of the grace period provided in such Indebtedness on the date of
            such default (a "Payment Default"); or


                  (B) results in the acceleration of such Indebtedness prior to
            its express maturity,

            and, in each case, the principal amount of any such Indebtedness,
            together with the principal amount of any other such Indebtedness
            under which there has been a Payment Default or the maturity of
            which has been so accelerated, aggregates $10.0 million or more;

            (6) failure by the Company or any of its Restricted Subsidiaries to
      pay final judgments entered by a court or courts of competent jurisdiction
      aggregating in excess of $10.0 million, which judgments are not paid,
      discharged or stayed for a period of 60 days

            (7) the Company or any of its Restricted Subsidiaries that is a
      Significant Subsidiary or any group of Restricted Subsidiaries of the
      Company that, taken together, would constitute a Significant Subsidiary
      pursuant to or within the meaning of Bankruptcy Law:

                  (A) commences a voluntary case,

                  (B) consents to the entry of an order for relief against it in
            an involuntary case,

                  (C) consents to the appointment of a custodian of it or for
            all or substantially all of its property,

                  (D) makes a general assignment for the benefit of its
            creditors, or

                  (E) generally is not paying its debts as they become due;

            (8) a court of competent jurisdiction enters an order or decree
      under any Bankruptcy Law that:

                  (A) is for relief against the Company or any of its Restricted
            Subsidiaries that is a Significant Subsidiary or any group of
            Restricted Subsidiaries of the Company that, taken together, would
            constitute a Significant Subsidiary in an involuntary case;

                  (B) appoints a custodian of the Company or any of its
            Restricted Subsidiaries that is a Significant Subsidiary or any
            group of Restricted Subsidiaries of the Company that, taken
            together, would constitute a Significant Subsidiary or for all or
            substantially all of the property of the Company or any of its
            Restricted Subsidiaries that is a Significant Subsidiary or any
            group of Restricted Subsidiaries of the Company that, taken
            together, would constitute a Significant Subsidiary; or

                  (C) orders the liquidation of the Company or any of its
            Restricted Subsidiaries that is a Significant Subsidiary or any
            group of Restricted Subsidiaries of the Company that, taken
            together, would constitute a Significant Subsidiary;

                                       63

            and the order or decree remains unstayed and in effect for 60
            consecutive days; or

                  (9) except as permitted by this Indenture, any Note Guarantee
            is held in any judicial proceeding to be unenforceable or invalid or
            ceases for any reason to be in full force and effect, or any
            Guarantor, or any Person acting on behalf of any Guarantor, denies
            or disaffirms its obligations under its Note Guarantee.

Section 6.02 Acceleration.

      In the case of an Event of Default specified in clause (7) or (8) of
Section 6.01 hereof, with respect to the Company, any Restricted Subsidiary of
the Company that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes shall become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately. Upon any such declaration, the Notes shall become due and
payable immediately.

      If an Event of Default occurs on or after April 15, 2009 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Indenture or in the Notes to the contrary notwithstanding.
If an Event of Default occurs prior to April 15, 2009 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Notes prior to
such date, then, upon acceleration of the Notes, an additional premium shall
also become and be immediately due and payable, to the extent permitted by law,
in an amount, for each of the years beginning on April 15 of the years set forth
below, as set forth below (expressed as a percentage of the principal amount of
the Notes on the date of payment that would otherwise be due but for the
provisions of this sentence):



        YEAR                                                                               PERCENTAGE
        ----                                                                               ----------
                                                                                        
        2004.............................................................................       9.50%
        2005.............................................................................       8.55%
        2006.............................................................................       7.60%
        2007.............................................................................       6.65%
        2008.............................................................................       5.70%


Section 6.03 Other Remedies.

      If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium and Liquidated
Damages, if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.

      The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.



                                       64

Section 6.04 Waiver of Past Defaults.

      Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase); provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.

Section 6.05 Control by Majority.

      Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.

Section 6.06 Limitation on Suits.

      A Holder may pursue a remedy with respect to this Indenture or the Notes
only if:

            (1) such Holder gives to the Trustee written notice that an Event of
      Default is continuing;

            (2) Holders of at least 25% in aggregate principal amount of the
      then outstanding Notes make a written request to the Trustee to pursue the
      remedy;

            (3) such Holder or Holders offer and, if requested, provide to the
      Trustee security or indemnity reasonably satisfactory to the Trustee
      against any loss, liability or expense;

            (4) the Trustee does not comply with the request within 60 days
      after receipt of the request and the offer of security or indemnity; and

            (5) during such 60-day period, Holders of a majority in aggregate
      principal amount of the then outstanding Notes do not give the Trustee a
      direction inconsistent with such request.

      A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.

Section 6.07 Rights of Holders of Notes to Receive Payment.

      Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.



                                       65

Section 6.08 Collection Suit by Trustee.

      If an Event of Default specified in Section 6.01(1) or (2) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on, the Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 6.09 Trustee May File Proofs of Claim.

      The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10 Priorities.

      If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:

            First: to the Trustee, its agents and attorneys for amounts due
      under Section 7.07 hereof, including payment of all compensation, expenses
      and liabilities incurred, and all advances made, by the Trustee and the
      costs and expenses of collection;

            Second: to Holders of Notes for amounts due and unpaid on the Notes
      for principal, premium and Liquidated Damages, if any, and interest,
      ratably, without preference or priority of any kind, according to the
      amounts due and payable on the Notes for principal, premium and Liquidated
      Damages, if any and interest, respectively; and

            Third: to the Company or to such party as a court of competent
      jurisdiction shall direct.

      The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

                                       66

Section 6.11 Undertaking for Costs.

      In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
aggregate principal amount of the then outstanding Notes.

                                    ARTICLE 7
                                     TRUSTEE

Section 7.01 Duties of Trustee.

      (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

      (b) Except during the continuance of an Event of Default:

            (1) the duties of the Trustee shall be determined solely by the
      express provisions of this Indenture and the Trustee need perform only
      those duties that are specifically set forth in this Indenture and no
      others, and no implied covenants or obligations shall be read into this
      Indenture against the Trustee; and

            (2) in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture.
      However, the Trustee shall examine the certificates and opinions to
      determine whether or not they conform to the requirements of this
      Indenture.

      (c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

            (1) this paragraph does not limit the effect of paragraph (b) of
      this Section 7.01;

            (2) the Trustee shall not be liable for any error of judgment made
      in good faith by a Responsible Officer, unless it is proved that the
      Trustee was negligent in ascertaining the pertinent facts; and

            (3) the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.05 hereof.

      (d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section 7.01.

      (e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under


                                       67

this Indenture at the request of any Holders, unless such Holder has offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.

      (f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

Section 7.02 Rights of Trustee.

      (a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.

      (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

      (c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.

      (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

      (e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.

      (f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders have offered to the Trustee reasonable indemnity
or security against the losses, liabilities and expenses that might be incurred
by it in compliance with such request or direction.

Section 7.03 Individual Rights of Trustee.

      The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee (if this Indenture has been qualified under the TIA) or
resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 hereof.

Section 7.04 Trustee's Disclaimer.

      The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or


                                       68

any statement in the Notes or any other document in connection with the sale of
the Notes or pursuant to this Indenture other than its certificate of
authentication.

Section 7.05 Notice of Defaults.

      If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium or
Liquidated Damages, if any, or interest on, any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.

Section 7.06 Reports by Trustee to Holders of the Notes.

      (a) Within 60 days after each May 15 beginning on May 15, 2005 and for so
long as Notes remain outstanding, the Trustee shall mail to the Holders of the
Notes a brief report dated as of such reporting date that complies with TIA
Section 313(a) (but if no event described in TIA Section 313(a) has occurred
within the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).

      (b) A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed by the Trustee to the Company and filed by the Trustee
with the SEC and each stock exchange on which the Notes are listed in accordance
with TIA Section 313(d). The Company shall promptly notify the Trustee when the
Notes are listed on any stock exchange.

Section 7.07 Compensation and Indemnity.

      (a) The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.

      (b) The Company and the Guarantors shall indemnify the Trustee against any
and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, the Guarantors, any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company or any of the Guarantors of their obligations hereunder. The
Company or such Guarantor shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. Neither the Company nor any
Guarantor need pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.

      (c) The obligations of the Company and the Guarantors under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.



                                       69

      (d) To secure the Company's and the Guarantors' payment obligations in
this Section 7.07, the Trustee shall have a Lien prior to the Notes on all money
or property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.

      (e) When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

      (f) The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.

Section 7.08 Replacement of Trustee.

      (a) A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.

      (b) The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in aggregate principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:

            (1) the Trustee fails to comply with Section 7.10 hereof;

            (2) the Trustee is adjudged a bankrupt or an insolvent or an order
      for relief is entered with respect to the Trustee under any Bankruptcy
      Law;

            (3) a custodian or public officer takes charge of the Trustee or its
      property; or

            (4) the Trustee becomes incapable of acting.

      (c) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in aggregate principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

      (d) If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in aggregate principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

      (e) If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10 hereof, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

      (f) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee; provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07


                                       70

hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09 Successor Trustee by Merger, etc.

      If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor or transferee corporation without any further act shall be the
successor Trustee.

Section 7.10 Eligibility; Disqualification.

      There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.

      This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).

Section 7.11 Preferential Collection of Claims Against Company.

      The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

                                    ARTICLE 8
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

      The Company may at any time, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

      Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each of the Guarantors shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been discharged from their obligations with respect to all
outstanding Notes (including the Note Guarantees) on the date the conditions set
forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose,
Legal Defeasance means that the Company and the Guarantors shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Notes (including the Note Guarantees), which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in clauses (1) and (2) below, and to have
satisfied all their other obligations under such Notes, the Note Guarantees and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder:



                                       71

            (1) the rights of Holders of outstanding Notes to receive payments
      in respect of the principal of, or interest or premium and Liquidated
      Damages, if any, on, such Notes when such payments are due from the trust
      referred to in Section 8.04 hereof;

            (2) the Company's obligations with respect to such Notes under
      Article 2 and Section 4.02 hereof;

            (3) the rights, powers, trusts, duties and immunities of the Trustee
      hereunder and the Company's and the Guarantors' obligations in connection
      therewith; and

            (4) this Article 8.

      Subject to compliance with this Article 8, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

      Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each of the Guarantors shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from each of their obligations under the covenants contained in
Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19,
4.20, 4.21 and 4.22, hereof and clause (4) of Section 5.01 hereof with respect
to the outstanding Notes on and after the date the conditions set forth in
Section 8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes and Note Guarantees, the Company and the Guarantors may omit
to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 6.01 hereof, but, except as specified above, the
remainder of this Indenture and such Notes and Note Guarantees shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(3) through 6.01(6) and 6.01(9) hereof shall not constitute Events of
Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

      In order to exercise either Legal Defeasance or Covenant Defeasance under
either Section 8.02 or 8.03 hereof:

            (1) the Company must irrevocably deposit with the Trustee, in trust,
      for the benefit of the Holders, cash in U.S. dollars, non-callable
      Government Securities, or a combination thereof, in such amounts as shall
      be sufficient, in the opinion of a nationally recognized investment bank,
      appraisal firm, or firm of independent public accountants, to pay the
      principal of, premium and Liquidated Damages, if any, and interest on, the
      outstanding Notes on the stated date for payment thereof or on the
      applicable redemption date, as the case may be, and the Company must
      specify whether the Notes are being defeased to such stated date for
      payment or to a particular redemption date;

                                       72

            (2) in the case of an election under Section 8.02 hereof, the
      Company must deliver to the Trustee an Opinion of Counsel confirming that:

                  (A) the Company has received from, or there has been published
            by, the Internal Revenue Service a ruling; or

                  (B) since the date of this Indenture, there has been a change
            in the applicable federal income tax law,

            in either case, to the effect that, and based thereon such Opinion
            of Counsel shall confirm that, the Holders of the outstanding Notes
            shall not recognize income, gain or loss for federal income tax
            purposes as a result of such Legal Defeasance and shall be subject
            to federal income tax on the same amounts, in the same manner and at
            the same times as would have been the case if such Legal Defeasance
            had not occurred;

            (3) in the case of an election under Section 8.03 hereof, the
      Company must deliver to the Trustee an Opinion of Counsel confirming that
      the Holders of the outstanding Notes shall not recognize income, gain or
      loss for federal income tax purposes as a result of such Covenant
      Defeasance and shall be subject to federal income tax on the same amounts,
      in the same manner and at the same times as would have been the case if
      such Covenant Defeasance had not occurred;

            (4) no Default or Event of Default shall have occurred and be
      continuing on the date of such deposit (other than a Default or Event of
      Default resulting from the borrowing of funds to be applied to such
      deposit);

            (5) such Legal Defeasance or Covenant Defeasance shall not result in
      a breach or violation of, or constitute a default under, any material
      agreement or instrument (other than this Indenture) to which the Company
      or any of its Subsidiaries is a party or by which the Company or any of
      its Subsidiaries is bound;

            (6) the Company must deliver to the Trustee an Officers' Certificate
      stating that the deposit was not made by the Company with the intent of
      preferring the Holders of Notes over the other creditors of the Company
      with the intent of defeating, hindering, delaying or defrauding any
      creditors of the Company or others; and

            (7) the Company must deliver to the Trustee an Officers' Certificate
      and an Opinion of Counsel, each stating that all conditions precedent
      relating to the Legal Defeasance or the Covenant Defeasance have been
      complied with.

      Notwithstanding the foregoing, the Opinion of Counsel required in clause
(2) or (3) above need not be delivered if at such time all outstanding Notes
have been irrevocably called for redemption. In the case of either Legal
Defeasance or Covenant Defeasance, the Note Guarantees shall terminate.

Section 8.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.

      Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this



                                       73

Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect
of principal, premium and Liquidated Damages, if any, and interest, but such
money need not be segregated from other funds except to the extent required by
law.

      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

      Notwithstanding anything in this Article 8 to the contrary, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(1) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06 Repayment to Company.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium or Liquidated
Damages, if any, or interest on, any Note and remaining unclaimed for two years
after such principal, premium or Liquidated Damages, if any, or interest has
become due and payable shall be paid to the Company on its request or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter be permitted to look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining shall be repaid to the Company.

Section 8.07 Reinstatement.

      If the Trustee or Paying Agent is unable to apply any U.S. dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations under this
Indenture and the Notes and the Note Guarantees shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium or
Liquidated Damages, if any, or interest on, any Note following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
of such Notes to receive such payment from the money held by the Trustee or
Paying Agent.


                                       74

                                    ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

      Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
or the Note Guarantees without the consent of any Holder of Note:

            (1) to cure any ambiguity, defect or inconsistency;

            (2) to provide for uncertificated Notes in addition to or in place
      of certificated Notes;

            (3) to provide for the assumption of the Company's or a Guarantor's
      obligations to the Holders of the Notes and Note Guarantees by a successor
      to the Company or such Guarantor pursuant to Article 5 or Article 11
      hereof;

            (4) to make any change that would provide any additional rights or
      benefits to the Holders of the Notes or that does not adversely affect the
      legal rights hereunder of any such Holder;

            (5) to comply with requirements of the SEC in order to effect or
      maintain the qualification of this Indenture under the TIA;

            (6) to conform the text of this Indenture, the Notes or the Note
      Guarantees to any provision of the "Description of Notes" section of the
      Offering Memorandum, relating to the initial offering of the Notes, to the
      extent that such provision in that "Description of Notes" was intended to
      be a verbatim recitation of a provision of this Indenture, the Note
      Guarantees or the Notes;

            (7) to provide for the issuance of Additional Notes in accordance
      with the limitations set forth in this Indenture as of the date hereof;

            (8) to allow any Guarantor to execute a supplemental indenture
      and/or a Note Guarantee with respect to the Notes; or

            (9) to provide for the Migration.

      Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

      Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including, without limitation, Section
3.09, 4.10 and 4.15 hereof) and the Notes and the Note Guarantees with the
consent of the Holders of at least a majority in aggregate


                                       75

principal amount of the then outstanding Notes (including, without limitation,
Additional Notes, if any) voting as a single class (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium or Liquidated Damages, if
any, or interest on, the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes or the Note Guarantees may be waived with the consent of
the Holders of a majority in aggregate principal amount of the then outstanding
Notes (including, without limitation, Additional Notes, if any) voting as a
single class (including, without limitation, consents obtained in connection
with a tender offer or exchange offer for, or purchase of, the Notes). Section
2.08 hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.

      Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.

      It is not be necessary for the consent of the Holders of Notes under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it is sufficient if such consent approves the
substance thereof.

      After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes or the Note Guarantees. However,
without the consent of each Holder affected, an amendment, supplement or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

            (1) reduce the principal amount of Notes whose Holders must consent
      to an amendment, supplement or waiver;

            (2) reduce the principal of or change the fixed maturity of any Note
      or alter or waive any of the provisions with respect to the redemption of
      the Notes (except as provided above with respect to Sections 3.09, 4.10
      and 4.15 hereof);

            (3) reduce the rate of or change the time for payment of interest,
      including default interest, on any Note;

            (4) waive a Default or Event of Default in the payment of principal
      of, or premium or Liquidated Damages, if any, or interest on, the Notes
      (except a rescission of acceleration of the Notes by the Holders of at
      least a majority in aggregate principal amount of the then outstanding
      Notes and a waiver of the payment default that resulted from such
      acceleration);

            (5) make any Note payable in money other than that stated in the
      Notes;



                                       76

            (6) make any change in the provisions of this Indenture relating to
      waivers of past Defaults or the rights of Holders of Notes to receive
      payments of principal of, or interest or premium or Liquidated Damages, if
      any, on, the Notes;

            (7) waive a redemption payment with respect to any Note (other than
      a payment required by Sections 3.09, 4.10 or 4.15 hereof);

            (8) release any Guarantor from any of its obligations under its Note
      Guarantee or this Indenture, except in accordance with the terms of this
      Indenture; or

            (9) make any change in the preceding amendment and waiver
      provisions.

Section 9.03 Compliance with Trust Indenture Act.

      Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental indenture that complies with the TIA as then
in effect.

Section 9.04  Revocation and Effect of Consents.

      Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05 Notation on or Exchange of Notes.

      The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

      Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06 Trustee to Sign Amendments, etc.

      The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amended or supplemental indenture until the Board of Directors
of the Company approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 13.04 hereof, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.



                                       77

                                   ARTICLE 10
                                  SUBORDINATION

Section 10.01 Agreement to Subordinate.

      The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the prior payment in
full in cash of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt.

Section 10.02 Liquidation; Dissolution; Bankruptcy.

      Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:

            (1) holders of Senior Debt shall be entitled to receive payment in
      full in cash of all Obligations due in respect of such Senior Debt
      (including interest after the commencement of any bankruptcy proceeding at
      the rate specified in the applicable Senior Debt) before the Holders of
      Notes shall be entitled to receive any payment with respect to the Notes
      (except that Holders of Notes may receive and retain Permitted Junior
      Securities and payments made from any defeasance trust created pursuant to
      Section 8.01 or 12.01 hereof); and

            (2) until all Obligations with respect to Senior Debt (as provided
      in clause (1) above) are paid in full, any distribution to which Holders
      would be entitled but for this Article 10 shall be made to holders of
      Senior Debt (except that Holders of Notes may receive and retain Permitted
      Junior Securities and payments made from any defeasance trust created
      pursuant to Section 8.01 hereof), as their interests may appear.

Section 10.03 Default on Designated Senior Debt.

      (a) The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than Permitted Junior Securities and payments made from any defeasance trust
created pursuant to Section 8.01 or 12.01 hereof) if:

            (1) payment default on Designated Senior Debt occurs and is
      continuing beyond any applicable grace period in the agreement, indenture
      or other document governing such Designated Senior Debt; or

            (2) any other default occurs and is continuing on any series of
      Designated Senior Debt that permits holders of that series of Designated
      Senior Debt to accelerate its maturity and the Trustee receives a notice
      of such default (a "Payment Blockage Notice") from the Company of the
      holders of any Designated Senior Debt. If the Trustee receives any such
      Payment Blockage Notice, no subsequent Payment Blockage Notice shall be
      effective for purposes of this Section 10.03 unless and until at least 360
      days have elapsed since the delivery of the immediately prior Payment
      Blockage Notice.



                                       78

      No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee may be, or may be made,
the basis for a subsequent Payment Blockage Notice unless such default has been
cured or waived for a period of not less than 90 days after the expiration of
such Payment Blockage Notice.

      (b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them:

            (1) in the case of a payment default, upon the date upon which such
      default is cured or waived, and

            (2) in the case of a nonpayment default, upon the earlier of the
      date on which such nonpayment default is cured or waived or 179 days after
      the date on which the applicable Payment Blockage Notice is received,
      unless the maturity of any Designated Senior Debt has been accelerated,

if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.

Section 10.04 Acceleration of Notes.

      If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.

Section 10.05 When Distribution Must Be Paid Over.

      In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes (other than Permitted Junior Securities
and payments made from any defeasance trust created pursuant to Section 8.01 or
12.01 hereof) at a time when the Trustee or such Holder, as applicable, has
actual knowledge that such payment is prohibited by Section 10.03 hereof, such
payment shall be held by the Trustee or such Holder, in trust for the benefit
of, and shall be paid forthwith over and delivered, upon written request, to,
the holders of Senior Debt as their interests may appear or their Representative
under the agreement, indenture or other document (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.

      With respect to the holders of Senior Debt, the Trustee undertakes to
perform only those obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee pays over or distributes to or on behalf of Holders or the Company or
any other Person money or assets to which any holders of Senior Debt are then
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.

Section 10.06 Notice by Company.

      The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article


                                       79

10, but failure to give such notice shall not affect the subordination of the
Notes to the Senior Debt as provided in this Article 10.

Section 10.07 Subrogation.

      After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.

Section 10.08 Relative Rights.

      This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:

            (1) impair, as between the Company and Holders of Notes, the
      obligation of the Company, which is absolute and unconditional, to pay
      principal of, premium and interest and Liquidated Damages, if any, on, the
      Notes in accordance with their terms;

            (2) affect the relative rights of Holders of Notes and creditors of
      the Company other than their rights in relation to holders of Senior Debt;
      or

            (3) prevent the Trustee or any Holder of Notes from exercising its
      available remedies upon a Default or Event of Default, subject to the
      rights of holders and owners of Senior Debt to receive distributions and
      payments otherwise payable to Holders of Notes.

      If the Company fails because of this Article 10 to pay principal of,
premium or interest or Liquidated Damages, if any, on, a Note on the due date,
the failure shall nonetheless constitute a Default or Event of Default, as the
case may be.

Section 10.09  Subordination May Not Be Impaired by Company.

      No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes may be impaired by any act or failure to act
by the Company or any Holder or by the failure of the Company or any Holder to
comply with this Indenture.

Section 10.10 Distribution or Notice to Representative.

      Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.

      Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.



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Section 10.11 Rights of Trustee and Paying Agent.

      Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee has received at its Corporate
Trust Office at least five Business Days prior to the date of such payment
written notice of facts that would cause the payment of any Obligations with
respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.

      The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.

Section 10.12 Authorization to Effect Subordination.

      Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.

Section 10.13 Amendments.

      In addition, any amendment to, or waiver of, the provisions of this
Article 10 that adversely affects the rights of the Holders of the Notes shall
require the consent of the Holders of at least 75% in aggregate principal amount
of Notes then outstanding.

                                   ARTICLE 11
                                 NOTE GUARANTEES

Section 11.01 Guarantee.

      (a) Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that:

            (1) the principal of, premium and Liquidated Damages, if any, and
      interest on, the Notes shall be promptly paid in full when due, whether at
      maturity, by acceleration, redemption or otherwise, and interest on the
      overdue principal of and interest on the Notes, if any, if lawful, and all
      other obligations of the Company to the Holders or the Trustee hereunder
      or thereunder shall be promptly paid in full or performed, all in
      accordance with the terms hereof and thereof; and

            (2) in case of any extension of time of payment or renewal of any
      Notes or any of such other obligations, that same shall be promptly paid
      in full when due or performed in accordance with the terms of the
      extension or renewal, whether at stated maturity, by acceleration or
      otherwise.

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      Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.

      (b) The Guarantors hereby agree that their obligations hereunder are,
subject to Section 11.03 hereof, unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenant that this Note Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes and this Indenture.

      (c) If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

      (d) Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (2) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Note Guarantee.

Section 11.02 Subordination of Note Guarantee.

      The Obligations of each Guarantor under its Note Guarantee pursuant to
this Article 11 shall be junior and subordinated to the Senior Debt of such
Guarantor on the same basis as the Notes are junior and subordinated to Senior
Debt of the Company. For the purposes of the foregoing sentence, the Trustee and
the Holders shall have the right to receive and/or retain payments by any of the
Guarantors only at such times as they may receive and/or retain payments in
respect of the Notes pursuant to this Indenture, including Article 10 hereof.

Section 11.03 Limitation on Guarantor Liability.

      Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor shall be limited to the maximum amount that shall, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive


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contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.

Section 11.04 Execution and Delivery of Note Guarantee.

      To evidence its Note Guarantee set forth in Section 11.01 hereof, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form attached as Exhibit E hereto shall be endorsed by an Officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by one of its Officers.

      Each Guarantor hereby agrees that its Note Guarantee set forth in Section
11.01 hereof shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.

      If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.

      The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.

      In the event that the Company or any of its Restricted Subsidiaries
creates or acquires any Domestic Subsidiary after the date of this Indenture, if
required by Section 4.19 hereof, the Company shall cause such Domestic
Subsidiary to comply with the provisions of Section 4.19 hereof and this Article
11, to the extent applicable.

Section 11.05 Guarantors May Consolidate, etc., on Certain Terms.

      Except as otherwise provided in Section 11.06 hereof, no Guarantor may
sell or otherwise dispose of all or substantially all of its assets to, or
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person, other than the Company or another Guarantor,
unless:

            (1) immediately after giving effect to such transaction, no Default
      or Event of Default exists; and

            (2) either:

                  (a) subject to Section 11.06 hereof, the Person acquiring the
      property in any such sale or disposition or the Person formed by or
      surviving any such consolidation or merger unconditionally assumes all the
      obligations of that Guarantor under this Indenture, its Note Guarantee and
      the Registration Rights Agreement on the terms set forth herein or
      therein, pursuant to a supplemental indenture in form and substance
      reasonably satisfactory to the Trustee; or

                  (b) the Net Proceeds of such sale or other disposition are
      applied in accordance with the applicable provisions of this Indenture,
      including without limitation, Section 4.10 hereof.

      In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual


                                       83

performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Note Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Note Guarantees had been issued at the date
of the execution hereof.

      Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses 2(a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.

Section 11.06 Releases.

      (a) The Note Guarantee of a Guarantor shall be released (i) in connection
with any sale or other disposition of all or substantially all of the assets of
that Guarantor (including by way of merger or consolidation) to a Person that is
not (either before or after giving effect to such transaction) the Company or a
Restricted Subsidiary of the Company if the sale or other disposition does not
violate Section 4.10 of this Indenture or (ii) in connection with any sale or
other disposition of the Capital Stock of that Guarantor such that the Guarantor
ceases to be a Subsidiary of the Company or Capital, if the sale or other
disposition does not violate Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to
the effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, including without limitation
Section 4.10 hereof, the Trustee shall execute any documents reasonably required
in order to evidence the release of any Guarantor from its obligations under its
Note Guarantee.

      (b) Upon designation of any Guarantor as an Unrestricted Subsidiary in
accordance with the terms of this Indenture, such Guarantor shall be released
and relieved of any obligations under its Note Guarantee.

      (c) Upon Legal Defeasance in accordance with Article 8 hereof or
satisfaction and discharge of this Indenture in accordance with Article 12
hereof, each Guarantor shall be released and relieved of any obligations under
its Note Guarantee.

      Upon the consummation of the Migration, the Guarantee of Capital and its
Foreign Subsidiaries shall be released.

      Any Guarantor not released from its obligations under its Note Guarantee
as provided in this Section 11.06 shall remain liable for the full amount of
principal of and interest and premium and Liquidated Damages, if any, on the
Notes and for the other obligations of any Guarantor under this Indenture as
provided in this Article 11.

                                   ARTICLE 12
                           satisfaction and discharge

Section 12.01 Satisfaction and Discharge.

      This Indenture shall be discharged and shall cease to be of further effect
as to all Notes issued hereunder and the related Note Guarantees, when:



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            (1) either:

                  (a) all Notes that have been authenticated, except lost,
      stolen or destroyed Notes that have been replaced or paid and Notes for
      whose payment money has theretofore been deposited in trust and thereafter
      repaid to the Company pursuant to Section 8.06, have been delivered to the
      Trustee for cancellation; or

                  (b) all Notes that have not been delivered to the Trustee for
      cancellation have become due and payable by reason of the mailing of a
      notice of redemption or otherwise or shall become due and payable within
      one year and the Company or any Guarantor has irrevocably deposited or
      caused to be deposited with the Trustee as trust funds in trust solely for
      the benefit of the Holders, cash in U.S. dollars, non-callable Government
      Securities, or a combination thereof, in such amounts as shall be
      sufficient, without consideration of any reinvestment of interest, to pay
      and discharge the entire Indebtedness on the Notes not delivered to the
      Trustee for cancellation for principal, premium and Liquidated Damages, if
      any, and accrued interest to the date of maturity or redemption;

            (2) no Default or Event of Default has occurred and is continuing on
      the date of such deposit (other than a Default or Event of Default
      resulting from the borrowing of funds to be applied to such deposit) and
      the deposit shall not result in a breach or violation of, or constitute a
      default under, any material agreement or other instrument (other than this
      Indenture) to which the Company or any Guarantor is a party or by which
      the Company or any Guarantor is bound;

            (3) the Company or any Guarantor has paid or caused to be paid all
      sums payable by it under this Indenture; and

            (4) the Company has delivered irrevocable instructions to the
      Trustee under this Indenture to apply the deposited money toward the
      payment of the Notes at maturity or on the redemption date, as the case
      may be.

In addition, the Company must deliver an Officers' Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

      Notwithstanding the satisfaction and discharge of this Indenture, if money
has been deposited with the Trustee pursuant to subclause (b) of clause (1) of
this Section 12.01, the provisions of Sections 12.02 and 8.06 hereof shall
survive. In addition, nothing in this Section 12.01 shall be deemed to discharge
those provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

Section 12.02  Application of Trust Money.

      Subject to the provisions of Section 8.06 hereof, all money deposited with
the Trustee pursuant to Section 12.01 hereof shall be held in trust and applied
by it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium and Liquidated Damages, if any)
and interest for whose payment such money has been deposited with the Trustee;
but such money need not be segregated from other funds except to the extent
required by law.

      If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 12.01 hereof by reason of any legal
proceeding or by reason of any order or


                                       85

judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's and any Guarantor's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 12.01 hereof; provided
that if the Company has made any payment of principal of, premium or Liquidated
Damages, if any, or interest on, any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.

                                   ARTICLE 13
                                  MISCELLANEOUS

Section 13.01 Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.

Section 13.02 Notices.

      Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or by first
class mail (registered or certified, return receipt requested), facsimile
transmission or overnight air courier guaranteeing next day delivery, to the
others' address:

      If to the Company and/or any Guarantor:

         Waste Services, Inc.
         1122 International Blvd., Suite 601
         Burlington, Ontario
         Canada L7L 6Z8
         Attention: Joy Grahek
         (Fax: (905) 319-9408).

         With a copy to:

         Shearman & Sterling LLP
         599 Lexington Avenue, New York, New York 10022,
         Attention:  Marc Rossell
         (Fax:  (212) 848-5361)

         If to the Trustee:

         Wells Fargo Bank, National Association
         213 Court Street, Suite 703
         Middletown, CT 06457
         Attention:  Joe O'Donnell
          (Fax:  (860) 704-6219)

      The Company, any Guarantor or the Trustee, by written notice to the
others, may designate additional or different addresses for subsequent notices
or communications.



                                       86

      All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and
the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.

      Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.

      If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.

      If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.

Section 13.03  Communication by Holders of Notes with Other Holders of Notes.

      Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).

Section 13.04 Certificate and Opinion as to Conditions Precedent.

      Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:

            (1) an Officers' Certificate in form and substance reasonably
      satisfactory to the Trustee (which must include the statements set forth
      in Section 13.05 hereof) stating that, in the opinion of the signers, all
      conditions precedent and covenants, if any, provided for in this Indenture
      relating to the proposed action have been satisfied; and

            (2) an Opinion of Counsel in form and substance reasonably
      satisfactory to the Trustee (which must include the statements set forth
      in Section 13.05 hereof) stating that, in the opinion of such counsel, all
      such conditions precedent and covenants have been satisfied.

Section 13.05 Statements Required in Certificate or Opinion.

      Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) must comply with the provisions of TIA
Section 314(e) and must include:

            (1) a statement that the Person making such certificate or opinion
      has read such covenant or condition;

            (2) a brief statement as to the nature and scope of the examination
      or investigation upon which the statements or opinions contained in such
      certificate or opinion are based;



                                       87

            (3) a statement that, in the opinion of such Person, he or she has
      made such examination or investigation as is necessary to enable him or
      her to express an informed opinion as to whether or not such covenant or
      condition has been complied with; and

            (4) a statement as to whether or not, in the opinion of such Person,
      such condition or covenant has been complied with.

Section 13.06 Rules by Trustee and Agents.

      The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 13.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.

      No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or the Guarantors under the Notes, this
Indenture, the Note Guarantees or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. This waiver and release are part
of the consideration for issuance of the Notes. The waiver may not be effective
to waive liabilities under the federal securities laws.

Section 13.08 Governing Law.

      THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

Section 13.09 No Adverse Interpretation of Other Agreements.

      This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 13.10 Successors.

      All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors. All agreements of each Guarantor in this Indenture shall bind its
successors, except as otherwise provided in Section 11.06 hereof.

Section 13.11 Severability.

      In case any provision in this Indenture or in the Notes is invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

Section 13.12 Counterpart Originals.

      The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.

Section 13.13 Table of Contents, Headings, etc.

                                       88

      The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.

                         [Signatures on following page]



                                       89

                                   SIGNATURES

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.

         Waste Services, Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Executive Vice President, General Counsel and Secretary

         Capital Environmental Resource Inc.


         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Executive Vice President, General Counsel and Secretary

         Gap Disposal 2001 Ltd.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Secretary

         Ram-Pak Compaction Systems Ltd.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary

         6045341 Canada Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary

         Waste Services of Florida, Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary

         Jacksonville Florida Landfill, Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary




         Jones Road Landfill and Recycling Ltd.

         By its General Partner:
         Jacksonville Florida Landfill, Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary

         Omni Waste of Osceola County LLC

         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Secretary

         Cactus Waste Systems, LLC

         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Manager

         Waste Services of Arizona, Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary



         Waste Services Limited Partner, LLC

         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Manager




         Waste Services of Alabama, Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary

         WS General Partner, LLC

         By its General Partner:
         Waste Services, Inc.



         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Executive Vice President, General Counsel and Secretary

         Ruffino Hills Transfer Station LP

         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
              Title: Vice President and Secretary

         Fort Bend Regional Landfill LP

         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
                  Title: Vice President and Secretary

         Florida Recycling Services, Inc., a Delaware Corporation

         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
                  Title: Vice President and Secretary

         Florida Recycling Services, Inc., an Illinois Corporation

         By /s/ Ivan R. Cairns
            -----------------------------------------
              Name: Ivan R. Cairns
                  Title: Vice President and Secretary

                                          Wells Fargo Bank, National Association
                                           as Trustee

                                          By:   /s/ Frank McDonald
                                                --------------------------------
                                                Name: Frank McDonald
                                                Title: Vice President




                                                                      EXHIBIT A1


                                 [Face of Note]
- --------------------------------------------------------------------------------

                                                        CUSIP/CINS _____________

                    9-1/2% Senior Subordinated Notes due 2014

No. ___                                                            $____________

                              WASTE SERVICES, INC.

promises to pay to [_________________] or registered assigns,

the principal sum of __________________________________________________ DOLLARS
on _____________, 2014.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Dated: _________________

                                    WASTE SERVICES, INC.


                                    By:_________________________________________
                                       Name:
                                       Title:


This is one of the Notes referred to
in the within-mentioned Indenture:

WELLS FARGO BANK, NATIONAL ASSOCIATION,
  as Trustee


By:__________________________________
          Authorized Signatory


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

                                      A1-1

                                 [Back of Note]
                    9-1/2% Senior Subordinated Notes due 2014

[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]

      Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

            (1) INTEREST. Waste Services, Inc., a Delaware corporation (the
      "Company"), promises to pay interest on the principal amount of this Note
      at __% per annum from ________________, 20__ until maturity and shall pay
      the Liquidated Damages, if any, payable pursuant to Section 5 of the
      Registration Rights Agreement referred to below. The Company shall pay
      interest and Liquidated Damages, if any, semi-annually in arrears on April
      15 and October 15 of each year, or if any such day is not a Business Day,
      on the next succeeding Business Day (each, an "Interest Payment Date").
      Interest on the Notes shall accrue from the most recent date to which
      interest has been paid or, if no interest has been paid, from the date of
      issuance; provided that if there is no existing Default in the payment of
      interest, and if this Note is authenticated between a record date referred
      to on the face hereof and the next succeeding Interest Payment Date,
      interest shall accrue from such next succeeding Interest Payment Date;
      provided further that the first Interest Payment Date shall be
      _____________, 20__. The Company shall pay interest (including
      post-petition interest in any proceeding under any Bankruptcy Law) on
      overdue principal and premium, if any, from time to time on demand at a
      rate that is 1% per annum in excess of the rate then in effect to the
      extent lawful; it shall pay interest (including post-petition interest in
      any proceeding under any Bankruptcy Law) on overdue installments of
      interest and Liquidated Damages if any (without regard to any applicable
      grace periods) from time to time on demand at the same rate to the extent
      lawful. Interest shall be computed on the basis of a 360-day year of
      twelve 30-day months.

            (2) METHOD OF PAYMENT. The Company shall pay interest on the Notes
      and Liquidated Damages, if any, to the Persons who are registered Holders
      of Notes at the close of business on the April 1 or October 1 next
      preceding the Interest Payment Date, even if such Notes are canceled after
      such record date and on or before such Interest Payment Date, except as
      provided in Section 2.12 of the Indenture with respect to defaulted
      interest. The Notes shall be payable as to principal, premium and
      Liquidated Damages, if any, and interest at the office or agency of the
      Company maintained for such purpose within the City and State of New York,
      or, at the option of the Company, payment of interest and Liquidated
      Damages, if any, may be made by check mailed to the Holders at their
      addresses set forth in the register of Holders; provided that payment by
      wire transfer of immediately available funds shall be required with
      respect to principal of and interest, premium and Liquidated Damages, if
      any, on, all Global Notes and all other Notes the Holders of which shall
      have provided wire transfer instructions to the Company or the Paying
      Agent. Such payment shall be in such coin or currency of the United States
      of America as at the time of payment is legal tender for payment of public
      and private debts.

            (3) PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank,
      National Association, the Trustee under the Indenture, shall act as Paying
      Agent and Registrar. The Company may change any Paying Agent or Registrar
      without notice to any Holder. The Company or any of its Subsidiaries may
      act in any such capacity.

                                      A1-2

            (4) INDENTURE. The Company issued the Notes under an Indenture,
      dated as of April 30, 2004 (the "Indenture"), among the Company, the
      Guarantors party thereto and the Trustee. The terms of the Notes include
      those stated in the Indenture and those made part of the Indenture by
      reference to the TIA. The Notes are subject to all such terms, and Holders
      are referred to the Indenture and such Act for a statement of such terms.
      To the extent any provision of this Note conflicts with the express
      provisions of the Indenture, the provisions of the Indenture shall govern
      and be controlling. The Notes are unsecured obligations of the Company.
      The Indenture does not limit the aggregate principal amount of Notes that
      may be issued thereunder.

            (5) OPTIONAL REDEMPTION. (a) Except as set forth in subparagraph (b)
      of this Paragraph 5, the Company shall not have the option to redeem the
      Notes prior to April 15, 2009. On or after April 15, 2009, the Company
      shall have the option to redeem all or a part of the Notes upon not less
      than 30 nor more than 60 days' notice, at the redemption prices (expressed
      as percentages of principal amount) set forth below plus accrued and
      unpaid interest and Liquidated Damages, if any, on the Notes redeemed to
      the applicable redemption date, if redeemed during the twelve-month period
      beginning on April 15 of the years indicated below, subject to the rights
      of Holders on the relevant record date to receive interest on the relevant
      interest payment date:



        Year                                                    Percentage
        ----                                                    ----------
                                                             
        2009.............................................        104.750%
        2010.............................................        103.167%
        2011.............................................        101.583%
        2012 and thereafter..............................        100.000%


            Unless the Company defaults in the payment of the redemption price,
      interest shall cease to accrue on the Notes or portions thereof called for
      redemption on the applicable redemption date.

                  (b) Notwithstanding the provisions of subparagraph (a) of this
      Paragraph 5, at any time prior to April 15, 2007, the Company may on any
      one or more occasions redeem up to 35% of the aggregate principal amount
      of Notes (including Additional Notes, if any) issued under the Indenture
      at a redemption price of 109.50% of the principal amount, plus accrued and
      unpaid interest and Liquidated Damages, if any, to the redemption date,
      with the net cash proceeds of one or more Equity Offerings of the Company;
      provided that at least 65% of the aggregate principal amount of Notes
      (including Additional Notes, if any) issued under this Indenture
      (excluding Notes held by the Company and its Subsidiaries) remains
      outstanding immediately after the occurrence of such redemption and the
      redemption occurs within 45 days of the date of the closing of any such
      Equity Offering.

            (6) MANDATORY REDEMPTION. The Company is not required to make
      mandatory redemption or sinking fund payments with respect to the Notes.

            (7) REPURCHASE AT THE OPTION OF HOLDER. (a) If there is a Change of
      Control, the Company shall be required to make an offer (a "Change of
      Control Offer") to each Holder to repurchase all or any part (equal to
      $1,000 or an integral multiple thereof) of each Holder's Notes at a
      purchase price in cash equal to 101% of the aggregate principal amount
      thereof plus accrued and unpaid interest and Liquidated Damages, if any,
      thereon to the date of purchase, subject to the rights of Holders on the
      relevant record date to receive interest due on the relevant interest
      payment date (the "Change of Control Payment"). Within 10 days following
      any Change of Control, the Company shall mail a notice to each Holder
      setting forth the procedures governing the Change of Control Offer as
      required by the Indenture.


                                      A1-3

                  (b) If the Company or a Restricted Subsidiary of the Company
      consummates any Asset Sales, within ten days of each date on which the
      aggregate amount of Excess Proceeds exceeds $15.0 million, the Company
      shall commence an offer to all Holders of Notes and all holders of other
      Indebtedness that is pari passu with the Notes containing provisions
      similar to those set forth in the Indenture with respect to offers to
      purchase or redeem with the proceeds of sales of assets (an "Asset Sale
      Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
      principal amount of Notes (including any Additional Notes) and such other
      pari passu Indebtedness that may be purchased out of the Excess Proceeds
      at an offer price in cash in an amount equal to 100% of the principal
      amount thereof plus accrued and unpaid interest and Liquidated Damages, if
      any, thereon to the date of purchase, in accordance with the procedures
      set forth in the Indenture. To the extent that the aggregate amount of
      Notes (including any Additional Notes) and other pari passu Indebtedness
      tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
      the Company (or such Restricted Subsidiary) may use such deficiency for
      any purpose not otherwise prohibited by the Indenture. If the aggregate
      principal amount of Notes and other pari passu Indebtedness tendered into
      such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee
      shall select the Notes and such other pari passu Indebtedness to be
      purchased on a pro rata basis. Holders of Notes that are the subject of an
      offer to purchase shall receive an Asset Sale Offer from the Company prior
      to any related purchase date and may elect to have such Notes purchased by
      completing the form entitled "Option of Holder to Elect Purchase" attached
      to the Notes.

            (8) NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
      least 30 days but not more than 60 days before the redemption date to each
      Holder whose Notes are to be redeemed at its registered address, except
      that redemption notices may be mailed more than 60 days prior to a
      redemption date if the notice is issued in connection with a defeasance of
      the Notes or a satisfaction or discharge of the Indenture. Notes in
      denominations larger than $1,000 may be redeemed in part but only in whole
      multiples of $1,000, unless all of the Notes held by a Holder are to be
      redeemed.

            (9) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
      form without coupons in denominations of $1,000 and integral multiples of
      $1,000. The transfer of Notes may be registered and Notes may be exchanged
      as provided in the Indenture. The Registrar and the Trustee may require a
      Holder, among other things, to furnish appropriate endorsements and
      transfer documents and the Company may require a Holder to pay any taxes
      and fees required by law or permitted by the Indenture. The Company need
      not exchange or register the transfer of any Note or portion of a Note
      selected for redemption, except for the unredeemed portion of any Note
      being redeemed in part. Also, the Company need not exchange or register
      the transfer of any Notes for a period of 15 days before a selection of
      Notes to be redeemed or during the period between a record date and the
      corresponding Interest Payment Date.

            (10) PERSONS DEEMED OWNERS. The registered Holder of a Note may be
      treated as its owner for all purposes.

            (11) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
      exceptions, the Indenture or the Notes or the Note Guarantees may be
      amended or supplemented with the consent of the Holders of at least a
      majority in aggregate principal amount of the then outstanding Notes
      including Additional Notes, if any, voting as a single class, and any
      existing Default or Event or Default or compliance with any provision of
      the Indenture or the Notes or the Note Guarantees may be waived with the
      consent of the Holders of a majority in aggregate principal amount of the
      then outstanding Notes including Additional Notes, if any, voting as a
      single class. Without the consent of any Holder of a Note, the Indenture
      or the Notes or the Note Guarantees may be

                                      A1-4

      amended or supplemented to cure any ambiguity, defect or inconsistency, to
      provide for uncertificated Notes in addition to or in place of
      certificated Notes, to provide for the assumption of the Company's or a
      Guarantor's obligations to Holders of the Notes and Note Guarantees in
      case of a merger or consolidation or sale of all or substantially all of
      the Company's or such Guarantor's assets, as applicable, to make any
      change that would provide any additional rights or benefits to the Holders
      of the Notes or that does not adversely affect the legal rights under the
      Indenture of any such Holder, to comply with the requirements of the SEC
      in order to effect or maintain the qualification of the Indenture under
      the TIA, to conform the text of the Indenture or the Notes to any
      provision of the "Description of Notes" section of the Offering
      Memorandum, to the extent that such provision in that "Description of
      Notes" was intended to be a verbatim recitation of a provision of the
      Indenture, the Note Guarantees or the Notes, to provide for the issuance
      of Additional Notes in accordance with the limitations set forth in the
      Indenture, to allow any Guarantor to execute a supplemental indenture to
      the Indenture and/or a Note Guarantee with respect to the Notes or to
      provide for the Migration.

            (12) DEFAULTS AND REMEDIES. Events of Default include: (i) default
      for 30 days in the payment when due of interest on, or Liquidated Damages,
      if any, with respect to the Notes, whether or not prohibited by the
      subordination provisions of the Indenture; (ii) default in the payment
      when due (at maturity, upon redemption or otherwise) of the principal of,
      or premium, if any, on, the Notes, whether or not prohibited by the
      subordination provisions of the Indenture, (iii) failure by the Company or
      any of its Restricted Subsidiaries to comply with Section 4.10, 4.15 or
      5.01 of the Indenture; (iv) failure by the Company or any of its
      Restricted Subsidiaries for 60 days after notice to the Company by the
      Trustee or the Holders of at least 25% in aggregate principal amount of
      the Notes then outstanding voting as a single class to comply with any of
      the other agreements in the Indenture or the Notes; (v) default under any
      mortgage, indenture or instrument under which there may be issued or by
      which there may be secured or evidenced any Indebtedness for money
      borrowed by the Company or any of its Restricted Subsidiaries (or the
      payment of which is guaranteed by the Company or any of its Restricted
      Subsidiaries), whether such Indebtedness or Guarantee now exists, or is
      created after the date of this Indenture, if that default (a) is caused by
      a failure to pay principal of such Indebtedness at the stated maturity
      thereof prior to the expiration of the grace period provided in such
      Indebtedness on the date of such default (a "Payment Default"); or (b)
      results in the acceleration of such Indebtedness prior to its express
      maturity, and, in each case, the principal amount of any such
      Indebtedness, together with the principal amount of any other such
      Indebtedness under which there has been a Payment Default or the maturity
      of which has been so accelerated, aggregates $10.0 million or more; (vi)
      failure by the Company or any of its Restricted Subsidiaries to pay final
      judgments entered by a court or courts of competent jurisdiction
      aggregating in excess of $10.0 million, which judgments are not paid,
      discharged or stayed for a period of 60 days; (vii) certain events of
      bankruptcy or insolvency with respect to the Company or any of its
      Restricted Subsidiaries that is a Significant Subsidiary or any group of
      Restricted Subsidiaries that, taken together, would constitute a
      Significant Subsidiary and (viii) except as permitted by the Indenture,
      any Note Guarantee is held in any judicial proceeding to be unenforceable
      or invalid or ceases for any reason to be in full force and effect or any
      Guarantor or any Person acting on behalf of any Guarantor denies or
      disaffirms its obligations under such Guarantor's Note Guarantee. If any
      Event of Default occurs and is continuing, the Trustee or the Holders of
      at least 25% in aggregate principal amount of the then outstanding Notes
      may declare all the Notes to be due and payable immediately.
      Notwithstanding the foregoing, in the case of an Event of Default arising
      from certain events of bankruptcy or insolvency, all outstanding Notes
      shall become due and payable immediately without further action or notice.
      Holders may not enforce the Indenture or the Notes except as provided in
      the Indenture. Subject to certain limitations, Holders of a majority in
      aggregate principal amount of the then outstanding Notes may direct the
      Trustee in its exercise of

                                      A1-5

      any trust or power. The Trustee may withhold from Holders of the Notes
      notice of any continuing Default or Event of Default (except a Default or
      Event of Default relating to the payment of principal or interest or
      premium or Liquidated Damages, if any) if it determines that withholding
      notice is in their interest. The Holders of a majority in aggregate
      principal amount of the then outstanding Notes by notice to the Trustee
      may, on behalf of the Holders of all of the Notes, rescind an acceleration
      or waive any existing Default or Event of Default and its consequences
      under the Indenture except a continuing Default or Event of Default in the
      payment of interest or premium or Liquidated Damages, if any, on, or the
      principal of, the Notes. The Company is required to deliver to the Trustee
      annually a statement regarding compliance with the Indenture, and the
      Company is required, upon becoming aware of any Default or Event of
      Default, to deliver to the Trustee a statement specifying such Default or
      Event of Default.

            (13) SUBORDINATION. Payment of principal, interest and premium and
      Liquidated Damages, if any, on the Notes is subordinated to the prior
      payment of Senior Debt on the terms provided in the Indenture.

            (14) TRUSTEE DEALINGS WITH COMPANY. Subject to the provisions of the
      Indenture and the TIA, the Trustee, in its individual or any other
      capacity, may make loans to, accept deposits from, and perform services
      for the Company or its Affiliates, and may otherwise deal with the Company
      or its Affiliates, as if it were not the Trustee.

            (15) NO RECOURSE AGAINST OTHERS. No director, officer, employee,
      incorporator or stockholder of the Company or any of the Guarantors, as
      such, shall have any liability for any obligations of the Company or the
      Guarantors under the Notes, the Note Guarantees or the Indenture or for
      any claim based on, in respect of, or by reason of, such obligations or
      their creation. Each Holder by accepting a Note waives and releases all
      such liability. This waiver and release are part of the consideration for
      the issuance of the Notes.

            (16) AUTHENTICATION. This Note shall not be valid until
      authenticated by the manual signature of the Trustee or an authenticating
      agent.

            (17) ABBREVIATIONS. Customary abbreviations may be used in the name
      of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
      ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
      survivorship and not as tenants in common), CUST (= Custodian), and
      U/G/M/A (= Uniform Gifts to Minors Act).

            (18) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
      RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
      of Notes under the Indenture, Holders of Restricted Global Notes and
      Restricted Definitive Notes shall have all the rights set forth in the
      Registration Rights Agreement dated as of April 30, 2004, among the
      Company, the Guarantors and the Initial Purchasers or, in the case of
      Additional Notes, Holders of Restricted Global Notes and Restricted
      Definitive Notes shall have the rights set forth in one or more
      registration rights agreements, if any, among the Company, the Guarantors
      and the other parties thereto, relating to rights given by the Company and
      the Guarantors to the purchasers of any Additional Notes (collectively,
      the "Registration Rights Agreement").

            (19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
      Committee on Uniform Security Identification Procedures, the Company has
      caused CUSIP numbers to be printed on the Notes, and the Trustee may use
      CUSIP numbers in notices of redemption as a convenience to Holders. No
      representation is made as to the accuracy of such numbers either as


                                      A1-6

      printed on the Notes or as contained in any notice of redemption, and
      reliance may be placed only on the other identification numbers placed
      thereon.

            (20) GOVERNING LAW. THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES
      SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
      OF NEW YORK.

      The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
Canada L7L 6Z8
Attention: Joy Grahek


                                      A1-7

                                 ASSIGNMENT FORM

      To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:___________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)


________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date: _______________

                                     Your Signature:____________________________
                                             (Sign exactly as your name appears
                                              on the face of this Note)

Signature Guarantee*: _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).


                                      A1-8

                       OPTION OF HOLDER TO ELECT PURCHASE

      If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:

                  [ ] Section 4.10          [ ] Section 4.15

      If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                                $________________

Date: _______________

                                    Your Signature:_____________________________
                                             (Sign exactly as your name appears
                                              on the face of this Note)

                                    Tax Identification No.:_____________________

Signature Guarantee*: _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).


                                      A1-9

             SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

      The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:



                                                                           Principal Amount
                           Amount of decrease    Amount of increase in    of this Global Note       Signature of
                           in Principal Amount      Principal Amount        following such       authorized officer
                                   of                      of                  decrease             of Trustee or
    Date of Exchange        this Global Note        this Global Note         (or increase)            Custodian
    ----------------        ----------------        ----------------         -------------            ---------
                                                                                     






* This schedule should be included only if the Note is issued in global form.

                                     A1-10

                                                                      EXHIBIT A2


                  [Face of Regulation S Temporary Global Note]
- --------------------------------------------------------------------------------

                                                        CUSIP/CINS _____________

                    9-1/2% Senior Subordinated Notes due 2014

No. ___                                                            $____________

                              WASTE SERVICES, INC.

promises to pay to [________________] or registered assigns,

the principal sum of __________________________________________________ DOLLARS
on _____________, 2014.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Dated: ______________________

                                     WASTE SERVICES, INC.


                                     By:________________________________________
                                        Name:
                                        Title:


This is one of the Notes referred to
in the within-mentioned Indenture:

WELLS FARGO BANK, NATIONAL ASSOCIATION,
  as Trustee


By:________________________________
        Authorized Signatory


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

                                      A2-1

                  [Back of Regulation S Temporary Global Note]
                    9-1/2% Senior Subordinated Notes due 2014

THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(A)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(B) IN

                                      A2-2

ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES, AND THE HOLDER AGREES THAT IT SHALL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.

      Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

            (1) INTEREST. Waste Services, Inc., a Delaware corporation (the
      "Company"), promises to pay interest on the principal amount of this Note
      at ___% per annum from ________________, 20__ until maturity and shall pay
      the Liquidated Damages, if any, payable pursuant to Section 5 of the
      Registration Rights Agreement referred to below. The Company shall pay
      interest and Liquidated Damages, if any, semi-annually in arrears on April
      15 and October 15 of each year, or if any such day is not a Business Day,
      on the next succeeding Business Day (each, an "Interest Payment Date").
      Interest on the Notes shall accrue from the most recent date to which
      interest has been paid or, if no interest has been paid, from the date of
      issuance; provided that if there is no existing Default in the payment of
      interest, and if this Note is authenticated between a record date referred
      to on the face hereof and the next succeeding Interest Payment Date,
      interest shall accrue from such next succeeding Interest Payment Date;
      provided further that the first Interest Payment Date shall be
      _____________, 20__. The Company shall pay interest (including
      post-petition interest in any proceeding under any Bankruptcy Law) on
      overdue principal and premium, if any, from time to time on demand at a
      rate that is 1% per annum in excess of the rate then in effect to the
      extent lawful; it shall pay interest (including post-petition interest in
      any proceeding under any Bankruptcy Law) on overdue installments of
      interest and Liquidated Damages if any (without regard to any applicable
      grace periods) from time to time on demand at the same rate to the extent
      lawful. Interest shall be computed on the basis of a 360-day year of
      twelve 30-day months.

            (2) METHOD OF PAYMENT. The Company shall pay interest on the Notes
      and Liquidated Damages, if any, to the Persons who are registered Holders
      of Notes at the close of business on the April 1 or October 1 next
      preceding the Interest Payment Date, even if such Notes are canceled after
      such record date and on or before such Interest Payment Date, except as
      provided in Section 2.12 of the Indenture with respect to defaulted
      interest. The Notes shall be payable as to principal, premium and
      Liquidated Damages, if any, and interest at the office or agency of the
      Company maintained for such purpose within the City and State of New York,
      or, at the option of the Company, payment of interest and Liquidated
      Damages, if any, may be made by check mailed to the Holders at their
      addresses set forth in the register of Holders; provided that payment by
      wire transfer of immediately available funds shall be required with
      respect to principal of and interest, premium and Liquidated Damages, if
      any, on, all Global Notes and all other Notes the Holders of which shall
      have provided wire transfer instructions to the Company or the Paying
      Agent. Such payment shall be in such coin or currency of the United States
      of America as at the time of payment is legal tender for payment of public
      and private debts.

            (3) PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank,
      National Association, the Trustee under the Indenture, shall act as Paying
      Agent and Registrar. The Company may change any Paying Agent or Registrar
      without notice to any Holder. The Company or any of its Subsidiaries may
      act in any such capacity.

            (4) INDENTURE. The Company issued the Notes under an Indenture,
      dated as of April 30, 2004 (the "Indenture"), among the Company, the
      Guarantors party thereto and the Trustee. The terms of the Notes include
      those stated in the Indenture and those made part of the Indenture by


                                      A2-3

      reference to the TIA. The Notes are subject to all such terms, and Holders
      are referred to the Indenture and such Act for a statement of such terms.
      To the extent any provision of this Note conflicts with the express
      provisions of the Indenture, the provisions of the Indenture shall govern
      and be controlling. The Notes are unsecured obligations of the Company.
      The Indenture does not limit the aggregate principal amount of Notes that
      may be issued thereunder.

            (5) OPTIONAL REDEMPTION. (a) Except as set forth in subparagraph (b)
      of this Paragraph 5, the Company shall not have the option to redeem the
      Notes prior to April 15, 2009. On or after April 15, 2009, the Company
      shall have the option to redeem all or a part of the Notes upon not less
      than 30 nor more than 60 days' notice, at the redemption prices (expressed
      as percentages of principal amount) set forth below plus accrued and
      unpaid interest and Liquidated Damages, if any, on the Notes redeemed to
      the applicable redemption date, if redeemed during the twelve-month period
      beginning on April 15 of the years indicated below, subject to the rights
      of Holders on the relevant record date to receive interest on the relevant
      interest payment date:



      Year                                                            Percentage
      ----                                                            ----------
                                                                   
      2009........................................................     104.750%
      2010........................................................     103.167%
      2011........................................................     101.583%
      2012 and thereafter.........................................     100.000%


            Unless the Company defaults in the payment of the redemption price,
      interest shall cease to accrue on the Notes or portions thereof called for
      redemption on the applicable redemption date.

                  (b) Notwithstanding the provisions of subparagraph (a) of this
      Paragraph 5, at any time prior to April 15, 2007, the Company may on any
      one or more occasions redeem up to 35% of the aggregate principal amount
      of Notes (including Additional Notes, if any) issued under the Indenture
      at a redemption price of 109.50% of the principal amount, plus accrued and
      unpaid interest and Liquidated Damages, if any, to the redemption date,
      with the net cash proceeds of one or more Equity Offerings of the Company;
      provided that at least 65% of the aggregate principal amount of Notes
      (including Additional Notes, if any) issued under this Indenture
      (excluding Notes held by the Company and its Subsidiaries) remains
      outstanding immediately after the occurrence of such redemption and the
      redemption occurs within 45 days of the date of the closing of any such
      Equity Offering.

            (6) MANDATORY REDEMPTION. The Company is not required to make
      mandatory redemption or sinking fund payments with respect to the Notes.

            (7) REPURCHASE AT THE OPTION OF HOLDER. (a) If there is a Change of
      Control, the Company shall be required to make an offer (a "Change of
      Control Offer") to each Holder to repurchase all or any part (equal to
      $1,000 or an integral multiple thereof) of each Holder's Notes at a
      purchase price in cash equal to 101% of the aggregate principal amount
      thereof plus accrued and unpaid interest and Liquidated Damages, if any,
      thereon to the date of purchase, subject to the rights of Holders on the
      relevant record date to receive interest due on the relevant interest
      payment date (the "Change of Control Payment"). Within 10 days following
      any Change of Control, the Company shall mail a notice to each Holder
      setting forth the procedures governing the Change of Control Offer as
      required by the Indenture.

                  (b) If the Company or a Restricted Subsidiary of the Company
      consummates any Asset Sales, within ten days of each date on which the
      aggregate amount of Excess Proceeds

                                      A2-4

      exceeds $15.0 million, the Company shall commence an offer to all Holders
      of Notes and all holders of other Indebtedness that is pari passu with the
      Notes containing provisions similar to those set forth in the Indenture
      with respect to offers to purchase or redeem with the proceeds of sales of
      assets (an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture
      to purchase the maximum principal amount of Notes (including any
      Additional Notes) and such other pari passu Indebtedness that may be
      purchased out of the Excess Proceeds at an offer price in cash in an
      amount equal to 100% of the principal amount thereof plus accrued and
      unpaid interest and Liquidated Damages, if any, thereon to the date of
      purchase, in accordance with the procedures set forth in the Indenture. To
      the extent that the aggregate amount of Notes (including any Additional
      Notes) and other pari passu Indebtedness tendered pursuant to an Asset
      Sale Offer is less than the Excess Proceeds, the Company (or such
      Restricted Subsidiary) may use such deficiency for any purpose not
      otherwise prohibited by the Indenture. If the aggregate principal amount
      of Notes and other pari passu Indebtedness tendered into such Asset Sale
      Offer exceeds the amount of Excess Proceeds, the Trustee shall select the
      Notes and such other pari passu Indebtedness to be purchased on a pro rata
      basis. Holders of Notes that are the subject of an offer to purchase shall
      receive an Asset Sale Offer from the Company prior to any related purchase
      date and may elect to have such Notes purchased by completing the form
      entitled "Option of Holder to Elect Purchase" attached to the Notes.

            (8) NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
      least 30 days but not more than 60 days before the redemption date to each
      Holder whose Notes are to be redeemed at its registered address, except
      that redemption notices may be mailed more than 60 days prior to a
      redemption date if the notice is issued in connection with a defeasance of
      the Notes or a satisfaction or discharge of the Indenture. Notes in
      denominations larger than $1,000 may be redeemed in part but only in whole
      multiples of $1,000, unless all of the Notes held by a Holder are to be
      redeemed.

            (9) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
      form without coupons in denominations of $1,000 and integral multiples of
      $1,000. The transfer of Notes may be registered and Notes may be exchanged
      as provided in the Indenture. The Registrar and the Trustee may require a
      Holder, among other things, to furnish appropriate endorsements and
      transfer documents and the Company may require a Holder to pay any taxes
      and fees required by law or permitted by the Indenture. The Company need
      not exchange or register the transfer of any Note or portion of a Note
      selected for redemption, except for the unredeemed portion of any Note
      being redeemed in part. Also, the Company need not exchange or register
      the transfer of any Notes for a period of 15 days before a selection of
      Notes to be redeemed or during the period between a record date and the
      corresponding Interest Payment Date.

            (10) PERSONS DEEMED OWNERS. The registered Holder of a Note may be
      treated as its owner for all purposes.

            (11) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
      exceptions, the Indenture or the Notes or the Note Guarantees may be
      amended or supplemented with the consent of the Holders of at least a
      majority in aggregate principal amount of the then outstanding Notes
      including Additional Notes, if any, voting as a single class, and any
      existing Default or Event or Default or compliance with any provision of
      the Indenture or the Notes or the Note Guarantees may be waived with the
      consent of the Holders of a majority in aggregate principal amount of the
      then outstanding Notes including Additional Notes, if any, voting as a
      single class. Without the consent of any Holder of a Note, the Indenture
      or the Notes or the Note Guarantees may be amended or supplemented to cure
      any ambiguity, defect or inconsistency, to provide for uncertificated
      Notes in addition to or in place of certificated Notes, to provide for the
      assumption

                                      A2-5

      of the Company's or a Guarantor's obligations to Holders of the Notes and
      Note Guarantees in case of a merger or consolidation or sale of all or
      substantially all of the Company's or such Guarantor's assets, as
      applicable, to make any change that would provide any additional rights or
      benefits to the Holders of the Notes or that does not adversely affect the
      legal rights under the Indenture of any such Holder, to comply with the
      requirements of the SEC in order to effect or maintain the qualification
      of the Indenture under the TIA, to conform the text of the Indenture or
      the Notes to any provision of the "Description of Notes" section of the
      Offering Memorandum, to the extent that such provision in that
      "Description of Notes" was intended to be a verbatim recitation of a
      provision of the Indenture, the Note Guarantees or the Notes, to provide
      for the issuance of Additional Notes in accordance with the limitations
      set forth in the Indenture, to allow any Guarantor to execute a
      supplemental indenture to the Indenture and/or a Note Guarantee with
      respect to the Notes or to provide for the Migration.

            (12) DEFAULTS AND REMEDIES. Events of Default include: (i) default
      for 30 days in the payment when due of interest on, or Liquidated Damages,
      if any, with respect to the Notes, whether or not prohibited by the
      subordination provisions of the Indenture; (ii) default in the payment
      when due (at maturity, upon redemption or otherwise) of the principal of,
      or premium, if any, on, the Notes, whether or not prohibited by the
      subordination provisions of the Indenture, (iii) failure by the Company or
      any of its Restricted Subsidiaries to comply with Section 4.10, 4.15 or
      5.01 of the Indenture; (iv) failure by the Company or any of its
      Restricted Subsidiaries for 60 days after notice to the Company by the
      Trustee or the Holders of at least 25% in aggregate principal amount of
      the Notes then outstanding voting as a single class to comply with any of
      the other agreements in the Indenture or the Notes; (v) default under any
      mortgage, indenture or instrument under which there may be issued or by
      which there may be secured or evidenced any Indebtedness for money
      borrowed by the Company or any of its Restricted Subsidiaries (or the
      payment of which is guaranteed by the Company or any of its Restricted
      Subsidiaries), whether such Indebtedness or Guarantee now exists, or is
      created after the date of this Indenture, if that default (a) is caused by
      a failure to pay principal of such Indebtedness at the stated maturity
      thereof prior to the expiration of the grace period provided in such
      Indebtedness on the date of such default (a "Payment Default"); or (b)
      results in the acceleration of such Indebtedness prior to its express
      maturity, and, in each case, the principal amount of any such
      Indebtedness, together with the principal amount of any other such
      Indebtedness under which there has been a Payment Default or the maturity
      of which has been so accelerated, aggregates $10.0 million or more; (vi)
      failure by the Company or any of its Restricted Subsidiaries to pay final
      judgments entered by a court or courts of competent jurisdiction
      aggregating in excess of $10.0 million, which judgments are not paid,
      discharged or stayed for a period of 60 days; (vii) certain events of
      bankruptcy or insolvency with respect to the Company or any of its
      Restricted Subsidiaries that is a Significant Subsidiary or any group of
      Restricted Subsidiaries that, taken together, would constitute a
      Significant Subsidiary and (viii) except as permitted by the Indenture,
      any Note Guarantee is held in any judicial proceeding to be unenforceable
      or invalid or ceases for any reason to be in full force and effect or any
      Guarantor or any Person acting on behalf of any Guarantor denies or
      disaffirms its obligations under such Guarantor's Note Guarantee. If any
      Event of Default occurs and is continuing, the Trustee or the Holders of
      at least 25% in aggregate principal amount of the then outstanding Notes
      may declare all the Notes to be due and payable immediately.
      Notwithstanding the foregoing, in the case of an Event of Default arising
      from certain events of bankruptcy or insolvency, all outstanding Notes
      shall become due and payable immediately without further action or notice.
      Holders may not enforce the Indenture or the Notes except as provided in
      the Indenture. Subject to certain limitations, Holders of a majority in
      aggregate principal amount of the then outstanding Notes may direct the
      Trustee in its exercise of any trust or power. The Trustee may withhold
      from Holders of the Notes notice of any continuing Default or Event of
      Default (except a Default or Event of Default relating to the

                                      A2-6

      payment of principal or interest or premium or Liquidated Damages, if any)
      if it determines that withholding notice is in their interest. The Holders
      of a majority in aggregate principal amount of the then outstanding Notes
      by notice to the Trustee may, on behalf of the Holders of all of the
      Notes, rescind an acceleration or waive any existing Default or Event of
      Default and its consequences under the Indenture except a continuing
      Default or Event of Default in the payment of interest or premium or
      Liquidated Damages, if any, on, or the principal of, the Notes. The
      Company is required to deliver to the Trustee annually a statement
      regarding compliance with the Indenture, and the Company is required, upon
      becoming aware of any Default or Event of Default, to deliver to the
      Trustee a statement specifying such Default or Event of Default.

            (13) SUBORDINATION. Payment of principal, interest and premium and
      Liquidated Damages, if any, on the Notes is subordinated to the prior
      payment of Senior Debt on the terms provided in the Indenture.

            (14) TRUSTEE DEALINGS WITH COMPANY. Subject to the provisions of the
      Indenture and the TIA, the Trustee, in its individual or any other
      capacity, may make loans to, accept deposits from, and perform services
      for the Company or its Affiliates, and may otherwise deal with the Company
      or its Affiliates, as if it were not the Trustee.

            (15) NO RECOURSE AGAINST OTHERS. No director, officer, employee,
      incorporator or stockholder of the Company or any of the Guarantors, as
      such, shall have any liability for any obligations of the Company or the
      Guarantors under the Notes, the Note Guarantees or the Indenture or for
      any claim based on, in respect of, or by reason of, such obligations or
      their creation. Each Holder by accepting a Note waives and releases all
      such liability. This waiver and release are part of the consideration for
      the issuance of the Notes.

            (16) AUTHENTICATION. This Note shall not be valid until
      authenticated by the manual signature of the Trustee or an authenticating
      agent.

            (17) ABBREVIATIONS. Customary abbreviations may be used in the name
      of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
      ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
      survivorship and not as tenants in common), CUST (= Custodian), and
      U/G/M/A (= Uniform Gifts to Minors Act).

            (18) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
      RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
      of Notes under the Indenture, Holders of Restricted Global Notes and
      Restricted Definitive Notes shall have all the rights set forth in the
      Registration Rights Agreement dated as of April 30, 2004, among the
      Company, the Guarantors and the Initial Purchasers or, in the case of
      Additional Notes, Holders of Restricted Global Notes and Restricted
      Definitive Notes shall have the rights set forth in one or more
      registration rights agreements, if any, among the Company, the Guarantors
      and the other parties thereto, relating to rights given by the Company and
      the Guarantors to the purchasers of any Additional Notes (collectively,
      the "Registration Rights Agreement").

            (19) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
      Committee on Uniform Security Identification Procedures, the Company has
      caused CUSIP numbers to be printed on the Notes, and the Trustee may use
      CUSIP numbers in notices of redemption as a convenience to Holders. No
      representation is made as to the accuracy of such numbers either as
      printed on the Notes or as contained in any notice of redemption, and
      reliance may be placed only on the other identification numbers placed
      thereon.


                                      A2-7

            (20) GOVERNING LAW. THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES
      SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
      OF NEW YORK.

      The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
Canada L7L 6Z8
Attention: Joy Grahek


                                      A2-8



                                 ASSIGNMENT FORM

      To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                 (Insert assignee's legal name)

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:  _______________

                                        Your Signature:_________________________
                                           (Sign exactly as your name appears on
                                           the face of this Note)

Signature Guarantee*: ____________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).


                                      A2-9

                       OPTION OF HOLDER TO ELECT PURCHASE

      If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:

                     Section 4.10               Section 4.15

      If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                                 $______________

Date: _______________

                                        Your Signature:_________________________
                                           (Sign exactly as your name appears on
                                           the face of this Note)

                                        Tax Identification No.:_________________

Signature Guarantee*: _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).


                                     A2-10

  SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE

      The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or exchanges of a part of another
Restricted Global Note for an interest in this Regulation S Temporary Global
Note, have been made:




                                                                           Principal Amount
                           Amount of decrease    Amount of increase in    of this Global Note       Signature of
                           in Principal Amount      Principal Amount        following such       authorized officer
                                   of                      of                  decrease             of Trustee or
    Date of Exchange        this Global Note        this Global Note         (or increase)            Custodian
    ----------------        ----------------        ----------------         -------------            ---------
                                                                                     




                                     A2-11

                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
Canada, L7L 6Z8

Wells Fargo Bank, National Association
213 Court Street
Suite 703
Middletown, CT 06457


      Re: 9-1/2% Senior Subordinated Notes due 2014

      Reference is hereby made to the Indenture, dated as of April 30, 2004 (the
"Indenture"), among Waste Services, inc. as issuer (the "Company"), the
Guarantors party thereto and Wells Fargo Bank, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

      ___________________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

      1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE 144A GLOBAL NOTE OR A RESTRICTED DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly,
the Transferor hereby further certifies that the beneficial interest or
Definitive Note is being transferred to a Person that the Transferor reasonably
believes is purchasing the beneficial interest or Definitive Note for its own
account, or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A, and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note shall be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Restricted Definitive Note and
in the Indenture and the Securities Act.

      2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE REGULATION S TEMPORARY GLOBAL NOTE, THE REGULATION S PERMANENT GLOBAL NOTE
OR A RESTRICTED DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a Person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the


                                      B-1

requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note shall be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Permanent Global Note, the Regulation S Temporary Global Note and/or the
Restricted Definitive Note and in the Indenture and the Securities Act.

      3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A RESTRICTED DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

            (a) [ ] such Transfer is being effected pursuant to and in
      accordance with Rule 144 under the Securities Act;

                                       or

            (b) [ ] such Transfer is being effected to the Company or a
      subsidiary thereof;

                                       or

            (c) [ ] such Transfer is being effected pursuant to an effective
      registration statement under the Securities Act and in compliance with the
      prospectus delivery requirements of the Securities Act;

                                       or

            (d) [ ] such Transfer is being effected to an Institutional
      Accredited Investor and pursuant to an exemption from the registration
      requirements of the Securities Act other than Rule 144A, Rule 144, Rule
      903 or Rule 904, and the Transferor hereby further certifies that it has
      not engaged in any general solicitation within the meaning of Regulation D
      under the Securities Act and the Transfer complies with the transfer
      restrictions applicable to beneficial interests in a Restricted Global
      Note or Restricted Definitive Notes and the requirements of the exemption
      claimed, which certification is supported by (1) a certificate executed by
      the Transferee in the form of Exhibit D to the Indenture and (2) an
      Opinion of Counsel provided by the Transferor or the Transferee (a copy of
      which the Transferor has attached to this certification), to the effect
      that such Transfer is in compliance with the Securities Act. Upon
      consummation of the proposed transfer in accordance with the terms of the
      Indenture, the transferred beneficial interest or Definitive Note shall be
      subject to the restrictions on transfer enumerated in the Private
      Placement Legend printed on the IAI Global Note and/or the Restricted
      Definitive Notes and in the Indenture and the Securities Act.

      4. [ ] CHECK IF TRANSFEREE SHALL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.


                                       B-2

      (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to AND in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note shall no longer be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Global Notes, on
Restricted Definitive Notes and in the Indenture.

      (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant tO and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note shall no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

      (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuanT to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note shall not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

      This certificate and the statements contained herein are made for the
benefit of each of you.

                                        ________________________________________
                                           [Insert Name of Transferor]



                                        By:_____________________________________
                                           Name:
                                           Title:

Dated:_______________


                                      B-3

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.    The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

      (a)   [ ] a beneficial interest in the:

            (i)   [ ] 144A Global Note (CUSIP _________), or

            (ii)  [ ] Regulation S Global Note (CUSIP _________), or

            (iii) [ ] IAI Global Note (CUSIP _________); or

      (b)   [ ] a Restricted Definitive Note.

2.    After the Transfer the Transferee will hold:

                                   [CHECK ONE]

      (a)   [ ] a beneficial interest in the:

            (i)   [ ] 144A Global Note (CUSIP _________), or

            (ii)  [ ] Regulation S Global Note (CUSIP _________), or

            (iii) [ ] IAI Global Note (CUSIP _________); or

            (iv)  [ ] Unrestricted Global Note (CUSIP _________); or

      (b)   [ ] a Restricted Definitive Note; or

      (c)   [ ] an Unrestricted Definitive Note,

      in accordance with the terms of the Indenture.


                                      B-4

                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
Canada L7L 6Z8

Wells Fargo Bank, National Association
213 Court Street
Suite 703
Middletown, CT 06457


      Re: 9-1/2% Senior Subordinated Notes due 2014

      Reference is hereby made to the Indenture, dated as of April 30, 2004 (the
"Indenture"), among Waste Services, inc. as issuer (the "Company"), the
Guarantors party thereto and Wells Fargo Bank, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

      __________________________, (the "Owner") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:

      1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE

      (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the Securities Act of 1933, as
amended (the "Securities Act"), (iii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest in
an Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

      (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.


                                       C-1

      (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

      (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

      2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

      (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued shall continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.

      (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
[ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI Global Note with an
equal princIpal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued shall be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the relevant Restricted Global Note and in
the Indenture and the Securities Act.


                                       C-2

      This certificate and the statements contained herein are made for the
benefit of each of you.

                                           _____________________________________
                                           [Insert Name of Transferor]


                                        By:_____________________________________
                                           Name:
                                           Title:

Dated: ______________________


                                      C-3

                                                                       EXHIBIT D


                            FORM OF CERTIFICATE FROM
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
Canada L7L 6Z8

Wells Fargo Bank, National Association
213 Court Street
Suite 703
Middletown, CT 06457


      Re: 9-1/2% Senior Subordinated Notes due 2014

      Reference is hereby made to the Indenture, dated as of April 30, 2004 (the
"Indenture"), among Waste Services, inc. as issuer (the "Company"), the
Guarantors party thereto and Wells Fargo Bank, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

      In connection with our proposed purchase of $____________ aggregate
principal amount of:

      (a)   [ ] a beneficial interest in a Global Note, or

      (b)   [ ] a Definitive Note,

      we confirm that:

      1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the "Securities Act").

      2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we shall do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any Person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.


                                       D-1

      3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we shall be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us shall bear a
legend to the foregoing effect.

      4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

      5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.

      You are each entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

                                           _____________________________________
                                           [Insert Name of Accredited Investor]


                                        By:_____________________________________
                                           Name:
                                           Title:

Dated: _______________________


                                      D-2

                                                                       EXHIBIT E

                         [FORM OF NOTATION OF GUARANTEE]

      For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of April 30, 2004 (the "Indenture") among
Waste Services, Inc. (the "Company"), the Guarantors party thereto and Wells
Fargo Bank, National Association, as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium and Liquidated Damages, if any,
and interest on, the Notes, whether at maturity, by acceleration, redemption or
otherwise, the due and punctual payment of interest on overdue principal of and
interest on the Notes, if any, if lawful, and the due and punctual performance
of all other obligations of the Company to the Holders or the Trustee all in
accordance with, and subject to, the terms of the Indenture and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that the same shall be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to the Note Guarantee and the
Indenture are expressly set forth in Article 11 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Note Guarantee.
Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose.

      Capitalized terms used but not defined herein have the meanings given to
them in the Indenture.


                                        [NAME OF GUARANTOR(S)]


                                        By:_____________________________________
                                           Name:
                                           Title:


                                      E-1

                                                                       EXHIBIT F

                         [FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

      SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, 200__, among __________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Waste Services, Inc. (or its permitted successor),
a Delaware corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) party to the Indenture on the date
hereof and Wells Fargo Bank, National Association, as trustee under the
Indenture referred to below (the "Trustee").

                               W I T N E S S E T H

      WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of April 30, 2004, providing for the
issuance of 9-1/2% Senior Subordinated Notes due 2014 (the "Notes");

      WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and

      WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.

      NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

      1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

      2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to
provide an unconditional Guarantee on the terms and subject to the conditions
set forth in the Note Guarantee and in the Indenture including but not limited
to Article 11 thereof.

      4. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guarantor (including the Guaranteeing Subsidiary) under the Notes, any
Note Guarantees, the Indenture or this Supplemental Indenture, as applicable, or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of the Notes by accepting a Note waives and releases
all such liability. This waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the SEC that such a
waiver is against public policy.

      5. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

      6. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.


                                      F-1

                                                                       EXHIBIT F

      7. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.

      8. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.


                                      F-2

                                                                       EXHIBIT F

      IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.



                                        [Guaranteeing Subsidiary]

                                        By:  _______________________________
                                             Name:
                                             Title:

                                        Waste Services, Inc.

                                        By:  _______________________________
                                             Name:
                                             Title:

                                        [Other Guarantors Existing on Date of
                                        This Supplemental Indenture]


                                        By:  _______________________________
                                             Name:
                                             Title:



                                        Wells Fargo Bank, National Association
                                          as Trustee

                                        By:  _______________________________
                                             Authorized Signatory


                                      F-3

EX-4.4

                                                                     EXHIBIT 4.4

      THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
      BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR
      QUALIFIED FOR DISTRIBUTION PURSUANT TO A PROSPECTUS UNDER THE SECURITIES
      ACT (ONTARIO) OR THE SECURITIES ACT (QUEBEC). THIS WARRANT AND THE
      SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN OR WILL BE ACQUIRED
      FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT
      BE SOLD OR OTHERWISE TRANSFERRED TO RESIDENTS OF THE UNITED STATES WITHOUT
      AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE UNITED
      STATES SECURITIES ACT OF 1933 OR TO RESIDENTS OF CANADA WITHOUT COMPLIANCE
      WITH PROSPECTUS AND REGISTRATION REQUIREMENTS OF APPLICABLE PROVINCIAL
      SECURITIES LAWS, UNLESS THERE IS AVAILABLE TO THE TRANSFEROR AN EXEMPTION
      FROM SUCH REGISTRATION, AND/OR PROSPECTUS FILING AND REGISTRATION
      REQUIREMENTS. THE FOLLOWING APPLIES ONLY TO HOLDERS RESIDENT IN CANADA:
      UNLESS PERMITTED UNDER THE SECURITIES ACT (ONTARIO) OR THE SECURITIES ACT
      (QUEBEC), A HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
      RESIDENT IN CANADA SHALL NOT TRADE SUCH SECURITIES BEFORE THE EARLIER OF
      (I) THE DATE THAT IS TWELVE MONTHS AND A DAY AFTER THE DATE THAT THE
      COMPANY FIRST BECAME A REPORTING ISSUER IN ANY OF ALBERTA, BRITISH
      COLUMBIA, MANITOBA, NOVA SCOTIA, ONTARIO, QUEBEC AND SASKATCHEWAN, IF THE
      COMPANY IS A SEDAR FILER (AS DEFINED UNDER RULE 45-102 OF THE SECURITIES
      ACT (ONTARIO)); AND (II) THE DATE THAT IS TWELVE MONTHS AND A DAY AFTER
      THE LATER OF (A) APRIL 30, 2004 AND (B) THE DATE THAT THE COMPANY BECAME A
      REPORTING ISSUER IN THE LOCAL JURISDICTION OF THE PURCHASER OF THE
      SECURITIES THAT ARE THE SUBJECT OF THE TRADE. NOTWITHSTANDING THE
      FOREGOING, A HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
      RESIDENT IN QUEBEC SHALL NOT TRADE THE SECURITIES UNTIL THE CONDITIONS IN
      SUBPARAGRAPH (II) ABOVE HAVE BEEN MET. THE COMPANY MAY REQUEST AN OPINION
      OF COUNSEL AS TO THE AVAILABILITY OF ANY SUCH EXEMPTION."

                      WARRANT TO PURCHASE [ ] COMMON SHARES
                                       OF
                       CAPITAL ENVIRONMENTAL RESOURCE INC.

                            VOID AFTER APRIL 30, 2009

      This Warrant is issued to __________________________, or its registered
assigns (the "Holder") by Capital Environmental Resource Inc., an Ontario
corporation (the "Company"), on April 30, 2004 (the "Warrant Issue Date"). This
Warrant is issued pursuant to the terms of a Common Share Subscription
Agreement, dated of even date herewith (the "Subscription Agreement"), by and
among the Company and the Holder. All capitalized terms not otherwise defined
herein shall have the meaning ascribed thereto in the Subscription Agreement.



            1.    Number of Shares Subject to Warrant; Exercise Price. Subject
to the terms and conditions hereinafter set forth, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company, to purchase
from the Company, at a per share price equal to the Exercise Price, the Warrant
Stock.

      For purposes of this Warrant: (A) "Warrant Stock" shall mean the number of
Shares purchasable upon exercise of this Warrant, as reflected on the face of
this Warrant, subject to adjustment as described in Section 7 below; (B)
"Shares" shall mean fully paid and non-assessable Common Shares of the Company,
and following the US Migration (as defined in Section 7(c) below) shall mean the
common stock of the ultimate parent company of the Company; and (C) "Exercise
Price" means U.S. $4.00 per share, subject to change as described in Section 7
below.

            2.    Exercise Period. Except as otherwise provided for herein, this
Warrant shall be exercisable, in whole or in part, at any time and from time to
time beginning on the Warrant Issue Date and ending at 5:00 p.m. eastern time on
the fifth (5th) anniversary of the Warrant Issue Date (the "Expiration Date").
Notwithstanding the foregoing, if this Warrant is outstanding and exercisable
for any Shares as of the time of a Sale (as defined below), unless otherwise
agreed to in writing by the Holder, this Warrant shall be deemed automatically
exercised immediately prior to such Sale in accordance with the net exercise
provisions of this Warrant set forth in Section 4(b) below.

            3.    Notice of Sale. The Company shall provide written notice to
the Holder not less than ten (10) days prior to the consummation of a Sale. A
"Sale" shall mean a sale of all or substantially all of the assets or shares of
the Company (and/or its ultimate parent company following the US Migration) or a
merger, reorganization or consolidation of the Company (or instead its ultimate
parent company following the US Migration) in which the owners of the
outstanding voting power of the Company (or instead its ultimate parent company
following the US Migration), immediately prior to such transaction own, directly
or indirectly, less than 51% of the voting power of the resulting or surviving
entity immediately upon completion of such transaction.

            4.    Method of Exercise.

                  (a)   Cash Exercise. While this Warrant remains outstanding
and exercisable in accordance with Section 2 hereof, the purchase rights hereby
represented may be exercised in whole or in part, at the election of the Holder,
by the tender of the Notice of Exercise in substantially the form attached
hereto as Exhibit A and the surrender of this Warrant at the principal office of
the Company and by the payment to the Company in cash, by check, cancellation of
indebtedness or other form of payment acceptable to the Company, of an amount
equal to the then applicable Exercise Price multiplied by the number of Shares
then being purchased.

                  (b)   Net Exercise. In lieu of exercising this Warrant
pursuant to Section 4(a), the Holder may elect to receive, without the payment
by the Holder of any

                                        2



additional consideration, Shares equal to the value of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with an executed Notice of Exercise, in
substantially the form attached hereto, in which event the Company shall issue
to the holder hereof a number of Shares computed using the following formula:

                               Y (A - B)
                               ---------
                         X =      A

      Where:      X     =     The number of Shares to be issued to the Holder
                              pursuant to this net exercise;

                  Y     =     The number of Shares in respect of which the net
                              exercise election under this Section 4(b) is made;

                  A     =     The fair market value of one Share at the time the
                              net exercise election is made; and

                  B     =     The Exercise Price.

For purposes of this Section 4(b), the fair market value of a Share as of a
particular date shall be the closing sale price of the Shares on the trading
date immediately prior to the date of exercise as quoted on the Nasdaq National
Market or any United States automated quotation system or national securities
exchange on which the Shares are then quoted or traded, as applicable; provided,
that if the Shares are not then so quoted or traded, the fair market value of
the Shares shall be determined by the Board of Directors of the Company in its
reasonable discretion.

            5.    Certificates for Shares. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter (with
appropriate restrictive legends, as applicable). In the event of a partial
exercise of the Warrant, a new warrant or warrants (dated the date hereof) of
like tenor shall be issued, calling in the aggregate on the face or faces
thereof for the number of Shares equal (without giving effect to any adjustment
therein) to the number of Shares called for on the face of this Warrant minus
the number of such Shares purchased by the Holder upon such exercise as provided
in subsections 4(a) and 4(b) above.

            6.    Issuance of Shares. The Company hereby covenants that it will
take all necessary actions to duly and validly reserve the necessary number of
Shares for issuance hereunder. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issuance thereof.

            7.    Adjustment of Exercise Price and Number of Shares. The number
of and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:

                  (a)   Subdivisions, Combinations and Other Issuances. If the
Company (or instead its ultimate parent company following the US Migration)
shall at any time after the

                                       3



date hereof and prior to the exercise or expiration of this Warrant subdivide
the Shares by split-up or otherwise, or combine or issue additional Shares as a
dividend with respect to its Shares, the number of Shares issuable on the
exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
Exercise Price, provided that the aggregate exercise price payable hereunder for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 7(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.

                  (b)   Reclassification, Reorganization and Consolidation. In
the event of any corporate reclassification, capital reorganization,
consolidation, spin-off or change in the Shares of the Company (or of its
ultimate parent company following the US Migration), other than as a result of a
subdivision, combination or dividend provided for in Section 7(a) above and
other than a transaction described in Section 7(c) below, then, as a condition
of such event, lawful provision shall be made, and duly executed documents
evidencing the same from the Company or its successor shall be delivered, to the
Holder, so that the Holder shall have the right at any time prior to the
expiration of this Warrant to purchase, at a total price equal to that payable
upon the exercise of this Warrant, the kind and amount of shares of stock and/or
other securities and property receivable in connection with such event by a
holder holding the same number of shares for which this Warrant could have been
exercised immediately prior to such event. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the Exercise Price,
provided that the aggregate exercise price payable hereunder for the total
number of Shares purchasable under this Warrant (as adjusted) shall remain the
same.

                  (c)   Migration into the United States. If the Company
completes a transaction pursuant to which the Company becomes a direct or
indirect subsidiary of a corporation incorporated in the United States (the "US
Migration"), this Warrant shall then become exercisable for the type of shares
into which the Shares have been converted or changed at the same exercise price
as provided for hereunder.

                  (d)   Notice of Adjustment. When any adjustment is required to
be made to the Exercise Price or in the number or kind of Shares purchasable
upon exercise of the Warrant, the Company shall promptly notify the Holder of
such event and of the adjusted Exercise Price or number of Shares or other
securities or property thereafter purchasable upon exercise of this Warrant.

            8.    Assumption of Warrant. If at any time while this Warrant, or
any portion thereof, is outstanding and unexpired there shall be a merger,
reorganization or consolidation of the Company or any other similar transaction
that does not constitute a Sale or US Migration, then, as a part of such
transaction, lawful provision shall be made so that the Holder shall thereafter
be entitled to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or

                                       4



other securities or property of the successor corporation resulting from such
transaction which a holder holding the Shares deliverable upon exercise of this
Warrant would have been entitled to receive in such transaction if this Warrant
had been exercised immediately before such transaction.

            9.    No Fractional Shares or Scrip. No fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional Shares the Company shall make a cash
payment therefor on the basis of the fair market value of a Share determined in
accordance with Section 4.

            10.   No Shareholder Rights. Prior to exercise of this Warrant, the
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such Holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the notices required under this Warrant or the Subscription Agreement.

            11.   Compliance With Securities Act; Transferability of Warrant or
Shares.

                  (a)   Compliance With Securities Act. The Holder, by
acceptance hereof, agrees that this Warrant, and the Shares issuable upon
exercise of this Warrant, are being acquired for investment and that such Holder
will not offer, sell or otherwise dispose of this Warrant, or any Shares
issuable upon exercise of this Warrant, except under circumstances which will
not result in a violation of the United States Securities Act of 1933, as
amended (the "Securities Act"), the Securities Act (Ontario), the Securities Act
(Quebec) or any other applicable provincial or state securities laws. This
Warrant and all Shares issued upon exercise of this Warrant (unless registered
under the Securities Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:

            "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR
            QUALIFIED FOR DISTRIBUTION PURSUANT TO A PROSPECTUS UNDER THE
            SECURITIES ACT (ONTARIO) OR THE SECURITIES ACT (QUEBEC). THESE
            SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
            DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
            TO RESIDENTS OF THE UNITED STATES WITHOUT AN EFFECTIVE REGISTRATION
            STATEMENT FOR SUCH SECURITIES UNDER THE UNITED STATES SECURITIES ACT
            OF 1933 OR TO RESIDENTS OF CANADA WITHOUT COMPLIANCE WITH PROSPECTUS
            AND REGISTRATION REQUIREMENTS OF APPLICABLE PROVINCIAL SECURITIES
            LAWS, UNLESS THERE IS AVAILABLE TO THE TRANSFEROR AN EXEMPTION FROM
            SUCH REGISTRATION, AND/OR PROSPECTUS FILING AND REGISTRATION
            REQUIREMENTS. THE FOLLOWING APPLIES ONLY TO HOLDERS RESIDENT IN
            CANADA: UNLESS PERMITTED UNDER THE SECURITIES ACT (ONTARIO) OR THE
            SECURITIES ACT (QUEBEC), A HOLDER OF THE SECURITIES REPRESENTED BY
            THIS CERTIFICATE RESIDENT IN CANADA SHALL

                                       5



            NOT TRADE SUCH SECURITIES BEFORE THE EARLIER OF (I) THE DATE THAT IS
            TWELVE MONTHS AND A DAY AFTER THE DATE THAT THE COMPANY FIRST BECAME
            A REPORTING ISSUER IN ANY OF ALBERTA, BRITISH COLUMBIA, MANITOBA,
            NOVA SCOTIA, ONTARIO, QUEBEC AND SASKATCHEWAN, IF THE COMPANY IS A
            SEDAR FILER (AS DEFINED UNDER RULE 45-102 OF THE SECURITIES ACT
            (ONTARIO)); AND (II) THE DATE THAT IS TWELVE MONTHS AND A DAY AFTER
            THE LATER OF (A) APRIL 30, 2004 AND (B) THE DATE THAT THE COMPANY
            BECAME A REPORTING ISSUER IN THE LOCAL JURISDICTION OF THE PURCHASER
            OF THE SECURITIES THAT ARE THE SUBJECT OF THE TRADE. NOTWITHSTANDING
            THE FOREGOING, A HOLDER OF THE SECURITIES REPRESENTED BY THIS
            CERTIFICATE RESIDENT IN QUEBEC SHALL NOT TRADE THE SECURITIES UNTIL
            THE CONDITIONS IN SUBPARAGRAPH (II) ABOVE HAVE BEEN MET. THE COMPANY
            MAY REQUEST AN OPINION OF COUNSEL AS TO THE AVAILABILITY OF ANY SUCH
            EXEMPTION."

                  (b)   Transferability. Subject to compliance with applicable
United States federal and state securities laws and Canadian federal and
provincial securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed for transfer
by delivery of an Assignment Form in substantially the form attached hereto as
Exhibit B, to the Company at the address set forth in Section 15 hereof, and the
payment to the Company of all transfer taxes and other governmental charges
imposed on such transfer. In the event of a partial transfer, the Company shall
issue to the holders one or more appropriate new warrants.

            12.   Restricted Securities. The Holder understands that this
Warrant, and the Shares issuable upon exercise of this Warrant, will not be
registered at the time of their issuance under the Securities Act for the reason
that the sale provided for in this Agreement is exempt pursuant to Section 4(2)
of the Securities Act based on the representations of the Holder set forth
herein. The Holder acknowledges that this Warrant and the Shares issuable upon
exercise of the Warrant are/will be issued under an exemption from the
prospectus filing and registration requirements of the Securities Act (Ontario)
and the Securities Act (Quebec) and that the resale or other disposition of all
or any part of such securities will be restricted by the Securities Act
(Ontario) and the Securities Act (Quebec). The Holder represents that it is
experienced in evaluating companies such as the Company, has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to suffer the total loss
of the investment. The Holder further represents that it has had the opportunity
to ask questions of and receive answers from the Company concerning the terms
and conditions of this Warrant, the business of the Company, and to obtain
additional information to such Holder's satisfaction. The Holder further
represents that it is an "accredited investor" within the meaning of Regulation
D under the Securities Act and within the meaning of Rule 45-501 under the
Securities Act (Ontario), each as presently in effect. The Holder further
represents that this Warrant is being acquired for the account of the Holder for
investment only and not with a view to, or with any intention of, a distribution
or resale thereof, in whole or in part, or the grant of any participation
therein.

                                       6



            13.   Successors and Assigns. The terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon, the Company and the
Holder hereof and their respective successors and assigns, except as limited
herein.

            14.   Amendments and Waivers. Any term of this Warrant may be
amended, and the observance of any term of this Warrant may be waived (either
generally or in a particular instance and either retroactively or
prospectively), upon the written consent of the Company and the Holder.

            15.   Notices. All notices required under this Warrant shall be
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile, (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the address of the Company set forth below (or at such other place as the
Company shall notify the Holder hereof in writing) and notices to the Holder
shall be sent to the address of the Holder set forth on the signature page
hereto (or at such other place as the Holder shall notify the Company hereof in
writing):

            To the Company:           Capital Environmental Resource Inc.
                                      1122 International Blvd., Suite 601
                                      Burlington, ON L7L 6Z8
                                      Facsimile: (905) 319-9048
                                      Attention: Ivan R. Cairns

            16.   Captions. The section and subsection headings of this Warrant
are inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.

            17.   Governing Law. This Warrant shall be governed by the laws of
the state of Delaware, without regard to the choice or conflict of laws
principles thereof.

                            [Signature page follows]

                                       7



            IN WITNESS WHEREOF, the undersigned have caused this Warrant to be
duly executed as of the date first set forth above.

                                            COMPANY

                                            CAPITAL ENVIRONMENTAL RESOURCE INC.

                                            By: ________________________________
                                            Name: Ivan R. Cairns
                                            Title: Executive Vice President,
                                                   General Counsel and Secretary

                                            HOLDER

SIGNED, SEALED AND DELIVERED

In the presence of :

_________________________                   By: ________________________________
Witness                                     Name:
                                            Title:

Address:
_________________________
_________________________
_________________________

                                       8



                                    EXHIBIT A

                               NOTICE OF EXERCISE

To: Capital Environmental Resource Inc.

                  The undersigned hereby elects to [check applicable
                  subsection]:

____________      (a)   Purchase ____________ Shares (as defined in the attached
                        Warrant) pursuant to the terms of the attached Warrant
                        and payment of the Exercise Price per Share required
                        under such Warrant accompanies this notice;

                  OR

____________      (b)   Exercise the attached Warrant for all of the Shares in
                        whole but not in part purchasable under the Warrant
                        pursuant to the net exercise provisions of Section 4 of
                        such Warrant.

            The undersigned hereby represents and warrants that the undersigned
is acquiring such shares for its own account for investment purposes only, and
not for resale or with a view to distribution of such shares or any part
thereof.

Date:_______________________                   WARRANTHOLDER:

                                               By: _____________________________
                                                   Name:
                                                   Address:

Name in which Shares should be registered: ______________________




                                    EXHIBIT B

                                 ASSIGNMENT FORM

TO: Capital Environmental Resource Inc.

The undersigned hereby assigns and transfers unto _____________________________
of _______________________________________________________________________
(Please typewrite or print in block letters) the right to purchase ____________
Shares (as defined in the attached Warrant) subject to the Warrant, dated as of
_____________________________, by and between Capital Environmental Resource
Inc. and the undersigned (the "Warrant").

This assignment complies with the provisions of Section 11 of the Warrant and is
accompanied by funds sufficient to pay all applicable transfer taxes.

Date:_______________________                By: ________________________________

                                            ____________________________________
                                            (Print Name of Signatory)

                                            ____________________________________
                                            (Title of Signatory)

                                       10

EX-10.1

                                                                    EXHIBIT 10.1

                       COMMON SHARE SUBSCRIPTION AGREEMENT

            THIS COMMON SHARE SUBSCRIPTION AGREEMENT (this "Agreement") is made
between Capital Environmental Resource Inc., a corporation amalgamated under the
laws of the Province of Ontario (the "Company"), and the person executing this
Agreement as an investor (the "Investor").

                              W I T N E S S E T H:

            WHEREAS, in part to finance working capital and planned acquisitions
by the Company, the Company wishes to issue and sell to certain persons
(collectively the "Investors") (i) certain of the Company's authorized but
unissued common shares (such shares, the "Common Shares") and (ii) warrants to
purchase shares of the Company's authorized but unissued Common Shares in the
form attached as Annex A hereto (each a "Warrant" and, collectively, the
"Warrants");

            WHEREAS, the Company intends to consummate a reorganization
transaction pursuant to which the Company will become an indirect subsidiary of
Waste Services, Inc., which is currently the Company's wholly-owned U.S.
subsidiary (the "U.S. Migration"); and

            WHEREAS, at the Closing, the Investor and the Company desire to
enter into a Registration Rights Agreement, substantially in the form attached
hereto as Annex D (the Registration Rights Agreement").

            NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Investor and the Company
hereby agree as follows (capitalized terms used in this Agreement shall, unless
otherwise defined herein, have the meanings ascribed to them in the Glossary
attached as Annex B hereto).

                                   SECTION 1

                         TERMS OF PURCHASE AND ISSUANCE

      1.1   Authorization of Sale of Shares and Warrants. The Company has
authorized the issuance and sale to the Investors of (i) up to an aggregate of
thirteen million four hundred thousand (13,400,000) Common Shares (such shares,
the "Shares") and (ii) up to an aggregate of one million three hundred forty
thousand (1,340,000) Warrants.

      1.2   Subscription. Subject to the terms and conditions hereof, the
Investor hereby subscribes to purchase the number of Shares specified on the
signature page hereof and one Warrant to purchase 10% of the number of Shares
specified on the signature page hereof; provided, however, that fractional
shares shall not be issued upon exercise of the Warrant and, in the event that
10% of the number of Shares purchased would otherwise result in a fractional
number of Shares underlying a Warrant, such number shall be rounded down to the
nearest whole Share. Investor hereby tenders a check payable to "Capital
Environmental Resource Inc. - Escrow Account", has wired funds to the Escrow
Agent pursuant to the instructions set forth in



the Private Placement Memorandum (as defined below), or has authorized Sanders
Morris Harris to forward funds from the Investor's account with Sanders Morris
Harris, in each case in an amount equal to US $4.00 for each Share (with each
Share being accompanied by a warrant to purchase 1/10th of a Share, rounded down
to the nearest whole share) for which the Investor has so subscribed (the
"Aggregate Purchase Price").

      1.3   Acceptance of Subscription. It is understood and agreed that the
Company shall have the right to accept or reject this Agreement, in whole or in
part, and to allocate a lesser number of Shares than subscribed for and that the
same shall be deemed to be accepted only when it is signed by an authorized
officer of the Company. Except as hereinafter provided, the undersigned
understands and acknowledges that the Company will rely on this Agreement and
that the undersigned has no right to cancel, assign, terminate, or otherwise
change or amend this Agreement and that the Company has the right in its sole
discretion to refuse to accept this Agreement. If not accepted, this Agreement
shall be null and void and all funds deposited by the undersigned shall be
returned, without interest.

      1.4   Sale and Purchase. At the Closing (as defined in Section 1.5 hereof)
and subject to the terms and conditions herein set forth, the Company shall
issue and sell to the Investor, and the Investor shall purchase from the
Company, (i) the number of Shares set forth on the signature page hereto and
(ii) one Warrant to purchase ten percent (10%) of the number of Shares specified
on the signature page hereto (rounded down to the nearest whole Share).

      1.5   Closing. The closing of the sale and purchase of the Shares and the
Warrant to the Investor (the "Closing") shall take place at the Washington, D.C.
offices of McDermott, Will & Emery at 10:00 A.M. local time, as promptly as
practicable (and in any event no later than the third business day) after the
satisfaction or waiver of all the conditions set forth in Sections 4 and 5
hereof (other than those conditions that will be satisfied at or concurrent with
the Closing), or at such other time, date or place as the Investor and the
Company may agree (the date upon which the Closing occurs, the "Closing Date").
At the Closing, the Company will deliver to the Investor a share certificate
issued in the Investor's name representing the number of Shares and the Warrant
to be purchased by the Investor against payment of the Aggregate Purchase Price
therefor in immediately available funds on behalf of the Investor by the Escrow
Agent or otherwise. If Closing does not take place on the agreed Closing Date,
any subscription funds held by the Company or the Escrow Agent shall be promptly
returned to the Investor. In no event shall the Closing occur after May 30,
2004.

                                   SECTION 2

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

            The Company represents and warrants to the Investor, as of the date
of the Company's execution of this Agreement as set forth on the signature page,
and as of the Closing Date, as follows:

      2.1   Organization and Qualification. The Company is a corporation duly
amalgamated, validly existing and in good standing under the laws of the
Province of Ontario



and has the requisite corporate power and authority to carry on its business as
it is now being conducted.

      2.2   Capitalization.

            (a)   The authorized capital of the Company consists of (i) an
unlimited number of Common Shares, no par value, and (ii) an unlimited number of
Preferred Shares, no par value (the "Preferred Shares"). Of such authorized
capital stock, (i) 73,708,778 Common Shares were issued and outstanding as of
April 16, 2004, all of which are validly issued and are fully paid,
nonassessable and free of preemptive rights, (ii) 55,000 Preferred Shares of the
Company's subsidiary, Waste Services, Inc. were issued and outstanding as of
April 16, 2004, (iii) as of April 16, 2004, 6,646,117 Common Shares were
available for issuance pursuant to the exercise of outstanding warrants to
purchase Common Shares and 10,862,541 Common Shares were available for issuance
pursuant to the exercise of outstanding options to purchase Common Shares, and
(iv) as of April 16, 2004, 7,150,000 shares of common stock of the Company's
subsidiary, Waste Services, Inc. were available for issuance pursuant to the
exercise of outstanding warrants to purchase common stock of Waste Services,
Inc.

            (b)   Except with respect to the Shares and the Warrants, as set
forth in subsection 2.2(a) above, or as stated in Section 2.2(b) of the
Disclosure Schedule attached hereto, there are no outstanding options, warrants,
subscriptions, calls, convertible securities or other rights, agreements,
arrangements or commitments (contingent or otherwise) (including any right of
conversion or exchange under any outstanding security, instrument or other
agreement) obligating the Company or any of its direct or indirect subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, any shares
or obligating them to grant, extend or enter into any such agreement or
commitment. Other than as set out in Section 2.2(b) of the Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any of its
direct or indirect subsidiaries to repurchase, redeem or otherwise acquire any
shares or make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person other than a subsidiary of the Company.

            (c)   Upon consummation of the Closing, including receipt by the
Company of the Aggregate Purchase Price payable pursuant to Section 1.5 hereof,
the Shares and the Warrant purchased by the Investor will be validly issued,
fully paid and nonassessable, and the Common Shares issuable upon exercise of
such Warrant (the "Underlying Warrant Shares") will have been duly authorized,
and upon issuance of the Underlying Warrant Shares upon exercise of the Warrant,
in accordance with the terms thereof, such Underlying Warrant Shares will be
validly issued, fully paid and nonassessable.

      2.3   Power and Authority; Non-contravention; Government Approvals.

            (a)   Power and Authority. The Company has all requisite corporate
power and authority to enter into this Agreement and the Ancillary Documents and
to consummate the transactions contemplated hereby and thereby. This Agreement,
the Ancillary Documents and the transactions contemplated hereby and thereby
have been duly approved by the Board of Directors of the Company. No other
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the



Ancillary Documents or the consummation by the Company of the transactions
contemplated hereby and thereby. This Agreement has been, and when executed and
delivered in accordance with the terms hereof the Ancillary Documents will have
been, duly executed and delivered by the Company. This Agreement constitutes,
and when executed and delivered in accordance with the terms hereof the
Ancillary Documents will constitute, valid and binding obligations of the
Company, enforceable against it in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to enforcement of creditors' rights generally
and by general equitable principles. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of their respective
articles, bylaws or equivalent organizational documents in any material respect.

            (b)   Non-contravention. The execution, delivery and performance of
this Agreement and the Ancillary Documents by the Company: (i) will not violate
or conflict with any provisions of the articles or bylaws of the Company or any
of its subsidiaries, (ii) will not conflict with or constitute a violation of
any applicable law, order, injunction, regulation or ruling of any governmental
authority applicable to the Company or any of its subsidiaries or by which the
Company or any of its subsidiaries or any of their respective properties or
assets are bound, and (iii) will not, either alone or with the giving of notice
or the passage of time, or both, modify, violate, conflict with or accelerate
the performance required by any agreement, note, license, franchise, permit or
other instrument and will not result in the creation or imposition of (or the
obligation to create or impose) any Lien on any of the Company's or any of its
subsidiaries' assets.

            (c)   Approvals. Except for (i) compliance with any applicable
requirements of the HSR Act and the Canadian Competition Act, (ii) compliance
with any applicable requirements of the Securities Act, Exchange Act, Ontario
Securities Act and the rules and regulations of Nasdaq, (iii) such filings as
may be required under any applicable state, blue sky or Canadian provincial
securities laws and (iv) compliance with the applicable requirements of the
Investment Canada Act (the filings and approvals referred to in clauses (i)
through (iv) being herein referred to collectively as the "Company Required
Statutory Approvals"), and except for any required approvals under the Credit
Facility (as defined in Section 2.9 hereof), no declaration, filing or
registration with, or notice to, or authorization, consent, approval, order or
permit of, any governmental or regulatory body or authority or any other Person
is necessary for the execution and delivery of this Agreement and the Ancillary
Documents by the Company or the consummation by the Company of the transactions
contemplated hereby and thereby except to the extent that the failure to obtain
any such authorization, consent, approval or order or to make any such
registration, declaration, filing or notice, would not have a Company Material
Adverse Effect or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Ancillary Documents or the ability of
the Company to perform its obligations hereunder or thereunder.

      2.4   SEC Reports; Financial Statements.

            (a)   Since January 1, 2001, the Company has filed with the SEC all
forms, statements, reports and documents (including all exhibits, post-effective
amendments and supplements thereto) required to be filed by it under each of the
Securities Act and the Exchange Act (collectively, the "Company SEC Reports"),
all of which complied when filed in all material



respects with all applicable requirements of the appropriate act and the rules
and regulations thereunder. The Company has provided to the Investor a
Confidential Private Placement Memorandum dated April 5, 2004 in connection with
the offering of Shares and Warrant to be purchased pursuant to this Agreement
(the "Private Placement Memorandum"). As of its date, the Private Placement
Memorandum did not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

            (b)   Each of the consolidated financial statements included in the
Private Placement Memorandum, together with the related notes and schedules
(collectively, the "Company Financial Statements"), has been prepared in
accordance with GAAP applied on a consistent basis, and fairly presents the
consolidated financial position of the Company and its subsidiaries as of the
respective dates thereof and the results of their operations and cash flow for
the periods then ended, subject, in the case of unaudited interim financial
statements, to normal year-end adjustments (none of which the Company reasonably
believes are or will be material in amount) and the omission of footnotes.

      2.5   Absence of Undisclosed Liabilities. Except as disclosed in the
Private Placement Memorandum or as set out in Section 2.5 of the Disclosure
Schedule, neither the Company nor any of its subsidiaries had, at December 31,
2003 or has incurred since that date, any Liabilities, except for (a)
Liabilities reflected in the financial statements contained in Company SEC
Reports filed prior to the date hereof, (b) current Liabilities which were
incurred after December 31, 2003 in the ordinary course of business and
consistent with past practice, (c) Liabilities which are of a nature not
required to be reflected in the Company Financial Statements in accordance with
GAAP consistently applied and which were incurred in the ordinary course of
business and (d) other Liabilities in an aggregate amount not exceeding US
$500,000.

      2.6   Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports or in the Private Placement Memorandum, since December 31,
2003, the business of the Company and its subsidiaries has been conducted in the
ordinary course consistent with past practice and there has not been any event,
occurrence or development that has had, or could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.

      2.7   Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of the Company, threatened against, relating to or
affecting the Company, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator that seek a remedy (at
law or in equity) as a result of or otherwise in connection with this Agreement
and the transactions contemplated hereby. Neither the Company nor any of its
subsidiaries nor any of their respective properties or assets is subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or arbitrator which
prohibits or restricts the consummation of the transactions contemplated hereby.

      2.8   Environmental Matters. The Company and its subsidiaries conduct and
have conducted their businesses in material compliance with all applicable
Environmental Laws,



including, without limitation, having all material permits, licenses and other
approvals and authorizations necessary for the operation of their businesses. To
the knowledge of the Company, none of the properties currently or formerly owned
or operated by the Company or any of its subsidiaries contain any Hazardous
Substance, no Hazardous Substance has been disposed of at or released from any
such properties as a result of any activity of the Company or any of its
subsidiaries other than in material compliance with applicable Environmental
Laws, and no such condition exists on or with respect to any of such properties
as a result of any activity by any other Person. Except as reflected, accrued or
reserved against in the Company Financial Statements or in the financial
statements contained in Company SEC Reports filed prior to the date hereof,
neither the Company, nor its subsidiaries, nor any of their respective
properties or assets are subject to any material Liabilities relating to any
suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law. To the
knowledge of the Company, there are no and have not been any investigations or
proceedings in which it is alleged that the Company, its subsidiaries, or any of
their predecessors, are potentially responsible for a clean-up or remediation of
lands contaminated with a Hazardous Substance or for any other remedial or
corrective action under an Environmental Law. There are no proceedings pending
or, to the Company's knowledge, threatened to revoke, change or limit any
material permits, licenses, approvals or other authorizations required under any
Environmental Law for the operation of the Company and its subsidiaries.

      2.9   Title to and Condition of Assets. Each of the Company and its
subsidiaries has good and marketable title to, or, in the case of leased
properties and assets, has good and valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for use
in, or which are necessary to conduct, the business of the Company and its
subsidiaries as currently conducted, free and clear of all Liens, except for (a)
Liens arising under the Company's Credit Agreement dated as of December 31, 2003
(as amended, the "Credit Facility"), (b) security interests granted to the
Company's bonding company, and (c) other Liens arising in the ordinary course of
business none of which are with respect to obligations that are material in
amount.

      2.10  Insurance. The Company and each of its subsidiaries has in effect
insurance coverage, including directors and officers' liability insurance, with
reputable insurers which, in respect of amounts, premiums, types and risks
insured, constitutes reasonably adequate coverage against all risks customarily
insured against by companies comparable in size and operations to the Company
and its subsidiaries. Neither the Company nor any of its subsidiaries has
received any notice of cancellation of any insurance policy or binder currently
in effect.

      2.11  No Violation of Law; Licenses; Permits and Registration. Neither the
Company nor any of its subsidiaries is in material violation of, or has been
given notice or been charged with, or, to the Company's knowledge, is being
investigated with respect to, any material violation of, any law, statute,
order, rule, regulation, ordinance or judgment of any governmental or regulatory
body or authority or arbitration panel. Each of the Company and its subsidiaries
has all material permits, licenses, approvals, authorizations of and
registrations under all Federal, state, local, provincial and foreign laws
applicable to it, and from all applicable governmental authorities as are
required by the Company and its subsidiaries to carry on their respective
businesses as currently conducted.



      2.12  Non-competition Agreements. Except as disclosed in the Company SEC
Reports, the Private Placement Memorandum or as set out in Section 2.13 of the
Disclosure Schedule, neither the Company nor any subsidiary of the Company is a
party to any agreement which purports to restrict or prohibit in any material
respect any of them or any corporation affiliated with any of them from,
directly or indirectly, engaging in any business involving the collection,
interim storage, transfer, recovery, processing, recycling, marketing or
disposal of rubbish, garbage, paper, textile wastes, liquid and other wastes or
any other material business currently engaged in by the Company or any of its
subsidiaries. None of the Company's officers or key employees is a party to any
agreement which, by virtue of such person's relationship with the Company,
restricts in any material respect the Company or any subsidiary of the Company
from, directly or indirectly, engaging in any of the businesses described above.

      2.13  Brokers and Finders. Except for placement agent commissions payable
to Sanders Morris Harris Inc. as described in the Private Placement Memorandum,
the Company is not a party to or bound by any contract, arrangement or
understanding with, or subject to any claim by, any person or firm which may
result in an obligation of the Company to pay any finder's fees, brokerage or
agent commissions or other like payments in connection with the transactions
contemplated hereby.

      2.14  Material Contracts. Neither the Company nor any of its subsidiaries
is in material breach or violation of or in default in the performance or
observance of any terms or provisions of, and no event has occurred which, with
notice, lapse of time or both, could result in a default under any contract,
agreement, lease or deed that is material to the business or operation of the
Company and its subsidiaries taken as a whole (a "Material Contract"). To the
knowledge of the Company, no other party to any Material Contract is in material
breach thereof or default thereunder.

      2.15  Securities Law Compliance. Assuming the representations and
warranties of the Investor set forth in Section 3 hereof and the representations
of any placement agent in the applicable placement agent agreement are true and
correct in all material respects, the issuance and sale of the Shares and a
Warrant pursuant to this Agreement will be exempt from the prospectus filing and
registration requirements of applicable U.S. and Canadian Federal, state, and
provincial securities laws.

      2.16  Rights Agreement. The Company, including its Board of Directors, has
irrevocably taken all actions necessary to (i) render the Rights Agreement
inapplicable to the transactions contemplated by this Agreement and (ii) ensure
that (x) none of the Investors or the Investors as a group are an Acquiring
Person (as defined in the Rights Agreement) pursuant to the Rights Agreement as
a result of the execution of this Agreement and the consummation of the
transactions contemplated hereby and (y) a Distribution Date, a Triggering Event
or a Share Acquisition Date (as such terms are defined in the Rights Agreement)
does not occur by reason of the approval, execution or delivery of this
Agreement, the announcement thereof or the consummation of the transactions
contemplated hereby.



                                   SECTION 3

                            INVESTOR REPRESENTATIONS

      3.1   Representations. The Investor hereby represents and warrants to the
Company with respect to the Investor's purchase of Shares and one Warrant
hereunder that:

                  (a)   The Investor is resident in the jurisdiction set forth
below the Investor's name on the signature page hereto.

                  (b)   If the Investor is an individual, he or she has obtained
the age of majority and is legally competent to execute this Agreement and the
Ancillary Documents and to take all actions required pursuant thereto.

                  (c)   If the Investor is a corporation, partnership,
unincorporated association or other entity, the Investor has the legal capacity
and authority to execute this Agreement and the Ancillary Documents and to take
all actions required pursuant thereto.

                  (d)   The execution of this Agreement and each of the
Ancillary Documents to which the Investor is a party has been duly and validly
authorized by all necessary action on the part of the Investor, has been duly
and validly executed and delivered by the Investor, and constitutes a valid,
binding agreement of the Investor, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to enforcement of creditors' rights generally
and by general equitable principles.

                  (e)   Neither the execution and delivery of this Agreement or
the Ancillary Documents to which the Investor is a party, or any other document
or instrument to be executed by the Investor in connection with the transactions
contemplated thereby nor the consummation of the transactions contemplated
thereby, nor the performance by the Investor of its covenants and agreements
thereunder, (i) violates any law, statute, ordinance, regulation, order,
judgment or decree of any court or other governmental authority applicable to
the Investor, or (ii) violates or will violate, or conflicts with or will
conflict with, or results in or will result in any breach of any of the terms
of, or constitutes or will constitute a default under, any contract or agreement
to which the Investor is a party or by which the Investor or any of its assets
is subject to or bound.

                  (f)   No broker, finder, agent or similar intermediary has
acted on behalf of the Investor in connection with this Agreement or the
transactions contemplated hereby and, except as set forth in Section 2.13, there
are no brokerage commissions, finder's fees or similar fees or commissions
payable in connection therewith.

                  (g)   The Investor acknowledges that it has been advised that
it and/or the Company may be required to provide to applicable securities
regulatory authorities with a list setting forth the identities of the
beneficial purchasers of the Shares and Warrants and the Investor will provide
to the Company and applicable securities regulatory authorities all such



information concerning the Investor as may be required to comply with applicable
securities laws. The Investor further acknowledges that if it is acting on
behalf of beneficial purchasers, the Investor has due and proper authority to
act on behalf of each such beneficial purchaser in connection with the
transactions contemplated hereby.

                  (h)   The Investor acknowledges that the Company has not made
any written representations, warranties or covenants in respect of the Company,
its business, results of operations, financial condition or prospects, or the
offering of Shares and a Warrant to be purchased pursuant to this Agreement,
except as expressly set forth in this Agreement. Without limiting the generality
of the foregoing, except as may be provided herein, no person has made any
written or oral representation to the Investor that any person will re-sell or
re-purchase the Shares, the Warrants or the Underlying Warrant Shares, or refund
any of the purchase price of the Shares, the Warrants or the Underlying Warrant
Shares or that the Shares, the Warrants or the Underlying Warrant Shares will be
listed on any exchange or quoted on any quotation system or that application has
been or will be made to list any such security on any exchange or quotation
system and no person has given any undertaking to the Investor relating to the
future value or price of the Shares, the Warrants or the Underlying Warrant
Shares.

                  (i)   Except for the Private Placement Memorandum, the
Investor has not received, nor has the Investor requested, nor does the Investor
have any need to receive, any prospectus, sales or advertising literature,
offering memorandum or any other document describing the business and affairs of
the Company in order to assist it in making an investment decision in respect of
the purchase of the Shares and one Warrant (including the Underlying Warrant
Shares) pursuant to this Agreement.

                  (j)   The obligations of the Investor under this Agreement,
the Registration Rights Agreement and any other documents delivered in
connection herewith and therewith (collectively, the "Transaction Documents")
are several and not joint with the obligations of any other purchaser of Shares
and Warrants, and the Investor shall not be responsible in any way for the
performance of the obligations of any other purchaser of Shares and Warrants
under any Transaction Document. The decision of the Investor to purchase Shares
and a Warrant pursuant to the Transaction Documents has been made by the
Investor independently of any other purchaser of Shares and Warrants. Nothing
contained herein or in any Transaction Document, and no action taken by any
purchaser of Shares and a Warrant pursuant hereto, shall be deemed to constitute
such purchasers as a partnership, an association, a joint venture, or any other
kind of entity, or create a presumption that the purchasers of Shares and
Warrants are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. The
Investor acknowledges that no other purchaser of Shares and a Warrant has acted
as agent for the Investor in connection with making its investment hereunder and
that no other purchaser of Shares and a Warrant will be acting as agent of the
Investor in connection with monitoring its investment in the Shares and Warrant
or enforcing its rights under the Transaction Documents. The Investor shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other purchaser of
Shares and a Warrant to be joined as an additional party in any proceeding for
such purpose.



      3.2   Representations by US Investor. The Investor, if resident in the
United States, hereby represents to the Company with respect to the Investor's
purchase of Shares and one Warrant hereunder that:

                  (a)   The Investor is acquiring the Shares and the Warrant
(including the Underlying Warrant Shares) for its own account, for investment,
and not with a view to any "resale" or "distribution" thereof within the meaning
of the Securities Act.

                  (b)   The Investor understands that because the Shares, the
Warrants and the Underlying Warrant Shares have not been registered under the
Securities Act, it cannot dispose of any or all of such securities unless such
securities are subsequently registered under the Securities Act or exemptions
from such registration are available. The Investor understands that each
certificate or other instrument representing the Shares, the Warrants and the
Underlying Warrant Shares will bear the following legend or one substantially
similar thereto:

            The securities represented by this certificate have not been
            registered under the United States Securities Act of 1933 or
            qualified for distribution pursuant to a prospectus under the
            Securities Act (Ontario). These securities have been acquired for
            investment and not with a view to distribution or resale, and may
            not be sold or otherwise transferred to residents of the United
            States without an effective registration statement for such
            securities under the United States Securities Act of 1933 or to
            residents of Canada without compliance with prospectus and
            registration requirements of applicable provincial securities laws,
            unless there is available to the transferor an exemption from such
            registration, and/or prospectus filing and registration
            requirements. The Company may request an opinion of counsel as to
            the availability of any such exemption.

                  (c)   The Investor is sufficiently knowledgeable and
experienced in the making of investments so as to be able to evaluate the risks
and merits of its investment in the Company, and is able to bear the economic
risk of loss of its investment in the Company.

                  (d)   The Investor will execute and deliver within the
applicable time periods all documentation as may be required to be executed by
the Investor by applicable securities laws to permit the purchase of the Shares
and one Warrant by the Investor on the terms herein set forth.

                  (e)   The Investor believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Shares and one Warrant (including the Underlying Warrant Shares).
The Investor has had an opportunity to ask questions and receive answers from
the Company regarding the terms and conditions of the offering of the Shares and
the Warrants (including the Underlying Warrant Shares) and the business,
properties and financial condition of the Company. The foregoing, however, does
not limit or modify the representations and warranties of the Company in Section
2 or the right of the Investor to rely thereon.



                  (f)   The Investor is an "accredited investor" within the
meaning of SEC Rule 501 of Regulation D of the Securities Act, as presently in
effect and within the meaning of Section 1.1 of Ontario Securities Commission
Rule 45-501 (a copy of which is attached hereto as Annex C) and is purchasing
the Shares and one Warrant (including the Underlying Warrant Shares) hereunder
as principal, not for the benefit of any other person and not with a view to the
sale or distribution of all or any part of the Shares, the Warrant, or the
Underlying Warrant Shares.

                  (g)   The Investor has been advised that the Shares, the
Warrant and the Underlying Warrant Shares have not been registered under the
Securities Act or under the "blue sky" laws of any jurisdiction and that the
Company, in issuing such securities is relying upon, among other things, the
representations and warranties of the Investor contained in this Section 3.

                  (h)   The Investor acknowledges that the Company will be
issuing the Shares and the Warrant (including the Underlying Warrant Shares)
under an exemption from the prospectus filing and registration requirements of
the Ontario Securities Act, that the resale or other disposition of all or any
part of such securities will be restricted by the Ontario Securities Act, that
it has been advised to consult its legal advisers in connection with resale
restrictions that will pertain to the Shares, the Warrant and the Underlying
Warrant Shares, and that it is solely responsible for compliance with applicable
resale restrictions.

      3.3   Representations by Ontario Investor. The Investor, if resident in
Ontario, hereby represents and warrants to the Company with respect to the
Investor's purchase of Shares and one Warrant hereunder that:

                  (a)   The Investor acknowledges that the Company will be
issuing the Shares and the Warrant (including the Underlying Warrant Shares)
under an exemption from the prospectus filing and registration requirements of
the Ontario Securities Act, that the resale or other disposition of all or any
part of such securities will be restricted by the Ontario Securities Act, that
it has been advised to consult its legal advisers in connection with resale
restrictions that will pertain to the Shares, the Warrant and the Underlying
Warrant Shares and that it is solely responsible for compliance with applicable
resale restrictions.

                  (b)   The Investor acknowledges that the Shares, the Warrant
and the Underlying Warrant Shares may only be resold in compliance with
applicable securities laws.

                  (c)   The Investor agrees to comply with any relevant
securities legislation, order or policy applicable to the Investor concerning
the purchase of and holding of the Shares, the Warrant and the Underlying
Warrant Shares by the Investor and concerning any resale of all or any part of
such securities by the Investor. The Investor understands that each certificate
or other instrument representing the Shares, the Warrant and the Underlying
Warrant Shares will bear the following legend or one substantially similar
thereto:

            The securities represented by this certificate have not been
            registered under the United States Securities Act of 1933 or
            qualified for distribution pursuant to a prospectus under the



            Securities Act (Ontario). These securities have been acquired for
            investment and not with a view to distribution or resale, and may
            not be sold or otherwise transferred to residents of the United
            States without an effective registration statement for such
            securities under the United States Securities Act of 1933 or to
            residents of Canada without compliance with prospectus and
            registration requirements of applicable provincial securities laws,
            unless there is available to the transferor an exemption from such
            registration, and/or prospectus filing and registration
            requirements. The Company may request an opinion of counsel as to
            the availability of any such exemption.

            Unless permitted under securities legislation, the holder of the
            securities shall not trade the securities before the earlier of (i)
            the date that is 12 months and a day after the date the Company
            first became a reporting issuer in any of Alberta, British Columbia,
            Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, if the
            Company is a SEDAR filer (as defined under Rule 45-102 of the
            Securities Act (Ontario); and (ii) the date that is 12 months and a
            day after the later of (A) the distribution date, and (B) the date
            the Company became a reporting issuer in the local jurisdiction of
            the purchaser of the securities that are the subject of the trade.

                  (d)   The Investor is an "accredited investor" within the
meaning of Section 1.1 of Ontario Securities Commission Rule 45-501 (a copy of
which is attached hereto as Annex C), is purchasing the Shares and one Warrant
(including the Underlying Warrant Shares) hereunder as principal, not for the
benefit of any other person and not with a view to the sale or distribution of
all or any part of the Shares, the Warrant or the Underlying Warrant Shares.

                  (e)   The Investor will execute and deliver within the
applicable time periods all documentation as may be required to be executed by
the Investor by applicable securities laws to permit the purchase of the Shares
and one Warrant by the Investor on the terms herein set forth.

                  (f)   The Investor is capable of assessing the proposed
investment as a result of the Investor's financial or investment experience or
as a result of advice received from a registered person other than the Company
or an affiliate thereof, and is able to bear the economic risk of loss of its
investment.

                  (g)   The Investor is not a "U.S. Person" (as that term is
defined in Rule 902(k) of Regulation S promulgated under the Securities Act,
which definition includes, but is not limited to, an individual resident in the
United States, an estate or trust of which any executor or administrator or
trustee, respectively, is a U.S. Person and any partnership or corporation
organized or incorporated under the laws of the United States) and is not
acquiring the Shares or the Warrant (including the Underlying Warrant Shares)
for the account or benefit of a U.S. Person or a Person in the United States or
for resale in the United States and the Shares and



Warrants have not been offered to the Investor in the United States and the
Investor was not in the United States when the order was placed or this
Agreement was executed and delivered.

                  (h)   The Investor will not offer or sell the Shares, the
Warrant or the Underlying Warrant Shares in the United States or to a U.S.
Person unless such securities are registered under the Securities Act or an
exemption from the registration requirements under the Securities Act and the
securities laws of all applicable states of the United States is available

      3.4   Representations by Quebec Investor. The Investor, if resident in
Quebec, hereby represents and warrants to the Company with respect to the
Investor's purchase of Shares and one Warrant hereunder that:

                  (a)   The purchase of the Shares and one Warrant (including
the Underlying Warrant Shares) was not made pursuant to any advertisement in
printed media of general or regular public circulation, or on radio, television
or any form of electronic display (including, without limitation, the Internet).

                  (b)   The Investor acknowledges that the Company will be
issuing the Shares and the Warrant (including the Underlying Warrant Shares)
hereunder under an exemption from the prospectus filing and registration
requirements of the Ontario Securities Act and the Securities Act (Quebec) and
that the resale or other disposition of all or any part of such securities will
be restricted by the Ontario Securities Act and the Securities Act (Quebec),
that it has been advised to consult its legal advisers in connection with resale
restrictions that will pertain to the Shares, the Warrant and the Underlying
Warrant Shares, and that it is solely responsible for compliance with applicable
resale restrictions.

                  (c)   The Investor acknowledges that the Shares, the Warrant
and the Underlying Warrant Shares may only be resold in compliance with
applicable securities laws.

                  (d)   The Investor is purchasing the Shares, the Warrant and
the Underlying Warrant Shares as principal for its own account for investment,
not for the benefit of any other person, and the Shares and the Warrant have an
aggregate purchase price to the Investor of not less than CDN $150,000.

                  (e)   The Investor agrees to comply with any relevant
securities legislation, order or policy applicable to the Investor concerning
the purchase of and holding of the Shares, the Warrant and the Underlying
Warrant Shares by the Investor and concerning any resale of all or any part of
such securities by the Investor. The Investor further acknowledges that it has
been advised to consult its own legal advisers with respect to applicable resale
restrictions and that it will be fully responsible for the compliance with such
restrictions. The Investor understands that each certificate or other instrument
representing the Shares, the Warrant and the Underlying Warrant Shares will bear
the following legend or one substantially similar thereto:

            The securities represented by this certificate have not been
            registered under the United States Securities Act of 1933 or
            qualified for distribution pursuant to a prospectus under the
            Securities Act (Ontario). These securities have been acquired for



            investment and not with a view to distribution or resale, and may
            not be sold or otherwise transferred to residents of the United
            States without an effective registration statement for such
            securities under the United States Securities Act of 1933 or to
            residents of Canada without compliance with prospectus and
            registration requirements of applicable provincial securities laws,
            unless there is available to the transferor an exemption from such
            registration, and/or prospectus filing and registration
            requirements. The Company may request an opinion of counsel as to
            the availability of any such exemption.

            Unless permitted under securities legislation, the holder of the
            securities shall not trade the securities before the earlier of (i)
            the date that is 12 months and a day after the date the Company
            first became a reporting issuer in any of Alberta, British Columbia,
            Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, if the
            Company is a SEDAR filer (as defined under Rule 45-102 of the
            Securities Act (Ontario); and (ii) the date that is 12 months and a
            day after the later of (A) the distribution date, and (B) the date
            the Company became a reporting issuer in the local jurisdiction of
            the purchaser of the securities that are the subject of the trade.

                  (f)   The Investor is an "accredited investor" within the
meaning of Section 1.1 of Ontario Securities Commission Rule 45-501 (a copy of
which is attached hereto as Annex C), is purchasing the Shares and one Warrant
(including the Underlying Warrant Shares) hereunder as principal, not for the
benefit of any other person and not with a view to the sale or distribution of
all or any part of the Shares, the Warrant or the Underlying Warrant Shares.

                  (g)   The Investor, if it is a corporation, has not been
established solely to permit the purchase of the Shares and one Warrant
(including the Underlying Warrant Shares) without a prospectus in reliance on an
exemption from the prospectus requirements of applicable securities legislation.

                  (h)   The Investor will execute and deliver within the
applicable time periods all documentation as may be required to be executed by
the Investor by applicable securities laws to permit the purchase of the Shares
and one Warrant (including the Underlying Warrant Shares) by the Investor on the
terms herein set forth.

                  (i)   The Investor is capable of assessing the proposed
investment as a result of the Investor's financial or investment experience or
as a result of advice received from a registered person other than the Company
or an affiliate thereof, and is able to bear the economic risk of loss of its
investment.

                  (j)   The Investor is not a "U.S. Person" (as that term is
defined in Rule 902(k) of Regulation S promulgated under the Securities Act,
which definition includes, but is not limited to, an individual resident in the
United States, an estate or trust of which any executor or administrator or
trustee, respectively, is a U.S. Person and any partnership or corporation



organized or incorporated under the laws of the United States) and is not
acquiring the Shares or the Warrant (including the Underlying Warrant Shares)
for the account or benefit of a U.S. Person or a Person in the United States or
for resale in the United States and the Shares and Warrant have not been offered
to the Investor in the United States and the Investor was not in the United
States when the order was placed or this Agreement was executed and delivered.

                  (k)   The Investor will not offer or sell the Shares, the
Warrant or the Underlying Warrant Shares in the United States or to a U.S.
Person unless such securities are registered under the Securities Act and the
laws of all applicable states of the United States or an exemption from the
registration requirements under the Securities Act and the securities laws of
all applicable states of the United States is available.

                                   SECTION 4

                            MUTUAL CLOSING CONDITIONS

      4.1   Mutual Closing Conditions to Closing. The Investor's obligation to
purchase and pay for its Shares and Warrant at the Closing, and the Company's
obligation to issue the Shares and the Warrant to the Investor and perform its
other obligations hereunder at the Closing, shall be subject to the fulfillment
to such party's satisfaction (or waiver in writing by the Company and the
Investor on or before the Closing Date) of the following conditions:

                  (a)   Waiting Periods. All applicable waiting periods, if any,
under the HSR Act, the Canadian Competition Act and the Investment Canada Act
shall have expired or been terminated.

                  (b)   No Order. No preliminary or permanent injunction or
other order or decree by any court or administrative or regulatory body which
prevents the consummation of the transactions at the Closing contemplated hereby
shall have been issued and remain in effect (the Company and the Investor
agreeing to use their reasonable best efforts to have any such injunction, order
or decree lifted).

                  (c)   Consents. All governmental waivers, consents, orders and
approvals required, if any, under the Canadian Competition Act and the
Investment Canada Act for the consummation of the transactions at the Closing
contemplated hereby shall have been obtained and be in effect. All other
governmental waivers, consents, orders and approvals legally required, if any,
for the consummation of the transactions at the Closing contemplated hereby
shall have been obtained and be in effect, except where the failure to obtain
the same would not be reasonably likely, individually or in the aggregate, to
have a Company Material Adverse Effect following the Closing.

                  (d)   No Conflicting Laws. No statute, rule or regulation
shall have been enacted by any state, provincial or Federal government or
governmental agency which would prevent the consummation of the transactions at
the Closing contemplated hereby.

                  (e)   Minimum Condition. The Company shall have received and
accepted subscription agreements substantially equivalent to this Agreement from
Investors for an aggregate of ten million six hundred and twenty five thousand
(10,625,000) Shares, which



subscription agreements shall remain in full force and effect, enforceable by
the Company in accordance with their respective terms (such condition, the
"Minimum Condition"), and the concurrent transactions described in the Private
Placement Memorandum shall be consummated simultaneously with the Closing
hereunder.

                                   SECTION 5

                           SEPARATE CLOSING CONDITIONS

      5.1   Investor's Closing Conditions. The Investor's obligation to purchase
and pay for its Shares and Warrant at the Closing shall be subject to the
fulfillment to the Investor's satisfaction on or before the Closing Date (or
waiver in writing by the Investor) of the following conditions:

                  (a)   Satisfaction of Conditions. The representations and
warranties of the Company contained in this Agreement shall be, if specifically
qualified by materiality or Company Material Adverse Effect, true in all
respects, and, if not so qualified, shall be true in all material respects, in
each case as of the date of execution of this Agreement by the Company and as of
the Closing Date, and the covenants and agreements contained in this Agreement
to be complied with by the Company on or before the Closing shall have been
complied with in all material respects. The Company shall have delivered to the
Investor a certificate dated as of the Closing Date to the foregoing effect.

                  (b)   Delivery of Warrant and Share Certificates. The Company
shall have executed and delivered to the Investor (or shall have caused to be
executed and delivered to the Investor by the appropriate persons) (i) a stock
certificate issued to the Investor evidencing the Shares issuable to the
Investor at the Closing and (ii) one Warrant to purchase 10% of the number of
Shares purchased by the Investor, rounded down to the nearest whole Share.

                  (c)   Registration Rights Agreement. The Company shall have
duly authorized, executed and delivered to the Investor the Registration Rights
Agreement.

      5.2   Company's Closing Conditions. The Company's obligations to issue the
Shares and one Warrant to the Investor at the Closing and perform its other
obligations hereunder with respect to the Investor at the Closing shall be
subject to the fulfillment to the Company's satisfaction at or before the
Closing Date (or waiver in writing by the Company) of the following conditions:

                  (a)   Satisfaction of Conditions. The representations and
warranties of the Investor contained in this Agreement shall be, if specifically
qualified by materiality, true in all respects, and, if not so qualified, shall
be true in all material respects, in each case as of the date of the Investor's
execution of this Agreement and as of the Closing Date, and the covenants and
agreements contained in this Agreement to be complied with by the Investor on or
before the Closing shall have been complied with in all material respects. If
requested, the Investor shall have delivered to the Company a certificate dated
as of the Closing Date to the foregoing effect.

                  (b)   Purchase of Shares and Warrant. The Investor shall have
purchased the Shares and Warrant to be purchased by the Investor at the Closing
pursuant to the



terms of this Agreement, and the Company shall have received the Aggregate
Purchase Price from the Investor, through the Escrow Agent or otherwise, in
accordance with the terms of this Agreement.

                                   SECTION 6

                                    COVENANTS

      6.1   Expenses. Each party hereto shall bear and pay its own fees and
expenses incurred in connection with the negotiation, execution, delivery and
performance of this Agreement, the Ancillary Documents and the transactions
contemplated hereby and thereby.

      6.2   Conduct of Business by the Company Pending Final Closing. The
Company covenants and agrees that, prior to the Closing Date or earlier
termination of this Agreement as provided herein, except as contemplated by this
Agreement or as disclosed in the Private Placement Memorandum the Company shall,
and shall cause its subsidiaries to, act and carry on their respective
businesses in the ordinary course of business consistent with past practice and
use its and their respective reasonable best efforts to preserve intact their
current material business organizations, keep available the services of their
current officers and employees (except for terminations of employees in the
ordinary course of business) and preserve their material relationships with
others having business dealings with them.

      6.3   All Reasonable Efforts; Agreement to Cooperate.

                  (a)   Subject to the terms and conditions herein provided,
each party hereto shall use its reasonable best efforts to take, or cause to be
taken, all action and to do, or cause to be done, and to assist and cooperate
with the other party in doing, all things necessary, proper or advisable
consistent with applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement; provided, however, that nothing
in this Section 6.3 shall require the Investor or the Company to agree to any
modification of this Agreement or any of the Ancillary Documents or the Investor
to make an investment in the Company that is greater than the amount set forth
opposite the Investor's name on the signature page hereto.

                  (b)   Without limiting the generality of the foregoing, and
notwithstanding anything in this Agreement to the contrary, the Company shall
use its reasonable best efforts to take or cause to be taken all reasonable
action and to do, or cause to be done, and to assist and cooperate with the
other party hereto in doing, all things necessary, proper or advisable to obtain
all governmental waivers, consents, authorizations, orders and approvals, all
consents, amendments to or waivers from other parties under the terms of all
Material Contracts and all other material permits, concessions, franchises or
licenses applicable to the Company or its subsidiaries required as a result of
the transactions contemplated by this Agreement.



                                   SECTION 7

                                     ACCESS

      7.1   Access; Notification of Certain Matters.

                  (a)   Prior to the Closing Date or the earlier termination of
this Agreement as provided herein, upon reasonable notice, the Company shall
afford the Investor and its representatives reasonable access during normal
business hours to the offices, properties, books, records and personnel of the
Company and its subsidiaries and such additional information concerning the
business and properties of the Company and its subsidiaries as the Investor and
its representatives may reasonably request. The Company shall instruct its and
its subsidiaries' employees, counsel and financial advisors to cooperate with
the Investor in its investigation of the business of the Company and its
subsidiaries during such period.

                  (b)   Prior to the Closing Date or the earlier termination of
this Agreement as provided herein, the Company shall promptly (and in any event
within five (5) business days after obtaining knowledge thereof) notify the
Investor of any action or event which could reasonably be expected to have a
Company Material Adverse Effect.

      7.2   Confidential Information. The Company and the Investor for
themselves, their respective directors, officers, employees, Affiliates, agents
and representatives covenant with each other that they each will use all
information provided by or relating to the other party acquired by them pursuant
to the provisions of this Agreement or in the course of negotiations with, or
examinations of, the other party (the "Confidential Information") only in
connection with the transactions contemplated hereby and not in any way
detrimental to the other party and shall cause the Confidential Information
obtained by them pursuant to this Agreement and such negotiations and
examinations to be treated as confidential, except as may otherwise be required
by law or the rules or regulations of Nasdaq or as may be necessary or
appropriate in connection with the enforcement of this Agreement or any
instrument or document referred to herein or contemplated hereby, and provided
that to the extent that any such party or any Affiliate thereof may become
legally compelled to disclose any Confidential Information, such party shall
give notice to and consult with the party providing such information prior to
disclosing such information. Notwithstanding the foregoing, no recipient of
Confidential Information (each, a "Recipient") shall be required to maintain the
confidentiality of Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the Recipient or
any party to whom the Recipient has disclosed such information; (ii) is obtained
by the Recipient, on a non-confidential basis, from a third party entitled to
disclose such information or (iii) is already known by the Recipient at the time
such information is received by the Recipient. In the event of termination of
this Agreement, each Recipient will cause to be delivered to the party providing
such information all documents, work papers and other material containing
Confidential Information obtained by it from such party, whether so obtained
before or after the execution of this Agreement.



                                   SECTION 8

                                  TERMINATION

      8.1   Termination. This Agreement may be terminated pursuant to written
notice of such termination to the other party as follows:

                  (a)   by mutual written consent of the Company and the
Investor;

                  (b)   by either the Company or the Investor if the Closing
shall not have occurred on or before May 30, 2004; provided, however, that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose breach has caused the failure of the Closing to
occur on or before such date;

                  (c)   by either the Company or the Investor if there shall be
any restraining order, injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
Closing or any of the other transactions contemplated hereby which is final and
nonappealable;

                  (d)   by the Investor upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have become
untrue, such that the conditions set forth in Section 5.1(a) would not be
satisfied ("Terminating Company Breach"); provided, however, that if such
Terminating Company Breach is curable by the Company through the exercise of its
reasonable best efforts and for as long as the Company continues to exercise
such efforts, but not beyond the date specified in paragraph (b) above, the
Investor may not terminate this Agreement under this Section 8.1(d); and

                  (e)   by the Company upon a breach of any representation,
warranty, covenant or agreement on the part of the Investor set forth in this
Agreement, or if any representation or warranty of the Investor shall have
become untrue, such that the conditions set forth in Section 5.2(a) would not be
satisfied.

      8.2   Effect of Termination. In the event of termination of this Agreement
pursuant to Section 8.1, this Agreement shall forthwith become void as to the
Company and the Investor, there shall be no liability under this Agreement on
the part of the Company or the Investor, and all rights and obligations of the
Company and the Investor shall cease, other than the obligations set forth in
Sections 6.1 and 7.2 hereof; provided, however, that nothing herein shall
relieve any party from liability for any willful or intentional breach of any
covenant or agreement of such party contained in this Agreement.

                                   SECTION 9

                                    GENERAL

      9.1   Amendments, Waivers and Consents. No covenant or other provision
hereof may be waived otherwise than by a written instrument signed by the party
so waiving such covenant or other provision. The waiver or failure to insist
upon strict compliance with any



condition or provision hereof shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other waiver or failure. This Agreement may not be
amended or modified except by an instrument in writing signed by the Company and
the Investor.

      9.2   Survival of Representations, Warranties and Covenants, Assignability
of Rights. All representations and warranties made herein and in the
certificates, exhibits or schedules delivered or furnished by or on behalf of a
party to the other party in connection herewith shall terminate as of the
Closing. Except as otherwise provided in this Agreement, all covenants,
agreements, representations and warranties shall inure to the benefit of the
successors and assigns of the parties.

      9.3   Governing Law. This Agreement shall be deemed to be a contract made
under, and shall be construed in accordance with, the laws of the State of New
York (without giving effect to principles of conflicts of law the effect of
which would cause the application of domestic substantive laws of any other
jurisdiction).

      9.4   Counterparts. This Agreement may be executed simultaneously in any
number of counterparts (including by facsimile), each of which when so executed
and delivered shall be taken to be an original; but such counterparts shall
together constitute but one and the same document.

      9.5   Notices and Demands. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, three
business days after being mailed by registered or certified mail (return receipt
requested) or when sent via confirmed facsimile to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

                        (i)   If to any Investor, to the address set forth on
the Investor's signature page hereto, and

                        (ii)  If to the Company:

                              Capital Environmental Resource Inc.
                              1122 International Blvd, Suite 601
                              Burlington, Ontario L7L 6Z8
                              Attention: Ivan R. Cairns
                              Facsimile: (905) 319-9048

                              with a copy to:

                              Karen A. Dewis
                              McDermott, Will & Emery
                              600 Thirteenth Street, NW
                              Washington, DC 20005-3096
                              Facsimile: (202) 756-8087

      9.6   Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any



provision of this Agreement shall be deemed prohibited or invalid under such
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity shall not
invalidate the remainder of such provision or the other provisions of this
Agreement.

      9.7   Integration. This Agreement, including the exhibits, documents and
instruments referred to herein or therein, constitutes all of the agreements and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.

      9.8   No Assignment. This Agreement may not be assigned, pledged,
hypothecated or otherwise transferred by the Company or the Investor.

      9.9   Third-Party Beneficiary. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any Person
other than the parties hereto any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.

                            [Signature pages follow]



      IN WITNESS WHEREOF, the undersigned have executed this Common Share
Subscription Agreement as of the dates indicated below.

                                  INVESTOR

Date:_________________________    ______________________________________________
                                  Name:
                                  Number of Shares: ____________________________
                                  Aggregate Purchase Price: US $ _______________

                                  Country of Residence: ________________________
                                  State or Province of Residence: ______________

                                  Address:

Accepted:

CAPITAL ENVIRONMENTAL RESOURCE INC.

By ________________________________               Date: April 30, 2004
Name: Ivan R. Cairns
Title: Executive Vice President, General Counsel and Secretary



                                FORM OF WARRANT

                             Please see Exhibit [ ]



                                                                         Annex B

                                    GLOSSARY

      As used herein, the following terms shall have the following meanings:

            "Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, such Person. For purposes of this definition, the term "control"
(including the correlative terms "controlling", "controlled by" and "under
common control with") means the possession, direct or indirect, 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.

            "Ancillary Documents" means the Registration Rights Agreement, the
Warrant and any other document referred to herein that is required to be
executed by the Company or the Investor as a condition to closing.

            "Canadian Competition Act" means the Competition Act (Canada), R.S.
1985 c. C-34, as amended.

            "Company Material Adverse Effect" shall mean any material adverse
effect on the business, operations, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole.

            "Disclosure Schedule" means the disclosure statement delivered at or
prior to the execution of this Agreement by the Company to the Investor setting
out certain information relating to the Company.

            "Environmental Law" means any Federal, state, provincial, local or
foreign law, statute, ordinance, rule, regulation, code, standard, guideline,
policy, license, permit, authorization, approval, consent, legal doctrine,
order, judgment, decree, injunction, requirement or agreement with any
governmental entity relating to (x) the protection, preservation or restoration
of the environment (including, without limitation, air, surface water,
groundwater, surface land, subsurface land or plant and animal life) or to human
health or safety or (y) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as amended
and as in effect on the Closing Date.

            "Escrow Agent" means Sterling Bank, who shall act as escrow agent
for the receipt from Investors and disbursement to the Company (or return to the
applicable Investor in the case of termination of a subscription agreement as to
such Investor) of subscription funds pursuant to that certain Escrow Agreement
dated as of April 6, 2004 among the Company, the Escrow Agent and Sanders Morris
Harris Inc.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.



            "Federal" shall mean of or relating to the federal government of
each of the United States and Canada.

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

            "Hazardous Substance" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive, or dangerous, or
otherwise regulated, under any Environmental Law and any substance that may
harm, impair or cause an adverse effect to the environment (including, without
limitation, air, surface water, groundwater, surface land, subsurface land or
plant and animal life) or to human health or safety and property. Hazardous
Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos, or
asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.

            "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

            "Investment Canada Act" means the Investment Canada Act, R.S. 1985,
c. 28 (1st Supp.), as amended.

            "Liability" means any liability or obligation (whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or become due).

            "Lien" means any mortgage, pledge, security interest, encumbrance,
lien, claim or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or charge).

            "Nasdaq" shall mean The Nasdaq Stock Market, including the Nasdaq
National Market and the Nasdaq SmallCap Market.

            "Ontario Securities Act" means the Securities Act (Ontario) R.S.O
1990, c.S.5 (as amended) and the rules and regulations promulgated thereunder.

            "Person" means an individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization.

            "Rights Agreement" means that certain Rights Agreement between the
Company and American Stock Transfer & Trust Company, as amended.

            "SEC" means the Securities and Exchange Commission.



            "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

      As used herein, the following terms shall have the meanings ascribed to
them in the Section of this Agreement opposite each such term:

            Term                                            Section
            ----                                            -------
            Aggregate Purchase Price                        1.2
            Agreement                                       Preamble
            Closing                                         1.5
            Closing Date                                    1.5
            Common Shares                                   Preamble
            Company                                         Preamble
            Company Financial Statements                    2.4(b)
            Company Required Statutory Approvals            2.3(c)
            Company SEC Reports                             2.4(a)
            "control"                                       Annex B ("Affiliate"
                                                            definition)
            Confidential Information                        7.2
            Credit Facility                                 2.9
            Investor                                        Preamble
            Investors                                       Preamble
            Material Contract                               2.14
            Minimum Condition                               4.1(e)
            Preferred Shares                                2.2(a)
            Private Placement Memorandum                    2.4(a)
            Recipient                                       7.2
            Registration Rights Agreement                   Preamble
            Shares                                          1.1
            Terminating Company Breach                      8.1(d)
            Underlying Warrant Shares                       2.2(c)
            Warrants                                        Preamble



                                                                         Annex C

            DEFINITION OF "ACCREDITED INVESTOR" UNDER SECTION 1.1 OF
                    ONTARIO SECURITIES COMMISSION RULE 45-501



                                                                         Annex D

                          REGISTRATION RIGHTS AGREEMENT

                             Please see Exhibit [ ]

EX-10.2

                                                                    EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

      This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of April
30, 2004 by and among Capital Environmental Resource Inc., a corporation
incorporated under the laws of the Province of Ontario (the "Company"), and the
parties identified as Investors on Schedule A hereto (each individually an
"Investor" and collectively the "Investors").

      WHEREAS, the Company and the Investors have entered into that certain
Common Share Subscription Agreement, dated as of the date hereof (the
"Subscription Agreement"), pursuant to which the Company is issuing and selling
to the Investors (i) up to an aggregate of thirteen million four hundred
thousand (13,400,000) of the Company's common shares and (ii) warrants to
purchase common shares of the Company;

      WHEREAS, the Company intends to consummate a reorganization transaction in
which the Company will become an indirect subsidiary of Waste Services, Inc.
("U.S. Newco"), which is currently the Company's wholly-owned U.S. subsidiary
(the "U.S. Migration");

      WHEREAS, in connection with the U.S. Migration, each outstanding Common
Share is expected to be converted into one share of common stock of U.S. Newco
(the "U.S. Newco Common Stock") in a transaction qualifying for an exemption
from registration under Section 3(a)(10) of the Securities Act, and such shares
of U.S. Newco Common Stock are expected to be freely tradable without
restriction by non-Affiliates of the Company; and

      WHEREAS, the execution and delivery of this Agreement is a condition to
closing of the Common Share Subscription Agreement.

      NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

            1.    Definitions. For purposes of this Agreement:

                  (a)   "Affiliate" shall have the meaning ascribed to such term
in Rule 405 under the Securities Act.

                  (b)   "Common Shares" means the common shares of the Company.

                  (c)   "Closing Date" means the date of the closing of the
Common Share Subscription Agreement.

                  (d)   "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.

                  (e)   "Holder" means any Person owning or having the right to
acquire Registrable Securities, or any assignee thereof in accordance with
Section 11 hereof.



                  (f)   "Person" means any individual, partnership, limited
liability company, joint venture, corporation, association, trust or any other
entity or organization.

                  (g)   "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and the declaration or
ordering of effectiveness of such registration statement or document.

                  (h)   "Registrable Securities" means (1) any Shares, (2) any
securities issuable upon exercise of the Warrants and (3) any Common Shares
issued to the Investor (or any assignee thereof in accordance with Section 11)
as (or issuable upon conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such Common Shares; provided, however,
that any Registrable Securities sold by an Investor in a transaction in which
such Investor's rights under this Agreement are not assigned pursuant to Section
11 below shall cease to be Registrable Securities from and after the time of
such sale. In addition, any securities shall cease to be Registrable Securities
from and after such time as they (4) are sold to the public in a registered
public offering (5) are eligible for sale pursuant to Rule 144 under the
Securities Act or (6) become freely tradable without restriction imposed by the
Securities Act in connection with the U.S. Migration or otherwise. For purposes
of determining whether any securities shall have ceased to be Registrable
Securities hereunder, such securities shall be deemed to be held by a person
that is a not an Affiliate of the Company.

                  (i)   "SEC" means the United States Securities and Exchange
Commission.

                  (j)   "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.

                  (k)   "Shares" means the Common Shares sold to the Investors
pursuant to the Subscription Agreement; provided, however, that upon completion
of the U.S. Migration the term "Shares" shall mean the shares of U.S. Newco
common stock issued to the Investors in exchange for their Common Shares in
connection with the U.S. Migration.

                  (l)   "Violation" means any of the following statements,
omissions or violations: (i) any untrue statement or alleged untrue statement of
a material fact contained in a registration statement filed pursuant to this
Agreement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto or any documents filed under
state securities or "blue sky" laws in connection therewith, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.

                  (m)   "Warrants" means the warrants to purchase Common Shares
issued to the Investors pursuant to the Subscription Agreement; provided,
however, that upon completion of the U.S. Migration, such Warrants will be
automatically converted into the right to purchase an equal number of shares of
U.S. Newco Common Stock.

                                       2



            2.    U.S. Migration.

                  (a)   The Company hereby agrees to use its reasonable best
efforts to cause the U.S. Migration to be consummated in a manner that qualifies
for exemption from registration under Section 3(a)(10) of the Securities Act on
or before June 30, 2004 with the effect that the shares of U.S. Newco Common
Stock issued to the Investors in exchange for their Shares in connection with
the U.S. Migration will be freely tradable without restriction imposed by the
Securities Act by Persons who are not Affiliates of the Company following such
consummation.

            3.    Shelf Registration Statement.

                  (a)   The Company agrees that it shall file with the SEC a
registration statement on Form S-3 under the Securities Act if the Company is
then eligible to use such form, or if the Company is not then so eligible, any
other SEC form which the Company is then eligible to use (any such registration
statement, a "Shelf Registration Statement") for an offering to be made on a
delayed and continuous basis pursuant to Rule 415 thereunder, and/or any similar
rule that may be adopted by the SEC, to register the resale of any Registrable
Securities outstanding as of such date (including any Shares (or securities
issuable upon exercise of the Warrants) that are not freely tradable without
restriction imposed by the Securities Act by Persons who are not Affiliates of
the Company) by the Holders from time to time in accordance with the methods of
distribution elected by such Holders and set forth in such Shelf Registration
Statement and, thereafter, shall use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective under the Securities Act
on or before 5:00 pm eastern time on the date that is one hundred twenty (120)
days after the Closing Date (the "Effective Date").

                  (b)   Notwithstanding the foregoing, the Company may postpone
having the Shelf Registration Statement declared effective for a reasonable
period not to exceed thirty (30) consecutive trading days if the Board of
Directors of the Company shall have determined in good faith because of valid
business reasons (not including avoidance of the Company's obligations
hereunder), including the acquisition or divestiture of assets, capital raising
activities, pending corporate developments and similar events, that postponing
effectiveness is in the best interests of the Company, and prior to postponing
the effectiveness the Company provides the Holders with written notice of such
postponement, which notice need not specify the nature of the event giving rise
to the postponement.

                  (c)   The Company shall use its reasonable best efforts to:
(i) to keep the Shelf Registration Statement continuously effective under the
Securities Act in order to permit the prospectus forming a part thereof to be
usable by Holders until the earliest of (1) the sale of all Registrable
Securities registered under the Shelf Registration Statement; (2) the expiration
of the period referred to in Rule 144(k) of the Securities Act with respect to
all Registrable Securities held by Persons who are not Affiliates of the
Company; and (3) one year from the date upon which the Shelf Registration
Statement is declared effective under the Securities Act (such period being
referred to herein as the "Effectiveness Period").

                  (d)   The Company may suspend the use of the prospectus
included in the Shelf Registration Statement for two separate periods (each, a
"Blackout Period") not to

                                       3



exceed thirty (30) consecutive trading days if the Board of Directors of the
Company shall have determined in good faith because of valid business reasons
(not including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, capital raising activities, pending
corporate developments and similar events, that it is in the best interests of
the Company to suspend such use, and prior to suspending such use the Company
provides the Holders with written notice of such suspension, which notice need
not specify the nature of the event giving rise to the suspension. The Company
may not declare more than one Blackout Period in any 365-calendar day period.
The Blackout Periods, and the restriction against declaring more than one
Blackout Period in any 365-day period, are together referred to as the "Maximum
Blackout Periods."

                  (e)   In the event that Holders are prevented from selling
Registrable Shares through the Shelf Registration Statement as a result of a
Blackout Period declared by the Company, the Effectiveness Period shall be
extended by the number of days that Holders are prevented from making sales
under the Shelf Registration Statement as a result of such Blackout Periods.

            4.    Obligations of the Company. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:

                  (a)   Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.

                  (b)   Furnish to the Holders such number of copies of such
registration statement and of each amendment and supplement thereto (in each
case without exhibits unless requested by such Holders), such number of copies
of the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents as any of the
Holders may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.

                  (c)   Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such states or jurisdictions as shall be reasonably requested
by the Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto (i) to qualify to do business in any state
or jurisdiction where it would not otherwise be required to qualify but for the
requirements of this clause (d), or (ii) to file a general consent to service of
process in any such state or jurisdiction.

                  (d)   In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering.

                                       4



                  (e)   Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not misleading.

                  (f)   Notify each Holder of Registrable Securities covered by
such registration statement and such Holder's underwriters, if any, and confirm
such advice in writing: (i) when the registration statement has become
effective, (ii) when any post-effective amendment to the registration statement
becomes effective and (iii) of any request by the SEC for any amendment or
supplement to the registration statement or prospectus or for additional
information.

                  (g)   Notify each Holder of Registrable Securities if at any
time the SEC should institute or threaten to institute any proceedings for the
purpose of issuing, or should issue, a stop order suspending the effectiveness
of the registration statement. Upon the occurrence of any of the events
mentioned in the preceding sentence, the Company will use its reasonable best
efforts to prevent the issuance of any such stop order or to obtain the
withdrawal thereof as soon as possible. The Company will advise each Holder of
Registrable Securities promptly of any order or communication of any public
board or body addressed to the Company suspending or threatening to suspend the
qualification of any Registrable Securities for sale in any jurisdiction.

                  (h)   In the case of an offering that is an underwritten
public offering, (x) cause to be delivered an opinion of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the Holders and the underwriters, and (y) cause to be
delivered, on the date that the registration statement with respect to such
securities becomes effective, a "comfort" letter dated such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to the
underwriters, addressed to the underwriters, and, a reaffirmation of such letter
on the date that such Registrable Securities are delivered to the underwriters
for sale.

                  (i)   As soon as practicable after the effective date of the
registration statement, and in any event within sixteen (16) months thereafter,
have "made generally available to its security holders" (within the meaning of
Rule 158 under the Securities Act) an earnings statement (which need not be
audited) covering a period of at least twelve (12) months beginning after the
effective date of the registration statement and otherwise complying with
Section 11(a) of the Securities Act.

                  (j)   List the Registrable Securities which are registered
pursuant to Section 3 on each national securities exchange or automated
quotation system upon which the shares to be registered are traded.

                                       5



            5.    Amendments, Supplements to Prospectus. Immediately upon
receipt of a notice referred to in Section 4(f) hereof, each Holder agrees to
(i) cease making sales of securities pursuant to any then effective registration
statement or any prospectus contained therein until it has received from the
Company an amendment or supplement to the registration statement or prospectus
and (ii) to promptly deliver to the Company any copies of the registration
statement or such prospectus then in its possession.

            6.    Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling Holder that such Holder
shall promptly furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.

            7.    Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 3, including (without limitation) all
registration, filing and qualification fees, printers' fees, fees and expenses
of counsel and accountants for the Company and the reasonable fees and
disbursements of one firm of counsel for the selling Holders, shall be borne by
the Company, even if such registrations, filings, or qualifications do not
become effective.

            8.    Registration Default.

                  (a)   If the Shelf Registration Statement has not been
declared effective on or before 5:00 p.m. eastern time on the Effective Date and
there are as of such date any outstanding Registrable Securities, the Company
shall become obligated to pay to each Investor who continues to hold Registrable
Securities on the Effective Date a cash payment equal to one percent (1%) of the
last reported sales price of one Common Share on the trading day immediately
preceding the Closing Date, as reported by the Nasdaq Stock Market (the "Last
Reported Sales Price"), multiplied by the number of Registrable Securities held
by such Investor as of the Effective Date. In addition, until the Shelf
Registration Statement has been declared effective, the Company shall become
obligated to pay to each Investor who continues to hold Registrable Securities
on the first day of each calendar month after the Effective Date (each a
"Subsequent Computation Date") a cash payment equal to one percent (1%) of the
Last Reported Sales Price multiplied by the number of Registrable Securities
held by such Investor as of such Subsequent Computation Date.

                  (b)   If the Company exceeds the Maximum Blackout Periods
permitted under this Agreement and there are then outstanding any Registrable
Securities included on the Shelf Registration Statement, the Company shall
become obligated to pay to each Investor who continues to hold Registrable
Securities included on the Shelf Registration Statement on the date that the
Maximum Blackout Periods are exceeded (the "First Blackout Penalty Date") a cash
payment equal to one percent (1%) of the Last Reported Sales Price multiplied by
the number of any such Registrable Securities held by such Investor as of such
First Blackout Penalty Date. In addition, until use of the prospectus contained
within the Shelf Registration Statement is no longer suspended pursuant to such
Blackout Period, the Company shall become obligated to pay to each Investor who
continues to hold Registrable Securities included in the Shelf Registration

                                       6



Statement on the first day of each calendar month after the First Blackout
Penalty Date (each a "Subsequent Blackout Penalty Date") a cash payment equal to
one percent (1%) of the Last Reported Sales Price multiplied by the number of
such remaining Registrable Securities held by such Investor as of such
Subsequent Blackout Penalty Date.

                  (c)   All payments made under this Section 8 shall be made
within five (5) business days after the Effective Date, the First Blackout
Penalty Date, or the relevant Subsequent Computation Date or Subsequent Blackout
Penalty Date, as the case may be, and shall be deemed and considered for all
purposes to be liquidated damages and not a penalty. As expressed in Section 20
of this Agreement, it is agreed that the payments made to each Investor under
this Section 8 shall not constitute such Investor's exclusive remedy, and such
payments shall be in addition to any other remedies available to such Investor
under applicable law.

            9.    Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:

                  (a)   The Company will indemnify and hold harmless each
Holder, its heirs, personal representatives and assigns, each of such Holder's
officers, directors, partners, employees and affiliates, any underwriter (as
defined in the Securities Act) for such Holder and each Person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal, state, Canadian, or provincial securities law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon a Violation; and the Company will pay to each
such indemnified party, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
to a particular indemnified party for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such indemnified
party.

                  (b)   Each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers, each Person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder (and any affiliate thereof) selling securities in such
registration statement and any controlling Person of any such underwriter or
other Holder, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing Persons may become subject, under the
Securities Act, the Exchange Act or other federal, state, Canadian, or
provincial securities law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any Person intended to be indemnified pursuant to this

                                       7



Section 9(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that in no event shall the
liability of any Holder under this Section 9(b) or otherwise in connection with
the offering exceed the net proceeds from the offering received by such Holder.

                  (c)   Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel (but no more than one separate counsel,
plus any required local counsel, with respect to all indemnified parties) with
the fees and expenses to be paid by the indemnifying party, if in the reasonable
opinion of counsel to an indemnified party, representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflicts of interests between, or different defenses
available to, such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 9 except if, and only to the extent that,
the indemnifying party is actually prejudiced thereby.

                  (d)   The obligations of the Company and Holders under this
Section 9 shall survive the completion of any offering of Registrable Securities
in a registration statement under this Agreement.

                  (e)   Any indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party.

                  (f)   If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, then, in lieu of
indemnifying such indemnified party, the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other but also the relative fault of
the indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The relative fault shall

                                       8



be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by or on behalf of the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Notwithstanding anything to the contrary in this Section 9,
no Holder shall be required, pursuant to this Section 9 or otherwise in
connection with the offering, to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of Common Shares in
the offering to which the losses, claims, damages, liabilities or expenses of
the indemnified party relate.

            10.   Reports Under the Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 under the Securities Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, for so long
as any Registrable Securities remain outstanding, the Company agrees to:

                  (a)   make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;

                  (b)   remain registered under the Exchange Act and file with
the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and

                  (c)   furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, (ii) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without
registration.

            11.   Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Agreement may be
assigned in whole or in part to any Person acquiring Registrable Securities from
a Holder in compliance with the applicable provisions of any relevant agreement
between such Holder and the Company, provided that such transferee or assignee
delivers to the Company a written instrument by which such transferee or
assignee agrees to be bound by the obligations imposed on Holders under this
Agreement to the same extent as if such transferee or assignee was a party
hereto.

            12.   Amendment; Waiver. Any provision of this Agreement may be
amended only with the written consent of the Company and Holders holding a
majority - in-interest of the Registrable Securities. The observance of any
provision of this Agreement by the Company may be waived (either generally or in
a particular instance and either retroactively or prospectively) only with the
written consent of Holders holding a majority of the Registrable Securities. The
observance of any provision of this Agreement by any Holder may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of

                                       9



the Company. Any amendment or waiver effected in accordance with this Section 12
shall be binding upon each Holder of Registrable Securities at the time
outstanding, each future Holder of all such securities, and the Company.

            13.   Changes in Registrable Securities. If, and as often as, there
are any changes in the Registrable Securities by way of stock split, stock
dividend, combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions of this Agreement, as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Registrable Securities as so changed. Without limiting the
generality of the foregoing, (i) the Company will require any successor by
merger or consolidation to assume and agree to be bound by the terms of this
Agreement, as a condition to any such merger or consolidation and (ii) upon the
consummation of the U.S. Migration, all references in this Agreement to Common
Shares shall be deemed to refer to the shares of common stock of U.S. Newco into
which the common shares of the Company have been converted or are convertible
and all references to the Company shall be deemed to refer to U.S. Newco.

            14.   Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the subject
matter hereof. Nothing in this Agreement, express or implied, is intended to
confer upon any Person, other than the parties hereto and their respective
successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided herein.

            15.   Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware as such laws are applied to
agreements between Delaware residents entered into and to be performed entirely
within Delaware.

            16.   Successors and Assigns. The provisions hereof shall inure to
the benefit of, and be binding upon, the successors, permitted assigns (as
provided in Section 11), heirs, executors and administrators of the parties
hereto.

            17.   Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon receipt by the party to be notified (including by
facsimile, receipt confirmed) or three (3) days after being sent by registered
or certified mail, postage prepaid and addressed to the party to be notified (a)
if to a party other than the Company, at such party's address set forth in the
Subscription Agreement or at such other address as such party shall have
furnished to the Company in writing, or (b) if to the Company, at its address
set forth in the Subscription Agreement, or at such other address as the Company
shall have furnished to the parties in writing.

            18.   Severability. Any invalidity, illegality or limitation on the
enforceability of this Agreement or any part hereof, by any party whether
arising by reason of the law of the respective party's domicile or otherwise,
shall in no way affect or impair the validity, legality or enforceability of
this Agreement with respect to other parties. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

                                       10



            19.   Titles and Subtitles. The titles and subtitles of the Sections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

            20.   Delays or Omissions; Remedies Cumulative. It is agreed that no
delay or omission to exercise any right, power or remedy accruing to the
parties, upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. It is further agreed that any waiver, permit, consent
or approval of any kind or character by a party of any breach or default under
this Agreement, or any waiver by a party of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to a party, shall be cumulative and
not alternative.

            21.   Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile), each of which shall be deemed an
original, but all of which together shall constitute one instrument.

                            [Signature page follows]

                                       11



      IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Agreement as of the date first above written.

                         CAPITAL ENVIRONMENTAL RESOURCE INC.

                         By: _____________________________________________
                         Name: Ivan R. Cairns
                         Title: Executive Vice President, General Counsel and
                                Secretary

                         INVESTOR

                         _________________________________________________
                         Name:
                         Title (if applicable):

                         Address:

                                       12

EX-10.3

                                                                    Exhibit 10.3



                          REGISTRATION RIGHTS AGREEMENT


                           DATED AS OF APRIL 30, 2004
                                  BY AND AMONG

                              WASTE SERVICES, INC.

                                    AS ISSUER

                      CAPITAL ENVIRONMENTAL RESOURCE, INC.
                             GAP DISPOSAL 2001 LTD.
                         RAM-PAK COMPACTION SYSTEMS LTD.
                               6045341 CANADA INC.
                         WASTE SERVICES OF FLORIDA, INC.
                       JACKSONVILLE FLORIDA LANDFILL, INC.
                     JONES ROAD LANDFILL AND RECYCLING LTD.
                        OMNI WASTE OF OSCEOLA COUNTY LLC
                            CACTUS WASTE SYSTEMS, LLC
                         WASTE SERVICES OF ARIZONA, INC.
                       WASTE SERVICES LIMITED PARTNER, LLC
                         WASTE SERVICES OF ALABAMA, INC.
                             WS GENERAL PARTNER, LLC
                        RUFFINO HILLS TRANSFER STATION LP
                         FORT BEND REGIONAL LANDFILL LP
            FLORIDA RECYCLING SERVICES, INC. (A DELAWARE CORPORATION)
           FLORIDA RECYCLING SERVICES, INC. (AN ILLINOIS CORPORATION)



                                  AS GUARANTORS

                                       AND

                              LEHMAN BROTHERS INC.
                            CIBC WORLD MARKETS CORP.







                  This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of April 30, 2004, by and among Waste Services, Inc, a
Delaware corporation (the "COMPANY"), the guarantors listed on the signature
pages hereto (collectively, the "GUARANTORS"), and Lehman Brothers, Inc. and
CIBC World Markets Corp. (each an "INITIAL PURCHASER" and, collectively, the
"INITIAL PURCHASERS"), each of whom has agreed to purchase the Company's 9 1/2%
Senior Subordinated Notes due 2014 (the "SERIES A NOTES") pursuant to the
Purchase Agreement (as defined below).

                  This Agreement is made pursuant to the Purchase Agreement,
dated April 26, 2004 (the "PURCHASE AGREEMENT"), by and among the Company, the
Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Series A Notes, the Company and the Guarantors have agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchasers set forth in Section 7(l) of the Purchase Agreement. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Indenture, dated the date hereof among the Company, the Guarantors
and Wells Fargo Bank, National Association as Trustee, relating to the Series A
Notes and the Series B Notes (the "INDENTURE").

                  The parties hereby agree as follows:

SECTION 1. DEFINITIONS

                  As used in this Agreement, the following capitalized terms
shall have the following meanings:

                  ACT: The Securities Act of 1933, as amended.

                  AFFILIATE: As defined in Rule 144 of the Act.

                  BROKER-DEALER: Any broker or dealer registered under the
Exchange Act.

                  CERTIFICATED SECURITIES: Definitive Notes, as defined in the
Indenture.

                  CLOSING DATE: The date hereof.

                  COMMISSION: The Securities and Exchange Commission.

                  CONSUMMATE: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes tendered by
Holders thereof pursuant to the Exchange Offer.





                                       2


                  CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.

                  EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a)
hereof.

                  EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.

                  EXCHANGE OFFER: The exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.

                  EXCHANGE OFFER REGISTRATION STATEMENT: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.

                  EXEMPT RESALES: The transactions in which the Initial
Purchasers propose to sell the Series A Notes to (i) certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act and
(ii) outside the United States to Persons other than U.S. Persons in offshore
transactions meeting the requirements of Rule 904 of Regulation S under the Act.

                  FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.

                  GUARANTEE: The Guarantee by a Guarantor of the Issuers'
obligations under the Notes and the Indenture.

                  HOLDERS: As defined in Section 2 hereof.

                  NOTES: The Series A Notes and the Series B Notes.

                  PROSPECTUS: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.

                  RECOMMENCEMENT DATE: As defined in Section 6(e) hereof.

                  REGISTRATION DEFAULT: As defined in Section 5 hereof.

                  REGISTRATION STATEMENT: Any registration statement of the
Company and the Guarantors relating to (a) an offering of Series B Notes and
related Subsidiary Guarantees pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, in each case (i) that is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.

                  REGULATION S: Regulation S promulgated under the Act.

                  RULE 144: Rule 144 promulgated under the Act.



                                       3


                  SERIES B NOTES: The Company's 9 1/2% Series B Senior
Subordinated Notes due 2014 to be issued pursuant to the Indenture: (i) in the
Exchange Offer or (ii) as contemplated by Section 4 hereof.

                  SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.

                  SUSPENSION NOTICE: As defined in Section 6(e) hereof.

                  TIA: The Trust Indenture Act of 1939, as amended.

                  TRANSFER RESTRICTED SECURITIES: Each Series A Note and the
related Subsidiary Guarantee, until the earliest to occur of: (a) the date on
which such Series A Note and related Subsidiary Guarantee are exchanged by a
person other than a Broker-Dealer for a Series B Note in the Exchange Offer, (b)
following the exchange by a Broker-Dealer in the Exchange Offer of a Series A
Note for a Series B Note, the date on which such Series B Note is sold to a
purchaser who receives from such Broker-Dealer on or prior to the date of such
sale a copy of the Prospectus contained in the Exchange Offer Registration
Statement, (c) the date on which such Series A Note and the related Subsidiary
Guarantee are effectively registered under the Act and disposed of in accordance
with the Shelf Registration Statement or (d) the date on which such Series A
Note and the related Subsidiary Guarantee are distributed to the public pursuant
to Rule 144 under the Act.

SECTION 2. HOLDERS

                  A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted
Securities.

SECTION 3. REGISTERED EXCHANGE OFFER

                  (a) Unless the Exchange Offer shall not be permitted by
applicable federal law or Commission policy (after the procedures set forth in
Section 6(a)(i) below have been complied with), the Company and the Guarantors
shall (i) cause the Exchange Offer Registration Statement to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 120 days after the Closing Date (such 120th day being the "FILING
DEADLINE"), (ii) use all commercially reasonable efforts to cause such Exchange
Offer Registration Statement to be declared effective on or prior to 210 days
after the Closing Date (such 210th day being the "EFFECTIVENESS DEADLINE"),
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
such Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Series B Notes and the related Subsidiary Guarantees to be made under the Blue
Sky laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The Exchange
Offer shall be on the appropriate form permitting (i) registration of the Series
B Notes and the related Subsidiary Guarantees to be offered in exchange for the
Series A Notes that are Transfer Restricted Securities and (ii) resales of
Series B Notes held by Broker-Dealers that tendered into



                                       4


the Exchange Offer Series A Notes that such Broker-Dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Series A Notes acquired directly from the Company or any of its
Affiliates) as contemplated by Section 3(c) below.

                  (b) The Company and the Guarantors shall use all commercially
reasonable efforts to cause the Exchange Offer Registration Statement to be
effective continuously, and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no
event shall such period be less than 20 business days. The Company and the
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Series B Notes and the
related Subsidiary Guarantees shall be included in the Exchange Offer
Registration Statement. The Company and the Guarantors shall use all
commercially reasonable efforts to cause the Exchange Offer to be Consummated on
the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 business days thereafter, or
longer, if required by the federal securities laws (such date being the
"CONSUMMATION DEADLINE").

                  (c) The Company and the Guarantors shall include a "Plan of
Distribution" section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Broker-Dealer who holds
Transfer Restricted Securities that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities (other than Series A Notes acquired directly from the Company or any
Affiliate of the Company) may exchange such Transfer Restricted Securities
pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also
contain all other information with respect to such sales by such Broker-Dealers
that the Commission may require in order to permit such sales pursuant thereto,
but such "Plan of Distribution" shall not name any such Broker-Dealer or
disclose the amount of Transfer Restricted Securities held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this Agreement.

                  Because such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of any Series B Notes and the related Subsidiary Guarantees received by
such Broker-Dealer in the Exchange Offer, the Company and the Guarantors shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery requirement.
To the extent necessary to ensure that the prospectus contained in the Exchange
Offer Registration Statement is available for sales of Series B Notes and the
related Subsidiary Guarantees by Broker-Dealers, the Company and the Guarantors
agree to use all commercially reasonable efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented, amended and current
as required by and subject to the provisions of Section 6(a) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 180 days from the date on which the Exchange Offer Registration
Statement is declared effective or such shorter period as will terminate when
all Transfer Restricted Securities covered by such Registration Statement have
been sold pursuant thereto. The Company shall provide sufficient copies of the
latest version of such Prospectus to such Broker-Dealers, promptly upon request
at any time during such period.



                                       5


SECTION 4. SHELF REGISTRATION

                  (a) SHELF REGISTRATION. If (i) (x) the Company and the
Guarantors are not required to file the Exchange Offer Registration Statement or
permitted to Consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the Company and the
Guarantors have complied with the procedures set forth in Section 6(a)(i) below)
or (y) the Commission shall refuse to declare effective the Exchange Offer
Registration Statement filed with the Commission or (ii) any Holder of Transfer
Restricted Securities shall notify the Company prior to the 20th business day
following the Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-Dealer
and holds Series A Notes acquired directly from the Company or any of its
Affiliates, then the Company and the Guarantors shall:

                  (x) cause to be filed, on or prior to 60 days after the
earlier of (i) the date on which the Company determines that the Exchange Offer
Registration Statement cannot be filed as a result of clause (a)(i) above and
(ii) the date on which the Company receives the notice specified in clause
(a)(ii) above (such earlier date, the "FILING DEADLINE"), a shelf registration
statement pursuant to Rule 415 under the Act (which may be an amendment to the
Exchange Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")),
relating to all Transfer Restricted Securities; and

                  (y) shall use all commercially reasonable efforts to cause
such Shelf Registration Statement to become effective on or prior to 120 days
after the Filing Deadline for the Shelf Registration Statement (such 120th day
the "EFFECTIVENESS DEADLINE").

                  If, after the Company and the Guarantors have filed an
Exchange Offer Registration Statement that satisfies the requirements of Section
3(a) above, the Company and the Guarantors are required to file and make
effective a Shelf Registration Statement solely because the Exchange Offer is
not permitted under applicable federal law (i.e., clause (a)(i) above), then the
filing of the Exchange Offer Registration Statement shall be deemed to satisfy
the requirements of clause (x) above; PROVIDED that, in such event, the Company
and the Guarantors shall remain obligated to meet the Effectiveness Deadline set
forth in clause (y).

                  To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a) and the other
securities required to be registered therein pursuant to Section 6(b)(ii)
hereof, the Company and the Guarantors shall use all commercially reasonable
efforts to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Sections 6(b) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years (as extended pursuant to Section 6(c)(i)) following the Closing
Date, or such



                                       6


shorter period as will terminate when all Transfer Restricted Securities covered
by such Shelf Registration Statement have been sold pursuant thereto.

(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE SHELF
REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may include
any of its Transfer Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes to the Company
in writing, within 20 days after receipt of a request therefor, the information
specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act, and
such other information as the Company may reasonably request, for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to liquidated damages pursuant to Section 5 hereof unless and until
such Holder shall have provided all such information. By its acceptance of
Transfer Restricted Securities, each Holder agrees to notify the Company
promptly if any of the information previously furnished is misleading or
inaccurate in any material respect and to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.

SECTION 5. LIQUIDATED DAMAGES

                  If (i) any Registration Statement required by this Agreement
is not filed with the Commission on or prior to the applicable Filing Deadlines
set forth in Sections 3(a) and 4(a) hereof, (ii) any such Registration Statement
has not been declared effective by the Commission on or prior to the applicable
Effectiveness Deadlines set forth in Sections 3(a) and 4(a) hereof (the
"EFFECTIVENESS TARGET DATE"), (iii) the Exchange Offer has not been Consummated
on or prior to the Consummation Deadline set forth in Section 3(b) hereof or
(iv) any Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable in
connection with resales of Transfer Restricted Securities during the period
required by this Agreement (each such event referred to in clauses (i) through
(iv), a "REGISTRATION DEFAULT"), then the Company and the Guarantors hereby
jointly and severally agree to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages, in cash, in an amount equal to
$.05 per week per $1,000 in principal amount of Transfer Restricted Securities
held by such Holder for each week that the Registration Default continues for
the first 90-day period immediately following the occurrence of such
Registration Default. The amount of the liquidated damages shall increase by an
additional $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities held by such Holder with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.50 per week per $1,000 in principal amount of Transfer
Restricted Securities; PROVIDED that the Company and the Guarantors shall in no
event be required to pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set forth
herein, upon (a) filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of clause (i) above,
(b) the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of clause (ii) above,
(c) Consummation of the Exchange Offer, in the case of clause (iii) above, or
(d) the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement)



                                       7


to again be declared effective or made usable in the case of clause (iv) above,
the liquidated damages payable with respect to the Transfer Restricted
Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable,
shall cease.

                  All accrued liquidated damages shall be paid to the Holders
entitled thereto, in the manner provided for the payment of interest in the
Indenture, on each interest payment date with respect to the Notes, as more
fully set forth in the Indenture and the Notes. Notwithstanding the fact that
any securities for which liquidated damages are due cease to be Transfer
Restricted Securities, all obligations of the Company and the Guarantors to pay
liquidated damages with respect to securities shall survive until such time as
such obligations with respect to such securities shall have been satisfied in
full.

SECTION 6. REGISTRATION PROCEDURES

                  (a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with
the Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use all commercially reasonable
efforts to effect such exchange and to permit the resale of Series B Notes by
any Broker-Dealer that tendered Series A Notes in the Exchange Offer that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:

                  (i) If, following the date hereof there has been announced a
         change in Commission policy with respect to exchange offers such as the
         Exchange Offer, that in the reasonable opinion of counsel to the
         Company raises a substantial question as to whether the Exchange Offer
         is permitted by applicable federal law, the Company and the Guarantors
         hereby agree to seek a no-action letter or other favorable decision
         from the Commission allowing the Company and the Guarantors to
         Consummate an Exchange Offer for the Series A Notes. The Company and
         the Guarantors hereby agree to pursue the issuance of such a decision
         to the Commission staff level but shall not be required to take
         commercially unreasonable action to effect a change of Commission
         policy. In connection with the foregoing, the Company and the
         Guarantors hereby agree to take all such other actions as may be
         requested by the Commission or otherwise required in connection with
         the issuance of such decision, including without limitation (A)
         participating in telephonic conferences with the Commission staff, (B)
         delivering to the Commission staff an analysis prepared by counsel to
         the Company setting forth the legal bases, if any, upon which such
         counsel has concluded that such an Exchange Offer should be permitted
         and (C) diligently pursuing a resolution (which need not be favorable)
         by the Commission staff.

                  (ii) As a condition to its participation in the Exchange
         Offer, each Holder of Transfer Restricted Securities (including,
         without limitation, any Holder who is a Broker Dealer) shall (x)
         furnish, upon the request of the Company, prior to the Consummation of
         the Exchange Offer, a written representation to the Company and the
         Guarantors (which may be contained in the letter of transmittal
         contemplated by the Exchange Offer Registration Statement) to the
         effect that (A) it is not an Affiliate of the Company, (B) it




                                       8


         is not engaged in, and does not intend to engage in, and has no
         arrangement or understanding with any person to participate in, a
         distribution of the Series B Notes to be issued in the Exchange Offer
         and (C) it is acquiring the Series B Notes in its ordinary course of
         business and (y) otherwise cooperate in the Company's and the
         Guarantors' preparations for the Exchange Offer. Each Holder using the
         Exchange Offer to participate in a distribution of the Series B Notes
         will be required to acknowledge and agree that, if the resales are of
         Series B Notes obtained by such Holder in exchange for Series A Notes
         acquired directly from the Company or an Affiliate thereof, it (1)
         could not, under Commission policy as in effect on the date of this
         Agreement, rely on the position of the Commission enunciated in MORGAN
         STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL
         HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the
         Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and
         similar no-action letters (including, if applicable, any no-action
         letter obtained pursuant to clause (i) above), and (2) must comply with
         the registration and prospectus delivery requirements of the Act in
         connection with a secondary resale transaction and that such a
         secondary resale transaction must be covered by an effective
         registration statement containing the selling security holder
         information required by Item 507 or 508, as applicable, of Regulation
         S-K.

                  (iii) Prior to effectiveness of the Exchange Offer
         Registration Statement, the Company and the Guarantors shall, to the
         extent required by the Commission, provide a supplemental letter to the
         Commission (A) stating that the Company and the Guarantors are
         registering the Exchange Offer in reliance on the position of the
         Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available
         May 13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) as
         interpreted in the Commission's letter to SHEARMAN & STERLING dated
         July 2, 1993, and, if applicable, any no-action letter obtained
         pursuant to clause (i) above, (B) including a representation that
         neither the Company nor any Guarantor has entered into any arrangement
         or understanding with any Person to distribute the Series B Notes to be
         received in the Exchange Offer and that, to the best of the Company's
         and each Guarantor's information and belief, each Holder (other than an
         Initial Purchaser) participating in the Exchange Offer is acquiring the
         Series B Notes in its ordinary course of business and has no
         arrangement or understanding with any Person to participate in the
         distribution of the Series B Notes received in the Exchange Offer and
         (C) any other undertaking or representation required by the Commission
         as set forth in any no-action letter obtained pursuant to clause (i)
         above, if applicable.

                  (b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall:

                  (i) comply with all the provisions of Section 6(c) and 6(d)
         below and use all commercially reasonable efforts to effect such
         registration to permit the sale of the Transfer Restricted Securities
         being sold in accordance with the intended method or methods of
         distribution thereof (as indicated in the information furnished to the
         Company pursuant to Section 4(b) hereof), and pursuant thereto the
         Company and the Guarantors will prepare and file with the Commission a
         Registration Statement relating to the registration on any appropriate
         form under the Act, which form shall be available for the sale of the
         Transfer Restricted Securities in accordance with the intended method
         or



                                       9


         methods of distribution thereof within the time periods and otherwise
         in accordance with the provisions hereof; and

                  (ii) issue, upon the request of any Holder or purchaser of
         Series A Notes covered by any Shelf Registration Statement contemplated
         by this Agreement, Series B Notes having an aggregate principal amount
         equal to the aggregate principal amount of Series A Notes sold pursuant
         to the Shelf Registration Statement and surrendered to the Company for
         cancellation; the Company and the Guarantors shall register Series B
         Notes and the related Subsidiary Guarantees on the Shelf Registration
         Statement for this purpose and issue the Series B Notes to the
         purchaser(s) of securities subject to the Shelf Registration Statement
         in the names as such purchaser(s) shall designate.

                  (c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company and
the Guarantors shall:

                  (i) use all commercially reasonable efforts to keep such
         Registration Statement continuously effective and provide all requisite
         financial statements for the period specified in Section 3 or 4 of this
         Agreement, as applicable. Upon the occurrence of any event that would
         cause any such Registration Statement or the Prospectus contained
         therein (A) to contain an untrue statement of material fact or omit to
         state any material fact necessary to make the statements therein not
         misleading or (B) not to be effective and usable for resale of Transfer
         Restricted Securities during the period required by this Agreement, the
         Company and the Guarantors shall file promptly an appropriate amendment
         to such Registration Statement curing such defect, and, if Commission
         review is required, use all commercially reasonable efforts to cause
         such amendment to be declared effective as soon as practicable; if at
         any time the Commission shall issue any stop order suspending the
         effectiveness of any Registration Statement, or any state securities
         commission or other regulatory authority shall issue an order
         suspending the qualification or exemption from qualification of the
         Transfer Restricted Securities under state securities or Blue Sky laws,
         the Company and the Guarantors shall use all commercially reasonable
         efforts to obtain the withdrawal or lifting of such order at the
         earliest possible time;

                  (ii) prepare and file with the Commission such amendments and
         post-effective amendments to the applicable Registration Statement as
         may be necessary to keep such Registration Statement effective for the
         applicable period set forth in Section 3 or 4 hereof, as the case may
         be; cause the Prospectus to be supplemented by any required Prospectus
         supplement, and as so supplemented to be filed pursuant to Rule 424
         under the Act, and to comply fully with Rules 424, 430A and 462, as
         applicable, under the Act in a timely manner; and comply with the
         provisions of the Act with respect to the disposition of all securities
         covered by such Registration Statement during the applicable period in
         accordance with the intended method or methods of distribution by the
         sellers thereof set forth in such Registration Statement or supplement
         to the Prospectus;

                  (iii) in connection with any sale of Transfer Restricted
         Securities that will result in such securities no longer being Transfer
         Restricted Securities, cooperate with the Holders to facilitate the
         timely preparation and delivery of certificates representing



                                       10


         Transfer Restricted Securities to be sold and not bearing any
         restrictive legends; and to register such Transfer Restricted
         Securities in such denominations and such names as the selling Holders
         may request at least two business days prior to such sale of Transfer
         Restricted Securities;

                  (iv) use all commercially reasonable efforts to cause the
         disposition of the Transfer Restricted Securities covered by the
         Registration Statement to be registered with or approved by such other
         governmental agencies or authorities as may be necessary to enable the
         seller or sellers thereof to consummate the disposition of such
         Transfer Restricted Securities; PROVIDED, HOWEVER, that neither the
         Company nor any Guarantor shall be required to register or qualify as a
         foreign corporation or as a dealer in securities in any jurisdiction
         where it is not now so qualified or to take any action that would
         subject it to the service of process in suits or to taxation, other
         than as to matters and transactions relating to the Registration
         Statement, in any jurisdiction where it is not now so subject;

                  (v) provide a CUSIP number for all Transfer Restricted
         Securities not later than the effective date of a Registration
         Statement covering such Transfer Restricted Securities and provide the
         Trustee under the Indenture with certificates for the Transfer
         Restricted Securities which are in a form eligible for deposit with The
         Depository Trust Company;

                  (vi) otherwise use all commercially reasonable efforts to
         comply with all applicable rules and regulations of the Commission, and
         make generally available to its security holders with regard to any
         applicable Registration Statement, as soon as practicable, a
         consolidated earnings statement meeting the requirements of Rule 158
         (which need not be audited) covering a twelve-month period beginning
         after the effective date of the Registration Statement (as such term is
         defined in paragraph (c) of Rule 158 under the Act); and

                  (vii) cause the Indenture to be qualified under the TIA not
         later than the effective date of the first Registration Statement
         required by this Agreement and, in connection therewith, cooperate with
         the Trustee and the Holders to effect such changes to the Indenture as
         may be required for such Indenture to be so qualified in accordance
         with the terms of the TIA; and execute and use all commercially
         reasonable efforts to cause the Trustee to execute, all documents that
         may be required to effect such changes and all other forms and
         documents required to be filed with the Commission to enable such
         Indenture to be so qualified in a timely manner.

                  (d) ADDITIONAL PROVISIONS APPLICABLE TO SHELF REGISTRATION
STATEMENTS AND CERTAIN EXCHANGE OFFER PROSPECTUSES. In connection with each
Shelf Registration Statement, and each Exchange Offer Registration Statement if
and to the extent that an Initial Purchaser has notified the Company that it is
a holder of Series B Notes that are Transfer Restricted Securities (for so long
as such Series B Notes are Transfer Restricted Securities or for the 180-day
period provided in Section 3, whichever is shorter), the Company and the
Guarantors shall:



                                       11


                  (i) advise each Holder promptly and, if requested by such
         Holder, confirm such advice in writing, (A) when the Prospectus or any
         Prospectus supplement or post-effective amendment has been filed, and,
         with respect to any applicable Registration Statement or any
         post-effective amendment thereto, when the same has become effective,
         (B) of any request by the Commission for amendments to the Registration
         Statement or amendments or supplements to the Prospectus or for
         additional information relating thereto, (C) of the issuance by the
         Commission of any stop order suspending the effectiveness of the
         Registration Statement under the Act or of the suspension by any state
         securities commission of the qualification of the Transfer Restricted
         Securities for offering or sale in any jurisdiction, or the initiation
         of any proceeding for any of the preceding purposes, (D) of the
         existence of any fact or the happening of any event that makes any
         statement of a material fact made in the Registration Statement, the
         Prospectus, any amendment or supplement thereto or any document
         incorporated by reference therein untrue, or that requires the making
         of any additions to or changes in the Registration Statement in order
         to make the statements therein not misleading, or that requires the
         making of any additions to or changes in the Prospectus in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading;

                  (ii) if any fact or event contemplated by Section 6(d)(i)(D)
         above shall exist or have occurred, prepare a supplement or
         post-effective amendment to the Registration Statement or related
         Prospectus or any document incorporated therein by reference or file
         any other required document so that, as thereafter delivered to the
         purchasers of Transfer Restricted Securities, the Prospectus will not
         contain an untrue statement of a material fact or omit to state any
         material fact necessary to make the statements therein, in the light of
         the circumstances under which they were made, not misleading;

                  (iii) furnish to each Holder in connection with such exchange
         or sale, if any, before filing with the Commission, copies of any
         Registration Statement or any Prospectus included therein or any
         amendments or supplements to any such Registration Statement or
         Prospectus (including all documents incorporated by reference after the
         initial filing of such Registration Statement), which documents will be
         subject to the review and comment of such Holders in connection with
         such sale, if any, for a period of not less than five business days,
         and the Company will not file any such Registration Statement or
         Prospectus or any amendment or supplement to any such Registration
         Statement or Prospectus (including all such documents incorporated by
         reference) to which such Holders shall reasonably object within five
         business days after the receipt thereof; a Holder shall be deemed to
         have reasonably objected to such filing if such Registration Statement,
         amendment, Prospectus or supplement, as applicable, as proposed to be
         filed, contains an untrue statement of a material fact or omits to
         state any material fact necessary to make the statements therein not
         misleading or fails to comply with the applicable requirements of the
         Act;

                  (iv) promptly prior to the filing of any document that is to
         be incorporated by reference into a Registration Statement or
         Prospectus, provide copies of such document to each Holder in
         connection with such exchange or sale, if any, make the Company's and
         the Guarantors' representatives available for discussion of such
         document and other



                                       12


         customary due diligence matters, and include such information in such
         document prior to the filing thereof as such Holders may reasonably
         request;

                  (v) subject to execution of a customary confidentiality
         agreement reasonably acceptable to the Company and the Guarantors, make
         available, at reasonable times, for inspection by each Holder and any
         attorney or accountant retained by such Holders, all financial and
         other records, pertinent corporate documents of the Company and the
         Guarantor and cause the Company's and the Guarantors' officers,
         directors and employees to supply all information reasonably requested
         by any such Holder, attorney or accountant in connection with such
         Registration Statement or any post-effective amendment thereto
         subsequent to the filing thereof and prior to its effectiveness;

                  (vi) if requested by any Holders in connection with such
         exchange or sale, promptly include in any Registration Statement or
         Prospectus, pursuant to a supplement or post-effective amendment if
         necessary, such information as such Holders may reasonably request to
         have included therein, including, without limitation, information
         relating to the "Plan of Distribution" of the Transfer Restricted
         Securities; and make all required filings of such Prospectus supplement
         or post-effective amendment as soon as practicable after the Company is
         notified of the matters to be included in such Prospectus supplement or
         post-effective amendment;

                  (vii) furnish to each Holder in connection with such exchange
         or sale without charge, at least one copy of the Registration
         Statement, as first filed with the Commission, and of each amendment
         thereto, including all documents incorporated by reference therein and
         all exhibits (including exhibits incorporated therein by reference);

(viii)   deliver to each Holder without charge, as many copies of the Prospectus
         (including each preliminary prospectus) and any amendment or supplement
         thereto as such Persons reasonably may request; the Company and the
         Guarantors hereby consent to the use (in accordance with law) of the
         Prospectus and any amendment or supplement thereto by each selling
         Holder in connection with the offering and the sale of the Transfer
         Restricted Securities covered by the Prospectus or any amendment or
         supplement thereto;

                  (ix) upon the request of any Holder, enter into such
         agreements (including underwriting agreements) and make such
         representations and warranties and take all such other actions in
         connection therewith in order to expedite or facilitate the disposition
         of the Transfer Restricted Securities pursuant to any applicable
         Registration Statement contemplated by this Agreement as may be
         reasonably requested by any Holder in connection with any sale or
         resale pursuant to any applicable Registration Statement. In such
         connection, the Company and the Guarantors shall:

                           (A) upon request of any Holder, furnish (or in the
                  case of paragraphs (2) and (3), use all commercially
                  reasonable efforts to cause to be furnished) to each Holder,
                  upon Consummation of the Exchange Offer or upon the
                  effectiveness of the Shelf Registration Statement, as the case
                  may be:




                                       13


                                    (1) a certificate, dated such date, signed
                           on behalf of the Company and each Guarantor by (x)
                           the President or any Vice President and (y) a
                           principal financial or accounting officer of the
                           Company and such Guarantor, confirming, as of the
                           date thereof, the matters set forth in the officers'
                           certificate required pursuant to Section 7(i) of the
                           Purchase Agreement and such other similar matters as
                           such Holders may reasonably request;

                                    (2) an opinion, dated the date of
                           Consummation of the Exchange Offer or the date of
                           effectiveness of the Shelf Registration Statement, as
                           the case may be, of counsel for the Company and the
                           Guarantors covering matters similar to those set
                           forth in Exhibit B to the Purchase Agreement;

                                    (3) an opinion, dated the date of
                           Consummation of the Exchange Offer or the date of
                           effectiveness of the Shelf Registration Statement, as
                           the case may be, of the general counsel for the
                           Company and the Guarantors covering matters similar
                           to those set forth in Exhibit C to the Purchase
                           Agreement; and

                                    (4) a customary comfort letter, dated the
                           date of Consummation of the Exchange Offer, or as of
                           the date of effectiveness of the Shelf Registration
                           Statement, as the case may be, from the Company's
                           independent accountants, in the customary form and
                           covering matters of the type customarily covered in
                           comfort letters to underwriters in connection with
                           underwritten offerings, and affirming the matters set
                           forth in the comfort letters delivered pursuant to
                           Sections 7(f) and (g) of the Purchase Agreement; and

                           (B) deliver such other documents and certificates as
                  may be reasonably requested by the selling Holders to evidence
                  compliance with the matters covered in clause (A) above and
                  with any customary conditions contained in any agreement
                  entered into by the Company and the Guarantors pursuant to
                  this clause (ix);

                  (x) prior to any public offering of Transfer Restricted
         Securities, cooperate with the selling Holders and their counsel in
         connection with the registration and qualification of the Transfer
         Restricted Securities under the securities or Blue Sky laws of such
         jurisdictions as the selling Holders may reasonably request and do any
         and all other acts or things as may be reasonably necessary or
         advisable to enable the disposition in such jurisdictions of the
         Transfer Restricted Securities covered by the applicable Registration
         Statement; PROVIDED, HOWEVER, that neither the Company nor any
         Guarantor shall be required to register or qualify as a foreign
         corporation or as a dealer in securities in any jurisdiction where it
         is not now so qualified or to take any action that would subject it to
         the service of process in suits or to taxation, other than as to
         matters and transactions relating to the Registration Statement, in any
         jurisdiction where it is not now so subject; and



                                       14


                  (xi) provide promptly to each Holder, upon request, each
         document filed with the Commission pursuant to the requirements of
         Section 13 or Section 15(d) of the Exchange Act.

                  (e) RESTRICTIONS ON HOLDERS. Each Holder's acquisition of a
Transfer Restricted Security constitutes such Holder's agreement that, upon
receipt of the notice referred to in Section 6(d)(i)(C) or any notice from the
Company of the existence of any fact of the kind described in Section 6(d)(i)(D)
hereof (in each case, a "SUSPENSION NOTICE"), such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until (i) such Holder has received copies of
the supplemented or amended Prospectus contemplated by Section 6(d)(ii) hereof,
or (ii) such Holder is advised in writing by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "RECOMMENCEMENT DATE"). Each Holder receiving a Suspension Notice
shall be required to either (i) destroy any Prospectuses, other than permanent
file copies, then in such Holder's possession which have been replaced by the
Company with more recently dated Prospectuses or (ii) deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. The
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.

SECTION 7. REGISTRATION EXPENSES

                  (a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including certificates for the
Series B Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company and the Guarantors and one counsel (including local
counsel) for the Holders of Transfer Restricted Securities which shall be Latham
& Watkins LLP or such other counsel as may be selected by a majority of such
Holders; (v) all application and filing fees in connection with listing the
Series B Notes on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company and the Guarantors
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

                  The Company will, in any event, bear its and the Guarantors'
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.



                                       15


                  (b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes into in the Exchange Offer and/or
selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel (including local counsel), who shall
be Latham & Watkins LLP unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared. The Company shall not be
required to pay any underwriting discount, commission or similar fee related to
the sale of any securities.

SECTION 8. INDEMNIFICATION

                  (a) The Company and the Guarantors agree, jointly and
severally, to indemnify and hold harmless each Holder, its affiliates, its
directors, officers and each Person, if any, who controls such Holder (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from
and against any and all losses, claims, damages, liabilities, judgments,
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, the related preliminary prospectus or
Prospectus (or any amendment or supplement thereto) provided by the Company to
any Holder or any prospective purchaser of Series B Notes or registered Series A
Notes, or caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Company by any of the Holders.

                  (b) By its acquisition of Transfer Restricted Securities, each
Holder of Transfer Restricted Securities agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors, and their respective
affiliates, directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company or the Guarantors to the same extent as the foregoing indemnity from
the Company and the Guarantors set forth in section (a) above, but only with
reference to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any Registration Statement. In no
event shall any Holder, its affiliates, its directors, officers or any Person
who controls such Holder be liable or responsible for any amount in excess of
the amount by which the total amount received by such Holder with respect to its
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages that such Holder, its affiliates,
its directors, officers or any Person who controls such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.



                                       16


                  (c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company and the Guarantors, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the indemnified
party for reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and, prior
to the date of such settlement, the indemnifying party shall have failed to
comply with such reimbursement request. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.

                  (d) To the extent that the indemnification provided for in
this Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such



                                       17


indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand, and the
Holders, on the other hand, from their initial sale of Transfer Restricted
Securities (or, in the case of Series B Notes that are Transfer Restricted
Securities, the sale of the Series A Notes for which such Series B Notes were
exchanged) or (ii) if the allocation provided by clause 8(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company and the Guarantors, on the one hand, and of the Holder, on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Guarantors, on the one hand, and of the Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or such
Guarantor, on the one hand, or by the Holder, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities or judgments
referred to above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such party in
connection with investigating or defending any matter, including any action that
could have given rise to such losses, claims, damages, liabilities or judgments.

                  The Company, the Guarantors and, by its acquisition of
Transfer Restricted Securities, each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder hereunder
and not joint.

SECTION 9. RULE 144A AND RULE 144

                  The Company and each Guarantor agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company or such Guarantor (i) is not subject to Section 13
or 15(d) of the Exchange Act, to make available, upon request of any Holder, to
such Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by



                                       18


Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13
or 15(d) of the Exchange Act, to make all filings required thereby in a timely
manner in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144.

SECTION 10. MISCELLANEOUS

                  (a) REMEDIES. The Company and the Guarantors acknowledge and
agree that any failure by the Company and/or the Guarantors to comply with their
respective obligations under Sections 3 and 4 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company's and the Guarantor's obligations under
Sections 3 and 4 hereof. The Company and the Guarantors further agree to waive
the defense in any action for specific performance that a remedy at law would be
adequate.

                  (b) NO INCONSISTENT AGREEMENTS. The Company and the Guarantors
will not, on or after the date of this Agreement, enter into any agreement with
respect to their respective securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The Company and the Guarantors have not previously entered
into any agreement granting any registration rights with respect to their
respective securities to any Person that would require such securities to be
included in any Registration Statement filed hereunder. The rights granted to
the Holders hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's and the Guarantors'
securities under any agreement in effect on the date hereof.

                  (c) AMENDMENTS AND WAIVERS. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case of
Section 5 hereof and this Section 10(c)(i), the Company has obtained the written
consent of Holders of all outstanding Transfer Restricted Securities and (ii) in
the case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to or departure from the provisions hereof that relates exclusively to the
rights of Holders whose Transfer Restricted Securities are being tendered
pursuant to the Exchange Offer, and that does not affect directly or indirectly
the rights of other Holders whose Transfer Restricted Securities are not being
tendered pursuant to such Exchange Offer, may be given by the Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
being so tendered.

                  (d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights hereunder.



                                       19


                  (e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:

                  (i) if to a Holder, at the address set forth on the records of
         the Registrar (as therein defined) under the Indenture, with a copy to
         the Registrar under the Indenture; and

                  (f) if to the Company or any Guarantor, shall be delivered or
sent by mail, telex, overnight courier or facsimile transmission to Waste
Services, Inc., 1122 International Boulevard, Suite 601, Burlington, Ontario,
Canada L7L 6Z8, Attention: Joy Grahek (Fax: (905) 319-9408), with a copy to
Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022,
Attention: Marc Rossell (Fax: (212) 848-5361).

                  Any such statements, requests, notices or agreements shall
take effect at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.

                  Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.

                  (g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders; PROVIDED, HOWEVER, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture; PROVIDED FURTHER that this Agreement shall not inure
to the benefit of or be binding upon a successor, transferee or assign of a
Holder unless such successor, transferee or assign acquired Transfer Restricted
Securities from such Holder. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Transfer Restricted
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof.

                  (h) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  (i) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.



                                       20


                  (j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  (k) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

                  (l) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.





                                       21

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

                                       WASTE SERVICES, INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Executive Vice President,
                                                  General Counsel and Secretary



                                       CAPITAL ENVIRONMENTAL RESOURCE INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Executive Vice President,
                                                  General Counsel and Secretary



                                       GAP DISPOSAL 2001 LTD.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Secretary



                                       RAM-PAK COMPACTION SYSTEMS LTD.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary








                                       22





                                       6045341 CANADA INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary



                                       WASTE SERVICES OF FLORIDA, INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary



                                       JACKSONVILLE FLORIDA LANDFILL, INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary



                                       JONES ROAD LANDFILL AND RECYCLING LTD.

                                       By its General Partner:
                                       JACKSONVILLE FLORIDA LANDFILL, INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary





                                       23



                                       OMNI WASTE OF OSCEOLA COUNTY LLC



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Secretary



                                       CACTUS WASTE SYSTEMS, LLC



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Manager



                                       WASTE SERVICES OF ARIZONA, INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary



                                       WASTE SERVICES OF ALABAMA, INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary






                                       24



                                       WASTE SERVICES LIMITED PARTNER, LLC



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Manager



                                       WS GENERAL PARTNER, LLC

                                       By its Sole Member:
                                       WASTE SERVICES, INC.



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Executive Vice President,
                                                  General Counsel and Secretary



                                       RUFFINO HILLS TRANSFER STATION LP



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary



                                       FORT BEND REGIONAL LANDFILL LP



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary



                                       FLORIDA RECYCLING SERVICES, INC.,
                                         a Delaware Corporation



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary





                                       25


                                       FLORIDA RECYCLING SERVICES, INC.,
                                         an Illinois Corporation



                                       By: /s/ Ivan R. Cairns
                                           -------------------------------------
                                           Name:  Ivan R. Cairns
                                           Title: Vice President and Secretary






                                       26


Accepted:

LEHMAN BROTHERS INC.
CIBC WORLD MARKETS CORP.

By LEHMAN BROTHERS INC.,
   as AUTHORIZED REPRESENTATIVE

By: /s/ Michael Moravec
      ----------------------------
      Name: Michael Moravec
      Title: Senior Vice President






                                       27

EX-10.4

                                                                     EXHBIT 10.4

                                                                  EXECUTION COPY

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

                                  $160,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                      AMONG

                 CAPITAL ENVIRONMENTAL RESOURCE INC./RESSOURCES
                         ENVIRONNEMENTALES CAPITAL INC.,

                              WASTE SERVICES, INC.,

                                  AS BORROWER,

                               THE SEVERAL LENDERS
                        FROM TIME TO TIME PARTIES HERETO,

                              LEHMAN BROTHERS INC.,

                                  AS ARRANGER,

                            CIBC WORLD MARKETS CORP.,
                              AS SYNDICATION AGENT,

                              BANK OF AMERICA, N.A.
                             AS DOCUMENTATION AGENT,

                 CANADIAN IMPERIAL BANK OF COMMERCE, AS CANADIAN
                                      AGENT

                                       AND

                          LEHMAN COMMERCIAL PAPER INC.,
                             AS ADMINISTRATIVE AGENT

                           DATED AS OF APRIL 30, 2004

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



                                TABLE OF CONTENTS



                                                                                                                     Page
                                                                                                                  
SECTION 1. DEFINITIONS......................................................................................           1

     1.1      Defined Terms.................................................................................           1
     1.2      Other Definitional Provisions.................................................................          33
     1.3      Interrelationship with the Original Credit Agreement..........................................          34
     1.4      Confirmation of Existing Obligations..........................................................          35

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS..................................................................          35

     2.1      Tranche B Term Loan Commitments...............................................................          35
     2.2      Procedure for Tranche B Term Loan Assignment..................................................          35
     2.3      Repayment of Term Loans.......................................................................          35
     2.4      Revolving Credit Commitments..................................................................          36
     2.5      Procedure for Revolving Credit Borrowing......................................................          37
     2.6      Swing Line Commitments........................................................................          41
     2.7      Procedure for US Swing Line Borrowing and Canadian Swing Line Borrowing; Refunding of
              US Swing Line Loans and Canadian Swing Line Loans.............................................          41
     2.8      Repayment of Loans; Evidence of Debt..........................................................          45
     2.9      Commitment Fees, etc..........................................................................          46
     2.10     Termination or Reduction of Revolving Credit Commitments......................................          46
     2.11     Optional Prepayments..........................................................................          46
     2.12     Mandatory Prepayments and Commitment Reductions...............................................          47
     2.13     Conversion and Continuation Options...........................................................          48
     2.14     Minimum Amounts and Maximum Number of Eurodollar Tranches.....................................          49
     2.15     Interest Rates and Payment Dates..............................................................          49
     2.16     Computation of Interest and Fees..............................................................          51
     2.17     Inability to Determine Interest Rate..........................................................          52
     2.18     Pro Rata Treatment and Payments...............................................................          53
     2.19     Requirements of Law...........................................................................          55
     2.20     Taxes.........................................................................................          56
     2.21     Indemnity.....................................................................................          58
     2.22     Illegality....................................................................................          59
     2.23     Change of Lending Office......................................................................          59

SECTION 3. LETTERS OF CREDIT................................................................................          59

     3.1      L/C Commitment................................................................................          59
     3.2      Procedure for Issuance of Letter of Credit....................................................          60
     3.3      Fees and Other Charges........................................................................          61
     3.4      L/C Participations............................................................................          61
     3.5      Reimbursement Obligation of the Borrower and CERI.  (a).......................................          64
     3.6      Obligations Absolute..........................................................................          65


                                        i



                                                                                                                   
     3.7      Letter of Credit Payments.....................................................................          65
     3.8      Applications..................................................................................          66

SECTION 4. REPRESENTATIONS AND WARRANTIES...................................................................          66

     4.1      Financial Condition...........................................................................          66
     4.2      No Change.....................................................................................          67
     4.3      Corporate Existence; Compliance with Law......................................................          67
     4.4      Corporate Power; Authorization; Enforceable Obligations.......................................          67
     4.5      No Legal Bar..................................................................................          68
     4.6      No Material Litigation........................................................................          68
     4.7      No Default....................................................................................          68
     4.8      Ownership of Property; Liens..................................................................          68
     4.9      Intellectual Property.........................................................................          69
     4.10     Taxes.........................................................................................          69
     4.11     Federal Regulations...........................................................................          69
     4.12     Labor Matters.................................................................................          69
     4.13     Pensions and Benefit Plans....................................................................          69
     4.14     Investment Company Act; Other Regulations.....................................................          70
     4.15     Subsidiaries..................................................................................          71
     4.16     Use of Proceeds...............................................................................          71
     4.17     Environmental Matters.........................................................................          71
     4.18     Accuracy of Information, etc..................................................................          72
     4.19     Security Documents............................................................................          72
     4.20     Solvency......................................................................................          73
     4.21     Senior Indebtedness...........................................................................          73
     4.22     Regulation H..................................................................................          73
     4.23     Insurance.....................................................................................          74
     4.24     Real Estate...................................................................................          74
     4.25     Inactive Subsidiaries.........................................................................          74
     4.26     Kelso Preferred Stock.........................................................................          74

SECTION 5. CONDITIONS PRECEDENT.............................................................................          74

     5.1      Conditions to Effectiveness and Extension of Credit...........................................          74
     5.2      Conditions to Each Extension of Credit........................................................          80

SECTION 6. AFFIRMATIVE COVENANTS............................................................................          81

     6.1      Financial Statements..........................................................................          81
     6.2      Certificates; Other Information...............................................................          82
     6.3      Payment of Obligations........................................................................          84
     6.4      Conduct of Business and Maintenance of Existence, etc.........................................          84
     6.5      Maintenance of Property; Insurance............................................................          84
     6.6      Inspection of Property; Books and Records; Discussions........................................          84
     6.7      Notices.......................................................................................          85
     6.8      Environmental Laws............................................................................          85



                                       ii



                                                                                                                  
     6.9      Interest Rate Protection......................................................................          86
     6.10     Additional Collateral, etc....................................................................          86
     6.11     Use of Proceeds...............................................................................          89
     6.12     Pension and Benefits Plans....................................................................          89
     6.13     Further Assurances.  (a)......................................................................          90
     6.14     Post Closing Obligations......................................................................          91

SECTION 7. NEGATIVE COVENANTS...............................................................................          91

     7.1      Financial Condition Covenants.................................................................          91
     7.2      Limitation on Indebtedness....................................................................          93
     7.3      Limitation on Liens...........................................................................          95
     7.4      Limitation on Fundamental Changes.............................................................          96
     7.5      Limitation on Disposition of Property.........................................................          97
     7.6      Limitation on Restricted Payments.............................................................          98
     7.7      Limitation on Capital Expenditures............................................................          99
     7.8      Limitation on Investments.....................................................................          99
     7.9      Limitation on Optional Payments and Modifications of Debt Instruments and Other
              Agreements....................................................................................         101
     7.10     Limitation on Transactions with Affiliates....................................................         101
     7.11     Limitation on Sales and Leasebacks............................................................         101
     7.12     Limitation on Changes in Fiscal Periods.......................................................         101
     7.13     Limitation on Negative Pledge Clauses.........................................................         101
     7.14     Limitation on Restrictions on Subsidiary Distributions........................................         102
     7.15     Limitation on Lines of Business...............................................................         102
     7.16     Limitation on Amendments to Acquisition Documentation.........................................         102
     7.17     Limitation on Hedge Agreements................................................................         103
     7.18     Limitation on Performance Bonds...............................................................         103

SECTION 8. EVENTS OF DEFAULT................................................................................         103

SECTION 9. THE AGENTS; THE ARRANGER.........................................................................         107

     9.1      Appointment...................................................................................         107
     9.2      Delegation of Duties..........................................................................         108
     9.3      Exculpatory Provisions........................................................................         108
     9.4      Reliance by Agents............................................................................         108
     9.5      Notice of Default.............................................................................         109
     9.6      Non-Reliance on the Arranger, the Agents and Other Lenders....................................         109
     9.7      Indemnification...............................................................................         110
     9.8      Arranger and Agents in their Individual Capacities............................................         110
     9.9      Successor Agents..............................................................................         110
     9.10     Authorization to Release Liens and Guarantees.................................................         111
     9.11     The Arranger; the Syndication Agent; the Documentation Agent..................................         111
     9.12     Withholding Tax...............................................................................         111

SECTION 10. MISCELLANEOUS...................................................................................         112



                                       iii



                                                                                                                  
     10.1     Amendments and Waivers........................................................................         112
     10.2     Notices.......................................................................................         114
     10.3     No Waiver; Cumulative Remedies................................................................         116
     10.4     Survival of Representations and Warranties....................................................         116
     10.5     Payment of Expenses...........................................................................         116
     10.6     Successors and Assigns; Participations and Assignments........................................         118
     10.7     Adjustments; Set-off..........................................................................         121
     10.8     Counterparts..................................................................................         122
     10.9     Severability..................................................................................         122
     10.10    Integration...................................................................................         122
     10.11    GOVERNING LAW.................................................................................         122
     10.12    Submission To Jurisdiction; Waivers...........................................................         123
     10.13    Acknowledgments...............................................................................         123
     10.14    Confidentiality...............................................................................         123
     10.15    Release of Collateral and Guarantee Obligations...............................................         124
     10.16    Accounting Changes............................................................................         125
     10.17    Delivery of Lender Addenda....................................................................         126
     10.18    WAIVERS OF JURY TRIAL.........................................................................         126
     10.19    Subordination of Intercompany Indebtedness....................................................         126
     10.20    Judgment Currency.............................................................................         126

SECTION 11. GUARANTEE.......................................................................................         127

     11.1     Guarantee.....................................................................................         127
     11.2     Rights of Reimbursement, Contribution and Subrogation.........................................         128
     11.3     Amendments, etc. with respect to the Canadian Obligations.....................................         129
     11.4     Guarantee Absolute and Unconditional..........................................................         130
     11.5     Reinstatement.................................................................................         131
     11.6     Payments......................................................................................         131
     11.7     Waivers by the Borrower.......................................................................         131



                                       iv



ANNEX:

A          Pricing Grid

SCHEDULES:

1.1        Historical Consolidated EBITDA
4.4        Consents, Authorizations, Filings and Notices
4.6        Material Litigation
4.10       Taxes
4.15(a)    Subsidiaries
4.15(b)    Agreements Related to Capital Stock
4.17       Environmental Matters
4.19       Filing Jurisdictions under Personal Property Security Legislation
4.24       Owned and Leased Property; Mortgaged Properties
5.1(a)     Post Closing Mortgage Delivery Requirements
5.1(k)     Environmental Assessments
7.2(d)     Existing Indebtedness
7.3(f)     Existing Liens
7.10       Transactions with Affiliates

EXHIBITS:

A-1        Amended and Restated Guarantee and Collateral Agreement
A-2        Canadian Guarantee and Collateral Agreement
B          Form of Compliance Certificate
C          Form of Closing Certificate
D-1        Form of U.S. Mortgage
D-2        Form of Canadian Mortgage
E          Form of Assignment and Acceptance
F-1        Form of Legal Opinion of Shearman & Sterling LLP
F-2        Form of Legal Opinion of Blake, Cassels & Graydon LLP
G-1        Form of Amended and Restated Term Note
G-2        Form of Amended and Restated US Revolving Credit Note
G-3        Form of Canadian Revolving Credit Note
G-4        Form of Amended and Restated US Swing Line Note
G-5        Form of Canadian Swing Line Note
H          Form of Discount Note
I          Form of Exemption Certificate
J          Form of Lender Addendum
K          Form of Borrowing Notice



            This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 30,
2004, among CAPITAL ENVIRONMENTAL RESOURCE INC./RESSOURCES ENVIRONNEMENTALES
CAPITAL INC. an Ontario corporation ("CERI"), WASTE SERVICES, INC., a Delaware
corporation (the "Borrower"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "Lenders"), LEHMAN
BROTHERS INC., as exclusive advisor, sole lead arranger and sole book runner (in
such capacity, the "Arranger"), CIBC WORLD MARKETS CORP, as syndication agent
(in such capacity, the "Syndication Agent"), BANK OF AMERICA, N.A., as
documentation agent (in such capacity, the "Documentation Agent"), LEHMAN
COMMERCIAL PAPER INC., as administrative agent (in such capacity, the
"Administrative Agent"), and CANADIAN IMPERIAL BANK OF COMMERCE, as Canadian
agent (in such capacity, the "Canadian Agent") AMENDS AND RESTATES IN FULL the
Credit Agreement dated as of December 31, 2003, by and among CERI, the Borrower,
the Lenders party thereto (the "Original Lenders"), the Arranger and the
Administrative Agent (the "Original Credit Agreement"); this amendment and
restatement of the Original Credit Agreement, as amended, supplemented, restated
or otherwise modified from time to time, is hereinafter referred to as this
"Agreement".

                                  WITNESSETH:

            WHEREAS, the Borrower has requested that the Original Credit
Agreement be amended and restated in full as set forth herein;

            WHEREAS, it is the intent of CERI, the Borrower, the Lenders, the
Administrative Agent, the Syndication Agent and the Arranger that this Agreement
amend and restate in its entirety the Original Credit Agreement and that, from
and after the Restatement Effective Date, the Original Credit Agreement shall
evidence the terms and conditions under which the Borrower heretofore has
incurred obligations and liabilities to the Original Lenders and the
Administrative Agent (as evidenced by the Original Credit Agreement and the
Administrative Agent's books and records); and

            WHEREAS, the Lenders (including the Original Lenders that are party
hereto) are willing to amend and restate the Original Credit Agreement and to
extend (or to continue to extend credit in the case of the Original Lenders that
are party hereto) credit to the Borrower and CERI upon and subject to the terms
and conditions hereinafter set forth;

            NOW, THEREFOR, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree to amend and restate the
Original Credit Agreement, and the Original Credit Agreement is hereby amended
and restated as follows:

                             SECTION 1. DEFINITIONS

            1.1   Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.

            "Acceptance Fee": a fee payable by CERI with respect to the
acceptance of a Bankers' Acceptance by a Lender under this Agreement, as set
forth in Section 2.5(d).

            "Acquisition": as defined in Section 5.1.



            "Acquisition Agreements": any and all asset purchase or stock
purchase agreements entered into by any Group Member in connection with any
Permitted Acquisition, the acquisition of the Allied Business or the FRS
Acquisition, as the same may be amended, supplemented, replaced or otherwise
modified from time to time in accordance with this Agreement, including, without
limitation, the Allied Acquisition Agreement and the FRS Acquisition Agreement.

            "Acquisition Documentation": collectively, the Acquisition
Agreements and all schedules, exhibits, annexes and amendments thereto and all
side letters and agreements affecting the terms thereof or entered into in
connection therewith, in each case, as amended, supplemented or otherwise
modified from time to time in accordance with this Agreement.

            "Adjustment Date": as defined in the Pricing Grid.

            "Administrative Agent": as defined in the preamble hereto.

            "Advanced Asset Swap": the exchange of the Nassau landfill, located
in Nassau County, Florida, which was acquired as part of the Allied Business,
for (a) a collection operation in the greater Orlando, Florida, metropolitan
area and (b) $10,000,000 in cash, subject to working capital adjustments.

            "Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.

            "Agents": the collective reference to the Syndication Agent, the
Documentation Agent, the Canadian Agent and the Administrative Agent.

            "Aggregate Exposure": with respect to any Lender at any time, an
amount equal to the sum of (i) the aggregate then unpaid principal amount of
such Lender's Term Loans and (ii) the amount of such Lender's Revolving Credit
Commitment then in effect or, if the Revolving Credit Commitments have been
terminated, the amount of such Lender's Revolving Extensions of Credit then
outstanding.

            "Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the sum of the Aggregate Exposures of all Lenders at such time.

            "Agreement": this Amended and Restated Credit Agreement, as amended,
supplemented, replaced or otherwise modified from time to time.

            "Allied Acquisition Agreement": the Asset Purchase Agreement, dated
as of November 12, 2003, by and among the Borrower, certain of its Subsidiaries
named therein, Allied Waste Industries, Inc. and certain of its Subsidiaries
named therein.

                                       2


            "Allied Business": the collection and hauling operations, transfer
stations, landfills and recycling facilities which were purchased by the
Borrower and its Subsidiaries from Allied Waste Industries, Inc. and certain
Subsidiaries thereof pursuant to the Allied Acquisition Agreement, it being
noted that the transfer of certain assets related to the Allied Business located
in Jacksonville, Florida and the Allied Business located in Camden County,
Florida has not been consummated as of the date of this Agreement.

            "Applicable Margin": for each Type of Loan under each Facility, the
rate per annum set forth opposite such Facility under the relevant column
heading below:



                                            Canadian Prime Rate      Base Rate     Acceptance     Eurodollar
                                                Rate Loans             Loans           Fee           Loans
                                            -------------------      ---------     ----------     ----------
                                                                                      
US Revolving Credit Facility                        N.A.               2.25%           N.A.          3.25%
(including US Swing Line Loans)
Canadian Revolving Credit Facility                 2.25%               2.25%          3.25%          3.25%
(including Canadian Swing Line Loans)
Tranche B Term Loan Facilities                      N.A.               2.25%           N.A.          3.25%


provided, that on and after the first Adjustment Date occurring after the
completion of two full fiscal quarters of the Borrower after the Restatement
Effective Date, the Applicable Margin with respect to US Revolving Credit Loans,
Canadian Revolving Credit Loans, US Swing Line Loans and Canadian Swing Line
Loans will be determined pursuant to the Pricing Grid.

            "Application": an application, in such form as the relevant Issuing
Lender may specify from time to time, requesting such Issuing Lender to issue a
Letter of Credit.

            "Arizona Sale and Leaseback": the sale and leaseback of the transfer
station located at Mountain Road/Pecos Road, Maricopa County, Arizona, for an
aggregate amount not to exceed $500,000 and on other terms and conditions
reasonably satisfactory to the Administrative Agent.

            "Arranger": as defined in the preamble hereto.

            "Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c), (d) or (f) of Section 7.5) which yields gross proceeds to any
Group Member (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of $500,000.

            "Assignee": as defined in Section 10.6(c).

            "Assignment and Acceptance": as defined in Section 10.6(c).

            "Assignor": as defined in Section 10.6(c).

            "Available Canadian Revolving Credit Commitment": with respect to
any Canadian Revolving Credit Lender at any time, an amount equal to the excess,
if any, of (a) such

                                       3


Lender's Canadian Revolving Credit Commitment then in effect over (b) such
Lender's Canadian Revolving Extensions of Credit then outstanding, provided
that, in calculating any Lender's Canadian Revolving Extensions of Credit for
the purpose of determining such Lender's (other than the Canadian Swing Line
Lender's) Available Canadian Revolving Credit Commitment for purposes of Section
2.9(a), the aggregate principal amount of Canadian Swing Line Loans then
outstanding shall be deemed to be zero.

            "Available US Revolving Credit Commitment": with respect to any US
Revolving Credit Lender at any time, an amount equal to the excess, if any, of
(a) such Lender's US Revolving Credit Commitment then in effect over (b) such
Lender's US Revolving Extensions of Credit then outstanding; provided, that in
calculating any Lender's US Revolving Extensions of Credit for the purpose of
determining such Lender's (other than the US Swing Line Lender's) Available US
Revolving Credit Commitment for purposes of Section 2.9(a), the aggregate
principal amount of US Swing Line Loans then outstanding shall be deemed to be
zero.

            "BA Equivalent Loan": a Canadian Revolving Credit Loan made by a Non
BA Lender evidenced by a Discount Note.

            "Bankers' Acceptance" and "B/A" each means a bill of exchange,
including a depository bill issued in accordance with the Depository Bills and
Notes Act (Canada), denominated in Canadian Dollars, drawn by CERI and accepted
by a Lender and includes a Discount Note.

            "Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the prime
lending rate as set forth on the British Banking Association Telerate Page 5 (or
such other comparable page as may, in the opinion of the Administrative Agent,
replace such page for the purpose of displaying such rate), as in effect from
time to time. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually available. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective day of such change
in the Prime Rate, or the Federal Funds Effective Rate, respectively.

            "Base Rate Loans": Loans for which the applicable rate of interest
is based upon the Base Rate or, with respect to Canadian Revolving Credit Loans,
the US Base Rate in Canada.

            "Benefited Lender": as defined in Section 10.7.

            "Board": the Board of Governors of the Federal Reserve System of the
United States of America (or any successor).

            "Borrower": as defined in the preamble hereto.

            "Borrowing Date": any Business Day specified by the Borrower or
CERI, as applicable, as a date on which the Borrower or CERI, as applicable,
requests the relevant Lenders to make Loans hereunder.

                                       4


            "Borrowing Notice": with respect to any request for borrowing of
Loans hereunder, a notice from the Borrower or CERI, substantially in the form
of, and containing the information prescribed by, Exhibit J, delivered to the
Administrative Agent or the Canadian Agent, as applicable.

            "Business Day": (a) for all purposes other than as covered by clause
(b) below, a day other than a Saturday, Sunday or other day on which commercial
banks in New York City or (solely with respect to all notices and determinations
in connection with, and payments of principal and interest on, Canadian
Revolving Extensions of Credit) Toronto, Ontario, are authorized or required by
law to close and (b) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (a) and which is also a day
for trading by and between banks in Dollar deposits in the interbank Eurodollar
market.

            "Canadian Agent": as defined in the preamble hereto.

            "Canadian Benefit Plans": all material employee benefit plans
maintained or contributed to by any Group Member that are not Canadian Pension
Plans including, without limitation, all profit sharing, savings, supplemental
retirement, retiring allowance, severance, pension, deferred compensation,
welfare, bonus, incentive compensation, phantom stock, supplementary
unemployment benefit plans or arrangements and all material life, health, dental
and disability plans and arrangements in which the employees or former employees
of any Group Member employed in Canada participate or are eligible to
participate, but excluding all stock option or stock purchase plans.

            "Canadian Dollars and Cdn. $": lawful currency of Canada.

            "Canadian Funding Office": the office specified from time to time by
the Canadian Agent as its funding office by notice to CERI, the Administrative
Agent and the Lenders.

            "Canadian Guarantee and Collateral Agreement": the Canadian
Guarantee and Collateral Agreement dated as of December 31, 2003, executed by
CERI and each Canadian Subsidiary Guarantor, as amended, supplemented, replaced
or otherwise modified from time to time, attached hereto as Exhibit A-2.

            "Canadian Issuing Lender": any Canadian Revolving Credit Lender from
time to time designated by the Borrower or CERI as a Canadian Issuing Lender
with the consent of such Canadian Revolving Credit Lender and the Canadian
Agent.

            "Canadian L/C Commitment": $15,000,000.

            "Canadian L/C Obligations": at any time, an amount equal to the sum
of (a) the then aggregate undrawn and unexpired amount of the then outstanding
Canadian Letters of Credit and (b) the aggregate amount of drawings under the
Canadian Letters of Credit that have not then been reimbursed pursuant to
Section 3.5.

                                       5


            "Canadian L/C Participants": with respect to any Canadian Letter of
Credit, the collective reference to the Canadian Revolving Credit Lenders other
than the Canadian Issuing Lender that issued such Canadian Letter of Credit.

            "Canadian Letters of Credit": as defined in Section 3.1(b).

            "Canadian Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Canadian Revolving Credit Loans and Canadian Revolving Credit Reimbursement
Obligations and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to CERI, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Canadian Revolving
Credit Loans, the Canadian Reimbursement Obligations and all other obligations
and liabilities of CERI to the Administrative Agent, the Canadian Agent or to
any Canadian Revolving Credit Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with this Agreement, any other Loan
Document, the Canadian Letters of Credit, or any other document made, delivered
or given in connection herewith or therewith by CERI, whether on account of
principal, interest, reimbursement obligations, fees, costs, expenses or
otherwise, in all cases in respect of the Canadian Revolving Credit Facility
only.

            "Canadian Payment Office": the office specified from time to time by
the Canadian Agent as its payment office by notice to CERI and the Canadian
Revolving Credit Lenders.

            "Canadian Pension Plans": any plan which is considered to be a
pension plan for the purposes of any applicable pension benefits standards
statute and/or regulation in Canada established, maintained or contributed to by
any Group Member, their respective employees or former employees.

            "Canadian Prime Rate": on any day the greater of:

            (a)   the annual rate of interest announced from time to time by the
Canadian Agent as being its reference rate then in effect for determining
interest rates on Canadian Dollar denominated commercial loans made by it in
Canada; and

            (b)   the CDOR Rate in effect from time to time plus 75 basis points
per annum.

      Any change in the Canadian Prime Rate shall be effective as of the opening
of business on the date the change becomes effective generally.

            "Canadian Prime Rate Loans": Canadian Revolving Credit Loans which
are denominated in Canadian Dollars and in respect of which CERI is obligated to
pay interest in accordance with Section 2.15 at the Canadian Prime Rate.

            "Canadian Refunded Swing Line Loans": as defined in Section 2.7(g).

            "Canadian Refunding Date": as defined in Section 2.7(h).

                                       6


            "Canadian Reimbursement Obligations": the Reimbursement Obligations
owing by CERI.

            "Canadian Revolving Credit Commitment": as to any Canadian Revolving
Credit Lender, the obligation of such Lender, if any, to make Canadian Revolving
Credit Loans and participate in Canadian Swing Line Loans and Canadian Letters
of Credit, in an aggregate principal and/or face amount not to exceed the amount
set forth under the heading "Canadian Revolving Credit Commitment" opposite such
Lender's name on Schedule 1 to the Lender Addendum delivered by such Lender, or,
as the case may be, in the Assignment and Acceptance pursuant to which such
Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof. The original aggregate amount of Canadian
Revolving Credit Commitments is $15,000,000.

            "Canadian Revolving Credit Commitment Period": the period from and
including the Restatement Effective Date to the Canadian Revolving Credit
Termination Date.

            "Canadian Revolving Credit Facility": as defined in the definition
of "Facility" in this Section 1.1.

            "Canadian Revolving Credit Lender": each Lender that has a Canadian
Revolving Credit Commitment or that is the holder of Canadian Revolving Credit
Loans, including the Canadian Issuing Lender and the Canadian Agent.

            "Canadian Revolving Credit Loans": as defined in Section 2.4.

            "Canadian Revolving Credit Note": as defined in Section 2.8.

            "Canadian Revolving Credit Percentage": as to any Canadian Revolving
Credit Lender at any time, the percentage which such Lender's Canadian Revolving
Credit Commitment then constitutes of the aggregate Revolving Credit Commitments
(or, at any time after the Canadian Revolving Credit Commitments shall have
expired or terminated, the percentage which the aggregate amount of such
Lender's Canadian Revolving Extensions of Credit then outstanding constitutes of
the amount of the aggregate Canadian Revolving Extensions of Credit then
outstanding).

            "Canadian Revolving Credit Termination Date": the fifth anniversary
of the Restatement Effective Date.

            "Canadian Revolving Extensions of Credit": as to any Canadian
Revolving Credit Lender at any time, an amount equal to the sum of (a) the
aggregate principal amount of all Canadian Revolving Credit Loans made by such
Lender then outstanding, (b) such Lender's Canadian Revolving Credit Percentage
of the Canadian L/C Obligations then outstanding and (c) such Lender's Canadian
Revolving Credit Percentage of the Canadian Swing Line Loans then outstanding.

            "Canadian Secured Parties": the Administrative Agent, the Canadian
Agent and the Canadian Revolving Credit Lenders.

                                       7


            "Canadian Subsidiaries": Ram-Pak Compaction Systems Ltd, a
corporation organized under the laws of Canada, 6045341 Canada Inc., a
corporation organized under the laws of Canada, Gap Disposal (2001), Ltd., a
corporation organized under the laws of Saskatchewan and each other direct
Subsidiary of CERI and, after the Migration, the Borrower, to the extent such
Subsidiary is organized under the laws of Canada or any province thereof.

            "Canadian Subsidiary Guarantor": each Canadian Subsidiary until the
Migration.

            "Canadian Swing Line Commitment": the obligation of the Canadian
Swing Line Lender to make Canadian Swing Line Loans pursuant to Section 2.6 in
an aggregate principal amount at any one time outstanding not to exceed
$3,000,000.

            "Canadian Swing Line Lender": each Lender that has a Canadian Swing
Line Commitment or that is a holder of Canadian Swing Line Loans.

            "Canadian Swing Line Loans": as defined in Section 2.6.

            "Canadian Swing Line Note": as defined in Section 2.8(e).

            "Canadian Swing Line Participation Amount": as defined in Section
2.7(h).

            "Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person for the acquisition or leasing
(pursuant to a capital lease) of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) to the extent required to be capitalized under GAAP on a balance
sheet of such Person.

            "Capital Holdings Company": Capital Environmental Holdings Company,
a Nova Scotia unlimited liability company.

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

            "Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.

            "Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States of America or issued by any
agency thereof and backed by the full faith and credit of the United States of
America or Canada or any agency, state, province or territory thereof, in each
case maturing within one year from the date of acquisition; (b) certificates of
deposit, time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or is a bank

                                       8


listed in Schedule I of the Bank Act (Canada) and having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2 by Moody's
Investors Service, Inc. ("Moody's") or R-1 by Dominion Bond Rating Service
Limited ("DBRS") or carrying an equivalent rating by a nationally recognized
rating agency, if all of the three named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six months
from the date of acquisition; (d) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 30 days with respect to securities issued or
fully guaranteed or insured by the United States of America or the Government of
Canada; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, province, commonwealth or
territory of the United States of America or Canada, by any political
subdivision or taxing authority of any such state, province, commonwealth or
territory or by any foreign government, the securities of which state, province,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P, A by Moody's, or A
by DBRS; (f) securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition;
and (g) shares of money market mutual or similar funds which invest exclusively
in assets satisfying the requirements of clauses (a) through (f) of this
definition.

            "CDOR Rate": on any day, the annual rate of interest which is the
arithmetic average of the "BA 1 month" rates applicable to Canadian Dollar
Bankers' Acceptances issued by Schedule I Lenders identified as such on the
Reuters Screen CDOR Page at approximately 10:00 a.m. (Toronto time) on such day
(as adjusted by the Canadian Agent after 10:00 a.m. to reflect any error in any
posted rate or in the posted average annual rate). If the rate does not appear
on the Reuters Screen CDOR Page as contemplated above, then the CDOR Rate on any
day shall be calculated as the arithmetic average of the discount rates
applicable to one month Canadian Dollar Bankers' Acceptances of, and as quoted
by, any two of the Schedule I Lenders, chosen by the Canadian Agent in its
discretion, as of 10:00 a.m. on the day, or if the day is not a Business Day,
then on the immediately preceding Business Day. If less than two Lenders quote
the aforementioned rate, the CDOR Rate shall be the rate quoted by the Canadian
Agent.

            "CERI Board Reconstitution": the reconstitution of the board of
directors of CERI to the extent necessary to comply with the applicable rules
and regulations of the Securities and Exchange Commission or any securities
exchange or quotation system on which its securities trade.

            "Change of Control": the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
excluding the Existing Investors and the Borrower (solely as a result of the
Migration), shall become, or obtain rights (whether by means or warrants,
options or otherwise) to become, the "beneficial owner" (as defined in Rules
13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more
than 30% of the outstanding common stock of CERI; (b) during any period of 12
consecutive months the board of directors of CERI shall cease to consist of a
majority of Continuing Directors at any time prior to the Migration, (c) at any
time after the Migration, any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), excluding the Existing Investors, shall become, or obtain
rights (whether by

                                       9


means or warrants, options or otherwise) to become, the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 30% of the outstanding common stock of the Borrower;
(d) during any period of 12 consecutive months, at any time after the Migration,
the board of directors of the Borrower shall cease to consist of a majority of
Continuing Directors; or (e) any Specified Change of Control. Notwithstanding
the foregoing (i) the Migration and each of the transactions and corporate
actions contemplated thereby and (ii) the CERI Board Reconstitution shall not
constitute, or be deemed to result in, a Change of Control.

            "Code": the Internal Revenue Code of 1986, as amended from time to
time.

            "Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.

            "Commitment": with respect to any Lender, the sum of Tranche B Term
Loan Commitment and the Revolving Credit Commitment of such Lender.

            "Commitment Fee Rate": 1/2 of 1% per annum.

            "Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001(b)(1) of ERISA or is part of a group that includes the Borrower
and that is treated as a single employer under Section 414(b) or 414(c) of the
Code or, solely for purposes of Section 412 of the Code to the extent required
by such section, Section 414(m) or 414(o) of the Code.

            "Compliance Certificate": a certificate duly executed by a
Responsible Officer, substantially in the form of Exhibit B.

            "Confidential Information Memorandum": the Confidential Information
Memorandum dated April 2004 and furnished to the initial Lenders in connection
with the syndication of the Facilities.

            "Consolidated Current Assets": of any Person at any date, all
amounts (other than cash and Cash Equivalents) that would, in conformity with
GAAP, be set forth opposite the caption "total current assets" (or any like
caption) on a consolidated balance sheet of such Person and its Subsidiaries at
such date.

            "Consolidated Current Liabilities": of any Person at any date, all
amounts that would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated balance
sheet of such Person and its Subsidiaries at such date, but excluding, with
respect to the Borrower or, prior to the Migration, CERI (a) the current portion
of any Funded Debt of the Group Members and (b), without duplication, all
Indebtedness consisting of Revolving Credit Loans, Letters of Credit or Swing
Line Loans, to the extent otherwise included therein.

            "Consolidated EBITDA": of any Person for any period, Consolidated
Net Income of such Person and its Subsidiaries for such period plus, without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) income tax expense, (b)
total cash interest expense of such Person and its Subsidiaries,

                                       10


amortization or write-off of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with Indebtedness,
(c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary, unusual or non-recurring expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business), (f) any other non-cash charges and expenses
(including any losses attributable to fluctuations in foreign currency exchange
rates), (g) one-time charges and expenses (including costs, fees and expenses in
connection with the Migration) not to exceed $1,000,000 over the term of this
Agreement, (h) one-time severance charges, not to exceed $200,000 over the term
of this Agreement, (i) one-time integration costs in connection with the
purchase of the Allied Business not to exceed $1,000,000 and (j) to the extent
not constituting cash interest expense, all expenses attributable to dividends
and accruals in respect of preferred stock (including the Kelso Preferred
Stock), and minus, to the extent included in the statement of such Consolidated
Net Income for such period, the sum of (a) interest income (except to the extent
deducted in determining total cash interest expense), (b) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business) and (c) any other non-cash income (including any gains attributable to
fluctuations in foreign currency exchange rates), all as determined on a
consolidated basis; provided that, for purposes of calculating Consolidated
EBITDA of the Group Members for any period, (i) the Consolidated EBITDA of any
business unit acquired by the Group Members during such period (other than a
business unit described in clause (iii) below) shall be included on a pro forma
basis (but without giving effect to any projected synergies or cost savings
resulting from such acquisition except those adjustments in accordance with
Regulation S-X of the Securities Act of 1933 or otherwise agreed to by the
Administrative Agent) for such period (assuming for purposes of the calculation
of Consolidated EBITDA the consummation of such acquisition occurred on the
first day of such period but without duplication of the Consolidated EBITDA of
such business unit after the date of acquisition thereof) if the consolidated
balance sheet of such acquired business unit as at the end of the period
preceding the acquisition of such business unit and the related consolidated
statements of income and stockholders' equity and of cash flows (or, if no such
balance sheet or statements of income and stockholder's equity and of cash flows
is available, such other financial information reasonably satisfactory to the
Administrative Agent) for the period in respect of which Consolidated EBITDA is
to be calculated (x) have been previously provided to the Administrative Agent
and (y) either (1) have been reported on without a qualification arising out of
the scope of the audit by independent certified public accountants of nationally
recognized standing or (2) have been found acceptable by the Administrative
Agent, (ii) the Consolidated EBITDA of the JED Landfill for the fiscal quarters
ending June 30, 2004, September 30, 2004 and December 31, 2004 shall be adjusted
(x) to exclude any Consolidated EBITDA attributable to such landfill for any
fiscal quarters preceding such fiscal quarters and (y) to include Consolidated
EBITDA of such landfill for such fiscal quarters equal to (A) in the case of the
fiscal quarter ending June 30, 2004, the Consolidated EBITDA attributable to
such landfill for such quarter multiplied by four, (B) in the case of the fiscal
quarter ending September 30, 2004, the Consolidated EBITDA attributable to such
landfill for the fiscal quarters ending June 30, 2004 and September 30, 2004
multiplied by two and (C) in the case of the fiscal quarter ending December 31,
2004, the Consolidated EBITDA attributable to such landfill for the fiscal
quarters ending June 30, 2004, September 30,

                                       11


2004 and December 31, 2004 multiplied by 4/3, (iii) the Consolidated EBITDA
attributable to the Borrower's Arizona collection business for the fiscal
quarters ending June 30, 2004 and September 30, 2004 shall be adjusted (x) to
exclude any Consolidated EBITDA attributable to such collections business for
the fiscal quarters prior to and including March 31, 2004 and (y) to annualize
Consolidated EBITDA for the fiscal quarters ending June 30, 2004 and September
30, 2004 by (A) in the case of the fiscal quarter ending June 30, 2004,
multiplying the Consolidated EBITDA attributable to the Arizona collection
business for the fiscal quarters ending March 31, 2004 and June 30, 2004 by two,
(B) in the case of the fiscal quarter ending September 30, 2004, multiplying the
Consolidated EBITDA attributable to the Arizona collection business for the
fiscal quarters ending March 31, 2004, June 30, 2004 and September 30, 2004 by
4/3 and (iv) the Consolidated EBITDA of any business unit Disposed of by the
Group Members during such period shall be excluded for such period (assuming for
purposes of the calculation of Consolidated EBITDA the consummation of such
Disposition occurred on the first day of such period); and provided, further,
that the Consolidated EBITDA of CERI and its Subsidiaries for the fiscal
quarters ending September 30, 2003, December 31, 2003 and March 31, 2004,
calculated to exclude the effect of the JED Landfill and the Arizona collection
business, shall be conclusively deemed to equal $14,529,000, $9,658,000 and
$8,112,625, respectively as more specifically set forth in Schedule 1.1 and the
Consolidated EBITDA of the Arizona collection business for the fiscal quarter
ending March 31, 2004, shall be conclusively deemed to equal $599,000.

            "Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA of the Group Members for such period to (b) Consolidated
Interest Expense of the Group Members for such period.

            "Consolidated Interest Expense": of any Person for any period, total
cash interest expense (including that attributable to Capital Lease Obligations)
of such Person and its Subsidiaries for such period with respect to all
outstanding Indebtedness of such Person and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed by such
Person with respect to letters of credit and bankers' acceptance financing and
net costs of such Person under Hedge Agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with GAAP);
provided that Consolidated Interest Expense of the Group Members for each of the
fiscal quarters ending September 30, 2003, December 31, 2003 and March 31, 2004
shall be conclusively deemed to be equal to $4,927,400; and provided, further,
that cash interest expense with respect to fees payable in connection with the
Existing Letters of Credit shall be calculated on the basis of when such fee is
earned.

            "Consolidated Leverage Ratio": as at the last day of any period of
CERI or, after the Migration, the Borrower, the ratio of (a) Consolidated Total
Debt on such day to (b) Consolidated EBITDA of the Group Members for such
period.

            "Consolidated Net Income": of any Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; provided,
that in calculating Consolidated Net Income of the Group Members for any period,
there shall be excluded (a) the income (or deficit) of any Person accrued prior
to the date it becomes a Subsidiary of CERI or, after the Migration, the
Borrower, or is merged into or consolidated with any Group Member, (b) the
income (or

                                       12


deficit) of any Person (other than a Subsidiary of CERI or, after the Migration,
the Borrower) in which any Group Member has an ownership interest, except to the
extent that any such income is actually received by a Group Member in the form
of cash dividends or similar distributions and (c) the undistributed earnings of
any Subsidiary of CERI or, after the Migration, the Borrower, to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law applicable
to such Subsidiary.

            "Consolidated Senior Debt": all Consolidated Total Debt other than
Subordinated Debt.

            "Consolidated Senior Secured Debt": at any date, without
duplication, the sum of (i) the aggregate principal amount of all Term Loans
then outstanding, (ii) the aggregate principal amount of Revolving Credit Loans
then outstanding, (iii) the aggregate principal amount of Swing Line Loans then
outstanding and (iv) the aggregate principal amount of any other secured
Consolidated Senior Debt then outstanding.

            "Consolidated Senior Secured Leverage Ratio": as of the last day of
any period of CERI or, after the Migration, the Borrower, the ratio of (a)
Consolidated Senior Secured Debt on such day to (b) Consolidated EBITDA of the
Group Members for such period.

            "Consolidated Total Debt": at any date, without duplication, the
aggregate principal amount of all Indebtedness of the Group Members at such date
that would be classified as a liability on the consolidated balance sheet of the
Group Members, determined on a consolidated basis in accordance with GAAP.

            "Consolidated Working Capital": at any date, the difference of (a)
Consolidated Current Assets of CERI or, after the Migration, the Borrower on
such date less (b) Consolidated Current Liabilities of CERI or, after the
Migration, the Borrower on such date.

            "Continuing Directors": (a) with respect to CERI, the directors of
CERI on the Restatement Effective Date and on the date of the CERI Board
Reconstitution, and each other director of CERI, if, in each case, such other
director's nomination for election to the board of directors of CERI is
recommended by at least a majority of the then Continuing Directors, or such
other director receives the vote of the Existing Investors in his or her
election by the shareholders of CERI, or such other director is appointed or
elected, or such Director's appointment was approved, in each case by the Kelso
Investors and (b) with respect to the Borrower, the directors of the Borrower,
immediately after giving effect to the Migration and each other director of the
Borrower, if, in each case, such other director's nomination for election to the
board of directors of CERI is recommended by at least a majority of the then
Continuing Directors, or such other director receives the vote of the Existing
Investors in his or her election by the shareholders of the Borrower or such
other director is appointed or elected, or such Director's appointment was
approved, in each case by the Kelso Investors.

            "Contractual Obligation": with respect to any Person, any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.

                                       13


            "Control Investment Affiliate": with respect to any Person, any
other Person that (a) directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person and (b) is organized by such
Person or the manager, advisor or administrator of such Person primarily for the
purpose of making equity or debt investments in one or more companies. For
purposes of this definition, "control" of a Person means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.

            "Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

            "Derivatives Counterparty": as defined in Section 7.6.

            "Discount Note": a non-interest bearing promissory note denominated
in Canadian Dollars, substantially in the form of Exhibit H, issued by CERI to a
Non BA Lender to evidence a BA Equivalent Loan.

            "Discount Proceeds": for any Bankers' Acceptance issued hereunder,
an amount calculated on the applicable Borrowing Date by multiplying:

            (a)   the face amount of the Bankers' Acceptance

            by

            (b)   the quotient obtained by dividing:

                  (i)   one

                  by

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

                        (A)   the Discount Rate applicable to the Bankers'
                              Acceptance

                        and

                        (B)   a fraction, the numerator of which is the
                              applicable Interest Period and the denominator of
                              which is 365

with the quotient being rounded up or down to the fifth decimal place and .00005
being rounded up.

            "Discount Rate": (a) in respect of any Bankers' Acceptance accepted
by a Lender that is a Schedule I Lender, the CDOR Rate for the applicable
period; and (b) in respect of any Bankers' Acceptance accepted by a Lender that
is a Schedule II Lender, the CDOR Rate for the applicable period plus .10%.

            "Disposition": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof
(other than the granting or creation

                                       14


of any Liens with respect to such property); and the terms "Dispose" and
"Disposed of" shall have correlative meanings.

            "Documentation Agent": as defined in the preamble hereto.

            "Dollars" and "$": lawful currency of the United States of America.

            "Dollar Equivalent": as to any amount denominated in Canadian
Dollars at any time, the equivalent amount in Dollars as determined on the basis
of the Exchange Rate for the purchase of Dollars with Canadian Dollars as of the
date of the calculation.

            "Domestic Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States of America.

            "ECF Percentage": with respect to any fiscal year of CERI or, after
the Migration, the Borrower, 50.0%; provided, that, with respect to any fiscal
year of CERI or, after the Migration, the Borrower ending on or after December
31, 2005, the ECF Percentage shall be 0.0% if the Consolidated Leverage Ratio as
of the last day of such fiscal year is not greater than 3.50 to 1.00.

            "Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, or other legally enforceable requirements
(including, without limitation, common law) of any international authority,
foreign government, the United States of America, Canada or any state,
provincial, territorial, local, municipal or other governmental authority,
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health, or employee health and safety,
as has been, is now, or hereafter becomes, in effect.

            "Environmental Permits": any and all permits, licenses, approvals,
registrations, notifications, exemptions and other authorizations required under
any applicable Environmental Law.

            "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

            "Eurocurrency Reserve Requirements": for any day, the aggregate
(without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

            "Eurodollar Base Rate": with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" for
purposes of this definition

                                       15


shall be determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the Administrative
Agent.

            "Eurodollar Loans": Loans for which the applicable rate of interest
is based upon the Eurodollar Rate.

            "Eurodollar Rate": with respect to each day during each Interest
Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):

                              Eurodollar Base Rate
                    ----------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

            "Eurodollar Tranche": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day).

            "Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.

            "Excess Cash Flow": for any fiscal year of CERI or, after the
Migration, the Borrower, the difference, if any, of (a) the sum, without
duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the
amount of all non-cash charges (including depreciation and amortization)
deducted in arriving at such Consolidated Net Income, (iii) the amount of the
decrease, if any, in Consolidated Working Capital for such fiscal year, (iv) the
aggregate net amount of non cash loss on the Disposition of Property by the
Group Members during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income and (v) the net increase during such fiscal year (if
any) in deferred tax accounts of the Group Members, minus (b) the sum, without
duplication, of (i) the amount of all non-cash credits included in arriving at
such Consolidated Net Income, (ii) the aggregate amount actually paid by the
Group Members in cash during such fiscal year on account of Capital Expenditures
(excluding (x) the amount of any Capital Expenditure to the extent financed by
Funded Debt (other than Indebtedness under revolving credit arrangements)
incurred and used to finance such expenditures and (y) the amount of any such
Capital Expenditures financed with the proceeds of any Reinvestment Deferred
Amount in such fiscal year), (iii) to the extent added in calculating
Consolidated Net Income the aggregate amount of Reinvestment Deferred Amounts on
the last day of such fiscal year, (iv) the aggregate amount of all optional
prepayments of Revolving Credit Loans and Swing Line Loans during such fiscal
year to the extent accompanying permanent optional reductions of the Revolving
Credit Commitments and all optional prepayments of the Term Loans during such
fiscal year, (v) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including, without limitation, the Term Loans) of the
Group Members made during such fiscal year (other than in respect of any
revolving credit facility to the extent there is not an equivalent permanent
reduction in commitments thereunder), (vi) the amount of the increase, if any,
in Consolidated Working Capital for such fiscal year, (vii) the aggregate net
amount of non cash gain on the Disposition of Property by the Group Members
during such fiscal year (other than sales of inventory in the ordinary course of
business), to the extent included in arriving at such Consolidated Net Income,
(viii) the net decrease during such fiscal year (if any) in deferred tax

                                       16


accounts of the Group Members, (ix) the amount of any Restricted Payments
permitted under Sections 7.6(d) and (h) made in such fiscal year and (x) the
aggregate amount of cash from operations used to consummate any acquisition
permitted under Section 7.8 in such fiscal year.

            "Excess Cash Flow Application Date": as defined in Section 2.12(c).

            "Exchange Rate": on any day, (i) with respect to Canadian Dollars,
the spot rate at which Dollars are offered on such day by the Canadian Agent in
Toronto, Canada (or such other location selected by the Canadian Agent) for
Canadian Dollars, and (ii) with respect to Dollars, the spot rate at which
Canadian Dollars are offered on such day by the Canadian Agent in Toronto,
Canada (or such other location selected by the Canadian Agent) for Dollars.

            "Exchangeable Shares": equity securities issued by CERI to certain
of its security holders in connection with the Migration that are exchangeable
into common stock of the Borrower.

            "Excluded Foreign Subsidiaries": any Foreign Subsidiary in respect
of which either (a) the pledge of all of the Capital Stock or any of the assets
of such Subsidiary as Collateral for the Borrower's Obligations or (b) the
guaranteeing by such Subsidiary of the Borrower's Obligations, would, in the
good faith judgment of the Borrower, result in adverse tax consequences to the
Borrower.

            "Excluded Proceeds": Net Cash Proceeds received by CERI or, after
the Migration, the Borrower from the issuance of its Capital Stock (including
preferred stock) to the extent such proceeds are used to make Investments
permitted by Section 7.8(h) and (l).

            "Excluded Taxes": as defined in Section 2.20(a).

            "Existing Investors": the collective reference to Michael DeGroote,
the Kelso Investors and each manager, officer and director of CERI who owns
Capital Stock of CERI on the Restatement Effective Date and their Control
Investment Affiliates.

            "Facility": each of (a) the Tranche B Term Loan Commitment and the
Tranche B Term Loans made thereunder (the "Tranche B Term Loan Facility"), (b)
the US Revolving Credit Commitments and the extensions of credit made thereunder
(the "US Revolving Credit Facility"), and (c) the Canadian Revolving Credit
Commitments and the extensions of credit made thereunder (the "Canadian
Revolving Credit Facility").

            "Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.

            "Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.

                                       17


            "FQ1", "FQ2 ", "FQ3", and "FQ4": when used with a numerical year
designation, means the first, second, third or fourth fiscal quarters,
respectively, of such fiscal year of the Borrower (e.g., FQ1 2004 means the
first fiscal quarter of the Borrower's 2004 fiscal year, which ends March 31,
2004).

            "FRS": Florida Recycling Services, Inc., an Illinois corporation.

            "FRS Acquisition": the acquisition by Waste Services of Florida,
Inc. of all the outstanding Capital Stock of FRS.

            "FRS Acquisition Agreement": the Amended and Restated Stock Purchase
Agreement dated as of March 4, 2004.

            "FRS Acquisition Documentation": collectively, the FRS Acquisition
Agreement and all schedules, exhibits, annexes and amendments thereto and all
side letters and agreements affecting the terms thereof or entered into in
connection therewith, in each case, as amended, supplemented or otherwise
modified from time to time in accordance with this Agreement.

            "Funded Debt": means Indebtedness that matures more than one year
from the date of its creation or matures within one year from such date but is
renewable or extendible, at the option of such Person, to a date more than one
year from such date or arises under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a period of more than
one year from such date.

            "Funding Office": the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrower and the
Lenders.

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

            "Governmental Authority": any nation or government, any state,
province, territory or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

            "Group Member": CERI and its Subsidiaries or, after the Migration,
the Borrower and its Subsidiaries.

            "Guarantee and Collateral Agreement": the Amended and Restated
Guarantee and Collateral Agreement executed and delivered by the Borrower and
each Subsidiary Guarantor on the Restatement Effective Date, as the same may be
amended, supplemented, replaced or otherwise modified from time to time,
attached hereto as Exhibit A-1.

            "Guarantee Obligation": with respect to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any letter of
credit), if to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "primary obligations") of any other third Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the

                                       18


guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any Property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase Property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.

            "Guarantors": the collective reference to CERI, the Canadian
Subsidiary Guarantors and the Subsidiary Guarantors.

            "Hedge Agreements": all interest rate or currency swaps, caps or
collar agreements, foreign exchange agreements, commodity contracts or similar
arrangements entered into by any Group Member providing for protection against
fluctuations in interest rates, currency exchange rates, commodity prices or the
exchange of nominal interest obligations, either generally or under specific
contingencies.

            "Inactive Subsidiaries": each of CERI, Inc., a Delaware corporation
and Capital Holdings Company, in each case, so long as they meet the
requirements of Section 4.25.

            "Incremental Term Loan Facility": as defined in Section 10.1(b).

            "Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of Property or services (other than trade
payables incurred in the ordinary course of such Person's business), (c) all
obligations of such Person evidenced by notes, debentures or other similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to Property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
Property), (e) all Capital Lease Obligations or Synthetic Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under acceptance, letter of credit, surety bonds
(except unmatured reimbursement obligations in respect of surety bonds obtained
in the ordinary course of business to secure the performance of obligations that
are not Indebtedness pursuant to another clause of this definition) or similar
facilities, (g) the liquidation value of all redeemable preferred Capital Stock
of such Person, to the extent mandatorily redeemable (upon the occurrence of a
contingency or otherwise) in cash on or prior to the date which is one year

                                       19


after the final maturity date of the Loans (other than in connection with change
of control events and asset sales to the extent that the terms of such Capital
Stock provide that such Person may not repurchase or redeem any such Capital
Stock in connection with such change of control or asset sale unless such
repurchase or redemption complies with the provisions of this Agreement, (h) all
obligations of such Person, contingent or otherwise, to purchase, redeem, retire
or otherwise acquire for value any Capital Stock of such Person in cash on or
prior to the date which is one year after the final maturity date of the Loans
(other than in connection with change of control events and asset sales to the
extent that the terms of such Capital Stock provide that such Person may not
repurchase or redeem any such Capital Stock in connection with such change of
control or asset sale unless such repurchase or redemption complies with the
provisions of this Agreement), (i) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through (h) above,
(j) all obligations of the kind referred to in clauses (a) through (i) above
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on Property (including,
without limitation, accounts and contract rights) owned by such Person, whether
or not such Person has assumed or become liable for the payment of such
obligation and (k) for the purposes of Section 8(e) only, all obligations of
such Person in respect of Hedge Agreements.

            "Indemnified Liabilities": as defined in Section 10.5.

            "Indemnitee": as defined in Section 10.5.

            "Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.

            "Insolvent": pertaining to a condition of Insolvency.

            "Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States of America, Canada, state, provincial, territorial,
multinational or foreign laws or otherwise, including, without limitation,
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, service-marks, technology, know-how and processes, recipes, formulas,
trade secrets, and all rights to sue at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and
damages therefrom.

            "Interest Payment Date": (a) as to any Base Rate Loan (other than
any Base Rate Loan under the Canadian Revolving Credit Facility) the last day of
each March, June, September and December to occur while such Loan is outstanding
and the final maturity date of such Loan, (b) as to any Base Rate Loan under the
Canadian Revolving Credit Facility and any Canadian Prime Rate Loan, the first
day of the month following the month in which such interest was accrued, (c) as
to any Eurodollar Loan having an Interest Period of three months or shorter, the
last day of such Interest Period, (d) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period and (e) as to any Loan (other than any Revolving
Credit Loan that is a Base Rate Loan and any Swing Line Loan), the date of any
repayment or prepayment made in respect thereof.

                                       20


            "Interest Period": as to any Eurodollar Loan or Bankers' Acceptance,
(a) initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such Eurodollar Loan or Bankers' Acceptance and
ending one, two, three or six months thereafter, as selected by the Borrower or
CERI, as applicable, in its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Loan or Bankers' Acceptance and ending one, two, three or six
months thereafter, as selected by the Borrower or CERI, as applicable, by
irrevocable notice to the Administrative Agent or the Canadian Agent in respect
of Bankers' Acceptance, not less than three Business Days prior to the last day
of the then current Interest Period with respect thereto; provided that, all of
the foregoing provisions relating to Interest Periods are subject to the
following:

                  (i)   if any Interest Period would otherwise end on a day that
      is not a Business Day, such Interest Period shall be extended to the next
      succeeding Business Day unless the result of such extension would be to
      carry such Interest Period into another calendar month in which event such
      Interest Period shall end on the immediately preceding Business Day;

                  (ii)  any Interest Period in respect of any Eurodollar Loan
      that would otherwise extend beyond the Revolving Credit Termination Date
      (in the case of a Eurodollar Loan which is a Revolving Loan) or beyond the
      date final payment is due on the Tranche B Term Loan (in the case of a
      Eurodollar Loan which is a Tranche B Term Loan), shall end on the
      Revolving Credit Termination Date or such due date, as applicable;

                  (iii) no Interest Period in respect of a Bankers' Acceptance
      may extend beyond the Canadian Revolving Credit Termination Date; and

                  (iv)  any Interest Period that begins on the last Business Day
      of a calendar month (or on a day for which there is no numerically
      corresponding day in the calendar month at the end of such Interest
      Period) shall end on the last Business Day of the calendar month at the
      end of such Interest Period.

            "Investments": as defined in Section 7.8.

            "IRB Transaction": means the issuance of industrial revenue bonds by
Governmental Authorities in connection with the purchase, construction,
development or improvement of real property by any Group Member to be used in
its business or any buildings and equipment related thereto which are guaranteed
by or backed by the credit of any Group Member.

            "Issuing Lender" any US Issuing Lender and any Canadian Issuing
Lender.

            "Jacksonville Acquisition" the consummation of the purchase by Waste
Services of Florida, Inc. of assets used in the Allied Business located in the
Jacksonville, Florida metropolitan area, pursuant to the Allied Acquisition
Agreement.

            "JED Landfill": a permitted municipal solid waste landfill located
in Osceola County, Florida.

                                       21


            "Judgment Currency": as defined in Section 10.20.

            "Kelso Investors": Kelso & Company and its Control Investment
Affiliates.

            "Kelso Preferred Stock": the Series A Preferred Stock of the
Borrower issued, paid-in-kind or accruing pursuant to the Kelso Preferred Stock
Documents.

            "Kelso Preferred Stock Documents": collectively, (a) the Preferred
Stock Subscription Agreement, dated as of May 6, 2003, among the Borrower, CERI
and certain Kelso Investors and (b) the Certificate of Designations with respect
to the Series A Preferred Stock of the Borrower, in each case, as amended,
supplemented, replaced, waived or otherwise modified from time to time in
accordance with this Agreement.

            "L/C Commitment": as to any Revolving Credit Lender, the sum of its
US L/C Commitment and its Canadian L/C Commitment.

            "L/C Fee Payment Date": as to any US Letters of Credit, the last day
of each March, June, September and December and the last day of the US Revolving
Credit Commitment Period and as to any Canadian Letters of Credit, the first day
of each April, July, October and January and the last day of the Canadian
Revolving Credit Commitment Period.

            "L/C Obligations": the Canadian L/C Obligations and the US L/C
Obligations.

            "Lender Addendum": with respect to any applicable Lender, a Lender
Addendum, substantially in the form of Exhibit I, to be executed and delivered
by such Lender on the Restatement Effective Date as provided in Section 10.17.

            "Lenders": as defined in the preamble hereto.

            "Letters of Credit": the Canadian Letters of Credit and the US
Letters of Credit.

            "Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).

            "Loan": any loan made by any Lender pursuant to this Agreement.

            "Loan Documents": this Agreement (including any amendments, consents
or waivers with respect thereto), the Security Documents, the Applications and
the Notes.

            "Loan Parties": CERI, the Borrower and each Subsidiary of CERI, or
after the Migration, of the Borrower, that is a party to a Loan Document.

            "Majority Facility Lenders": with respect to (i) the Tranche B Term
Loan Facility, the holders of more than 50% of the sum of the aggregate unpaid
principal amount of the Tranche B Term Loans or (ii) the Revolving Credit
Facilities, the holders of more than 50%

                                       22


of the Total Revolving Credit Commitments then in effect or, if the Revolving
Credit Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.

            "Majority Revolving Credit Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Credit Facilities.

            "Material Adverse Effect": a material adverse effect on (a) the
business, assets, financial condition, or results of operation of the Group
Members taken as a whole or (b) the validity or enforceability of this Agreement
or any of the other Loan Documents or the rights or remedies of the Agents or
the Lenders hereunder or thereunder.

            "Material Environmental Amount": an amount or amounts payable by the
Group Members, in the aggregate in excess of $2,000,000 for: unbudgeted costs to
comply with any Environmental Law; costs of any investigation, and any
remediation, of any Material of Environmental Concern; and compensatory damages
(including, without limitation damages to natural resources), punitive damages,
fines, and penalties pursuant to any Environmental Law.

            "Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos,
radioactivity, and any other substances, pollutants, contaminants or forces of
any kind that are defined or regulated as hazardous, dangerous or toxic under
any Environmental Law or could give rise to liability under any Environmental
Law.

            "Migration": the reorganization in which CERI and its Canadian
Subsidiaries will become indirect Subsidiaries of the Borrower by way of a plan
of arrangement under the Business Corporations Act (Ontario) to be approved by
the Ontario Superior Court of Justice and certain security holders of CERI
pursuant to which (a) all common shares of CERI will be held by Capital Holdings
Company or another subsidiary of the Borrower organized in Nova Scotia, (b) the
former holders of common shares of CERI will receive shares of common stock of
the Borrower or Exchangeable Shares, (c) the balance of the outstanding
intercompany Indebtedness from the Borrower to CERI will be assumed by Capital
Holdings Company, and (d) CERI and its Canadian Subsidiaries shall become
Excluded Foreign Subsidiaries; provided, however, that other than as a result of
the redemption of the common stock of the Borrower held by CERI, the Migration
does not give rise to any Canadian or United States of America income tax
liability to any Group Member; provided, further, that the redemption of the
common stock of the Borrower held by CERI does not give rise to any Canadian
taxable income that would exceed the amount of CERI's loss carry forwards
available at the time of the Migration.

            "Mortgaged Properties": the owned real properties listed on Schedule
4.24, as to which the Administrative Agent for the benefit of the Secured
Parties shall be granted a Lien pursuant to the Mortgages.

            "Mortgages": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Secured Parties, substantially in the form of Exhibit D-1 with
respect to property in the United States of America, and Exhibit D-2 with
respect to property in Canada (with such changes thereto as shall be advisable
under the law of the jurisdiction in which such mortgage or deed of trust is to
be

                                       23


recorded), as the same may be amended, supplemented, replaced or otherwise
modified from time to time.

            "Multiemployer Plan": a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA to which the Borrower or a Commonly Controlled
Entity is making or accruing an obligation to make contributions, or has within
any of the preceding five plan years made or accrued an obligation to make
contributions.

            "Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of reasonable and customary attorneys' fees, accountants'
fees, investment banking fees, amounts required to be applied to the repayment
of Indebtedness secured by a Lien expressly permitted hereunder on any asset
which is the subject of such Asset Sale or Recovery Event (other than any Lien
pursuant to a Security Document), and other reasonable and customary fees and
expenses actually incurred in connection therewith and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements) and, solely in connection with any such Asset Sale, any reserves
in accordance with GAAP with respect to any adjustments to the sales prices of
such assets or established with respect to any liabilities (including
indemnities) potentially arising in connection with such sale; provided, that
any such reserved amount shall be Net Cash Proceeds to the extent and at the
time not required to be so reserved, (b) in connection with any issuance or sale
of equity securities or debt securities or instruments or the incurrence of
loans, the cash proceeds received from such issuance or incurrence, net of
attorneys' fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith and (c) in connection with any Purchase Price
Refund, the cash amount thereof, net of any reasonable and customary expenses
incurred in the collection thereof and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangement).

            "Non BA Lender": a Canadian Revolving Credit Lender that cannot or
does not as a matter of policy issue Bankers' Acceptances.

            "Non-Excluded Taxes": as defined in Section 2.20(a).

            "Non-U.S. Lender": as defined in Section 2.20(e).

            "Note": any promissory note evidencing any Loan.

            "Obligation Currency": as defined in Section 10.20.

            "Obligations": (i) the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Loans and Reimbursement Obligations and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Loans, the

                                       24


Reimbursement Obligations and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender or any Qualified
Counterparty, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document, the Letters
of Credit, any Specified Hedge Agreement or any other document made, delivered
or given in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees, charges and disbursements of counsel
to the Arranger, to the Agents or to any Lender that are required to be paid by
the Borrower pursuant hereto) or otherwise and (ii) the Canadian Obligations;
provided, that (x) obligations of any Group Member under any Specified Hedge
Agreement shall be secured and guaranteed pursuant to the Security Documents
only to the extent that, and for so long as, the other Obligations are so
secured and guaranteed and (y) any release of Collateral or Guarantors effected
in the manner permitted by this Agreement shall not require the consent of
holders of obligations under Specified Hedge Agreements.

            "Original Credit Agreement": as defined in the preamble.

            "Original Lenders": as defined in the preamble.

            "Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.

            "Participant": as defined in Section 10.6(b).

            "Payment Office": the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and the
Lenders.

            "PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).

            "Permits": the collective reference to (i) Environmental Permits,
and (ii) any and all other franchises, licenses, leases, permits, approvals,
notifications, certifications, registrations, authorizations, exemptions,
qualifications, easements, and rights of way.

            "Permitted Acquisition": as defined in Section 7.8(h).

            "Permitted Liens": the collective reference to (i) in the case of
Collateral other than Pledged Stock, Liens permitted by Section 7.3 and (ii) in
the case of Collateral consisting of Pledged Stock, non-consensual Liens
permitted by Section 7.3 to the extent arising by operation of law.

            "Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

            "Personal Property Security Legislation": all applicable personal
property security legislation as all such legislation now exists or may from
time to time hereafter be

                                       25


amended, modified, recodified, supplemented or replaced, together with all rules
and regulations thereunder or related thereto, including without limitation, the
UCC and the Personal Property Security Act (Ontario).

            "Plan": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA, but excluding, for greater certainty, Canadian Benefit Plans and Canadian
Pension Plans.

            "Pledged Stock": as defined in the Guarantee and Collateral
Agreement or the Canadian Guarantee and Collateral Agreement, as applicable.

            "Pricing Grid": the pricing grid attached hereto as Annex A.

            "Pro Forma Balance Sheet": as defined in Section 4.1(a).

            "Projections": as defined in Section 6.2(c).

            "Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.

            "Purchase Price Refund": any amount received by any Group Member as
a result of a purchase price adjustment or similar event in connection with any
acquisition of Property by any Group Member.

            "Qualified Counterparty": with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an affiliate of a Lender.

            "Real Estate": all Real Property held or used by the Group Members,
which the relevant Group Member owns in fee or in which it holds a leasehold
interest as a tenant.

            "Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Group Member.

            "Register": as defined in Section 10.6(d).

            "Regulation H": Regulation H of the Board as in effect from time to
time.

            "Regulation U": Regulation U of the Board as in effect from time to
time.

            "Reimbursement Obligation": the obligation of the Borrower and/or
CERI, as applicable, to reimburse each Issuing Lender pursuant to Section 3.5
for amounts drawn under Letters of Credit issued by such Issuing Lender.

                                       26


            "Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by any Group Member in
connection therewith that are not applied to prepay the Term Loans or reduce the
Revolving Credit Commitments pursuant to Section 2.12(b) as a result of the
delivery of a Reinvestment Notice.

            "Reinvestment Event": any Asset Sale, Purchase Price Refund or
Recovery Event in respect of which the Borrower has delivered a Reinvestment
Notice.

            "Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Default or Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a Wholly Owned
Subsidiary of the Borrower) intends and expects to use all or a specified
portion of the Net Cash Proceeds of an Asset Sale, Purchase Price Refund or
Recovery Event to acquire assets useful in its or such Subsidiary's business.

            "Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended on or prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's business.

            "Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring one year after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire assets useful in the Borrower's business
with all or any portion of the relevant Reinvestment Deferred Amount.

            "Related Fund": with respect to any Lender, any fund that (x)
invests in commercial loans and (y) is managed or advised by the same investment
advisor as such Lender, by such Lender or an Affiliate of such Lender.

            "Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

            "Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period is
waived under PBGC Reg. Section 4043.

            "Required Lenders": at any time, the holders of more than 50% of the
sum of (i) the aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the Total Revolving Credit Commitments then in effect or,
if the Revolving Credit Commitments have been terminated, the Total Revolving
Extensions of Credit then outstanding.

            "Required Prepayment Lenders": the Majority Facility Lenders in
respect of each Facility.

            "Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.

                                       27


            "Responsible Officer": as to any Person, the chief executive
officer, president or chief financial officer of such Person, but in any event,
with respect to financial matters, the chief financial officer of such Person,
and for purposes of (i) Section 6.7, the chief legal officer of such Person and
(ii) Section 5.1(a) any Vice President or other duly authorized officer of such
Person. Unless otherwise qualified, all references to a "Responsible Officer"
shall refer to a Responsible Officer of CERI or, after the Migration, the
Borrower.

            "Restatement Effective Date": the date on which the conditions
precedent set forth in Section 5.1 have been satisfied, which date shall be
deemed to be April 30, 2004.

            "Restatement Effective Date Equity Issuance": as defined in Section
4.1.

            "Restricted Payments": as defined in Section 7.6.

            "Reuters Screen CDOR Page": the display designated as page CDOR on
the Reuters Monitor Money Rates Service or other page as may, from time to time,
replace that page on that service for the purpose of displaying bid quotations
for Bankers' Acceptances accepted by leading Canadian banks.

            "Revolving Credit Commitment": as to any Canadian Revolving Credit
Lender, its Canadian Revolving Credit Commitment, and as to any US Revolving
Credit Lender, its US Revolving Credit Commitment.

            "Revolving Credit Facilities": collectively, the Canadian Revolving
Credit Facility and the US Revolving Credit Facility.

            "Revolving Credit Lender": each Canadian Revolving Credit Lender and
each US Revolving Credit Lender.

            "Revolving Credit Loans": collectively, the Canadian Revolving
Credit Loans and the US Revolving Credit Loans.

            "Revolving Credit Percentage": as to any Canadian Revolving Credit
Lender at any time, such Lender's Canadian Revolving Credit Percentage and as to
any US Revolving Credit Lender, such Lender's US Revolving Credit Percentage.

            "Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans made by such Lender then outstanding, (b) such
Lender's Revolving Credit Percentage of the L/C Obligations then outstanding and
(c) such Lender's Revolving Credit Percentage of the aggregate principal amount
of Swing Line Loans then outstanding.

            "Schedule I Lender": any Lender named on Schedule I to the Bank Act
(Canada).

            "Schedule II Lender": any Lender named on Schedule II or Schedule
III to the Bank Act (Canada).

            "SEC": the Securities and Exchange Commission of the United States
of America (or successors thereto or an analogous Governmental Authority).

                                       28


            "Secured Parties": as defined in the Guarantee and Collateral
Agreement.

            "Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Canadian Guarantee and Collateral Agreement, the
Mortgages, any intellectual property security agreements or control agreements
that may be required to be delivered pursuant to the Guarantee and Collateral
Agreement or any other Loan Document and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any Property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.

            "Seller": as defined in the recitals hereto.

            "Senior Subordinated Note Indenture": the Indenture entered into by
the Borrower and certain of its Subsidiaries in connection with the issuance of
the Senior Subordinated Notes, together with all instruments and other
agreements entered into by the Borrower or such Subsidiaries in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with Section 7.9.

            "Senior Subordinated Notes": the subordinated notes of the Borrower
issued from time to time pursuant to the Senior Subordinated Note Indenture.

            "Single Employer Plan": any Plan that is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.

            "Solvent": with respect to any Person, as of any date of
determination, (a) the amount of the "present fair saleable value" of the assets
of such Person will, as of such date, exceed the amount of all "liabilities of
such Person, contingent or otherwise", as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, (d) such Person will be able to pay its debts as they mature and (e)
such Person is not insolvent within the meaning of any applicable Requirements
of Law relating to bankruptcy, insolvency or creditor's rights. For purposes of
this definition, (i) "debt": liability on a "claim", and (ii) "claim": any (x)
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an equitable
remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.

            "Specified Change of Control": a "change of control" or similar
event (howsoever defined) as defined in the Senior Subordinated Note Indenture
and the Kelso Preferred Stock Documents.

            "Specified Hedge Agreement": any Hedge Agreement entered into by the
Borrower or any Guarantor and any Qualified Counterparty.

                                       29


            "Subordinated Debt": the Senior Subordinated Notes and any other
Indebtedness of any Group Member which by its terms is expressly subordinated to
the Obligations.

            "Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of CERI or, after the Migration, the Borrower.

            "Subsidiary Guarantor": each Subsidiary of the Borrower other than
(i) any Excluded Foreign Subsidiary and (ii) to the extent Capital Holdings
Company is not an Excluded Foreign Subsidiary, Capital Holdings Company until
the earlier of (x) the Migration or (y) the date on which it ceases to be an
Inactive Subsidiary.

            "Swing Line Commitment": as to any Canadian Swing Line Lender, its
Canadian Swing Line Commitment, and as to any US Swing Line Lender, its US Swing
Line Commitment.

            "Swing Line Loans": collectively, the US Swing Line Loans and the
Canadian Swing Line Loans.

            "Syndication Agent": as defined in the preamble hereto.

            "Syndication Date": the earlier of the date on which the Arranger
completes the syndication of the Facilities and 30 days after the Restatement
Effective Date.

            "Synthetic Lease Obligations": all monetary obligations of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations
which do not appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person, would be characterized as the
Indebtedness of such Person (without regard to accounting treatment); it being
understood that obligations in respect of operating leases entered into by any
Group Member in the ordinary course of business which would not, upon the
insolvency of a Group Member be characterized as indebtedness of a Group Member,
shall not constitute "Synthetic Lease Obligations".

            "Term Loans": the collective reference to the Tranche B Term Loans
and Loans made under the Incremental Term Loan Facility.

            "Term Loan Facilities" the Tranche B Term Loan Facilities and each
other term loan facility under this Agreement, including the Incremental Term
Loan Facility.

            "Term Loan Lenders": the collective reference to the Tranche B Term
Loan Lenders.

                                       30


            "Term Loan Percentages": with respect to any Lender holding Tranche
B Term Loans, the Tranche B Term Loan Percentage of such Lender.

            "Term Notes": as defined in Section 2.8(e).

            "Title Insurance Company": as defined in Section 5.1(r).

            "Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments then in effect.

            "Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit Lenders
outstanding at such time.

            "Tranche B Term Loan": as defined in Section 2.1.

            "Tranche B Term Loan Commitment": as to any Lender, the obligation
of such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder
in a principal amount not to exceed the amount set forth under the heading
"Tranche B Term Loan Commitment" opposite such Lender's name on Schedule 1 to
the Lender Addendum delivered by such Lender, or, as the case may be, in the
Assignment and Acceptance pursuant to which such Lender became a party hereto,
as the same may be changed from time to time pursuant to the terms hereof. The
original aggregate amount of the Tranche B Term Loan Commitments is
$100,000,000.

            "Tranche B Term Loan Facility": as defined in the definition of
"Facility" in this Section 1.1.

            "Tranche B Term Loan Lender": each Lender that has a Tranche B Term
Loan Commitment or is the holder of a Tranche B Term Loan.

            "Tranche B Term Loan Percentage": as to any Tranche B Term Loan
Lender at any time, the percentage which such Lender's Tranche B Term Loan
Commitment then constitutes of the aggregate Tranche B Term Loan Commitments
(or, at any time after the Restatement Effective Date, the percentage which the
aggregate principal amount of such Lender's Tranche B Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche B Term
Loans then outstanding).

            "Transferee": as defined in Section 10.14.

            "Type": as to any Loan, its nature as a Base Rate Loan, a Eurodollar
Loan, a Canadian Prime Rate Loan or BA Equivalent Loan.

            "UCC": the Uniform Commercial Code, as in effect from time to time
in any jurisdiction.

            "US Base Rate in Canada": at any time, the greater of (i) the rate
of interest per annum equal to the rate at which the principal office of the
Canadian Agent in Toronto, Ontario, announces from time to time as the reference
rate of interest for loans in Dollars to its Canadian borrowers, adjusted
automatically with each change in such rate without the necessity of any

                                       31


notice to CERI, the Borrower or any other Person, and (ii) the Federal Funds
Effective Rate (converted to a rate based on based on a 365 or 366 day period,
as the case may be), in effect from time to time, plus .50% per annum. Any
change in the US Base Rate in Canada shall be effective as of the opening of
business on the day the change becomes effective generally.

            "US Issuing Lender": any US Revolving Credit Lender from time to
time designated by the Borrower as a US Issuing Lender with the consent of such
US Revolving Credit Lender and the Administrative Agent.

            "US L/C Commitment": $45,000,000.

            "US L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding US
Letters of Credit and (b) the aggregate amount of drawings under US Letters of
Credit that have not then been reimbursed pursuant to Section 3.5.

            "US L/C Participants": with respect to any US Letter of Credit, the
collective reference to the US Revolving Credit Lenders other than the US
Issuing Lender that issued such US Letter of Credit.

            "US Letters of Credit": as defined in Section 3.1(a).

            "US Refunded Swing Line Loans": as defined in Section 2.7(b).

            "US Refunding Date": as defined in Section 2.7(c).

            "US Reimbursement Obligations": the Reimbursement Obligations owing
by the Borrower.

            "US Revolving Credit Commitment": as to any Lender, the obligation
of such Lender, if any, to make US Revolving Credit Loans and participate in US
Swing Line Loans and US Letters of Credit, in an aggregate principal and/or face
amount not to exceed the amount set forth under the heading "US Revolving Credit
Commitment" opposite such Lender's name on Schedule 1 to the Lender Addendum
delivered by such Lender, or, as the case may be, in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as the same may
be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the aggregate US Revolving Credit Commitments is
$45,000,000.

            "US Revolving Credit Commitment Period": the period from and
including the Restatement Effective Date to the US Revolving Credit Termination
Date.

            "US Revolving Credit Facility": as defined in the definition of
"Facility" in this Section 1.1.

            "US Revolving Credit Lender": each Lender that has a US Revolving
Credit Commitment or that is the holder of US Revolving Credit Loans.

            "US Revolving Credit Loans": as defined in Section 2.4.

                                       32


            "US Revolving Credit Note": as defined in Section 2.8.

            "US Revolving Credit Percentage": as to any US Revolving Credit
Lender at any time, the percentage which such Lender's US Revolving Credit
Commitment then constitutes of the aggregate US Revolving Credit Commitments
(or, at any time after the US Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate amount of such Lender's US
Revolving Extensions of Credit then outstanding constitutes of the amount of the
aggregate US Revolving Extensions of Credit then outstanding).

            "US Revolving Credit Termination Date": the fifth anniversary of the
Restatement Effective Date.

            "US Revolving Extensions of Credit": as to any US Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all US Revolving Credit Loans made by such Lender then outstanding,
(b) such Lender's US Revolving Credit Percentage of the US L/C Obligations then
outstanding and (c) such Lender's US Revolving Credit Percentage of the
aggregate principal amount of US Swing Line Loans then outstanding.

            "US Swing Line Commitment": the obligation of the US Swing Line
Lender to make US Swing Line Loans pursuant to Section 2.6 in an aggregate
principal amount at any one time outstanding not to exceed $5,000,000.

            "US Swing Line Lender": each Lender that has a US Swing Line
Commitment or that is a holder of US Swing Line Loans.

            "US Swing Line Loans": as defined in Section 2.6.

            "US Swing Line Note": as defined in Section 2.8(e).

            "US Swing Line Participation Amount": as defined in Section 2.7(c).

            "Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.

            "Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of the Borrower.

            1.2   Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.

            (b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP.

            (c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular

                                       33


provision of this Agreement, and Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.

            (d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

            (e) All calculations of financial ratios set forth in Section 7.1
and the calculation of the Consolidated Leverage Ratio for purposes of
determining the Applicable Margin shall be calculated to the same number of
decimal places as the relevant ratios are expressed in and shall be rounded
upward if the number in the decimal place immediately following the last
calculated decimal place is five or greater. For example, if the relevant ratio
is to be calculated to the hundredth decimal place and the calculation of the
ratio is 5.126, the ratio will be rounded up to 5.13.

            (f) The expressions "payment in full," "paid in full" and any other
similar terms or phrases when used herein with respect to the Obligations shall
mean the payment in full, in immediately available funds, of all of the
Obligations.

            1.3   Interrelationship with the Original Credit Agreement.

            (a) As stated in the preamble hereof, this Agreement is intended to
amend and restate the provisions of the Original Credit Agreement and,
notwithstanding any amendment and restatement of Notes as of the Restatement
Effective Date, except as expressly modified herein, (x) all of the terms and
provisions of the Original Credit Agreement and the other Loan Documents shall
continue to apply for the period prior to the Restatement Effective Date,
including any determinations of payment dates, interest rates, Events of Default
or any amount that may be payable to the Administrative Agent or the Original
Lenders (or their assignees or replacements hereunder) to but excluding the
Restatement Effective Date, and (y) the obligations under the Original Credit
Agreement and the other Loan Documents shall continue to be paid or prepaid on
or prior to the Restatement Effective Date, and shall from and after the
Restatement Effective Date continue to be owing and be subject to the terms of
this Agreement to the extent accrued or arising prior to the Restatement
Effective Date or otherwise relating to the period prior to the Restatement
Effective Date. All references in any Loan Documents to (i) the "Credit
Facility" or the "Credit Agreement" shall be deemed to include references to
this Agreement and (ii) the "Lenders" or a "Lender" or to the "Administrative
Agent" shall mean such terms as defined in this Agreement. As to all periods
occurring on or after the Restatement Effective Date, all of the covenants set
forth in the Original Credit Agreement shall be of no further force and effect,
it being understood that all obligations of the Borrower under the Original
Credit Agreement shall be governed by this Agreement from and after the
Restatement Effective Date.

            (b) The Borrower, the Agents and the Lenders acknowledge and agree
that all principal, interest, fees, costs, reimbursable expenses and
indemnification obligations accruing or arising under or in connection with the
Original Credit Agreement and the other Loan Documents which remain unpaid and
outstanding as of the Restatement Effective Date shall be and remain outstanding
and payable as an obligation under this Agreement and the other Loan Documents;
provided that no Lender hereunder which was not an Original Lender shall be
liable for any obligation or indemnification of any of the Original Lenders
under the Original Credit Agreement.

                                       34


            1.4   Confirmation of Existing Obligations. The Borrower hereby
reaffirms and admits the validity and enforceability of this Agreement and the
other Loan Documents and all of its obligations hereunder and thereunder and
agrees and admits that, as of the Restatement Effective Date, it has no defenses
to, or offsets or counterclaims against, any of its obligations to the Secured
Parties under the Loan Documents of any kind whatsoever.

                   SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

            2.1   Tranche B Term Loan Commitments. Subject to the terms and
conditions hereof, the Tranche B Term Loan Lenders severally agree to purchase
term loans (each, a "Tranche B Term Loan") from the Original Lenders on the
Restatement Effective Date in an amount for each Tranche B Term Loan Lender not
to exceed the amount of the Tranche B Term Loan Commitment of such Lender. The
Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.13.

            2.2   Procedure for Tranche B Term Loan Assignment. The Borrower
shall deliver to the Administrative Agent a written notice (which written notice
must be received by the Administrative Agent prior to 10:00 A.M., New York City
time, one Business Day prior to the anticipated Restatement Effective Date)
requesting that the Tranche B Term Loan Lenders purchase the Tranche B Term
Loans on the Restatement Effective Date and specifying the amount of Tranche B
Term Loans available for purchase. The Tranche B Term Loans purchased by the
Tranche B Term Loan Lenders on the Restatement Effective Date shall initially be
Base Rate Loans, and no Tranche B Term Loan may be converted into or continued
as a Eurodollar Loan prior to the Syndication Date. Upon receipt of such notice
the Administrative Agent shall promptly notify each Tranche B Term Loan Lender
thereof. Not later than 12:00 Noon, New York City time, on the Restatement
Effective Date each Tranche B Term Loan Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Tranche B Term Loan or Tranche B Term Loans to be purchased
by such Tranche B Term Loan Lender.

            2.3   Repayment of Term Loans. The Tranche B Term Loan of each
Tranche B Term Loan Lender shall mature in 28 consecutive quarterly
installments, commencing on June 30, 2004, each of which shall be in an amount
equal to such Lender's Tranche B Term Loan Percentage multiplied by the amount
set forth below opposite such installment:



Installment                                  Principal Amount
- -----------                                  ----------------
                                          
June 30, 2004                                  $   250,000
September 30, 2004                             $   250,000
December 31, 2004                              $   250,000
March 31, 2005                                 $   250,000
June 30, 2005                                  $   250,000
September 30, 2005                             $   250,000
December 31, 2005                              $   250,000
March 31, 2006                                 $   250,000
June 30, 2006                                  $   250,000
September 30, 2006                             $   250,000
December 31, 2006                              $   250,000


                                       35




Installment                                  Principal Amount
- -----------                                  ----------------
                                          
March 31, 2007                                 $   250,000
June 30, 2007                                  $   250,000
September 30, 2007                             $   250,000
December 31, 2007                              $   250,000
March 31, 2008                                 $   250,000
June 30, 2008                                  $   250,000
September 30, 2008                             $   250,000
December 31, 2008                              $   250,000
March 31, 2009                                 $   250,000
June 30, 2009                                  $   250,000
September 30, 2009                             $   250,000
December 31, 2009                              $   250,000
March 31, 2010                                 $   250,000
June 30, 2010                                  $23,500,000
September 30, 2010                             $23,500,000
December 31, 2010                              $23,500,000
March 31, 2011                                 $23,500,000


            2.4   Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, the US Revolving Credit Lenders severally agree to make
revolving credit loans ("US Revolving Credit Loans") to the Borrower from time
to time during the US Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding for each US Revolving Credit Lender
which, when added to such Lender's US Revolving Credit Percentage of the sum of
(i) the US L/C Obligations then outstanding and (ii) the aggregate principal
amount of the US Swing Line Loans then outstanding, does not exceed the amount
of such Lender's US Revolving Credit Commitment. During the US Revolving Credit
Commitment Period the Borrower may use the US Revolving Credit Commitments by
borrowing, prepaying (in whole or in part), and reborrowing, the US Revolving
Credit Loans, all in accordance with the terms and conditions hereof. The US
Revolving Credit Loans may only be made in Dollars and from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.5 and 2.13, provided
that no US Revolving Credit Loan shall be made as a Eurodollar Loan after the
day that is one month prior to the US Revolving Credit Termination Date.

            (b) The Borrower shall repay all outstanding US Revolving Credit
Loans on the US Revolving Credit Termination Date.

            (c) Subject to the terms and conditions hereof, the Canadian
Revolving Credit Lenders severally agree to make revolving credit loans
("Canadian Revolving Credit Loans") to CERI from time to time during the
Canadian Revolving Credit Commitment Period in an aggregate principal amount at
any one time outstanding for each Canadian Revolving Credit Lender which, when
added to such Lender's Canadian Revolving Credit Percentage of the sum of (i)
Canadian L/C Obligations then outstanding and (ii) the aggregate principal
amount of the Canadian Swing Line Loans then outstanding, does not exceed the
amount of such Lender's Canadian Revolving Credit Commitment. During the
Canadian Revolving Credit Commitment Period, CERI may use the Canadian Revolving
Credit Commitments by borrowing, prepaying

                                       36


(in whole or in part), and reborrowing, the Canadian Revolving Credit Loans, all
in accordance with the terms and conditions hereof. The Canadian Revolving
Credit Loans may be made from time to time by way of (i) Bankers' Acceptance or
Canadian Prime Rate Loans, in Canadian Dollars only or (ii) Eurodollar Loans or
Base Rate Loans, in Dollars only, as determined by CERI and notified to the
Administrative Agent and the Canadian Agent in accordance with Sections 2.5 and
2.13, provided that no Canadian Revolving Credit Loan shall be made as a
Eurodollar Loan or a Bankers' Acceptance after the day that is one month prior
to the Canadian Revolving Credit Termination Date.

            (d) CERI shall repay all outstanding Canadian Revolving Credit Loans
on the Canadian Revolving Credit Termination Date.

            2.5   Procedure for Revolving Credit Borrowing(a) The Borrower
may borrow under the US Revolving Credit Commitments on any Business Day during
the US Revolving Credit Commitment Period, provided that the Borrower shall
deliver to the Administrative Agent a Borrowing Notice (which Borrowing Notice
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the case
of Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing
Date, in the case of Base Rate Loans). Any US Revolving Credit Loans made on the
Restatement Effective Date shall initially be Base Rate Loans, and no US
Revolving Credit Loan may be made as, converted into or continued as a
Eurodollar Loan having an Interest Period in excess of one month prior to the
Syndication Date. Each borrowing of US Revolving Credit Loans under the US
Revolving Credit Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then
aggregate Available US Revolving Credit Commitments are less than $1,000,000,
such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a
whole multiple of $1,000,000 in excess thereof; provided, that the US Swing Line
Lender may request, on behalf of the Borrower, borrowings of Base Rate Loans
under the US Revolving Credit Commitments in other amounts pursuant to Section
2.7. Upon receipt of any such Borrowing Notice from the Borrower, the
Administrative Agent shall promptly notify each US Revolving Credit Lender
thereof. Each US Revolving Credit Lender will make its US Revolving Credit
Percentage of the amount of each borrowing of US Revolving Credit Loans
available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent in like funds as received by the Administrative Agent.

            (b) CERI may borrow under the Canadian Revolving Credit Commitments
on any Business Day during the Canadian Revolving Credit Commitment Period,
provided, that CERI shall deliver to the Canadian Agent a Borrowing Notice
(which Borrowing Notice must be received by the Canadian Agent prior to 12:00
Noon, Toronto time, (i) three Business Days prior to the requested Borrowing
Date in the case of Eurodollar Loans, or (ii) one Business Day prior to the
requested Borrowing Date in the case of Base Rate Loans, Canadian Prime Rate
Loans, or Bankers' Acceptances). Any Canadian Revolving Credit Loans made on the
Restatement Effective Date shall initially be Base Rate Loans or Canadian Prime
Rate Loans. Each borrowing of Canadian Revolving Credit Loans under the Canadian
Revolving Credit Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans or Canadian Prime Rate Loans, $500,000 or Cdn. $500,000 or a
whole multiple of $100,000 or Cdn.

                                       37

$100,000 in excess thereof (or, if the then aggregate Available Canadian
Revolving Credit Commitments are less than Cdn. $100,000, (or, if applicable,
the Dollar Equivalent thereof) such lesser amount); (y) in the case of
Eurodollar Loans, $500,000 or a whole multiple of $100,000 in excess thereof and
(z) in the case of Bankers' Acceptance, Cdn. $500,000 and a whole multiple of
Cdn. $100,000 in excess thereof; provided, that the Canadian Swing Line Lender
may request, on behalf of CERI, borrowings of Base Rate Loans or Canadian Prime
Rate Loans under the Canadian Revolving Credit Commitments in other amounts
pursuant to Section 2.7. Upon receipt of any such Borrowing Notice from the
Borrower, the Canadian Agent shall promptly notify each Canadian Revolving
Credit Lender thereof. Each Canadian Revolving Credit Lender will make its
Canadian Revolving Credit Percentage of the amount of each borrowing of Canadian
Revolving Credit Loans available to the Canadian Agent for the account of CERI
at the Canadian Funding Office prior to 12:00 Noon, Toronto time, on the
Borrowing Date requested by the Borrower in funds immediately available to the
Canadian Agent. Such borrowing will then be made available to CERI by the
Canadian Agent in like funds as received by the Canadian Agent.

            (c) CERI hereby designates the Borrower as its representative and
agent on its behalf for the purposes of issuing Borrowing Notices and notices of
conversion or continuation, giving instructions with respect to the disbursement
of the proceeds of the Loans, selecting interest rate options, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of CERI under the Loan Documents. The Administrative
Agent, the Canadian Agent and each Lender may regard any notice or other
communication pursuant to any Loan Document from the Borrower as a notice or
communication from CERI and the Borrower. Each warranty, covenant, agreement and
undertaking made on its behalf by the Borrower shall be deemed for all purposes
to have been made by CERI and shall be binding upon and enforceable against CERI
to the same extent as it if the same had been made directly by CERI.

            (d) Bankers' Acceptances

                  (i)   Discount Rate. On each Borrowing Date on which Bankers'
      Acceptances are to be accepted, the Canadian Agent shall advise CERI as to
      the Canadian Agent's determination of the applicable Discount Rate for the
      Bankers' Acceptances which any of the Canadian Revolving Credit Lenders
      have agreed to purchase.

                  (ii)  Purchase. Each Canadian Revolving Credit Lender shall
      purchase a Bankers' Acceptance accepted by it, and CERI shall sell such
      Bankers' Acceptance at the applicable Discount Rate. The relevant Canadian
      Revolving Credit Lender shall provide to the Canadian Agent on the
      Borrowing Date the Discount Proceeds less the Acceptance Fee payable by
      CERI with respect to the Bankers' Acceptance.

                  (iii) Sale. Each Canadian Revolving Credit Lender may from
      time to time hold, sell, rediscount or otherwise dispose of any or all
      Bankers' Acceptances accepted and purchased by it.

                  (iv)  Power of Attorney for the Execution of Bankers'
      Acceptances. To facilitate the issuance of Bankers' Acceptances, CERI
      hereby appoints each Canadian

                                       38


      Revolving Credit Lender as its attorney to sign and endorse on its behalf,
      in handwriting or by facsimile or mechanical signature as and when deemed
      necessary by such Canadian Revolving Credit Lender, blank forms of
      Bankers' Acceptances. In this respect, it is each Canadian Revolving
      Credit Lender's responsibility to maintain an adequate supply of blank
      forms of Bankers' Acceptances for acceptance under this Agreement. CERI
      recognizes and agrees that all Bankers' Acceptances signed and/or endorsed
      on its behalf by a Canadian Revolving Credit Lender shall bind CERI as
      fully and effectually as if signed in the handwriting of and duly issued
      by the proper signing officers of CERI. Each Canadian Revolving Credit
      Lender is hereby authorized to issue such Bankers' Acceptance endorsed in
      blank in such face amounts as may be determined by such Canadian Revolving
      Credit Lender; provided that the aggregate amount thereof is equal to the
      aggregate amount of Bankers' Acceptances required to be accepted and
      purchased by such Canadian Revolving Credit Lender. No Canadian Revolving
      Credit Lender shall be liable for any damage, loss or other claim arising
      by reason of any loss or improper use of any such instrument except the
      gross negligence or willful misconduct of the Canadian Revolving Credit
      Lender or its officers, employees, agents or representatives. Each
      Canadian Revolving Credit Lender shall maintain a record with respect to
      Bankers' Acceptances held by it in blank hereunder, voided by it for any
      reason, accepted and purchased by it hereunder, and cancelled at their
      respective maturities. Each Canadian Revolving Credit Lender agrees to
      provide such records to CERI at CERI's expense upon request.

                  (v)   Execution. Drafts drawn by CERI to be accepted as
      Bankers' Acceptances shall be signed by a duly authorized officer or
      officers of CERI or by its attorneys including attorneys appointed
      pursuant to this Section 2.5. Notwithstanding that any Person whose
      signature appears on any Bankers' Acceptance may no longer be an
      authorized signatory for CERI at the time of issuance of a Bankers'
      Acceptance, that signature shall nevertheless be valid and sufficient for
      all purposes as if the authority had remained in force at the time of
      issuance and any Bankers' Acceptance so signed shall be binding on CERI.

                  (vi)  Issuance. The Canadian Agent, promptly following receipt
      of a Borrowing Notice for Bankers' Acceptances, shall advise the Canadian
      Revolving Credit Lenders of the notice and shall advise each Canadian
      Revolving Credit Lender of the face amount of Bankers' Acceptances to be
      accepted by it and the applicable Interest Period (which shall be
      identical for all Canadian Revolving Credit Lenders). The aggregate face
      amount of Bankers' Acceptances to be accepted by a Canadian Revolving
      Credit Lender shall be determined by the Canadian Agent by reference to
      that Canadian Revolving Credit Lender's Canadian Revolving Credit
      Percentage of the issue of Bankers' Acceptances, except that, if the face
      amount of a Bankers' Acceptance which would otherwise be accepted by a
      Canadian Revolving Credit Lender would not be Cdn. $100,000 or a whole
      multiple thereof, the face amount shall be increased or reduced by the
      Canadian Agent in its sole discretion to Cdn. $100,000, or the nearest
      whole multiple of that amount, as appropriate; provided that after such
      issuance, no Canadian Revolving Credit Lender shall have aggregate
      outstanding Canadian Revolving Credit Loans in excess of its Canadian
      Revolving Credit Commitment.

                                       39


                  (vii)  Waiver of Presentment and Other Conditions. CERI waives
      presentment for payment and any other defense to payment of any amounts
      due to a Canadian Revolving Credit Lender in respect of a Bankers'
      Acceptance accepted and purchased by it pursuant to this Agreement which
      might exist solely by reason of the Bankers' Acceptance being held, at the
      maturity thereof, by the Lender in its own right and CERI agrees not to
      claim any days of grace if the Lender as holder sues CERI on the Bankers'
      Acceptance for payment of the amount payable by CERI thereunder.

                  (viii) BA Equivalent Loans by Non BA Lenders. Whenever CERI
      requests a Canadian Revolving Credit Loan under this Agreement by way of
      Bankers' Acceptances, each Non BA Lender shall, in lieu of accepting a
      Bankers' Acceptance, make a BA Equivalent Loan in an amount equal to the
      Non BA Lender's Ratable Portion of the Canadian Revolving Credit Loan.

                  (ix)   Terms Applicable to Discount Notes. As set out in the
      definition of Bankers' Acceptances, that term includes Discount Notes and
      all terms of this Agreement applicable to Bankers' Acceptances shall apply
      equally to Discount Notes evidencing BA Equivalent Loans with such changes
      as may in the context be necessary. For greater certainty:

                  (a)    the term of a Discount Note shall be the same as the
            Interest Period for Bankers' Acceptances accepted and purchased on
            the same Borrowing Date in respect of the same Canadian Revolving
            Credit Loan;

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

                  (c)    the Discount Rate applicable to a Discount Note shall
            be the Discount Rate applicable to Bankers' Acceptances accepted by
            the Canadian Agent (as Lender) on the same Borrowing Date, as the
            case may be, in respect of the same Canadian Revolving Credit Loan.

                  (x)    Depository Bills and Notes Act. At the option of CERI
      and any Lender, Bankers' Acceptances under this Agreement to be accepted
      by that Lender may be issued in the form of depository bills for deposit
      with The Canadian Depository for Securities Limited pursuant to the
      Depository Bills and Notes Act (Canada). All depository bills so issued
      shall be governed by the provisions of this Section 2.5.

                  (xi)   Prepayments and Mandatory Payments. If at any time any
      Bankers' Acceptances are to be paid prior to their maturity, CERI shall be
      required to deposit the amount of such prepayment in a cash collateral
      account with the Canadian Agent until the date of maturity of those
      Bankers' Acceptances. The cash collateral account shall be under the sole
      control of the Canadian Agent. Except as contemplated by this Section 2.5,
      neither CERI nor any Person claiming on behalf of CERI shall have any
      right to any of the cash in the cash collateral account. The Canadian
      Agent shall apply the cash held in the cash collateral account to the face
      amount of those Bankers'

                                       40


      Acceptances at maturity whereupon any cash remaining in the cash
      collateral account shall be released by the Canadian Agent to CERI.

            2.6   Swing Line Commitments(a) Subject to the terms and conditions
hereof, the US Swing Line Lender agrees that, during the US Revolving Credit
Commitment Period, it will make available to the Borrower in the form of swing
line loans ("US Swing Line Loans") a portion of the credit otherwise available
to the Borrower under the US Revolving Credit Commitments; provided, that (i)
the aggregate principal amount of US Swing Line Loans outstanding at any time
shall not exceed the US Swing Line Commitment then in effect (notwithstanding
that the US Swing Line Loans outstanding at any time, when aggregated with the
US Swing Line Lender's other outstanding US Revolving Credit Loans hereunder,
may exceed the US Swing Line Commitment then in effect or such US Swing Line
Lender's US Revolving Credit Commitment then in effect) and (ii) the Borrower
shall not request, and the US Swing Line Lender shall not make, any US Swing
Line Loan if, after giving effect to the making of such US Swing Line Loan, the
aggregate amount of the Available US Revolving Credit Commitments would be less
than zero. During the US Revolving Credit Commitment Period, the Borrower may
use the US Swing Line Commitment by borrowing, repaying and reborrowing, all in
accordance with the terms and conditions hereof. US Swing Line Loans shall be
Base Rate Loans only.

            (b) The Borrower shall repay all outstanding US Swing Line Loans on
the US Revolving Credit Termination Date.

            (c) Subject to the terms and conditions hereof, the Canadian Swing
Line Lender agrees that, during the Canadian Revolving Credit Commitment Period,
it will make available to CERI in the form of swing line loans ("Canadian Swing
Line Loans") a portion of the credit otherwise available to CERI under the
Canadian Revolving Credit Commitments; provided, that (i) the aggregate
principal amount of Canadian Swing Line Loans outstanding at any time shall not
exceed the Canadian Swing Line Commitment then in effect (notwithstanding that
the Canadian Swing Line Loans outstanding at any time, when aggregated with the
Canadian Swing Line Lender's other outstanding Canadian Revolving Credit Loans
hereunder, may exceed the Canadian Swing Line Commitment then in effect or such
Canadian Swing Line Lender's Canadian Revolving Credit Commitment then in
effect) and (ii) CERI shall not request, and the Canadian Swing Line Lender
shall not make, any Canadian Swing Line Loan if, after giving effect to the
making of such Canadian Swing Line Loan, the aggregate amount of the Available
Canadian Revolving Credit Commitments would be less than zero. During the
Canadian Revolving Credit Commitment Period, CERI may use the Canadian Swing
Line Commitment by borrowing, repaying and reborrowing, all in accordance with
the terms and conditions hereof. Swing Line Loans shall be Canadian Prime Rate
Loans only.

            (d) CERI shall repay all outstanding Canadian Swing Line Loans on
the Canadian Revolving Credit Termination Date.

            2.7   Procedure for US Swing Line Borrowing and Canadian Swing Line
Borrowing; Refunding of US Swing Line Loans and Canadian Swing Line Loans.

            (a) The Borrower may borrow under the US Swing Line Commitment on
any Business Day during the US Revolving Credit Commitment Period, provided, the
Borrower shall

                                       41


give the US Swing Line Lender irrevocable telephonic notice confirmed promptly
in writing (which telephonic notice must be received by the US Swing Line Lender
not later than 1:00 P.M., New York City time, on the proposed Borrowing Date),
specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date.
Each borrowing under the US Swing Line Commitment shall be in an amount equal to
$500,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00
P.M., New York City time, on the Borrowing Date specified in the borrowing
notice in respect of any US Swing Line Loan, the US Swing Line Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the amount of such US Swing Line Loan. The
Administrative Agent shall make the proceeds of such US Swing Line Loan
available to the Borrower on such Borrowing Date in like funds as received by
the Administrative Agent.

            (b) The US Swing Line Lender, at any time and from time to time in
its sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the US Swing Line Lender to act on its behalf), on one
Business Day's notice given by the US Swing Line Lender no later than 12:00
Noon, New York City time, request each US Revolving Credit Lender to make, and
each US Revolving Credit Lender hereby agrees to make, a US Revolving Credit
Loan (which shall initially be a Base Rate Loan), in an amount equal to such US
Revolving Credit Lender's US Revolving Credit Percentage of the aggregate amount
of the US Swing Line Loans (the "US Refunded Swing Line Loans") outstanding on
the date of such notice, to repay the US Swing Line Lender. Each US Revolving
Credit Lender shall make the amount of such US Revolving Credit Loan available
to the Administrative Agent at the Funding Office in immediately available
funds, not later than 10:00 A.M., New York City time, one Business Day after the
date of such notice. The proceeds of such US Revolving Credit Loans shall be
made immediately available by the Administrative Agent to the US Swing Line
Lender for application by the US Swing Line Lender to the repayment of the US
Refunded Swing Line Loans. The Borrower irrevocably authorizes the US Swing Line
Lender to charge the Borrower's accounts with the Administrative Agent (up to
the amount available in each such account) in order to immediately pay the
amount of such US Refunded Swing Line Loans to the extent amounts received from
the US Revolving Credit Lenders are not sufficient to repay in full such US
Refunded Swing Line Loans.

            (c) If prior to the time a US Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrower,
or if for any other reason, as determined by the US Swing Line Lender in its
sole discretion, US Revolving Credit Loans may not be made as contemplated by
Section 2.7(b), each US Revolving Credit Lender shall, on the date such US
Revolving Credit Loan was to have been made pursuant to the notice referred to
in Section 2.7(b) (the "US Refunding Date"), purchase for cash an undivided
participating interest in the then outstanding US Swing Line Loans by paying to
the US Swing Line Lender an amount (the "US Swing Line Participation Amount")
equal to (i) such US Revolving Credit Lender's US Revolving Credit Percentage
times (ii) the sum of the aggregate principal amount of US Swing Line Loans then
outstanding which were to have been repaid with such US Revolving Credit Loans.

            (d) Whenever, at any time after the US Swing Line Lender has
received from any US Revolving Credit Lender such Lender's US Swing Line
Participation Amount, the US Swing Line Lender receives any payment on account
of the US Swing Line Loans, the US Swing Line

                                       42


Lender will distribute to such Lender its US Swing Line Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
pay the principal of and interest on all US Swing Line Loans then due);
provided, however, that in the event that such payment received by the US Swing
Line Lender is required to be returned, such US Revolving Credit Lender will
return to the US Swing Line Lender any portion thereof previously distributed to
it by the US Swing Line Lender.

            (e) Each US Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.7(b) and to purchase participating interests pursuant
to Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such US Revolving Credit
Lender or the Borrower may have against the US Swing Line Lender, the Borrower
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of
the other conditions specified in Section 5; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower; (iv) any breach of this
Agreement or any other Loan Document by the Borrower, any other Loan Party or
any other US Revolving Credit Lender; or (v) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.

            (f) CERI may borrow under the Canadian Swing Line Commitment on any
Business Day during the Canadian Revolving Credit Commitment Period, provided,
CERI shall give the Canadian Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Canadian Swing Line Lender not later than 1:00 P.M., Toronto time, on the
proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the
requested Borrowing Date. Each borrowing under the Canadian Swing Line
Commitment shall be in an amount equal to Cdn. $500,000 or a whole multiple of
Cdn. $100,000 in excess thereof. Not later than 3:00 P.M., Toronto time, on the
Borrowing Date specified in the borrowing notice in respect of any Canadian
Swing Line Loan, the Canadian Swing Line Lender shall make available to the
Canadian Agent at the Canadian Funding Office an amount in immediately available
funds equal to the amount of such Canadian Swing Line Loan. The Canadian Agent
shall make the proceeds of such Canadian Swing Line Loan available to CERI on
such Borrowing Date in like funds as received by the Canadian Agent.
Notwithstanding the foregoing, the Canadian Swing Line Loans may be borrowed
pursuant to an overdraft arrangement on terms acceptable to the Canadian Swing
Line Lender.

            (g) The Canadian Swing Line Lender, at any time and from time to
time in its sole and absolute discretion may, on behalf of CERI (which hereby
irrevocably directs the Canadian Swing Line Lender to act on its behalf), on one
Business Day's notice given by the Canadian Swing Line Lender to the Canadian
Agent no later than 12:00 Noon, Toronto time, request each Canadian Revolving
Credit Lender to make, and each Canadian Revolving Credit Lender hereby agrees
to make, a Canadian Revolving Credit Loan (which shall initially be a Canadian
Prime Rate Loan), in an amount equal to such Canadian Revolving Credit Lender's
Canadian Revolving Credit Percentage of the aggregate amount of the Canadian
Swing Line Loans (the "Canadian Refunded Swing Line Loans") outstanding on the
date of such notice, to repay the Canadian Swing Line Lender. Each Canadian
Revolving Credit Lender shall make the amount of such Canadian Revolving Credit
Loan available to the Canadian Agent at the

                                       43


Canadian Funding Office in immediately available funds, not later than 10:00
A.M., Toronto time, one Business Day after the date of such notice. The proceeds
of such Canadian Revolving Credit Loans shall be made immediately available by
the Canadian Agent to the Canadian Swing Line Lender for application by the
Canadian Swing Line Lender to the repayment of the Canadian Refunded Swing Line
Loans. CERI irrevocably authorizes the Canadian Swing Line Lender to charge
CERI's accounts with the Canadian Agent (up to the amount available in each such
account) in order to immediately pay the amount of such Canadian Refunded Swing
Line Loans to the extent amounts received from the Canadian Revolving Credit
Lenders are not sufficient to repay in full such Canadian Refunded Swing Line
Loans.

            (h) If prior to the time a Canadian Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(g), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to CERI, or if
for any other reason, as determined by the Canadian Swing Line Lender in its
sole discretion, Canadian Revolving Credit Loans may not be made as contemplated
by Section 2.7(g), each Canadian Revolving Credit Lender shall, on the date such
Canadian Revolving Credit Loan was to have been made pursuant to the notice
referred to in Section 2.7(g) (the "Canadian Refunding Date"), purchase for cash
an undivided participating interest in the then outstanding Canadian Swing Line
Loans by paying to the Canadian Swing Line Lender an amount (the "Canadian Swing
Line Participation Amount") equal to (i) such Canadian Revolving Credit Lender's
Canadian Revolving Credit Percentage times (ii) the sum of the aggregate
principal amount of Canadian Swing Line Loans then outstanding which were to
have been repaid with such Canadian Revolving Credit Loans.

            (i) Whenever, at any time after the Canadian Swing Line Lender has
received from any Canadian Revolving Credit Lender such Lender's Canadian Swing
Line Participation Amount, the Canadian Swing Line Lender receives any payment
on account of the Canadian Swing Line Loans, the Canadian Swing Line Lender will
distribute to such Lender its Canadian Swing Line Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
pay the principal of and interest on all Canadian Swing Line Loans then due);
provided, however, that in the event that such payment received by the Canadian
Swing Line Lender is required to be returned, such Canadian Revolving Credit
Lender will return to the Canadian Swing Line Lender any portion thereof
previously distributed to it by the Canadian Swing Line Lender.

            (j) Each Canadian Revolving Credit Lender's obligation to make the
Loans referred to in Section 2.7(g) and to purchase participating interests
pursuant to Section 2.7(h) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Canadian Revolving
Credit Lender or CERI may have against the Canadian Swing Line Lender, CERI or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of CERI; (iv) any breach of this Agreement or any other
Loan Document by CERI, any other Loan Party or any other Canadian Revolving
Credit Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.

                                       44


            2.8   Repayment of Loans; Evidence of Debt(a) . The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate US Revolving Credit Lender or Term Loan Lender, as the case may
be, (i) the then unpaid principal amount of each US Revolving Credit Loan of
such US Revolving Credit Lender on the US Revolving Credit Termination Date (or
on such earlier date on which the Loans become due and payable pursuant to
Section 8), (ii) the then unpaid principal amount of each US Swing Line Loan of
such US Swing Line Lender on the US Revolving Credit Termination Date (or on
such earlier date on which the Loans become due and payable pursuant to Section
8) and (iii) the principal amount of each Tranche B Term Loan of such Tranche B
Term Loan Lender in installments according to the amortization schedule set
forth in Section 2.3 (or on such earlier date on which the Loans become due and
payable pursuant to Section 8). CERI hereby unconditionally promises to pay to
the Canadian Agent for the account of the appropriate Canadian Revolving Credit
Lender (i) the then unpaid principal amount of each Canadian Revolving Credit
Loan of such Canadian Revolving Credit Lender on the Canadian Revolving Credit
Termination Date (or on such earlier date on which the Loans become due and
payable pursuant to Section 8) and (ii) the then unpaid principal amount of each
Canadian Swing Line Loan of such Canadian Swing Line Lender on the Canadian
Revolving Credit Termination Date (or on such earlier date on which the Loans
become due and payable pursuant to Section 8). Each of the Borrower and CERI
hereby further agree to pay interest on the unpaid principal amount of the Loans
borrowed by the Borrower and CERI, as applicable, from time to time outstanding
from the Restatement Effective Date until payment in full thereof at the rate
per annum and on the dates, set forth in Section 2.15.

            (b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower or CERI, as
applicable, to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.

            (c) The Administrative Agent, on behalf of the Borrower, and the
Canadian Agent, on behalf of CERI, shall maintain the Register pursuant to
Section 10.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder and any Note evidencing such
Loan, the Type of such Loan and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower or CERI, as applicable, to each Lender hereunder and
(iii) both the amount of any sum received by the Administrative Agent hereunder
from the Borrower, or by the Canadian Agent from CERI, and each Lender's share
thereof.

            (d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower or CERI therein recorded; provided, however, that
the failure of any Lender, the Administrative Agent or the Canadian Agent to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrower or CERI, as applicable, to
repay (with applicable interest) the Loans made to the Borrower or CERI by such
Lender in accordance with the terms of this Agreement.

            (e) Each of the Borrower and CERI agree that, upon the request to
the Administrative Agent or the Canadian Agent by any Lender, the Borrower or
CERI, as

                                       45


applicable, will promptly execute and deliver to such Lender a promissory note
of the Borrower or CERI, as applicable, evidencing any Term Loans, US Revolving
Credit Loans, Canadian Revolving Credit Loans, US Swing Line Loans, or Canadian
Swing Line Loans as the case may be, of such Lender, substantially in the forms
of Exhibit G-1, G-2, G-3, G-4 or G-5, respectively (a "Term Note", "US Revolving
Credit Note", "Canadian Revolving Credit Note", "US Swing Line Note" or
"Canadian Swing Line Note", respectively), with appropriate insertions as to
date and principal amount; provided, that delivery of Notes shall not be a
condition precedent to the occurrence of the Restatement Effective Date or the
making of the Loans on the Restatement Effective Date.

            2.9   Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each US Revolving Credit Lender a
commitment fee for the period from and including the Restatement Effective Date
to the last day of the US Revolving Credit Commitment Period computed at the
Commitment Fee Rate on the average daily amount of the Available US Revolving
Credit Commitment of such Lender and CERI agrees to pay to the Canadian Agent
for the account of each Canadian Revolving Credit Lender a commitment fee for
the period from and including the Restatement Effective Date to the last day of
the Canadian Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Canadian Revolving Credit
Commitment of such Lender, in each case, during the period for which payment is
made, payable quarterly in arrears on the last day of each March, June,
September and December and on the US Revolving Credit Termination Date with
respect to US Revolving Credit Loans or the Canadian Revolving Termination Date
with respect to Canadian Revolving Credit Loans, commencing on the first of such
dates to occur after the Restatement Effective Date.

            (b) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates from time to time agreed to in writing by the
Borrower and the Administrative Agent.

            2.10  Termination or Reduction of Revolving Credit Commitments. Each
of the Borrower and CERI, as applicable, shall have the right, upon not less
than three Business Days notice to the Administrative Agent (and with respect to
the Canadian Revolving Credit Commitments, the Canadian Agent), to terminate the
US Revolving Credit Commitments or the Canadian Revolving Credit Commitments, as
applicable, or, from time to time, to reduce the aggregate amount of the US
Revolving Credit Commitments or the Canadian Revolving Credit Commitments, as
applicable; provided, that no such termination or reduction of the US Revolving
Credit Commitments or the Canadian Revolving Credit Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof,
(i) the aggregate amount of US Revolving Extensions of Credit would exceed the
aggregate amount of US Revolving Credit Commitments or (ii) the aggregate amount
of Canadian Revolving Extensions of Credit would exceed the aggregate amount of
Canadian Revolving Credit Commitments. Any such reduction shall be in an amount
equal to $1,000,000 or, Cdn. $100,000, in the case of the Canadian Revolving
Credit Commitments, or a whole multiple thereof, and shall reduce permanently
the applicable Revolving Credit Commitments then in effect.

            2.11  Optional Prepayments. Each of the Borrower and CERI may at any
time and from time to time prepay the Loans, in whole or in part, without
premium or penalty (except

                                       46


as otherwise provided herein), upon irrevocable notice delivered to the
Administrative Agent (and, with respect to the Canadian Revolving Credit
Commitments, the Canadian Agent), at least three Business Days prior thereto in
the case of Eurodollar Loans or Bankers' Acceptances and at least one Business
Day prior thereto in the case of Base Rate Loans or Canadian Prime Rate Loans,
which notice shall specify the date and amount of such prepayment, and whether
such prepayment is of Term Loans, US Revolving Credit Loans or Canadian
Revolving Credit Loans, and whether such prepayment is of Eurodollar Loans,
Bankers' Acceptances, Base Rate Loans or Canadian Prime Rate Loans; provided,
that (i) if a Eurodollar Loan is prepaid on any day other than the last day of
the Interest Period applicable thereto, the Borrower or CERI, as applicable,
shall also pay any amounts owing pursuant to Section 2.21, (ii) prepayments of
Bankers' Acceptances shall be made in accordance with Section 2.5(d) and (iii)
no prior notice is required for the prepayment of Swing Line Loans. Upon receipt
of any such notice the Administrative Agent (or the Canadian Agent, if
applicable) shall promptly notify each relevant Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with (except in the case of (1) Revolving
Credit Loans that are Base Rate Loans, (2) Canadian Prime Rate Loans and (3)
Swing Line Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Term Loans and Revolving Credit Loans shall be in an aggregate
principal amount of $1,000,000 or Cdn. $1,000,000, as applicable, or a whole
multiple thereof. Partial prepayments of Swing Line Loans shall be in an
aggregate principal amount of $100,000 or Cdn. $100,000 or a whole multiple
thereof. Amounts applied in connection with the prepayments made pursuant to
this Section 2.11 shall be applied to the relevant Loans as provided in Section
2.18.

            2.12  Mandatory Prepayments and Commitment Reductions. (a)
Unless the Required Prepayment Lenders shall otherwise agree, (i) if any Capital
Stock shall be issued by CERI (other than the Capital Stock issued as part of
the Restatement Effective Date Equity Issuance) or, after the Migration, the
Borrower or (ii) if any Indebtedness shall be incurred, by any Group Member
excluding any Indebtedness incurred in accordance with Section 7.2 as in effect
on the Restatement Effective Date (except Indebtedness incurred pursuant to
Section 7.2(g)(i)(y) and 7.2(g)(ii)), then on the date of such issuance or
incurrence, the Term Loans shall be prepaid, and/or the Revolving Credit Loans
shall be repaid, by an amount equal to, in the case of an issuance of Capital
Stock, 50% of the Net Cash Proceeds thereof, reducing to 0.0% when the
Consolidated Leverage Ratio as of the last day of the most recently completed
fiscal quarter for which financial statements are available is equal to or less
than 3.50:1.00, or in the case of Indebtedness, 100% of the Net Cash Proceeds,
other than any Excluded Proceeds, of such issuance or incurrence, as set forth
in Section 2.12(d). The provisions of this Section do not constitute a consent
to the issuance of any equity securities by any entity whose equity securities
are pledged pursuant to the Guarantee and Collateral Agreement or the Canadian
Guarantee and Collateral Agreement, or a consent to the incurrence of any
Indebtedness by CERI, the Borrower or any of its Subsidiaries.

            (b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date any Group Member shall receive Net Cash Proceeds from any Asset
Sale, Purchase Price Refund or Recovery Event then, unless a Reinvestment Notice
shall be delivered in respect thereof, on the date of receipt by such Group
Member of such Net Cash Proceeds, the Term Loans shall be prepaid, and/or the
Revolving Credit Loans shall be repaid, by an amount equal to the amount of such
Net Cash Proceeds, as set forth in Section 2.12(d); provided, that,
notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset
Sales and Recovery

                                       47


Events that may be excluded from the foregoing requirement pursuant to one or
more Reinvestment Notices and pending reinvestment at any given time shall not
exceed $25,000,000 and (ii) on each Reinvestment Prepayment Date the Term Loans
shall be prepaid, and/or the Revolving Credit Loans shall be repaid, by an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event, as set forth in Section 2.12(d). The provisions of this
Section do not constitute a consent to the consummation of any Disposition not
permitted by Section 7.5.

            (c) Unless the Required Prepayment Lenders shall otherwise agree,
if, for any fiscal year of the Borrower commencing with the fiscal year ending
December 31, 2005 there shall be Excess Cash Flow, then, on the relevant Excess
Cash Flow Application Date, the Term Loans shall be prepaid and/or the Revolving
Credit Loans shall be repaid, by an amount equal to the ECF percentage of such
Excess Cash Flow, as set forth in Section 2.12(d). Each such prepayment shall be
made on a date (an "Excess Cash Flow Application Date") no later than five days
after the earlier of (i) the date on which the financial statements of CERI or,
after the Migration, the Borrower referred to in Section 6.1(a), for the fiscal
year with respect to which such prepayment is made, are required to be delivered
to the Lenders and (ii) the date such financial statements are actually
delivered.

            (d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section 2.12 shall be applied,
first, to the prepayment of the Term Loans and, second, to the repayment of the
Revolving Credit Loans, as provided in Section 2.18. Any repayment of Revolving
Credit Loans pursuant to this Section 2.12 shall not result in a reduction of
the Revolving Credit Commitments.

            (e) If at any time the Dollar Equivalent of the Canadian Revolving
Credit Loans exceeds the aggregate Canadian Revolving Credit Commitments, CERI
shall repay such excess forthwith upon notice by the Canadian Agent.

            2.13  Conversion and Continuation Options(a) Each of the Borrower
and CERI may elect from time to time to convert Eurodollar Loans to Base Rate
Loans and CERI may elect to convert Bankers' Acceptances upon their maturity to
Canadian Prime Rate Loans by giving the Administrative Agent, and, with respect
to Canadian Revolving Credit Loans, the Canadian Agent, at least one Business
Day's prior irrevocable notice of such election, provided, that, any such
conversion of Eurodollar Loans may be made only on the last day of an Interest
Period with respect thereto. Each of the Borrower and CERI may elect from time
to time to convert Base Rate Loans to Eurodollar Loans, and CERI may elect to
convert Canadian Prime Rate Loans to Bankers' Acceptances, by giving the
Administrative Agent, and, with respect to Canadian Revolving Credit Loans, the
Canadian Agent, at least three Business Days prior irrevocable notice of such
election (which notice shall specify the length of the initial Interest Period
therefor), provided, that no Base Rate Loan under a particular Facility may be
converted into a Eurodollar Loan and no Canadian Prime Rate Loan may be
converted to Bankers' Acceptances (i) when any Event of Default has occurred and
is continuing and the Administrative Agent has or with respect to the Canadian
Revolving Credit Facility, the Canadian Agent has, or the Majority Facility
Lenders in respect of such Facility have, determined in its or their sole
discretion not to permit such conversions or (ii) after the date that is one
month prior to the final scheduled termination or maturity date of such
Facility. Upon

                                       48


receipt of any such notice the Administrative Agent, or the Canadian Agent, as
applicable, shall promptly notify each relevant Lender thereof.

            (b) Each of the Borrower and CERI may elect to continue any
Eurodollar Loan as such and CERI may elect to continue Bankers' Acceptance as
such upon the expiration of the then current Interest Period with respect
thereto by giving at least two Business Days' prior irrevocable notice to the
Administrative Agent, and with respect to Canadian Revolving Credit Loans, the
Canadian Agent, in accordance with the applicable provisions of the term
"Interest Period" set forth in Section 1.1 in respect of Eurodollar Loans, of
the length of the next Interest Period to be applicable to such Loans, provided,
that no Eurodollar Loan or Bankers' Acceptance under a particular Facility may
be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or with respect to the Canadian
Revolving Credit Facility, the Canadian Agent has, or the Majority Facility
Lenders in respect of such Facility have, determined in its or their sole
discretion not to permit such continuations or (ii) after the date that is one
month prior to the final scheduled termination or maturity date of such
Facility, and provided, further, that if the Borrower or CERI, as applicable,
shall fail to give any required notice as described above in this paragraph (i)
such Eurodollar Loans shall be continued for the same Interest Period as the
then expiring Interest Period as of the last day of such then expiring Interest
Period, except that if such continuation is not permitted pursuant to the first
proviso in this Section 2.13(b), such Loans shall be repaid or converted
automatically to Base Rate Loans and (ii) the face amount of such Bankers'
Acceptance shall be repaid or automatically converted to Canadian Prime Rate
Loans on the last day of such then expiring Interest Period. Upon receipt of any
such notice the Administrative Agent, or the Canadian Agent, as applicable,
shall promptly notify each relevant Lender thereof.

            2.14  Minimum Amounts and Maximum Number of Eurodollar Tranches. (a)
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to
such elections so that, (i) after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal
to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (ii) no
more than 10 Eurodollar Tranches shall be outstanding at any one time.

            (b) Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Bankers'
Acceptances and all selections of Interest Periods shall be in such amounts and
be made pursuant to such elections so that after giving effect thereto, the
aggregate principal amount of any Bankers' Acceptance shall be equal to Cdn.
$500,000 or a whole multiple of Cdn. $100,000 in excess thereof.

            2.15  Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin in effect for such day.

            (b) Each Base Rate Loan (other than a Canadian Revolving Credit
Loan) shall bear interest for each day on which it is outstanding at a rate per
annum equal to the Base Rate in effect for such day plus the Applicable Margin
in effect for such day and each Base Rate Loan which is a Canadian Revolving
Credit Loan shall bear interest for each day on which it is

                                       49


outstanding at a rate per annum equal to the US Base Rate in Canada in effect
for such day plus the Applicable Margin in effect for such day.

            (c) Each Canadian Prime Rate Loan shall bear interest for each day
on which it is outstanding at a rate per annum equal to the Canadian Prime Rate
in effect for such day plus the Applicable Margin in effect for such day.

            (d) Upon acceptance of a Bankers' Acceptance by a Lender, the
Borrower shall pay to the Canadian Agent on behalf of the Lender a fee (the
"Acceptance Fee") calculated on the face amount of the Bankers' Acceptances at a
rate per annum equal to the Applicable Margin on the basis of the number of days
in the Interest Period for the Bankers' Acceptance and a year of 365 days.

            (e) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) (to the extent legally permitted) shall
bear interest at a rate per annum that is equal to (x) in the case of the Loans,
the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section plus 2.00%, (y) in the case of the Borrower's
Reimbursement Obligations, the rate applicable to Base Rate Loans under the US
Revolving Credit Facility plus 2.00% or (2) in the case of CERI's Reimbursement
Obligations, the rate applicable to Canadian Prime Rate Loans under the Canadian
Revolving Credit Facility plus 2.00% and (ii) if all or a portion of any
interest payable on any Loan or Reimbursement Obligation or any commitment fee
or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to Base Rate
Loans under the relevant Facility plus 2.00% for interest due in Dollars and the
Canadian Prime Rate plus 2.00% for interest due in Canadian Dollars (or, in the
case of any such other amounts that do not relate to a particular Facility, the
rate then applicable to Base Rate Loans under the Revolving Credit Facilities
plus 2.00% for amounts due in Dollars and the Canadian Prime Rate plus 2.00% for
amounts due in Canadian Dollars), in each case, with respect to clauses (i) and
(ii) above, from the date of such non-payment until such amount is paid in full
(after as well as before judgment).

            (f) Interest shall be payable quarterly in arrears on each Interest
Payment Date, provided, that interest accruing pursuant to paragraph (e) of this
Section shall be payable from time to time on demand.

            (g) If any provision of this Agreement or any of the other Loan
Documents would obligate CERI to make any payment of interest with respect to
the Obligations or other amount payable to the Canadian Agent or any Lender in
an amount or calculated at a rate which would be prohibited by law or would
result in a receipt by the Canadian Agent or such Lender of interest with
respect to the Obligations at a criminal rate (as such terms are construed under
the Criminal Code (Canada)) then, notwithstanding such provision, such amount or
rates shall be deemed to have been adjusted with retroactive effect to the
maximum amount or rate of interest, as the case may be, as would not be so
prohibited by law or so result in a receipt by the Canadian Agent or such Lender
of interest with respect to the Obligations at a criminal rate, such adjustment
to be effected, to the extent necessary, as follows: (1) first, by reducing the
amount or rates of interest required to be paid to the Canadian Agent or the
affected Lender under this

                                       50


Section 2.15(g); and (2) thereafter, by reducing any fees, commissions, premiums
and other amounts required to be paid to the Canadian Agent or the affected
Lender which would constitute interest with respect to the Obligations for
purposes of Section 347 of the Criminal Code (Canada). Notwithstanding the
foregoing, and after giving effect to all adjustments contemplated thereby, if
the Canadian Agent or any Lender shall have received an amount in excess of the
maximum permitted by that section of the Criminal Code (Canada), then CERI shall
be entitled, by notice in writing to the Canadian Agent or the affected Lender,
to obtain reimbursement from the Canadian Agent or such Lender in an amount
equal to such excess, and pending such reimbursement, such amount shall be
deemed to be an amount payable by the Canadian Agent or such Lender to CERI. Any
amount or rate of interest under the Obligations referred to in this Section
2.15(e) shall be determined in accordance with generally accepted actuarial
practices and principles as an effective annual rate of interest over the term
that any Canadian Revolving Credit Loans remain outstanding on the assumption
that any charges, fees or expenses that fall within the meaning of "interest"
(as defined in the Criminal Code (Canada)) shall, if they relate to a specific
period of time, be pro-rated over that period of time and otherwise be pro-rated
over the period from the Restatement Effective Date to the Canadian Revolving
Credit Termination Date and, in the event of a dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries appointed by the Canadian Agent
shall be conclusive for the purposes of such determination.

            (h) For purposes of disclosure pursuant to the Interest Act
(Canada), the annual rates of interest or fees to which the rates of interest or
fees provided in this Agreement and the other Loan Documents (and stated herein
or therein, as applicable, to be computed on the basis of a 360 day year or any
other period of time less than a calendar year) are equivalent to the rates so
determined multiplied by the actual number of days in the applicable calendar
year and divided by 360 or such other period of time, respectively.

            2.16  Computation of Interest and Fees(a). (a) Interest, fees,
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to (i) Base
Rate Loans on which interest is calculated on the basis of the Prime Rate and
(ii) Base Rate Loans in which interest is calculated on the US Base Rate in
Canada and Canadian Prime Rate Loans on which interest is calculated on the
basis of the Canadian Prime Rate, the interest thereon shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed. The Administrative Agent, or with respect to Canadian Revolving Credit
Loans, the Canadian Agent, shall as soon as practicable notify the Borrower or
CERI, as applicable, and the relevant Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Canadian Prime Rate, the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent, or with respect
to Canadian Revolving Credit Loans, the Canadian Agent, shall as soon as
practicable notify the Borrower, CERI and the relevant Lenders of the effective
date and the amount of each such change in interest rate.

            (b) Each determination of an interest rate by the Administrative
Agent, or with respect to Canadian Revolving Credit Loans, the Canadian Agent,
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and CERI and the Lenders in the absence of manifest error. The
Administrative Agent or the Canadian Agent, as applicable, shall, at the request
of the Borrower or CERI, deliver to the Borrower or CERI, as applicable, a

                                       51


statement showing the quotations used by the Administrative Agent or the
Canadian Agent in determining any interest rate or Acceptance Fee pursuant to
Section 2.15.

            2.17  Inability to Determine Interest Rate. If prior to the first
day of any Interest Period:

            (a) (i) the Administrative Agent, or with respect to Canadian
Revolving Credit Loans, the Canadian Agent, shall have determined (which
determination shall be conclusive and binding upon the Borrower and CERI) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or

            (ii) the Administrative Agent, or with respect to Canadian Revolving
Credit Loans, the Canadian Agent, shall have received notice from the Majority
Facility Lenders in respect of the relevant Facility that the Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such Interest
Period,

the Administrative Agent or the Canadian Agent, as applicable, shall give
telecopy or telephonic notice thereof to the Borrower or CERI, as applicable,
and the relevant Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans under the relevant Facility requested to be made
on the first day of such Interest Period shall be made as Base Rate Loans, (y)
any Loans under the relevant Facility that were to have been converted on the
first day of such Interest Period to Eurodollar Loans shall be continued as Base
Rate Loans and (z) any outstanding Eurodollar Loans under the relevant Facility
shall be converted, on the last day of the then current Interest Period with
respect thereto, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent or the Canadian Agent, as applicable, no further Eurodollar
Loans under the relevant Facility shall be made or continued as such, nor shall
the Borrower or CERI have the right to convert Loans under the relevant Facility
to Eurodollar Loans.

            (b) any Canadian Revolving Credit Lender determines in good faith,
which determination shall be final, conclusive and binding upon CERI, and
notifies CERI that, by reason of circumstances affecting the money market there
is no market for Bankers' Acceptances or the demand for Bankers' Acceptances is
insufficient to allow the sale or trading of the Bankers' Acceptances created
hereunder, then:

                  (i)   the right of CERI to request a Canadian Revolving Credit
      Loan by means of Bankers' Acceptances shall be suspended until such
      Canadian Revolving Credit Lender determines that the circumstances causing
      such suspension no longer exist and such Canadian Revolving Credit Lender
      so notifies CERI; and

                  (ii)  any notice for the issuance of a Bankers' Acceptance
      which is outstanding shall be cancelled and the request for such issuance
      shall be deemed to be a request for a Canadian Prime Rate Loan in the face
      amount of the requested Bankers' Acceptance;

                                       52


such Canadian Revolving Credit Lender shall promptly notify CERI of the
suspension of CERI's right to request a Canadian Revolving Credit Loan by way of
a Bankers' Acceptance and of the termination of any such suspension.

            2.18  Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower or CERI from the Lenders hereunder, each payment by the Borrower or
CERI on account of any Acceptance Fee, commitment fee or Letter of Credit fee,
and any reduction of the Commitments of the Lenders, shall be made pro rata
according to the respective Term Loan Percentages, US Revolving Credit
Percentages or Canadian Revolving Credit Percentages, as the case may be, of the
relevant Lenders. Each payment (other than prepayments) in respect of principal
or interest in respect of the Term Loans and each payment in respect of fees or
expenses payable hereunder shall be applied to the amounts of such obligations
owing to the Lenders pro rata according to the respective amounts then due and
owing to the Lenders.

            (b) Each optional and mandatory payment (including prepayments)
required by Section 2.12 to be applied to the Term Loans shall be allocated
among the Term Loan Facilities pro rata according to the respective outstanding
principal amounts of Term Loans under such Facilities. Each payment (including
each prepayment) of the Term Loans outstanding under any Term Loan Facility
shall be allocated among the Term Loan Lenders holding such Term Loans pro rata
based on the principal amount of such Term Loans held by such Term Loan Lenders,
and shall be applied to the installments of such Term Loans, first, in direct
order of maturity for the four quarterly installments due immediately after the
date of such prepayment and, second, with respect to any remainder, to the
remaining installments of such Term Loans ratably in accordance with the then
outstanding amounts thereof. Amounts prepaid on account of the Term Loans may
not be reborrowed.

            (c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be
allocated among the Revolving Credit Facilities pro rata according to the
respective outstanding principal amounts of Revolving Credit Loans under such
Facilities. Each payment (including each prepayment) of the Revolving Credit
Loans outstanding under any Revolving Credit Facility shall be allocated among
the Revolving Credit Lenders holding such Revolving Credit Loans pro rata
according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by such Revolving Credit Lenders. Each payment in respect
of Reimbursement Obligations in respect of any Letter of Credit shall be made to
the Issuing Lender that issued such Letters of Credit.

            (d) The application of any payment of Loans under any Facility
(including optional and mandatory prepayments) shall be made, first, to Base
Rate Loans (and Canadian Prime Rate Loans, in the case of CERI), under such
Facility and, second, to Eurodollar Loans (and Bankers' Acceptances, in the case
of CERI), under such Facility. Each payment of the Loans (except in the case of
Swing Line Loans and Revolving Credit Loans that are Base Rate Loans or Canadian
Prime Rate Loans) shall be accompanied by accrued interest to the date of such
payment on the amount paid.

            (e) All payments (including prepayments) to be made by the Borrower
and CERI hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim. All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise shall be made prior to

                                       53


12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the relevant Lenders, at the Payment Office, in
Dollars and in immediately available funds. Any payment made by the Borrower
after 12:00 Noon, New York City time, on any Business Day shall be deemed to
have been made on the next following Business Day. The Administrative Agent
shall distribute such payments to the Lenders promptly upon receipt in like
funds as received. All payments (including prepayments) to be made by CERI
hereunder with respect to the Canadian Revolving Credit Facility, whether on
account of principal, interest, fees or otherwise, shall be made prior to 12:00
Noon, Toronto time, on the due date thereof to the Canadian Agent, for the
account of the relevant Lenders, at the Canadian Payment Office, in Canadian
Dollars and in immediately available funds. Any payment made by CERI after 12:00
Noon, Toronto time, on any Business Day shall be deemed to have been made on the
next following Business Day. The Canadian Agent shall distribute such payments
to the Canadian Revolving Credit Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans
and Bankers' Acceptances) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day. If any
payment on a Eurodollar Loan or Bankers' Acceptance becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day. In the case of any
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.

            (f) Unless the Administrative Agent or the Canadian Agent, as
applicable, shall have been notified in writing by any Lender prior to a
borrowing that such Lender will not make the amount that would constitute its
share of such borrowing available to the applicable Agent, such Agent may assume
that such Lender is making such amount available to such Agent, and such Agent
may, in reliance upon such assumption, make available to the Borrower or CERI,
if applicable, a corresponding amount. If such amount is not made available to
the Administrative Agent or the Canadian Agent, as applicable, by the required
time on the Borrowing Date therefor, such Lender shall pay to the Administrative
Agent or the Canadian Agent, as applicable, on demand, such amount with interest
thereon at a rate equal to the daily average Federal Funds Effective Rate for
amounts in Dollars and the interbank offered rate quoted by the Canadian Agent
for amounts in Canadian Dollars for the period until such Lender makes such
amount immediately available to such Agent. A certificate of the applicable
Agent submitted to any Lender with respect to any amounts owing under this
paragraph shall be conclusive in the absence of manifest error. If such Lender's
share of such borrowing is not made available to the applicable Agent by such
Lender within three Business Days after such Borrowing Date, the applicable
Agent shall also be entitled to recover such amount with interest thereon at the
rate per annum applicable to Base Rate Loans under the relevant Facility, on
demand, from the Borrower or, with respect to the Canadian Revolving Credit
Facility, CERI.

            (g) Unless the Administrative Agent or the Canadian Agent, as
applicable, shall have been notified in writing by the Borrower or CERI, as
applicable, prior to the date of any payment due to be made by the Borrower or
CERI hereunder that the Borrower or CERI, as applicable, will not make such
payment to the applicable Agent, the applicable Agent may assume that the
Borrower or CERI, as applicable, is making such payment, and the applicable
Agent may, but shall not be required to, in reliance upon such assumption, make
available to the

                                       54


Lenders their respective pro rata shares of a corresponding amount. If such
payment is not made to the applicable Agent by the Borrower or CERI within three
Business Days after such due date, the applicable Agent shall be entitled to
recover, on demand, from each Lender to which any amount which was made
available pursuant to the preceding sentence, such amount with interest thereon
at the rate per annum equal to the daily average Federal Funds Effective Rate
for amounts in Dollars and the interbank offered rate quoted by the Canadian
Agent for amounts in Canadian Dollars. Nothing herein shall be deemed to limit
the rights of the Administrative Agent, the Canadian Agent or any Lender against
the Borrower or CERI.

            2.19  Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the Restatement Effective Date (other than with respect to taxes,
which shall be governed exclusively by Section 2.20):

                  (i)   shall impose, modify or hold applicable any reserve,
      special deposit, compulsory loan or similar requirement against assets
      held by, deposits or other liabilities in or for the account of, advances,
      loans or other extensions of credit by, or any other acquisition of funds
      by, any office of such Lender that is not otherwise included in the
      determination of the Eurodollar Rate hereunder; or

                  (ii)  shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Loans or issuing or participating in Letters of
Credit, or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower or CERI, as applicable, shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this Section, it
shall promptly notify the Borrower and CERI (with a copy to the Administrative
Agent and the Canadian Agent, if applicable) of the event by reason of which it
has become so entitled.

            (b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the Restatement Effective Date shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder or under or in respect of
any Letter of Credit to a level below that which such Lender or such corporation
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower or CERI, as
applicable (with a copy to the Administrative Agent and the Canadian Agent) of a
written request therefor, the Borrower, or CERI, as applicable, shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such corporation for such reduction on an after-tax basis.

                                       55


            (c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower or CERI (with a copy to the
applicable Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower and CERI pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

            2.20  Taxes . (a) All payments made by the Borrower or CERI
under this Agreement or any other Loan Documents shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding (i) net income
taxes, and gross income taxes, gross receipts taxes, capital taxes and franchise
taxes (in each case, imposed in lieu of net income taxes) imposed on the
Arranger, any Agent or any Lender as a result of a present or former connection
between the Arranger, such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Arranger's, such Agent's or such Lender's having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document in such jurisdiction), (ii) any branch
profit taxes imposed by the United States of America (or any similar tax imposed
by any other jurisdiction described in clause (i) above), and (iii) any taxes
that are imposed as a result of any voluntary action taken by the Arranger, any
Agent or any Lender occurring after the Arranger, such Agent or such Lender
becomes a party to this Agreement other than any taxes resulting from a change
in law or regulation or a change in interpretation or administration of any law
or regulation (collectively, "Excluded Taxes"). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or any Other Taxes are required to be withheld from any
amounts payable to the Arranger, any Agent or any Lender hereunder, the amounts
so payable to the Arranger, such Agent or such Lender shall be increased to the
extent necessary to yield to the Arranger, such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that none of the Borrower, CERI or any Guarantor
shall be required to increase any such amounts payable to the Arranger, any
Agent or any Lender with respect to (x) any Excluded Taxes or (y) any
Non-Excluded Taxes (i) that are attributable to the Arranger's, such Agent's or
such Lender's failure to comply with the requirements of paragraph (e) of this
Section, (ii) in the case of any Non-U.S. Lender, that are United States of
America withholding taxes imposed on amounts payable to the Arranger, such Agent
or such Lender at the time the Arranger, such Agent or such Lender becomes a
party to this Agreement, except to the extent that the Arranger's, such Agent's
or such Lender's assignor (if any) was entitled, at the time of assignment, to
receive additional amounts from the Borrower with respect to such Non-Excluded
Taxes pursuant to this paragraph (a) or (iii) in the case of any Canadian
Revolving Credit Lender that is not a resident of Canada for the purposes of the
Canadian Income Tax Act, that are Canadian withholding taxes imposed on amounts
payable to the Arranger, the Canadian Agent or such Canadian Revolving Credit
Lender in relation to payments made under or in respect of the Canadian
Revolving Credit Facility at the time the Arranger, the Canadian Agent or such
Canadian Revolving Credit Lender becomes a party to this Agreement. The Borrower
or the applicable Guarantor shall make any required withholding and pay the full
amount withheld to the relevant tax authority or other Governmental Authority in
accordance with applicable Requirements of Law.

                                       56


            (b) In addition, the Borrower and CERI shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.

            (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower or CERI, as promptly as possible thereafter it shall send to the
Administrative Agent or Canadian Agent, as applicable, for the account of the
relevant Arranger, Agent or Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower or CERI showing payment
thereof or other written proof of payment thereof that is reasonably
satisfactory to the applicable Agent. If the Borrower or CERI, as applicable,
fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to the applicable Agent the required receipts
or other required documentary evidence, the Borrower and CERI shall indemnify
the Arranger, the Agents and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Arranger, any Agent or any Lender as a
result of any such failure.

            (d) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.

            (e) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement shall deliver to
the Borrower, CERI and the Administrative Agent or Canadian Agent, as
applicable, at the time or times reasonably requested in writing by the Borrower
or CERI, as applicable, such properly completed and executed documentation
prescribed by Requirements of Law or as may be required by the applicable Agent
as will permit such payments to be made without withholding or at a reduced
rate.

            In addition, and without limiting the generality of the foregoing,
each Lender (or Transferee), other than a Canadian Revolving Credit Lender, that
is not a citizen or resident of the United States of America, a corporation,
partnership or other entity created or organized in or under the laws of the
United States of America (or any jurisdiction thereof), or any estate or trust
that is subject to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent two copies of either U.S. Internal Revenue Service Form
W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest" a statement substantially in
the form of Exhibit H to the effect that such Lender is eligible for a complete
exemption from withholding of U.S. taxes under Section 871(h) or 881(c) of the
Code and a Form W-8BEN, or any subsequent versions thereof or successors thereto
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all
payments by the Borrower under this Agreement and the other Loan Documents. Such
forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement. In addition, each Non-U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this paragraph, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this paragraph that
such Non-U.S. Lender is not legally able to deliver.

                                       57


            (f) If a Lender receives a refund in respect of any Non-Excluded
Taxes or Other Taxes as to which it has been indemnified by the Borrower or
CERI, or with respect to which the Borrower or CERI, as applicable, has paid
additional amounts pursuant to this Section 2.20, it shall within 180 days from
the date of such receipt pay over the amount of such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
or CERI under this Section 2.20 with respect to the Non-Excluded Taxes or Other
Taxes giving rise to such refund) to the Borrower or CERI, net of all reasonable
out-of-pocket expenses of such Lender (including any taxes imposed with respect
to such refund) as determined by such Lender in good faith and in its sole
discretion, and without interest (other than interest paid by the relevant
taxation authority with respect to such refund); provided, however, that the
Borrower or CERI, as applicable, upon the request of such Lender, agrees to
repay as soon as reasonably practicable the amount paid over to the Borrower or
CERI (plus applicable interest imposed by the relevant Governmental Authority)
to such Lender in the event such Lender is required to repay such refund to such
Governmental Authority.

            (g) Each Lender that is a "United States person" within the meaning
of Section 7701(a)(30) of the Code shall deliver to the Borrower and the
Administrative Agent, on or before the date such Lender becomes a party to this
Agreement, two copies of Internal Revenue Service Form W-9 or any successor or
other form prescribed by the Internal Revenue Service. If any such Lender fails
to deliver Internal Revenue Service Form W-9 (or any subsequent versions thereof
or successors thereto) as required herein, then the Borrower may withhold from
any payment to such Lender the applicable backup withholding tax imposed by the
Code and remit such amount to the relevant tax authority or other Governmental
Authority in accordance with the applicable Requirements of Law, without
reduction, and such Lender shall not be entitled to any additional amounts under
this Section 2.20 with respect to Non-Excluded Taxes imposed by the United
States by reason of such failure.

            2.21  Indemnity. The Borrower and CERI agree to indemnify each
Lender for, and to hold each Lender harmless from, any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by the Borrower or
CERI in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower or CERI, as applicable, has given a notice requesting
the same in accordance with the provisions of this Agreement, (b) default by the
Borrower or CERI in making any prepayment after the Borrower or CERI, as
applicable, has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment or conversion of Eurodollar Loans on
a day that is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower or CERI by any Lender shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

                                       58


            2.22  Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower or, with respect to Canadian Revolving Credit Loans, CERI,
shall pay to such Lender such amounts, if any, as may be required pursuant to
Section 2.21.

            2.23  Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.19 or 2.20
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.19 or 2.20.

                          SECTION 3. LETTERS OF CREDIT

            3.1   L/C Commitment(a) Subject to the terms and conditions hereof,
each US Issuing Lender, in reliance on the agreements of the other Revolving
Credit Lenders set forth in Section 3.4(a), agrees to issue letters of credit
("US Letters of Credit") for the account of the Borrower or any other Group
Member on any Business Day during the US Revolving Credit Commitment Period in
such form as may be approved from time to time by such Issuing Lender; provided,
that no US Issuing Lender shall have any obligation to issue any US Letter of
Credit if, after giving effect to such issuance, (i) the US L/C Obligations
would exceed the US L/C Commitment or (ii) the aggregate amount of the Available
US Revolving Credit Commitments would be less than zero. Each US L/C shall (i)
be denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the US Revolving Credit Termination Date; provided that
any US Letter of Credit with a one-year term may provide for the renewal thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above). In addition, the US Issuing Lender agrees to
issue US Letters of Credit with an expiration date later than the date specified
in the two immediately preceding sentences (but no later than one year from the
date of issuance thereof) in reliance upon the Borrower's agreement to cash
collateralize such Letters of Credit by the date which is 30 days prior to the
US Revolving Credit Termination Date in the amount that would be required by the
US Issuing Lender pursuant to Section 10.15(c) to deem such US Letter of Credit
not outstanding, and the Borrower so agrees to cash collateralize such US
Letters of Credit by such date, it being understood that until the Loans, the
Reimbursement Obligations and the other Obligations under the Loan Documents are
paid in full, the Commitments have been terminated and no other Letters of
Credit shall be

                                       59


outstanding, such cash collateral shall be subject to the rights of each other
Lender under Section 10.7.

            (b) Subject to the terms and conditions hereof, each Canadian
Issuing Lender, in reliance on the agreements of the other Canadian Revolving
Credit Lenders set forth in Section 3.4(d), agrees to issue letters of credit
("Canadian Letters of Credit") for the account of CERI on any Business Day
during the Canadian Revolving Credit Commitment Period in such form as may be
approved from time to time by such Canadian Issuing Lender; provided, that no
Canadian Issuing Lender shall have any obligation to issue any Canadian Letter
of Credit if, after giving effect to such issuance (i) the Canadian L/C
Obligations would exceed the Canadian L/C Commitment or (ii) the aggregate
amount of the Available Canadian Revolving Credit Commitments would be less than
zero. Each Canadian Letter of Credit shall (i) be denominated in Canadian
Dollars and (ii) expire no later than the earlier of (x) the first anniversary
of its date of issuance and (y) the date which is five Business Dates prior to
the Canadian Revolving Credit Termination Date; provided that any Canadian
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above). In addition, the Canadian Issuing Lender
agrees to issue Canadian Letters of Credit with an expiration date later than
the date specified in the two immediately preceding sentences (but no later than
one year from the date of issuance thereof) in reliance upon the Borrower's and
CERI's agreement to cash collateralize such Canadian Letters of Credit by the
date which is 30 days prior to the Canadian Revolving Credit Termination Date in
the amount that would be required by such Issuing Lender pursuant to Section
10.15(c) to deem such Letter of Credit not outstanding, and the Borrower and
CERI so agree to cash collateralize such Letters of Credit by such date, it
being understood that until the Loans, the Reimbursement Obligations and the
other Obligations under the Loan Documents are paid in full, the Commitments
have been terminated and no other Letters of Credit shall be outstanding, such
cash collateral shall be subject to the rights to the rights of each other
Lender under Section 10.7.

            (c) No Issuing Lender shall at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause such
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.

            3.2   Procedure for Issuance of Letter of Credit. (a) The
Borrower may from time to time request that a US Issuing Lender issue a US
Letter of Credit by delivering to such US Issuing Lender, with a copy to the
Administrative Agent, at their addresses for notices specified herein an
Application therefor, completed to the satisfaction of such US Issuing Lender,
and such other certificates, documents and other papers and information as such
US Issuing Lender may request. Upon receipt of any such Application, a US
Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the US Letter
of Credit requested thereby by issuing the original of such US Letter of Credit
to the beneficiary thereof or as otherwise may be agreed to by such US Issuing
Lender and the Borrower (but in no event shall any US Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto). Promptly after issuance by a US
Issuing Lender of a US Letter of Credit, such US Issuing Lender shall furnish a
copy of such Letter of Credit to the Borrower and the Administrative Agent. Each

                                       60


US Issuing Lender shall promptly give notice to the Administrative Agent of the
issuance of each US Letter of Credit issued by such US Issuing Lender (including
the amount thereof).

            (b) CERI may from time to time request that a Canadian Issuing
Lender issue a Canadian Letter of Credit by delivering to such Canadian Issuing
Lender, with a copy to the Administrative Agent and the Canadian Agent, at their
addresses for notices specified herein an Application therefor, completed to the
satisfaction of such Canadian Issuing Lender, and such other certificates,
documents and other papers and information as such Canadian Issuing Lender may
request. Upon receipt of any such Application, a Canadian Issuing Lender will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Canadian Letter of Credit
requested thereby by issuing the original of such Canadian Letter of Credit to
the beneficiary thereof or as otherwise may be agreed to by such Canadian
Issuing Lender and CERI (but in no event shall any Canadian Issuing Lender be
required to issue any Letter of Credit earlier than three Business Days after
its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto). Promptly after
issuance by a Canadian Issuing Lender of a Canadian Letter of Credit, such
Canadian Issuing Lender shall furnish a copy of such Letter of Credit to CERI,
the Administrative Agent and the Canadian Agent. Each Canadian Issuing Lender
shall promptly give notice to the Administrative Agent and the Canadian Agent of
the issuance of each Canadian Letter of Credit issued by such Canadian Issuing
Lender (including the amount thereof).

            3.3   Fees and Other Charges. (a) (i) The Borrower will pay a fee on
the aggregate drawable amount of all outstanding US Letters of Credit at a per
annum rate equal to the Applicable Margin then in effect with respect to
Eurodollar Loans under the US Revolving Credit Facility, shared ratably among
the US Revolving Credit Lenders in accordance with their respective US Revolving
Credit Percentages (ii) CERI will pay a fee on the aggregate drawable amount of
all outstanding Canadian Letters of Credit at a per annum rate equal to the
Applicable Margin then in effect with respect to Eurodollar Loans under the
Canadian Revolving Credit Facility, shared ratably among the Canadian Revolving
Credit Lenders in accordance with their respective Canadian Revolving Credit
Percentages and each such fee is payable quarterly in arrears on each L/C Fee
Payment Date after the issuance date of such Letter of Credit. Such fees shall
be payable in the same currency as the Letter of Credit to which such fees
relate and in addition, the Borrower shall pay to the relevant US Issuing Lender
and CERI shall pay to the relevant Canadian Issuing Lender for its own account a
fronting fee on the aggregate drawable amount of all outstanding Letters of
Credit issued by it of 1/4 of 1% per annum, payable quarterly in arrears on each
L/C Fee Payment Date after the issuance of date of such Letter of Credit.

            (b) In addition to the foregoing fees, the Borrower shall pay or
reimburse each US Issuing Lender and CERI shall pay or reimburse each Canadian
Issuing Lender for such normal and customary costs and expenses as are incurred
or charged by such Issuing Lender in issuing, negotiating, effecting payment
under, amending or otherwise administering any Letter of Credit.

            3.4   L/C Participations. (a) Each US Issuing Lender irrevocably
agrees to grant and hereby grants to each US L/C Participant, and, to induce
each US Issuing Lender to issue US Letters of Credit hereunder, each US L/C
Participant irrevocably agrees to accept and

                                       61


purchase and hereby accepts and purchases from each US Issuing Lender, on the
terms and conditions hereinafter stated, for such US L/C Participant's own
account and risk, an undivided interest equal to such US L/C Participant's US
Revolving Credit Percentage in each US Issuing Lender's obligations and rights
under each US Letter of Credit issued by such US Issuing Lender hereunder and
the amount of each draft paid by such US Issuing Lender thereunder. Each US L/C
Participant unconditionally and irrevocably agrees with each US Issuing Lender
that, if a draft is paid under any US Letter of Credit issued by such US Issuing
Lender for which such US Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such US L/C Participant
shall pay to such US Issuing Lender, regardless of the occurrence or continuance
of a Default or Event of Default or the failure to satisfy any of the other
conditions specified in Section 5, upon demand at the Administrative Agent's
address for notices specified herein (and thereafter, the Administrative Agent
shall promptly pay to the US Issuing Lender) an amount in Dollars equal to such
US L/C US Participant's Revolving Credit Percentage of the amount of such draft,
or any part thereof, that is not so reimbursed.

            (b) If any amount required to be paid by any US L/C Participant to
an US Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by such US Issuing Lender under any US Letter of
Credit is paid to such US Issuing Lender within three Business Days after the
date such payment is due, the US Issuing Lender shall so notify the
Administrative Agent, who shall promptly notify the US L/C Participants and each
such US L/C Participant shall pay to the Administrative Agent, for the account
of the US Issuing Lender on demand (and thereafter the Administrative Agent
shall promptly pay to the US Issuing Lender) an amount equal to the product of
(i) such amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to such US Issuing Lender,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any US L/C Participant pursuant to Section 3.4(a) is not
made available to the Administrative Agent, for the account of such US Issuing
Lender, by such US L/C Participant within three Business Days after the date
such payment is due, the Administrative Agent, on behalf of such US Issuing
Lender shall be entitled to recover from such US L/C Participant, on demand,
such amount with interest thereon calculated from such due date at the rate per
annum applicable to Base Rate Loans. A certificate of the Administrative Agent
on behalf of such US Issuing Lender submitted to any US L/C Participant with
respect to any such amounts owing under this Section shall be conclusive in the
absence of manifest error.

            (c) Whenever, at any time after any US Issuing Lender has made
payment under any US Letter of Credit and has received from the Administrative
Agent any US L/C Participant's pro rata share of such payment in accordance with
Section 3.4(a), such US Issuing Lender receives any payment related to such US
Letter of Credit (whether directly from the Borrower or otherwise, including
proceeds of collateral applied thereto by such US Issuing Lender), or any
payment of interest on account thereof, such US Issuing Lender will distribute
to the Administrative Agent for the account of such US L/C Participant (and
thereafter, the Administrative Agent will promptly distribute to such US L/C
Participant) its pro rata share thereof; provided, however, that in the event
that any such payment received by such US Issuing Lender shall be required to be
returned by such US Issuing Lender, such US L/C Participant shall return to the
Administrative Agent for the account of such US Issuing Lender the portion
thereof previously distributed by such US Issuing Lender to it.

                                       62


            (d) Each Canadian Issuing Lender irrevocably agrees to grant and
hereby grants to each Canadian L/C Participant, and, to induce each Canadian
Issuing Lender to issue Canadian Letters of Credit hereunder, each Canadian L/C
Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from each Canadian Issuing Lender, on the terms and conditions
hereinafter stated, for such Canadian L/C Participant's own account and risk, an
undivided interest equal to such Canadian L/C Participant's Canadian Revolving
Credit Percentage in each Canadian Issuing Lender's obligations and rights under
each Canadian Letter of Credit issued by such Canadian Issuing Lender hereunder
and the amount of each draft paid by such Canadian Issuing Lender thereunder.
Each Canadian L/C Participant unconditionally and irrevocably agrees with each
Canadian Issuing Lender that, if a draft is paid under any Letter of Credit
issued by such Canadian Issuing Lender for which such Canadian Issuing Lender is
not reimbursed in full by CERI in accordance with the terms of this Agreement,
such Canadian L/C Participant shall pay to such Canadian Issuing Lender,
regardless of the occurrence or continuance of a Default or Event of Default or
the failure to satisfy any of the other conditions specified in Section 5, upon
demand at the Canadian Agent's address for notices specified herein (and
thereafter, the Canadian Agent shall promptly pay to the Canadian Issuing
Lender) an amount in Canadian Dollars, equal to such Canadian L/C Participant's
Canadian Revolving Credit Percentage of the amount of such draft, or any part
thereof, that is not so reimbursed.

            (e) If any amount required to be paid by any Canadian L/C
Participant to a Canadian Issuing Lender pursuant to Section 3.4(d) in respect
of any unreimbursed portion of any payment made by such Canadian Issuing Lender
under any Canadian Letter of Credit is paid to such Canadian Issuing Lender
within three Business Days after the date such payment is due, the Canadian
Issuing Lender shall so notify the Administrative Agent and the Canadian Agent
who shall promptly notify the Canadian L/C Participants and each such Canadian
L/C Participant shall pay to the Canadian Agent, for the account of the Canadian
Issuing Lender on demand (and thereafter the Canadian Agent shall promptly pay
to the Canadian Issuing Lender) an amount equal to the product of (i) such
amount, times (ii) the daily average interbank offered rate quoted by the
Canadian Agent during the period from and including the date such payment is
required to the date on which such payment is immediately available to such
Canadian Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any Canadian L/C Participant
pursuant to Section 3.4(d) is not made available to the Canadian Agent, for the
account of such Canadian Issuing Lender, by such Canadian L/C Participant within
three Business Days after the date such payment is due, the Canadian Agent, on
behalf of such Canadian Issuing Lender shall be entitled to recover from such
Canadian L/C Participant, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Base Rate
Loans for amounts due in Dollars and Canadian prime Rate Loans for amounts due
in Canadian Dollars. A certificate of the Canadian Agent on behalf of such
Canadian Issuing Lender submitted to any Canadian L/C Participant with respect
to any such amounts owing under this Section shall be conclusive in the absence
of manifest error.

            (f) Whenever, at any time after a Canadian Issuing Lender has made
payment under any Canadian Letter of Credit and has received from the Canadian
Agent any Canadian L/C Participant's pro rata share of such payment in
accordance with Section 3.4(d), such Canadian Issuing Lender receives any
payment related to such Canadian Letter of Credit (whether directly from CERI,
the Borrower or otherwise, including proceeds of collateral applied thereto by
such Canadian Issuing Lender), or any payment of interest on account thereof,
such

                                       63


Canadian Issuing Lender will distribute to the Canadian Agent for the account of
such Canadian L/C Participant (and thereafter, the Canadian Agent will promptly
distribute to such Canadian L/C Participant) its pro rata share thereof;
provided, however, that in the event that any such payment received by such
Canadian Issuing Lender shall be required to be returned by such Canadian
Issuing Lender, such Canadian L/C Participant shall return to the Canadian Agent
for the account of such Canadian Issuing Lender the portion thereof previously
distributed by such Canadian Issuing Lender to it.

            3.5   Reimbursement Obligation of the Borrower and CERI. (a) The
Borrower agrees to reimburse each US Issuing Lender, on each date on which such
US Issuing Lender notifies the Borrower of the date and amount of a draft
presented under any US Letter of Credit and paid by such US Issuing Lender, for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by such US Issuing Lender in connection with such
payment (the amounts described in the foregoing clauses (a) and (b) in respect
of any drawing, collectively, the "Payment Amount"). Each such payment shall be
made to such US Issuing Lender at its address for notices specified herein in
lawful money of the United States of America and in immediately available funds.
Interest shall be payable on the Payment Amount from the date of the applicable
drawing until payment in full at the rate set forth in (i) until the second
Business Day following the date of the applicable drawing, Section 2.15(b) and
(ii) thereafter, Section 2.15(c). Each drawing under any US Letter of Credit
shall (unless an event of the type described in clause (i) or (ii) of Section
8(f) shall have occurred and be continuing with respect to the Borrower, in
which case the procedures specified in Section 3.4 for funding by US L/C
Participants shall apply) constitute a request by the Borrower to the
Administrative Agent for a borrowing pursuant to Section 2.5 of Base Rate Loans
(or, at the option of the Administrative Agent and the US Swing Line Lender in
their sole discretion, a borrowing pursuant to Section 2.7 of US Swing Line
Loans) in the amount of such drawing. The Borrowing Date with respect to such
borrowing shall be the first date on which a borrowing of US Revolving Credit
Loans (or, if applicable, US Swing Line Loans) could be made, pursuant to
Section 2.5 (or, if applicable, Section 2.7), if the Administrative Agent had
received a notice of such borrowing at the time the Administrative Agent
receives notice from the relevant US Issuing Lender of such drawing under such
US Letter of Credit. All payments due from the Borrower hereunder in respect of
US Letters of Credit (and US Reimbursement Obligations in connection therewith)
shall be made in Dollars.

            (b) CERI agrees to reimburse each Canadian Issuing Lender, on each
date on which such Canadian Issuing Lender notifies CERI of the date and amount
of a draft presented under any Canadian Letter of Credit and paid by such
Canadian Issuing Lender, for the amount of (a) such draft so paid and (b) any
taxes, fees, charges or other costs or expenses incurred by such Canadian
Issuing Lender in connection with such payment (the amounts described in the
foregoing clauses (a) and (b) in respect of any drawing, collectively, the
"Canadian Payment Amount"). The Canadian Issuing Lender shall provide notice to
CERI on each Business Day on which a draft is presented and paid by the Canadian
Issuing Lender indicating Canadian Payment Amount stated in Canadian Dollars.
Each such payment shall be made to such Canadian Issuing Lender at its address
for notices specified herein in Canadian Dollars and in immediately available
funds. Interest shall be payable on the amount of each Canadian Payment Amount
from the date of the applicable drawing until payment in full at the rate set
forth in (i) until the second Business Day following the date of the applicable
drawing, Section 2.15(e) and (ii) thereafter, Section 2.15(f). Each drawing
under any Canadian Letter of Credit shall (unless an

                                       64


event of the type described in clause (i) or (ii) of Section 8(f) shall have
occurred and be continuing with respect to the Borrower, in which case the
procedures specified in Section 3.4 for funding by L/C Participants shall apply)
constitute a request by CERI to the Canadian Agent for a borrowing pursuant to
Section 2.5(b) of Canadian Prime Rate Loans (or, at the option of the Canadian
Agent and the Canadian Swing Line Lender in their sole discretion, a borrowing
pursuant to Section 2.7 of Canadian Swing Line Loans) in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the first
date on which a borrowing of Canadian Revolving Credit Loans (or, if applicable,
Canadian Swing Line Loans) could be made, pursuant to Section 2.5(b) (or, if
applicable, Section 2.7), if the Canadian Agent had received a notice of such
borrowing at the time the Canadian Agent received notice from the relevant
Canadian Issuing Lender of such drawing under such Canadian Letter of Credit.
All payments due from CERI hereunder in respect of Canadian Letters of Credit
(and Canadian Reimbursement Obligations in connection therewith) shall be made
in Canadian Dollars.

            3.6   Obligations Absolute. The Borrower's and CERI's obligations
under this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
that the Borrower or CERI may have or have had against any Issuing Lender, any
beneficiary of a Letter of Credit or any other Person. The Borrower and CERI
also agree with each Issuing Lender that such Issuing Lender shall not be
responsible for, and the Borrower's and CERI's Reimbursement Obligations under
Section 3.5 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and/or CERI and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or any claims whatsoever of the Borrower and/or CERI against any
beneficiary of such Letter of Credit or any such transferee. No Issuing Lender
shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or omissions found by a
court of competent jurisdiction to have resulted directly from the gross
negligence or willful misconduct of such Issuing Lender. The Borrower and CERI
agree that any action taken or omitted by an Issuing Lender under or in
connection with any Letter of Credit issued by it or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and,
with respect to US Letters of Credit, in accordance with the standards of care
specified in the UCC of the State of New York, shall be binding on the Borrower
and CERI, as applicable and shall not result in any liability of such Issuing
Lender to the Borrower or CERI, as applicable.

            3.7   Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the relevant Issuing Lender shall promptly
notify the Administrative Agent and the Canadian Agent if such Letter of Credit
is a Canadian Letter of Credit and the Borrower of the date and the amount
thereof. The responsibility of the relevant Issuing Lender to the Borrower or
CERI, as applicable, in connection with any draft presented for payment under
any Letter of Credit, in addition to any payment obligation expressly provided
for in such Letter of Credit issued by such Issuing Lender, shall be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment appear on their face to be
in conformity with such Letter of Credit.

                                       65


            3.8   Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.

                    SECTION 4. REPRESENTATIONS AND WARRANTIES

            To induce the Arranger, the Agents and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, CERI and the Borrower hereby jointly and severally represent and warrant
to the Arranger, each Agent and each Lender that:

            4.1   Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of CERI and its consolidated Subsidiaries as at December 31, 2003
(including the notes thereto) (the "Pro Forma Balance Sheet"), copies of which
have heretofore been furnished to each Lender, has been prepared giving effect
(as if such events had occurred on such date) to (i) the acquisition of the
Allied Business, including the consummation of the Jacksonville Acquisition,
(ii) the FRS Acquisition, (iii) the Loans to be made and the Senior Subordinated
Notes to be issued on the Restatement Effective Date and the use of proceeds
thereof, (iv) the issuance of 13,400,000 common shares of CERI and warrants to
purchase 1,340,000 common shares of CERI (the "Restatement Effective Date Equity
Issuance") and (v) the payment of fees and expenses in connection with the
foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to the Borrower as of the date of delivery thereof, and
presents fairly on a pro forma basis the estimated financial position of CERI
and its consolidated Subsidiaries as at December 31, 2003, assuming that the
events specified in the preceding sentence had actually occurred at such date.

            (b) The audited consolidated balance sheets of CERI and its
Subsidiaries as at December 31, 2001, December 31, 2002 (as restated) and
December 31, 2003, and the related consolidated statements of income and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report from PricewaterhouseCoopers LLP, with respect to the
2001 and 2002 financial statements and BDO Dunwoody LLP/ BDO Siedman LLP with
respect to the 2003 financial statements, present fairly the consolidated
financial condition of CERI and its Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The audited consolidated balance sheets of
the Allied Business as at December 31, 2000, December 31, 2001 and December 31,
2002 and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from PricewaterhouseCoopers LLP, to the best knowledge of
CERI and the Borrower, present fairly the consolidated financial condition of
the Allied Business as at such date, and the consolidated results of its
operations and its consolidated cash flows for the respective fiscal years then
ended. The unaudited consolidated balance sheet of the Allied Business as at
September 30, 2003, and the related unaudited consolidated statements of income
and cash flows for the 9-month period ended on such date, to the best knowledge
of CERI and the Borrower, present fairly the consolidated financial condition of
the Allied Business as at such date, and the consolidated results of its
operations and its consolidated cash flows for the 9-month period then ended
(subject to normal year-end audit adjustments). The audited consolidated balance
sheets of FRS as at December 31, 2001, December 31, 2002 and December 31, 2003,
and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates,

                                       66


reported on by and accompanied by an unqualified report from Shepard Schwartz &
Harris LLP, to the best knowledge of CERI and the Borrower, present fairly the
consolidated financial condition of FRS as at such date, and the consolidated
results of its operations and its consolidated cash flows for the respective
fiscal years then ended. All such financial statements of CERI and its
Subsidiaries and to the knowledge of CERI and the Borrower, of the Allied
Business and FRS, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by the aforementioned firm of accountants and
disclosed therein). As of the Restatement Effective Date, no Loan Party has any
material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term commitments,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, that are not
reflected in the most recent financial statements referred to in this paragraph;
provided, that such statement as to the assets and liabilities of the Allied
Business or FRS is made to the best knowledge of CERI and the Borrower. During
the period from December 31, 2003, to and including the Restatement Effective
Date there has been no Disposition by any Loan Party or its Subsidiaries of any
material part of its business or Property, other than the Advanced Asset Swap.

            4.2   No Change. Since December 31, 2003, there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.

            4.3   Corporate Existence; Compliance with Law. Each Group Member
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has the corporate or other power and
authority, and the legal right, to own and operate its Property, to lease the
Property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation, partnership
or limited liability company and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of Property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law except with respect to clause (c) and (d), to the extent
that the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

            4.4   Corporate Power; Authorization; Enforceable Obligations. Each
Loan Party has the corporate or other power and authority, and the legal right,
to make, deliver and perform the Loan Documents and the FRS Acquisition
Documentation to which it is a party and, in the case of the Borrower, to borrow
hereunder. Each Loan Party has taken all necessary corporate or other
organizational action to authorize the execution, delivery and performance of
the Loan Documents and the FRS Acquisition Documentation to which it is a party
and, in the case of the Borrower, to authorize the borrowings on the terms and
conditions of this Agreement. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or
material consent or authorization of, filing with, notice to or other act by or
in respect of any other Person is required in connection with the FRS
Acquisition, the borrowings hereunder or the execution, delivery, performance,
validity or enforceability of this Agreement or any of the other Loan Documents
or any of the FRS Acquisition Documentation except (i) consents, authorizations,
filings and notices described in Schedule 4.4, which consents, authorizations,
filings and notices have been obtained or made (in each case, to the extent the
related assets have been acquired by a Group Member) and are in full force and
effect or, to the extent contemplated by the FRS Acquisition Agreement, a
managing, operating or sub-

                                       67


contracting arrangement or other relationship has been established in lieu
thereof with respect to that portion of the business of the Group Members to
which such consent, authorization, filing or notice relates, (ii) the filings
referred to in Section 4.19 and (iii) with respect to the FRS Acquisition only
(A) immaterial consents, authorizations or filings with Governmental Authorities
and (B) consents, authorizations of or filings with or notices to Governmental
Authorities with respect to Environmental Permits which pursuant to applicable
law may be made after the transfer of the assets or operations to which such
Environmental Permits relate (which consents, authorizations of, filings with or
notices to will be obtained in accordance with Section 6.14). Each Loan Document
has been duly executed and delivered on behalf of each Loan Party that is a
party thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party that is a party thereto, enforceable against each such Loan Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

            4.5   No Legal Bar. (a) The execution, delivery and performance of
(i) this Agreement and the other Loan Documents, the issuance of Letters of
Credit, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or any Contractual Obligation of any Group Member
and (ii) the FRS Acquisition will not violate any material Requirement of Law or
material contractual obligation of any Group Member.

            (b) The execution, delivery and performance of this Agreement, the
other Loan Documentation, the issuance of the Letters of Credit, the borrowings
hereunder and the use of proceeds thereof will not result in, or require, the
creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Security Documents and the Liens on the
cash collateral securing the Existing Letters of Credit permitted under Section
7.3(f)). No Requirement of Law or Contractual Obligation applicable to any Group
Member could reasonably be expected to have a Material Adverse Effect.

            4.6   No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of CERI or the Borrower, threatened by or against any Group
Member or against any of their properties or revenues (a) with respect to any of
the Loan Documents, the FRS Acquisition Documentation or any of the transactions
contemplated hereby or thereby, or (b) except as set forth on Schedule 4.6, that
could reasonably be expected to have a Material Adverse Effect.

            4.7   No Default. No Group Member is in default under or with
respect to any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.

            4.8   Ownership of Property; Liens. Each Group Member is the sole
owner of, legally and beneficially, and has good marketable and insurable title
in fee simple to, or a valid leasehold interest in, all its real property, and
good title to, or a valid leasehold interest in, all its other material
Property, and none of such Property is subject to any claims, liabilities,
obligations, charges or restrictions of any kind, nature or description or to
any Lien except for Permitted Liens. None of the Pledged Stock is subject to any
Lien except for Permitted Liens.

                                       68


            4.9   Intellectual Property. Except as could not reasonably be
expected to have a Material Adverse Effect (a) each Group Member owns, or is
licensed to use, all Intellectual Property necessary for the conduct of its
business as currently conducted, (b) no claim has been asserted and is pending
by any Person challenging or questioning the use of any Intellectual Property or
the validity or effectiveness of any Intellectual Property, nor does CERI or the
Borrower know of any valid basis for any such claim and (c) the use of
Intellectual Property by the Group Members does not infringe on the rights of
any Person in any material respect.

            4.10  Taxes. Except as set forth on Schedule 4.10, each Group Member
has filed or caused to be filed all Federal, material state and provincial and
other material tax returns that are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any material assessments made
against it or any of its Property and all other material taxes, fees or other
charges imposed on it or any of its Property by any Governmental Authority
(other than the amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of such Group Member) and
no tax Lien has been filed (other than a Permitted Lien), and, to the knowledge
of CERI and the Borrower, no material claim is being asserted, with respect to
any such tax, fee or other charge.

            4.11  Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1 referred to in Regulation U.

            4.12  Labor Matters. There are no strikes, stoppages or slowdowns or
other labor disputes against any Group Member pending or, to the knowledge of
CERI or the Borrower, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of any Group Member have not been in violation of the
Fair Labor Standards Act or any other applicable Requirement of Law dealing with
such matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments due from any Group
Member on account of employee health and welfare insurance that (individually or
in the aggregate) could reasonably be expected to have a Material Adverse Effect
if not paid have been paid or accrued as a liability on the books of the
relevant Group Member.

            4.13  Pensions and Benefit Plans. (a) ERISA. Except as could not
reasonably be expected to result in a Material Adverse Effect, (i) neither a
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Single Employer Plan, (ii) each Plan (other than
a Multiemployer Plan) has complied in all material respects with the applicable
provisions of ERISA and the Code, (iii) no termination of a Single Employer Plan
has occurred, (iv) no Lien in favor of a Single Employer Plan or in favor of the
PBGC with respect to a Single Employer Plan has arisen during the five-year
period prior to the date on which this representation is made or deemed made,
(v) the present value of all accrued benefits under each

                                       69


Single Employer Plan (based on those assumptions used to fund such plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
plan allocable to such accrued benefits by a material amount, (vi) neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and (vii) no Multiemployer Plan is in
Reorganization or Insolvent.

            (b) Canadian Pension Plans and Canadian Benefit Plans. CERI and the
Borrower will cause to be delivered to the Administrative Agent, promptly upon
the Administrative Agent's request, a copy of each Canadian Benefit Plan and
Canadian Pension Plan (or, where any such Canadian Benefit Plan or Canadian
Pension Plan is not in writing, a complete description of all material terms
thereof) and, if applicable, related trust agreements or other funding
instruments and all amendments thereto, and all written interpretations thereof
and written descriptions thereof that have been distributed to employees or
former employees of the Group Members. The Canadian Pension Plans are duly
registered under the Income Tax Act (Canada) and any other Requirement of Law
which to the knowledge of CERI or the Borrower require registration and no event
has occurred which is reasonably likely to cause the loss of such registered
status. As of the Restatement Effective Date, all material, if any, obligations
of each Group Member (including fiduciary, funding, investment and
administration obligations) required to be performed pursuant to a Requirement
of Law in connection with the Canadian Pension Plans and the funding agreements
therefor have been performed in a timely fashion. There have been no improper
withdrawals or applications of the assets of the Canadian Pension Plans or the
Canadian Benefit Plans. Except as could not reasonably be expected to result in
a Material Adverse Effect, (i) there are no outstanding disputes concerning the
assets held under the funding agreements for the Canadian Pension Plans or the
Canadian Benefit Plans and (ii) each Canadian Pension Plan is fully funded both
on an ongoing basis and on a solvency basis (using actuarial methods and
assumptions which are consistent with the valuations last filed with the
applicable Governmental Authorities and which are consistent with generally
accepted actuarial principles). No promises of benefit improvements under the
Canadian Pension Plans or the Canadian Benefit Plans have been made except where
such improvement could not have a Material Adverse Effect. All contributions or
premiums required to be made or paid by each Group Member, if any, to the
Canadian Pension Plans or the Canadian Benefit Plans have been made or paid in a
timely fashion in accordance with the terms of such plans and all Requirements
of Law. All employee contributions to the Canadian Pension Plans or the Canadian
Benefit Plans by way of authorized payroll deduction or otherwise have been
properly withheld or collected and fully paid into such plans in a timely
manner. All material reports and disclosures relating to the Canadian Pension
Plans required by such plans and any Requirement of Law to be filed or
distributed have been filed or distributed in a timely manner. Each Group Member
has withheld all employee withholdings and has made all employer contributions
to be withheld and made by it pursuant to applicable law on account of Canadian
Pension Plans employment insurance and employee income taxes.

            4.14  Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.

                                       70


            4.15  Subsidiaries. (a) The Subsidiaries listed on Schedule
4.15(a) constitute all the Subsidiaries of CERI as of the Restatement Effective
Date. Schedule 4.15(a) sets forth as of the Restatement Effective Date and after
giving effect to the FRS Acquisition, the exact legal name as reflected on the
certificate of incorporation (or formation) and jurisdiction of incorporation
(or formation) of each Subsidiary of CERI and, as to each such Subsidiary, the
percentage and number of each class of Capital Stock owned by each Group Member.

            (b) As of the Restatement Effective Date, there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of
CERI or any Group Member, except as set forth on Schedule 4.15(b).

            4.16  Use of Proceeds. The proceeds of the Revolving Credit Loans,
Swing Line Loans, and the Letters of Credit, shall be used to finance the
working capital needs and for general corporate purposes of CERI, the Borrower
and their respective Subsidiaries in the ordinary course of business including
Permitted Acquisitions. The proceeds of the Incremental Term Loan Facility shall
be used for Permitted Acquisitions or for general corporate purposes.

            4.17  Environmental Matters. Except as disclosed on Schedule 4.17,
and other than exceptions to any of the following that could not, individually
or in the aggregate, reasonably be expected to result in the payment of a
Material Environmental Amount:

            (a) The Group Members: (i) are, and since September 10, 2001, have
been, in compliance with all applicable Environmental Laws; (ii) hold all
Environmental Permits (each of which is in full force and effect) required for
any of their operations or for any property owned, leased, or otherwise operated
by any of them; (iii) are, and since September 10, 2001, have been, in
compliance with all of their Environmental Permits; and (iv) have no knowledge
that any of their Environmental Permits will not be timely renewed and complied
with; any additional Environmental Permits that may be required of any of them
will not be timely obtained and complied with; and compliance with any
Environmental Law that is applicable to any of them will not be maintained.

            (b) Materials of Environmental Concern are not present at, on,
under, in, or about any real property now owned, leased or operated by any Group
Member that requires investigation or remediation under any applicable
Environmental Law, (ii) were, to the best knowledge of any Group Member,
released at any property formerly owned, leased or operated by any Group Member
during the period of such Group Member's ownership, lease or operation thereof,
that requires investigation or remediation under any applicable Environmental
Law, (iii) to the best knowledge of any Group Member, have not been sent for
re-use or recycling or for treatment, storage, or disposal at any other location
which could reasonably be expected to give rise to liability of any Group Member
under any applicable Environmental Law or (iv) are not present at, on, under,
in, or about any real property now owned, leased or operated by any Group Member
such that the Group Member is precluded from the normal conduct of its business
at any such property.

            (c) There is no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or relating to
any Environmental Law to which any

                                       71


Group Member is, or to the knowledge of any Group Member will be, named as a
party that is pending or, to the knowledge of any Group Member, threatened.

            (d) No Group Member has received any written request for
information, or been notified in writing that it is a potentially responsible
party under or relating to the federal Comprehensive Environmental Response,
Compensation, and Liability Act or any analogous Environmental Law with respect
to any Materials of Environmental Concern that require, or allegedly require,
investigation or remediation under applicable Environmental Law.

            (e) No Group Member has entered into or agreed to any consent
decree, order, or settlement or other agreement, or is subject to any judgment,
decree, or order or other agreement, in any judicial, administrative or arbitral
forum for dispute resolution, relating to compliance with or liability under any
Environmental Law.

            (f) No Group Member has received written notice that it is
responsible under any contract to which it is a party for liability arising
under any Environmental Law or with respect to any Material of Environmental
Concern.

            4.18  Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, or any other document,
certificate or statement furnished to the Administrative Agent, the Arranger,
the Agents or the Lenders or any of them, by or on behalf of any Loan Party for
use in connection with the transactions contemplated by this Agreement or the
other Loan Documents, taken as a whole, contained as of the date of such
statement, information, document or certificate was so furnished, any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which such statements were made. The projections and
pro forma financial information contained in the materials referenced above are
based upon good faith estimates and assumptions believed by management of CERI
and the Borrower to be reasonable at the time made, it being recognized by the
Lenders that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered
by such financial information may differ from the projected results set forth
therein by a material amount. As of the Restatement Effective Date, the
representations and warranties (to the best knowledge of CERI and the Borrower
with respect to the representations and warranties of FRS) contained in the FRS
Acquisition Documentation are true and correct in all material respects. There
is no fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents or in any other documents, certificates and statements
furnished to the Arranger, the Agents and the Lenders for use in connection with
the transactions contemplated hereby and by the other Loan Documents.

            4.19  Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Secured Parties, a legal, valid, binding and enforceable security interest
in the Collateral described therein and proceeds and products thereof. At any
time prior to the Migration, the Canadian Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Secured Parties, a legal, valid, binding and enforceable security interest in
the Collateral described therein and proceeds and products thereof. Upon the
effectiveness of, and at any time after the Migration, the Canadian Guarantee
and Collateral Agreement shall be effective to create

                                       72

in favor of the Administrative Agent, for the benefit of the Canadian Revolving
Credit Lenders, a legal, valid, binding and enforceable security interest in the
Collateral described therein and proceeds and products thereof solely to secure
the Canadian Obligations. In the case of the Pledged Stock described in the
Guarantee and Collateral Agreement, and the Canadian Guarantee and Collateral
Agreement, when any stock certificates representing such Pledged Stock are
delivered to the Administrative Agent, and in the case of the other Collateral
described in the Guarantee and Collateral Agreement (except Vehicles and Deposit
Accounts, each as defined therein) and other Collateral described in the
Canadian Guarantee and Collateral Agreement (except insurance and patents), when
financing statements in appropriate form are filed in the offices specified on
Schedule 4.19 (which financing statements may be filed by the Administrative
Agent) at any time and such other filings as are specified on Schedule 3 to the
Guarantee and Collateral Agreement and Schedule 3 to the Canadian Guarantee and
Collateral Agreement have been completed (all of which filings may be filed by
the Administrative Agent at any time), (x) the Guarantee and Collateral
Agreement and, at any time prior to the Migration, the Canadian Guarantee and
Collateral Agreement, shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds and products thereof, as security for the
Obligations (as defined in the Guarantee and Collateral Agreement or the
Canadian Guarantee and Collateral Agreement, as applicable), and (y) upon the
effectiveness of, and at any time after the Migration, the Canadian Guarantee
and Collateral Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties party
thereto in such Collateral and the proceeds and products thereof, as security
for the Canadian Obligations (as defined in the Canadian Guarantee and
Collateral Agreement) in each case prior and superior in right to any other
Person (except Permitted Liens). Schedule 7.3(f) lists each financing statement
under all applicable Personal Property Security Legislation that (i) names any
Loan Party as debtor and (ii) will remain on file after the Restatement
Effective Date. On or prior to the Restatement Effective Date, the Borrower will
have delivered to the Administrative Agent, or caused to be filed, duly
completed UCC or other applicable termination statements under Personal Property
Security Legislation, signed by the relevant secured party, in respect of each
financing statement filed in respect of Liens other than Permitted Liens or
otherwise made arrangements satisfactory to the Administrative Agent with
respect thereto.

            4.20  Solvency. Each Loan Party is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith and the issuance of the Senior Subordinated Notes and the Restatement
Effective Date Equity Issuance will be and will continue to be, Solvent.

            4.21  Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Subsidiary Guarantor under the Guarantee
and Collateral Agreement constitute "Guarantor Senior Indebtedness" of such
Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.

            4.22  Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of 1968
(except any Mortgaged Properties as to which

                                       73


such flood insurance as required by Regulation H has been obtained and is in
full force and effect as required by this Agreement).

            4.23  Insurance. Each Group Member is insured, in accordance with
Section 5.3 of the Guarantee and Collateral Agreement and with respect to CERI
and each Canadian Subsidiary, Section 5.3 of the Canadian Guarantee and
Collateral Agreement, by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which it is engaged, and no Group Member (i) has received notice
from any insurer or agent of such insurer that substantial capital improvements
or other material expenditures will have to be made in order to continue such
insurance or (ii) has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers at a cost that could not reasonably be
expected to have a Material Adverse Effect.

            4.24  Real Estate. As of the Restatement Effective Date, Schedule
4.24 sets forth a true, complete and correct list of all real property owned or
leased by any Group Member and indicates which such properties are Mortgaged
Properties.

            4.25  Inactive Subsidiaries. No Inactive Subsidiary owns any assets
(other than shares of Capital Stock in any other Inactive Subsidiary), conducts
any business or is the obligor under any Indebtedness or other liabilities.

            4.26  Kelso Preferred Stock. The incurrence of the Loans and the
issuance of each Letter of Credit constitutes "Permitted Indebtedness" and
"Senior Debt" as defined in and under the Kelso Preferred Stock Documents,
including with respect to Section 5(b)(iii) of the Certificate of Designations
with respect thereto, or Indebtedness otherwise permitted to be incurred under
said Section 5(b)(iii).

                         SECTION 5. CONDITIONS PRECEDENT

            5.1   Conditions to Effectiveness and Extension of Credit. The
effectiveness of this amendment and restatement and the agreement of each Lender
to make the extensions of credit requested to be made by it hereunder on the
Restatement Effective Date is subject to the satisfaction, prior to or
concurrently with the making of such extension of credit on the Restatement
Effective Date, of the following conditions precedent:

            (a)   Loan Documents. The Administrative Agent shall have received
(i) this Agreement, executed and delivered by a duly authorized officer of CERI,
the Borrower and the Original Lenders who have not delivered a consent pursuant
to 5.1(f), (ii) the Guarantee and Collateral Agreement, executed and delivered
by a duly authorized officer of the Borrower and each Subsidiary Guarantor,
Amendment No. 1 to the Canadian Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of CERI and each of the Canadian
Subsidiaries, except the Inactive Subsidiaries, (iii) to the extent required by
the Administrative Agent, a Mortgage covering each of the Mortgaged Properties,
executed and delivered by a duly authorized officer of each party thereto (to
the extent not previously delivered to the Administrative Agent) and Mortgage
modifications with respect to any Mortgage delivered to the Administrative Agent
prior to the Restatement Effective Date, except

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as set forth on Schedule 5.1(a) and (iv) a Lender Addendum executed and
delivered by each Lender which is not an Original Lender and accepted by the
Borrower.

            (b) Acquisition, Etc.

                  (i)   The FRS Acquisition shall have been consummated for a
      purchase price not to exceed $98,500,000 (exclusive of working capital and
      similar adjustments) and the issuance of 9,250,000 common shares of CERI
      in the aggregate, as more particularly set forth in the FRS Acquisition
      Agreement and in accordance with the terms thereof and no material
      provision of the FRS Acquisition Agreement shall have been waived,
      amended, supplemented or otherwise modified without the prior written
      consent of the Arranger which shall not be unreasonably withheld or
      delayed;

                  (ii)  CERI shall have received at least $40,000,000 from the
      proceeds of the Restatement Effective Date Equity Issuance; and

                  (iii) the Borrower shall have received at least $160,000,000
      in gross cash proceeds from the issuance of the Senior Subordinated Notes
      on terms and pursuant to documentation satisfactory to the Arranger and no
      provision thereof shall have been waived, amended, supplemented or
      otherwise modified without prior written consent of the Arranger.

            (c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) audited consolidated
financial statements of CERI and its Subsidiaries for the 2001, 2002 and 2003
fiscal years, (iii) audited financial statements of the Allied Business for the
2000, 2001 and 2002 fiscal years, (iv) audited financial statements of FRS for
the 2001, 2002 and 2003 fiscal years and (v) unaudited interim consolidated
financial statements of each of CERI and its Subsidiaries for each quarterly
period ended subsequent to the date of the latest applicable financial
statements delivered pursuant to clause (ii) of this paragraph as to which such
financial statements are available; and such financial statements shall not, in
the reasonable judgment of the Lenders, reflect any material adverse change in
the consolidated financial condition of CERI and its Subsidiaries taken as a
whole, as reflected in the financial statements or projections previously
provided to the Administrative Agent and the Lenders.

            (d) Approvals. All material governmental and third party approvals
and consents necessary in connection with the FRS Acquisition, the continuing
operations of the Group Members and the transactions contemplated hereby shall
have been obtained and be in full force and effect or, to the extent
contemplated by the FRS Acquisition Agreement, a managing, operating or
sub-contracting arrangement or other relationship has been established in lieu
thereof with respect to that portion of the business of the Group Members to
which such consent, authorization, filing or notice relates, and all applicable
waiting periods shall have expired without any action being taken or threatened
by any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the financing contemplated hereby.

            (e) Related Agreements. The Administrative Agent shall have received
(in a form reasonably satisfactory to the Administrative Agent), true and
correct copies, certified as to authenticity by the Borrower, of (i) the Senior
Subordinated Note Indenture and the FRS

                                       75


Acquisition Documentation and (ii) such other material documents or instruments
as may be reasonably requested by the Administrative Agent, including, without
limitation, a copy of any material debt instrument, security agreement or other
material contract to which the Loan Parties may be a party.

            (f) Original Lender Reallocation and Payment of Exiting Lenders. The
Loans and other extensions of credit and commitments made by the Original
Lenders which are outstanding pursuant to the Original Credit Agreement shall be
assigned without recourse and re-allocated among the Lenders so that, and Loans
and other extensions of credit and commitments shall be made by the Lenders
pursuant to this Agreement so that, from and after the Restatement Effective
Date, the respective Loans and other extensions of credit and commitments of
each Lender shall be in accordance with Schedule 1 of the Lender Addendum
delivered by such Lender or set forth in the Assignment and Acceptance pursuant
to which such Lender became a party hereto and the Administrative Agent shall
have received a consent from each Original Lender who will not continue to hold
or make extensions of credit to the Borrower. Loans and other extensions of
credit made by the Original Lenders remaining outstanding on and after the
Restatement Effective Date shall, effective as of the Restatement Effective
Date, be evidenced and governed by this Agreement and the other Loan Documents.

            (g) Fees. The Lenders, the Arranger and the Agents shall have
received all fees required to be paid, and all expenses for which invoices have
been presented (including reasonable fees, disbursements and other charges of
counsel to the Agents), on or before the Restatement Effective Date. All such
amounts will be paid with proceeds of Loans made on the Restatement Effective
Date and will be reflected in the funding instructions given by the Borrower to
the Administrative Agent on or before the Restatement Effective Date.

            (h) Projections. The Lenders shall have received satisfactory
projections for CERI and its Subsidiaries for fiscal years 2004 through 2011.

            (i) Solvency Analysis. The Lenders shall have received a reasonably
satisfactory solvency certificate by the chief financial officer of CERI which
shall document the solvency of each of CERI and its Subsidiaries after giving
effect to the transactions contemplated hereby.

            (j) Lien Searches. The Administrative Agent shall have received the
results of a recent lien, tax lien, bankruptcy, judgment and (other than in
Canada) litigation search in each of the jurisdictions (including the United
States of America and Canada) or offices (including, without limitation, in the
United States Patent and Trademark Office, the United States Copyright Office
and the Canadian Intellectual Property Office) in which financing statements
under the UCC or other Personal Property Security Legislation or other filings
or recordations should be made to evidence or perfect (with the priority
required under the Loan Documents) security interests in all assets of the Loan
Parties (or would have been made at any time during the five years immediately
preceding the Restatement Effective Date to perfect Liens on any assets of CERI
or its subsidiaries), and such search shall reveal no Liens on any of the assets
of the Loan Parties, except for Permitted Liens or Liens which will be
terminated on or prior to the Restatement Effective Date or subject to other
arrangements agreed to by the Administrative Agent.

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            (k) Environmental Matters. The Administrative Agent shall have
received all of the existing current written environmental assessments regarding
CERI and its Subsidiaries, which environmental assessments are listed on
Schedule 5.1(k).

            (l) Closing Certificate. The Administrative Agent shall have
received a certificate of each Loan Party, dated the Restatement Effective Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.

            (m) Other Certifications. The Administrative Agent shall have
received the following:

                  (i)   a copy of the charter of each Loan Party and each
      amendment thereto, certified (as of a date reasonably near the date of the
      initial extension of credit to the extent such certification is obtainable
      in the relevant jurisdiction) as being a true and correct copy thereof by
      the Secretary of State or other applicable Governmental Authority of the
      jurisdiction in which each such Loan Party is organized;

                  (ii)  a copy of a certificate of the Secretary of State or
      other applicable Governmental Authority, to the extent such certification
      is obtainable, of the jurisdiction in which each such Loan Party is
      organized, dated reasonably near the date of the initial extension of
      credit, listing the charter of such Loan Party and each amendment thereto
      on file in such office and certifying that (A) such amendments are the
      only amendments to such Loan Party's charter on file in such office, (B)
      such Loan Party has paid all franchise taxes to the date of such
      certificate (if obtainable in such jurisdiction) and (C) such Loan Party
      is duly organized and in good standing under the laws of such
      jurisdiction;

                  (iii) to the extent obtainable, an electronic or facsimile
      confirmation from the Secretary of State or other applicable Governmental
      Authority of each jurisdiction in which each Loan Party is organized
      certifying that such Loan Party is duly organized and in good standing
      under the laws of such jurisdiction on the date of the initial extension
      of credit; together with a written confirmatory report in respect thereof
      prepared by, or on behalf of, a filing service acceptable to the
      Administrative Agent; and

                  (iv)  to the extent obtainable, a copy of a certificate of the
      Secretary of State or other applicable Governmental Authority of each
      state or province where any Loan Party is required to be qualified as a
      foreign corporation or entity, other than any state or province where the
      failure to be so qualified could not reasonably be expected to have a
      Material Adverse Effect, dated reasonably near the date of the initial
      extension of credit, stating that such Loan Party is duly qualified and in
      good standing as a foreign corporation or entity in each such jurisdiction
      and has filed all annual reports required to be filed to the date of such
      certificate; and an electronic confirmation, prepared by or on behalf of,
      a filing service acceptable to the Administrative Agent, stating that the
      Secretary of State or other applicable Governmental Authority of each such
      jurisdiction on the date of the initial extension of credit has confirmed
      the due qualification and continued good standing of each such Person as a
      foreign corporation or entity in each such jurisdiction on or about such
      date.

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            (n) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:

                  (i)   the legal opinion of Shearman & Sterling LLP, counsel of
      the Group Members, substantially in the form of Exhibit F-1;

                  (ii)  the legal opinion of Blake, Cassels & Graydon LLP,
      Canadian counsel of the Group Members, substantially in the form of
      Exhibit F-2; and

                  (iii) the legal opinion of local counsel in each of Florida,
      Arizona, Illinois, Texas and Ohio and of such other special and local
      counsel as may be reasonably required by the Administrative Agent.

Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.

            (o) Pledged Stock; Stock Powers; Acknowledgment and Consent; Pledged
Notes. The Administrative Agent shall have received (i) the certificates, if
any, representing all of the shares of Capital Stock pledged pursuant to the
Guarantee and Collateral Agreement and the Canadian Guarantee and Collateral
Agreement, together with an undated stock power and irrevocable proxy for each
such certificate executed in blank by a duly authorized officer of the pledgor
thereof, (ii) an Acknowledgment and Consent, substantially in the form of Annex
II to the Guarantee and Collateral Agreement, duly executed by any issuer of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement or the
Canadian Guarantee and Collateral Agreement that is not itself a party to the
Guarantee and Collateral Agreement or the Canadian Guarantee and Collateral
Agreement, as applicable, and (iii) each promissory note pledged pursuant to the
Guarantee and Collateral Agreement or the Canadian Guarantee and Collateral
Agreement endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank satisfactory to the Administrative Agent) by the pledgor
thereof.

            (p) Filings, Registrations and Recordings. Except as otherwise
agreed by the Administrative Agent, each document (including, without
limitation, any financing statement filed pursuant to the UCC or other
applicable Personal Property Security Legislation) required by the Security
Documents or under law or reasonably requested by the Administrative Agent to be
filed, registered or recorded in order to create in favor of the Administrative
Agent, for the benefit of the Secured Parties, a perfected Lien on the
Collateral except Vehicles located in the United States of America and insurance
and patents located in Canada described therein, prior and superior in right to
any other Person (other than with respect to Permitted Liens), shall have been
filed, registered or recorded or shall have been delivered to the Administrative
Agent in proper form for filing, registration or recordation.

            (q) Surveys. To the extent not previously delivered to the
Administrative Agent, the Administrative Agent shall have received, and the
title insurance company issuing the policy referred to in Section 5.1(r) below
(the "Title Insurance Company") shall have received, maps or plats of an
as-built survey of the sites of the Mortgaged Properties located in the United
States of America, except as set forth on Schedule 5.1(a), certified to the
Administrative Agent and the Title Insurance Company in a manner satisfactory to
them, dated not more than 30 days prior to the date on which the related
Mortgage was executed unless the Title Insurance Company has

                                       78


agreed to delete its survey disclosure exception on the basis of an earlier
survey and such survey is, in any event, dated not more than 2 years prior to
the date on which the related Mortgage was executed by an independent
professional licensed land surveyor satisfactory to the Administrative Agent and
the Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1997 or 1999 and meeting the accuracy requirements as defined
therein, and, without limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the following: each survey
shall (a) be a current "as-built" survey showing the location of any adjoining
streets (including their widths and any pavement or other improvements),
easements (including the recorded information with respect to all recorded
instruments), the mean high water base line or other legal boundary lines of any
adjoining bodies of water, fences, zoning or restriction setback lines,
rights-of-way, utility lines to the points of connection and any encroachments;
(b) locate all means of ingress and egress, certifying the amount of acreage and
square footage, indicate the address of the property, contain the legal
description of the property, and also contain a location sketch of the property;
(c) show the location of all improvements as constructed on the property, all of
which shall be within the boundary lines of the property and conform to all
applicable zoning ordinances, set-back lines and restrictions and the surveyor
shall certify compliance with the foregoing; (d) indicate the location of any
improvements on the property with the dimensions in relations to the lot and
building lines; (e) show measured distances from the improvements to be set back
and specified distances from street or property lines in the event that deed
restrictions, recorded plats or zoning ordinances require same; (f) designate
all courses and distances referred to in the legal description, and indicate the
names of all adjoining owners on all sides of the property, to the extent
available; and (g) indicate the flood zone designation, if any, in which the
property is located. The legal description of the applicable property shall be
shown on the face of each survey, and the same shall conform to the legal
description contained in the title policy described below.

            (r) Title Insurance.

                  (i)   The Administrative Agent shall have received in respect
      of each Mortgaged Property located in the United States of America, except
      as set forth on Schedule 5.1(a), a mortgagee's title insurance policy (or
      policies) or marked up unconditional binder for such insurance or, with
      respect to mortgagee's title insurance policies previously delivered to
      the Administrative Agent, a "date down" endorsement in form and substance
      satisfactory to the Administrative Agent. Each such policy shall (A) be in
      an amount reasonably satisfactory to the Administrative Agent; (B) be
      issued at ordinary rates; (C) insure that the Mortgage insured thereby
      creates a valid first Lien on, and security interest in, such Mortgaged
      Property free and clear of all defects and encumbrances, except for
      Permitted Liens disclosed therein; (D) name the Administrative Agent for
      the benefit of the Secured Parties as the insured thereunder; (E) be in
      the form of ALTA Loan Policy - 1970 form B (Amended 10/17/70 and 10/17/84)
      to the extent available in the particular jurisdiction of each Mortgaged
      Property (or equivalent policies); (F) contain such endorsements and
      affirmative coverage as the Administrative Agent may reasonably request in
      form and substance acceptable to the Administrative Agent, including,
      without limitation (to the extent applicable with respect to such
      Mortgaged Property and available in the jurisdiction in which such
      Mortgaged Property is

                                       79


      located), the following: variable rate endorsement; survey endorsement;
      comprehensive endorsement; zoning (ALTA 3.1 with parking added)
      endorsement; first loss, last dollar and tie-in endorsement; access
      coverage; separate tax parcel coverage; contiguity coverage; usury; doing
      business; subdivision; environmental protection lien; CLTA 119.2 and CLTA
      119.3 (for leased Real Estate, only); and such other endorsements as the
      Administrative Agent shall reasonably require in order to provide
      insurance against specific risks identified by the Administrative Agent in
      connection with such Mortgaged Property, and (G) be issued by title
      companies satisfactory to the Administrative Agent (including any such
      title companies acting as co-insurers or reinsurers, at the option of the
      Administrative Agent). The Administrative Agent shall have received
      evidence satisfactory to it that all premiums in respect of each such
      policy, all charges for mortgage recording tax, and all related expenses,
      if any, have been paid.

                  (ii)  The Administrative Agent shall have received a copy of
      all recorded documents referred to, or listed as exceptions to title in,
      the title policy or policies referred to in clause (i) above and a copy of
      all other material documents affecting the Mortgaged Properties.

            (s) Flood Insurance. If requested by the Administrative Agent, the
Administrative Agent shall have received (A) a policy of flood insurance for
Mortgaged Properties located in a flood hazard zone as designated by the Federal
Emergency Management Agency that (1) covers any parcel of improved material real
property located in the United States of America that is encumbered by any
Mortgage (2) is written in an amount not less than the outstanding principal
amount of the indebtedness secured by such Mortgage that is reasonably allocable
to such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood Insurance
Act of 1968, whichever is less, and (3) has a term ending not later than the
maturity of the indebtedness secured by such Mortgage or that may be extended to
such maturity date and (B) confirmation that the Borrower has received the
notice required pursuant to Section 208(e)(3) of Regulation H of the Board.

            (t) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of the
Guarantee and Collateral Agreement and Section 5.3 of the Canadian Guarantee and
Collateral Agreement.

            (u) Patriot Act. The Administrative Agent shall have received all
documentation and other information required by bank regulatory authorities
under applicable "know your customer" and Anti-Money Laundering rules and
regulations, including, without limitation, the USA Patriot Act as it shall have
reasonably requested.

            (v) Kelso Preferred Stock. The Certificate of Designation with
respect to the Kelso Preferred Stock shall have been amended in form and
substance reasonably satisfactory to the Administrative Agent.

            (w) Miscellaneous. The Administrative Agent shall have received such
other documents, agreements, certificates and information as it shall reasonably
request.

            5.2   Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it hereunder on
any date (including,

                                       80


without limitation, its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:

            (a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of such date as if made on
and as of such date, except for representations and warranties expressly stated
to relate to a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date.

            (b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.

            (c) Senior Debt. A Responsible Officer of the Borrower shall certify
in writing to the Administrative Agent that the incurrence of Indebtedness
represented by the requested extension of credit is permitted under the Senior
Subordinated Notes Indenture.

            Each borrowing by and issuance of a Letter of Credit on behalf of
the Borrower hereunder shall constitute a representation and warranty by CERI
and the Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.

                        SECTION 6. AFFIRMATIVE COVENANTS

            CERI and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender, any Agent or the
Arranger hereunder, each of CERI and the Borrower shall and shall cause each of
its Subsidiaries to:

            6.1   Financial Statements. Furnish to each Agent and each Lender:

            (a) as soon as available, but in any event within 90 days after the
end of each fiscal year of CERI or, after the Migration, the Borrower, a copy of
the audited consolidated balance sheet of CERI and its consolidated Subsidiaries
or, after the Migration, the Borrower and its consolidated Subsidiaries as at
the end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative form
the figures as of the end of and for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by BDO Dunwoody LLP/ BDO Seidman LLP or other
independent certified public accountants of nationally recognized standing;

            (b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of CERI or, after the Migration, the Borrower, the unaudited consolidated
balance sheet of CERI and its consolidated Subsidiaries or, after the Migration,
the Borrower and its consolidated Subsidiaries as at the end of such quarter and
the related unaudited consolidated statements of income and of cash flows for
such quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures as of the end of and
for the corresponding period in the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments);

                                       81


            (c) as soon as available, but in any event not later than 45 days
after the end of each month occurring during each fiscal year of CERI or, after
the Migration, the Borrower (other than the third, sixth, ninth and twelfth such
month), the unaudited consolidated balance sheets of CERI and its Subsidiaries
or, after the Migration, the Borrower and its consolidated Subsidiaries as at
the end of such month and the related unaudited consolidated statements of
income and of cash flows for such month and the portion of the fiscal year
through the end of such month, setting forth in each case in comparative form
the figures as of the end of and for the corresponding period in the previous
year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); and

all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and, except with respect to the
statement of cash flows delivered pursuant to Section 6.1(c), in accordance with
GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein); it being understood that at the Administrative
Agent's reasonable request, such statements of cash flow will also be prepared
in accordance with GAAP.

            6.2   Certificates; Other Information. Furnish to each Agent and
each Lender, or, in the case of clause (i), to the relevant Lender:

            (a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate (it being understood that
such certificate shall be limited to the items that independent certified public
accountants are permitted to cover in such certificates pursuant to their
professional standards and customs of the profession);

            (b) concurrently with the delivery of any financial statements
pursuant to Sections 6.1(b) and (c), (i) a certificate of a Responsible Officer
stating that, to the best of such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements contained in this Agreement and the other Loan Documents to
which it is a party to be observed, performed or satisfied by it on or before
such date, and that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and (ii) in
the case of quarterly or annual financial statements, (x) a Compliance
Certificate stating that to the best of such Responsible Officer's knowledge,
each Loan Party during such period has observed or performed all of its
covenants and other agreements contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by it on
or before such date, and containing all information and calculations necessary
for determining compliance by the Group Members with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or fiscal
year of the Borrower, as the case may be, (y) to the extent not previously
disclosed to the Administrative Agent, in writing, a listing of any county,
state, territory, province, region or any other jurisdiction, or any political
subdivision thereof within the United States of America, Canada or otherwise
where any Loan Party keeps material inventory or equipment and of any registered
Intellectual Property acquired by any Loan Party since the date of the most
recent list delivered pursuant to this clause (y) (or, in the case of the first
such list so

                                       82


delivered, since the Restatement Effective Date) and (z) any financing
statements under the UCC or applicable Personal Property Security Legislation or
other filings specified in such Compliance Certificate as being required to be
delivered therewith;

            (c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of CERI or, after the Migration, the Borrower,
a detailed consolidated budget for the following fiscal year (including a
projected consolidated balance sheet of CERI and its Subsidiaries or after the
Migration, the Borrower and its Subsidiaries as of the end of the following
fiscal year, and the related consolidated statements of projected cash flow and
projected income), and, as soon as available, significant revisions, if any, of
such budget and projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by a
certificate of a Responsible Officer stating that such Projections are based on
reasonable estimates, information and assumptions and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;

            (d) within 45 days after the end of each fiscal quarter of CERI or,
after the Migration, the Borrower, a narrative discussion and analysis of the
financial condition and results of operations of CERI and its Subsidiaries or,
after the Migration, the Borrower and its Subsidiaries for such fiscal quarter
and for the period from the beginning of the then current fiscal year to the end
of such fiscal quarter, as compared to the portion of the Projections covering
such periods and to the comparable periods of the previous year;

            (e) no later than 5 Business Days, or such shorter period as the
Administrative Agent shall reasonably agree to, prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior Subordinated
Notes, the Allied Acquisition Agreement, the FRS Acquisition Agreement, or the
Kelso Preferred Stock Documents or any proposed material amendment, supplement
or other modification of the governing documents of the Borrower and, prior to
the Migration, CERI;

            (f) within five days after the same are sent, copies of all
financial statements and reports that any Group Member sends to the holders of
any class of its debt securities or public equity securities and, within 5 days
after the same are filed, copies of all financial statements and reports that
any Group Member may make to, or file with, the SEC;

            (g) as soon as reasonably possible and in any event within 5
Business Days of obtaining knowledge thereof: (i) notice of any development,
event, or condition that, individually or in the aggregate with other
developments, events or conditions that, individually or in the aggregate, could
reasonably be expected to result in the payment by any Group Member, in the
aggregate, of a Material Environmental Amount; and (ii) any notice that any
Governmental Authority will deny any application for an Environmental Permit
sought by, or revoke or refuse to renew any Environmental Permit or any other
material Permit held by the Borrower or condition approval of any such material
Permit on terms and conditions that are materially more burdensome than the
current terms and conditions of such material Permits to the operation of any of
the Group Members' businesses or any property owned, leased or operated by such
Person, where such denial, revocation, refusal or condition would preclude the

                                       83


normal conduct of the Group Members' business in respect of the operation to
which such Environmental Permit or material Permit applies;

            (h) to the extent not included in clauses (a) through (g) above, no
later than the date the same are required to be delivered thereunder, copies of
all agreements, documents or other instruments (including, without limitation,
(i) audited and unaudited, pro forma and other financial statements, reports,
forecasts, and projections, together with any required certifications thereon by
independent public auditors or officers of any Group Member or otherwise, (ii)
press releases and (iii) statements or reports furnished to any other holder of
the securities of any Group Member);

            (i) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a report of a reputable insurance broker with
respect to the insurance required by Section 6.5, and, from time to time, such
supplemental reports thereto as the Administrative Agent may reasonably request;
and

            (j) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.

            6.3   Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the applicable Group Member.

            6.4   Conduct of Business and Maintenance of Existence, etc. (a) (i)
Preserve, renew and keep in full force and effect its corporate or other
existence and (ii) take all reasonable action to maintain all rights,
privileges, franchises, Permits and licenses necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise permitted by
Section 7.4 and except, in the case of clause (ii) above, to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (b) to the extent not in conflict with this Agreement or the other
Loan Documents, comply with all Contractual Obligations and Requirements of Law,
except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

            6.5   Maintenance of Property; Insurance. (a) Keep all Property
and systems useful and necessary in its business in reasonably good working
order and condition, ordinary wear and tear excepted and (b) (i) maintain with
financially sound and reputable insurance companies insurance on all its
Property meeting the requirements of Section 5.3 of the Guarantee and Collateral
Agreement and Section 5.3 of the Canadian Guarantee and Collateral Agreement and
in at in at least such amounts and against at least such risks (but including in
any event public liability, product liability and business interruption) as are
usually insured against in the same general area by similarly situated companies
engaged in the same or a similar business and consistent with past practices.

            6.6   Inspection of Property; Books and Records; Discussions. (a)
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its

                                       84


business and activities and (b) permit representatives of any Lender to visit
and inspect any of its properties and examine and, at the Borrower's expense,
make abstracts from any of its books and records at any reasonable time and as
often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Group Members with officers
and employees of the Group Members and with their respective independent
certified public accountants.

            6.7   Notices. Promptly give notice to each Agent and each Lender
of:

            (a) the occurrence of any Default or Event of Default;

            (b) any (i) default or event of default (or alleged default) under
any Contractual Obligation of any Group Member or (ii) litigation, investigation
or proceeding which may exist at any time between any Group Member and any
Governmental Authority, that in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;

            (c) any litigation or proceeding affecting any Group Member in which
the amount involved is $5,000,000 or more and not covered by insurance or in
which injunctive or similar relief is sought;

            (d) the following events if, individually or in the aggregate, they
could reasonably be expected to result in a Material Adverse Effect, as soon as
possible and in any event within 30 days after CERI or the Borrower knows or has
reason to know thereof: (i) the occurrence of any Reportable Event with respect
to any Single Employer Plan, a failure to make any required contribution to a
Single Employer Plan, the creation of any Lien in favor of a Single Employer
Plan or in favor of the PBGC with respect to a Single Employer Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any Commonly Controlled Entity with
respect to the withdrawal from, or the termination of, any Single Employer Plan;
and

            (e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action CERI, the Borrower or the relevant Subsidiary proposes
to take with respect thereto.

            6.8   Environmental Laws(a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws and Environmental Permits, and
obtain, maintain and comply in all material respects with, and ensure that all
tenants and subtenants obtain, maintain and comply in all material respects with
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws.

            (b) Comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws,
including, without limitation, such

                                       85


orders and directives to conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required under
Environmental Laws.

            6.9   Interest Rate Protection. In the case of the Borrower, enter
into Hedge Agreements to the extent necessary to provide that at least 50% of
the aggregate principal amount of the Senior Subordinated Notes and the Term
Loans is subject to either a fixed interest rate or interest rate protection for
a period of not less than three years, which Hedge Agreements shall have terms
and conditions reasonably satisfactory to the Administrative Agent.

            6.10  Additional Collateral, etc. (a) With respect to any
Property acquired after the Restatement Effective Date by any Group Member
(other than (w) any Property acquired on or after the effectiveness of the
Migration by any Canadian Subsidiary of the Borrower (including CERI) (x) any
Property described in paragraph (c), paragraph (d) or paragraph (e) of this
Section, (y) any Property subject to a Lien expressly permitted by Section
7.3(g) and (z) any Property acquired by an Excluded Foreign Subsidiary or
Inactive Subsidiary) as to which the Administrative Agent, for the benefit of
the Secured Parties, does not have a perfected Lien, promptly (i) execute and
deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement, the Canadian Guarantee and Collateral Agreement or such
other documents as the Administrative Agent deems necessary or advisable to
grant to the Administrative Agent, for the benefit of the Secured Parties, a
security interest in such Property and (ii) take all actions necessary or
advisable to grant to the Administrative Agent, for the benefit of the Secured
Parties, a perfected first priority security interest in such Property (other
than Vehicles located in the United States and insurance located in Canada),
including without limitation, the filing of financing statements under the UCC
and other applicable Personal Property Security Legislation in such
jurisdictions as may be required by the Guarantee and Collateral Agreement, the
Canadian Guarantee and Collateral Agreement or by law or as may be requested by
the Administrative Agent.

            (b) With respect to any Property acquired on or after the
effectiveness of the Migration by any Canadian Subsidiary of the Borrower
(including CERI) (other than (x) any Property described in paragraph (c),
paragraph (d) or paragraph (e) of this Section, (y) any Property subject to a
Lien expressly permitted by Section 7.3(g) and (z) any Property acquired by, or
that consists of Capital Stock of an Inactive Subsidiary) as to which the
Administrative Agent for the benefit of the Canadian Secured Parties does not
have a perfected Lien, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Canadian Guarantee and Collateral Agreement or such
other documents as the Administrative Agent deems necessary or advisable to
grant to the Administrative Agent for the benefit of the Canadian Secured
Parties, a security interest in such Property and (ii) take all actions
necessary or advisable to grant to the Administrative Agent or the Canadian
Secured Parties, as applicable, a perfected first priority security interest in
such Property (other than insurance located in Canada), including without
limitation, the filing of financing statements applicable Personal Property
Security Legislation in such jurisdictions as may be required by the Canadian
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent.

            (c) With respect to any fee interest (or leasehold interest, to the
extent such leasehold is created under a triple net ground lease or similar
transaction) in any real property having a value (together with improvements
thereof) of at least $250,000 acquired after the Restatement Effective Date by
any Group Member (other than any such real property owned by

                                       86


an Excluded Foreign Subsidiary (including, upon and after the effectiveness of
the Migration, CERI and its Subsidiaries) or subject to a Lien expressly
permitted by Section 7.3(g)), promptly (i) execute and deliver a first priority
Mortgage (except for Permitted Liens and Liens otherwise allowed under the
Mortgages) in favor of the Administrative Agent, for the benefit of the Secured
Parties, covering such real property, (ii) if requested by the Administrative
Agent, provide the Lenders with (x) title and extended coverage insurance,
complying with the provisions of Section 5.1(r), covering such real property in
an amount at least equal to the purchase price of such real property (or such
other amount as shall be reasonably specified by the Administrative Agent) as
well as a current ALTA survey thereof complying with the provisions of Section
5.1(q), together with a surveyor's certificate and (y) any consents or estoppels
reasonably deemed necessary or advisable by the Administrative Agent in
connection with such Mortgage to the extent that such consents or estoppels may
be obtained using reasonable efforts without payment of money and without
obligation to commence litigation, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

            (d) With respect to any fee interest (or leasehold interest, to the
extent such leasehold is created under a triple net ground lease or similar
transaction) in any real property having a value (together with improvements
thereof) of at least $250,000 acquired after the effectiveness of the Migration
by any Canadian Subsidiary of the Borrower (including CERI) (other than any such
real property subject to a Lien expressly permitted by Section 7.3(g)), promptly
(i) execute and deliver a first priority Mortgage (except for Permitted Liens
and Liens otherwise allowed under the Mortgages) in favor of the Administrative
Agent, for the benefit of the Canadian Secured Parties, covering such real
property, (ii) if requested by the Administrative Agent, provide the Canadian
Secured Parties with a satisfactory title opinion covering such real property
and any consents or estoppels reasonably deemed necessary or advisable by the
Administrative Agent in connection with such Mortgage to the extent that such
consents or estoppels may be obtained using reasonable efforts without payment
of money and without obligation to commence litigation, each of the foregoing in
form and substance reasonably satisfactory to the Administrative Agent and (iii)
if requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

            (e) With respect to any new Subsidiary of CERI or the Borrower
(other than an Excluded Foreign Subsidiary (including upon and after the
effectiveness of the Migration, CERI and its Subsidiaries)) created or acquired
after the Restatement Effective Date (which, for the purposes of this paragraph,
shall include any existing Subsidiary of the Borrower that ceases to be an
Excluded Foreign Subsidiary and/or an Inactive Subsidiary), by any Group Member,
promptly (i) execute and deliver to the Administrative Agent such amendments to
the Security Documents as the Administrative Agent deems necessary or advisable
to grant to the Administrative Agent, for the benefit of the Secured Parties, a
perfected first priority security interest in the Capital Stock of such new
Subsidiary that is owned by any Group Member, (ii) deliver to the Administrative
Agent the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
the applicable Group Member, (iii) cause such new Subsidiary (A) to become a
party to the

                                       87


applicable Security Documents and (B) to take such actions necessary or
advisable to grant to the Administrative Agent for the benefit of the Secured
Parties a perfected first priority security interest in the Collateral described
in the Security Documents with respect to such new Subsidiary, including,
without limitation, the recording of instruments in the United States Patent and
Trademark Office, the United States Copyright Offices and the Canadian
Intellectual Property Office, the execution and delivery by all necessary
persons of control agreements, and the filing of financing statements under
applicable Personal Property Security Legislation in such jurisdictions as may
be required by the Security Documents or by law or as may be requested by the
Administrative Agent, and (iv) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.

            (f) With respect to any Excluded Foreign Subsidiary created or
acquired after the Restatement Effective Date by the Borrower or any of its
Subsidiaries (other than by any Excluded Foreign Subsidiary (including, upon and
after the effectiveness of the Migration, CERI and its Subsidiaries)), promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the Administrative
Agent deems necessary or advisable in order to grant to the Administrative
Agent, for the benefit of the Secured Parties, a perfected first priority
security interest in the Capital Stock of such new Subsidiary that is owned by
the Borrower or any of its Subsidiaries (other than any Excluded Foreign
Subsidiaries), (provided that in no event shall more than 65% of the total
outstanding Capital Stock of any such Excluded Foreign Subsidiary be required to
be so pledged), (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with irrevocable proxies, undated
stock powers, in blank, executed and delivered by a duly authorized officer of
the applicable Group Member, and take such other action as may be necessary or,
in the opinion of the Administrative Agent, desirable to perfect the Lien of the
Administrative Agent thereon, and (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.

            (g) Notwithstanding anything to the contrary in this Section 6.10,
with respect to any leasehold interest required to be encumbered with a first
priority Mortgage pursuant to paragraphs (c) or (d) of this Section 6.10, (i)
the Borrower shall use commercially reasonable efforts (excluding commencing
litigation) to obtain (y) (1) a memorandum or notice of lease in recordable (or
registerable) form with respect to such leasehold interest, executed and
acknowledged by the lessor of such leasehold interest, or (2) evidence that the
applicable lease with respect to such leasehold interest or a memorandum or
notice thereof has been recorded (or registered) in all places necessary, in the
Administrative Agent's reasonable judgment, to give constructive notice to
third-party purchasers of such leasehold interest, and (z) any lessor consent or
approval of such Mortgage as may be required pursuant to the terms of the
applicable lease with respect to such leasehold interest, and (ii) if the
Borrower shall fail to obtain the documents referred to in clauses (y) or (z)
above with respect to any such leasehold interest, after using commercially
reasonable efforts to do so, the Borrower shall have no further obligation to
comply with paragraphs (c) or (d) of this Section 6.10 with respect to the
applicable leasehold interest. The Borrower shall promptly, upon request,
provide the Administrative Agent with a

                                       88


report in reasonable detail summarizing the commercially reasonable efforts
undertaken to obtain the items referenced in this Section 6.10(g).

            (h) Notwithstanding anything to the contrary in this Section 6.10,
paragraphs (a), (b), (c), (d), (e) and (f) of this Section 6.10 shall not apply
to any Property, new Subsidiary of CERI or the Borrower or new Excluded Foreign
Subsidiary created or acquired after the Restatement Effective Date, as
applicable, as to which the Administrative Agent has determined in its sole
discretion that the collateral value thereof is insufficient to justify the
difficulty, time and/or expense of obtaining a perfected security interest
therein.

            6.11  Use of Proceeds. Use the proceeds of the Loans only for the
purposes specified in Section 4.16.

            6.12  Pension and Benefits Plans.

            (a) ERISA Documents(b) . The Borrower will cause to be delivered to
the Administrative Agent, promptly upon the Administrative Agent's request, any
or all of the following: (i) a copy of each Single Employer Plan; (ii) the most
recent determination letter issued by the Internal Revenue Service with respect
to each Plan (other than any Plan of a Commonly Controlled Entity); (iii) for
the most recent plan year preceding the Administrative Agent's request, Annual
Reports on Form 5500 Series required to be filed with any governmental agency
for each Single Employer Plan; (iv) a listing of all Multiemployer Plans, with
the aggregate amount of the most recent annual contributions required to be made
by the Borrower or any Commonly Controlled Entity to each such Plan and copies
of the collective bargaining agreements requiring such contributions; (v) any
information that has been provided to the Borrower or any Commonly Controlled
Entity regarding withdrawal liability under any Multiemployer Plan; (vi) the
aggregate amount of payments made under any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) to any retired employees of the Borrower or
any of its Subsidiaries (or any dependents thereof) during the most recently
completed fiscal year; and (vii) documents reflecting any agreements between the
PBGC and the Borrower or any Commonly Controlled Entity with respect to any
Plan.

            (b) Canadian Pension Plans and Canadian Benefit Plans.

                  (i)   Each Group Member shall use its commercially reasonable
      efforts to obtain and to provide the Administrative Agent with written
      confirmation from the applicable Governmental Authorities that each
      Canadian Pension Plan adopted by any Group Member which is required to be
      registered under the Income Tax Act (Canada) or any other Requirement of
      Law has been registered. From and after the adoption and registration of
      any Canadian Pension Plan and subject to any power or right to terminate a
      Canadian Pension Plan in whole or in part, each Group Member shall use
      commercially reasonable efforts to ensure that the plan retains its
      registered status under and is administered in all material respects in
      accordance with the applicable pension plan text, funding agreement, the
      Income Tax Act (Canada) and all other Requirements of Law

                  (ii)  Each Group Member shall cause all reports and
      disclosures relating to any Canadian Pension Plan that are required by the
      plan or any Requirement of Law to be filed or distributed in a timely
      manner.

                                       89


                  (iii) Each Group Member shall perform in all material respects
      all obligations (including (if applicable), funding, investment and
      administration obligations) required to be performed by it in connection
      with each Canadian Pension Plan and Canadian Benefit Plan and the funding
      media therefor; make all contributions and pay all premiums required to be
      made or paid by it in accordance with the terms of the plan and all
      Requirements of Law and withhold by way of authorized payroll deductions
      or otherwise collect and pay into the plan all employee contributions
      required to be withheld or collected by it in accordance with the terms of
      the plan and all Requirements of Law; and ensure that, except as could not
      reasonably be expected to result in a Material Adverse Effect, to the
      extent that the Group Member has a Canadian Pension Plan which is a
      defined benefit pension plan, that such plan is fully funded, both on an
      ongoing basis and on a solvency basis (using actuarial methods and
      assumptions which are consistent with the valuations last filed with the
      applicable Governmental Authorities and which are consistent with
      generally accepted actuarial principles).

                  (iv)  CERI and the Borrower shall deliver to the
      Administrative Agent, (A) promptly on request, copies of each annual and
      other return, report or valuation with respect to each Canadian Pension
      Plan filed by any Group Member with any applicable Governmental Authority;
      (B) promptly on request, a copy of any material direction, order or notice
      that any Group Member may receive from any applicable Governmental
      Authority with respect to any Canadian Pension Plan; and (C) notification
      within 30 days of any material increases in the benefits of any existing
      Canadian Pension Plan or Canadian Benefit Plan, or the establishment of
      any new Canadian Pension Plan or Canadian Benefit Plan, or the
      commencement of contributions to any Canadian Pension Plan or Canadian
      Benefit Plan to which it was not previously contributing.

            6.13  Further Assurances. (a) From time to time execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take all such actions, as the Administrative
Agent may reasonably request for the purposes of implementing or effectuating
the provisions of this Agreement and the other Loan Documents, or of more fully
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds or products thereof or with respect to any other
property or assets hereafter acquired by any Group Member which may be deemed to
be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording, qualification or authorization of any Governmental
Authority, the Borrower will execute and deliver, or will cause the execution
and delivery of, all applications, certifications, instruments and other
documents and papers that the Administrative Agent or such Lender may be
required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.

            (b) Preserve and protect the Lien status of each respective Mortgage
and, if any Lien (other than unrecorded Liens permitted under Section 7.3 that
arise by operation of law and other Liens permitted under Section 7.3(f)) is
asserted against a Mortgaged Property, promptly and at its expense, give the
Administrative Agent a detailed written notice of such Lien and pay the
underlying claim in full or take such other action so as to cause it to be
released or bonded over in a manner satisfactory to the Administrative Agent.

                                       90


            6.14  Post Closing Obligations.

            (a) Within 30 days from the acquisition of any ongoing business
permitted by Section 7.8(e), (h), (k) or (l), or such later date as may
reasonably be agreed to by the Administrative Agent, file all notices required
in connection with the transfer of Permits related to such acquisition with the
applicable Governmental Authority and send the Administrative Agent copies
thereof; and

            (b) (i) Ensure that none of the Inactive Subsidiaries acquires any
assets (other than the Capital Stock of another Inactive Subsidiary), conducts
any business or incurs any Indebtedness or other liabilities (except, with
respect to Capital Holdings Company, to the extent contemplated by the Migration
(at which time Capital Holdings Company will cease to be an Inactive
Subsidiary)) and (ii) by June 30, 2004, or such later date as may be reasonably
agreed to by the Administrative Agent, file with the applicable Governmental
Authorities all documents necessary to dissolve duly and validly each of the
Inactive Subsidiaries (except Capital Holdings Company).

                          SECTION 7. NEGATIVE COVENANTS

            CERI and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender, any Agent or the
Arranger hereunder, each of CERI and the Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly:

            7.1   Financial Condition Covenants.

            (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal quarters of
CERI or, after the Migration, the Borrower ending with the last day of any
fiscal quarter set forth below to exceed the ratio set forth below opposite such
fiscal quarter:

                                       91




Fiscal Quarter                   Total Leverage Ratio
- --------------                   --------------------
                              
FQ2 2004                             5.50 : 1.00
FQ3 2004                             5.50 : 1.00
FQ4 2004                             5.25 : 1.00
FQ1 2005                             5.00 : 1.00
FQ2 2005                             4.75 : 1.00
FQ3 2005                             4.50 : 1.00
FQ4 2005                             4.25 : 1.00
FQ1 2006                             4.25 : 1.00
FQ2 2006                             4.25 : 1.00
FQ3 2006                             4.25 : 1.00
FQ4 2006                             4.00 : 1.00
FQ1 2007                             4.00 : 1.00
FQ2 2007                             4.00 : 1.00
FQ3 2007                             4.00 : 1.00
FQ4 2007                             4.00 : 1.00
FQ1 2008                             4.00 : 1.00
FQ2 2008                             4.00 : 1.00
FQ3 2008                             4.00 : 1.00
FQ4 2008                             4.00 : 1.00
FQ1 2009                             4.00 : 1.00
FQ2 2009                             4.00 : 1.00
FQ3 2009                             4.00 : 1.00
FQ4 2009, and thereafter             3.75 : 1.00


            (b) Consolidated Senior Secured Leverage Ratio. Permit the
Consolidated Senior Secured Leverage Ratio as at the last day of any period of
four consecutive fiscal quarters of CERI or, after the Migration, the Borrower
ending with the last day of any fiscal quarter set forth below to exceed the
ratio set forth below opposite such fiscal quarter:



                                     Consolidated Senior Secured
Fiscal Quarter                             Leverage Ratio
- --------------                             --------------
                                  
FQ2 2004                                    2.50 : 1.00
FQ3 2004                                    2.50 : 1.00
FQ4 2004                                    2.25 : 1.00
FQ1 2005                                    2.25 : 1.00
FQ2 2005                                    2.25 : 1.00
FQ3 2005, and thereafter                    2.00 : 1.00


            (c) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
CERI or, after the Migration, the Borrower ending with the last day of any
fiscal quarter set forth below to be less than the ratio set forth below
opposite such fiscal quarter:

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                                       Consolidated
Fiscal Quarter                    Interest Coverage Ratio
- --------------                    -----------------------
                               
FQ2 2004                               2.50 : 1.00
FQ3 2004                               2.50 : 1.00
FQ4 2004                               2.75 : 1.00
FQ1 2005                               2.75 : 1.00
FQ2 2005                               3.00 : 1.00
FQ3 2005                               3.00 : 1.00
FQ4 2005                               3.00 : 1.00
FQ1 2006                               3.00 : 1.00
FQ2 2006                               3.00 : 1.00
FQ3 2006                               3.00 : 1.00
FQ4 2006, and thereafter               3.25 : 1.00


            7.2   Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:

            (a) Indebtedness of any Loan Party pursuant to any Loan Document;

            (b) Indebtedness of (i) the Borrower or any Subsidiary Guarantor to
any Group Member, (ii) to the extent constituting an Investment permitted under
Section 7.8, any Subsidiary that is not a Subsidiary Guarantor to the Borrower
or any Subsidiary Guarantor, and (iii) any Subsidiary that is not a Subsidiary
Guarantor to any other Subsidiary that is not a Subsidiary Guarantor;

            (c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $12,000,000 at any one time outstanding;

            (d) Indebtedness outstanding on the Restatement Effective Date and
listed on Schedule 7.2(d) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount thereof or any
shortening of the maturity of any principal amount thereof (other than by fees
and expenses incurred in connection with such refinancing and interest with
respect thereto being capitalized));

            (e) Guarantee Obligations made in the ordinary course of business by
any Group Member of Indebtedness of any Loan Party;

            (f) Indebtedness of the Borrower or any Subsidiary acquired pursuant
to, or assumed in connection with, any Permitted Acquisition under Section
7.8(h); provided that such Indebtedness was not incurred (x) to provide all or a
portion of the funds utilized to consummate the transaction or series of related
transactions constituting such Permitted Acquisition or (y) otherwise in
connection with, or in contemplation of, such Permitted Acquisition; and
provided, further, that after giving effect to the incurrence of any such
Indebtedness (and any substantially concurrent repayment of Obligations or
consummation of a Permitted Acquisition)

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on a pro forma basis, as if such Indebtedness (and any substantially concurrent
repayment of Obligations or consummation of a Permitted Acquisition) had been
incurred on the first day of the twelve-month period ending on the last day of
the Borrower's then most recently completed fiscal quarter for which financial
statements are available, CERI, or after the Migration, the Borrower and its
Subsidiaries would have been in compliance with all the financial covenants set
forth in Section 7.1 and the Borrower shall have delivered to the Administrative
Agent a certificate of a Responsible Officer of the Borrower to such effect
setting forth in reasonable detail the computations necessary to determine such
compliance, and (ii) any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof or shortening of
the maturity of any principal amount thereof (other than by fees and expenses
incurred and interest to be capitalized in connection with such refinancing) and
on other material terms no less favorable to the Borrower or the applicable
Subsidiary);

            (g) (i) unsecured Indebtedness of the Borrower, the proceeds of
which are used either (x) to repay the Obligations hereunder or (y) to
consummate Permitted Acquisitions and (ii) unsecured subordinated Indebtedness
of the Borrower in an aggregate principal amount not to exceed $100,000,000, the
proceeds of which are used for general corporate purposes; provided that with
respect to each of clauses (i) and (ii), (1) no portion of the principal of such
Indebtedness shall have a maturity date earlier than six months after the final
maturity of the Loans hereunder, (2) after giving effect to the incurrence of
any such Indebtedness (and any substantially concurrent repayment of Obligations
or consummation of a Permitted Acquisition) on a pro forma basis, as if such
incurrence of Indebtedness (and any substantially concurrent repayment of
Obligations or consummation of a Permitted Acquisition) had been incurred on the
first day of the twelve-month period ending on the last day of the Borrower's
then most recently completed fiscal quarter for which financial statements are
available, the Borrower and its Subsidiaries would have been in compliance with
all the financial covenants set forth in Section 7.1 and the Borrower shall have
delivered to the Administrative Agent a certificate of a Responsible Officer of
the Borrower to such effect setting forth in reasonable detail the computations
necessary to determine such compliance, (3) at the time of the incurrence of
such Indebtedness and after giving effect thereto, no Default or Event of
Default shall exist or be continuing and (4) the documentation governing such
Indebtedness contains customary market terms (including, if applicable,
subordination terms at least as favorable to the Lenders as the Senior
Subordinated Notes or as otherwise reasonably agreed to by the Administrative
Agent);

            (h) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed $160,000,000
and (ii) Guarantee Obligations of any Subsidiary Guarantor or any Canadian
Subsidiary Guarantor in respect of such Indebtedness; provided that such
Guarantee Obligations are subordinated to the obligations of such Subsidiary
Guarantor under the Guarantee and Collateral Agreement and to the obligations of
such Canadian Subsidiary Guarantor under the Canadian Guarantee and Collateral
Agreement to the same extent as the obligations of the Borrower in respect of
the Senior Subordinated Notes are subordinated to the Obligations;

            (i) Indebtedness of any Group Member consisting of a subordinated
guarantee or other subordinated credit support obligations on customary market
terms, including subordination terms reasonably acceptable to the Administrative
Agent, in respect of IRB Transactions in an aggregate amount not to exceed
$20,000,000 at any one time outstanding; and

                                       94


            (j) additional Indebtedness of any Group Member in an aggregate
principal amount (for any Group Member) not to exceed $7,500,000 at any one time
outstanding.

            7.3   Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its Property, whether now owned or hereafter acquired,
except for:

            (a) Liens for taxes, assessments and governmental charges not yet
due or which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the books
of the applicable Group Member in conformity with GAAP;

            (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings; provided that adequate reserves with
respect thereto are maintained in the books of the applicable Group Member, in
conformity with GAAP;

            (c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;

            (d) deposits by or on behalf of any Group Member and security
interests on assets related to a particular performance bond granted to the
surety providing such performance bond, in each case, to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business, so long as the
aggregate amount of deposits at any one time securing appeal bonds does not
exceed $5,000,000;

            (e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and any Liens permitted
or excepted in the Mortgages that, in the aggregate, do not in any case
materially detract from the value of the Property subject thereto or materially
interfere with the ordinary conduct of the business of the Group Members;

            (f) Liens in existence on the Restatement Effective Date listed on
Schedule 7.3(f); provided that no such Lien is spread to cover any additional
Property after the Restatement Effective Date and that the amount secured
thereby is not increased;

            (g) Liens securing Indebtedness of any Group Member incurred
pursuant to Section 7.2(c) to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber any Property other than the Property financed
by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the amount of Indebtedness initially secured thereby is not
more than 100% of the purchase price of such fixed or capital asset;

            (h) Liens created pursuant to the Security Documents;

            (i) any interest or title of a lessor under any lease entered into
by any Group Member in the ordinary course of its business and covering only the
assets so leased;

                                       95


            (j) advance deposits (including extension payments) (i) arising
after the Restatement Effective Date in connection with any Investment permitted
by Section 7.8(h) or (ii) existing on the date hereof;

            (k) Liens on the property or assets of a Person which becomes a
Subsidiary of the Borrower after the date hereof, or is acquired by the Borrower
or any of its Subsidiaries after the date hereof, securing Indebtedness
permitted by Section 7.2(f); provided that (i) such Liens existed at the time
such Person became a Subsidiary of the Borrower, (ii) such Liens were not
granted in connection with or in contemplation of the applicable Permitted
Acquisition and (iii) the amount of Indebtedness secured thereby is not
increased (except as expressly provided in Section 7.2(f)) and such Liens are
not expanded to cover additional Property (other than proceeds thereof);

            (l) Liens securing Indebtedness of a Group Member permitted by
Section 7.2(i) on the assets of such Group Member purchased, developed, improved
or constructed with the proceeds of such Indebtedness and accounts receivable
arising therefrom; and

            (m) Liens not otherwise permitted by this Section 7.3 so long as
neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate fair market value (determined, in the
case of each such Lien, as of the date such Lien is incurred) of the assets
subject thereto exceeds (as to all Group Members) $5,000,000 at any one time.

            7.4   Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:

            (a)   any Solvent Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (provided that (i) such Subsidiary Guarantor shall be the continuing
or surviving corporation or (ii) simultaneously with such transaction, the
continuing or surviving corporation shall become a Subsidiary Guarantor and the
Borrower shall comply with Section 6.10 in connection therewith);

            (b)   any Subsidiary of the Borrower may Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor;

            (c)   provided that (i) no Default or Event of Default has occurred
and is continuing and (ii) the Administrative Agent and the Lenders have
received opinions of Canadian and United States of America tax counsel to CERI
and the Borrower to the effect that other than as a result of the redemption of
the common stock of the Borrower held by CERI, the Migration shall not give rise
to any Canadian or United States of America income tax liability to any Group
Member, CERI may consummate the Migration, and provided that no Default or Event
of Default has occurred and is continuing, notwithstanding the provisions of
Section 10.1, the Administrative Agent and the Loan Parties may enter into such
amendments and supplements to the Loan Documents as are necessary to reflect the
Migration, including, without limitation, the release from its guarantee
obligations of the Borrower's Obligations hereunder any Loan Party which becomes
an Excluded Foreign Subsidiary by virtue of the Migration and the release from

                                       96


any pledge under the Security Documents of 35% of the voting Capital Stock of
any such Excluded Foreign Subsidiary owned by the Borrower or the Subsidiary
Guarantors;

            (d)   the Borrower or any Subsidiary of the Borrower may merge with
any Person in connection with an acquisition permitted by Section 7.8(h), so
long as (i) if such transaction involves the Borrower, the Borrower is the
continuing or surviving corporation and (ii) if such transaction involves any
Subsidiary of the Borrower, the surviving corporation must be or become a
Subsidiary Guarantor; and

            (e) any Subsidiary may Dispose of its assets (by merger,
consolidation, dissolution or otherwise) in a transaction permitted, in its
entirety, by Section 7.5 or contemplated by Section 6.14(c)(ii).

            7.5   Limitation on Disposition of Property. Dispose of any of its
Property (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary of
CERI or the Borrower, issue or sell any shares of such Subsidiary's Capital
Stock to any Person, except:

            (a) the Disposition of obsolete or worn out property in the ordinary
course of business;

            (b) Dispositions permitted by Section 7.4(b);

            (c) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Subsidiary Guarantor;

            (d) the sale or issuance of any Canadian Subsidiary's Capital Stock
to CERI or any Canadian Subsidiary;

            (e) the Disposition of assets not otherwise permitted to be Disposed
of pursuant to this Section 7.5 having a fair market value not to exceed
$25,000,000 in the aggregate for any fiscal year of the Borrower;

            (f) the issuance and exchange of shares of the Capital Stock of CERI
and the Borrower as part of the Migration (including, without limitation,
issuances of Capital Stock of the Borrower from time to time in exchange for the
Exchangeable Shares);

            (g) an exchange or "swap" of fixed, tangible assets of any Group
Member for the assets of a Person other than another Group Member in the
ordinary course of business; provided that (i) the assets received by such Group
Member will be used or useful in such Group Member's business and (ii) such
Group Member received reasonable equivalent value for such assets, such
equivalent value to be demonstrated to the reasonable satisfaction of the
Administrative Agent; provided further that the fair market value of all such
assets of the Group Members exchanged or "swapped" in any fiscal year of the
Borrower does not exceed $25,000,000; and

            (h) as a result of any Recovery Event.

                                       97


            7.6   Limitation on Restricted Payments. Declare or pay any dividend
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any Capital Stock of CERI, the Borrower or any of its
Subsidiaries, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of CERI or any other Group Member, or enter into
any derivatives or other transaction with any financial institution, commodities
or stock exchange or clearinghouse (a "Derivatives Counterparty") obligating
CERI or any other Group Member to make payments to such Derivatives Counterparty
as a result of any change in market value of any such Capital Stock
(collectively, "Restricted Payments"), except that:

            (a) any Subsidiary of the Borrower may make Restricted Payments to
the Borrower or any Subsidiary Guarantor;

            (b) any Canadian Subsidiary may make Restricted Payments to CERI or
any Canadian Subsidiary which is a Loan Party;

            (c) CERI may make Restricted Payments in the form of Capital Stock
of CERI;

            (d) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower and any Canadian Subsidiary may pay dividends to
CERI to permit CERI to purchase its common stock or common stock options from
present or former officers or employees of any Group Member upon the death,
disability or termination of employment of such officer or employee, provided,
that the aggregate amount of payments under this clause (c) subsequent to the
Restatement Effective Date (net of any proceeds received by CERI and contributed
to the Borrower subsequent to the Restatement Effective Date in connection with
resales of any common stock or common stock options so purchased) shall not
exceed $100,000;

            (e) prior to the Migration, the Borrower and any Canadian Subsidiary
may pay dividends to CERI to permit CERI to (i) pay corporate expenses incurred
in the ordinary course of business not to exceed $10,000,000 in any fiscal year
and (ii) pay any taxes which are due and payable by CERI and the Borrower as
part of a consolidated group;

            (f) the Borrower may (i) make Restricted Payments in kind (and not
in cash) to the holders of the Kelso Preferred Stock as required by the Kelso
Preferred Stock Documents and (ii) after May 6, 2006, if no Default or Event of
Default has occurred and is continuing and the Borrower's (or if the Migration
has not occurred, CERI's) Consolidated Leverage Ratio pro forma for any
repurchase or redemption pursuant to this Section 7.6(f)(ii) is less than
4.00:1.00, repurchase or redeem the Kelso Preferred Stock in accordance with its
terms;

            (g) after the Migration, the shares of Capital Holdings Company held
by the Borrower may be converted into interest bearing intercompany
Indebtedness; and

            (h) commencing on the 121st day after the closing of the Restatement
Effective Date Equity Issuance, CERI may pay to the holders of the common shares
and warrants issued thereby up to $600,000 per month for up to three months as a
penalty for the failure to register such common shares and warrants within the
agreed upon time frame.

                                       98


            7.7   Limitation on Capital Expenditures. Make or commit to make any
Capital Expenditure, except (a) Capital Expenditures of the Group Members in the
ordinary course of business not exceeding $50,000,000 per fiscal year plus, in
each fiscal year, 10.0% of revenues for the immediately preceding fiscal year
from any Permitted Acquisitions; provided that (i) up to 50% of any such amount
referred to above for any fiscal year, if not so expended in the fiscal year for
which it is permitted, may be carried over for expenditure in the next
succeeding fiscal year only and (ii) Capital Expenditures made pursuant to this
clause (a) during any fiscal year shall be deemed made first, in respect of
amounts originally permitted for such fiscal year as provided above and second
in respect of amounts carried over from the prior fiscal year pursuant to
subclause (i) above, (b) Capital Expenditures made with the proceeds of any
Reinvestment Deferred Amount and (c) the acquisition of capital assets pursuant
to any Acquisition Documentation.

            7.8   Limitation on Investments. Make any advance, loan, extension
of credit (by way of guaranty or otherwise) or capital contribution to, or
purchase any Capital Stock, bonds, notes, debentures or other debt securities
of, or any assets constituting an ongoing business from, or make any other
investment in, any other Person (all of the foregoing, "Investments"), except:

            (a) extensions of trade credit in the ordinary course of business;

            (b) investments in Cash Equivalents;

            (c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 7.2(b)(i) and (iii) and 7.2(e);

            (d) loans and advances to employees of any Group Member in the
ordinary course of business (including, without limitation, for travel,
entertainment and relocation expenses) in an aggregate amount for all Group
Members not to exceed $100,000 at any one time outstanding;

            (e) the acquisition of the assets of the Allied Business which have
not been acquired as of the Restatement Effective Date;

            (f) Investments in assets useful in the Borrower's or the applicable
Subsidiary's business made by the Borrower or any of its Subsidiaries with the
proceeds of any Reinvestment Deferred Amount;

            (g) Investments (other than those relating to the incurrence of
Indebtedness permitted by Section 7.8(c)) by any Group Member in the Borrower or
any Person that, prior to such Investment, is a Subsidiary Guarantor;

            (h) in addition to Investments otherwise expressly permitted by this
Section, Investments by CERI, the Borrower or any Guarantor constituting
acquisitions of other Persons in the same or similar line of business as the
Group Members (a "Permitted Acquisition"); provided that

                  (i)   immediately prior to and after giving effect to any such
      Permitted Acquisition, (x) no Default or Event of Default has occurred and
      is continuing and (y) CERI or, after the Migration, the Borrower shall be
      in pro forma compliance with the

                                       99


      financial covenants set forth in Section 7.1 and CERI or, after the
      Migration, the Borrower shall have certified each of the same to the
      Administrative Agent in writing;

                  (ii)  if such Permitted Acquisition is structured as a stock
      acquisition, or a merger or consolidation, then either (A) the Person so
      acquired becomes a Wholly Owned Subsidiary of the Borrower or of CERI or
      (B) such Person is merged with and into either the Borrower or a Wholly
      Owned Subsidiary of the Borrower or of CERI (with the Borrower or such
      Subsidiary of the Borrower or of CERI being the surviving corporation in
      such merger);

                  (iii) all of the provisions of Section 6.10 have been or will
      be complied with in respect of such Permitted Acquisition and, if the
      purchase price for such Permitted Acquisition exceeds $1,000,000, the
      Acquisition Documentation with respect to any such Permitted Acquisition
      shall have been delivered to the Administrative Agent;

                  (iv)  the aggregate purchase price for all such Permitted
      Acquisitions shall not exceed (x) $100,000,000 over the term of this
      Agreement or (y) $40,000,000 for any single Permitted Acquisition; and

                  (v)   immediately after consummation of such Permitted
      Acquisition, the sum of the aggregate amount of Available Canadian
      Revolving Credit Commitments and the aggregate amount of Available US
      Revolving Credit Commitments shall be equal to or greater than
      $10,000,000.

            (i)   Investments by CERI or the Borrower in any Canadian
Subsidiary, including Investments arising in connection with Indebtedness
permitted under Section 7.2(b), in an aggregate amount (valued at cost) not to
exceed $5,000,000 in the aggregate, after taking into account recoveries,
returns, repayments, interest and other payments and distributions received in
cash thereon by any Loan Party, at any time outstanding;

            (j)   Investments in Specified Hedge Agreements permitted by Section
7.17;

            (k)   the FRS Acquisition;

            (l)   in addition to Investments otherwise expressly permitted by
this Section, Investments by any Group Member in an aggregate amount (valued at
cost) not to exceed $3,500,000 in the aggregate, after taking into account
recoveries, returns, repayments, interest and other payments and distributions
received in cash thereon by any Loan Party, at any time outstanding during the
term of this Agreement;

            (m)   Investments consisting of asset swaps or exchanges permitted
by Section 7.5(g); and

            (n)   Investments consisting of promissory notes and deferred
payment obligations received in connection with a Disposition permitted by
Section 7.5(e) in an aggregate principal amount not to exceed $5,000,000 in the
aggregate, after taking into account recoveries, returns, repayments, interest
and other payments and distributions received in cash thereon by any Loan Party,
at any time outstanding during the term of this Agreement.

                                      100


            7.9   Limitation on Optional Payments and Modifications of Debt
Instruments and Other Agreements.(a) Make or offer to make any optional or
voluntary payment, prepayment, repurchase or redemption of, or otherwise
voluntarily or optionally defease the Senior Subordinated Notes (other than the
exchange pursuant to the Senior Subordinated Note Indenture) or any Indebtedness
incurred pursuant to Sections 7.2(f) (except as expressly permitted thereby) or
(g), or segregate funds for any such payment, prepayment, repurchase, redemption
or defeasance, or enter into any derivative or other transaction with any
Derivatives Counterparty obligating any Group Member to make payments to such
Derivatives Counterparty as a result of any change in market value of the Senior
Subordinated Notes or any Indebtedness incurred pursuant to Sections 7.2(f) or
(g), (b) amend, modify or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to, any of the terms of the
Senior Subordinated Notes, or any Indebtedness incurred pursuant to Sections
7.2(f) or (g) (other than any such amendment, modification, waiver or other
change which (i) would extend the maturity or reduce the amount of any payment
of principal thereof, reduce the rate or extend the date for payment of interest
thereon or relax any covenant or other restriction applicable to the Group
Members and (ii) does not involve the payment of a consent fee), or (c)
designate any Indebtedness (other than the Obligations) as "Designated Senior
Indebtedness" for purposes of the Senior Subordinated Note Indenture or (d)
amend the Kelso Preferred Stock Documents or its certificate of incorporation,
by-laws or other governing documents in any manner determined by the
Administrative Agent to be adverse to the Lenders.

            7.10  Limitation on Transactions with Affiliates. Except as set
forth on Schedule 7.10, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than a Loan Party) unless such transaction is (a) (i) otherwise
not prohibited by this Agreement, (ii) in the ordinary course of business of
CERI, the Borrower or such Subsidiary, as the case may be, and (iii) upon fair
and reasonable terms no less favorable to CERI, the Borrower or the Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person that is not an Affiliate, (b) expressly permitted by
Section 7.6 or (c) entered into to effectuate the Migration.

            7.11  Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by any Group Member of real or
personal property which has been or is to be sold or transferred by such Group
Member to such Person or to any other Person to whom funds have been or are to
be advanced by such Person on the security of such property or rental
obligations of such Group Member, except for (a) the Arizona Sale and Leaseback
and (b) any arrangement with respect to which the sale of such real or personal
property was permitted by Section 7.5 and the capitalized lease created in
connection therewith was permitted by Section 7.2.

            7.12  Limitation on Changes in Fiscal Periods. Permit the fiscal
year of the Borrower to end on a day other than December 31 or change the
Borrower's method of determining fiscal quarters.

            7.13  Limitation on Negative Pledge Clauses. Enter into or suffer to
exist or become effective any agreement that prohibits or limits the ability of
any Group Member to create, incur, assume or suffer to exist any Lien upon any
of its Property or revenues, whether now owned or hereafter acquired, to secure
the Obligations or, in the case of any other Loan

                                      101


Party, its obligations under the Guarantee and Collateral Agreement or the
Canadian Guarantee and Collateral Agreement, other than (a) this Agreement and
the other Loan Documents, (b) any agreements governing any purchase money Liens
or Capital Lease Obligations otherwise permitted hereby (in which case, any
prohibition or limitation shall only be effective against the assets financed
thereby), (c) any agreements governing Indebtedness permitted by Sections 7.2
(c), (d), (f) or (i) (in which case any such prohibition shall only be effective
against the assets permitted to be subject to Liens permitted by Sections
7.3(f), (g), (k) or (l), as applicable), (d) the Senior Subordinated Note
Indenture and (e) provisions in leases that restrict the transfer of such lease
by the lessee.

            7.14  Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay or subordinate
any Indebtedness owed to CERI, the Borrower or any other Subsidiary, (b) make
Investments in CERI, the Borrower or any Subsidiary or (c) transfer any of its
assets to CERI, the Borrower or any other Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) any restrictions
existing under the Loan Documents, (ii) any restrictions with respect to a
Subsidiary of the Borrower or any Canadian Subsidiary imposed pursuant to an
agreement that has been entered into in connection with the Disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary, (iii)
customary net worth provisions contained in real property leases entered into by
any Loan Party so long as such net worth provisions could not reasonably be
expected to impair materially the ability of the Loan Parties to meet their
ongoing obligations under this Agreement or any of the other Loan Documents,
(iv) any restrictions existing under (A) the Senior Subordinated Notes Indenture
or (B) any agreement to be entered into in connection with the incurrence of
Indebtedness permitted by Sections 7.2(f) or (g) solely to the extent such
agreement is no more restrictive than this Agreement, and (v) with respect to
clause (c) only, (A) agreements described in clauses (b)-(d) of Section 7.13, to
the extent set forth in such clauses and (B) restrictions with respect to the
transfer of any asset contained in an agreement that has been entered into in
connection with a disposition of such asset permitted hereunder.

            7.15  Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Group Members are engaged on the Restatement Effective Date or that are
reasonably related thereto.

            7.16  Limitation on Amendments to Acquisition Documentation. Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the indemnities and licenses furnished to any Group Member
pursuant to the Allied Acquisition Agreement, the FRS Acquisition Agreement and
any related documentation such that after giving effect thereto such indemnities
or licenses shall be materially less favorable to the interests of the Loan
Parties or the Lenders with respect thereto unless the Administrative Agent
shall have consented thereto or (b) otherwise amend, supplement or otherwise
modify or fail to enforce the terms and conditions of the Allied Acquisition
Agreement, the FRS Acquisition Agreement and any related documentation, except
to the extent that any such amendment, supplement or modification could not
reasonably be expected to have a Material Adverse Effect.

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            7.17  Limitation on Hedge Agreements. Enter into any Hedge Agreement
other than Hedge Agreements entered into in the ordinary course of business, and
not for speculative purposes.

            7.18  Limitation on Performance Bonds. Create, incur, assume or
suffer to exist any secured obligations in respect of performance and surety
bonds and other obligations of a like nature other than performance and surety
bonds incurred in connection with credit support obligations related to the
waste collection and disposal business in the ordinary course of business,
including, without limitation, bonds for closure and post closure obligations
relating to any landfill and bonds relating to municipal collection contracts.

                          SECTION 8. EVENTS OF DEFAULT

            If any of the following events shall occur and be continuing:

            (a) The Borrower or CERI shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower or CERI shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any Loan Party shall fail to pay any other amount payable by it
hereunder or under any other Loan Document, within five days after any such
interest or other amount becomes due in accordance with the terms hereof or
thereof; or

            (b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made or furnished; or

            (c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section 6.4(a)
(with respect to CERI and the Borrower only), Section 6.7(a) or Section 7 of
this Agreement, or in Sections 5.2(a) and (d), 5.3(b)(iii) and (v), 5.5(a) and
(c), 5.6(b)(i) and (ii), 5.7 and 5.8(b) of the Guarantee and Collateral
Agreement, or (ii) Sections 5.2(a), 5.3(b)(iii) and (v), 5.5(a) and (c),
5.6(b)(i), 5.7 and 5.8(b) of the Canadian Guarantee and Collateral Agreement; or

            (d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 days; or

            (e) any Group Member shall (i) default in making any payment of any
principal of any Indebtedness (including, without limitation, any Guarantee
Obligation, but excluding the Loans and Reimbursement Obligations) on the
scheduled or original due date with respect thereto beyond the period of grace,
if any, provided in the instrument or agreement under which such Indebtedness
was created; or (ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created; or (iii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or contained in any instrument or

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agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or to become subject to a mandatory offer to
purchase by the obligor thereunder or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; provided, that a
default, event or condition described in clause (i), (ii) or (iii) of this
paragraph (e) shall not at any time constitute an Event of Default unless, at
such time, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $5,000,000; or

            (f) (i) any Group Member shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, interim receiver, receiver-manager, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its assets,
or any Group Member shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against any Group Member any case,
proceeding or other action of a nature referred to in clause (i) above that (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there shall be commenced against any Group Member any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint, possession, foreclosure or similar process against all or
any substantial part of its assets that results in the entry of an order for any
such relief that shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) any Group Member
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) any Group Member shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or

            (g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Single Employer Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Single Employer Plan, or any Lien in favor of a Single Employer Plan or in favor
of the PBGC with respect to a Single Employer Plan shall arise on the assets of
the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, or (v) the Borrower or any Commonly Controlled Entity shall incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan; and in each case in clauses (i) through
(v) above, such event or condition, together with all other such events

                                      104


or conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect; or

            (h) One or more judgments or decrees shall be entered against any
Group Member involving for all Group Members taken as a whole a liability (not
paid or fully covered by insurance as to which the relevant insurance company
has acknowledged coverage) of $5,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof; or

            (i) Any of the Security Documents shall cease, for any reason (other
than by reason of the express release thereof pursuant to Section 10.15), to be
in full force and effect, or any Loan Party or any Affiliate of any Loan Party
shall so assert, or any Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported to be
created thereby; or

            (j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement or in Section 2 of the Canadian Guarantee and Collateral
Agreement shall cease, for any reason (other than by reason of the express
release thereof pursuant to Section 10.15), to be in full force and effect or
any Loan Party or any Affiliate of any Loan Party shall so assert; or

            (k) Any Change of Control shall occur; or

            (l) The Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party, any Affiliate of any Loan Party, the trustee in
respect of the Senior Subordinated Notes or the holders of at least 25% in
aggregate principal amount of the Senior Subordinated Notes shall so assert;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower or
CERI, automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of Bankers' Acceptances and L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) and whether or not the Bankers' Acceptances have
matured shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Majority Revolving Credit Facility Lenders, the
Administrative Agent may, or upon the request of the Majority Revolving Credit
Facility Lenders, the Administrative Agent shall, by notice to the Borrower and
CERI declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower and CERI, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of Bankers' Acceptances
and L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) and
whether or not the Bankers'

                                      105


Acceptances have matured to be due and payable forthwith, whereupon the same
shall immediately become due and payable. In the case of all US Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount in immediately available funds equal to the aggregate then
undrawn and unexpired amount of such US Letters of Credit (and the Borrower
hereby grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a continuing security interest in all amounts at any time on
deposit in such cash collateral account to secure the undrawn and unexpired
amount of such US Letters of Credit and all other Obligations of the Borrower).
In the case of all Canadian Letters of Credit with respect to which presentment
for honor shall not have occurred or Bankers' Acceptances which have not matured
at the time of an acceleration pursuant to this paragraph, CERI shall at such
time deposit in a cash collateral account opened by the Canadian Agent an amount
in immediately available funds equal to the aggregate then undrawn and unexpired
amount of such Canadian Letters of Credit and the aggregate face amount of
unmatured Bankers' Acceptances (and CERI hereby grants to the Canadian Agent,
for the ratable benefit of the Secured Parties or, after the Migration, the
Canadian Revolving Credit Lenders, a continuing security interest in all amounts
at any time on deposit in such cash collateral account to secure the undrawn and
unexpired amount of such Canadian Letters of Credit or the unmatured Bankers'
Acceptances and all other Obligations of CERI). If at any time the
Administrative Agent or the Canadian Agent determines that any funds held in
such cash collateral account are subject to any right or claim of any Person
other than the Administrative Agent, the Canadian Agent and the Secured Parties
or that the total amount of such funds is less than the aggregate undrawn and
unexpired amount of outstanding US Letters of Credit, Canadian Letters of Credit
or Bankers' Acceptances, the Borrower or CERI, as applicable, shall, forthwith
upon demand by the Administrative Agent or the Canadian Agent, as applicable,
pay to the Administrative Agent or the Canadian Agent, as applicable, as
additional funds to be deposited and held in such cash collateral account, an
amount equal to the excess of (a) such aggregate undrawn and unexpired amount
over (b) the total amount of funds, if any, then held in such cash collateral
account that the Administrative Agent (or the Canadian Agent, as applicable)
determines to be free and clear of any such right and claim. Amounts held in
such cash collateral account with respect to US Letters of Credit shall be
applied by the Administrative Agent to the payment of drafts drawn under such US
Letters of Credit, and the unused portion thereof after all such US Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the other Loan
Documents. Amounts held in such cash collateral account with respect to Canadian
Letters of Credit and Bankers' Acceptances shall be applied by the Canadian
Agent to the payment of drafts drawn under such Canadian Letters of Credit and
the reimbursement obligations of CERI with respect to matured Bankers'
Acceptances, and the unused portion thereof after all such Canadian Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of CERI hereunder and under the other Loan Documents.
After all such Bankers' Acceptances shall have matured and all such Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
and CERI hereunder and under the other Loan Documents shall have been paid in
full, the balance, if any, in such cash collateral account shall be returned to
the Borrower or CERI, as applicable (or such other Person as may be lawfully
entitled thereto).

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                      SECTION 9. THE AGENTS; THE ARRANGER

            9.1   Appointment(a) Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.

            (b) For greater certainty, and without limiting the powers of the
Agents or any other Person acting as an agent, attorney-in-fact or mandatary for
the Agents under this Credit Agreement or under any of the Loan Documents, each
Secured Party (including, without limitation, the Canadian Agent), hereby (a)
irrevocably constitutes, to the extent necessary and confirms the constitution
of (to the extent necessary), the Administrative Agent as the holder of an
irrevocable power of attorney (fonde de pouvoir within the meaning of Article
2692 of the Civil Code of Quebec) for the purposes of holding on their behalf,
and for their benefit, any Liens, including hypothecs ("Hypothecs"), granted or
to be granted by the Borrower or any other Loan Party on movable or immovable
property pursuant to the laws of the Province of Quebec to secure obligations of
the Borrower or any other Loan Party under any bond issued by the Borrower or
any other Loan Party and exercising such powers and duties which are conferred
upon the Administrative Agent in its capacity as fonde de pouvoir under any of
the Hypothecs; and (b) appoints (and confirms the appointment of) and agrees
that the Administrative Agent, acting as agent for the Secured Parties, may act
as the bondholder and mandatary with respect to any bond that may be issued and
pledged from time to time for the benefit of the Secured Parties.

            (c) The said constitution of the fonde de pouvoir (within the
meaning of Article 2692 of the Civil Code of Quebec) as the holder of such
irrevocable power of attorney and of the Administrative Agent as bondholder and
mandatary with respect to any bond that may be issued and pledged from time to
time for the benefit of the Secured Parties shall be deemed to have been
ratified and confirmed by any Assignee by the execution of an Assignment and
Acceptance and by a Qualified Counterparty by its agreement to be bound by the
provisions of this Section 9 as if it were a Lender party thereto;

            (d) Notwithstanding the provisions of Section 32 of An Act
respecting the special powers of legal persons (Quebec), the Administrative
Agent may purchase, acquire and be the holder of any bond issued by the Borrower
or any other Loan Party. Each of the Borrower and CERI hereby acknowledges that
any such bond shall constitute a title of indebtedness, as such term is used in
Article 2692 of the Civil Code of Quebec.

            (e) The Administrative Agent herein appointed as fonde de pouvoir
shall have the same rights, powers and immunities as the Agents as stipulated in
this Section 9 of the Credit Agreement, which shall apply mutatis mutandis.
Without limitation, the provisions of Section

                                      107


9.9 shall apply mutatis mutandis to the resignation and appointment of a
successor to the Administrative Agent acting as fonde de pouvoir.

            (f) Without limiting the generality of Section 1.3(a) hereof: (i)
the appointment of the Administrative Agent, including its appointment as fonde
de pouvoir and bondholder under the Original Credit Agreement continues in full
force and effect and is not rescinded or replaced by this Agreement; (ii) the
demand bond No. 1 in the principal amount of Cdn. $330,000,000 dated as of
January 28, 2004 issued by CERI in favour of the Administrative Agent (the
"Bond") pursuant to the deed of hypothec executed by CERI on January 28, 2004
before Stephanie Grondin, Notary, under her minute number 353 (the "Deed of
Hypothec") continues to secure the "Obligations" as described in the movable
hypothec dated January 28, 2004 (the "Bond Pledge") including, without
limitation, the Canadian Guarantee and Collateral Agreement dated as of December
31, 2003 among, inter alia CERI and the Administrative Agent, as amended by
Amendment No. 1 to the Canadian Guarantee and Collateral Agreement and any and
all further modifications, extensions , replacements, amendments, renewals,
supplements, restatements and continuations thereof; and (iii) the execution of
this Agreement shall not constitute novation of any kind nor derogate from the
rank and priority of the charges and hypothecs created under the Deed of
Hypothec and the Bond Pledge, all hypothecs created under the Deed of Hypothec
and the Bond Pledge being reserved in favour of the Secured Parties.

            9.2   Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

            9.3   Exculpatory Provisions. Neither the Arranger, any Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a court of competent jurisdiction to have resulted directly from its or such
Person's own gross negligence or willful misconduct) or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Arranger, the
Agents under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
any Loan Party to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party.

            9.4   Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without

                                      108


limitation, counsel to the Loan Parties), independent accountants and other
experts selected by such Agent. The Agents may deem and treat the payee of any
Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 10.6 and all actions required by such
Section in connection with such transfer shall have been taken. Each Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance
with a request of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.

            9.5   Notice of Default. No Agent shall be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
such Agent shall have received notice from a Lender, CERI or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent shall receive such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders or any other instructing group of Lenders specified by this Agreement);
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.

            9.6   Non-Reliance on the Arranger, the Agents and Other Lenders.
Each Lender expressly acknowledges that neither the Arranger, any of the Agents
nor any of their respective officers, directors, employees, agents, attorneys
and other advisors, partners, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by the
Arranger, any Agent to any Lender. Each Lender represents to the Agents and the
Arranger that it has, independently and without reliance upon the Arranger, any
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates and made its own
decision to make its Loans (and in the case of any Issuing Lender, to issue its
Letters of Credit) hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Arranger,
any Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates. Except
for notices, reports and other documents expressly required to

                                      109


be furnished to the Lenders by the Administrative Agent hereunder, no Arranger
and no Agent shall have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of any Loan
Party or any affiliate of a Loan Party that may come into the possession of the
Arranger or Agent or any of its officers, directors, employees, agents,
attorneys and other advisors, partners, attorneys-in-fact or affiliates.

            9.7   Indemnification. The Lenders agree to indemnify the Arranger
and each Agent in its capacity as such (to the extent not reimbursed by CERI or
the Borrower and without limiting the obligation of CERI or the Borrower to do
so), ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), for,
and to save the Arranger and each Agent harmless from and against, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Arranger or such Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Arranger or such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found by a court of
competent jurisdiction to have resulted directly from the Arranger's or such
Agent's gross negligence or willful misconduct. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable hereunder.

            9.8   Arranger and Agents in their Individual Capacities. The
Arranger and each Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with any Loan Party as though
the Arranger or such Agent were not an Arranger or an Agent. With respect to its
Loans made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, the Arranger and each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Arranger or an Agent, and the
terms "Lender" and "Lenders" shall include the Arranger and the Agent in their
individual capacities.

            9.9   Successor Agents. (a) The Administrative Agent may resign as
Administrative Agent upon 10 days notice to the Lenders and the Borrower. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall
(unless an Event of Default under Section 8(a) or Section 8(f) with respect to
the Borrower shall have occurred and be continuing) be subject to approval by
the Borrower (which approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act

                                      110


or deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans or issuers of Letters of Credit. If
no successor agent has accepted appointment as Administrative Agent by the date
that is 10 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective, and the Lenders shall assume and perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above. The Canadian
Agent may resign as Canadian Agent upon 10 days notice to the Lenders and the
Borrower. If the Canadian Agent shall resign as Canadian Agent under this
Agreement and the other Loan Documents, then the a majority of the Canadian
Lenders shall appoint from among the Canadian Lenders a successor agent for the
Canadian Lenders, whereupon such successor agent shall succeed to the rights,
powers and duties of the Canadian Agent, and the term "Canadian Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Canadian Agent's rights, powers and duties as Canadian Agent shall be
terminated, without any other or further act or deed on the part of such former
Canadian Agent or any of the parties to this Agreement or any holders of the
Loans or issuers of Letters of Credit. If no successor agent has accepted
appointment as Canadian Agent by the date that is 10 days following a retiring
Canadian Agent's notice of resignation, the retiring Canadian Agent's
resignation shall nevertheless thereupon become effective, and the Canadian
Lenders shall assume and perform all of the duties of the Canadian Agent
hereunder until such time, if any, as the such Lenders appoint a successor agent
as provided for above. Each of the Syndication Agent and the Documentation Agent
may, at any time, by notice to the Lenders and the Administrative Agent, resign
as an Agent hereunder, whereupon the duties, rights, obligations and
responsibilities of such Agent hereunder, if any, shall automatically be assumed
by, and inure to the benefit of, the Administrative Agent, without any further
act by the Arranger, any Agent or any Lender. After any retiring Agent's
resignation as Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.

            9.10  Authorization to Release Liens and Guarantees. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
effect any release of Liens or guarantee obligations contemplated by Section
10.15.

            9.11  The Arranger; the Syndication Agent; the Documentation Agent.
The Arranger, the Syndication Agent and the Documentation Agent, in their
respective capacities as such, shall have no duties or responsibilities, and
shall incur no liability, under this Agreement and the other Loan Documents.

            9.12  Withholding Tax. (a) To the extent required by any applicable
law, the Administrative Agent or the Canadian Agent may withhold from any
interest payment to any Lender an amount equivalent to any applicable
withholding tax. If the forms or other documentation required by Section 2.20(e)
are not delivered to the Administrative Agent or the Canadian Agent, as
applicable, then the applicable Agent may withhold from any interest payment to
any Lender not providing such forms or other documentation, a maximum amount of
the applicable withholding tax.

            (b) If the Internal Revenue Service, Canada Revenue Agency or any
authority of the United States of America, Canada or other jurisdiction asserts
a claim that the Administrative

                                      111


Agent or the Canadian Agent did not properly withhold tax from amounts paid to
or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Administrative Agent and the Canadian Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason), such Lender shall indemnify the Administrative Agent
and the Canadian Agent fully for all amounts paid, directly or indirectly, by
the Administrative Agent or the Canadian Agent as tax or otherwise, including
penalties and interest, together with all expenses incurred, including legal
expenses, allocated staff costs and any out of pocket expenses.

            (c) If any Lender sells, assigns, grants a participation in, or
otherwise transfers its rights under this Agreement, the purchaser, assignee,
participant or transferee, as applicable, shall comply and be bound by the terms
of Sections 2.20(e) and 9.12; provided that with respect to any Participant, as
set forth in Section 10.6(b), such Participant shall only be required to comply
with the requirements of Sections 2.20(e) if such Participant seeks to obtain
the benefits of Section 2.20.

                           SECTION 10. MISCELLANEOUS

            10.1  Amendments and Waivers. (a) Neither this Agreement or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party party to the relevant
Loan Document may, or (with the written consent of the Required Lenders) the
Administrative Agent and each Loan Party party to the relevant Loan Document
may, from time to time, (1) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents (including amendments and
restatements hereof or thereof) for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (2) waive, on such
terms and conditions as may be specified in the instrument of waiver, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall:

                  (i)   forgive the principal amount or extend the final
      scheduled date of maturity of any Loan or Reimbursement Obligation, extend
      the scheduled date of any amortization payment in respect of any Term
      Loan, reduce the stated rate of any interest or fee payable hereunder or
      extend the scheduled date of any payment thereof, or increase the amount
      or extend the expiration date of any Commitment of any Lender, in each
      case without the consent of each Lender directly affected thereby;

                  (ii)  amend, modify or waive any provision of this Section or
      reduce any percentage specified in the definition of Required Lenders or
      Required Prepayment Lenders, consent to the assignment or transfer by
      either the Borrower or CERI of any of its rights and obligations under
      this Agreement and the other Loan Documents, release all or substantially
      all of the Collateral or release all or substantially all of the
      Subsidiary Guarantors from their guarantee obligations under the Guarantee
      and Collateral Agreement, in each case without the consent of all Lenders;

                                      112


                  (iii) amend, modify or waive any condition precedent to any
      extension of credit under the Revolving Credit Facilities set forth in
      Section 5.2 (including, without limitation, the waiver of an existing
      Default or Event of Default required to be waived in order for such
      extension of credit to be made) without the consent of the Majority
      Revolving Credit Facility Lenders with respect to such Revolving Credit
      Facility;

                  (iv)  reduce the percentage specified in the definition of
      Majority Facility Lenders with respect to any Facility without the written
      consent of all Lenders under such Facility;

                  (v)   amend, modify or waive any provision of Section 9 or any
      other provision affecting the rights, duties and obligations of the
      Arranger or any Agent without the consent of the Arranger or Agent
      directly affected thereby;

                  (vi)  amend, modify or waive any provision of Section 2.6 or
      2.7 without the written consent of each Swing Line Lender directly
      affected thereby;

                  (vii) amend, modify or waive the pro rata provisions of
      Section 2.18, Section 6.5 of the Guarantee and Collateral Agreement or
      Section 6.5 of the Canadian Guarantee and Collateral Agreement, in each
      case without the consent of each Lender directly affected thereby;

                  (viii) amend, modify or waive any provision of Section 3
      without the consent of each Issuing Lender directly affected thereby ;

                  (ix)  impose restrictions on assignments and participations
      that are more restrictive than, or additional to, those set forth in
      Section 10.6; or

                  (x)   amend, modify or waive any provision of any Loan
      Document directly affecting the rights, duties or obligations of the
      Canadian Agent without the consent of the Canadian Agent.

Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Arranger, the Agents and all future holders of the Loans. In the
case of any waiver, the Loan Parties, the Lenders, the Arranger and the Agents
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon. Any such waiver, amendment, supplement or modification shall be
effected by a written instrument signed by the parties required to sign pursuant
to the foregoing provisions of this Section; provided, that delivery of an
executed signature page of any such instrument by facsimile transmission shall
be effective as delivery of a manually executed counterpart thereof.

            Notwithstanding the foregoing, this Agreement and any other Loan
Document may be amended (or amended and restated) with the written consent of
the Required Lenders, the Administrative Agent and each Loan Party to each
relevant Loan Document (x) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof

                                      113


(collectively, the "Additional Extensions of Credit") to share ratably in the
benefits of this Agreement and the other Loan Documents with the Term Loans, the
US Revolving Extensions of Credit and the Canadian Revolving Extensions of
Credit and the accrued interest and fees in respect thereof and (y) to include
appropriately the Lenders holding such credit facilities in any determination of
the Required Lenders, Required Prepayment Lenders and Majority Revolving Credit
Facility Lenders; provided, however, that no such amendment shall permit the
Additional Extensions of Credit to share ratably with or with preference to the
Loans in the application of mandatory prepayments without the consent of the
applicable Required Prepayment Lenders.

            (b) In addition to the foregoing, and notwithstanding Section
10.1(a), this Agreement and any other Loan Document may be amended (or amended
and restated) with the consent of CERI, the Borrower, the Administrative Agent
and the Lenders providing commitments therefor, but without the consent of the
other Lenders, to establish an additional term loan facility (the "Incremental
Term Loan Facility") in an aggregate principal amount of up to $50,000,000; so
long as (i) no Default has occurred and is continuing and (ii) the Borrower is
in pro forma compliance with the financial covenants set forth in Section 7.1
with respect to the most recently completed fiscal quarter for which financial
statements are then available. Any Incremental Term Loan Facility effected
pursuant to this Section will be a term loan facility which will mature and
amortize in a manner reasonably acceptable to the Administrative Agent, but will
not in any event have a shorter average life than the Tranche B Term Loan
Facility or a final maturity date earlier than that of the Tranche B Term Loan
Facility. Any Incremental Term Loan Facility effected pursuant to this Section
(i) will rank pari passu in right of payment and security with the other Credit
Facilities and (ii) except as set forth above, will be treated substantially the
same as (and in any event no more favorably than) the Tranche B Term Loan
Facility (including with respect to mandatory and optional prepayments). If the
yield on the Incremental Term Loan Facility (taking into account upfront fees
payable to Lenders providing the Incremental Term Loan Facility and any original
issue discount) is higher than the then-current yield on the Tranche B Term Loan
Facility, the pricing on the Tranche B Term Loan Facility will be increased to
equal the yield on the Incremental Term Loan Facility. No Lenders will be
required to commit to provide any portion of the Incremental Facility. The
proceeds of the Incremental Facility will be used for Permitted Acquisitions or
for general corporate purposes.

            (c) In addition to the foregoing and notwithstanding the provisions
set forth in Section 10.1(a), this Agreement and any other Loan Document may be
amended or amended and restated by the Administrative Agent, the Canadian Agent
and the Loan Parties without the payment of any structuring, arrangement or
amendment fee with respect thereto (other than the fees and expenses set forth
in Section 10.5) at the time of the Migration (as defined in Section 7.4(c) as
of the Restatement Effective Date) solely to reflect the change in corporate
structure resulting therefrom and effectuate the changes to the terms of this
Agreement required thereby.

            10.2  Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed (a) in the case of CERI, the Borrower, the Arranger and the
Agents, as follows and (b) in the case of the Lenders, as set forth in an
administrative questionnaire delivered to the Administrative Agent or on
Schedule I to the Lender Addendum to

                                      114

which such Lender is a party or, in the case of a Lender which becomes a party
to this Agreement pursuant to an Assignment and Acceptance, in such Assignment
and Acceptance or (c) in the case of any party, to such other address as such
party may hereafter notify to the other parties hereto:

                  CERI:                     Capital Environmental Resources Inc.
                                            1122 International Blvd., Suite 601
                                            Burlington, Ontario  L7L 6Z8
                                            Attention:  General Counsel
                                            Telecopy:  (905) 319-9408
                                            Telephone: (905) 319-1237

                  The Borrower:             Waste Services, Inc.
                                            1122 International Blvd., Suite 601
                                            Burlington, Ontario  L7L 6Z8
                                            Attention:  General Counsel
                                            Telecopy:  (905) 319-9408
                                            Telephone: (905) 319-1237

                                            with a copy to:

                                            Shearman & Sterling LLP
                                            599 Lexington Avenue
                                            New York, New York 10022
                                            Attention: William J. Wiegmann
                                            Telecopy: (212) 848-7179
                                            Telephone: (212) 848-8204
                  The Syndication Agent:

                                            CIBC World Markets Corp.
                                            425 Lexington Avenue
                                            New York, New York 10017
                                            Attention:  Gerald J. Girardi
                                            Telecopy:  (212) 885-4911
                                            Telephone:  (212) 856-3649

                  The Administrative Agent:

                                            Lehman Commercial Paper Inc.
                                            745 Seventh Avenue
                                            New York, New York 10019
                                            Attention:  Frank Turner
                                            Telecopy:  (646) 758-1986
                                            Telephone:  (212) 526-1463

                                            with a copy to

                                            Latham & Watkins LLP
                                            885 Third Avenue, Suite 1000

                                      115


                                      New York, New York  10022
                                      Attention:  Christopher R. Plaut
                                      Telecopy:  (212) 751-4864
                                      Telephone:  (212) 906-1200

            The Canadian Agent:       Canadian Imperial Bank of Commerce
                                      BCE Place, Canada Trust Tower
                                      161 Bay Street, 8th Floor
                                      Toronto, Ontario  M5J 2S8
                                      Attention:  M. Warren Lobo
                                      Telecopy:  (416) 956-3830
                                      Telephone:  (416) 956-3849

            Issuing Lenders:          As notified by such Issuing Lender
                                      to the Administrative Agent and the
                                      Borrower

provided that any notice, request or demand to or upon the Arranger, any Agent,
the Issuing Lender or any Lender shall not be effective until received; and
provided further that any notices or deliveries required to be given to any
Lender hereunder may be effected by delivery of notice to the Administrative
Agent as provided above, followed by a distribution of such notice by the
Administrative Agent to any Lender through IntraLinks (or any similar electronic
system customarily used by financial institutions), to the extent such system is
being used by the Administrative Agent, it being understood that the
Administrative Agent shall bear no responsibility for any failure of any Lender
to receive any such notice or delivery and the Borrower shall remain responsible
therefor.

            10.3  No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

            10.4  Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

            10.5  Payment of Expenses. Each of CERI and the Borrower agrees (a)
to pay or reimburse the Arranger and the Agents for all their reasonable
out-of-pocket costs and expenses incurred in connection with the syndication of
the Facilities (other than fees payable to syndicate members) and the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements and other charges of
counsel to the Administrative Agent and the charges of Intralinks, (b) to pay or
reimburse each Lender, the

                                      116


Arranger and the Agents for all their costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any other documents prepared in connection herewith or
therewith, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and disbursements and other charges of in-house
counsel) to each Lender and of counsel to the Agents, (c) to pay, indemnify, or
reimburse each Lender, the Arranger and the Agents for, and hold each Lender,
the Arranger and the Agents harmless from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify or reimburse each Lender, the Arranger,
each Agent, their respective affiliates, and their respective officers,
directors, trustees, employees, affiliates, shareholders, attorneys and other
advisors, agents and controlling persons (each, an "Indemnitee") for, and hold
each Indemnitee harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of any Group Member or any of the
Properties or the use by unauthorized persons of information or other materials
sent through electronic, telecommunications or other information transmission
systems that are intercepted by such persons and the fees and disbursements and
other charges of legal counsel in connection with claims, actions or proceedings
by any Indemnitee against the Borrower and CERI hereunder (all the foregoing in
this clause (d), collectively, the "Indemnified Liabilities"), provided, that
neither the Borrower nor CERI shall have any obligation hereunder to any
Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a court of competent jurisdiction to have
resulted directly from the gross negligence or willful misconduct of such
Indemnitee or any affiliate thereof. No Indemnitee shall be liable for any
damages arising from the use by unauthorized persons of Information or other
materials sent through electronic, telecommunications or other information
transmission systems that are intercepted by such persons or for any special,
indirect, consequential or punitive damages in connection with the Facilities.
Without limiting the foregoing, and to the extent permitted by applicable law,
each of the Borrower and CERI agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries so to
waive, all rights for contribution or any other rights of recovery with respect
to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to Environmental
Laws, that any of them might have by statute or otherwise against any
Indemnitee, except to the extent such claim, demand, penalty, fine, liability,
settlement, damage, cost or expense is found by a court of competent
jurisdiction to have resulted directly from the gross negligence or willful
misconduct of such Indemnitee. All amounts due under this Section shall be
payable not later than 30 days after written demand therefor. Statements payable
by the Borrower or CERI pursuant to this Section shall be submitted to the
address of the Borrower or CERI set forth in Section 10.2, or to such other
Person or address as may be hereafter designated by the Borrower or CERI in a
notice to the

                                      117


Administrative Agent. The agreements in this Section shall survive repayment of
the Loans and all other amounts payable hereunder.

            10.6  Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of CERI, the
Borrower, the Lenders, the Arranger, the Agents, all future holders of the Loans
and their respective successors and assigns, except that neither CERI nor the
Borrower may assign or transfer any of their respective rights or obligations
under this Agreement without the prior written consent of the Arranger, the
Agents and each Lender.

            (b) Any Lender may, without the consent of the Borrower, CERI or any
other Person, in accordance with applicable law, at any time sell to one or more
banks, financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agents shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would require the consent of all Lenders pursuant to Section
10.1. Each of CERI and the Borrower agrees that if amounts outstanding under
this Agreement and the Loans are due or unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if such Participant
were a Lender hereunder. Each of CERI and the Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.18, 2.19 and 2.20
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if such Participant were a Lender; provided that, in the
case of Section 2.20, such Participant shall have complied with the requirements
of said Section, and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.

            If and to the extent that a Non-U.S. Lender sells a participating
interest to a Participant which, pursuant to Section 9.12(c), seeks to obtain
the benefits of Section 2.20, then (a) in the case of a Loan that is not a
Canadian Revolving Credit Loan, such Lender shall promptly provide the Borrower
and the Administrative Agent with documentation reflecting the portion of its
Loan, Commitment and/or any other interest of such Lender hereunder and under
the other Loan Documents sold pursuant to such participating interest on a
properly completed

                                      118


and duly executed Internal Revenue Service Form W-8IMY (or any subsequent
versions thereof or successors thereto) with any required attachments and the
portion of its Loan, Commitment and/or any other interest of such Lender
hereunder and under the other Loan Documents retained on a properly completed
and duly executed Internal Revenue Service Form W-8BEN or Form W-8ECI (or any
subsequent versions thereof or successors thereto) or (b) in the case of a
Canadian Revolving Credit Loan, such Lender shall promptly provide CERI and the
Canadian Agent with documentation reflecting the portion of its Loan, Commitment
and/or any other interest of such Lender hereunder and under the other Loan
Documents sold pursuant to such participating interest in such form as the
Canadian Agent shall determine from time to time.

            (c) Any Lender (an "Assignor") may, in accordance with applicable
law and upon written notice to the Administrative Agent (and the Canadian Agent,
in the case of the Canadian Revolving Credit Loans or Canadian Revolving Credit
Commitments), at any time and from time to time assign to any Lender or any
affiliate, Related Fund or Control Investment Affiliate thereof or, with the
consent of the Borrower and the Administrative Agent and, (A) in the case of any
assignment of US Revolving Credit Commitments, the written consent of the US
Issuing Lender and the US Swing Line Lender which, in each case, shall not be
unreasonably withheld or delayed) and (B) in the case of any assignment of
Canadian Revolving Credit Commitments, the written consent of the Canadian
Issuing Lender and the Canadian Swing Line Lenders (which, in each case, shall
not be unreasonably withheld or delayed); provided (x) that no such consent need
be obtained by the Administrative Agent or its affiliates and (y) the consent of
the Borrower need not be obtained with respect to any assignment of Term Loans,
to an additional bank, financial institution or other entity (an "Assignee") of
all or any part of its rights and obligations under this Agreement pursuant to
an Assignment and Acceptance, substantially in the form of Exhibit E (an
"Assignment and Acceptance"), executed by such Assignee and such Assignor (and,
where the consent of the Borrower, the Administrative Agent, the Canadian Agent,
the US Issuing Lender, the Canadian Issuing Lender, the US Swing Line Lender or
the Canadian Swing Line Lender is required pursuant to the foregoing provisions,
by the Borrower and such other Persons) and delivered to the Administrative
Agent for its acceptance and recording in the Register and with respect to the
Canadian Revolving Credit Facility, the Canadian Agent; provided that no such
assignment to an Assignee (other than any Lender or any affiliate thereof) shall
be in an aggregate principal amount of less than $1,000,000 (with respect to
Term Loans and $2,500,000 with respect to the Revolving Credit Facilities (other
than, in each case, in the case of an assignment of all of a Lender's interests
under this Agreement)), unless otherwise agreed by the Borrower and the
Administrative Agent. Any such assignment need not be ratable as among the
Facilities. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with Commitments and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto, except as to Section 2.19, 2.20, 2.21, 9.12 and 10.5 in respect of the
period prior to such effective date). Notwithstanding any provision of this
Section, neither the consent of the Borrower nor CERI, as applicable, shall be
required for any assignment that occurs at any time when any Event of Default
shall have occurred and be continuing. For purposes of the minimum assignment
amounts set forth in this paragraph, multiple assignments by two or more Related
Funds shall be aggregated.

                                      119


            (d) The Administrative Agent shall, on behalf of the Borrower and
CERI, maintain at its address referred to in Section 10.2 a copy of each
Assignment and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, CERI, each Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loans and any Notes
evidencing such Loans recorded therein for all purposes of this Agreement. Any
assignment of any Loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance; thereupon one or
more new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower or CERI, as applicable, marked "canceled". The Register
shall be available for inspection by the Borrower, CERI or any Lender (with
respect to any entry relating to such Lender's Loans) at any reasonable time and
from time to time upon reasonable prior notice.

            (e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor and an Assignee (and, in any case where the consent of any other Person
is required by Section 10.6(c), by each such other Person) together with payment
to the Administrative Agent of a registration and processing fee of $3,500
(treating multiple, simultaneous assignments by or to two or more Related Funds
as a single assignment) (except that no such registration and processing fee
shall be payable in the case of an Assignee which is already a Lender or is an
affiliate or Related Fund of a Lender or a Person under common management with a
Lender), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Borrower. On or prior to such effective date, the
Borrower or CERI, as applicable, at their own expense, upon request, shall
execute and deliver to the Administrative Agent (in exchange for the Revolving
Credit Note and/or applicable Term Notes, as the case may be, of the assigning
Lender) a new Revolving Credit Note and/or applicable Term Notes, as the case
may be, to the order of such Assignee in an amount equal to the Revolving Credit
Commitment and/or applicable Term Loans, as the case may be, assumed or acquired
by it pursuant to such Assignment and Acceptance and, if the Assignor has
retained a Revolving Credit Commitment and/or Term Loans, as the case may be,
upon request, a new Revolving Credit Note and/or Term Notes, as the case may be,
to the order of the Assignor in an amount equal to the Revolving Credit
Commitment and/or applicable Term Loans, as the case may be, retained by it
hereunder. Such new Note or Notes shall be dated the Restatement Effective Date
and shall otherwise be in the form of the Note or Notes replaced thereby.

            (f) For the avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests in Loans and Notes, including,
without limitation, any pledge or assignment by a Lender of any Loan or Note to
any Federal Reserve Bank in accordance with applicable law.

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            (g) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent, or the Canadian Agent with respect to Canadian
Revolving Credit Loans and Canadian Revolving Credit Commitments, and the
Borrower or CERI, as applicable, the option to provide to the Borrower, or CERI,
as applicable, all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower, or CERI, as applicable, pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise
such option or otherwise fails to provide all or any part of such Loan, the
Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for
any indemnity or similar payment obligation under this Agreement (all liability
for which shall remain with the Granting Lender). In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
indebtedness of any SPC, it will not institute against, or join any other person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States of
America or any state thereof or Canada or any province thereof. In addition,
notwithstanding anything to the contrary in this Section 10.6(g), any SPC may
(A) with notice to, but without the prior written consent of, the Borrower, or
CERI, as applicable, and the applicable Agents and without paying any processing
fee therefor, assign all or a portion of its interests in any Loans to the
Granting Lender, or with the prior written consent of the Borrower or CERI, as
applicable, and the applicable Agents (which consent shall not be unreasonably
withheld) to any financial institutions providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans, and (B) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC;
provided that non-public information with respect to the Borrower or CERI may be
disclosed only with the Borrower's or CERI's consent which will not be
unreasonably withheld. This paragraph (g) may not be amended without the written
consent of any SPC with Loans outstanding at the time of such proposed
amendment.

            10.7  Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender or to the
Lenders under a particular Facility, if any Lender (a "Benefited Lender") shall
at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise) or any proceeds from Collateral
(whether pursuant to the exercise of the rights of any Secured Party under the
Security Agreements or under law or otherwise), in a greater proportion than any
such payment to or collateral or proceeds of Collateral received by any other
Lender, if any, in respect of the Obligations owing to such other Lender, such
Benefited Lender shall purchase for cash from the other Lenders a participating
interest in such portion of the Obligations owing to each such other Lender, or
shall provide such other Lenders with the benefits of any such collateral, as
shall be necessary to cause such Benefited Lender to share the excess payment,
benefits of such collateral or proceeds from Collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits or

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proceeds is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest. The provisions of this paragraph are
intended to apply to all Lenders and to all payments, Collateral or proceeds of
Collateral received by such Lenders in respect of the Obligations of the
Borrower or CERI hereunder regardless of whether such payment, collateral or
proceeds from Collateral received by such Benefited Lender were received by such
Lender with respect to the Obligations of the Borrower or of CERI and regardless
of whether the collateral or proceeds of Collateral were pledged to secure the
Canadian Revolving Credit Facility or the US Revolving Credit Facility and the
Term Loan Facilities.

            (b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to CERI or the
Borrower, any such notice being expressly waived by CERI and the Borrower to the
extent permitted by applicable law, upon any amount becoming due and payable by
CERI or the Borrower hereunder (whether at the stated maturity, by acceleration
or otherwise), to set off and appropriate and apply against such amount any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of CERI or the Borrower, as the case
may be; provided that notwithstanding the foregoing, no Lender may set off
deposits, claims or other property of CERI or a Canadian Subsidiary against
amounts owed to such Lender unless such amounts owed are Canadian Obligations.
Each Lender agrees to notify promptly the Borrower and the Administrative Agent
after any such setoff and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such setoff and
application.

            10.8  Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement or of a
Lender Addendum by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

            10.9  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 prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

            10.10 Integration. This Agreement and the other Loan Documents,
represent the entire agreement of CERI, the Borrower, the Agents, the Arranger
and the Lenders with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the Arranger,
any Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.

            10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED

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BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

            10.12 Submission To Jurisdiction; Waivers. Each of CERI and the
Borrower hereby irrevocably and unconditionally:

            (a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York located in the County of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from any
thereof;

            (b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

            (c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to CERI or the
Borrower, as the case may be at its address set forth in Section 10.2 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto;

            (d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and

            (e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.

            10.13 Acknowledgments. Each of CERI and the Borrower hereby
acknowledges that:

            (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;

            (b) neither the Arranger, any Agent nor any Lender has any fiduciary
relationship with or duty to CERI or the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Arranger, the Agents and the Lenders, on one hand, and
CERI and the Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and

            (c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Arranger, the Agents and the Lenders or among CERI, the Borrower and
the Lenders.

            10.14 Confidentiality. Each of the Arranger, the Agents and the
Lenders agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this

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Agreement that is designated by such Loan Party as confidential; provided that
nothing herein shall prevent the Arranger, any Agent or any Lender from
disclosing any such information (a) to the Arranger, any Agent, any other Lender
or any affiliate of any thereof, (b) to any Participant or Assignee (each, a
"Transferee") or prospective Transferee that agrees to comply with the
provisions of this Section or substantially equivalent provisions, (c) to any of
its employees, directors, agents, attorneys, accountants and other professional
advisors, (d) to any financial institution that is a direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of
this Section), (e) upon the request or demand of any Governmental Authority
having jurisdiction over it, (f) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (g) if requested or required to do so in connection with any
litigation or similar proceeding, (h) that has been publicly disclosed other
than in breach of this Section, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender or (j) in
connection with the exercise of any remedy hereunder or under any other Loan
Document. Notwithstanding anything to the contrary in the foregoing sentence or
any other express or implied agreement, arrangement or understanding, the
parties hereto hereby agree that, from the commencement of discussions with
respect to the financing provided hereunder, any party hereto (and each of its
employees, representatives, or agents) is permitted to disclose to any and all
persons, without limitation of any kind, the tax structure and tax aspects of
the transactions contemplated hereby, and all materials of any kind (including
opinions or other tax analyses) related to such tax structure and tax aspects.

            10.15 Release of Collateral and Guarantee Obligations.

            (a) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, upon request of the Borrower in connection with any
Disposition of Property by any Group Member permitted by the Loan Documents, the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any affiliate of any Lender that is a party to any Specified Hedge
Agreement) take such actions as shall be required to release its security
interest in any Collateral being Disposed of in such Disposition, and to release
any guarantee obligations under any Loan Document of any Person being Disposed
of in such Disposition, to the extent necessary to permit consummation of such
Disposition in accordance with the Loan Documents; provided that the Borrower
shall have delivered to the Administrative Agent, at least ten Business Days
prior to the date of the proposed release (or such shorter period agreed to by
the Administrative Agent), a written request for release identifying the
relevant Collateral being Disposed of in such Disposition and the terms of such
Disposition in reasonable detail, including the date thereof, the price thereof
and any expenses in connection therewith, together with a certification by the
Borrower stating that such transaction is in compliance with this Agreement and
the other Loan Documents and that the proceeds of such Disposition will be
applied in accordance with this Agreement and the other Loan Documents.

            (b) Notwithstanding anything to the contrary contained herein or any
other Loan Document, when all Obligations (other than obligations in respect of
any Specified Hedge Agreement) have been paid in full, all Commitments have
terminated or expired and no Letter of Credit shall be outstanding, upon request
of the Borrower, the Administrative Agent shall

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(without notice to, or vote or consent of, any Lender, or any affiliate of any
Lender that is a party to any Specified Hedge Agreement) take such actions as
shall be required to release its security interest in all Collateral, and to
release all guarantee obligations provided for in any Loan Document, whether or
not on the date of such release there may be outstanding Obligations in respect
of Specified Hedge Agreements. Any such release of guarantee obligations shall
be deemed subject to the provision that such guarantee obligations shall be
reinstated if after such release any portion of any payment in respect of the
Obligations guaranteed thereby shall be rescinded or must otherwise be restored
or returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any other Loan Party, or upon or as a result
of the appointment of a receiver, interim receiver, receiver - manger,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
any other Loan Party or any substantial part of its property, or otherwise, all
as though such payment had not been made.

            (c) For purposes of this Agreement, a Letter of Credit shall not be
deemed outstanding if (i) the Loans, the Reimbursement Obligations and the other
Obligations under the Loan Documents shall have been paid in full and the
Commitments have been terminated and (ii) the Borrower or CERI, as applicable,
has either supported such Letter of Credit, on terms and conditions reasonably
acceptable to the Issuing Lender, with another letter of credit from a financial
institution reasonably acceptable to the Issuing Lender or provided such Issuing
Lender with cash collateral in a manner and an amount acceptable to the Issuing
Lender. Each Issuing Lender hereby acknowledges and agrees that if a Letter of
Credit has been supported with another letter or credit or cash collateralized
as provided in this Section, all obligations of the Lenders with respect to such
Letters of Credit shall have terminated, including the obligations of the
Lenders to purchase L/C Participations pursuant to Section 3.4 and the
obligations of the Lenders to make Revolving Loans pursuant to Section 2.4.

            (d) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, upon the Migration, (i) the guarantee by CERI and the
Canadian Subsidiary Guarantors of the Borrower's Obligations hereunder (but not
their guarantee of the Canadian Obligations) shall automatically be released and
the Collateral pledged by the Canadian Subsidiary Guarantors and CERI in support
of such terminated guarantees shall be automatically be released (except that
such Collateral will continue to be pledged in support of the Canadian
Obligations) and (ii) the Administrative Agent (without notice to, or vote or
consent of any Lender or any affiliate of any Lender that is a party to any
Specified Hedging Agreement) will take such actions as shall be required to
effectuate such releases and terminations.

            10.16 Accounting Changes. In the event that any "Accounting Change"
(as defined below) shall occur and such change results in a change in the method
of calculation of financial covenants, standards or terms in this Agreement,
then CERI, the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the
criteria for evaluating CERI's and the Borrower's financial condition shall be
the same after such Accounting Change as if such Accounting Change had not been
made. Until such time as such an amendment shall have been executed and
delivered by CERI and the Borrower, the Administrative Agent and the Required
Lenders, all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such Accounting Change had not
occurred. "Accounting Change" refers to any change in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting

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Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.

            10.17 Delivery of Lender Addenda. Each Lender as of the Restatement
Effective Date which is not an Original Lender shall become a party to this
Agreement by delivering to the Administrative Agent a Lender Addendum duly
executed by such Lender, the Borrower and the Administrative Agent.

            10.18 WAIVERS OF JURY TRIAL. CERI, THE BORROWER, THE ARRANGER, THE
AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

            10.19 Subordination of Intercompany Indebtedness. CERI and the
Borrower agree that they will not, and will not permit any Loan Party to, become
obligated or otherwise liable for any intercompany Indebtedness that is owed to
any Group Member who is not a Guarantor, unless such Group Member agrees in
writing for the benefit of the Secured Parties that (a) such Indebtedness is
completely subordinated to the Obligations and subject in right of payment to
the prior payment in full of the Obligations, and (b) if an Event of Default has
occurred and is continuing, no payment on any such Indebtedness shall be made
until the payment in full in cash of the Obligations. If any payment on
intercompany Indebtedness is received by such Group Member prior to such time as
the Obligations are paid in full, then such Group Member shall receive and hold
the same in trust, as trustee, for the benefit of the Administrative Agent and
the other Secured Parties, and shall forthwith deliver the same to the
Administrative Agent in precisely the form received (except for the endorsement
or assignment of such Group Member where necessary or advisable in the
Administrative Agent's reasonable judgment) for application to any of the
Obligations, due or not due, and, until so delivered, the same shall be
segregated from the other assets of such Group Member and held in trust by such
Group Member as the property of the Administrative Agent for the benefit of the
Secured Parties.

            10.20 Judgment Currency. (a) If, for the purpose of obtaining or
enforcing judgment against a Loan Party in any court in any jurisdiction, it
becomes necessary to convert into any other currency (such other currency being
hereinafter in this Section 10.20 referred to as the "Judgment Currency") an
amount due under any Loan Document in any currency (the "Obligation Currency")
other than the Judgment Currency, the conversion shall be made at the rate of
exchange prevailing on the Business Day immediately preceding the date of actual
payment of the amount due, in the case of any proceeding in the courts of the
State of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date, or the date on which the
judgment is given, in the case of any proceeding in the courts of any other
jurisdiction (the applicable date as of which such conversion is made pursuant
to this Section 10.20 being hereinafter in this Section 10.20 referred to as the
"Judgment Conversion Date"); and (b) If, in the case of any proceeding in the
court of any jurisdiction referred to in Section 10.20(a), there is a change in
the rate of exchange prevailing between the Judgment Conversion Date and the
date of actual receipt of the amount due in immediately available funds, the
Loan Party shall pay such additional amount (if any, but in any event not a
lesser amount) as may be necessary to ensure that the amount actually received
in the Judgment

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Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of the Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date. Any amount due from Borrower under this Section 10.20 shall be
due as a separate debt and shall not be affected by judgment being obtained for
any other amounts due under or in respect of any of the Loan Documents. The term
"rate of exchange" in this Section 10.20 means the rate of exchange at which the
Administrative Agent, on the relevant date at or about 12:00 noon (New York
time), would be prepared to sell, in accordance with its normal course foreign
currency exchange practices, the Obligation Currency against the Judgment
Currency.

                             SECTION 11. GUARANTEE

            11.1  Guarantee.

            (a) The Borrower unconditionally and irrevocably, guarantees to the
Administrative Agent, for the ratable benefit of the Canadian Secured Parties
and their respective successors, indorsees, transferees and assigns the prompt
and complete payment and performance by CERI when due (whether at the stated
maturity, by acceleration or otherwise) of the Canadian Obligations.

            (b) If and to the extent required in order for the Obligations of
the Borrower to be enforceable under applicable federal, state and other laws
relating to the insolvency of debtors, the maximum liability of the Borrower
hereunder shall be limited to the greatest amount which can lawfully be
guaranteed by the Borrower under such laws, after giving effect to any rights of
contribution, reimbursement and subrogation arising under Section 11.2. The
Borrower acknowledges and agrees that, to the extent not prohibited by
applicable law, (i) the Borrower (as opposed to its creditors, representatives
of creditors or bankruptcy trustee, including the Borrower in its capacity as
debtor in possession exercising any powers of a bankruptcy trustee) has no
personal right under such laws to reduce, or request any judicial relief that
has the effect of reducing, the amount of its liability under this Section 11,
(ii) the Borrower (as opposed to its creditors, representatives of creditors or
bankruptcy trustee, including the Borrower in its capacity as debtor in
possession exercising any powers of a bankruptcy trustee) has no personal right
to enforce the limitation set forth in this Section 11.1(b) or to reduce, or
request judicial relief reducing, the amount of its liability under this Section
11.1, and (iii) the limitation set forth in this Section 11.1(b) may be enforced
only to the extent required under such laws in order for the obligations of the
Borrower under this Section 11 to be enforceable under such laws and only by or
for the benefit of a creditor, representative of creditors or bankruptcy trustee
of the Borrower or other Person entitled, under such laws, to enforce the
provisions thereof.

            (c) The Borrower agrees that the Canadian Obligations may at any
time and from time to time be incurred or permitted in an amount exceeding the
maximum liability of the Borrower's guarantee under Section 11.1(b) without
impairing the guarantee contained in this Section 11 or affecting the rights and
remedies of any Canadian Secured Party hereunder.

            (d) The guarantee contained in this Section 11 shall remain in full
force and effect until final payment in full of the Canadian Obligations,
notwithstanding that from time to time during the term of the Credit Agreement
CERI may be free from any Canadian Obligations.

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            (e) No payment made by the Borrower, any other guarantor or any
other Person or received or collected by any Canadian Secured Party from the
Borrower, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Canadian Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of the
Borrower under this Section 11 which shall, notwithstanding any such payment
(other than any payment made by the Borrower in respect of the Canadian
Obligations or any payment received or collected from the Borrower in respect
the Canadian Obligations), remain liable for the Canadian Obligations up to the
maximum liability of the Borrower's guarantee hereunder until the Canadian
Obligations (other than Obligations in respect of any Specified Hedge Agreement)
are paid in full, no Letter of Credit shall be outstanding (except Letters of
Credit which have been supported with a letter of credit or cash collateralized
in accordance with Section 10.15(c)) and the Commitments are terminated or have
expired.

            11.2  Rights of Reimbursement, Contribution and Subrogation. In case
any payment is made on account of the Canadian Obligations or is received or
collected on account of the Canadian Obligations:

            (a) If such payment is made by CERI or from its property, then, if
and to the extent such payment is made on account of the Canadian Obligations
arising from or relating to a Loan made to CERI or a Letter of Credit issued for
CERI, CERI shall not be entitled to (A) demand or enforce reimbursement or
contribution in respect of such payment from the Borrower or (B) be subrogated
to any claim, interest, right or remedy of any Canadian Secured Party against
any Person, including the Borrower or its property.

            (b) If such payment is made by the Borrower or from its property,
the Borrower shall be entitled, subject to and upon payment in full of the
Obligations, (A) to demand and enforce reimbursement for the full amount of such
payment from CERI (with respect to any payment on the Canadian Obligations) and
(B) to demand and enforce contribution in respect of such payment from each
Subsidiary Guarantor and each other guarantor of the Canadian Obligations which
has not paid its fair share of such payment, as necessary to ensure that (after
giving effect to any enforcement of reimbursement rights provided hereby) each
Subsidiary Guarantor and each other guarantor of the Canadian Obligations pays
its fair share of the unreimbursed portion of such payment. For this purpose,
the fair share of each Subsidiary Guarantor and each other guarantor of the
Canadian Obligations as to any unreimbursed payment shall be determined based on
an equitable apportionment of such unreimbursed payment among all Subsidiary
Guarantors and each other guarantor of the Canadian Obligations based on the
relative value of their assets and any other equitable considerations deemed
appropriate by the court.

            (c) If and whenever (after payment in full of the Obligations) any
right of reimbursement or contribution becomes enforceable by the Borrower
against any other Loan Party under Sections 11.2(a) and 11.2(b), the Borrower
shall be entitled, subject to and upon payment in full of the Obligations, to be
subrogated (equally and ratably with all other Loan Parties entitled to
reimbursement or contribution from any other Loan Party as set forth in Section
2 of the Guarantee and Collateral Agreement or Section 2 of the Canadian
Guarantee and Collateral Agreement) to any security interest that may then be
held by the Administrative Agent upon any Collateral granted to it which secures
the Canadian Obligations. Such right of

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subrogation shall be enforceable solely against the other Loan Parties, and not
against the Canadian Secured Parties, and neither the Administrative Agent nor
any other Secured Party shall have any duty whatsoever to warrant, ensure or
protect any such right of subrogation or to obtain, perfect, maintain, hold,
enforce or retain any Collateral for any purpose related to any such right of
subrogation. If subrogation is demanded by any Loan Party, then (after payment
in full of the Obligations) the Administrative Agent shall deliver to the Loan
Party making such demand, or to a representative of such Loan Party or of the
Loan Parties generally, an instrument satisfactory to the Administrative Agent
transferring, on a quitclaim basis without any recourse, representation,
warranty or obligation whatsoever, whatever security interest the Administrative
Agent then may hold in whatever Collateral may then exist that was not
previously released or disposed of by the Administrative Agent.

            (d) All rights and claims arising under this Section 11.2 or based
upon or relating to any other right of reimbursement, indemnification,
contribution or subrogation that may at any time arise or exist in favor of the
Borrower as to any payment on account of the Canadian Obligations made by it or
received or collected from its property shall be fully subordinated in all
respects to the prior payment in full of all of the Obligations. Until payment
in full of the Obligations, the Borrower shall not demand or receive any
collateral security, payment or distribution whatsoever (whether in cash,
property or securities or otherwise) on account of any such right or claim. If
any such payment or distribution is made or becomes available to the Borrower in
any bankruptcy case or receivership, insolvency or liquidation proceeding, such
payment or distribution shall be delivered by the person making such payment or
distribution directly to the Administrative Agent, for application to the
payment of the Canadian Obligations. If any such payment or distribution is
received by the Borrower, it shall be held by the Borrower in trust, as trustee
of an express trust for the benefit of the Canadian Secured Parties, and shall
forthwith be transferred and delivered by the Borrower to the Administrative
Agent, in the exact form received and, if necessary, duly endorsed.

            (e) The obligations of the Borrower under the Loan Documents,
including its liability for the Obligations and the enforceability of the
security interests granted thereby, are not contingent upon the validity,
legality, enforceability, collectibility or sufficiency of any right of
reimbursement, contribution or subrogation arising under this Section 11.2. The
invalidity, insufficiency, unenforceability or uncollectibility of any such
right shall not in any respect diminish, affect or impair any such obligation or
any other claim, interest, right or remedy at any time held by any Canadian
Secured Party against the Borrower or its property. The Canadian Secured Parties
make no representations or warranties in respect of any such right and shall
have no duty to assure, protect, enforce or ensure any such right or otherwise
relating to any such right.

            (f) The Borrower reserves any and all other rights of reimbursement,
contribution or subrogation at any time available to it as against any other
Loan Party, but (i) the exercise and enforcement of such rights shall be subject
to Section 11.2(d) and (ii) neither the Administrative Agent nor any other
Canadian Secured Party shall ever have any duty or liability whatsoever in
respect of any such right, except as provided in Section 11.2(c).

            11.3  Amendments, etc. with respect to the Canadian Obligations. The
Borrower shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Borrower and without notice to or further
assent by the Borrower, any demand

                                      129


for payment of any of the Canadian Obligations made by any Canadian Secured
Party may be rescinded by such Canadian Secured Party and any of the Canadian
Obligations continued, and the Canadian Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, increased, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Canadian
Secured Party, and the Credit Agreement and the other Loan Documents and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the requisite Lenders or all Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by any Canadian Secured Party for the payment of the
Canadian Obligations may be sold, exchanged, waived, surrendered or released. No
Canadian Secured Party shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Canadian Obligations
or for the guarantee contained in this Section 11 or any property subject
thereto.

            11.4  Guarantee Absolute and Unconditional. The Borrower waives any
and all notice of the creation, renewal, extension or accrual of any of the
Canadian Obligations and notice of or proof of reliance by any Canadian Secured
Party upon the guarantee contained in this Section 11 or acceptance of the
guarantee contained in this Section 11; the Canadian Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 11; and all dealings between the Loan Parties, on the
one hand, and the Canadian Secured Parties, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 11. The Borrower waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon CERI or any of the other Loan Parties with respect to the Canadian
Obligations. The Borrower understands and agrees that the guarantee contained in
this Section 11 shall be construed as a continuing, absolute and unconditional
guarantee of payment and performance without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Canadian Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
any Canadian Secured Party, (b) any defense, set-off or counterclaim (other than
a defense of payment or performance hereunder) which may at any time be
available to or be asserted by the Borrower or CERI or any other Person against
any Canadian Secured Party, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Borrower, CERI or such other Loan Party)
which constitutes, or might be construed to constitute, an equitable or legal
discharge of the Canadian Obligations or of the Borrower under the guarantee
contained in this Section 11, in bankruptcy or in any other instance. When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against the Borrower, any Canadian Secured Party may, but shall be
under no obligation to, make a similar demand on or otherwise pursue such rights
and remedies as it may have against CERI any other Loan Party or any other
Person or against any collateral security or guarantee for the Canadian
Obligations or any right of offset with respect thereto, and any failure by any
Canadian Secured Party to make any such demand, to pursue such other rights or
remedies or to collect any payments from CERI, any other Loan Party or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of CERI, any other Loan Party
or any other Person or any such

                                      130


collateral security, guarantee or right of offset, shall not relieve the
Borrower of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Canadian Secured Party against the Borrower. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.

            11.5  Reinstatement. The guarantee contained in this Section 11
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, if any of the Canadian Obligations is
rescinded or must otherwise be restored or returned by any Canadian Secured
Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower, CERI or any other Loan Party, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower, CERI or any other Loan Party or
any substantial part of its property, or otherwise, all as though such payments
had not been made.

            11.6  Payments. The Borrower hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Canadian Dollars in immediately available funds at the office of
the Administrative Agent located at the Payment Office.

            11.7  Waivers by the Borrower. The Borrower expressly waives all
rights it may have now or in the future under any statute, or at common law, or
at law or in equity, or otherwise, to compel the Agents or the Lenders to
marshal assets or to proceed in respect of the Obligations guaranteed hereunder
against any other Loan Party, any other party or against any security for the
payment and performance of the Obligations guaranteed hereunder before
proceeding against, or as a condition to proceeding against, the Borrower. It is
agreed among the Borrower, the Agents and the Lenders that the foregoing waivers
are of the essence of the transaction contemplated by this Agreement and the
other Loan Documents and that, but for the provisions of this Section 11.7 and
such waivers, the Agents and the Lenders would decline to enter into this
Agreement. The Borrower also expressly waives the benefits of division and
discussion under the Civil Code of Quebec.

                            (Signature pages follow)

                                      131


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

                                            CAPITAL ENVIRONMENTAL RESOURCE
                                            INC./RESSOURCES ENVIRONNEMENTALES
                                            CAPITAL INC

                                            By: /s/ Ivan R. Cairns
                                                -------------------------------
                                                Name: Ivan R. Cairns
                                                Title: Executive Vice President
                                                       and General Counsel

                                            WASTE SERVICES, INC.

                                            By: /s/ Ivan R. Cairns
                                                -------------------------------
                                                Name: Ivan R. Cairns
                                                Title: Executive Vice President
                                                       and General Counsel


[CERI - Amended and Restated Credit Agreement]



                                            LEHMAN BROTHERS INC.,
                                            as Arranger

                                            By: /s/ Frank P. Turner
                                                -------------------------------
                                                Name: Frank P. Turner
                                                Title: Vice President

                                            LEHMAN COMMERCIAL PAPER INC.,
                                            as Administrative Agent and a Lender

                                            By: /s/ Frank P. Turner
                                                --------------------------------
                                                Name: Frank P. Turner
                                                Title: Vice President

[CERI - Amended and Restated Credit Agreement]


                                            CANADIAN IMPERIAL BANK OF COMMERCE,
                                            as Canadian Agent and a Lender

                                            By: /s/ Peter A. Mastromarini
                                                --------------------------------
                                                Name: Peter A. Mastromarini
                                                Title: Executive Director

                                            By: /s/ Warren Lobo
                                                --------------------------------
                                                Name: Warren Lobo
                                                Title: Director

                                            CIBC INC.,
                                            as a Lender

                                            By: /s/ Gerald Girardi
                                                --------------------------------
                                                Name: Gerald Girardi
                                                Title: Executive Director

                                            CIBC WORLD MARKETS CORP.,
                                            as Syndication Agent

                                            By: /s/ Gerald Girardi
                                                --------------------------------
                                                Name: Gerald Girardi
                                                Title: Executive Director

[CERI - Amended and Restated Credit Agreement]


                                            BANK OF AMERICA, N.A.,
                                            as Documentation Agent

                                            By: /s/ Jonathan M. Phillips
                                                --------------------------------
                                                Name: Jonathan M. Phillips
                                                Title: Vice President

[CERI - Amended and Restated Credit Agreement]

EX-10.5

                                                                    EXHIBIT 10.5


                              AMENDED AND RESTATED
                            STOCK PURCHASE AGREEMENT


         This Amended and Restated Stock Purchase Agreement (this "AGREEMENT")
is dated this 11th day of March, 2004, by and among Capital Environmental
Resource Inc., an Ontario (Canada) corporation ("Buyer Parent"), Waste Services,
Inc., a Delaware corporation and a wholly-owned subsidiary of Buyer Parent
("BUYER"), Waste Services of Florida, Inc., a Delaware corporation and a
wholly-owned subsidiary of Buyer ("BUYER SUB"), Frank Ward, Sr., Larry Henk,
Frank Ward, Jr. Irrevocable Trust, George Ward Irrevocable Trust, Victoria
Camalick Irrevocable Trust, Cynthia Fifer Irrevocable Trust, Robert Ward
Irrevocable Trust and Matthew J. Carmody Irrevocable Trust (each a "SELLER" and
together, the "SELLER PARTIES"), and George Ward, Frank Ward, Jr., Victoria
Camalick, Cynthia Fifer, Robert Ward, and Matthew Carmody (each a "TRUST
BENEFICIARY" and together, the "TRUST BENEFICIARIES"), and Florida Recycling
Services, Inc., an Illinois corporation ("FRS").

                              W I T N E S S E T H:

         WHEREAS, the Seller Parties own all of the issued and outstanding
capital stock of FRS;

         WHEREAS, the Trust Beneficiaries are the beneficiaries of each of their
respective Trusts (as defined herein) and will benefit directly from the
transactions contemplated hereby;

         WHEREAS, FRS is engaged in the Solid Waste Business (as defined herein)
in the Subject Geographic Areas (as defined herein) (the "TARGET OPERATIONS");

         WHEREAS, the Seller Parties wish to sell to Buyer Sub and Buyer Sub
wishes to purchase from the Seller Parties all of the issued and outstanding
capital stock of FRS and to enter into a number of ancillary agreements in
connection therewith;

         WHEREAS, Buyer Parent, Buyer, Buyer Sub, the Seller Parties, the Trust
Beneficiaries and FRS (collectively, the "PARTIES") have entered into a Stock
Purchase Agreement dated November 21, 2003, which was amended by an Amendment
No. 1 dated as of January __, 2004 and an Amendment No. 2 dated as of February
__, 2004 (the "EXISTING AGREEMENT"); and

         WHEREAS, the Parties wish to amend and restate the Existing Agreement
in its entirety to read as set forth herein.

         NOW, THEREFORE, the Parties agree as follows:



                                      -1-


                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

         1.1 DEFINITIONS. In this Agreement:

         "2003 FINANCIAL STATEMENTS" has the meaning set forth in Section 6.10
of this Agreement.

         "ACQUIRED SHARES" means all of the issued and outstanding shares of
capital stock in FRS, all of which are owned by the Seller Parties and all of
which are to be acquired by Buyer Sub pursuant to this Agreement.

         "ACQUISITION" means the purchase and sale of the Acquired Shares as
contemplated by this Agreement.

         "AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such specified Person
with the terms "CONTROL" and "CONTROLLED" meaning for purposes of this
definition, the power to direct the management and policies of a Person,
directly or indirectly, whether through the ownership of voting securities or
partnership or other ownership interests, or by contract or otherwise.

         "AGREEMENT" has the meaning set forth in the introduction to this
Agreement.

         "ALTAMONTE LEASE" has the meaning set forth in Section 3.4(e) of this
Agreement.

         "ANCILLARY AGREEMENTS" means, collectively, the Escrow Agreement, the
Release, the Consulting Agreements, the Registration Rights Agreement, the
Container Services Agreement, the Altamonte Lease, the Sanford Lease Agreement,
the Transfer Station Disposal and Processing Agreement, the Referral Fee
Agreement, the RIP Option Agreement and any other agreements delivered pursuant
to this Agreement.

         "ANTITRUST DIVISION" means the Antitrust Division of the United States
Department of Justice.

         "AUDITED YEAR-END FINANCIAL STATEMENTS" means the audited consolidated
balance sheets of FRS and its Subsidiaries as of December 31, 2002 and the
related statements of operations, changes in stockholders' equity and cash flows
for the fiscal year then ended.

         "BUSINESS DAY" means a day other than Saturday, Sunday or any day on
which banks located in New York, New York are authorized or obligated to close.

         "BUYER" has the meaning set forth in the introduction to this
Agreement.

         "BUYER INDEMNIFIED PARTIES" has the meaning set forth in Section 14.1
of this Agreement.

         "BUYER PARENT" has the meaning set forth in the Recitals to this
Agreement.



                                      -2-


         "BUYER PARENT COMMON STOCK" means the Common Stock, par value $0.01 per
share, of Buyer.

         "BUYER SUB" has the meaning set forth in the introduction to this
Agreement.

         "BUYER'S AUDITORS" means BDO Seidman LLP.

         "CAP" has the meaning set forth in Section 14.5(b) of this Agreement.

         "CASH CONSIDERATION" has the meaning set forth in Section 2.2 of this
Agreement.

         "CASH DEPOSIT" has the meaning set forth in Section 2.9 of this
Agreement.

         "CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended.

         "CLAIM" has the meaning set forth in Section 14.4 of this Agreement.

         "CLOSING" has the meaning set forth in Section 3.1 of this Agreement.

         "CLOSING CASH CONSIDERATION" means the Estimated Cash Consideration,
less the Cash Deposit, less the Extension Payment (if applicable) less the May 1
Payment (if applicable).

         "CLOSING DATE" means (a) the fifth (5th) Business Day immediately
following the earliest date upon or by which the conditions to the respective
obligations of the Parties set forth in Articles VIII, IX and X shall have been
satisfied or waived, or (b) such other date as Buyer and the Seller Parties may
mutually agree.

         "CLOSING DATE CURRENT ASSETS" means the amount which would be reflected
as current assets on a combined balance sheet of FRS and its Subsidiaries dated
as of the Closing Date and prepared in accordance with U.S. GAAP on a consistent
basis with the Audited Year-End Financial Statements, giving effect to the
principles set forth in Sections 2.6(b)(i)(A) and (B).

         "CLOSING DATE CURRENT LIABILITIES" means the amount which would be
reflected as current liabilities on a combined balance sheet of FRS and its
Subsidiaries dated as of the Closing Date and prepared in accordance with U.S.
GAAP on a consistent basis with the Audited Year-End Financial Statements;
PROVIDED, HOWEVER, that current liabilities shall include a reserve for bad
debts calculated on a basis consistent with the bad debt reserve for the year
ended December 31, 2002, included within the Audited Year-End Financial
Statements.

         "CLOSING DATE TOTAL INDEBTEDNESS" means the combined Indebtedness of
FRS and its Subsidiaries as of the Closing Date, as finally determined in
accordance with Section 2.6(a).

         "CLOSING DATE WORKING CAPITAL" means the positive or negative amount
obtained by subtracting (a) the Closing Date Current Liabilities from (b) the
Closing Date Current Assets.

         "CLOSING DATE WORKING CAPITAL BALANCE" means the amount, if any, by
which the Closing Date Current Assets exceed the Closing Date Current
Liabilities.

                                      -3-


         "CLOSING DATE WORKING CAPITAL DEFICIT" means the amount, if any, by
which Closing Date Current Liabilities exceed the Closing Date Current Assets.

         "CLOSING STOCK CONSIDERATION" means 9,250,000 shares of Buyer Parent
Common Stock, less 3,000,000 shares of Buyer Parent Common Stock to be deposited
with the Escrow Agent pursuant to the Escrow Agreement, less the Stock Deposit.

         "CLOSING WORKSHEET" has the meaning set forth in Section 2.4 of this
Agreement.

         "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1986.

         "CODE" means the United States Internal Revenue Code of 1986, as
amended.

         "COLLECTION PERIOD" has the meaning set forth in Section 11.10 of this
Agreement.

         "COMPANY EMPLOYEE PLANS" has the meaning set forth in Section 4.17(a)
of this Agreement.

         "COMPANY FINANCIAL STATEMENTS" has the meaning set forth in Section
4.7(a) of this Agreement.

         "COMPANY PENSION PLANS" has the meaning set forth in Section 4.17(b) of
this Agreement.

         "COMPANY PERMITS" means all Permits held by, or applicable to, FRS and
its Subsidiaries.

         "COMPETING TRANSACTION" has the meaning set forth in Section 6.6(b) to
this Agreement.

         "CONTAINER SERVICES AGREEMENT" has the meaning set forth in Section
3.4(d) of this Agreement.

         "CONSULTING AGREEMENTS" has the meaning set forth in Section 3.4(b) of
this Agreement.

         "CORPORATE RECORDS" means the corporate franchise, stock record books,
corporate record books containing minutes of meetings of directors and
stockholders, and any other records of FRS and its Subsidiaries.

         "COVERED PARTY ACCEPTANCE NOTICE" has the meaning set forth in Section
11.7 of this Agreement.

         "DAMAGES" means all obligations, claims, liabilities, damages,
penalties, deficiencies, losses, investigations, proceedings, judgments, fines,
and reasonable costs and expenses (including, but not limited to, reasonable
costs and expenses incurred in connection with the performance of obligations,
interest, bonding and court costs and attorneys', accountants', engineers',
consultants' and investigators' fees and disbursements) and disbursements
incurred in connection with any investigation or defense of any of the
foregoing.

         "DISPOSAL AGREEMENT" has the meaning set forth in Section 15.4(c) of
this Agreement.

                                      -4-


         "ENVIRONMENTAL CLAIM" means any claim by a Person alleging or imposing
actual or potential liability (including potential liability for any
investigatory cost, containment or oversight cost, control cost, prevention
cost, remediation cost, cleanup cost, governmental response cost, natural
resources damage, toxic tort claim, property damage, personal injury, or
penalty) or use limitation arising out of, based on, resulting from or relating
to (a) the presence or potential presence, storage, transport, disposal, use,
discharge, release or threatened release of any Hazardous Substance at any
location, whether or not owned by the Person against which the claim is made, or
(b) circumstances actually or allegedly forming the basis for any liability or
use limitation under, or any violation or alleged violation of, any
Environmental Law.

         "ENVIRONMENTAL CONSULTANT" has the meaning set forth in Section 6.5 of
this Agreement.

         "ENVIRONMENTAL LAWS" means all applicable federal, state, local and
foreign Laws, including common Laws and administrative or judicial
interpretations of those Laws by any Governmental Entity, regulations,
directives, consent agreements, ordinances, orders and moratoria relating to the
preservation of natural resources, pollution, the protection of human health and
safety from the effects of pollution or protection of the environment (which
includes its ambient air, surface water, ground water, land surface or
subsurface strata), including Laws relating to emissions, discharges, releases
or threatened releases of Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, existence, treatment, storage,
disposal, transport, recycling, reporting or handling of Hazardous Substances,
but not including zoning and land use Laws.

         "ENVIRONMENTAL PERMITS" means all Permits from any Governmental Entity
required under any Environmental Law for FRS and its Subsidiaries to conduct the
Target Operations as presently conducted.

         "ENVIRONMENTAL REPORT" has the meaning set forth in Section 6.5 of this
Agreement.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "ERISA AFFILIATE" means, with respect to any Person, any trade or
business, whether or not incorporated, which together with that Person would be
deemed a single employer within the meaning of Section 4001 of ERISA or Section
414 of the Code.

         "ESCROW AGENT" has the meaning set forth in Section 2.7 of this
Agreement.

         "ESCROW AGREEMENT" has the meaning set forth in Section 2.7 of this
Agreement.

         "ESCROW FUND" has the meaning set forth in Section 2.7 of this
Agreement.

         "ESTIMATED CASH CONSIDERATION" has the meaning set forth in Section 2.4
of this Agreement.

         "ESTIMATED CLOSING DATE TOTAL INDEBTEDNESS" has the meaning set forth
in Section 2.4 of this Agreement.

                                      -5-


         "ESTIMATED CLOSING DATE WORKING CAPITAL" has the meaning set forth in
Section 2.4 of this Agreement.

         "ESTIMATED CLOSING DATE WORKING CAPITAL BALANCE" has the meaning set
forth in Section 2.4 of this Agreement.

         "ESTIMATED CLOSING DATE WORKING CAPITAL DEFICIT" has the meaning set
forth in Section 2.4 of this Agreement.

         "EXCESS SECTION 338(H)(10) TAXES" has the meaning set forth in Section
12.1(d) of this Agreement.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated under such Act.

         "EXCLUDED ACCOUNTS RECEIVABLE" has the meaning set forth in Section
2.6(b)(i) of this Agreement.

         "EXCLUDED COUNTIES" has the meaning set forth in Section 11.7 of this
Agreement.

         "EXISTING AGREEMENT" has the meaning set forth in the introduction to
this Agreement.

         "EXTENSION PAYMENT" has the meaning set forth in Section 15.3(d) of
this Agreement.

         "FINALLY DETERMINED CURRENT ASSETS" means the amount which would be
reflected as current assets on a combined balance sheet of FRS and its
Subsidiaries dated as of the Closing Date and prepared in accordance with U.S.
GAAP on a consistent basis with the Audited Year-End Financial Statements;
PROVIDED, HOWEVER, that the calculation of Finally Determined Current Assets
shall exclude the effect of any Permitted Capital Expenditures.

         "FINALLY DETERMINED CURRENT LIABILITIES" means the amount which would
be reflected as current liabilities on a combined balance sheet of FRS and its
Subsidiaries dated as of the Closing Date and prepared in accordance with U.S.
GAAP on a consistent basis with the Audited Year-End Financial Statements;
PROVIDED, HOWEVER, that current liabilities shall include a reserve for bad
debts calculated on a basis consistent with the bad debt reserve for the year
ended December 31, 2002, included within the Audited Year-End Financial
Statements; and PROVIDED, FURTHER that the calculation of Finally Determined
Current Liabilities shall exclude the effect of any Permitted Capital
Expenditures.

         "FINALLY DETERMINED WORKING CAPITAL" means the positive or negative
amount obtained by subtracting (a) the Finally Determined Current Liabilities
from (b) the Finally Determined Current Assets.

         "FINALLY DETERMINED WORKING CAPITAL BALANCE" means the amount, if any,
by which the Finally Determined Current Assets exceed the Finally Determined
Current Liabilities, as finally determined in accordance with Section 2.6(b).

                                      -6-


         "FINALLY DETERMINED WORKING CAPITAL DEFICIT" means the amount, if any,
by which Finally Determined Current Liabilities exceed the Finally Determined
Current Assets, as finally determined in accordance with Section 2.6(b).

         "FIRST OFFER ELECTION" has the meaning set forth in Section 11.7 of
this Agreement.

         "FIRST OFFER NOTICE" has the meaning set forth in Section 11.7 of this
Agreement.

         "FIRST OFFER TERMS" has the meaning set forth in Section 11.7 of this
Agreement.

         "FRS" means Florida Recycling Services, Inc., an Illinois corporation.

         "FTC" means the United States Federal Trade Commission.

         "GOVERNMENTAL ENTITY" means any U.S., state, territorial, federal,
local or foreign court, executive office, legislature, governmental agency or
ministry, commission or administrative, regulatory or self-regulatory authority
or instrumentality.

          "HAZARDOUS SUBSTANCES" means chemicals, pollutants, contaminants,
wastes (including ambient wastes, hazardous wastes and liquid industrial
wastes), or other substances (including toxic, deleterious or hazardous
substances), as defined, listed or regulated pursuant to Environmental Laws,
including, asbestos or asbestos-containing materials, polychlorinated biphenyls,
urea formaldehyde, toxic mold and fungus, radon, pesticides and oils, and
petroleum and petroleum products (as those exemplary terms are defined in or
regulated under the United States National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. Sections 300.1 et seq. and other
Environmental Laws).

         "HOMOSASSA LANDFILL" has the meaning set forth in Section 11.7 of this
Agreement.

         "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended and the rules and regulations promulgated thereunder.

         "IMPROVEMENTS" has the meaning set forth in Section 4.19(d) of this
Agreement.

         "INDEBTEDNESS" means with respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture, letter of credit or similar instrument, (c) all
obligations of such Person with respect to guarantees, (d) all obligations of
such Person under leases of property which are required to be capitalized under
U.S. GAAP, (e) all obligations of such Person in respect of acceptances issued
or created for the account of such Person (other than endorsements in the
ordinary course of business), (f) all obligations in respect of interest rate
swaps or other interest rate hedging products or foreign currency exchange
agreements or exchange rate hedging arrangements, (g) all obligations in respect


                                      -7-


of reimbursement obligations under letters of credit, and (h) all liabilities of
the type referred to in clauses (a) through (g) above that are secured by any
Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.

         "INDEMNIFIED PARTY" has the meaning set forth in Sections 14.3 and 14.4
of this Agreement, as applicable.

         "INDEMNIFYING PARTY" has the meaning set forth in Sections 14.3 and
14.4 of this Agreement, as applicable.

         "INSURANCE" has the meaning set forth in Section 4.27 of this
Agreement.

         "INTELLECTUAL PROPERTY" has the meaning set forth in Section 4.25 of
this Agreement.

         "INTERIM FINANCIAL STATEMENTS" has the meaning set forth in Section
4.7(a) of this Agreement.

         "IRS" means the Internal Revenue Service.

         "LAND" means each parcel of real property owned or leased by FRS or any
of its Subsidiaries (including all structures, buildings, fixtures, personalty
and improvements located thereon, easements, interests, rights, tenements,
hereditaments, and appurtenances thereto that in any way benefit the Land or the
improvements thereon or relating to the Target Operations, all mineral, water,
and irrigation rights, and any interests in any roadway adjoining the Land and
any rights or interests that may accrue to the benefit of FRS or any of its
Subsidiaries or the Land as a result of the abandonment thereof or, if the Land
is leased, all of the leasehold interest of FRS and its Subsidiaries in and to
the Land and any structures, buildings or improvements thereon).

         "LAW" means a law, statute, ordinance, rule, code or regulation enacted
or promulgated, or order, directive, instruction or other legally binding
guideline or policy issued or rendered by, any Governmental Entity.

         "LIEN" means a lien, mortgage, encumbrance, deed of trust, deed to
secure debt, pledge, hypothecation, assignment, deposit arrangement, easement,
preference, priority, assessment, security interest, lease, sublease, charge,
claim, adverse claim, levy, interest of other Persons, or other encumbrance of
any kind (including any conditional sale or other title retention agreement
having the same economic effect as any of the foregoing).

         "LOCK-UP PERIOD" shall have the meaning set forth in Section 2.8 of
this Agreement.

         "MATERIAL ADVERSE EFFECT" means (a) when used with reference to FRS, a
material adverse effect on the financial condition, business, assets, or results
of operation of FRS and its Subsidiaries taken as a whole, (b) when used with
reference to a Seller, a material adverse effect on such Seller's ability to
perform its obligations under this Agreement or any Ancillary Agreement to which
it is a party, and (c) when used with reference to the Target Operations, a
material adverse effect on the financial condition, business, assets, or results
of operations of the Target Operations taken as a whole.

                                      -8-


         "MATERIAL CONTRACTS" has the meaning set forth in Section 4.18 of this
Agreement.

         "MAY 1 PAYMENT" has the meaning set forth in Section 15.3(d) of this
Agreement.

         "NOTE" has the meaning set forth in Section 15.4(d) of this Agreement.

         "NOTICE OF OBJECTION" has the meaning set forth in Section 2.6(a)(ii)
of this Agreement.

         "OSHA" means the U.S. Occupational Safety & Health Administration.

         "OUTSIDE DATE" has the meaning set forth in Section 15.3(d) of this
Agreement.

         "PARTIES" has the meaning set forth in the introduction to this
Agreement.

         "PERMITS" means all federal, state, local, or other governmental and
other third party permits (including occupancy permits), certificates, licenses,
franchises, concessions, consents, registrations, exemptions, approvals and
other authorizations.

         "PERMITTED CAPITAL EXPENDITURES" means all capital expenditures of FRS
and its Subsidiaries set forth on EXHIBIT C and any other capital expenditures
made by FRS and its Subsidiaries from the date hereof through the Closing Date
which are approved in writing by Buyer before such capital expenditures are
incurred.

         "PERMITTED LIENS" means (a) those Liens set forth in Section 4.10 of
the Seller Disclosure Schedule, (b) Liens for water and sewer charges and
current Taxes not yet due and payable or being contested in good faith but only
to the extent reserved on the Audited Year-End Financial Statements, and (c)
other Liens (including mechanics', couriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens) arising in the ordinary
course of business as would not in the aggregate materially adversely affect the
value of, or materially adversely interfere with the use of, the property
subject thereto.

         "PERSON" means an individual, corporation, partnership, association,
joint stock company, limited liability company, Governmental Entity, trust,
unincorporated organization or other legal entity.

         "POST-SIGNING INTERIM FINANCIAL STATEMENTS" has the meaning set forth
in Section 6.4 of this Agreement.

         "PRE-CLOSING SELLER INSURANCE CLAIMS" means any liability, personal
injury, property damage, workers compensation or other similar claim (other than
health and welfare insurance claims) made against FRS or any of its Subsidiaries
by any Person with respect to a loss, damage, claim, incident or occurrence
which occurred on or before the time of Closing and of which the Seller Parties
had knowledge, including any such matter which was incurred but not reported on
or before the time of Closing.

         "PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.

                                      -9-


         "PROPRIETARY INFORMATION" has the meaning set forth in Section 11.6 of
this Agreement.

         "PURCHASE PRICE" has the meaning set forth in Section 2.2 of this
Agreement.

         "REAL ESTATE LEASES" means all existing leases, occupancy agreements or
licenses or similar agreements of FRS and its Subsidiaries and any amendment
thereto in connection with the Land.

         "REFERRAL FEE AGREEMENT" has the meaning set forth in Section 3.4(f) of
this Agreement.

         "REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in Section
3.4(c) of this Agreement.

         "RELEASE" has the meaning set forth in Section 3.4(a) of this
Agreement.

         "REPRESENTATIVES" has the meaning set forth in Section 6.6(a) of this
Agreement.

         "RIGHT OF FIRST OFFER" has the meaning set forth in Section 11.7 of
this Agreement.

         "RIP" means RIP, Inc., a Florida corporation.

         "RIP OPTION AGREEMENT" has the meaning set forth in Section 3.4(g) of
this Agreement.

         "SANFORD LEASE AGREEMENT" has the meaning set forth in Section 3.4(i)
of this Agreement.

         "SEC" means the United States Securities and Exchange Commission or any
successor agency.

         "SEC REPORTS" has the meaning set forth in Section 5.6 of this
Agreement.

         "SECURITIES ACT" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.

         "SECTION 338(H)(10) ELECTION" has the meaning set forth in Section
12.1(a) of this Agreement.

         "SELLER" has the meaning set forth in the introduction to this
Agreement.

         "SELLER DISCLOSURE SCHEDULE" means the Seller Disclosure Schedule,
signed for identification purposes only by each Seller, which the Seller Parties
have delivered to the Buyer on or before the date of this Agreement, and which
contains information relevant to the representations and warranties made by the
Seller Parties in Article IV.

         "SELLER GUARANTY" means any guaranty, performance guaranty, bond,
performance bond, suretyship arrangement, surety bond, credit, letter of credit,
reimbursement agreement or other undertaking, deposit commitment or arrangement
by which any Seller is or may be primarily, secondarily, contingently or
conditionally liable for or in respect of (or which creates, constitutes or


                                      -10-


evidences a Lien on any of the assets or properties of any Seller which secures
the payment or performance of) any present or future liability or obligation of
FRS or any of its Subsidiaries as set forth in Section 4.18 of the Seller
Disclosure Schedule.

         "SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 14.2
of this Agreement.

         "SELLER PARTIES" has the meaning set forth in the introduction to this
Agreement.

         "SELLER REPRESENTATIVES" has the meaning set forth in Section 11.8 of
this Agreement.

         "SIGNING DEPOSIT" has the meaning set forth in Section 2.9 of this
Agreement.

         "SOFTWARE" means all electronic data processing systems, information
systems, computer software programs, program specifications, charts, procedures,
source codes, object codes, input data, routines, data bases and report layouts
and formats, record file layouts, diagrams, functional specifications and
narrative descriptions, flow charts and other related material and documentation
and any and all licenses and copies thereof and rights thereto.

         "SOLID WASTE" means any waste which can be lawfully disposed of in a
landfill regulated under Subtitle D of the Resource Conservation and Recovery
Act of 1976, as amended ("RCRA").

         "SOLID WASTE BUSINESS" means the collection, compaction,
transportation, resource recovery, storage, recycling or disposal of Solid
Waste.

         "STOCK CONSIDERATION" has the meaning set forth in Section 2.2 of this
Agreement.

         "STOCK DEPOSIT" has the meaning set forth in Section 2.9 of this
Agreement.

         "SUBJECT GEOGRAPHIC AREAS" means the following counties in the State of
Florida: Volusia, Orange, Lee, Hillsborough, Citrus, Seminole, Lake, Highlands,
Hendry, Glades, Osceola and St. Lucie Counties.

         "SUBJECT LAND" has the meaning set forth in Section 3.5(b) of this
Agreement.

         "SUBSIDIARY" of a Party means an Affiliate of that Party more than
fifty percent (50%) of the aggregate voting power (or of any other form of
voting equity interest in the case of a Person that is not a corporation) of
which is beneficially owned by that Party directly or indirectly through one or
more other Persons.

         "SURVEY" has the meaning set forth in Section 3.5(d) of this Agreement.

         "TARGET OPERATIONS" has the meaning set forth in the introduction to
this Agreement.

         "TAX" means any tax of any kind, however denominated, including any
interest, penalties, fines or other additions to tax that may become payable in
respect thereof or in respect of a failure to comply with any requirement
relating to any Tax Return, imposed by any federal, territorial, state, local or
foreign Governmental Entity, including all income, gross income, gross receipts,
profits, goods and services, social security, health, old age security, federal
pension plan, state pension plan, sales and use, ad valorem, excise, custom,


                                      -11-


franchise, business license, property, occupation, real property gains, payroll
and employee withholding, unemployment or employment insurance, real and
personal property, stamp, environmental, transfer, workers' compensation,
payroll, severance, alternative minimum, windfall, and capital gains taxes,
premiums, surtaxes, charges, levies, assessments, reassessments, and other
obligations of the same or a similar nature to any of the foregoing.

         "TAX ALLOCATION AGREEMENTS" means all contracts, agreements, policies,
practices, intercompany procedures and understandings, whether written or oral,
between FRS or any of its Subsidiaries, and any other Person by which all or any
portion of any federal, state or local income Tax is allocated to or shared or
required to be paid by FRS or any of its Subsidiaries.

         "TAX LIABILITY ISSUE" has the meaning set forth in Section 12.5 of this
Agreement.

         "TAX PROCEEDING" has the meaning set forth in Section 12.3(d) of this
Agreement.

         "TAX RETURNS" means all tax returns, declarations, reports, estimates,
information returns and statements required to be filed with any Taxing
Authority, or provided to any partner, stockholder, joint venturer or member
under federal, state, local or foreign Laws (including reports with respect to
backup withholding and payments to Persons other than Taxing Authorities), and
annual tax returns or information returns on behalf of employee benefit plans
sponsored by Buyer or FRS or any of its Subsidiaries, as the case may be, or any
of their respective ERISA Affiliates.

         "TAXING AUTHORITY" means any Governmental Entity responsible for the
imposition, assessment, enforcement or collection of any Tax.

         "TERMINATING BUYER BREACH" has the meaning set forth in Section 15.3(c)
of this Agreement.

         "TERMINATING SELLER BREACH" has the meaning set forth in Section
15.3(b) of this Agreement.

         "THIRD PARTY CLAIM" has the meaning set forth in Section 14.3 of this
Agreement.

         "THRESHOLD" has the meaning set forth in Section 14.5(b) of this
Agreement.

         "TITLE COMMITMENTS" has the meaning set forth in Section 3.5(b) of this
Agreement.

         "TITLE COMPANY" has the meaning set forth in Section 3.5(b) of this
Agreement.

         "TITLE POLICIES" has the meaning set forth in Section 3.5(b) of this
Agreement.

         "TOTAL INDEBTEDNESS SETTLEMENT STATEMENT" has the meaning set forth in
Section 2.6(a)(i) of this Agreement.

                                      -12-


         "TRANSFER STATION DISPOSAL AND PROCESSING AGREEMENT" has the meaning
set forth in Section 3.4(h) of this Agreement.

         "TRANSFER TAXES" has the meaning set forth in Section 12.4 of this
Agreement.

         "TRUST BENEFICIARY" and "TRUST BENEFICIARIES" has the meaning set forth
in the introduction to this Agreement.

         "TRUSTS" means the Frank Ward, Jr. Irrevocable Trust, George Ward
Irrevocable Trust, Victoria Camalick Irrevocable Trust, Cynthia Fifer
Irrevocable Trust, Robert Ward Irrevocable Trust and Matthew J. Carmody
Irrevocable Trust.

         "$" or "U.S. DOLLARS" refers to lawful currency of the United States of
America.

         "U.S." means the United States of America.

         "U.S. GAAP" means United States of America generally accepted
accounting principles consistently applied throughout the specified period and
the immediately preceding comparable period.

         "WARD GROUP" means Frank Ward, Sr., the Trusts (other than the Matthew
J. Carmody Irrevocable Trust) and the Trust Beneficiaries (other than Matthew
Carmody).

         "WARN ACT" means the United States Worker Adjustment and Retraining
Notification Act of 1988.

         "WELFARE PLAN" has the meaning set forth in Section 4.17(g) of this
Agreement.

         "WORKING CAPITAL SETTLEMENT STATEMENT" has the meaning set forth in
Section 2.6(b)(i) of this Agreement.

         "YEAR-END FINANCIAL STATEMENTS" has the meaning set forth in Section
4.7(a) of this Agreement.

         1.2 INTERPRETATION. Capitalized terms defined in this Agreement are
equally applicable to both their singular and plural forms. References to a
designated "Article" or "Section" refer to an Article or Section of this
Agreement, unless otherwise specifically indicated. In this Agreement,
"including" is used only to indicate examples, without limitation to the
indicated examples, and without limiting any generality which precedes or
follows it.

         1.3 KNOWLEDGE. When a representation and warranty in Article IV or
Article V is made to the "knowledge" of a Person or a definition is qualified to
the "knowledge" of a Person, it means receipt of notice by, or actual knowledge
of, that Person if such Person is an individual, or receipt by, or actual
knowledge of, any officer or member of management of that Person, including,
without limitation, the Chief Executive Officer, Chief Financial Officer, and


                                      -13-


Chief Operating Officer if such Person is a corporation. The "knowledge" of FRS
shall include the "knowledge" of its Subsidiaries and shall also be deemed to
include such "knowledge" of the person(s) primarily responsible for
environmental matters and human resources of FRS and each of its Subsidiaries,
and the "knowledge" of the Seller Parties or each or any Seller shall be deemed
to include such "knowledge" of the Trust Beneficiaries. No representation or
warranty may be qualified or limited by reference to "knowledge" unless due
inquiry has actually been made by the above referenced Persons.

                                   ARTICLE II

                                 THE TRANSACTION

         2.1 SALES AND PURCHASES OF STOCK. On the terms and subject to the
conditions of this Agreement, each Seller agrees to sell, grant, convey,
transfer and assign and deliver to Buyer Sub all of such Seller's issued and
outstanding shares of capital stock of FRS free and clear of all Liens and Buyer
Sub agrees to purchase such shares.

         2.2 CONSIDERATION. Subject to adjustment as provided in this Article
II, the aggregate consideration payable by Buyer Sub for the Acquired Shares
shall be (a) nine million two hundred fifty thousand (9,250,000) shares of Buyer
Parent Common Stock (the "STOCK CONSIDERATION"), including the Stock Deposit,
and (b) ninety-eight million five hundred thousand dollars ($98,500,000) in cash
(the "CASH CONSIDERATION"), including the Extension Payment (if applicable), the
May 1 Payment (if applicable) and the Cash Deposit. The Stock Consideration and
the Cash Consideration are hereinafter referred to as the "PURCHASE PRICE".

         2.3 CASH CONSIDERATION AND PURCHASE PRICE ADJUSTMENTS.

                  (a) The Cash Consideration shall be reduced by the amount of
Closing Date Total Indebtedness.

                  (b) The Cash Consideration shall be reduced by any Closing
Date Working Capital Deficit and increased by any Closing Date Working Capital
Balance, as the case may be.

                  (c) Any adjustments to the Cash Consideration pursuant to
Sections 2.3(a) or 2.3(b) shall result in corresponding adjustments to the
Purchase Price.

                                      -14-


         2.4 CLOSING WORKSHEET.

                  At least ten (10) Business Days prior to the Closing Date, the
Seller Parties shall deliver to Buyer a worksheet (the "CLOSING WORKSHEET")
setting forth their good faith estimate of the Closing Date Total Indebtedness
(the "ESTIMATED CLOSING DATE TOTAL INDEBTEDNESS") and their good faith estimate
of the Closing Date Working Capital (the "ESTIMATED CLOSING DATE WORKING
CAPITAL"). The Closing Worksheet shall also set forth (a) the Seller Parties'
good faith estimate of the Purchase Price as adjusted pursuant to Section 2.3
above which shall be calculated by (i) deducting from the Purchase Price (A) the
Estimated Closing Date Total Indebtedness, and (B) the Seller Parties' good
faith estimate of any Closing Date Working Capital Deficit (the "ESTIMATED
CLOSING DATE WORKING CAPITAL DEFICIT"), and (ii) adding to the Purchase Price,
the Seller Parties' good faith estimate of any Closing Date Working Capital
Balance (the "ESTIMATED CLOSING DATE WORKING CAPITAL BALANCE") and (b) the
Seller Parties' good faith estimate of the Cash Consideration as adjusted
pursuant to Section 2.3(a) or (b) (the "ESTIMATED CASH CONSIDERATION").

         2.5 [RESERVED].

         2.6 INDEBTEDNESS AND WORKING CAPITAL TRUE-UP.

                 (a) INDEBTEDNESS ADJUSTMENT.

                           (i) On or before the one hundred twentieth (120th)
calendar day following the Closing, Buyer shall calculate and deliver to the
Seller Parties a written statement (the "TOTAL INDEBTEDNESS SETTLEMENT
STATEMENT") setting forth the amount of the Closing Date Total Indebtedness.

                           (ii) The Total Indebtedness Settlement Statement
shall be prepared by Buyer and certified in writing by the Chief Financial
Officer of Buyer. Buyer will grant to the Seller Parties reasonable access to
the books and records of FRS and its Subsidiaries after the Closing for the
purpose of confirming the Total Indebtedness Settlement Statement. The Total
Indebtedness Settlement Statement shall be final and binding on the Seller
Parties unless, within ten (10) Business Days following the date of delivery to
the Seller Parties of the Total Indebtedness Settlement Statement, the Seller
Parties notify Buyer in writing (a "NOTICE OF OBJECTION") that the Seller
Parties do not accept as correct the amount of any calculation reflected in the
Total Indebtedness Settlement Statement. If the Seller Parties timely deliver a
Notice of Objection to Buyer, then Buyer and the Seller Parties shall
respectively instruct Buyer's Auditors and Shepard, Schwartz & Harris to attempt
to reach mutual agreement as to each disputed calculation made in the Total
Indebtedness Settlement Statement. If, within twenty (20) Business Days after
the matter has been referred to such accounting firms, they have not reached
agreement as to all disputed calculations, then Buyer's Auditors and Shepard,
Schwartz & Harris shall be promptly instructed by Buyer and the Seller Parties,
respectively, to designate a third accounting firm of internationally recognized
standing, which (acting as experts and not as arbitrators) shall be instructed
to make, as soon as practicable after the matter is referred to such firm, all
calculations which are in dispute, and the determination of such third
accounting firm in the matter shall be final and binding on all Parties.



                                      -15-


                           (iii) If the Closing Date Total Indebtedness exceeds
the Estimated Closing Date Total Indebtedness, then the amount of such excess
shall be paid to Buyer Sub in accordance with Section 2.6(d) and the Purchase
Price shall be deemed reduced by the amount of such excess. If the Closing Date
Total Indebtedness is less than the Estimated Closing Date Total Indebtedness,
then Buyer Sub shall pay to the Seller Parties the amount of such deficiency in
immediately available funds by wire transfer to accounts designated by the
Seller Parties in writing at least two (2) Business Days before the day on which
the transfer is required to be made. Any payments required to be made by Buyer
Sub to the Seller Parties pursuant to this Section 2.6(a)(iii) shall be
allocated among the Sellers in accordance with the percentages set forth on
EXHIBIT A and shall be made within five (5) Business Days after the Closing Date
Total Indebtedness has been finally determined as provided in this Section
2.6(a).

                 (b) WORKING CAPITAL ADJUSTMENT.

                           (i) On or before the one hundred twentieth (120th)
calendar day following the Closing, Buyer shall calculate and deliver to the
Seller Parties a written statement (the "WORKING CAPITAL SETTLEMENT STATEMENT")
setting forth the amount of the Finally Determined Working Capital Deficit or
the Finally Determined Working Capital Balance, as the case may be. For purposes
of calculating the Finally Determined Working Capital, the outstanding
individual accounts receivable of FRS and its Subsidiaries as of the Closing
Date shall be valued as follows:

                                    (A) one hundred percent (100%) of the amount
of any undisputed account receivable shall be included in Finally Determined
Current Assets if the account receivable is aged ninety (90) or less days as of
the Closing Date; and

                                    (B) no value shall be given to any account
receivable (or portion thereof) (1) that is aged more than ninety (90) days as
of the Closing Date, (2) that is otherwise owing by an account debtor that is
insolvent, or (3) that has been disputed in writing by the account debtor, which
dispute has not been resolved (the "EXCLUDED ACCOUNTS RECEIVABLE").

                           (ii) The Working Capital Settlement Statement shall
be calculated by Buyer and certified in writing by the Chief Financial Officer
of Buyer. Buyer will grant to the Seller Parties reasonable access to the books
and records of FRS and its Subsidiaries after the Closing for the purpose of
confirming the Working Capital Settlement Statement. The Working Capital
Settlement Statement shall be final and binding on the Seller Parties unless,
within ten (10) Business Days following the date of delivery to them of the
Working Capital Settlement Statement, the Seller Parties deliver to Buyer a
Notice of Objection that the Seller Parties do not accept as correct the amount
of any calculation reflected in the Working Capital Settlement Statement. If the
Seller Parties timely deliver a Notice of Objection to Buyer, then Buyer and the
Seller Parties shall respectively instruct Buyer's Auditors and Shepard,
Schwartz & Harris to attempt to reach mutual agreement as to each disputed
calculation made in the Working Capital Settlement Statement. If within twenty
(20) Business Days after the matter has been referred to such accounting firms,
they have not reached agreement as to all disputed calculations, then Buyer's


                                      -16-


Auditors and Shepard, Schwartz & Harris shall be promptly instructed by Buyer
and the Seller Parties, respectively, to designate a third accounting firm of
internationally recognized standing, which (acting as experts and not as
arbitrators) shall be instructed to make, as soon as practicable after the
matter is referred to such firm, all calculations which are in dispute, and the
determination of such third accounting firm in the matter shall be final and
binding on all Parties.

                           (iii) If (A) the Finally Determined Working Capital
Deficit exceeds the Estimated Closing Date Working Capital Deficit or (B) the
Estimated Closing Date Working Capital Balance exceeds the Finally Determined
Working Capital Balance, the amount of such excess shall be paid to Buyer Sub in
accordance with Section 2.6(d) and the Purchase Price shall be deemed reduced by
the amount of such excess. If (1) the Finally Determined Working Capital Deficit
is less than the Estimated Closing Date Working Capital Deficit or (2) the
Estimated Closing Date Working Capital Balance is less than the Finally
Determined Working Capital Balance, Buyer Sub shall pay the amount of such
deficiency to the Seller Parties in immediately available funds by wire transfer
to accounts designated by the Seller Parties in writing at least two (2)
Business Days before the day on which the transfer is required to be made. Any
such payments required to be made by Buyer Sub to the Seller Parties pursuant to
this Section 2.6(b)(ii) shall be allocated among the Sellers in accordance with
the percentages set forth on EXHIBIT A and shall be made within five (5)
Business Days after the Closing Date Working Capital has been finally determined
as provided in this Section 2.6(b).

                  (c) ACCOUNTANT'S FEES. The fees of all accounting firms (other
than Buyer's Auditors and Shepard, Schwartz & Harris) engaged to make any
calculations under this Section 2.6 shall be paid by (i) Buyer if the effect of
all disputed calculations made by such accounting firms results in adjustments
in favor of the Seller Parties of $250,000 or more in comparison to the
adjustments which would have been made had the Seller Parties accepted the Total
Indebtedness Settlement Statement or the Working Capital Settlement Statement,
as the case may be and (ii) the Seller Parties in all other cases. The fees of
Buyer's Auditors with respect to any calculations under this Section 2.6 shall
be paid by Buyer and the fees of Shepard, Schwartz & Harris shall be paid by the
Seller Parties.

                  (d) PAYMENT OF ADJUSTMENT BY SELLER PARTIES AND TRUST
BENEFICIARIES. In the event of any reductions in the Purchase Price pursuant to
this Section 2.6, the Seller Parties and Trust Beneficiaries shall be jointly
and severally liable to Buyer Sub for the amount of such deficiency and shall
pay to Buyer Sub the amount of such deficiency within five (5) Business Days
after the Closing Date Total Indebtedness and/or the Closing Date Working
Capital, as the case may be, has been finally determined pursuant to this
Section 2.6.

         2.7 ESCROW. At the Closing, 3,000,000 shares of Buyer Parent Common
Stock from the Stock Consideration shall be deposited with Bank One, National
Association (or such other institution selected by Buyer with the reasonable
consent of the Seller Parties) as escrow agent (the "ESCROW AGENT"), such
deposit to constitute the "ESCROW FUND" and to be governed by the terms set
forth herein and in the Escrow Agreement attached hereto as EXHIBIT B (the
"ESCROW AGREEMENT"). The Escrow Fund shall be available as a source of recovery
by Buyer Parent, Buyer and Buyer Sub with respect to the indemnification
obligations of the Seller Parties under Article XIV hereof.



                                      -17-


         2.8 COMPLIANCE WITH SECURITIES LAWS; CONSENT TO U.S. REORGANIZATION
TRANSACTION.

                  (a) The shares of Buyer Parent Common Stock to be issued to
the Seller Parties pursuant to this Agreement shall be issued in a transaction
exempt from registration under the Securities Act (by reason of Section 4(2)
thereof and/or Regulation D promulgated thereunder) and otherwise in compliance
with such other federal and state securities laws of the U.S. as may be
applicable to the transactions contemplated hereby, and such shares may not be
re-offered, resold, distributed or otherwise transferred by the Seller Parties
other than in compliance with the applicable federal and state securities laws
of the U.S. Except with respect to a sale of shares of Buyer Parent Common Stock
pursuant to the Registration Rights Agreement, each Seller hereby agrees not to
sell, assign, dispose of or otherwise transfer any shares of Buyer Parent Common
Stock issued to Seller pursuant to this Agreement for a period of one year from
the Closing Date (the "LOCK-UP PERIOD"). The certificates issued by Buyer
representing the shares of Buyer Parent Common Stock issued hereunder shall be
legended to the effect described above and shall include such additional legends
as necessary to comply with applicable Laws.

                  (b) Each Seller Party agrees to vote all shares of Buyer
Parent Common Stock issued to such Seller Party pursuant to the Stock Purchase
Agreement, all shares of Buyer Parent Common Stock issued to such Seller Party
as (or issuable upon conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such shares of Buyer Parent Common
Stock, and any other shares of Buyer Parent Common Stock then owned by such
Seller Party in favor of any share exchange or other reorganization or
recapitalization transaction resulting in Buyer Parent becoming a direct or
indirect subsidiary of Buyer.

         2.9 DEPOSIT AND OTHER PAYMENTS. The Parties acknowledge that (a) Buyer
has posted a deposit consisting of (i) an aggregate of $3,000,000 in cash (the
"CASH DEPOSIT") and (ii) an aggregate of 1,000,000 shares of Buyer Parent Common
Stock (the "STOCK DEPOSIT" and together with the Cash Deposit, the "SIGNING
DEPOSIT"), (b) the Cash Deposit was paid to FRS on behalf of the Seller Parties
and will be used by FRS for the purpose of funding capital expenditures required
in the continued operation of FRS' business, and (c) the Stock Deposit will be
allocated among the Seller Parties in accordance with the proceeds direction set
forth on EXHIBIT A attached to this Agreement. The Cash Deposit and the Stock
Deposit shall be applied toward payment of the Cash Consideration or the Stock
Consideration, as applicable, at Closing.

                                  ARTICLE III

                         THE CLOSING AND RELATED MATTERS

         3.1 THE CLOSING. The consummation of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of McDermott,
Will & Emery, 227 West Monroe Street, Chicago, Illinois at 10:00 a.m. local time
on the Closing Date. At the Closing:

                                      -18-


                  (a) Each Seller shall deliver to Buyer Sub, free and clear of
any and all Liens, certificate(s) evidencing the Acquired Shares held by such
Seller, duly endorsed in blank or accompanied by duly executed stock powers or
other appropriate instruments of transfer, and in proper form for registration
in the name of Buyer Sub;

                  (b) Buyer shall issue and deliver to the Seller Parties, on
behalf of Buyer Sub and free and clear of any and all Liens, stock certificates
representing the Closing Stock Consideration, allocated among the Seller Parties
in accordance with the percentages set forth in EXHIBIT A;

                  (c) Buyer shall pay to the Seller Parties, on behalf of Buyer
Sub, the Closing Cash Consideration, allocated among the Seller Parties in
accordance with the percentages set forth in EXHIBIT A; and

                  (d) Buyer shall deliver to the Escrow Agent, on behalf of
Buyer Sub, 3,000,000 shares of the Stock Consideration in accordance with the
Escrow Agreement.

         3.2 [RESERVED].

         3.3 ACTIONS IN CONTEMPLATION OF CLOSING. On or before the Closing Date:

                  (a) The Seller Parties shall cause to be delivered to Buyer
the resignation of each of the officers and directors of FRS and its
Subsidiaries, and shall assume and perform in full all obligations, agreements
and commitments of any type relating to the resignation or the employment of
such officers and directors arising before the Closing; and

                  (b) The Seller Parties shall cause to be delivered to Buyer
all business records, copies of Tax returns, books, and other data relating to
FRS and its Subsidiaries (including the original Corporate Records as to which
only copies need be delivered), provided that the Seller Parties may retain
copies of each of the foregoing.

         3.4 OTHER ACTIONS AT THE CLOSING. In addition to the consummation of
the Acquisition and the actions contemplated by Section 3.3 above, the following
actions shall take place at the Closing:

                  (a) Each of the Seller Parties and Trust Beneficiaries shall
execute and deliver a Release in substantially the form of EXHIBIT D attached to
this Agreement (the "RELEASE");

                  (b) Buyer and each of Gertrude Ward, George Ward, Frank Ward,
Jr. and Robert Ward shall execute and deliver a Consulting Agreement
substantially in the form of EXHIBIT E attached to this Agreement (the
"CONSULTING AGREEMENTS");

                  (c) Buyer and each of the Sellers shall execute and deliver a
Registration Rights Agreement substantially in the form of EXHIBIT F attached to
this Agreement (the "REGISTRATION RIGHTS AGREEMENT");

                                      -19-


                  (d) FRS and Florida Container Services, Inc. shall execute and
deliver a Container Services Agreement substantially in the form of EXHIBIT G
attached to this Agreement (the "CONTAINER SERVICES AGREEMENT");

                  (e) FRS and Draw Enterprises Manufacturing, L.P. shall execute
and deliver a lease agreement for the Altamonte facility substantially in the
form of EXHIBIT H attached to this Agreement (the "ALTAMONTE LEASE");

                  (f) Buyer and each of Frank Ward, Sr., George Ward, Frank
Ward, Jr., Robert Ward and Matthew Carmody shall execute and deliver a Referral
Fee Agreement substantially in the form of EXHIBIT I attached to this Agreement
(the "REFERRAL FEE AGREEMENT");

                  (g) The Seller Parties and Buyer shall enter into an Option
Agreement substantially in the form of EXHIBIT J attached to this Agreement (the
"RIP OPTION AGREEMENT").

                  (h) FRS and Taft Recycling, Inc. shall execute and deliver a
Transfer Station Disposal and Processing Agreement substantially in the form of
EXHIBIT K attached to this Agreement (the "TRANSFER STATION DISPOSAL AND
PROCESSING AGREEMENT");

                  (i) FRS and Sanford Recycling and Transfer, Inc. shall enter
into an agreement relating to the construction and lease of a recycling transfer
station in Sanford, Florida substantially in the form of EXHIBIT L attached to
this Agreement (the "SANFORD LEASE AGREEMENT"); and

         3.5 REAL PROPERTY DELIVERIES BY THE SELLER PARTIES.

                  (a) At the Closing, the Seller Parties shall deliver to the
Buyer, a sworn affidavit stating, under penalty of perjury, that such applicable
Seller Party is not a "foreign person" as defined under the Code, or other
appropriate evidence that Buyer, Buyer Parent and Buyer Sub are not required to
withhold any portion of the Purchase Price under Section 1445(a) of the Code or
any other withholding provision of any other Tax law.

                  (b) Buyer has received a preliminary title commitment (the
"TITLE COMMITMENTS") in respect of each parcel of Land owned by FRS or any of
its Subsidiaries (the "SUBJECT LAND"), copies of which have been provided to the
Seller Parties. The Seller Parties shall deliver to Buyer copies of all
exception instruments referenced in such Title Commitments, and any unrecorded
leases, option agreements, contracts and any other items affecting title which
are in the possession of, or known to, the Seller Parties or the Trust
Beneficiaries at least fifteen (15) days before the Closing so that the Title
Policies can be issued simultaneously with the Closing. The Seller Parties shall
furnish to Buyer at the Closing at the Sellers Parties' cost and expense one or
more extended coverage policies of title insurance for the Subject Land from a
title company selected by Buyer (the "TITLE COMPANY") in an amount to be
reasonably determined by Buyer, with each of the Title Company's standard
printed exceptions deleted, and including such endorsements reasonably requested
by Buyer and that are available in the state where the Subject Land is located,
insuring fee simple title, to such Subject Land to be in FRS, subject only to
the exceptions permitted by Section 3.5(c) hereof (the "TITLE POLICIES").



                                      -20-


                  (c) The Title Policies shall insure FRS' interest in the
Subject Land to be free and clear of all Liens whatsoever except: (i) zoning
ordinances and regulations which do not, in Buyer's judgment, adversely affect
Buyer's or FRS' use of the Subject Land for its current uses after the Closing
Date; (ii) real estate taxes and assessments, both general and special, which
constitute a lien but are not yet due and payable at the Closing Date; and (iii)
easements, encumbrances, covenants, conditions, reservations and restrictions of
record, if any, as shown on the Title Commitment and as have been approved in
writing by Buyer prior to the Closing Date.

                  (d) At least twenty (20) days before the Closing Date, the
Seller Parties shall deliver to Buyer and the Title Company such affidavits or
certifications with respect to title to the Subject Land and any surveys
conducted thereon as may be requested by Buyer or the Title Company; PROVIDED,
HOWEVER, that if such affidavits or certifications are not sufficient to enable
Buyer or Buyer Parent to obtain financing for the Acquisition on terms and
conditions reasonably satisfactory to Buyer or to enable the Title Company to
delete its standard survey exceptions from the Title Policies, then the Seller
Parties shall obtain for Buyer's and Buyer Parent's use and for the use of the
Title Company in connection with the issuance of the Title Policies a current
and complete survey of the Subject Land (the "SURVEYS"). The Surveys shall be
made on the ground by a competent registered surveyor and shall show: (i) the
exact boundary lines of each parcel of Subject Land; (ii) the location thereon
of all, if any, buildings, improvements, roads, and easements now existing;
(iii) the number of acres in the Subject Land; (iv) the location of any
buildings, fences or other improvements which encroach on the Subject Land; (v)
the location of any improvements on the Subject Land which encroach on any
neighboring property; (vi) all building lines established in respect of the
Subject Land; (vii) all public access to the Subject Land; and (viii) all other
matters shown on the Title Commitments which can be shown on a Survey. The
Surveys shall contain a representation that the boundaries of the Subject Land
are contiguous with the boundaries of all adjoining parcels. A copy of the
Surveys complying with the above requirements shall be delivered to Buyer and
the Title Company at least twenty (20) days before the Closing Date, together
with certification to each of Buyer and the Title Company by the surveyor, and
also together with such additional supporting reports and other certificates as
the Title Company may require to enable the Title Company to delete its standard
survey exceptions from the Title Policies.

         3.6 BULK SALES. Each Seller, Buyer Parent, Buyer and Buyer Sub hereby
waive compliance with their respective obligations under applicable bulk sales
laws of any states or jurisdictions in which compliance may be required. Each
Seller and Trust Beneficiary shall forever jointly and severally indemnify and
hold harmless Buyer Parent, Buyer and Buyer Sub against any loss which Buyer
Parent, Buyer or Buyer Sub may suffer as a result of claims asserted by third
parties against Buyer Parent, Buyer or Buyer Sub due to any non-compliance by
Seller, FRS, the Subsidiaries of FRS, Buyer Parent, Buyer or Buyer Sub with
applicable bulk sales Laws.

         3.7 FURTHER ASSURANCES. Each Seller and Trust Beneficiary, from time to
time after the Closing, at the request of Buyer, and without further
consideration, shall execute and deliver further instruments of transfer and
assignment and take such other action as Buyer may reasonably require to more
effectively transfer and assign to, and vest in, Buyer Sub ownership of the
Acquired Shares.

                                      -21-


                                   ARTICLE IV

    REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES AND TRUST BENEFICIARIES

         The Seller Parties and the Trust Beneficiaries jointly and severally
represent and warrant to Buyer Parent, Buyer and Buyer Sub, as of November 21,
2003, as of the date hereof and as of the Closing Date, that:

         4.1 ORGANIZATION AND QUALIFICATION.

                  (a) Section 4.1 of the Seller Disclosure Schedule sets forth
with respect to FRS and each of its Subsidiaries (i) its jurisdiction of
incorporation, (ii) each jurisdiction in which it is qualified to do business as
a foreign corporation, (iii) its authorized, issued and outstanding shares of
capital stock, and (iv) the holder or holders of all of its issued and
outstanding shares of capital stock. FRS is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation and has full authority and power to conduct its business as it is
currently conducted. Each of FRS' Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation and has full authority and power to conduct its business as it is
currently being conducted. FRS and each of its Subsidiaries is duly qualified to
do business, and in good standing, in each jurisdiction where the nature of its
properties or business requires such qualification, except for failures to be so
qualified which could not, individually or in the aggregate, have a Material
Adverse Effect on FRS.

                  (b) The Acquired Shares represent all of the issued and
outstanding shares of capital stock of FRS and such shares are validly issued,
fully paid and nonassessable, are owned of record and beneficially, and free of
any Liens, by the Seller Parties and were not issued in violation of any
preemptive, subscription or other right of any Person to acquire securities of
FRS. Each Seller has good, marketable and indefeasible title to all of the
Acquired Shares, and the absolute right, power and capacity to sell, assign,
transfer and deliver all right, title and interest both legal and equitable, in
and to such Acquired Shares, registered in his, her or its name as set forth in
Section 4.1 of the Seller Disclosure Schedule, free and clear of all Liens and
any defects of title whatsoever. Upon delivery of payment for the Acquired
Shares as herein provided, Buyer Sub will acquire good and valid title to such
shares free and clear of all Liens and with no defects of title whatsoever. All
of the issued and outstanding shares of capital stock of each of FRS'
Subsidiaries are validly issued, fully paid and nonassessable, and are owned of
record and beneficially, and free of any Liens and with no defects of title
whatsoever, by FRS. There are no preemptive rights or outstanding subscriptions,
options, warrants, calls, rights, convertible securities, obligations to make
capital contributions or advances, voting or voting trust arrangements,
stockholders' agreements, restrictions on transfer or other agreements,
commitments or understandings relating to the capital stock of FRS or any of its
Subsidiaries. All shares of the capital stock of FRS, whether or not currently
outstanding, were issued in compliance (and if acquired or cancelled by FRS,
reacquired or cancelled in compliance) with all applicable Laws, including the


                                      -22-


Securities Act and any applicable state Laws. The Seller Parties have delivered
to the Buyer true, complete and correct copies of the charter and bylaws (or
similar organizational documents) of FRS and of each of its Subsidiaries.

         4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. FRS and each Seller that is a
Trust has full power and authority to enter into and perform its obligations
under this Agreement and each Ancillary Agreement to which it will be a party.
Each Seller Party that is an individual and each Trust Beneficiary has the
requisite capacity to enter into and perform its obligations under this
Agreement and each Ancillary Agreement to which it will be a party. The
execution and delivery of this Agreement by FRS and each Trust and the
performance by FRS and each Trust of its obligations hereunder have been duly
authorized by the Board of Directors of FRS or the trustees of such Trust, as
the case may be, and no other corporate or other proceedings on the part of FRS
or Trust are necessary to authorize the execution and delivery of this Agreement
or the consummation of the Acquisition or the other transactions contemplated in
this Agreement, except as set forth in Section 4.2 of the Seller Disclosure
Schedule. The execution and delivery of each Ancillary Agreement to which FRS or
any Trust will be a party and the performance by FRS or Trust, as the case may
be, of its obligations thereunder have been duly authorized by the Board of
Directors of FRS or the trustees of such Trust, as the case may be, and no other
proceedings on the part of FRS or Trust are necessary to authorize the execution
and delivery of such Ancillary Agreement or the consummation of the transactions
contemplated thereby. This Agreement has been duly executed and delivered by
FRS, each Seller and each Trust Beneficiary. Each Ancillary Agreement required
to be executed and delivered by FRS, any Seller or any Trust Beneficiary at the
Closing will be, upon its execution and delivery, duly executed and delivered by
FRS, Seller or Trust Beneficiary, as the case may be. Assuming the valid
authorization, execution and delivery of this Agreement (and each Ancillary
Agreement to which Buyer Parent, Buyer or Buyer Sub will be a party) by Buyer
Parent, Buyer and/or Buyer Sub, as the case may be, this Agreement is, and each
Ancillary Agreement to which FRS, any Seller or any Trust Beneficiary is a party
will be, upon its execution and delivery, a valid and binding obligation of FRS,
Seller or Trust Beneficiary, enforceable in accordance with its terms.

         4.3 NO VIOLATIONS. The execution, delivery and performance of this
Agreement by FRS, each Seller and each Trust Beneficiary, the execution,
delivery and performance of each Ancillary Agreement to which FRS, any Seller or
any Trust Beneficiary is a party, and the consummation of the Acquisition and
the other transactions contemplated in this Agreement and the Ancillary
Agreements will not:

                  (a) constitute a breach or violation of or default under the
charter, bylaws, or trust documents or agreements (or similar organizational
documents) of FRS or any of its Subsidiaries or any Trust or any Law applicable
to FRS or any of its Subsidiaries, any Seller or any Trust Beneficiary; or

                  (b) except as accurately reflected in Section 4.3 of the
Seller Disclosure Schedule, violate or conflict with, or result in a breach of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination
under, or result in the creation of any Lien upon the Acquired Shares or any of
the assets or properties of FRS or any of its Subsidiaries under, any contract,


                                      -23-


indenture, loan document, license, permit, order, agreement, decree or
instrument to which any Seller Party, any Trust Beneficiary, FRS or any of its
Subsidiaries is a party or by which any of them or their assets or properties
are bound.

         4.4 CONSENTS AND APPROVALS. No consent, order, approval, waiver or
authorization of, or registration, application, declaration, notice or filing
with or to, any Governmental Entity or other Person is required with respect to
any Seller Party or Trust Beneficiary, FRS or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or any Ancillary
Agreement, the consummation of the Acquisition, or the other transactions
contemplated in this Agreement and the Ancillary Agreements, except for:

                  (a) the HSR Act filings and approvals contemplated in this
Agreement; and

                  (b) the consents and approvals described on Section 4.4 of the
Seller Disclosure Schedule.

         4.5 NO OTHER SUBSIDIARIES. Except as described in Section 4.5 of the
Seller Disclosure Schedule, neither FRS nor any Subsidiary of FRS has owned,
owns or is obligated to acquire any investment in any other corporation,
partnership, joint venture or other business entity.

         4.6 CONDUCT OF TARGET OPERATIONS. The Target Operations are owned and
operated exclusively by FRS and its Subsidiaries, and, except as described in
Section 4.6 of the Seller Disclosure Schedule, no Person other than FRS and its
Subsidiaries conducts any operations associated with, or owns any assets or
properties used in, or holds any Permits used in, the Target Operations. Except
as described in Section 4.6 of the Seller Disclosure Schedule, none of FRS nor
any of its Subsidiaries is or has been engaged in any business other than the
Target Operations or owns or has owned any assets or properties which are used
in any business other than the Target Operations.

         4.7 FINANCIAL STATEMENTS.

                  (a) The Seller Parties have delivered to Buyer (i) audited
consolidated balance sheets of FRS and its Subsidiaries as of December 31, 2000,
December 31, 2001 and December 31, 2002 and the related audited consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
fiscal years then ended (the "YEAR-END FINANCIAL STATEMENTS"), and (ii)
unaudited consolidated balance sheets of FRS and its Subsidiaries as of March
31, 2003, June 30, 2003, September 30, 2003, March 31, 2002, June 30, 2002 and
September 30, 2002 and the related unaudited consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the three, six and
nine month periods then ended (the "INTERIM FINANCIAL STATEMENTS" and together
with the Year-End Financial Statements, the "COMPANY FINANCIAL STATEMENTS"),
copies of which are included in Section 4.7 of the Seller Disclosure Schedule.
The Company Financial Statements have been prepared in accordance with U.S. GAAP
and fairly and accurately present in all respects the consolidated financial
position of FRS and its Subsidiaries at the respective dates thereof, and the
results of the consolidated operations, stockholders' equity and cash flows of
FRS and its Subsidiaries for the respective periods indicated therein.



                                      -24-


                  (b) To the knowledge of the Seller Parties, the Company
Financial Statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the Company Financial Statements
not misleading with respect to the periods covered by them.

                  (c) FRS maintains disclosure controls and procedures which
ensure that material information relating to FRS and its Subsidiaries is
communicated to management of FRS. The effectiveness of such disclosure controls
and procedures are evaluated by FRS management from time to time.

         4.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.8 of
the Seller Disclosure Schedule, since December 31, 2002, the Target Operations
have been conducted only in the ordinary course, consistent with past practice,
and there has not occurred a Material Adverse Effect on FRS or any event that
could result in a Material Adverse Effect on FRS.

         4.9 NO UNDISCLOSED LIABILITIES. Except as disclosed in the Company
Financial Statements or as set forth in Section 4.9 of the Seller Disclosure
Schedule, neither FRS nor any of its Subsidiaries has any liabilities or
obligations, asserted or unasserted, known or unknown, fixed or contingent,
other than (a) those liabilities and obligations (other than for borrowed money)
arising since December 31, 2002 in the ordinary course of its business and
consistent with its past practice, and (b) liabilities and obligations (other
than for borrowed money) arising after the date of this Agreement without
violation of Sections 6.1 and 6.2, in each case which, individually or in the
aggregate, could not result in a Material Adverse Effect on FRS.

         4.10 TARGET OPERATIONS; PROPERTIES. Except as set forth on Section 4.10
of the Seller Disclosure Schedule, FRS and its Subsidiaries have good and
marketable title to their respective properties and assets, including the Land
and those properties and assets reflected in the Company Financial Statements
and, when delivered in accordance with Section 6.10, the 2003 Financial
Statements (other than properties and assets disposed of in the ordinary course
of business after the date of such financial statements, which in the aggregate
are not material), free of all Liens except Permitted Liens. The properties and
assets of FRS and its Subsidiaries (a) constitute all of the assets and
properties used in connection with the Target Operations and (b) are sufficient
for FRS and its Subsidiaries to conduct the Target Operations as currently
conducted and as proposed to be conducted. To the knowledge of the Seller
Parties, all leasehold improvements, furnishings, machinery and equipment of FRS
and its Subsidiaries are in good condition and repair (ordinary wear and tear
excepted), and all such items, including such machinery and equipment, are
usable in the ordinary course of business.

         4.11 LANDFILLS AND TRANSFER STATIONS. Except as set forth on Section
4.11 of the Seller Disclosure Schedule, neither FRS nor any of its Subsidiaries
now owns or operates or has ever owned or operated any landfill or transfer
station. Section 4.11 of the Seller Disclosure Schedule lists each landfill and
transfer station not owned or operated by FRS and its Subsidiaries, but to which
FRS or any of its Subsidiaries hauls or has hauled Solid Waste in connection
with the Target Operations.



                                      -25-


         4.12 TAXES AND TAX RETURNS. Except as described in Section 4.12 of the
Seller Disclosure Schedule:

                  (a) all Tax Returns required to be filed with any Taxing
Authority with respect to any Pre-Closing Tax Period by or on behalf of FRS or
any of its Subsidiaries have been duly filed on a timely basis in accordance
with all applicable Laws, or will be timely filed in accordance with Section
12.2;

                  (b) at the time of their filings all such Tax Returns were or
will be complete and correct in all respects;

                  (c) there are no Liens for Taxes upon any assets of FRS or any
of its Subsidiaries, except Liens for Taxes not yet due for current Tax periods
ending on or after the Closing Date;

                  (d) there are no outstanding deficiencies, assessments or
written proposals for the assessment of Taxes proposed, asserted or assessed
against FRS or any of its Subsidiaries, or for which FRS or any of its
Subsidiaries could be directly or indirectly liable and there is no basis for
any additional assessment or reassessment for any Taxes for which adequate
provision has not been made in the books and records of FRS or such Subsidiary;

                  (e) no extension of the statute of limitations or waiver of
normal reassessment periods on the assessment of any Taxes has been granted to
or on behalf of FRS or any of its Subsidiaries;

                  (f) neither FRS nor any of its Subsidiaries is or has ever
been a controlled foreign corporation as defined by Code Section 957;

                  (g) neither FRS nor any of its Subsidiaries is, or during the
prior ten years has been, a member of an affiliated group of corporations within
the meaning of Code Section 1504;

                  (h) neither FRS nor any of its Subsidiaries, and no Seller, no
Trust Beneficiary nor any of their respective Affiliates, have ever owned and do
not now own any shares of Buyer or Buyer Sub, any of their respective Affiliates
or any predecessor thereof;

                  (i) neither FRS nor any of its Subsidiaries is a member of any
unitary or combined group for state tax purposes;

                  (j) FRS has timely and properly elected to be taxed as an "S
corporation" (within the meaning of Code Section 1361(a)(1)) effective as of the
date of its incorporation and at all times since that date has continuously
remained an S corporation;

                  (k) neither FRS nor any of its Subsidiaries has acquired
assets with a carryover basis from a C corporation during the prior ten years;

                  (l) neither FRS nor any of its Subsidiaries has liability for
any Taxes of any Person other than itself or is a party to a Tax Allocation
Agreement;



                                      -26-


                  (m) all Taxes required to be withheld, collected or deposited
by FRS or any Subsidiary of FRS (including amounts required to be withheld,
collected or deposited with respect to amounts paid or owing to any employee,
creditor, independent contractor or other Person) have been timely withheld,
collected or deposited and, to the extent required, have been timely paid to the
relevant Taxing Authority;

                  (n) no closing agreements or settlement agreements have been
entered into with any Taxing Authority by or with respect to FRS or any
Subsidiary of FRS which requires FRS or such Subsidiary to include any item of
income in, or exclude any item of deduction from, any Tax Return for any taxable
period ending after the Closing Date; and

                  (o) neither FRS nor any of its Subsidiaries will have any
liability for Taxes under Code Section 1374 (or any similar provision of another
jurisdiction) in connection with the deemed sale of assets caused by the Section
338(h)(10) Election (as hereinafter defined).

         4.13 LITIGATION. Except as disclosed in Section 4.13 of the Seller
Disclosure Schedule, there is no suit, action, investigation or proceeding
pending or, to the knowledge of the Seller Parties or FRS, threatened against
FRS or any of its Subsidiaries at law or in equity before or by any Governmental
Entity or before any arbitrator or mediator of any kind, and there is no
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator or mediator to which FRS or any of its Subsidiaries (or any of their
assets or properties) are subject. Neither FRS nor the Seller Parties have
knowledge of any grounds on which any suit, action, investigation or proceeding
of the nature referred to in this Section 4.13 might be commenced with any
reasonable likelihood of success.

         4.14 ENVIRONMENTAL MATTERS. Except as described in Section 4.14 of the
Seller Disclosure Schedule:

                  (a) FRS and its Subsidiaries hold, and are in compliance with
and have been in compliance with, all Environmental Permits, and are otherwise
in compliance and have been in compliance with, all applicable Environmental
Laws, and there is no condition of the Environmental Permits or of the
operations of FRS or any of its Subsidiaries that could prevent or interfere
with compliance by FRS or any of its Subsidiaries with all Environmental Laws;

                  (b) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review by, or approval
of, any Governmental Entity or other Person of any Environmental Permit is
required in connection with the execution or delivery of this Agreement or any
Ancillary Agreement, the consummation of the Acquisition, or the operation of
the business of the Target Operations immediately after the Closing;

                  (c) neither FRS nor any of its Subsidiaries has received any
Environmental Claim, nor has any Environmental Claim been threatened, to the
knowledge of FRS or the Seller Parties, against FRS or any of its Subsidiaries;

                  (d) neither FRS nor any of its Subsidiaries has entered into,
agreed to or is subject to any outstanding judgment, decree, order or other
directive issued by, or consent arrangement with, any Governmental Entity under


                                      -27-


any Environmental Law, including, but not limited to, any such judgment, decree,
order or other directive relating to compliance with any Environmental Law or to
the investigation, clean-up, remediation or removal of Hazardous Substances;

                  (e) neither FRS nor any of its Subsidiaries has received
notice of noncompliance or of a proposed enforcement action by any Governmental
Entity under any Environmental Law;

                  (f) there are no circumstances that could give rise to
liability under any agreement with any Person or by operation of law which would
require FRS or any of its Subsidiaries to defend, indemnify, hold harmless, or
otherwise be responsible for any violation or alleged violation by another
Person or any liability or expense of another Person, arising under any
Environmental Law;

                  (g) there are no other circumstances or conditions that could
give rise to any liability or obligation of FRS or any of its Subsidiaries under
any Environmental Law;

                  (h) the liabilities and reserves reflected on the Company
Financial Statements adequately provide for, in accordance with U.S. GAAP (i)
all future claims and costs for closure, intermediate capping, post-closure
monitoring, investigation and maintenance, reclamation, remediation, restoration
and clean-up of all landfills, transfer stations or other facilities previously
owned, occupied, leased or operated by, or previously under the management or
control of, FRS or any of its Subsidiaries or to which FRS or any of its
Subsidiaries have transported waste, and (ii) all Environmental Claims against
FRS or any of its Subsidiaries;

                  (i) neither FRS nor any of its Subsidiaries, nor any of the
Sellers or Trust Beneficiaries have received a request for information pursuant
to an Environmental Law;

                  (j) there has not been, and is not now occurring, at any
facility, property or site currently owned or operated or previously owned or
operated, by FRS or any of its Subsidiaries, any release or threatened release
of any Hazardous Substance or petroleum, including crude oil or any fraction
thereof. Neither FRS nor any of its Subsidiaries have applied or disposed of any
Hazardous Substance or petroleum, including crude oil or any fraction thereof,
in any manner which may form the basis for any present or future Environmental
Claim at any facility, site, location or body of water, surface or subsurface;

                  (k) neither FRS nor any of its Subsidiaries have ever sent,
arranged for disposal or treatment, arranged with a transporter for transport
for disposal or treatment, transported, or accepted for transport any Hazardous
Substance, solid waste or petroleum, including crude oil or any fraction
thereof, to a facility, site or location, which, pursuant to CERCLA or any
similar state or local Law, (i) has been placed, or is proposed to be placed, on
the national priorities list or its state equivalent or (ii) is subject to a
claim, administrative order or other request to effect removal or take remedial
action;

                  (l) there has not been any contamination of groundwaters,
surface waters, soils or sediments, as a result of the manufacture, storage,
processing, loss, leak, escape, spillage, release, disposal or other handling or


                                      -28-


disposition by or on behalf of FRS or any of its Subsidiaries of any product or
substance on or prior to the Closing Date;

                  (m) Section 4.14 of the Seller Disclosure Schedule sets forth
a correct and complete list of all environmental audits or assessments or
occupational health studies undertaken by or on behalf of FRS or any of its
Subsidiaries, or any Governmental Entity with respect to FRS or any of its
Subsidiaries or their respective assets, employees, facilities, sites or other
properties, the results of any groundwater and soil testing undertaken by or on
behalf of FRS or any of its Subsidiaries, the results of any underground fuel,
water or waste tank tests and soil samples undertaken by or on behalf of FRS or
any of its Subsidiaries, any written communications by or on behalf of FRS or
any of its Subsidiaries with Federal, state or local governments on
environmental matters, and any OSHA citations issued to FRS or any of its
Subsidiaries; and

                  (n) no underground storage tanks are present on any property
operated by or on behalf of FRS or any of its Subsidiaries at any location and
no such tanks were previously abandoned or removed.

         4.15 GOVERNMENTAL LICENSES AND PERMITS; COMPLIANCE WITH LAWS.

                  (a) Section 4.15 of the Seller Disclosure Schedule contains an
accurate, correct and complete list and summary description of each Permit
issued to FRS or any of its Subsidiaries and used in the Target Operations. Such
Permits are valid and in full force and effect and there are not pending, or, to
the knowledge of the Seller Parties or FRS, threatened, any proceedings which
could result in the termination, revocation, modification, limitation or
impairment of any such Permit. Except as described in Section 4.15 of the Seller
Disclosure Schedule, neither FRS nor any of its Subsidiaries has received any
notice of any revocation or modification of any Permit by any Governmental
Entity nor has FRS or any of its Subsidiaries received notice of any proposed or
intended revocation or modification of any Permit by any Governmental Entity.
The Permits listed in Section 4.15 of the Seller Disclosure Schedule constitute
all Permits that are necessary or appropriate to own and conduct the Target
Operations as presently conducted and to own, occupy and lease the Land. All
such Permits will continue to be in full force and effect after the consummation
of the transactions contemplated hereby.

                  (b) The Target Operations comply and have been conducted in
compliance with all applicable Laws. No notice from any Governmental Entity or
other person of any violation of any Law or requiring or calling attention to
the necessity of any repairs, installation or alteration in connection with the
Target Operations has been served.

        4.16 LABOR MATTERS.

                  (a) Section 4.16 of the Seller Disclosure Schedule lists and
describes each collective bargaining agreement covering any employees of FRS or
any Subsidiary of FRS. Except as disclosed in Section 4.16 of the Seller
Disclosure Schedule, (i) neither FRS nor any of its Subsidiaries is a party to
or bound by any collective bargaining or similar agreement with any labor
organization applicable to any employees of FRS or any of its Subsidiaries, (ii)
there is no labor strike, dispute, slowdown, work stoppage, unresolved material
labor union grievance or labor arbitration proceedings pending or, to the
knowledge of FRS or the Seller Parties, threatened against FRS or any of its


                                      -29-


Subsidiaries, and (iii) to the knowledge of FRS and the Seller Parties, there
are no current union organizing activities among employees of FRS or any of its
Subsidiaries.

                  (b) Since the enactment of the WARN Act, neither FRS nor any
of its Subsidiaries has effectuated a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of FRS or any of its
Subsidiaries. Except as set forth in Section 4.16 of the Seller Disclosure
Schedule, no employees of FRS or any of its Subsidiaries have suffered an
"employment loss" (as defined in the WARN Act) since December 31, 2002. For each
such plant closing or employment loss identified on the Seller Disclosure
Schedule, the Seller Parties have identified the date(s) on which FRS issued
notices to the affected employees, as required under the WARN Act.

        4.17 EMPLOYEE BENEFIT PLANS.

                  (a) Section 4.17 of the Seller Disclosure Schedule sets forth
each retirement, pension, bonus, stock purchase, profit sharing, stock option,
deferred compensation, severance or termination pay, insurance, medical,
hospital, dental, vision care, drug, sick leave, disability, accidental death
and dismemberment, salary continuation, legal benefits, unemployment benefits,
vacation, incentive or other compensation plan or arrangement or other employee
benefit which is maintained, or otherwise contributed to or required to be
contributed to, by FRS or any of its Subsidiaries or any ERISA Affiliate of FRS
or any of its Subsidiaries for the benefit of employees or former employees and
directors or former directors of FRS or any of its Subsidiaries and, if
applicable, their spouses, dependents or beneficiaries (the "COMPANY EMPLOYEE
PLANS"). True and correct copies of each of the Company Employee Plans have been
delivered to Buyer, along with the three most recent annual reports for such
plans (including any actuarial report), any trust agreement relating to such
plans and the most recent summary plan description, as well as all determination
letters for Company Employee Plans intended to be qualified under Code Section
401(a).

                  (b) FRS and each of its Subsidiaries have at all times
complied with, both as to form and operation, and in all respects, the
applicable provisions of ERISA and the Code, and any underlying regulation or
guidance issued thereunder, and each other Law imposed or administered by any
Governmental Entity with respect to each of the Company Employee Plans. Each
Company Employee Plan has been administered in accordance with its terms. Except
as set forth in Section 4.17 of the Seller Disclosure Schedule, neither FRS nor
any of its Subsidiaries has at any time maintained, adopted, established,
contributed to or been required to contribute to, otherwise participated in or
been required to participate in, or had any liability with respect to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA. All Company
Employee Plans providing pension or retirement benefits or obligations to
current or former employees or their beneficiaries are referred to collectively
as "COMPANY PENSION PLANS" and are identified on Section 4.17 of the Seller
Disclosure Schedule.

                                      -30-


                  (c) Neither FRS, nor any of its Subsidiaries, nor any ERISA
Affiliate of FRS nor any of its Subsidiaries sponsors, maintains or contributes
to, or has ever sponsored, maintained or contributed to, or had any liability
with respect to, any employee benefit plan subject to Section 302 of ERISA,
Section 412 of the Code or Title IV of ERISA, nor does it have a current or
contingent obligation to contribute to, or ever had an obligation to contribute
to, or have any other liability with respect to, any multiemployer plan (as
defined in Section 3(37) of ERISA). Neither FRS nor any of its Subsidiaries has
any liability with respect to any benefit plan or arrangement other than with
respect to the Company Employee Plans.

                  (d) Except as set forth in Section 4.17 of the Seller
Disclosure Schedule, no provision concerning a Company Pension Plan is contained
in any collective bargaining agreement affecting any current or former employees
of FRS or any of its Subsidiaries. Each Company Pension Plan that is required to
be qualified under Section 401(a) and Section 501(a) of the Code has received a
determination letter to such effect. Any such determination letter that has been
obtained remains in effect and has not been revoked, and with respect to any
application that is pending, none of the Seller Parties, nor FRS nor any of FRS'
Subsidiaries has any reason to suspect that such application for a determination
will be denied. Nothing has occurred since the date of any such determination
letter that is reasonably likely to adversely affect such qualification or
exemption, or result in the imposition of excise taxes or income taxes on
unrelated business income under the Code or ERISA with respect to any such
Company Pension Plan.

                  (e) FRS and its Subsidiaries have paid all amounts required to
be paid as a contribution to each Company Employee Plan as of the last day of
the most recent fiscal year of such Company Employee Plan; all benefits accrued
under any funded or unfunded Company Employee Plan will have been paid, accrued,
or otherwise adequately reserved in accordance with U.S. GAAP as of the Closing
Date and all monies withheld from employee payroll with respect to any Company
Employee Plan have been transferred to the appropriate Company Employee Plan in
a timely manner as required by applicable Law.

                  (f) All reports, Tax Returns and similar documents with
respect to each Company Employee Plan required to be filed with any Governmental
Entity or distributed to any Company Employee Plan participant have been duly
filed on a timely basis or distributed. There are no pending investigations by
any Governmental Entity involving or relating to any Company Employee Plan, no
threatened or pending claims (except for claims for benefits payable in the
normal operation of the Company Employee Plans), suits or proceedings against
any Company Employee Plan or asserting any rights or claims to benefits under
any Company Employee Plan which could give rise to a liability nor, to the
knowledge of the Seller Parties, the Trust Beneficiaries or FRS, are there any
facts that could give rise to any liability in the event of any such
investigation, claim, suit or proceeding. No notice has been received by any
Seller, any Trust Beneficiary, FRS or any of its Subsidiaries of any complaints
or other proceedings of any kind involving FRS or any of its Subsidiaries or any
of the employees of FRS or any of its Subsidiaries or other potential claimants
before any Governmental Entity relating to any Company Employee Plan or to FRS
or any of its Subsidiaries and to the knowledge of the Seller Parties, the Trust


                                      -31-


Beneficiaries and FRS, there is no basis for any such claims. No excise tax
under Chapter 43 of the Code is payable with respect to any Company Employee
Plan, and no event has occurred that could result in any such tax being due.

                  (g) Neither FRS nor any of its Subsidiaries maintains any
welfare benefit fund within the meaning of Section 419 of the Code. With respect
to any Company Employee Plan that is an employee welfare benefit plan (within
the meaning of Section 3(1) of ERISA) (a "WELFARE PLAN"), except as specified in
Section 4.17 of the Seller Disclosure Schedule, (i) each Welfare Plan for which
contributions are claimed by FRS or any of its Subsidiaries as deductions under
any provision of the Code complies with all applicable requirements pertaining
to such deduction, (ii) with respect to any welfare benefit fund (within the
meaning of Section 419 of the Code) related to a Welfare Plan, there is no
disqualified benefit (within the meaning of Section 4976(b) of the Code) that
would result in the imposition of a tax under Section 4976(a) of the Code, (iii)
any Benefit Plan that is a group health plan (within the meaning of Section
4980B(g)(2) of the Code) complies, and in each and every case has complied, with
all of the applicable requirements of Section 4980B of the Code, ERISA, Title
XXII of the Public Health Service Act, the applicable provisions of the Social
Security Act, the Health Insurance Portability and Accountability Act of 1996,
the Women's Health and Cancer Rights Act of 1998 and other applicable Laws, and
(iv) all Welfare Plans may be amended or terminated at any time on or after the
Closing Date. Except as specified in Section 4.17 of the Seller Disclosure
Schedule, no Company Employee Plan provides any health, life or other welfare
coverage to employees of FRS or any of its Subsidiaries beyond termination of
their employment by reason of retirement or otherwise, other than coverage as
may be required under Section 4980B of the Code or under the continuation of
coverage provisions of the Laws of any state or locality.

                  (h) Except as otherwise set forth in Section 4.17 of the
Seller Disclosure Schedule, neither the execution and delivery of this Agreement
nor the consummation of this Agreement will (i) result in any payment to be made
by FRS or any of its Subsidiaries becoming due to any employee or former
employee, officer or director, or (ii) increase or vest any benefits payable
under any Company Employee Plan.

                  (i) Except as otherwise set forth in Section 4.17 of the
Seller Disclosure Schedule, any amount that could be received (whether in cash
or property or the vesting of property) as a result of the Acquisition by any
employee, officer or director of FRS or any of its Subsidiaries who is a
disqualified individual (as such term is defined in proposed Treasury
Regulations Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Company Employee Plan currently in
effect will not be characterized as an excess parachute payment (as such term is
defined in Section 280G(b)(1) of the Code). Except as described in Section 10.2,
neither FRS nor any of its Subsidiaries has declared or paid any bonus
compensation in contemplation of the Acquisition.

         4.18 MATERIAL CONTRACTS . Section 4.18 of the Seller Disclosure
Schedule lists all of the following written or oral contracts, agreements and
commitments (collectively, the "MATERIAL CONTRACTS"):

                                      -32-


                  (a) all employment, consulting or personal services agreements
or contracts with any present or former officer, director or employee of FRS or
any of its Subsidiaries who has an annual salary of $100,000 or more;

                  (b) all Solid Waste management agreements and contracts
(including those relating to the receipt, transport, disposal or other
management of waste) between FRS or any of its Subsidiaries and any municipality
or other Governmental Entity or Person which call for annual payments to or by
FRS or any of its Subsidiaries of $100,000 or more, which list includes the term
of such agreements or contracts;

                  (c) all contracts, agreements, agreements in principle,
letters of intent and memoranda of understanding which call for or contemplate
the acquisition of (or right to acquire or right of first refusal or offer for)
any interest in any business enterprise, or any assets or properties outside the
ordinary course of business of FRS or any of its Subsidiaries, and all
contracts, agreements and commitments relating to the future disposition of a
material portion of the assets or properties of FRS or any of its Subsidiaries;

                  (d) all contracts, agreements with, or commitments to, any
Person containing any provision or covenant relating to the indemnification or
holding harmless by FRS or any of its Subsidiaries of any Person which could
result in a liability to FRS or any of its Subsidiaries of $100,000 or more;

                  (e) all leases or subleases of real property used in the
conduct of business of FRS or any of its Subsidiaries providing for annual
rental payments to be paid by or on behalf of FRS or such Subsidiary of more
than $100,000;

                  (f) all contracts or agreements committing FRS or any of its
Subsidiaries to make a capital expenditure in excess of $100,000;

                  (g) all guaranties or other commitments or undertakings under
which FRS or any of its Subsidiaries may be primarily, secondarily, contingently
or conditionally liable for or in respect of (or which creates, constitutes or
evidences a Lien on any of the assets or properties of FRS or such Subsidiary or
which secures the payment or performance of) any present or future liability or
obligation of or to any other Person;

                  (h) all contracts, agreements and undertakings with any
Governmental Entity or other Person which contain any provision or covenant
limiting (i) the ability of FRS or any of its Subsidiaries to engage in any line
of business, to compete with any Person, to do business with any Person or in
any location or to employ any Person or (ii) the ability of any Person to
compete with or obtain products or services from FRS or any of its Subsidiaries;

                  (i) all outstanding proxies, powers of attorney or similar
delegations of authority granted by FRS or any of its Subsidiaries or any Seller
or Trust Beneficiary or any other Person relating in any way to the Acquired
Shares, FRS or any of its Subsidiaries; and

                  (j) all other agreements which are material to FRS or any of
its Subsidiaries or the conduct of the Target Operations.

                                      -33-


         The Seller Parties have delivered to the Buyer a true and correct copy
of each Material Contract. Each of the Material Contracts is in full force and
effect and constitutes a legal, valid and binding obligation of FRS or the
applicable Subsidiary which is a party to it, and, to the knowledge of FRS, the
Trust Beneficiaries and the Seller Parties, of each other Person that is a party
to it and each Material Contract will continue to be legal, valid, binding,
enforceable and in full force and effect on the same terms immediately after the
Closing. Except as set forth in Section 4.18 of the Seller Disclosure Schedule,
neither FRS nor any of its Subsidiaries is, and, to the knowledge of FRS, the
Trust Beneficiaries and the Seller Parties, no other party to any Material
Contract is, in violation, breach or default of such Material Contract or, with
or without notice or lapse of time or both, would be in violation, breach or
default of any such Material Contract. Except as set forth in Section 4.18 of
the Seller Disclosure Schedule, no Material Contract provides that any party
thereto may terminate such Material Contract by reason of the execution of this
Agreement or the consummation of the Acquisition and no Material Contract
requires the consent or approval of any Governmental Entity or other Person as a
result of or in connection with consummation of the Acquisition.

        4.19 REAL PROPERTY INTERESTS.

                  (a) OWNED LAND. Section 4.19(a) of the Seller Disclosure
Schedule contains an accurate legal description of all Land owned by FRS or any
of its Subsidiaries and a complete description of existing surveys, abstracts
and title policies in the possession of the Seller Parties, the Trust
Beneficiaries, FRS or any of its Subsidiaries relating to the owned and leased
Land of FRS and its Subsidiaries. FRS and its Subsidiaries have good and
marketable fee simple title to all fee estates included in all owned Land, free
and clear of all Liens, except for Permitted Liens. The Seller Parties have
delivered to Buyer true and complete copies of all existing surveys, abstracts
and title policies listed in Section 4.19 of the Seller Disclosure Schedule.

                  (b) LEASED LAND. Section 4.19(b) of the Seller Disclosure
Schedule is a complete list of all Real Estate Leases to which FRS or any of its
Subsidiaries is a party or subject. Except as otherwise disclosed in Section
4.19(b) of the Seller Disclosure Schedule, (i) each Real Estate Lease is legal,
valid, binding, enforceable and in full force and effect; (ii) subject to
obtaining any consent described in Section 4.19(b) of the Seller Disclosure
Schedule, each Real Estate Lease will continue to be legal, valid, binding,
enforceable and in full force and effect on the same terms immediately after the
Closing; (iii) neither FRS nor any of its Subsidiaries is in breach or default
in any material respect under, and no event has occurred which, with notice or
lapse of time, would constitute such a breach or default or permit termination,
modification or acceleration of, any Real Estate Lease; (iv) no other party to
any Real Estate Lease is in breach or default in any material respect under, and
no event has occurred which, with notice or lapse of time, would constitute such
a breach or default or permit termination, modification or acceleration of, such
Real Estate Lease; (v) no party to any Real Estate Lease has repudiated any
provision thereof; (vi) there are no disputes, oral agreements or forbearances
in effect as to any Real Estate Lease; (vii) no Real Estate Lease has been
modified in any respect, except to the extent that such modifications are
described in Section 4.19(b) of the Seller Disclosure Schedule; and (viii)
neither FRS nor any of its Subsidiaries, nor any Seller, nor any Trust


                                      -34-


Beneficiary has assigned, transferred, conveyed, mortgaged, deeded in trust or
caused any Lien to exist with respect to any interest of FRS or any of its
Subsidiaries in any Real Estate Lease.

                  (c) NO PROCEEDINGS. There is no proceeding in eminent domain
or any similar proceeding pending, or, to the knowledge of the Seller Parties or
FRS or its Subsidiaries, threatened, affecting the fee or the leasehold interest
of FRS or any of its Subsidiaries in any Land. There exists no writ, injunction,
decree, order or judgment outstanding, nor any litigation pending, or, to the
knowledge of FRS, the Trust Beneficiaries and the Seller Parties, threatened,
relating to the lease, use, occupancy or operation by FRS or any of its
Subsidiaries of any fee or leasehold interest in Land.

                  (d) CONDITION AND OPERATION OF IMPROVEMENTS. To the knowledge
of FRS, the Trust Beneficiaries and the Seller Parties, as to each parcel of
Land: (i) all components of all buildings, structures and other improvements
included upon or within such Land (the "IMPROVEMENTS"), including the roofs and
structural elements thereof, are in adequate condition to operate such
facilities as currently used, occupied or operated and comply with all
applicable zoning Laws and building codes, regulations, ordinances and
restrictions applicable thereto; (ii) there are no structural deficiencies in
any buildings located upon any Land; and (iii) no Improvement or portion thereof
is dependent for its access, operation or utility on any land, building or other
improvement not included in any Land.

                  (e) MATERIAL VIOLATIONS. To the knowledge of FRS, the Trust
Beneficiaries and the Seller Parties, there are no material violations of any
orders of any Governmental Entity or court orders requiring repairs, alterations
or correction of existing conditions on the Improvements; there are no material
defects or deficiencies in any of the buildings, or any machinery, equipment,
fixtures, systems, appliances or other Improvements, including, without
limitation, any material leakage or seepage from roofs, walls, foundations or
underground storage tanks; and all buildings, structures and other Improvements
and all mechanical systems and fixtures including, without limitation, all
water, sewer, plumbing, heating, cooling, air conditioning, sprinkling, gas,
public sewer, communications and electrical systems and all other facilities of
whatever nature are in good working order.

                  (f) UTILITY SERVICE. To the knowledge of FRS, the Trust
Beneficiaries and the Seller Parties, (i) all gas, electric, water and other
utility lines, sewers and curbs which are required in connection with the
conduct of the Target Operations have been installed; (ii) all Improvements used
by FRS or any of its Subsidiaries, including, without limitation, any septic
tank, field or drain tiles servicing any buildings used by FRS or any of its
Subsidiaries, are in compliance in all material respects with all building,
zoning, air pollution, land use, health and other Laws and restrictions
applicable thereto, and there are no notices, suits or judgments relating to
violations of any building, zoning, air pollution, land use, health or other
Laws and restrictions, and there are no such violations which have not been
corrected; and (iii) no labor, material or services have been furnished by or at
the direction of FRS or any of its Subsidiaries in or about the Land used by FRS
or any of its Subsidiaries in connection with the Target Operations, or any part
thereof, as a result of which any mechanics', laborers' or materialmen's liens
or claims might arise.



                                      -35-


         4.20 BANK ACCOUNTS. Section 4.20 of the Seller Disclosure Schedule
lists each bank, trust company or similar institution with which FRS or any of
its Subsidiaries maintains an account or safe deposit box, and accurately
identifies each such account or safe deposit box by its number or other
identification and the names of all individuals authorized to draw thereon or
have access thereto.

         4.21 ACCOUNTS RECEIVABLE. Except as set forth in Section 4.21 of the
Seller Disclosure, all accounts receivable of FRS and its Subsidiaries reflected
in the Company Financial Statements are valid receivables, subject to no offsets
or counterclaims and are current and collectible, net of the applicable reserve
for bad debts contained in the Company Financial Statements.

         4.22 OFFICERS AND DIRECTORS. Section 4.22 of the Seller Disclosure
Schedule accurately lists by name and title all officers and directors of FRS
and each of its Subsidiaries. None of the officers or directors of FRS or its
Subsidiaries during the previous five (5) years has been (a) subject to
voluntary or involuntary petition under the federal bankruptcy laws or any state
insolvency law or the appointment of a receiver, fiscal agent or similar officer
by a court for his business or property; (b) convicted in a criminal proceeding
or named as a subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses); (c) subject to any order, judgment, or
decree (not subsequently reversed, suspended or vacated) of any court of
competent jurisdiction permanently or temporarily enjoining him from engaging,
or otherwise imposing limits or conditions on his engagement in any securities,
investment advisory, banking, insurance or other type of business or acting as
an officer or director of a public company; or (d) found by a court of competent
jurisdiction in a civil action or by the SEC or the Commodity Futures Trading
Commission to have violated any federal or state securities, commodities or
unfair trade practices law, which judgment or finding has not been subsequently
reversed, suspended, or vacated.

         4.23 BROKERS. Except as described in Section 4.23 of the Seller
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission from Buyer Parent, Buyer, Buyer
Sub or FRS or any of its Subsidiaries in connection with this Agreement or the
Acquisition based upon arrangements made by or on behalf of any Seller or Trust
Beneficiary, or FRS or any of its Subsidiaries.

         4.24 DISCLOSURE. The representations, warranties and statements
contained in this Agreement and in each Ancillary Agreement and in the
certificates, Exhibits, and Schedules delivered to Buyer by the Seller Parties
and the Trust Beneficiaries pursuant to this Agreement do not contain any untrue
statement of a material fact, and, when taken together, do not omit to state a
material fact required to be stated therein or necessary to be stated therein in
order to make such representations, warranties or statements not misleading in
light of the circumstances under which they were made. There is no material fact
directly relating to the properties, assets, business, operations, condition
(financial or otherwise) or prospects of FRS or any of its Subsidiaries or the
Target Operations (including any competitive developments other than facts which
relate to general economic or industry trends or conditions) that has had or
could have a Material Adverse Effect on FRS or the Target Operations that has
not been set forth in this Agreement or in the Seller Disclosure Schedule.



                                      -36-


         4.25 INTELLECTUAL PROPERTY. Section 4.25 of the Seller Disclosure
Schedule sets forth an accurate, correct and complete list and summary
description of all patents, trademarks, trademark rights, trade names, trade
styles, trade dress, product designations, service marks, copyright
registrations and applications for any of the foregoing utilized in the Target
Operations (the "INTELLECTUAL PROPERTY"). Section 4.25 of the Seller Disclosure
Schedule sets forth an accurate, correct and complete list and summary
description of all licenses and other agreements relating to any Intellectual
Property. None of the Intellectual Property is subject to any extensions,
renewals, Taxes or fees due within ninety (90) days after Closing. With respect
to the Intellectual Property, (a) FRS and/or its Subsidiaries are the sole and
exclusive owners or have the sole and exclusive right to use the Intellectual
Property; (b) no action, suit, proceeding or investigation is pending or, to the
knowledge of FRS, the Trust Beneficiaries and the Seller Parties, threatened
with respect to the Intellectual Property; (c) none of the Intellectual Property
interferes with, infringes upon, conflicts with or otherwise violates the rights
of others or, to the knowledge of FRS, the Trust Beneficiaries and the Seller
Parties, is being interfered with or infringed upon by others, and none is
subject to any outstanding order, decree, judgment, stipulation or charge; (d)
there are no royalty, commission or similar arrangements, and no licenses,
sublicenses or agreements, pertaining to any of the Intellectual Property; (e)
neither FRS nor any of its Subsidiaries have agreed to indemnify any Person for
or against any infringement of or by the Intellectual Property; (f) all items of
Intellectual Property are properly registered under applicable Law; and (g) the
Intellectual Property constitutes all such assets, properties and rights which
are used in or necessary for the conduct of the Target Operations as conducted
as of the date hereof.

         4.26 SOFTWARE. Section 4.26 of the Seller Disclosure Schedule sets
forth an accurate and complete list and summary description of all the Software
owned, licensed or otherwise used by FRS or any of its Subsidiaries. Section
4.26 of the Seller Disclosure Schedule identifies or describes (A) all Software
of or relating primarily to the Target Operations which is owned by FRS and its
Subsidiaries; and (B) all Software of or relating primarily to the Target
Operations which is licensed to FRS and its Subsidiaries by third parties. With
respect to the Software:

                  (a) all documentation for Software licensed to FRS and/or its
Subsidiaries is current (to the extent any third party owner supplies updated
documentation to licensees), accurate and sufficient in detail and content to
identify and explain the nature thereof, and to allow its full and proper use by
Buyer Parent, Buyer, Buyer Sub, FRS and its Subsidiaries following the Closing
without reliance on the special knowledge or memory of others; and

                  (b) FRS and its Subsidiaries own all right, title and interest
in the Software that is not designated as licensed free and clear of any Liens
or legal or equitable claims of others.

         4.27 INSURANCE. Section 4.27 of the Seller Disclosure Schedule sets
forth an accurate and complete list and summary description (including name of
the insurer, coverage, premium and expiration date) of all binders, policies of
insurance, self insurance programs or fidelity bonds related to the Target
Operations ("INSURANCE"). All insurance premiums with respect to the Insurance
have been paid in full. All Insurance has been issued by financially sound
insurance companies under valid and enforceable policies or binders for the
benefit of FRS and its Subsidiaries and all such policies or binders are in full


                                      -37-


force and effect and are in such types and amounts and insure against such
risks, casualties and contingencies as is customary for enterprises in
operations similar to the Target Operations. There are no pending or asserted
claims against any Insurance as to which any insurer has denied liability or
reserved rights, and there are no claims under any Insurance that have been
disallowed or improperly filed within the last three fiscal years. Section 4.27
of the Seller Disclosure Schedule sets forth the claims experience for the last
three full fiscal years and the interim period through the date hereof with
respect to the Target Operations (both insured and self-insured). Except as set
forth on Section 4.27 of the Seller Disclosure Schedule, no notice of
cancellation or nonrenewal with respect to, or material increase of premium for,
any Insurance has been received by FRS or any of its Subsidiaries within the
last three fiscal years.

         4.28 COMPLIANCE WITH REGULATION D; STOCKHOLDERS. Each Seller and Trust
Beneficiary is aware that the Stock Consideration to be issued pursuant to the
Acquisition constitutes "restricted securities" within the meaning of the
Securities Act. Each Seller and Trust Beneficiary is an "accredited investor" as
defined in Regulation D under the Securities Act. Each Seller and Trust
Beneficiary acknowledges that the securities comprising the Stock Consideration
have not been registered under the Securities Act or the securities Laws of any
state or other jurisdiction and cannot be disposed of unless they are
subsequently registered under the Securities Act and any applicable state Laws
or unless an exemption from such registration is available. Each Seller and
Trust Beneficiary (a) has such knowledge and experience in financial and
business matters so as to be capable of evaluating and understanding the merits
and risks of an investment in Buyer Parent, (b) has received certain information
concerning Buyer Parent and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks of an
investment in Buyer Parent Common Stock, and (c) is able to bear the economic
risk of its investment in Buyer Parent and the Stock Consideration in that,
among other factors, such Seller and Trust Beneficiary can afford to hold the
shares of Buyer Parent Common Stock issued hereunder for an indefinite period
and can afford a complete loss of its investment in Buyer Parent.

         4.29 CORRUPT PRACTICES. Except in compliance with all applicable Laws,
none of FRS nor any of its Subsidiaries, nor any Seller or Trust Beneficiary,
nor any of their respective officers, directors, employees or agents, have,
directly or indirectly, ever made, offered or agreed to offer anything of value
to (a) any employees, representatives or agents of any customers of FRS or any
of its Subsidiaries for the purpose of attracting business or (b) any domestic
governmental official, political party or candidate for government office or any
of their employees, representatives or agents.

         4.30 AGGREGATION. The imperfections, defects, orders, actions,
defaults, liabilities, inaccuracies and other items omitted from disclosure in
connection with the representations and warranties made in Sections 4.1 through
4.29 on grounds of immateriality, lack of knowledge or failure to have a
Material Adverse Effect do not and could not, taken as a whole, constitute a
Material Adverse Effect on FRS or the Target Operations.

                                      -38-



                                   ARTICLE V

                     REPRESENTATIONS AND WARRANTIES OF BUYER

         The Buyer Parent and Buyer represent and warrant to the Seller Parties,
as of November 21, 2003, as of the date hereof and as of the Closing Date, that:

         5.1 ORGANIZATION. Each of Buyer and Buyer Sub is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. Buyer Parent is a corporation duly organized and validly existing
under the laws of Ontario. Each of Buyer Parent, Buyer and Buyer Sub has full
authority and corporate power to conduct its business as it is currently being
conducted.

         5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Buyer Parent, Buyer
and Buyer Sub has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and each Ancillary Agreement to
which it will be a party. The execution and delivery of this Agreement and each
Ancillary Agreement to which Buyer Parent, Buyer or Buyer Sub, as the case may
be, will be party, and the consummation of the Acquisition and the other
transactions contemplated in this Agreement and the Ancillary Agreements have
been duly authorized by the Board of Directors of Buyer Parent, Buyer or Buyer
Sub, as the case may be, and, no other corporate proceedings on the part of
Buyer Parent, Buyer or Buyer Sub are necessary to authorize this Agreement, any
Ancillary Agreement to which Buyer Parent, Buyer or Buyer Sub, as the case may
be, will be a party, or the consummation of the Acquisition or the other
transactions contemplated in this Agreement and the Ancillary Agreements. This
Agreement has been duly executed and delivered by Buyer Parent, Buyer and Buyer
Sub. Assuming the valid authorization, execution and delivery of this Agreement
(and each Ancillary Agreement to which FRS, any Seller Party or any Trust
Beneficiary will be a party) by FRS, each Seller Party and each Trust
Beneficiary in the case of this Agreement (and each of FRS, each Seller Party
and each Trust Beneficiary, as applicable, in the case of the Ancillary
Agreements), this Agreement is, and upon its execution and delivery by Buyer
Parent, Buyer or Buyer Sub, as the case may be, each Ancillary Agreement to
which Buyer Parent, Buyer or Buyer Sub, as the case may be, is a party will be,
a valid and binding obligation of Buyer Parent, Buyer or Buyer Sub, as the case
may be, in each case enforceable in accordance with its respective terms.

         5.3 NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the applicable Ancillary Agreements by Buyer Parent, Buyer and
Buyer Sub, and the consummation of the Acquisition and the other transactions
contemplated in this Agreement and the Ancillary Agreements will not constitute
a breach or violation of or default under the charter or bylaws (or similar
organizational documents) or internal rules or regulations governing the conduct
of corporate actions of Buyer Parent, Buyer or Buyer Sub or any Law applicable
to Buyer Parent, Buyer or Buyer Sub.

         5.4 CONSENTS AND APPROVAL. Except as set forth in Section 5.4 of
Buyer's Disclosure Schedule, and except for HSR Act filings, no consent, order,
approval, waiver, authorization of, or registration, application, declaration or
filing with, any Person is required with respect to Buyer Parent, Buyer or Buyer


                                      -39-


Sub in connection with the execution and delivery of this Agreement and the
consummation of the Acquisition and the other transactions contemplated in this
Agreement and the Ancillary Agreements.

         5.5 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Acquisition based upon arrangements made by or on behalf of Buyer Parent,
Buyer or Buyer Sub.

         5.6 SEC REPORTS. Buyer Parent has filed all forms, reports, schedules,
statements and documents required to be filed by Buyer Parent with the SEC since
January 1, 2002 pursuant to the requirements of the Exchange Act, and all rules
and regulations promulgated thereunder. All forms, reports, schedules,
statements and documents filed by Buyer Parent with the SEC since January 1,
2002 (collectively, the "SEC REPORTS") have been filed on a timely basis in
accordance with the applicable requirements of the Exchange Act, and all rules
and regulations promulgated thereunder, and did not at the time they were filed
(or if amended or superseded by a filing prior to the date hereof, then on the
date of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

                                   ARTICLE VI

                        SELLER AGREEMENTS PENDING CLOSING

         The Seller Parties and Trust Beneficiaries, jointly and severally,
agree that, between the date hereof and the Closing Date, without the prior
written consent of Buyer:

         6.1 CONDUCT OF BUSINESS. The Seller Parties and Trust Beneficiaries
shall cause FRS and each of its Subsidiaries to conduct its operations according
to its ordinary and usual course of business, comply with applicable Laws,
comply with the terms of the Company Employee Plans (including by making all
contributions required by the terms thereof, applicable actuarial
recommendations and applicable Law), and use its reasonable best efforts to
preserve intact its business organization, keep available the services of its
officers and employees and maintain normal business relationships with
customers, suppliers and others having business relationships with it. The
Seller Parties and Trust Beneficiaries shall confer on a regular and frequent
basis with one or more designated representatives of Buyer to report on
operational matters of materiality and to report the general status of on-going
operations of FRS and its Subsidiaries. The Seller Parties and Trust
Beneficiaries shall notify Buyer of:

                  (a) any unexpected material emergency or other material change
in the normal course of business of the Target Operations;

                  (b) the instigation of, or any significant development in, any
regulatory proceedings, governmental complaints, investigations or hearings (or
communications indicating that any may be contemplated) involving FRS or any of
its Subsidiaries, which instigation or development could have a Material Adverse
Effect on FRS or the Target Operations; and



                                      -40-


                  (c) any matter or event which comes to the knowledge of the
Seller Parties or the Trust Beneficiaries and which makes or could make any
representation or warranty made by the Seller Parties and Trust Beneficiaries in
Article IV untrue or inaccurate.

         The Seller Parties and Trust Beneficiaries shall keep Buyer fully
informed of such events and permit Buyer's representatives access to all
materials prepared in connection with such events.

         The Seller Parties and Trust Beneficiaries further agree to cause FRS
and its Subsidiaries to maintain and continue, between the date hereof and the
Closing Date, the customer billing, receivable collection and payables payment
practices of FRS and its Subsidiaries in a manner consistent with past practices
and in the ordinary course of business.

         6.2 FORBEARANCE BY FRS. The Seller Parties and the Trust Beneficiaries
shall not cause or permit FRS or any of its Subsidiaries to:

                  (a) amend its charter, bylaws or operating agreement (or other
similar organizational documents);

                  (b) issue, sell, pledge, dispose of or encumber any shares of
its capital stock or equity interests or securities convertible into any such
shares or equity interests, or enter into any agreement or commitment with
respect to the issuance or purchase of any such shares, equity interests or
securities;

                  (c) pay any dividend or other distribution in respect of its
capital stock, or redeem, purchase or acquire any of its capital stock or equity
interests;

                  (d) make or commit to make any capital investment, capital
expenditure, capital addition or capital improvement, except for Permitted
Capital Expenditures;

                  (e) except in the ordinary course of business, and except for
settlements made by insurers, enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to FRS or any of
its Subsidiaries or their respective properties which requires FRS or any of its
Subsidiaries to make a payment in excess of $100,000 or which would result in
the imposition of any restriction upon the operations of FRS or any of its
Subsidiaries, or the disposition of any of their respective properties;

                  (f) sell real property or any interest in or improvement upon
real property or any other capital asset the book value or sales price of which
is more than $100,000;

                  (g) amend any Company Employee Plan or make any statement
relating to any anticipated or proposed increase in benefits under any Company
Employee Plan for current, future or former employees of FRS or any of its
Subsidiaries other than strictly in accordance with the terms of the Company
Employee Plans as constituted on the date hereof;

                  (h) transfer, license, lease, sell, dispose of, mortgage or
encumber any assets or properties other than in the ordinary course of business;



                                      -41-


                  (i) increase compensation, benefits or severance for employees
of FRS or any of its Subsidiaries, except as required by any collective
bargaining agreements entered into by FRS or such Subsidiary as in effect on the
date hereof; or

                  (j) enter into any agreement to acquire the stock, equity,
assets or business of any other Person.

         6.3 ACCESS AND INFORMATION. The Seller Parties and Trust Beneficiaries
shall, and shall cause FRS and its Subsidiaries to, give to Buyer Parent, Buyer,
Buyer Sub and their representatives (including their lenders, investors and
other financing sources and their respective representatives) full access during
normal business hours to all the properties, books, contracts, commitments,
records, Tax Returns, personnel and advisors of each Seller, each Trust
Beneficiary, FRS and each of its Subsidiaries at a location designated by Seller
so that Buyer Parent, Buyer, Buyer Sub and their representatives may have full
opportunity to make such investigation of FRS and its Subsidiaries as they shall
reasonably request in advance. The Seller Parties and Trust Beneficiaries will
direct Shepard, Schwartz & Harris to permit Buyer's Auditors to review and
examine the work papers of Shepard, Schwartz & Harris relating to FRS and its
Subsidiaries and the Target Operations. The Seller Parties and Trust
Beneficiaries will, and will cause FRS and its Subsidiaries to (a) promptly
furnish to Buyer all information concerning FRS and its Subsidiaries and the
Target Operations, including without limitation audited and unaudited financial
statements and other financial information for FRS and its Subsidiaries,
required for inclusion in any application, filing, statement or notice to be
made by Buyer Parent, Buyer or Buyer Sub to, or filed or joined in by Buyer
Parent, Buyer or Buyer Sub with, any Governmental Entity, including, without
limitation, any registration statement, proxy statement or other statement or
notice, or in any offering memorandum, prospectus, bank book or other offering
document prepared in connection with Buyer Parent's, Buyer's or Buyer Sub's
financing of the transaction, and none of such information (including any
information provided to Buyer's Auditors by FRS, any of its Subsidiaries, the
Seller Parties, the Trust Beneficiaries or Shepard, Schwartz & Harris) shall, at
the date furnished, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading; (b) cause counsel and independent accounts of FRS and
its Subsidiaries to cooperate with Buyer, Buyer Parent, Buyer Sub and their
respective affiliates and representatives (including investment bankers, counsel
and independent accountants) in the preparation of such applications, filings,
statements, notices, offering memoranda, bank books, prospectuses and other
offering documents; and (c) use their commercially reasonable efforts to obtain
consents and "comfort letters" from Shepard, Schwartz & Harris or any other
independent accountants of FRS and its Subsidiaries as required in connection
with any such filings, statements, notices, reports, offering memoranda, bank
books, prospectuses and other offering documents.

         6.4 SUPPLEMENTAL INFORMATION. Between the date hereof and the Closing
or the earlier termination of this Agreement, the Seller Parties and Trust
Beneficiaries shall furnish Buyer with such additional financial and operating
data and other information as to FRS and its Subsidiaries and the Target
Operations as Buyer may from time to time request. Without limiting the
generality of the foregoing, as soon as practicable but in any event within
fifteen (15) days after the end of each month occurring between the date hereof
and the Closing Date, the Seller Parties shall furnish to Buyer the unaudited


                                      -42-


consolidated balance sheets of FRS and its Subsidiaries and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
fiscal month then ended (the "POST-SIGNING INTERIM FINANCIAL STATEMENTS"). The
Post-Signing Interim Financial Statements will be prepared in accordance with
U.S. GAAP, and will fairly present in all material respects in accordance with
such accounting principles the consolidated financial position of FRS and its
Subsidiaries at the respective dates thereof, and the consolidated results of
operations, stockholders' equity (deficit) and cash flows of FRS and its
Subsidiaries for the respective periods covered thereby, subject to year-end
adjustments (consisting of normal recurring accruals) and the omission of
explanatory footnote materials required by U.S. GAAP.

         6.5 ACCESS FOR ENVIRONMENTAL REPORT. The Seller Parties and Trust
Beneficiaries shall cause FRS and its Subsidiaries to give to the independent
environmental consultants engaged by and at the expense of Buyer (the
"ENVIRONMENTAL CONSULTANT"), full access to the facilities, personnel and
records of FRS and its Subsidiaries as such consultants shall reasonably request
(including physical inspection of sites, drilling of wells and soil borings and
collection of samples and other Phase II investigatory activities and
techniques) in order to conduct Phase II environmental assessments of each
parcel of real property owned, or under the management or control of, or
operated, leased or occupied by, FRS or any of its Subsidiaries, and to prepare
a report reflecting the findings and recommendations of such consultants
concerning such Phase II environmental assessments (the "ENVIRONMENTAL REPORT").
The Seller Parties and Trust Beneficiaries shall use their reasonable best
efforts to ensure that all information provided to Environmental Consultant in
the course of its conduct of such environmental assessments is accurate,
complete and not misleading (including by omissions). The Seller Parties and
Trust Beneficiaries will provide, and will cause FRS and its Subsidiaries to
provide, upon written request therefor, all consents, approvals and directions
(and waivers of privacy, freedom of information and similar Laws) so as to
permit the Environmental Consultant to have prompt and unrestricted access to
all relevant information in the possession or under the control of Governmental
Entities. Any and all environmental reports prepared by Buyer prior to Closing
with respect to the Land shall be delivered to the Seller Parties upon their
request.

         6.6 NO SOLICITATION OF TRANSACTIONS.

                  (a) Unless and until this agreement is terminated pursuant to
Section 15.3(a), (c) or (d), none of the Seller Parties, the Trust
Beneficiaries, FRS nor any of its Subsidiaries will, directly or indirectly, and
the Seller Parties, the Trust Beneficiaries, FRS and its Subsidiaries will
instruct their respective officers, directors, employees, agents, advisors or
other representatives (including, without limitation, any investment banker,
attorney or accountant retained by it) (collectively, the "REPRESENTATIVES"),
not to, directly or indirectly, solicit, initiate, seek, entertain or encourage
(including by way of furnishing nonpublic information), or take any other action
to facilitate or support, any inquiries or the making of any proposal or offer
that constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or continue
discussions, negotiate with or furnish any information to, any Person in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to
or endorse any Competing Transaction. The Seller Parties and the Trust
Beneficiaries will notify Buyer immediately after receipt by any of the Seller
Parties, the Trust Beneficiaries, or FRS or any of its Subsidiaries (or their
respective Representatives) of any proposal for, or inquiry respecting, any
Competing Transaction, or any request for nonpublic information in connection


                                      -43-


with such proposal or inquiry or for access to the properties, books or records
of FRS or any of its Subsidiaries by any Person that informs or has informed any
of the Seller Parties, the Trust Beneficiaries or FRS or any of its Subsidiaries
(or their respective Representatives) that it is considering making or has made
such a proposal or inquiry. Such notice to Buyer shall indicate in reasonable
detail the identity of the Person making such proposal or inquiry and the terms
and conditions of such proposal or inquiry. The Seller Parties, the Trust
Beneficiaries and FRS and its Subsidiaries immediately shall cease and cause to
be terminated (and shall instruct their respective Representatives to
immediately cease and terminate) all existing discussions or negotiations with
any parties conducted heretofore with respect to a Competing Transaction.

                  (b) A "COMPETING TRANSACTION" means any of the following
(other than the transactions contemplated by this Agreement): (i) a merger,
consolidation, share exchange, tender offer, sale of stock, business combination
or other similar transaction involving FRS or any of its Subsidiaries; or (ii)
any sale, lease, exchange, transfer or other disposition of assets or properties
used or useable in connection with the Target Operations other than in the
ordinary course of business consistent with past practice.

         6.7 CONSUMMATION OF ACQUISITION. The Seller Parties and the Trust
Beneficiaries shall use their reasonable best efforts to perform and fulfill,
and shall use their reasonable best efforts to cause FRS and its Subsidiaries to
perform and fulfill, all conditions and obligations on their part to be
performed and fulfilled under this Agreement, to the end that the Acquisition
shall be consummated. Without limiting the generality of the foregoing, and
notwithstanding anything in this Agreement to the contrary, the Seller Parties
and the Trust Beneficiaries shall use their reasonable best efforts to take or
cause to be taken all reasonable action to do or cause to be done, and to assist
and cooperate with, and to cause FRS and its Subsidiaries to assist and
cooperate with, the Buyer in doing, all things necessary, proper or advisable to
obtain all consents, amendments, waivers or authorizations under the terms of
all Material Contracts and under all Company Permits required as a result of or
in connection with the transactions contemplated hereby and to obtain all
necessary consents, approvals and authorizations of Governmental Entities as are
required to be obtained under applicable Law as a result of or in connection
with the transactions contemplated hereby.

         6.8 EMPLOYEE PLANS.

                  (a) Effective as of the date prior to the Closing Date, FRS
and its Subsidiaries shall terminate, or terminate their participation in, the
Company Employee Plans; PROVIDED that if, on or before the Closing Date, FRS and
its Subsidiaries shall have established a group medical and dental benefit plan
with CIGNA and such plan remains in effect on the Closing Date, such plan shall
not be so terminated. Buyer shall offer all employees of FRS or its Subsidiaries
who continue their employment with FRS or any of its Subsidiaries following the
Closing coverage with immediate eligibility under Buyer's group medical plan and
group dental plan, covering claims incurred on or after the Closing Date,
without a pre-existing condition limitation.

                  (b) If FRS obtains a favorable determination letter from the
IRS, Buyer shall take any and all necessary action to cause the trustee of a
defined contribution plan of Buyer or one of its ERISA Affiliates, to accept a


                                      -44-


direct rollover of all or a portion of any employee distributions from FRS'
401(k) plan (including plan loans) that constitute an eligible rollover
distribution pursuant to Code Section 402(c)(4).

                  (c) Buyer shall be responsible for all COBRA obligations that
arise with respect to all employees and former employees (and their dependents)
of FRS and its Subsidiaries who have experienced a COBRA qualifying event, as
defined in Code Section 4980B(f) or ERISA Section 603, on or prior to the
Closing Date.

         6.9 CERTAIN ASSETS. As of the Closing, the assets of FRS and its
Subsidiaries shall consist of all assets necessary or appropriate for the
conduct of the Target Operations, but excluding (a) the Altamonte facility in
Orlando, Florida currently leased by FRS, and (b) the lease agreement relating
to the premises currently used by FRS and its Subsidiaries to provide
compactor/container repair and refurbishment services and all assets currently
used to perform such services, which assets are listed on EXHIBIT M attached
hereto.

         6.10 AUDITED 2003 FINANCIAL STATEMENTS. On or before March 18, 2003,
the Seller Parties and the Trust Beneficiaries shall deliver to Buyer the
audited consolidated balance sheet of FRS and its Subsidiaries as of December
31, 2003 and the related audited consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the fiscal year then ended
(the "2003 FINANCIAL STATEMENTS"). Upon delivery, the 2003 Financial Statements
shall be considered "Year-End Financial Statements" solely for the purpose of
the representation and warranty set forth in Section 4.7.

                                  ARTICLE VII

                         BUYER COVENANTS PENDING CLOSING

         Buyer agrees that, between the date hereof and the Closing Date:

         7.1 CERTAIN INFORMATION. Buyer will furnish to each Seller Party all
information concerning Buyer Parent, Buyer, Buyer Sub and their respective
Subsidiaries required for inclusion in any application, filing, statement or
notice to be made by any Seller Party to, or filed or joined in by any Seller
Party with, any Governmental Entity in connection with this Agreement or the
Acquisition, and none of such information shall, at the date furnished, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

         7.2 FINANCING. Buyer Parent shall use commercially reasonable efforts
to obtain the financing necessary to consummate the Acquisition.

         7.3 CONSUMMATION OF ACQUISITION. Buyer shall use its commercially
reasonable efforts to perform and fulfill all conditions and obligations on its
part to be performed and fulfilled under this Agreement, to the end that the
Acquisition shall be consummated.



                                      -45-


                                  ARTICLE VIII

                                MUTUAL CONDITIONS

         The respective obligations of all Parties to consummate the Acquisition
and to take the other actions called for under this Agreement and the Ancillary
Agreements are subject to the fulfillment of each of the following conditions:

         8.1 NO ADVERSE PROCEEDINGS. No order entered or Law promulgated or
enacted by any Governmental Entity shall be in effect which would prevent
consummation of the Acquisition, and no proceeding brought by a Governmental
Entity or any other Person shall have been commenced and be pending which seeks
to restrain, enjoin, prevent or materially delay or restructure the transactions
contemplated hereby.

         8.2 HSR WAITING PERIOD. The waiting period under the HSR Act shall have
expired or otherwise been terminated.

                                   ARTICLE IX

                       CONDITIONS TO OBLIGATIONS OF BUYER

         The obligations of Buyer Parent, Buyer and Buyer Sub to consummate the
Acquisition and to take the other actions called for under this Agreement and
the Ancillary Agreements is subject to the fulfillment of each of the following
conditions:

         9.1 REPRESENTATIONS TRUE AT CLOSING. The Seller Parties, the Trust
Beneficiaries, FRS and its Subsidiaries shall have performed and complied in all
material respects with all obligations and agreements required to be performed
or complied with by them under this Agreement and the Ancillary Agreements at or
prior to the Closing, and the representations and warranties of the Seller
Parties and the Trust Beneficiaries contained in this Agreement shall be true
and correct when made and at and as of the Closing as if made at and as of such
date and time; and Buyer shall have received certificates, each dated the
Closing Date, of each of the Sellers and the Trust Beneficiaries and of the
President of FRS, to the effect set forth in this Section 9.1.

         9.2 THIRD PARTY CONSENTS. All consents, approvals or authorizations
required to be obtained pursuant to the Material Contracts and Company Permits
set forth on Section 9.2 of the Seller Disclosure Schedule shall have been
obtained.

         9.3 NO ADVERSE CHANGES. Since the date of this Agreement, no event or
series of events taken in the aggregate shall have occurred which could have a
Material Adverse Effect on FRS or the Target Operations.

         9.4 FINANCING. Buyer or Buyer Parent shall have received financing for
the Acquisition on terms and conditions reasonably satisfactory to Buyer and
Buyer Parent.



                                      -46-


         9.5 RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER. Allied Waste
Industries, Inc. ("ALLIED") and BFI Waste Systems of North America, Inc. ("BFI")
shall have waived in writing all of their respective rights and interests under
that certain Right of First Refusal Agreement dated as of September 20, 1999
among FRS, BFI and Allied (the "ROFR AGREEMENT") with respect to the Acquisition
and a copy of such written waiver shall have been delivered to Buyer or all of
Allied's and BFI's rights and interests under the ROFR Agreement with respect to
the Acquisition shall have expired or terminated without having been exercised
by Allied and Buyer shall have received a certificate dated as of the Closing
Date, of the President of FRS to such effect.

         9.6 SANFORD RECYCLING TRANSFER STATION. FRS and Sanford Recycling and
Transfer, Inc. shall have executed and delivered the Sanford Lease Agreement.

         9.7 BANK CONSENT. Buyer Parent shall have received the consent of its
lenders under its Credit Agreement dated as of December 31, 2003, as amended, to
the consummation of the Acquisition and the other transactions contemplated
hereby.

         9.8 CLOSING DOCUMENTS AND DELIVERIES. The Seller Parties and the Trust
Beneficiaries, FRS and its Subsidiaries shall have executed and delivered to
Buyer all documents required to be executed and delivered by them and shall have
taken all other actions required to be taken by them at or prior to Closing as
contemplated by Article III hereof.

                                   ARTICLE X

                  CONDITIONS TO THE SELLER PARTIES' OBLIGATIONS

         The respective obligations of the Seller Parties to consummate the
Acquisition and to take the other actions called for under this Agreement and
the Ancillary Agreements are subject to the fulfillment of each of the following
conditions:

         10.1 REPRESENTATIONS TRUE AT CLOSING. Buyer Parent, Buyer and Buyer Sub
shall have performed and complied in all material respects with all obligations
and agreements required to be performed or complied with by them under this
Agreement and the Ancillary Agreements at or prior to the Closing and the
representations and warranties of Buyer contained in this Agreement shall be
true and correct when made and at and as of the Closing as if made at and as of
such date; and Seller Parties shall have received a certificate, dated the
Closing Date, of the President of Buyer to the effect set forth in this Section
10.1.

         10.2 RETENTION AND TRANSACTION BONUS AGREEMENTS. Buyer shall have
executed retention and transaction bonus agreements in substantially the form of
EXHIBIT N for each of the persons listed on EXHIBIT O.



                                      -47-


                                   ARTICLE XI

                              ADDITIONAL AGREEMENTS

         11.1 HSR ACT FILINGS. As soon as practicable after the date of this
Agreement, Buyer and each Seller shall file notification and report forms under
the HSR Act with the FTC and the Antitrust Division, and shall use their
reasonable best efforts to respond as promptly as practicable to all requests
received from the FTC or the Antitrust Division for additional information or
documentation.

         11.2 PUBLICITY. Neither Buyer, Buyer Parent, nor Buyer Sub nor any
Seller, any Trust Beneficiary, FRS or any Subsidiary of FRS shall issue any
press release, public announcement or public filing pertaining to this
Agreement, the Acquisition, any Ancillary Agreement or the transactions
contemplated hereby or thereby without the prior written consent of the other
Parties; PROVIDED HOWEVER, that such prior consent shall not be required in
cases where the Party proposing to disseminate such release, announcement or
filing believes in good faith that such release, announcement or filing is
required by Law, the rules of any national securities exchange or automated
quotation system on which the Buyer Parent Common Stock is then traded, and it
is impracticable to consult with the other Parties or, after such consultation,
the Parties cannot agree on the content of such release, announcement or filing.

         11.3 EXPENSES. Each Party shall pay its own costs and expenses incurred
in connection with the Acquisition and the transactions contemplated hereby
(including any brokerage or finder's fees), whether or not the Acquisition is
consummated, provided, however, that no such costs or expenses of the Seller
Parties, the Trust Beneficiaries, FRS or any of its Subsidiaries shall be paid
by or charged to FRS or any of its Subsidiaries and any costs or expenses
previously incurred and paid by FRS or any of its Subsidiaries shall be
reimbursed by the Selling Parties and Trust Beneficiaries prior to Closing.

         11.4 USE OF COMPANY NAMES. As soon as practicable, and in any event
within thirty (30) days after the Closing Date, the Seller Parties and Trust
Beneficiaries shall cease to use the name "Florida Recycling Services" in
connection with the conduct of any of their respective businesses or other
operations.

         11.5 SELLER GUARANTIES. Buyer agrees to use all commercially reasonable
efforts to cause each Seller to be fully and finally released and discharged
from all further liability or obligation in respect of all Seller Guaranties in
respect of which such Seller is an obligated party, effective as of the Closing
Date.

         11.6 CONFIDENTIALITY. All confidential information about Buyer, Buyer
Parent, Buyer Sub and their respective Affiliates is referred to herein as
"PROPRIETARY INFORMATION." Proprietary Information shall not include, however,
information which is or becomes generally available to the public other than as
a result of a disclosure by any Seller, any Trust Beneficiary, FRS or any of its
Subsidiaries or their respective Representatives. Unless otherwise agreed to in
writing by Buyer, the Seller Parties, the Trust Beneficiaries, FRS and its
Subsidiaries shall keep all Proprietary Information confidential, shall not


                                      -48-


disclose or reveal any Proprietary Information to any Person and shall not use
any Proprietary Information for any purpose other than for purposes of
consummating the Acquisition and the other transactions contemplated by this
Agreement. The Seller Parties, the Trust Beneficiaries, FRS and its Subsidiaries
shall be responsible for any breach of the terms of this provision by their
Representatives. The provisions of this Section 11.6 shall survive the Closing
indefinitely.

         11.7 COVENANTS NOT TO COMPETE AND SOLICIT.

                  (a) Each Seller and Trust Beneficiary hereby severally and not
jointly agrees that, for the period of five (5) years commencing on the date
hereof, it shall not induce or encourage, or assist others to induce or
encourage, any employee of FRS or any of its Subsidiaries to decline to continue
an employment arrangement with Buyer, Buyer Parent, Buyer Sub, FRS or any of its
Subsidiaries after the Closing, or interfere in any manner with the relationship
between such employee and any such entity. Each Seller and Trust Beneficiary
hereby agrees that, for a period of five (5) years from the Closing Date, he,
she or it shall not induce or encourage, or assist others to induce or
encourage, any employee of Buyer, Buyer Sub, FRS or any of its Subsidiaries to
leave the employ of such entity after the Closing, whether to accept a position
with any Seller or Trust Beneficiary or an entity related to or affiliated with
any Seller or Trust Beneficiary or otherwise. Notwithstanding anything contained
in this Section 11.7(a), it shall not be deemed to be a violation hereof for any
Seller or Trust Beneficiary to employ any of the employees of the FRS Container
Yard listed on Schedule 11.7(a) attached hereto or publish a mass media or
general advertisement consistent with its hiring practices that is not directed
at the employees of Buyer Parent, Buyer, Buyer Sub or FRS or any of its
Subsidiaries. The provisions of this Section 11.7(a) shall not survive
termination of this Agreement but shall survive the Closing for a period of five
(5) years.

                  (b) Each Seller and each Trust Beneficiary hereby severally
and not jointly agrees that, for the period commencing on the date hereof and
ending on the fifth anniversary of the Closing, it shall not induce or assist
others to induce any supplier of Buyer Parent, Buyer, Buyer Sub, FRS or any of
its Subsidiaries to terminate its association with Buyer Parent, Buyer, Buyer
Sub, FRS or any of its Subsidiaries or do anything to interfere with the
business relationship between any such entity and any of its suppliers. The
provisions of this Section 11.7(b) shall not survive termination of this
Agreement but shall survive the Closing for a period of five (5) years.

                  (c) In furtherance of the Acquisition and more effectively to
protect the business and goodwill of FRS and its Subsidiaries, upon the
consummation of the Acquisition, each Seller and Trust Beneficiary agrees that,
for the period commencing on the Closing Date and ending on the fifth
anniversary thereof, it will not directly or indirectly (whether as an employer,
employee, agent, consultant, advisor, independent contractor, general partner,
officer, director, stockholder, investor, lender or guarantor of any
corporation, partnership or other entity, or in any other capacity), own,
manage, operate, control or be employed by, participate in, consult with, or be
otherwise connected in any manner with the ownership, management or operation of
any Solid Waste Business in the State of Florida; PROVIDED, HOWEVER, that (i)
nothing in this Section 11.7(c) shall restrict a Seller or Trust Beneficiary


                                      -49-


from engaging in the business of recycling Solid Waste as long as such activity
is limited to (A) performing services pursuant to, and in accordance with, the
Ancillary Agreements or (B) operating recycling facilities and recycling
collection activities that (1) do not utilize any standard refuse collection
equipment including, without limitation, rear loaders, front loaders, side
loaders and roll off trucks and (2) do not compete with Buyer Parent, Buyer,
Buyer Sub, FRS or any of their respective Subsidiaries or Affiliates with
respect to the provision or potential provision of recycling collection services
to current or future customers of Buyer Parent, Buyer, Buyer Sub, FRS or any of
their respective Subsidiaries or Affiliates; (ii) nothing in this Section
11.7(c) shall restrict a Seller or Trust Beneficiary from constructing and
operating one Class I and Class III recycling and transfer facility in Volusia
County, Florida as long as such operation complies with the conditions set forth
in Section 11.7(c)(i) above; (iii) nothing in this Section 11.7(c) shall
restrict a Seller or a Trust Beneficiary from owning, solely for investment
purposes, up to one percent (1%) of any class of publicly traded securities of
any Person engaged in the Solid Waste Business, as long as such Seller or Trust
Beneficiary does not manage, operate, control or be employed by, participate in,
consult with, or otherwise be connected in any manner with the management or
operation of any such company; (iv) nothing in this Section 11.7(c) shall
restrict a Seller or Trust Beneficiary from owning or operating (A) the landfill
presently owned and operated by RIP, Inc. in Citrus County Florida (the
"HOMOSASSA LANDFILL") and (B) a Solid Waste Business operating exclusively
within a 150 mile radius of the Homosassa Landfill; PROVIDED that Solid Waste
collected by such Solid Waste Business is disposed of exclusively at the
Homosassa Landfill; and (v) nothing in this Section 11.7(c) shall restrict a
Seller or Trust Beneficiary, or any of their respective Affiliates, from
operating a Solid Waste Business in the Florida counties listed on Schedule
11.7(c) attached hereto (the "EXCLUDED COUNTIES"). If a Seller or Trust
Beneficiary, or any of their respective Affiliates, operates a Solid Waste
Business in one or more Excluded Counties within ten (10) years following the
Closing Date, Buyer shall have a right of first offer with respect to such Solid
Waste Business expiring on the tenth (10th) anniversary of the Closing Date on
the following terms (the "RIGHT OF FIRST OFFER"):

                           (i) If a Seller or Trust Beneficiary of any of their
respective Affiliates (a "COVERED PARTY") desires to sell such operations, then
the Covered Party shall give notice thereof to Buyer (a "FIRST OFFER NOTICE").
The First Offer Notice shall include a description of the Solid Waste Business
that is proposed to be sold and the desired purchase price and intended timing
of such sale.

                           (ii) Buyer shall have the right, but not the
obligation, exercisable at any time within thirty (30) days following delivery
of the First Offer Notice, to deliver to the Covered Party an offer to purchase
such Solid Waste Business (the "FIRST OFFER ELECTION") setting forth the
material terms and conditions on which it proposes to acquire such Solid Waste
Business (the "FIRST OFFER TERMS").

                           (iii) The Covered Party shall have a period of ten
(10) days after delivery of the First Offer Election in which to accept or
reject the offer by the Buyer on the First Offer Terms. Notice of such
acceptance shall be referred to as the "COVERED PARTY ACCEPTANCE NOTICE".

                           (iv) Upon the acceptance of any such offer pursuant
to (iii) above, the Covered Party shall designate a date to purchase the Solid
Waste Business to be acquired, which date shall be not less than five (5) days


                                      -50-


following the date on which the Covered Party notifies the Buyer thereof and not
more than thirty (30) days following delivery of the Covered Party Acceptance
Notice, at which time Buyer shall deliver payment in the appropriate amount to
the Covered Party and the parties shall execute and deliver all documentation
necessary to consummate the sale on the First Offer Terms. All relevant terms
and conditions of this Agreement regarding title matters, the transfer of good
and marketable title to Buyer Parent, allocation of liabilities (including
environmental liabilities), risk of loss, representations, warranties, covenants
and agreements, and survival of representations, warranties, covenants and
agreements shall apply to the transfer of the operations as if fully set forth
herein and shall be complied with by the parties as a condition to closing for
the operations. Notwithstanding the foregoing, however, the terms and conditions
of this Agreement shall be modified as necessary to give effect to the terms,
conditions and provisions of the First Offer Terms.

                           (v) If Buyer does not make a First Offer Election or
if the Covered Party has not accepted the offer embodied in the First Offer
Notice within the ten (10) day period set forth in subparagraph (iii) above, the
Covered Party shall have the unlimited right at its option, at any time within
the one hundred eighty (180) days following the date of the First Offer Notice
to sell the Solid Waste Business that was the subject of the First Offer Notice
free of any obligation to sell such Solid Waste Business to Buyer; PROVIDED,
however, that if Buyer shall have made a First Offer Election but the Covered
Party did not accept such offer as aforesaid, the total consideration in such
sale shall not be less than the total consideration contained in the First Offer
Terms. Any subsequent or other proposed sale of such Solid Waste Business shall
be subject to the rights of first offer set forth herein.

                  (d) The parties agree and acknowledge that the duration, scope
and geographic areas applicable to the covenant not to compete described in this
Section 11.7 are fair, reasonable and necessary, that adequate compensation has
been received by each Seller and Trust Beneficiary for such obligations, and
that these obligations do not prevent any Seller or Trust Beneficiary from
earning a livelihood. Without limiting the right of Buyer, Buyer Parent or Buyer
Sub to pursue all other legal and equitable rights available to it for violation
of this Section 11.7 by any Seller or Trust Beneficiary, it is agreed that other
remedies cannot fully compensate Buyer, Buyer Parent or Buyer Sub for such a
violation and that Buyer, Buyer Parent and Buyer Sub shall be entitled to
injunctive relief to prevent the violation or the continuing violation thereof.
It is the intent and understanding of each party hereto that if, in any action
before any Governmental Entity legally empowered to enforce Section 11.7, any
term, restriction, covenant or promise in this Section 11.7 is found to be
unreasonable, or it is determined that the consideration therefore was
inadequate or that any Seller or Trust Beneficiary has been prevented from
earning a livelihood and therefore such term, restriction, covenant or promise
is determined to be unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to make it enforceable
by such Governmental Entity.

         11.8 APPOINTMENT OF SELLER REPRESENTATIVE. Each Seller and Trust
Beneficiary hereby appoints George Ward and Matthew J. Carmody, acting jointly
(the "SELLER REPRESENTATIVES"), the attorneys-in-fact of such Seller or Trust
Beneficiary, as the case may be, with full power and authority, including power
of substitution, acting in the name of and for and on behalf of such Seller or
Trust Beneficiary, as the case may be, (i) to amend or waive any provision of


                                      -51-


this Agreement or any Ancillary Agreement, (ii) to terminate this Agreement or
any Ancillary Agreement pursuant to the provisions hereof or thereof, (iii) to
do all other things and to take all other action under or related to this
Agreement or any Ancillary Agreement that the Seller Representatives may
consider necessary or proper to effectuate the transactions contemplated hereby
and thereby, (iv) to resolve any dispute with Buyer Parent, Buyer or Buyer Sub
over any aspect of this Agreement or any Ancillary Agreement, and (v) on behalf
of such Seller or Trust Beneficiary, as the case may be, to enter into any
agreement to effectuate any of the foregoing which shall have the effect of
binding such Seller or Trust Beneficiary, as the case may be, as if such Seller
or Trust Beneficiary had personally entered into such an agreement. The Seller
Representatives shall have the exclusive right, power and authority, on behalf
of all Sellers and Trust Beneficiaries, to pursue, defend, and settle any
indemnification claims pursuant to Article XIV and to do all things and to take
all other actions the Seller Representatives may consider necessary or proper to
resolve any indemnification claims after the Closing. This appointment and power
of attorney shall be deemed as coupled with an interest and all authority
conferred hereby shall be irrevocable and shall not be subject to termination by
operation of law, whether by the death or incapacity or liquidation or
dissolution of any Seller or Trust Beneficiary or the occurrence of any other
event or events and the Seller Representatives may not terminate this power of
attorney with respect to any Seller or Trust Beneficiary or such Seller's or
Trust Beneficiary's successors or assigns without the consent of Buyer. Upon the
death, disability or resignation of a Seller Representative, such Person's
successor shall be appointed by the surviving or remaining Seller
Representative. Any notice given to the Seller Representatives pursuant to this
Agreement or any other agreements contemplated hereby shall constitute effective
notice to all Sellers and Trust Beneficiaries, and any other Party to this
Agreement or any other Person may rely on any notice, consent, document,
election or other communication received from the Seller Representatives as if
such notice, consent, document, election or other communication had been
received from all the Sellers and Trust Beneficiaries. Each Seller and Trust
Beneficiary agrees to hold the Seller Representatives harmless from any and all
loss, damage, liability or expense (including legal fees) which such Seller
Representatives may sustain as a result of any action taken in good faith by the
Seller Representatives.

         11.9 POST-CLOSING SECURITIES FILINGS. The Seller Parties and Trust
Beneficiaries understand that Buyer Parent, Buyer or Buyer Sub or one or more of
their respective Affiliates may in the future prepare offering memoranda, bank
books, prospectuses and other offering documents and/or file registration
statements, proxy statements and other documents with the SEC under the
Securities Act or the Exchange Act, and such offering memoranda, bank books,
prospectuses, offering documents, registration statements, proxy statements and
other documents may be required to contain financial statements and other
financial information of Buyer Parent, Buyer, Buyer Sub, FRS and its
Subsidiaries suitable for filing with the SEC and prepared in accordance with
Regulation S-X of the Securities Act. Accordingly, the Seller Parties and Trust
Beneficiaries agree to furnish to Buyer any information or documents necessary
for completion of such offering memoranda, bank books, prospectuses, offering
documents, registration statements, proxy statements and other documents and the
Seller Parties and Trust Beneficiaries agree to cause the appropriate officers
of FRS and its Subsidiaries to execute any necessary management representation
letters to permit Buyer's or Buyer Parent's independent accountants to issue
unqualified reports with respect to such financial statements.

                                      -52-


         11.10 COLLECTION OF RECEIVABLES. For a period of 360 days following the
Closing Date (the "COLLECTION Period"), Buyer shall use reasonable efforts to
collect the Excluded Accounts Receivable (other than any Excluded Accounts
Receivable relating to FRS' municipal contracts with the City of St. Lucie and
the City of South Bay) using an attorney selected by Buyer with the approval of
the Seller Parties (which approval shall not be unreasonably withheld). Buyer
shall have no obligation to undertake any collection efforts with respect to any
Excluded Accounts Receivable following the Collection Period. Buyer shall remit
to the Seller Parties, ratably in accordance with the percentages set forth in
EXHIBIT A, any and all amounts received by Buyer within the Collection Period in
respect of any Excluded Accounts Receivable, net of any out-of-pocket collection
costs incurred by Buyer or its Affiliates in connection therewith. Buyer shall
be entitled to retain any and all amounts received by Buyer after the expiration
of the Collection Period with respect to the Excluded Accounts Receivable. For
purposes of this Section, "reasonable efforts" shall mean the same level of
effort and diligence Buyer employs in the collection of its own accounts
receivable. From and after the Closing Date, the Seller Parties agree to keep
Buyer informed of the status of FRS' collection activities with respect to its
municipal contracts with the City of St. Lucie and the City of South Bay.

                                  ARTICLE XII

                                   TAX MATTERS

         12.1 SECTION 338(H)(10) ELECTIONS.

                  (a) At Buyer's request made to Seller Representatives prior to
June 30, 2004 or ninety (90) days after the Closing Date, whichever is later
(which request may or may not be made in Buyer's sole discretion), each Seller
and Trust Beneficiary shall join Buyer Parent, Buyer and Buyer Sub in an
election to have the provisions of Section 338(h)(10) of the Code and similar
provisions of other applicable Laws (where permissible) ("SECTION 338(H)(10)
ELECTION") apply to the Acquisition whereby FRS and each of its Subsidiaries
will be treated as having sold all of its assets in a single transaction as of
the close of business on the Closing Date. The election will include the
execution and subsequent filing of IRS Forms 8023 pursuant to the requirements
stated therein. Buyer shall, at the time of making a request to the Seller
Representatives to have the Sellers and Trust Beneficiaries join in a Section
338(h)(10) Election, provide to each Seller an allocation of the deemed purchase
price among the assets of FRS and each of its Subsidiaries in accordance with
Code Section 338 and any comparable provisions of other applicable Laws, as
appropriate (including copies of detailed workpapers and proposed attachments to
Form 8023). Such allocation shall be deemed acceptable to each Seller and Trust
Beneficiary unless any Seller or Trust Beneficiary notifies Buyer of any
objections within sixty (60) days after receipt of such allocation. If Buyer and
such Seller or Trust Beneficiary, as the case may be, are unable to agree on
such allocation within two hundred ten (210) days after the Closing Date, then
Buyer's Auditor shall, prior to the due date of the Forms 8023, make a binding
determination with respect to such allocation, the fees and expenses of which
shall be paid equally by Buyer and such Seller or Trust Beneficiary, as the case
may be.

                                      -53-


                  (b) Within sixty (60) days after delivery to the Seller
Parties of the allocation schedule described in Section 12.1(a) above, each
Seller and Trust Beneficiary shall properly execute and deliver to Buyer the
Forms 8023 (together with attachments) and other forms that are required to be
submitted to any federal, state, county, or local taxing authority in connection
with the Section 338(h)(10) Elections. In the event the parties have not yet
agreed on the allocation described in Section 12.1(a), such forms shall still be
delivered to Buyer, and all Tax Returns filed on a basis consistent with the
binding determination of the accounting firm described in Section 12.1(a).

                  (c) After the date of this Agreement, none of FRS, any of its
respective Subsidiaries, nor any Seller or Trust Beneficiary shall take, or fail
to take, any action which may cause the Acquisition to not be eligible for a
Section 338(h)(10) Election if requested by Buyer pursuant to Section 12.1(a)
above.

                  (d) If a Section 338(h)(10) Election is made pursuant to the
provisions of this Section 12.1, Buyer will reimburse each Seller for any
additional Taxes incurred by such Seller which would not have been incurred had
the sale of the Acquired Shares to Buyer Sub occurred pursuant to the terms of
this Agreement but no Section 338(h)(10) Election had been made (the "EXCESS
SECTION 338(H)(10) TAXES"). For purposes of this Section 12.1(d), the
calculation of each Seller's Excess Section 338(h)(10) Taxes shall consist of:
(A) such Seller's incremental federal income Taxes attributable to the
difference between such Seller's marginal rate of tax on ordinary income and
such Seller's marginal tax rate on long-term capital gains multiplied by the
excess of (x) any ordinary income recognized by such Seller as a result of the
sale of the Acquired Shares, which ordinary income would have been long-term
capital gain but for the Section 338(h)(10) Election, over (y) any ordinary
deductions allocable to such Seller (including the deduction for any Taxes of
FRS or any of its Subsidiaries paid by Buyer or FRS) which deductions result
from or are attributable to the Section 338(h)(10) Election; (B) such Seller's
incremental state income Taxes attributable to the difference, if any, between
such Seller's effective state and local tax rate on income and gain recognized
by such Seller as a result of the sale of the Acquired Shares as compared to
what such Seller's effective state and local income tax rate would have been
with respect to such income and gain but for the Section 338(h)(10) Election;
and (C) any additional federal, state and local income Taxes incurred by such
Seller attributable to the payment made to such Seller pursuant to this Section
12.1(d). The amount of each Seller's Excess Section 338(h)(10) Taxes, if any,
shall be determined by such Seller's tax accountants, subject to approval by
Buyer's tax accountants which, in the event of a dispute, shall be finally
determined by an independent tax accounting expert mutually agreeable to Buyer
and Sellers.

                  (e) The payment of Excess Section 338(h)(10) Taxes shall be
made by Buyer by June 30, 2004 or ninety days after the Closing Date, whichever
is later. If the payment is not made to the Seller Parties by such date, then
interest shall be charged on the outstanding amount until paid to the Seller
Parties at the Prime Rate as in effect from time to time (where "Prime Rate"
means the prime commercial lending rate from time to time published in The Wall
Street Journal (United States edition)) plus 1%. If the payment is not made to
the Seller Parties by the deadline by which the Seller Parties are required to
pay their taxes for the year in which the Closing occurs, then Buyer shall


                                      -54-


reimburse the Seller Parties for any fines or penalties assessed by the Internal
Revenue Service and paid by the Seller Parties as a result of Buyer failing to
timely pay the Excess Section 338(h)(10) Taxes.

         12.2 FUTURE TAX RETURNS.

                  (a) FRS and its Subsidiaries shall prepare and file in a
timely fashion, federal, state and local corporate income Tax Returns for all
taxable periods ending on or before the Closing Date. The Tax Returns for the
period ending on the Closing Date shall include the results of operations of FRS
and its Subsidiaries for the Pre-Closing Tax Period beginning January 1 of the
year in which the Closing occurs, and ending on the Closing Date, and all income
recognized as a result of any Section 338(h)(10) Election. FRS and its
Subsidiaries shall pay or discharge any and all Taxes reflected on such Tax
Returns for which FRS or any of its Subsidiaries is or may be held liable. Each
such payment shall be made on or before the date any such payment is due. The
Seller Parties shall receive any tax refunds reflected on such returns. FRS and
its Subsidiaries will promptly provide the information to the Seller Parties
necessary to prepare such returns. All Tax Returns that are required to be filed
pursuant to this Section 12.2(a) shall not be filed without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.

                  (b) Buyer shall timely prepare and file, or cause FRS and its
Subsidiaries to timely prepare and file, all other applicable Tax Returns for
the taxable period beginning on the Closing Date and ending on December 31 of
the year in which the Closing occurs. FRS and its Subsidiaries shall pay or
cause to be paid any and all Taxes (and applicable penalties and interest, if
any) due as a result of the Tax Returns required to be filed pursuant to the
preceding clause.

         12.3 TAX COVENANTS.

                  (a) Without the prior written consent of Buyer, no Seller nor
any Affiliate of any Seller, including any Trust Beneficiary, nor FRS or any of
its Subsidiaries shall, to the extent it may affect or relate to FRS or any of
its Subsidiaries, make or change any tax election, change any annual tax
accounting period, adopt or change any method of tax accounting, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim,
assessment or proposed assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment or take or omit to take any other action, if any such
action or omission would have the effect of increasing any post-Closing Tax
liability of FRS or any of its Subsidiaries, Buyer, Buyer Sub, Buyer Parent or
any of their respective Affiliates.

                  (b) Without the prior written consent of the Seller Parties,
neither Buyer nor any of its Affiliates shall, to the extent it may affect or
relate to FRS or any of its Subsidiaries, make or change any tax election, file
any amended Tax Return, enter into any closing agreement, settle any Tax claim,
assessment or proposed assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment or take or omit to take any other action, if any such
action or omission would affect a Pre-Closing Tax Period for FRS or any of its
Subsidiaries.



                                      -55-


                  (c) Buyer, each Seller and each Trust Beneficiary agree that
so long as any books, records and files retained by Buyer, such Seller, or Trust
Beneficiary or their Affiliates relating to FRS or any of its Subsidiaries or
the Target Operations, or the books, records and files delivered to the control
of Buyer pursuant to this Agreement to the extent they relate to FRS or any of
its Subsidiaries or the Target Operations prior to the Closing Date, remain in
existence and available, each Party (at its own expense) shall have the right
upon prior notice to inspect and to make copies of the same at any time during
business hours for any proper purpose. Buyer, each Seller and each Trust
Beneficiary shall use reasonable efforts not to destroy or allow the destruction
of any such books, records and files for a period of seven (7) years from the
Closing Date without first providing sixty (60) days' written notice of
intention to destroy to the other, and allowing such other Party to take
possession of such records.

                  (d) Buyer, FRS and each of its Subsidiaries will make their
personnel available to the Seller Parties to answer requests related to any Tax
controversy including, without limitation, an audit, a protest to the appeals
division of the IRS, or similar state or local appellate division, and
litigation in the U.S. Tax Court, or any other court of competent jurisdiction
(a "TAX PROCEEDING"). Buyer will either provide documents needed to respond to
federal and state information requests or queries for such proceedings within
thirty (30) days after such request or allow the Seller Parties to take
possession of records necessary to answer such requests.

         12.4 TRANSFER TAX MATTERS. All transfer, documentary, sales, use,
stamp, registration, goods and services, value added and other such Taxes and
fees (including any penalties and interest) incurred in connection with the
Acquisition, or otherwise in connection with the transactions effected pursuant
to this Agreement, including without limitation all Transfer Taxes related to
the transfer of the Subject Land contemplated by this Agreement (collectively,
the "TRANSFER TAXES"), shall be borne and paid by the Seller Parties.

         12.5 TAX CONTROVERSIES. Buyer and the Seller Parties and Trust
Beneficiaries shall each use reasonable efforts to keep the other advised as to
the status of any Tax Proceeding involving any direct, indirect or contingent
Taxes which could give rise to a liability of the Seller Parties or the Trust
Beneficiaries to Buyer, Buyer Parent or Buyer Sub under this Agreement for any
Pre-Closing Tax Period (a "TAX LIABILITY ISSUE"). Such efforts shall include
attorney comfort letters provided to Buyer's independent auditors and
discussions with attorneys representing the Seller Parties, the Trust
Beneficiaries, and/or FRS and its Subsidiaries as requested by Buyer. Each
Seller and each Trust Beneficiary agrees to timely notify Buyer regarding any
proposed written communication (i.e., communications not responding to inquiries
or requests for information) by such Seller or Trust Beneficiary to any such
Taxing Authority with respect to a Tax Liability Issue to the extent that the
issue would impact a post-Closing period of Buyer, Buyer Parent, Buyer Sub or
FRS or any of its Subsidiaries. Buyer shall have the right to consult with each
Seller and each Trust Beneficiary regarding any such communications.



                                      -56-


                                  ARTICLE XIII

              NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES

         13.1 NATURE OF STATEMENTS. All, but only those, statements contained in
this Agreement, any Ancillary Agreement or any disclosure schedule or
certificate delivered by or on behalf of a Party under this Agreement shall be
deemed representations and warranties made by that Party in connection with the
transactions contemplated by this Agreement.

         13.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

                  (a) The representations and warranties contained in this
Agreement shall not be affected by any investigation made at any time by or on
behalf of any Party or of any information any Party may have as a result of any
such investigation. All representations, warranties, covenants, obligations and
agreements made in or pursuant to this Agreement or any Ancillary Agreement
(including any disclosure schedule or certificate delivered under this Agreement
or any Ancillary Agreement) shall, except as otherwise provided in this Section
13.2, survive the Closing and shall continue in effect indefinitely thereafter.

                  (b) The representations and warranties made by the Seller
Parties and Trust Beneficiaries (other than in Sections 4.1, 4.2, 4.3, 4.4, 4.5,
4.7, 4.9, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.19(a), 4.19(c), 4.21,
4.24, 4.25, 4.26, 4.27, 4.28 and 4.29) and Buyer (other than in Sections 5.1,
5.2, 5.3 and 5.4) in this Agreement shall terminate on the date which is six (6)
months following the Closing Date. The representations and warranties made by
the Seller Parties and Trust Beneficiaries in Sections 4.7, 4.9, 4.11, 4.15,
4.16, 4.21, 4.24, 4.25, 4.26, 4.27 and 4.29 of this Agreement shall terminate on
a date which is twelve (12) months following the Closing Date. The
representations and warranties made by the Seller Parties and Trust
Beneficiaries in Sections 4.12, 4.14, 4.17 and 4.28 of this Agreement and the
covenants, obligations and agreements set forth in Article XII shall terminate
in accordance with the applicable statute of limitations. All claims for
indemnification must be asserted in writing within the applicable survival
period.

                                  ARTICLE XIV

                                 INDEMNIFICATION

         The respective indemnification obligations of the Buyer, the Seller
Parties and the Trust Beneficiaries are as follows:

         14.1 INDEMNIFICATION BY THE SELLER PARTIES AND THE TRUST BENEFICIARIES.
The Ward Group, jointly and severally, and Larry Henk, Matthew Carmody and the
Matthew J. Carmody Irrevocable Trust severally up to the amount of the Purchase
Price received by Mr. Henk and the Matthew J. Carmody Irrevocable Trust
respectively, agree to pay and to indemnify and hold harmless Buyer, Buyer Sub,
Buyer Parent, FRS, the Subsidiaries of FRS and each of their respective
Affiliates, and the stockholders and persons serving as officers, directors,
partners, employees or agents thereof, and their respective successors and


                                      -57-


assigns ("BUYER INDEMNIFIED PARTIES") from and against any and all Damages
suffered by such Persons which are caused by, or arise out of or in respect of,
or result from:

                  (a) all Taxes of FRS or any of its Subsidiaries attributable
to any Pre-Closing Tax Period (including any transaction consummated in such
Pre-Closing Tax Period);

                  (b) any Tax on or attributable to the elimination, reversal,
release, satisfaction, distribution, or discharge of intercompany Indebtedness
or intercompany investments of FRS and its Subsidiaries (including any
intercompany items solely between FRS and its Subsidiaries, as well as items
between any Seller or Trust Beneficiary and other Sellers and Trust
Beneficiaries or their Affiliates and between any Seller or Trust Beneficiary
and FRS or any Subsidiary of FRS), and any other reorganization steps or other
actions taken by any Seller, any Trust Beneficiary, FRS or any of its
Subsidiaries or Affiliates in placing FRS and its Subsidiaries in the condition
required for Closing;

                  (c) any Pre-Closing Seller Insurance Claims;

                  (d) any claim by any Seller or Trust Beneficiary against FRS
or any of its Subsidiaries based on any event occurring or condition existing on
or before the Closing Date;

                  (e) any breach or default in the performance by any Seller or
Trust Beneficiary of any covenant or agreement made by such Seller or Trust
Beneficiary in this Agreement or in any Ancillary Agreement to which such Seller
or Trust Beneficiary is a party; and

                  (f) any breach of representation or warranty or inaccurate or
erroneous representation or warranty made by any Seller or Trust Beneficiary
contained in this Agreement or any Ancillary Agreement to which such Seller or
Trust Beneficiary is a party or in the Seller Disclosure Schedule or in any
certificate delivered by or on behalf of any Seller or Trust Beneficiary under
this Agreement.

         14.2 INDEMNIFICATION BY BUYER. Buyer agrees to pay and to indemnify and
hold harmless and defend each Seller and its Affiliates, and their respective
successors and assigns (the "SELLER INDEMNIFIED PARTIES") from and against any
and all Damages suffered by such Persons which are caused by or arise out of or
in respect of, or result from:

                  (a) any breach or default in the performance by Buyer, Buyer
Parent or Buyer Sub of any covenant or agreement of Buyer, Buyer Parent or buyer
Sub contained in this Agreement or any Ancillary Agreement to which Buyer, Buyer
Parent or Buyer Sub is a party; and

                  (b) any breach of representation or warranty or inaccurate or
erroneous representation or warranty made by Buyer contained in this Agreement
or any Ancillary Agreement to which Buyer is a party.

         14.3 THIRD PARTY CLAIMS. If any Buyer Indemnified Party or Seller
Indemnified Party (for purposes of this Section 14.3, an "INDEMNIFIED PARTY")
becomes aware of a fact, circumstance, claim, situation, demand or other matter
which has resulted or could result in a liability owed by the Indemnified Party


                                      -58-


to a third party or a claim otherwise advanced by a third party against the
Indemnified Party (any such item being herein called a "THIRD PARTY CLAIM"), the
Indemnified Party shall give prompt written notice of the Third Party Claim to
the Party obligated to provide indemnity with respect to such Third Party Claim
(for purposes of this Section 14.3, the "INDEMNIFYING PARTY"), requesting
indemnification therefore, specifying the nature of and specific basis for the
Third Party Claim and the amount or estimated amount thereof to the extent then
feasible; PROVIDED, HOWEVER, a failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually materially prejudiced by such failure. The
Indemnifying Party shall have the right to assume the defense or investigation
of such Third Party Claim and to retain counsel and other experts to represent
the Indemnified Party and shall pay the fees and disbursements of such counsel
and other experts. If within thirty (30) days after receipt of the request (or
five (5) days if litigation is pending) the Indemnifying Party fails to give
notice to the Indemnified Party that the Indemnifying Party assumes the defense
or investigation of the Third Party Claim, such Indemnified Party may retain
counsel and other experts (whose fees and disbursements shall be at the expense
of the Indemnifying Party) to file any motion, answer or other pleading and take
such other action which the Indemnified Party reasonably deems necessary to
protect its interests or those of the Indemnifying Party until the date on which
the Indemnified Party receives such notice from the Indemnifying Party. If an
Indemnifying Party assumes the defense or investigation and retains such counsel
and other experts, any Indemnified Party shall have the right to retain its own
counsel and other experts, but the fees and expenses of such counsel and other
experts shall be at the expense of the Indemnified Party unless (a) the
Indemnifying Party and the Indemnified Party mutually agree to the retention of
such counsel and other experts or (b) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would,
in the opinion of counsel retained by the Indemnifying Party, be inappropriate
due to actual or potential differing interests between them. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim which the
Indemnifying Party defends, or, if appropriate and related to the Third Party
Claim in question, in making any counterclaim against the Person asserting the
Third Party Claim, or any cross-complaint against any Person. No Third Party
Claim may be settled by the Indemnified Party without the consent of the
Indemnifying Party, which consent will not be unreasonably withheld. Unless the
Indemnifying Party agrees in writing that the Damages to the Indemnified Party
resulting from such settlement are fully covered by the indemnities provided
herein and that such Damages are fully compensable in money, no Third Party
Claim may be settled without the consent of the Indemnified Party, which consent
will not be unreasonably withheld. Except with respect to settlements entered
without the Indemnified Party's consent pursuant to the immediately preceding
sentence, to the extent it is determined that the Indemnified Party has no right
under this Article XIV to be indemnified by the Indemnifying Party, the
Indemnified Party shall promptly pay to the Indemnifying Party any amounts
previously paid or advanced by the Indemnifying Party with respect to such
matters pursuant to this Article XIV. After the delivery of a notice of a Third
Party Claim hereunder, at the reasonable request of the Indemnifying Party, the
Indemnified Party shall grant the Indemnifying Party and its representatives


                                      -59-


full and complete access to the books, records and properties of the Indemnified
Party to the extent reasonably related to the matters to which the notice
relates. The Indemnifying Party will not disclose, and shall instruct its
representatives not to disclose, to any third Person (except its
representatives) any information obtained pursuant to the preceding sentence
which is designated as confidential by the Indemnified Party and which is not
otherwise generally available to the public, except as may be required by
applicable Law.

         14.4 CLAIMS BETWEEN THE PARTIES. If any Party (for purposes of this
Section 14.4, an "INDEMNIFIED PARTY") becomes aware of a fact, circumstance,
claim, situation, demand or other matter (other than a Third Party Claim) which
has resulted or could result in a liability (any such items being herein called
a "CLAIM") being owed to the Indemnified Party by another Party (for purposes of
this Section 14.4, the "INDEMNIFYING PARTY"), the Indemnified Party shall give
prompt written notice to the Indemnifying Party of the Claim, stating the nature
and basis of the Claim and the amount claimed thereunder, together with
supporting information to the Claim, if any. If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days from the date such Claim
notice is given that it disputes the Claim, the amount of the Claim shall
conclusively be deemed to be a liability of the Indemnifying Party hereunder.

         14.5 GENERAL.

                  (a) For purposes of determining the obligations of the Seller
Parties and Trust Beneficiaries to indemnify the Buyer Indemnified Parties under
Section 14.1(f) all materiality qualifications and all references to a Material
Adverse Effect included in the representation and warranties contained in
Article IV shall be disregarded, and for purposes of determining the obligation
of Buyer to indemnify the Seller Indemnified Parties under Section 14.2(b), all
materiality qualifications and all references to a Material Adverse Effect
included in the representations and warranties contained in Article V shall be
disregarded.

                  (b) The Ward Group, Larry Henk, Matthew Carmody and the
Matthew J. Carmody Irrevocable Trust shall not be liable to the Buyer
Indemnified Parties for indemnification for breaches of representations or
warranties pursuant to Section 14.1(f): (i) to the extent the aggregate Damages
suffered by the Buyer Indemnified Parties by reason of any single breach do not
exceed a $200,000 minimum value per claim and (ii) until the aggregate amount of
all claims meeting the minimum threshold provided in clause (i) exceeds
$1,000,000 (the "THRESHOLD"), in which event the Buyer Indemnified Parties shall
be entitled to recover the amount of all such claims in excess of the Threshold.
The maximum aggregate amount recoverable by the Buyer Indemnified Parties from
the Ward Group, Larry Henk, Matthew Carmody and the Matthew J. Carmody
Irrevocable Trust pursuant to Sections 14.1(f), whether satisfied out of the
Escrow Fund or otherwise, shall not exceed $20,000,000 (the "CAP").
Notwithstanding anything herein to the contrary, the Threshold and the Cap shall
not apply with respect to a breach of any of the representations and warranties
contained in Sections 4.1, 4.2, 4.3, 4.4 and 4.5.

                  (c) Buyer shall not be liable to the Seller Indemnified
Parties for indemnification for breaches of representations or warranties
pursuant to Section 14.2(b): (i) to the extent the aggregate Damages suffered by
the Seller Indemnified Parties by reason of any single breach do not exceed a
$200,000 minimum value per claim and (ii) until the aggregate amount of all
claims meeting the minimum threshold provided in clause (i) exceeds the


                                      -60-


Threshold, in which event the Seller Indemnified Parties shall be entitled to
recover the amount of all such claims in excess of the Threshold. The maximum
aggregate amount recoverable from the Buyer pursuant to Section 14.2(b) shall
not exceed the Cap.

                  (d) The amount of any Damages suffered by an Indemnified Party
shall be reduced by any insurance proceeds or other amounts actually recovered
by such Indemnified Party (other than from an Indemnifying Party) as a result of
claims against third parties, in each case in respect of or as a result of such
Damages or the facts or circumstances relating thereto, with respect to
insurance proceeds, net of any insurance premiums, recovery costs and increased
insurance premiums for subsequent years due to such claims relating thereto and,
with respect to any claims against third parties, net of any recovery costs
relating thereto.

                                   ARTICLE XV

                            AMENDMENT AND TERMINATION

         15.1 AMENDMENT. This Agreement may be amended only by a written
instrument executed by all of the Parties; PROVIDED, HOWEVER, that the Seller
Representatives shall have the authority to execute any amendment on behalf of
each Seller and Trust Beneficiary pursuant to Section 11.8 hereof.

         15.2 WAIVER. Any provision of this Agreement may be waived on or prior
to the Closing Date if, and only if, such waiver is in writing and signed by the
Party giving such waiver; PROVIDED, HOWEVER, that the Seller Representatives
shall have the authority to execute any waiver on behalf of each Seller and
Trust Beneficiary pursuant to Section 11.8 hereof.

         15.3 TERMINATION. This Agreement may be terminated at any time before
the Closing by:

                  (a) the mutual consent of Buyer, Buyer Sub, Buyer Parent and
each Seller and Trust Beneficiary;

                  (b) Buyer upon a material breach of any representation,
warranty, covenant or agreement of any Seller, any Trust Beneficiary, FRS or any
Subsidiary of FRS or if any such representation or warranty shall have become
untrue in any material respect (a "TERMINATING SELLER BREACH"); PROVIDED,
HOWEVER, that if such Terminating Seller Breach is curable by such Seller, such
Trust Beneficiary, FRS or such Subsidiary through the exercise of reasonable
best efforts and for so long as such Seller, such Trust Beneficiary, FRS or such
Subsidiary continues to exercise such efforts (but not beyond the date set forth
in Section 15.3(d) below), Buyer may not terminate this Agreement pursuant to
this Section 15.3(b);

                  (c) the Seller Parties upon a material breach by Buyer of any
representation, warranty, covenant or agreement of Buyer set forth in this
Agreement or if any such representation or warranty shall have become untrue in
any material respect (a "TERMINATING BUYER BREACH"); PROVIDED, HOWEVER, that if
such Terminating Buyer Breach is curable by Buyer through the exercise of
reasonable best efforts and for so long as Buyer continues to exercise such


                                      -61-


efforts (but not beyond the date set forth in Section 15.3(d) below) the Seller
Parties may not terminate this Agreement pursuant to this Section 15.3(c); or

                  (d) either the Seller Parties or Buyer if the Closing has not
occurred on or before March 15, 2004 (such date, the "OUTSIDE DATE"); PROVIDED,
HOWEVER, that such right to terminate this Agreement shall not be available to
any Party that has breached in any material respect its obligations under this
Agreement in any manner that has proximately caused the failure of the
Acquisition to occur on or before such date; and PROVIDED FURTHER that if the
Closing has not occurred on or prior to March 15, 2004, Buyer may, in its sole
discretion, elect to extend the Outside Date to May 1, 2004 by making a cash
payment to Sellers (allocated among the Sellers in accordance with the
percentages set forth on EXHIBIT A hereto) of $750,000 in the form of an
additional deposit on or before March 18, 2004 (the "EXTENSION PAYMENT"); and
PROVIDED FURTHER that if Buyer has made the Extension Payment and the Closing
has not occurred on or prior to May 1, 2004, Buyer shall make an additional cash
payment to Sellers (allocated among the Sellers in accordance with the
percentages set forth on EXHIBIT A hereto) of $1,000,000 (the "MAY 1 PAYMENT").
The Parties acknowledge that a payment of $500,000 was made by Buyer to the
Sellers on or about February 18, 2004 and shall not be refundable to Buyer
pursuant to Section 15.4(d) or considered in the calculation of the Purchase
Price pursuant to Section 2.2.

        15.4 CONSEQUENCES OF TERMINATION.

                  (a) If this Agreement is terminated as provided in Section
15.3, it shall forthwith become void and there shall be no further obligation on
the part of any Party or their respective officers or directors and all rights
and obligations of each Party shall cease, subject to the remedies set forth in
subsections 15.4(b), 15.4(c) and 15.4(d); PROVIDED, HOWEVER, that (i) nothing in
this Section 15.4 shall relieve any Party from any liability for any willful or
intentional breach of any covenant or agreement of such Party contained in this
Agreement prior to its termination; and (ii) Sections 11.2, 11.3 and 11.6 shall
survive any such termination in accordance with their respective terms.

                  (b) If this Agreement is terminated by the Seller Parties (i)
as a result of a Terminating Buyer Breach pursuant to Section 15.3(c), or (ii)
pursuant to Section 15.3(d) and the sole reason that the Closing has not
occurred by the Outside Date is that one or more of the conditions to closing
set forth in Article X have not been met, the Seller Parties shall be entitled
to retain the Signing Deposit, the Extension Payment (if applicable) and the May
1 Payment (if applicable) and such Signing Deposit, Extension Payment (if
applicable) and May 1 Payment (if applicable) shall constitute the sole and
exclusive remedy of the Seller Parties and the Trust Beneficiaries in the event
of such termination.

                  (c) If this Agreement is terminated by the Seller Parties
pursuant to Section 15.3(d) and the sole reason that the Closing has not
occurred by the Outside Date is that the condition to closing set forth in
Section 9.4 has not been met, the Seller Parties shall be entitled to retain the
Signing Deposit, the Extension Payment (if applicable) and the May 1 Payment (if
applicable) and Buyer shall cause Omni Waste of Osceola County, LLC, an Ohio
limited liability company, to execute and deliver to FRS, on the Business Day
following the termination date, a disposal agreement (the "DISPOSAL AGREEMENT")


                                      -62-


substantially in the form of EXHIBIT P attached to this Agreement. The Signing
Deposit, the Extension Payment (if applicable), the May 1 Payment (if
applicable) and the Disposal Agreement shall constitute the sole and exclusive
remedy of the Seller Parties and the Trust Beneficiaries in the event of such
termination.

                  (d) If Buyer terminates this Agreement (i) pursuant to Section
15.3(b), or (ii) pursuant to Section 15.3(d) and the reason that the Closing has
not occurred by the Outside Date is that one or more of the conditions to
Closing set forth in Article VIII or Article IX (other than the condition to
closing set forth Section 9.4) have not been met, the Seller Parties shall
refund the Signing Deposit, the Extension Payment (if applicable) and the May 1
Payment (if applicable) to Buyer within five (5) Business Days after such
termination. In the event this Section 15.4(d) is enforceable for the benefit of
Buyer, Buyer shall be entitled to enforce the Promissory Note attached hereto as
EXHIBIT Q (the "NOTE") against any or all of FRS, Frank Ward, Sr., George Ward
and Frank Ward, Jr. pursuant to, and in accordance with, the terms of the Note.

                                  ARTICLE XVI

                               GENERAL PROVISIONS

         16.1 NON-BUSINESS DAYS. If the date on which any action (including the
delivery of notices) to be taken under this Agreement is to occur falls on a day
which is not a Business Day, such action will be deemed timely taken if taken on
the first Business Day following such day.

         16.2 NOTICES. All notices or other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or transmitted by facsimile (with
receipt confirmed) or one Business Day after being sent by overnight courier
(subject to signature verification) to a Party at the address or facsimile
number, as applicable, set forth below (as any such address or facsimile number
may be changed from time to time by notice similarly given):

         (1)      if to Buyer, to:

                  Waste Services, Inc.
                  1005 Skyview Drive, Suite 221
                  Burlington, ON
                  Canada L7P 5B1
                  Attention:  General Counsel
                  Facsimile: (905) 319-9050



                                      -63-


                  with a copy to:

                  McDermott, Will & Emery
                  600 13th Street, N.W.
                  12th Floor
                  Washington, D.C. 20005-3096
                  Attention: Karen A. Dewis, Esq.
                  Facsimile: (202) 756-8087

         (2)      if to any Seller Party or Trust Beneficiary, to:

                  Florida Recycling Services, Inc.
                  2401 South Laflin Street
                  Chicago, Illinois 60608
                  Attention:  Mr. Frank Ward, Sr.
                  Facsimile: (312) 942-0541

         with a copy to:

                  Matthew J. Carmody, Ltd.
                  10644 South Western Avenue
                  Chicago, Illinois 60643
                  Attention:  Matthew J. Carmody, Esq.
                  Facsimile: (773) 233-9719

         16.3 ENTIRE AGREEMENT. This Agreement, its Exhibits, the Seller
Disclosure Schedule, and all documents delivered under this Agreement and the
Ancillary Agreements constitute the entire agreement, and supersede the Existing
Agreement, its Exhibits and its Seller Disclosure Schedule and all other prior
agreements and undertakings, both written and oral, among the Parties, or any of
them, with respect to the subject matter of this Agreement. The Parties hereby
agree to terminate that certain letter dated December 10, 2002 and amended from
time to time thereafter from Buyer to the Seller Parties effective as of the
date hereof.

         16.4 ASSIGNMENT; BINDING EFFECT. This Agreement and the rights of the
Parties hereunder may not be assigned (except by operation of law) by any of the
Parties without the written consent of the other Parties; PROVIDED that Buyer
Parent, Buyer and Buyer Sub may assign their respective rights and obligations
hereunder to a direct or indirect Subsidiary or Affiliate thereof, whereupon any
and all references to "Buyer Parent," "Buyer" or "Buyer Sub", as the case may
be, hereunder shall refer to such assignee; and PROVIDED FURTHER that Buyer
Parent, Buyer and Buyer Sub may assign any and all of their rights, interests
and obligations hereunder as security for obligations to their lenders,
investors and other financing sources. This Agreement shall be binding upon the
Parties and their respective successors and permitted assigns.

         16.5 COUNTERPARTS. This Agreement may be executed in counterparts which
together shall constitute a single agreement.



                                      -64-


         16.6 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the internal substantive laws of the State of
Illinois without regard to any conflict or choice of law rules of the State of
Illinois or any other jurisdiction. The parties agree that all disputes, legal
actions, suits and proceedings arising out of or relating to this Agreement must
be brought exclusively in a federal district court located in the Northern
District of Illinois or the Illinois state court in Cook County, Illinois. Each
party hereby irrevocably consents and submits to the exclusive jurisdiction of
the federal district court in the Northern District of Illinois or the Illinois
state court in Cook County, Illinois. No legal action, suit or proceeding with
respect to this Agreement may be brought in any other forum. Each party hereby
irrevocably waives all claims of immunity from jurisdiction and any right to
object on the basis that any dispute, action, suit or proceeding brought in the
federal district court located in the Northern District of Illinois or the
Illinois state court in Cook County, Illinois has been brought in an improper or
inconvenient forum or venue.

         16.7 SEVERABILITY OF PROVISIONS. Subject to Section 11.7, if a
provision of this Agreement or its application to any Person or circumstance is
held invalid or unenforceable in any jurisdiction, to the extent permitted by
law, such provision or the application of such provision to Persons or
circumstances other than those as to which it is held invalid or unenforceable
and in other jurisdictions, and the remaining provisions of this Agreement,
shall not be affected.

         16.8 SPECIFIC PERFORMANCE. Except as otherwise provided in Section 15.4
above, each Party agrees that one or more other Parties would be irreparably
damaged if any provision of this Agreement were not performed in accordance with
its specific terms or was otherwise breached. Therefore, subject to Section 15.4
above, the Parties agree that each Party shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or any of its provisions and
to specifically enforce this Agreement or any of its terms and provisions in any
action instituted in any court in the State of Illinois having subject matter
jurisdiction, in addition to any other remedy to which a Party may be entitled,
at law or in equity.

         16.9 JOINT DRAFTING. This Agreement and its Exhibits have been jointly
drafted by the Parties and their counsel. Neither this Agreement nor any of its
Exhibits shall be construed against any Party based on its authorship.

         16.10 CAPTIONS. The article and section headings in this Agreement are
for convenience only, and shall not affect the meaning or interpretation of this
Agreement.

         16.11 NO THIRD-PARTY BENEFICIARIES. There are no third-party
beneficiaries of this Agreement, except as provided in Section 11.8 and Article
XIV hereof.

         16.12 WAIVER. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default occurring before or after that waiver.



                                      -65-


         IN WITNESS WHEREOF, the Parties have duly executed this Agreement, all
as of the date first written above.

                                  BUYER PARENT:

                                  CAPITAL ENVIRONMENTAL
                                  RESOURCE INC.


                                  By: /s/ Ivan R. Cairns
                                     -------------------------------------
                                        Name: Ivan R. Cairns
                                        Title: Executive Vice President
                                               and General Counsel


                                  BUYER:

                                  WASTE SERVICES, INC.


                                  By: /s/ Ivan R. Cairns
                                     -------------------------------------
                                        Name: Ivan R. Cairns
                                        Title: Executive Vice President
                                               and General Counsel


                                  BUYER SUB:

                                  WASTE SERVICES OF FLORIDA, INC.


                                  By: /s/ Ivan R. Cairns
                                     -------------------------------------
                                        Name: Ivan R. Cairns
                                        Title: Vice President
                                               and Secretary


                                  SELLER PARTIES:

                                  /s/ Frank Ward, Sr.
                                  ----------------------------------------
                                  FRANK WARD, SR.

                                  /s/ Larry Henk
                                  ----------------------------------------
                                  LARRY HENK







                                      -66-




                             FRANK WARD, JR. IRREVOCABLE TRUST


                             By: /s/ Matthew Carmody
                                --------------------------------------------
                                   Name: Matthew Carmody
                                   Title: Trustee


                             GEORGE  WARD IRREVOCABLE TRUST


                             By: /s/ Matthew Carmody
                                --------------------------------------------
                                   Name: Matthew Carmody
                                   Title: Trustee


                             VICTORIA CAMALICK  IRREVOCABLE TRUST


                             By: /s/ Matthew Carmody
                                --------------------------------------------
                                   Name: Matthew Carmody
                                   Title: Trustee


                             CYNTHIA FIFER IRREVOCABLE TRUST


                             By: /s/ Matthew Carmody
                                --------------------------------------------
                                   Name: Matthew Carmody
                                   Title: Trustee


                             ROBERT WARD IRREVOCABLE TRUST


                             By: /s/ Matthew Carmody
                                --------------------------------------------
                                   Name: Matthew Carmody
                                   Title: Trustee




                                      -67-




                                    MATTHEW J. CARMODY IRREVOCABLE TRUST


                                    By: /s/ George Ward  /s/ Matthew Carmody
                                       -------------------------------------
                                          Name:
                                          Title:

                                    SELLER REPRESENTATIVES FOR
                                    TRUST BENEFICIARIES:

                                    /s/ George Ward      /s/ Matthew Carmody
                                    ----------------------------------------
                                    GEORGE WARD

                                    /s/ George Ward      /s/ Matthew Carmody
                                    ----------------------------------------
                                    FRANK WARD, JR.

                                    /s/ George Ward      /s/ Matthew Carmody
                                    ----------------------------------------
                                    VICTORIA CAMALICK

                                    /s/ George Ward      /s/ Matthew Carmody
                                    ----------------------------------------
                                    CYNTHIA FIFER

                                    /s/ George Ward      /s/ Matthew Carmody
                                    ----------------------------------------
                                    ROBERT WARD

                                    /s/ Matthew Carmody
                                    ----------------------------------------
                                    MATTHEW CARMODY


                                    FRS:

                                    FLORIDA RECYCLING SERVICES, INC.


                                    By: /s/ George Ward
                                       -------------------------------------
                                          Name: George Ward
                                          Title: Secretary and Treasurer



                                      -68-

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form F-3 (No. 333-111085) of Capital Environmental Resource Inc. of our report dated March 18, 2004 relating to the financial statements of the North Central Florida District (wholly-owned divisions of Allied Waste Industries, Inc.), which appears in the Current Report on Form 8-K of Capital Environmental Resource Inc. dated May 10, 2004.

/s/ PricewaterhouseCoopers LLP

Phoenix, Arizona
May 10, 2004

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference of our report dated February 11, 2004 on our audits of the consolidated financial statements of Florida Recycling Services, Inc. of Illinois and its subsidiary, Florida Recycling Services, Inc. of Delaware for the years ended December 31, 2003, 2002 and 2001 included in this Current Report on Form 8-K into the previously filed registration statement on Form F-3/A (Amendment No. 2) (Registration No. 333-111085) of Capital Environmental Resource Inc.

/s/ Shepard Schwartz & Harris LLP
Shepard Schwartz & Harris LLP
May 10, 2004.

EX-99.1

Exhibit 99.1

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2003 AND DECEMBER 31, 2002 AND

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2003

1

REPORT OF INDEPENDENT AUDITORS

To Allied Waste Industries, Inc.

      In our opinion, the accompanying combined balance sheets and the related combined statements of operations, of equity, and of cash flows present fairly, in all material respects, the financial position of the North Central Florida District (wholly owned divisions of Allied Waste Industries, Inc.) (the “Company”) at December 31, 2003 and 2002, and the results of their operations and their cash flows for the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      As discussed in Note 4 to the combined financial statements, the Company changed its method of accounting for obligations associated with the retirement of long-lived tangible assets and the associated asset retirement costs as of January 1, 2003. As discussed in Note 3 to the combined financial statements, the Company changed its method of accounting for goodwill and other intangible assets as of January 1, 2002.

PRICEWATERHOUSECOOPERS LLP

March 18, 2004

Phoenix, Arizona

2

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED BALANCE SHEETS

		December 31,		December 31,
		2003		2002
		(In thousands)
ASSETS
Current Assets —
Cash		$	4	$	23
Accounts receivable, net of allowance of $80 and $141			9,385		9,976
Prepaid and other current assets			517		723
	Total current assets		9,906		10,722
Property and equipment, net			16,739		18,476
Goodwill			84,835		116,168
Other assets, net			57		609
	Total assets	$	111,537	$	145,975
LIABILITIES AND DISTRICT’S EQUITY
Current Liabilities —
Current portion of long-term debt		$	2	$	—
Accounts payable			4,733		5,157
Current portion of accrued capping, closure, post-closure and environmental costs			308		378
Accrued liabilities			977		1,063
Unearned revenue			4,549		4,630
	Total current liabilities		10,569		11,228
Long-term debt, net of current portion			—		12
Accrued capping, closure, post-closure and environmental costs, less current portion			1,159		268
Due to parent			85,290		98,321
Commitments and contingencies
District’s equity			14,519		36,146
	Total liabilities and district’s equity	$	111,537	$	145,975

The accompanying Notes to Combined Financial Statements are an

integral part of these combined balance sheets.

3

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED STATEMENTS OF OPERATIONS

			Year Ended December 31,
			2003			2002			2001
			(In thousands)
Revenues			$	89,702		$	90,576		$	89,346
Cost of operations				65,657			63,927			60,668
Selling, general and administrative expenses				8,000			6,888			5,649
Depreciation and amortization				4,804			4,663			7,977
Impairment of goodwill				31,333			—			—
	Operating (loss) income			(20,092	)		15,098			15,052
Interest income, net				(5,245	)		(3,409	)		(3,003	)
	(Loss) income before income taxes			(14,847	)		18,507			18,055
Income tax expense				6,594			7,403			8,283
	Net (loss) income before cumulative effect of change in accounting principle			(21,441	)		11,104			9,772
Cumulative effect of change in accounting principle, net of tax				186			—			—
Net (loss) income			$	(21,627	)	$	11,104		$	9,772
Pro forma amounts, assuming the change in accounting principle is applied retroactively and excluding the cumulative effect of change in accounting principle in the year of adoption:
		Net (loss) income	$	(21,441	)	$	11,137		$	9,800

The accompanying Notes to Combined Financial Statements are an

integral part of these combined statements.

4

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED STATEMENTS OF DISTRICT’S EQUITY

		District’s
		Equity
		(In thousands)
Balance as of December 31, 2000		$	15,270
	Net income		9,772
	Balance as of December 31, 2001		25,042
	Net income		11,104
	Balance as of December 31, 2002		36,146
	Net loss		(21,627	)
	Balance as of December 31, 2003	$	14,519

The accompanying Notes to Combined Financial Statements are an

integral part of these combined statements.

5

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

COMBINED STATEMENTS OF CASH FLOWS

		Year Ended December 31,
		2003			2002			2001
		(In thousands)
Operating activities —
Net (loss) income		$	(21,627	)	$	11,104		$	9,772
Adjustments to reconcile net (loss) income to cash provided by operating activities —
Provisions for:
	Depreciation and amortization		4,804			4,663			7,977
	Doubtful accounts		233			180			373
	Gain on sale of fixed assets		(62	)		(59	)		(121	)
	Loss on sale of trade receivables		1,476			—			—
	Write-off of goodwill		31,333			—			—
	Cumulative effect of change in accounting principle, net of tax		186			—			—
Change in operating assets and liabilities, excluding the effects of purchase acquisitions —
	Accounts receivable, prepaid expenses, inventories and other		(907	)		542			653
	Accounts payable, accrued liabilities, unearned revenue and other		(591	)		601			(2,247	)
	Capping, closure and post-closure accretion and provision		40			244			230
	Capping, closure, post-closure and environmental expenditures		(376	)		(227	)		(224	)
Cash provided by operating activities			14,509			17,048			16,413
Investing activities —
	Cost of acquisitions, net of cash required		—			—			(383	)
	Proceeds from sale of fixed assets		155			100			1,076
	Capital expenditures, excluding acquisitions		(2,178	)		(1,147	)		(877	)
	Capitalized interest		—			(1	)		(11	)
	Change in notes receivable and other		542			3			(545	)
Cash used for investing activities			(1,481	)		(1,045	)		(740	)
Financing activities —
	Change in due to parent		(13,037	)		(16,110	)		(15,678	)
	Payments on debt		(10	)		—			—
Cash used for financing activities			(13,047	)		(16,110	)		(15,678	)
Decrease in cash			(19	)		(107	)		(5	)
Cash at beginning of year			23			130			135
Cash at end of year		$	4		$	23		$	130
Supplemental disclosures:
	Liabilities incurred or assumed in acquisitions	$	—		$	—		$	125
	Non-cash change in due to parent	$	129		$	(192	)	$	314
	Note receivable due from affiliate for trade receivables sold	$	1,405		$	—		$	—

The accompanying Notes to Combined Financial Statements are an

integral part of these combined statements.

6

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

      The North Central Florida District (Company) is a group of several business units that provide waste collection, transfer, recycling and disposal services in North and Central Florida and are wholly-owned by Allied Waste Industries, Inc. (Allied or Parent), a Delaware corporation. Allied is the second largest, non-hazardous solid waste management company in the United States, as measured by revenues and provides non-hazardous waste collection, transfer, recycling and disposal services in 37 states. All significant operational and financial decisions of the Company are made by Allied’s management.

      In November 2003, Allied entered into a definitive agreement to sell substantially all of the Company’s assets and certain liabilities to a third party for expected proceeds of approximately $120 million plus working capital as defined in the agreement. On December 31, 2003, a portion of the divestiture transaction was completed and Allied received proceeds of approximately $76 million. The remainder of the transaction is expected to close during the first and second quarter of 2004. The accompanying balance sheet at December 31, 2003 was prepared by Allied prior to the divestiture and reflects the assets and liabilities of the Company prior to the sale.

Basis of presentation —

      All significant intercompany accounts and transactions between the business units within the Company are eliminated in the combined financial statements. We are not a registrant with the Securities and Exchange Commission (SEC) and are not subject to the SEC’s periodic reporting requirements. Certain estimates, including allocations from the Parent, have been made to provide financial information for SEC and stand-alone reporting purposes. We believe that the presentations and disclosures herein are adequate to make the information not misleading. In the opinion of management, all adjustments necessary to fairly state the financial statements have been reflected.

      We adopted certain changes in accounting principles that impact the comparability of the financial information presented herein. See Recently adopted accounting pronouncements below.

Use of estimates —

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Allowance for doubtful accounts —

      We perform credit evaluations of our significant customers and establish an allowance for doubtful accounts based on the aging of our receivables, payment performance factors, historical trends and other information. In general, we reserve 50% of those receivables outstanding 90 to 120 days and 100% of those outstanding over 120 days. We also review outstanding balances on an account specific basis and fully reserve the receivable prior to 120 days if information becomes available indicating we will not receive payment. Our reserve is evaluated and revised on a monthly basis.

Concentration of credit risk —

      Financial instruments that potentially subject us to concentrations of credit risk consist of trade receivables. Concentrations of credit risk with respect to trade receivables are limited due to the large number

7

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

of customers comprising our customer base. On-going credit evaluations are performed on customers, but we do not require collateral to support customer receivables.

Fair value of financial instruments —

      The carrying value of our financial instruments, which include cash, accounts receivable and accounts payable, as defined by Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures about the Fair Value of Financial Instruments, approximate fair values due to the short-term maturities of these instruments.

Accrued capping, closure and post-closure costs —

      Accrued capping, closure and post-closure costs represent an estimate of the present value of the future obligation associated with capping, closure and post-closure monitoring of our two non-hazardous solid waste landfills. Site specific capping, closure and post-closure engineering cost estimates are prepared annually. The present value of estimated future costs are accrued on a per unit basis as landfill disposal capacity is consumed. For active landfills, the impact of changes determined to be changes in estimates, based on the annual update, are accounted for on a prospective basis. Changes in estimates for closed landfill sites and fully incurred capping events are recognized when determined.

Environmental costs —

      We accrue for costs associated with environmental remediation obligations when such costs are probable and reasonably estimable. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value, as the timing of cash payments is not reliably determinable. Recoveries of environmental remediation costs from other parties are recorded when their receipt is deemed probable. Environmental liabilities and apportionment of responsibility among potentially responsible parties are accounted for in accordance with the guidance provided by the American Institute of Certified Public Accountants Statement of Position 96-1 Environmental Remediation Liabilities.

Revenue —

      Revenues result primarily from fees charged to customers for waste collection, transfer, recycling and disposal services. We generally provide collection services under direct agreements with our customers or pursuant to contracts with municipalities. Commercial and municipal contract terms generally range from one to five years and commonly have renewal options.

      Advance billings are recorded as unearned revenue, and revenue is recognized when services are provided, usually within 90 days.

Business combinations —

      Under the purchase method, we allocate the cost of the acquired business to the assets acquired and liabilities assumed based upon their estimated fair values. These estimates are revised during the allocation period as necessary when, and if, information regarding contingencies becomes available to further define and quantify assets acquired and liabilities assumed. The allocation period generally does not exceed one year. To the extent contingencies are resolved or settled during the allocation period, such items are included in the revised allocation of the purchase price. Purchase accounting adjustments, acquisition related costs and other possible charges that may arise from the acquisitions may materially impact our future combined balance sheet and statements of operations.

8

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Allied acquired a hauling and recycling business in February 2001 for cash consideration of approximately $425,000 which was accounted for under the purchase method and is reflected in the results of operations since the effective date of the acquisition. Our reported revenues and net income for the year ended December 31, 2001 were not significantly impacted by the pro forma effect of this acquisition.

Recently adopted accounting pronouncements —

      In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, Accounting for Asset Retirement Obligations (SFAS 143), which outlines the standards for accounting for obligations associated with the retirement of a long-lived tangible asset. The standard was effective beginning January 1, 2003 and impacts the accounting for landfill retirement obligations, which we have historically referred to as closure and post-closure. See Note 4 for additional discussion.

      In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The recognition requirements of FIN 45 are effective for any guarantees entered into subsequent to January 1, 2003. The adoption of FIN 45 did not have a material impact on our combined financial statements.

      Effective January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangibles Assets (SFAS 142), which among other things, eliminates the amortization of goodwill and instead requires an annual assessment of goodwill impairment by applying a fair value based test. See Note 3 for additional discussion.

      Effective January 1, 2002, we adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144) which supercedes SFAS No. 121. SFAS 144 provides a single accounting model for impairment of long-lived assets held for use and for long-lived assets that are to be disposed of by sale (including discontinued operations). SFAS 144 does not address impairment of goodwill. There was no impact on our financial statements or results of operations upon adoption.

2. Property and Equipment

      Property and equipment are recorded at cost. Depreciation is provided on the straight-line method over the estimated useful lives of land improvements (10 years), buildings and improvements (30 to 40 years), vehicles and equipment (3 to 10 years), containers and compactors (5 to 10 years) and furniture and office equipment (3 to 8 years). We do not assume a residual value on our depreciable assets. In accordance with SFAS 144, property and equipment are evaluated for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

      The cost of landfill airspace, including original acquisition cost and incurred and projected landfill construction costs, is amortized over the capacity of the landfill based on a per unit basis as landfill airspace is consumed. We periodically review the realizability of our investment in operating landfills. Should events and circumstances indicate that any of our landfills be reviewed for possible impairment, such review for recoverability will be made in accordance with Emerging Issues Task Force (EITF) Issue 95-23, The Treatment of Certain Site Restoration/Environmental Exit Costs When Testing a Long-Lived Asset for Impairment (EITF 95-23). EITF 95-23 outlines how cash flows for environmental exit costs should be determined and measured.

9

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Expenditures for major renewals and betterments are capitalized, while expenditures for maintenance and repairs, which do not improve assets or extend their useful lives, are charged to expense as incurred. When property is retired, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in cost of operations.

      Property and equipment at December 31, 2003 and December 31, 2002 are as follows (in thousands):

		December 31,		December 31,
		2003		2002
Land and land improvements		$	2,886	$	2,684
Land held for permitting as landfills			96		208
Landfills			4,056		2,156
Buildings and improvements			2,933		2,899
Vehicles and equipment			19,121		18,804
Containers and compactors			8,402		7,838
Furniture and fixtures			340		334
	Total property and equipment		37,834		34,923
Less: Accumulated depreciation and amortization			21,095		16,447
	Property and equipment, net	$	16,739	$	18,476

3. Goodwill

      Our goodwill balance reflects an amount related to the acquisition completed in February 2001, as discussed in Note 1, and an allocation from our Parent related to the acquisition of Browning-Ferris Industries, Inc. (BFI) completed in July 1999. The allocation from our Parent utilized estimates that we believe were applied using a reasonable approach.

      As discussed in Note 1, we adopted SFAS 142, effective January 1, 2002. SFAS 142 eliminates the amortization of goodwill and instead requires an annual assessment of goodwill impairment by applying a fair value based test. The calculation of fair value is subject to judgments and estimates. The estimates of fair value are assumptions about our future business plans and are based on facts and circumstances known at the time of the assessment. We estimate fair value of the combined divisions based on net cash flows discounted using a weighted-average cost of capital and other considerations. The estimated fair value could change if there were future changes in our expenditures levels or ability to perform at levels that were forecasted.

      Upon adoption of SFAS 142 on January 1, 2002, we tested our existing goodwill for realizability and determined that we had no impairment of goodwill and therefore SFAS 142 had no impact to the combined financial statements upon adoption (other than the elimination of goodwill amortization discussed above). The impairment test of goodwill will be completed more frequently than annually under certain conditions. For example, a significant adverse change in liquidity or the business environment, unanticipated competition, a significant adverse action by a regulator or a disposal of a significant portion of our operations could prompt an impairment test between annual assessments.

      In November 2003, Allied entered into a definitive agreement to sell substantially all of the assets and certain liabilities of the Company. As a result of the definitive agreement, we performed an impairment assessment of our goodwill using the anticipated sales price as our estimate of fair value and recorded a charge of approximately $31 million as a component of operating income. The impairment charge was determined as the excess of the estimated implied fair value over the carrying amount of our goodwill. The implied fair value of goodwill was determined in the same manner as the amount of goodwill recognized in a business

10

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

combination. The impairment charge is non-cash in nature and does not affect either the Company’s or Allied’s liquidity or compliance with debt covenants.

      Following is a summary of the changes in our goodwill during the year ended December 31, 2003 (in thousands):

Balance at December 31, 2002	$	116,168
Impairment		(31,333	)
Balance at December 31, 2003	$	84,835

      There was no activity in the goodwill balance from December 31, 2001 through December 31, 2002.

      We adopted SFAS 142 effective January 1, 2002. For the year ended December 31, 2001, net income adjusted to exclude goodwill amortization expense was $12,675.

4. Landfill Accounting

Change in accounting principle —

      Effective January 1, 2003, we adopted SFAS 143 which outlines standards for accounting for our landfill retirement obligations that have historically been referred to as closure and post-closure. SFAS 143 does not change the basic accounting principles that the waste industry has historically followed for accounting for these types of obligations. In general, the industry has followed the accounting practice of recognizing a liability on the balance sheet and related expense as waste is disposed at the landfill to match operating costs with revenues. The industry refers to this practice as life-cycle accounting. The principle elements of life-cycle accounting are still being followed.

      The new rules are a refinement to our industry practices and have caused a change in the mechanics of calculating landfill retirement obligations and the classification of where amounts are recorded in the financial statements. Landfill retirement obligations are no longer accrued through a provision to cost of operations, but rather as an increase to landfill assets. In addition, in accordance with SFAS 143, we changed the classification of certain costs related to capping, closure and post-closure obligations to other accounts. The most significant change in classification is that we now record the costs for methane gas collection systems in the landfill development assets. Further, the cost of financial assurance instruments are no longer accrued as part of the post-closure liability, but rather are expensed as incurred.

      Upon adoption, SFAS 143 required a cumulative change in accounting for landfill obligations retroactive to the date the landfill operations commenced or the date the asset was acquired. To do this, SFAS 143 required the creation of the related landfill asset, net of accumulated amortization and an adjustment to the capping, closure and post-closure liabilities for cumulative accretion.

      At January 1, 2003, we recorded a cumulative effect of a change in accounting principle of a net loss of approximately $186,000 (net of income tax benefit of $123,000). In addition, we recorded an increase in our capping, closure and post-closure liabilities of approximately $286,000 and a decrease in our net landfill assets of approximately $23,000.

Landfill assets —

      We have two active landfills in the North Central Florida District. One landfill has an expected operating life of 4 years. The second landfill has a remaining operating life of 9 years, including permitted airspace approved in October 2003. We use a life-cycle accounting method for landfills and the related capping, closure and post-closure liabilities. This method applies the costs to be capitalized associated with acquiring,

11

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

developing, closing and monitoring the landfills over the associated landfill capacity and associated consumption. On an annual basis, we update the development cost estimates (which include the costs to develop the site as well as the individual cell construction costs), and capping, closure and post-closure cost estimates for each landfill. Additionally, future capacity estimates (sometimes referred to as airspace) are updated annually using aerial surveys of each landfill to estimate utilized disposal capacity and remaining disposal capacity. The overall cost and capacity estimates are reviewed and approved by senior operations management annually.

      We use the units of production method for purposes of calculating the amortization rate at each landfill. This methodology divides the remaining costs (including unamortized amounts recorded) associated with acquiring, permitting and developing the entire landfill plus the present value of the total remaining costs for specific capping projects, closure and post-closure by the total remaining disposal capacity of that landfill (except for capping costs, which are divided by the total remaining capacity of the specific capping project). The resulting per unit amortization rate is applied to each unit disposed at the landfill and is recorded as expense for that period.

      Costs associated with developing the landfill include direct costs such as excavation, liners, leachate collection systems, engineering and legal fees, and capitalized interest. We classify this total disposal capacity as either permitted (having received the final permit from the governing authorities) or probable expansion. Probable expansion disposal capacity has not yet received final approval from the regulatory agencies, but we have determined that certain critical criteria have been met and the successful completion of the expansion is highly probable. Our requirements to classify disposal capacity as probable expansion are as follows:

      1. We have control of and access to the land where the expansion permit is being sought.

      2. All geologic and other technical siting criteria for a landfill have been met, or a variance from such requirements has been received (or can reasonably be expected to be achieved).

      3. The political process has been assessed and there are no identified impediments that cannot be resolved.

      4. We are actively pursuing the expansion permit and have an expectation that the final local, state and federal permits will be received within the next five years.

      5. Senior operations management approval has been obtained.

      Upon successfully meeting the preceding criteria, the costs associated with developing, constructing, closing and monitoring the total additional future disposal capacity are considered in the life-cycle cost of the landfill and reflected in the calculation of the amortization rate and the rate at which capping, closure and post-closure is accrued.

      Allied and its engineering and legal consultants continually monitor the progress of obtaining local, state and federal approval for each of its expansion permits. If it is determined that the expansion no longer meets our criteria, the disposal capacity is removed from our total available disposal capacity, the costs to develop that disposal capacity and the associated capping, closure and post-closure costs are removed from the landfill amortization base, and rates are adjusted prospectively. In addition, any value assigned to probable expansion capacity is written-off to expense during the period in which it is determined that the criteria are no longer met.

Capping, closure and post-closure —

      As individual areas within each landfill reach capacity, we are required to cap and close the areas in accordance with the landfill site permit. Generally, capping activities include the installation of compacted clay, geosynthetic liners, drainage channels, compacted soil layers and vegetative soil barriers over areas of a

12

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

landfill where total airspace has been consumed and waste is no longer being received. Capping activities occur throughout the life of the landfill.

      Closure costs are those costs incurred after a landfill site stops receiving waste, but prior to being certified as closed. After the entire landfill site has reached capacity and is closed, we are required to maintain and monitor the site for a post-closure period, which may extend for 30 years. Post-closure requirements generally include maintenance and operational costs of the site and monitoring the methane gas collection systems and groundwater systems, among other post-closure activities. Estimated costs for capping, closure and post-closure as required under Subtitle D regulations are compiled and updated annually for each landfill by local and regional company engineers. Daily maintenance activities, such as leachate disposal, methane gas and groundwater monitoring and maintenance, and mowing and fertilizing capped areas, incurred during the operating life of the landfill are expensed as incurred.

      SFAS 143 required landfill obligations to be recorded at fair value. Quoted market prices in active markets are the best evidence of fair value. Since quoted market prices for landfill retirement obligations are not available to determine fair value, we use discounted cash flows of capping, closure and post-closure cost estimates to approximate fair value. The cost estimates are prepared by our local management and third-party engineers based on the applicable local, state and federal regulations and site specific permit requirements and are intended to approximate fair value.

      Capping, closure and post-closure costs are estimated for the period of performance utilizing estimates a third party would charge (including profit margins) to perform those activities in full compliance with Subtitle D. If we perform the capping, closure and post-closure activities internally, the difference between amounts accrued, based upon third party cost estimates (including profit margins) and our actual cost incurred is recognized as a component of cost of operations in the period earned. An estimate of fair value should include the price that marketplace participants are able to receive for bearing the uncertainties in cash flows. However, when utilizing discounted cash flows, reliable estimates of market risk premiums may not be obtainable. In our industry, there is no market that exists for selling the responsibility for capping, closure and post-closure independent of selling the entire landfill. Accordingly, we believe that it is not possible to develop a methodology to reliably estimate a market risk premium and have excluded a market risk premium from our determination of expected cash flows for capping, closure and post-closure liability.

      We discount our capping, closure and post-closure costs using our credit-adjusted, risk-free rate (of 9% in 2003). The credit-adjusted, risk-free rate is based on the risk-free interest rate on obligations of similar maturity adjusted for our own credit rating. Changes in our credit-adjusted, risk-free rate do not change recorded liabilities, but subsequently recognized obligations are measured using the revised credit-adjusted, risk-free rate.

      Accretion expense is necessary to increase the accrued capping, closure and post-closure accrual balance to its future, or undiscounted, value. To accomplish this, we accrete our capping, closure and post-closure accrual balance using the credit-adjusted, risk-free rate (of 9% in 2003) and charge this accretion as an operating expense in that period. Accretion expense on recorded landfill liabilities is recorded to cost of operations from the time the liability is recognized until the costs are paid.

13

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Following is a table that shows the activity and balances for the capping, closure and post-closure accruals from December 31, 2002 to December 31, 2003 (in thousands):

Balance at December 31, 2002	$	593
Charges to expenses		40
Other charges(1)		1,163
Payments		(366	)
Balance at December 31, 2003	$	1,430

(1)  Amounts consist primarily of the cumulative effect of change in accounting principle for the adoption of SFAS 143 and the recognition of amounts accrued for capping, closure and post-closure liability to landfill asset during the period.

      The pro forma capping, closure and post-closure obligations as of December 31, 2002, 2001 and 2000 would have been approximately $879,000, $718,000 and $572,000, respectively.

Environmental costs —

      We engage independent environmental consulting firms to assist us in conducting environmental assessments of existing landfills or other properties, and in connection with companies acquired from third parties.

      The ultimate amounts for environmental liabilities cannot be precisely determined and estimates of such liabilities made by us, after consultation with our independent environmental engineers and legal counsel, require assumptions about future events due to a number of uncertainties including the extent of the contamination, the appropriate remedy, the financial viability of other potentially responsible parties and the final apportionment of responsibility among the potentially responsible parties. Where we have concluded that our estimated share of potential liabilities is probable, a provision has been made in the combined financial statements.

      Since the ultimate outcome of these matters may differ from the estimates used in our assessment to date, the recorded liabilities are periodically evaluated, as additional information becomes available to ascertain whether the accrued liabilities are adequate. We have determined that the recorded liability for environmental matters as of December 31, 2003 and December 31, 2002 of approximately $38,000 and $53,000, respectively, represents the most probable outcome of these contingent matters. We do not reduce our estimated obligations for proceeds from other potentially responsible parties or insurance companies. If receipt is probable, proceeds are recorded as an offset to environmental expense in operating income. There were no significant recovery receivables outstanding as of December 31, 2003 or December 31, 2002. We do not expect that adjustments to estimates, which are reasonably possible in the near term and that may result in changes to recorded amounts, will have a material effect on our combined liquidity, financial position or results of operations. In addition, we do not believe that it is reasonably possible the ultimate outcome of environmental matters, excluding closure and post-closure could result in any additional material liability.

5. Retirement Plan

      Allied sponsors the AWI 401(k) Plan, a defined contribution plan which is available to all eligible employees not represented by collective bargaining agreements. Eligible employees may contribute up to 25% of their annual compensation on a pre-tax basis. Participant contributions are subject to certain restrictions as set forth in the Internal Revenue Code. Allied matches in cash 50% of employee contributions, up to the first 5% of the employee’s compensation which is deferred. Participant contributions vest immediately and the

14

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

employer contributions vest in increments of 20% based upon years of service. Allied’s matching contributions to the plan on our behalf amounted to approximately $214,000, $242,000 and $85,000 for the years ended December 31, 2003, 2002, and 2001, respectively, included in selling, general and administrative expenses.

6. Income Taxes

      Our operating results are included in the consolidated federal income tax return of AWI for the periods ended December 31, 2003, 2002 and 2001. Separate company state income tax returns are filed in Florida. The allocation of consolidated taxes of Allied to us is determined as if we prepared a separate tax return, in accordance with the provisions of the SFAS No. 109, Accounting for Income Taxes. The components of the income tax provision consist of the following (in thousands):

	For the Year Ended
	December 31,
	2003		2002		2001
Current state tax provision	$	670	$	812	$	1,173
Balance of provision		5,924		6,591		7,110
Total	$	6,594	$	7,403	$	8,283

      The current state tax provision represents the state income taxes paid and payable for the periods presented. The balance of the provision represents federal and deferred state income taxes. The income tax provision allocated includes both current and deferred taxes. Under our tax sharing arrangement with the Parent, the total provision is considered to be a current provision, reduces our cash flows from operating activities and is reflected in the due to Parent on our combined balance sheet. The reconciliation of our income tax provision at the federal statutory tax rate to our effective tax rate is as follows (in thousands):

	For the Year Ended
	December 31,
	2003			2002		2001
Federal statutory tax rate	$	(5,196	)	$	6,478	$	6,320
Consolidated state taxes, net of federal benefit		823			925		943
Write off of goodwill(1)		10,967			—		—
Amortization of goodwill(1)		—			—		1,020
Effective tax rate	$	6,594		$	7,403	$	8,283

(1)  In connection with various acquisitions, we recorded goodwill that was non-deductible goodwill for income tax purposes.

15

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

      Deferred tax assets and liabilities (including any valuation allowance) are recognized, realized and maintained on a corporate-wide basis by AWI. Our cumulative tax-effected temporary differences that have been recorded in due to Parent on our combined balance sheets are as follows (in thousands):

	December 31,
	2003			2002
Cumulative Tax-Effected Future (Taxable) Deductible Temporary Differences:
Relating primarily to basis differences in goodwill, landfills, fixed assets and other assets	$	(2,597	)	$	(3,089	)
Environmental, capping, closure and post-closure reserves		587			258
Other reserves		32			57
Total	$	(1,978	)	$	(2,774	)

7. Commitments and Contingencies

Litigation —

      We are subject to extensive and evolving laws and regulations and have implemented our own environmental safeguards to respond to regulatory requirements. In the normal course of conducting operations, we may become involved in certain legal and administrative proceedings. Some of these actions may result in fines, penalties or judgments against us, which may have an impact on earnings for a particular period. Litigation and regulatory compliance contingencies are accrued for when such costs are probable and reasonably estimable. There are no matters at December 31, 2003 that management expects to have a material adverse effect on our liquidity, financial position or results of operations.

Lease agreements —

      We have non-cancelable operating lease agreements for certain facilities and equipment. Future minimum lease commitments under these agreements are as follows (in thousands):

For the Years Ending December 31,
2004	$	1,822
2005		778
2006		62
2007		22
2008		—
Total	$	2,684

      Rent expense was approximately $1.7 million, $1.5 million and $588,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

Financial assurances —

      We are required to provide $9.4 million in financial assurances to governmental agencies under applicable environmental regulations relating to our landfill operations and collection contracts. We satisfy the financial assurance requirements by providing performance bonds, letters of credit, or trust deposits to secure our obligations as they relate to landfill capping, closure and post-closure costs and performance under certain

16

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

collection, landfill and transfer station contracts. Additionally, we are required to provide financial assurances for collateral required for certain performance obligations.

      These financial instruments are issued in the normal course of business. They are not debt and, therefore, are not reflected in the accompanying combined balance sheets. The underlying obligations of the financial assurance instruments would be valued and recorded in the combined balance sheets based on the likelihood of performance being required. We do not expect this to occur.

Guarantees and collateral —

      We enter into contracts in the normal course of business that include indemnification clauses. Indemnifications relating to known liabilities are recorded in our combined financial statements based on our best estimate of required future payments. Certain of these indemnifications relate to contingent events or occurrences, such as the imposition of additional taxes due to a change in the tax law or adverse interpretation of the tax law, and indemnifications made in divestiture agreements where we indemnify the buyer for liabilities that may become known in the future but that relate to our activities prior to the divestiture.

      Along with substantially all of the other operations of our Parent, our assets collateralize certain of our Parent’s outstanding debt obligations.

8. Related Party Transactions

      All treasury functions are maintained by Allied. Cash receipts are deposited into an account maintained by Allied, and our cash requirements are met by Allied on our behalf. The net amount of these cash transactions is recorded in due to Parent balance. We earn interest on the balance with our Parent, excluding tax-related items, purchase accounting related items, goodwill and certain other non-cash, non-interest bearing items at a rate of 6%, 6% and 9% for the years ended December 31, 2003, 2002 and 2001, respectively. Related interest income allocated by our Parent to us was approximately $5.2 million, $3.4 million and $3.0 million for the years ended December 31, 2003, 2002 and 2001, respectively.

      The average balance due from Parent for which we earned interest income was $86.6 million, $56.4 million and $32.5 million for the years ended December 31, 2003, 2002 and 2001, respectively. The average balance due to Parent for which no interest was charged by the Parent was $174.4 million, $162.9 million and $154.8 million for the years ended December 31, 2003, 2002 and 2001, respectively.

      In 2002 and 2001, we received services from affiliated business units which are recorded in our statement of operations at amounts that approximate arms length transactions. However, these amounts would not necessarily represent those charged by non-affiliate companies. We recorded related expenses of approximately $91,000 and $124,000 as disposal expenses in cost of operations for the years ended December 31, 2002 and 2001, respectively.

      In 2001, we entered into operating lease agreements with certain other subsidiaries of our Parent for equipment and vehicles. The associated lease expense included in cost of operations for the years ended December 31, 2003, 2002 and 2001 was approximately $1.5 million, $1.3 million and $0.4 million, respectively.

      During 2003, we sold trade receivables at a discount to another subsidiary of Allied in connection with Allied’s receivables secured loan program. In connection with the sale, we recognized a loss of approximately $1.4 million recorded in selling, general and administrative expenses for the year ended December 31, 2003, and recorded a note receivable from the affiliate of approximately $1.4 million which is included in the due to Parent balance as part of the initial sale of receivables. Allocated interest income on the note receivable was approximately $19,000 for the year ended December 31, 2003. In November 2003, we discontinued selling

17

NORTH CENTRAL FLORIDA DISTRICT

(WHOLLY-OWNED DIVISIONS OF ALLIED WASTE INDUSTRIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

trade receivables to a subsidiary of our Parent in connection with the divestiture transaction described in Note 1.

      We are charged for management, financial and other administrative services provided by Allied during the year, including allocations for overhead. Amounts were allocated on the basis of revenues earned. Related charges for the years ended December 31, 2003, 2002 and 2001 are $1.7 million, $1.6 million and $1.1 million, respectively, and are included in selling, general and administrative expenses. In addition, Allied maintains employee health and workers’ compensation insurance coverage for us and we are allocated a portion of the cost of such coverage. Related charges included in cost of operations for the years ended December 31, 2003, 2002 and 2001 of $6.6 million, $5.7 million and $5.1 million, respectively, were allocated on the basis of payroll expenses incurred. Management believes the method of allocation used is reasonable, but would not necessarily represent those charged by non-affiliated companies or incurred for similar functions on a stand-alone basis. With the exception of the lease agreements discussed above, there are no contractual relationships between us and Allied.

18 EX-99.2 14 g88543exv99w2.htm CONSOLIDATED FINANCIAL STATEMENTS

Exhibit 99.2

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS

AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

TABLE OF CONTENTS

Independent Auditor’s Report	F-61
Consolidated Balance Sheets	Exhibit  A
Consolidated Statements of Operations	Exhibit  B
Consolidated Statements of Shareholder’s Equity (Deficit)	Exhibit  C
Consolidated Statements of Cash Flows	Exhibit  D
Notes to Consolidated Financial Statements	F-66

2

INDEPENDENT AUDITOR’S REPORT

To the Shareholders

Florida Recycling Services, Inc. of Illinois

Chicago, Illinois

      We have audited the accompanying consolidated balance sheets of Florida Recycling Services, Inc. of Illinois and Subsidiary as of December 31, 2003, 2002 and 2001, and the related consolidated statements of operations, cash flows and shareholder’s equity (deficit) for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

      We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida Recycling Services, Inc. of Illinois and Subsidiary as of December 31, 2003, 2002 and 2001, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

SHEPARD SCHWARTZ & HARRIS LLP

February 11, 2004

Chicago, Illinois

3

EXHIBIT A

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31, 2003, 2002 and 2001

				2003			2002			2001
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	669,735		$	69,192		$	897,341
	Receivables
		Trade			16,156,222			10,691,735			12,256,134
		Other			2,506			11,424			45,347
	Prepaid expenses				1,643,739			492,026			370,707
	Advances to related parties				855,000			510,000			—
	Supplies and materials				963,480			487,520			432,939
			Total current assets		20,290,682			12,261,897			14,002,468
PROPERTY AND EQUIPMENT
	Building				607,636			699,721			1,451,221
	Machinery and equipment				57,645,604			50,661,524			45,253,426
					58,253,240			51,361,245			46,704,647
	Less — accumulated depreciation				40,312,888			33,828,548			24,966,942
					17,940,352			17,532,697			21,737,705
	Land				98,197			413,198			476,226
					18,038,549			17,945,895			22,213,931
OTHER ASSETS
	Deposits				17,962			18,435			2,878
	Contract acquisition rights (net of accumulated amortization of $97,721 in 2003 and $21,667 in 2002)				453,601			363,566			—
	Goodwill (net of accumulated amortization of $68,611 in 2001)				174,489			174,489			581,389
	Deferred income taxes				601,100			636,000			636,000
					1,247,152			1,192,490			1,220,267
				$	39,576,383		$	31,400,282		$	37,436,666
LIABILITIES AND SHAREHOLDER’S DEFICIT
CURRENT LIABILITIES
	Checks issued in excess of bank balance			$	—		$	—		$	2,170,476
	Note payable — bank				10,000,000			4,500,000			—
	Current maturities of long-term debt				12,928,121			8,198,916			10,687,496
	Accounts payable				6,555,149			5,369,645			3,775,630
	Accrued expenses				2,655,732			2,697,802			4,168,021
			Total current liabilities		32,139,002			20,766,363			20,801,623
LONG-TERM DEBT — net of current maturities					12,060,243			15,051,757			25,457,100
SHAREHOLDER’S DEFICIT
	Common stock — $1,000 par value, 1,000 shares authorized, 100 shares issued and outstanding				100,000			100,000			100,000
	Additional paid-in capital				11,670,550			11,670,550			6,716,512
	Accumulated deficit				(16,393,412	)		(16,188,388	)		(15,638,569	)
			Total shareholder’s deficit		(4,622,862	)		(4,417,838	)		(8,822,057	)
				$	39,576,383		$	31,400,282		$	37,436,666

The accompanying notes are an integral part of these statements.

4

EXHIBIT B

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2003, 2002 and 2001

		2003			2002			2001
Sales		$	90,519,364		$	84,783,830		$	81,722,405
Cost of sales
	Direct labor		23,844,185			22,268,603			23,188,341
	Dumping and hauling		30,349,486			28,516,654			30,123,083
	Depreciation and amortization		8,632,711			9,172,228			10,645,485
	Amortization of contract rights		75,727			43,334			—
	Other		10,051,118			9,561,909			9,938,131
			72,953,227			69,562,728			73,895,040
Gross profit			17,566,137			15,221,102			7,827,365
Operating expenses			14,910,255			13,666,493			12,497,884
Operating income (loss)			2,655,882			1,554,609			(4,670,519	)
Other (income) expense
	(Gain) loss on sale of assets		(40,947	)		11,466			38,470
	Interest expense		1,931,303			2,092,962			2,626,756
			1,890,356			2,104,428			2,665,226
Income (loss) before income tax expense (benefit)			765,526			(549,819	)		(7,335,745	)
Income tax expense (benefit) — deferred			34,900			—			(150,000	)
Net income (loss)		$	730,626		$	(549,819	)	$	(7,185,745	)
Earnings per share		$	7,306.26		$	(5,498.19	)	$	(71,857.45	)

The accompanying notes are an integral part of these statements.

5

EXHIBIT C

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY (DEFICIT)

Years Ended December 31, 2003, 2002 and 2001

					Additional
	Shares		Par		Paid-in		Accumulated
	Issued		Value		Capital		Deficit			Total
Balance — January 1, 2001		100	$	100,000	$	6,687,112	$	(8,452,824	)	$	(1,665,712	)
Net loss		—		—		—		(7,185,745	)		(7,185,745	)
Shareholder’s contribution		—		—		29,400		—			29,400
Balance — December 31, 2001		100		100,000		6,716,512		(15,638,569	)		(8,822,057	)
Net loss		—		—		—		(549,819	)		(549,819	)
Shareholder’s contribution		—		—		4,954,038		—			4,954,038
Balance — December 31, 2002		100		100,000		11,670,550		(16,188,388	)		(4,417,838	)
Net income		—		—		—		730,626			730,626
Shareholder’s distribution		—		—		—		(935,650	)		(935,650	)
Balance — December 31, 2003		100	$	100,000	$	11,670,550	$	(16,393,412	)	$	(4,622,862	)

The accompanying notes are an integral part of these statements.

6

EXHIBIT D

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2003, 2002 and 2001

					2003			2002			2001
Cash flows from operating activities
	Cash received from customers				$	85,054,877		$	86,348,229		$	81,572,652
	Cash paid for goods and operating expenses					(79,728,995	)		(76,284,274	)		(78,757,105	)
	Interest paid					(1,832,673	)		(2,011,004	)		(2,450,343	)
				Net cash provided by operating activities		3,493,209			8,052,951			365,204
Cash flows from investing activities
	Advances to related parties					(345,000	)		(510,000	)		—
	Deposits paid (returned)					472			(15,557	)		443,019
	Cash received from sale of property and equipment					73,718			117,221			1,578,756
	Purchase of property and equipment					(9,185,157	)		(5,821,311	)		(5,670,297	)
	Payment for contract acquisition rights					(165,762	)		—			—
				Net cash used for investing activities		(9,621,729	)		(6,229,647	)		(3,648,522	)
Cash flows from financing activities
	Proceeds from note payable — bank					5,500,000			1,300,000			—
	Proceeds of long-term debt					10,699,978			1,590,216			11,282,538
	Payments of long-term debt					(8,962,288	)		(7,641,669	)		(7,955,236	)
	Contribution from shareholder					—			2,100,000			—
	Distributions to shareholder					(508,627	)		—			—
				Net cash provided by (used for) financing activities		6,729,063			(2,651,453	)		3,327,302
Net increase (decrease) in cash and cash equivalents						600,543			(828,149	)		43,984
Cash and cash equivalents — beginning						69,192			897,341			853,357
Cash and cash equivalents — ending					$	669,735		$	69,192		$	897,341
Reconciliation of net income (loss) to net cash provided by operating activities
	Net income (loss)				$	730,626		$	(549,819	)	$	(7,185,745	)
	Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities
		Depreciation and amortization				8,708,438			9,215,562			10,645,485
		(Gain) loss on sale of property and equipment				(40,947	)		11,466			38,470
		(Increase) decrease in
			Receivables — trade			(5,464,487	)		1,564,399			(149,753	)
			Other receivables			8,918			33,923			(6,735	)
			Supplies and materials			(475,961	)		(54,580	)		(118,929	)
			Prepaid expenses			(1,151,712	)		(121,320	)		(4,052	)
			Deferred income taxes			34,900			—			(150,000	)
		Increase (decrease) in
			Checks issued in excess of bank balance			—			(2,170,476	)		623,321
			Accounts payable			1,185,504			1,594,015			(3,681,907	)
			Accrued expenses			(42,070	)		(1,470,219	)		355,049
						2,762,583			8,602,770			7,550,949
				Net cash provided by operating activities	$	3,493,209		$	8,052,951		$	365,204

The accompanying notes are an integral part of these statements.

7

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A — Nature of Operations

      Florida Recycling Services, Inc. of Illinois (FRS of Illinois) and its subsidiary Florida Recycling Services, Inc. of Delaware (FRS of Delaware) operate waste disposal and recycling services in central Florida.

Note B — Summary of Significant Accounting Policies

Principles of Consolidation

      The accompanying consolidated financial statements include the accounts of FRS of Illinois and its subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

      The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

Accounts Receivable

      Trade receivables are uncollateralized customer obligations due 30 days from the invoice date.

      Trade receivables are stated at the amount billed to the customer. The carrying amount of trade receivables is reduced by an allowance for doubtful accounts that reflects management’s estimate of the amounts that will not be collected. Management reviews individual receivable balances and the Company’s average write offs to estimate the allowance for doubtful accounts. At December 31, 2003, 2002 and 2001, an allowance of $260,179, $379,120 and $363,332, respectively was considered necessary.

Property and Equipment

      Property and equipment is stated at cost. Expenditures for maintenance, repairs and minor renewals are charged to expense as incurred. Expenditures for improvements, replacements and major renewals are capitalized.

      Depreciation is provided principally by accelerated methods over estimated useful lives of 5 to 39 years.

      In January 2003, the Company outsourced the refurbishing of its containers to a related party. Costs associated with the betterments totaling $1,000,000 have been capitalized to machinery and equipment. In prior years, the repair and refurbishing was done internally. No amounts were capitalized in previous years since there was no objective basis to measure the betterments.

Goodwill and Other Intangible Assets

      Goodwill, representing the aggregate excess cost of companies acquired over the fair value of their net assets at dates of acquisition, was being amortized by the straight-line method over a period of 15 years for the year ended December 31, 2001.

      In June 2001, Statement of Financial Accounting Standards (SFAS) No. 142 was issued to address the initial recognition and measurement of intangible assets acquired outside of a business combination and the accounting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 provides that intangible assets with finite useful lives be amortized and that goodwill and intangible assets with indefinite lives not be amortized, but rather be tested at least annually for impairment. The Company adopted SFAS No. 142 as of January 1, 2002. Upon adoption of SFAS 142, the Company assigned approximately $407,000 of previously reported goodwill to contract acquisition costs.

8

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —  (Continued)

      Contract acquisition costs are being amortized over their estimated remaining useful lives of approximately 8 years. Estimated amortization expense for each year is $84,014 through December 31, 2007 and $59,151 for 2008.

      On January 1, 2002, goodwill amounting to $174,489 was not subject to further amortization as a result of SFAS No. 142. The Company conducted its initial impairment test in 2002, with no reduction of recorded goodwill resulting from the test. A reconciliation adjusting comparative net earnings and earnings per share for the year ended December 31, 2001, to show the effect of amortizing the contract acquisition costs and no longer amortizing goodwill, follows:

		2001
Reported net loss		$	(7,185,745	)
Adjustments:
	Goodwill amortization		43,334
	Contract acquisition costs amortization		(30,334	)
Adjusted net loss		$	(7,172,745	)
Basic earnings per share:
	Reported net earnings	$	(71,857.45	)
	Effect of amortization changes		130.00
Adjusted net loss per share		$	(71,727.45	)

Impairment of Long-Lived Assets

      In accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, property and equipment and amortizable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable from estimated future undiscounted cash flows, excluding interest charges. Impairment losses are measured as the amount by which the carrying amount of the assets exceed their fair value.

Fair Value of Financial Instruments

      SFAS No. 107 requires disclosures about the fair value for all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about fair value of financial instruments are based on pertinent information available to management as of December 31, 2003, 2002 and 2001. Accordingly, the estimates presented in these statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.

      Management estimates the fair value of (i) receivables, advances to related parties, accounts payable, accrued expenses and notes payable to approximate carrying value due to short maturity of these instruments; and (ii) borrowings under the long-term debt approximates carrying value because the most significant portion of these borrowings accrues interest at a floating interest rate based on the market.

      The Company’s remaining assets and liabilities, which are not considered financial instruments, have not been valued differently than customary with historical cost accounting.

Per Share Data

      Net earnings per share (EPS) are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Weighted average shares outstanding amounted to 100 shares in the years ended December 31, 2003, 2002 and 2001.

9

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —  (Continued)

Income Taxes

      FRS of Illinois, with the consent of its shareholder, has elected to be taxed as an S corporation for Federal and state income tax purposes. The shareholder of an S corporation includes his share of the company’s income or loss on his individual income tax returns. Therefore, no provision or liability for federal or state income taxes has been made in the 2003, 2002 and 2001 financial statements for FRS of Illinois net income/ (loss) of approximately $673,000, $(480,000) and $(6,966,000), respectively.

      FRS of Delaware provides for federal and state taxes currently due plus deferred taxes, if any, arising from temporary differences between income for financial reporting and income tax purposes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income.

Advertising

      Advertising costs are expensed when incurred. Advertising expense for the years ended December 31, 2003, 2002 and 2001 was $79,000, $73,300 and $65,046, respectively.

Estimates and Assumptions

      The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note C — Note Payable — Bank

      The Company has a $12,000,000 commitment of which $10,000,000 and $4,500,000 is drawn at December 31, 2003 and 2002, respectively. The note, which is due June 2004, bears interest at the banks prime rate (effective rate of 3.8% in 2003 and 5% in 2002). Interest is payable monthly. The note is collateralized by a personal guarantee of the Company’s shareholder.

10

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —  (Continued)

Note D — Long-Term Debt

      Long-term debt consists of the following:

	2003		2002		2001
The Company has a $3,000,000 commitment that bears interest at the bank’s prime rate (effective rate of 4% in 2003). The note is payable in monthly installments of $50,000 plus interest through January 2009 and is collateralized by a personal guarantee of the Company’s shareholder	$	3,000,000	$	—	$	—
Property note — payable in monthly installments of $5,065 including interest at 8%, due February 2015. Collateralized by land and building with a cost of $835,000	$	—	$	—	$	490,280
Equipment notes — payable in monthly installments aggregating $869,540, $777,591 and $803,579 for 2003, 2002 and 2001, respectively, including interest at rates ranging LIBOR plus 2% to 9.78% (effective rate of 5.68%, 6.7% and 7.62% in 2003, 2002 and 2001, respectively) due at various dates through 2008. Collateralized by equipment with a cost of $37,719,523, $34,723,265 and $28,695,553 in 2003, 2002 and 2001 and personal guarantees of the Company’s shareholder		19,588,364		21,850,673		27,891,166
Equipment note — due March 2004. Interest is payable monthly at 4%. The note is collateralized by a personal guarantee of the Company’s shareholder. The Company is presently negotiating the extension of this loan		1,000,000		—		—
Unsecured note payable to shareholder, interest payable monthly at 8%		—		—		3,163,150
Note payable — interest payable monthly at 8.0%, due April 2004. The note is collateralized by a personal guarantee of the Company’s shareholder		1,400,000		1,400,000		1,400,000
Note payable — interest payable monthly at 5.75%, due on demand. The note is collateralized by a personal guarantee of the Company’s shareholder		—		—		3,200,000
		24,988,364		23,250,673		36,144,596
Less — current maturities		12,928,121		8,198,916		10,687,496
	$	12,060,243	$	15,051,757	$	25,457,100

11

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —  (Continued)

      Maturities of long-term debt in the five years subsequent to 2003 are:

Year		Amount
2004		$	12,928,121
	2005		6,192,013
	2006		3,239,708
	2007		1,472,491
	2008		1,106,031
Thereafter			50,000
		$	24,988,364

Note E — Retirement Plan

      The Company has a qualified cash or deferred compensation plan under Section 401(k) of the Internal Revenue Code. Under the plan, employees who meet minimum eligibility requirements may elect to defer portions of their salary, subject to Internal Revenue Service limits. Employer contributions are discretionary. There was no profit sharing expense during 2003, 2002 and 2001.

Note F — Leases

      FRS of Illinois leases a recycling facility and warehouses under the terms of operating leases. The leases, which expire in September 2006 provide for minimum monthly rentals aggregating approximately $7,420 plus operating expenses. In addition, the Company rents office space for approximately $7,800 per month under a month-to-month lease. Minimum future rents under these leases are:

Year	Amount
2004	$	89,040
2005		89,040
2006		80,560
Total	$	258,640

      Rent expense for the years ended December 31, 2003, 2002 and 2001 was $169,543, $268,108 and $311,422, respectively.

Note G — Income Taxes

      Income tax expense (benefit) is comprised of the following:

		Years Ended December 31,
		2003		2002		2001
Current federal income tax		$	—	$	—	$	—
Deferred federal income tax			34,900		—		(150,000	)
	Income tax expense (benefit)	$	34,900	$	—	$	(150,000	)

12

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —  (Continued)

      Income tax expense (benefit), as a percentage of pretax earnings, is as follows:

	As a Percent of
	Pretax Earnings
	2003			2002			2001
Combined statutory federal income tax rate		39.0	%		39.0	%		39.0	%

      At December 31, 2003, FRS of Delaware has available net operating loss carryforwards that may be used to reduce future taxable income amounting to $1,580,000. The carryforwards expire in the years 2013 – 2017. A deferred tax asset, amounting to $601,100, $636,000 and $636,000 at December 31 2003, 2002 and 2001, respectively, was recorded relating to the future tax benefit of the net operating loss carryforwards. The Company has determined that it is more likely than not that the future tax benefit will be fully utilized; therefore no valuation allowance has been established related to the deferred tax asset.

Note H — Related Party Transactions

      The Company has transactions with related parties as follows:

	2003		2002		2001
Management fee expense	$	3,062,000	$	2,720,000	$	2,972,500
Insurance expense		852,000		2,233,600		2,041,000
Capitalized container refurbishing		1,000,000		—		—
Container repair expense		323,000		—		—
Truck and truck parts		980,600		1,064,400		505,000

      Balances due to and from related parties at December 31, were as follows:

	2003		2002		2001
Accounts payable and accrued expenses	$	1,911,600	$	556,000	$	949,500
Other receivables		38,800		241,700		—

Note I — Concentrations of Credit Risk

      Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high credit quality financial institutions. Concentrations of credit risk with respect to accounts receivable are limited due to the Company’s large number of customers.

Note J — Cash Flow Information

      Non-cash investing and financing activities:

      During 2003, the Company distributed land and building to the Company’s shareholders with a book value of $427,023.

      During 2002, the Company distributed land and building subject to the related debt to its sole shareholder as partial payment on the note payable to the shareholder. The Company’s shareholder contributed the remaining balance on the note payable to additional paid-in capital. No additional shares

13

FLORIDA RECYCLING SERVICES, INC. OF ILLINOIS AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —  (Continued)

were issued to the shareholder for the capital contribution. The additional paid-in capital contributed by the shareholder is as follows:

Loan payable to shareholder					$	3,163,150
Less — property distributions
	Net building	$	704,932
	Land		83,500
	Debt assumed		(479,320	)		(309,112	)
Loan contributed to additional paid-in capital						2,854,038
Cash contributions						2,100,000
Total					$	4,954,038

      In 2001, the shareholder contributed equipment (containers) valued at $29,400 to additional paid-in capital.

14 EX-99.3 15 g88543exv99w3.htm PRO FORMA COMBINED FINANCIAL STATEMENTS

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      These unaudited pro forma condensed consolidated financial statements have been prepared from the consolidated financial statements of Capital Environmental Resource Inc. (the “Company”) as of and for the year ended December 31, 2003, the combined financial statements of the North Central District of Allied Waste Industries, Inc. as of and for the year ended December 31, 2003 (the “Allied Assets”) and the consolidated financial statements of Florida Recycling Services, Inc. of Illinois and its subsidiary (“Florida Recycling”) as of and for the year ended December 31, 2003.

      The unaudited pro forma condensed consolidated statement of operations has been prepared on a basis to reflect the following events as if each event occurred as of January 1, 2003:

•  acquisition of the Allied Assets;

•  acquisition of Florida Recycling;

•  entering into the new Senior Secured Credit Facility;

•  issuance of the Senior Subordinated Notes;

•  issuance and registration of 13,400,000 common shares of the Company and warrants to purchase 1,340,000 common shares of the Company; and

•  tax effects of the foregoing events.

      The unaudited pro forma condensed balance sheet has been prepared on a basis to reflect the following events as if they had occurred as of December 31, 2003:

•  acquisition of the Allied Assets which were not acquired in December 2003;

•  acquisition of Florida Recycling;

•  entering into the new Senior Secured Credit Facility;

•  issuance of the Senior Subordinated Notes; and

•  issuance and registration of 13,400,000 common shares of the Company and warrants to purchase 1,340,000 common shares of the Company.

      You should read these unaudited pro forma condensed consolidated financial statements in conjunction with the consolidated financial statements of the Company as filed on Form 20-F with the Securities and Exchange Commission, the combined financial statements of the Allied Assets and the consolidated financial statements of Florida Recycling.

      The pro forma adjustments are based on preliminary estimates, available information and certain assumptions that management believes are reasonable, and may be revised as additional information becomes available. The pro forma adjustments are more fully described in the notes to the unaudited pro forma condensed consolidated financial statements.

      The unaudited pro forma condensed consolidated financial statements should not be considered indicative of actual results that would have been achieved had the acquisitions and the other transactions and events described been completed as of the dates or as of the beginning of the period indicated and do not purport to project the financial condition or results of operations and cash flows for any future date or period.

      These unaudited pro forma condensed consolidated financial statements do not include operating results from any other recently acquired landfill sites or recently acquired collection operations.

1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2003

(in thousands)

					Allied			Florida
		Actual			Assets			Recycling			Adjustments			Pro Forma
Revenue		$	126,750		$	89,702		$	90,519		$	—		$	306,971
Operating expenses:
	Cost of operations		79,992			65,657			64,245			(1,510	)(1)		208,384
	Selling, general and administrative		35,117			8,000			14,910			(2,537	)(2)		54,117
												(1,373	)(3)
	Depreciation, depletion and amortization		14,927			4,804			8,708			6,723	(4)		35,680
												518	(1)
	Goodwill impairment		—			31,333			—			(31,333	)(5)		—
	Loss (recovery) related to disposal of U.S. operations		(155	)		—			—			—			(155	)
	Foreign exchange loss (gain) and other		1,915			—			(41	)		—			1,874
Income (loss) from operations			(5,046	)		(20,092	)		2,697			29,512			7,071
Interest income			—			(5,245	)		—			5,245	(6)		—
Interest expense			18,439			—			1,931			20,795	(7)		31,942
												(7,292	)(7)
												(1,931	)(6)
Income (loss) before income taxes			(23,485	)		(14,847	)		766			12,695			(24,871	)
Income tax provision (benefit)			(587	)		6,594			35			(6,629	)(8)		(587	)
Income (loss) before cumulative effect of change in accounting principle			(22,898	)		(21,441	)		731			19,324			(24,284	)
Deemed dividend on series 1 preferred shares			(54,572	)		—			—			—			(54,572	)
Net income (loss) attributable to common shareholders before cumulative effect of change in accounting principle		$	(77,470	)	$	(21,441	)	$	731		$	19,324		$	(78,856	)
Basic and diluted loss per share before cumulative effect of change in accounting principle		$	(1.99	)										$	(1.29	)
Weighted average common shares outstanding — basic and diluted			38,782			—			—			22,549	(9)		61,331

The accompanying notes are an integral part of these financial statements.

2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of December 31, 2003

(in thousands)

							Remaining						Florida
					Remaining		Allied Assets			Florida			Recycling			Financing
		Actual			Allied Assets		Adjustment			Recycling			Adjustment			Adjustment			Pro Forma
Assets
Cash and cash equivalents		$	21,062		$	—	$	(31,245	)(10)	$	670		$	(97,000	)(10)	$	129,309	(13)	$	22,796
Restricted cash			14,433			—		(14,433	)(10)		—			—			—			—
Accounts receivable			26,999			4,358		—			16,159			—			—			47,516
Prepaid expenses and other assets			27,057			220		—			3,462			(855	)(11)		—			29,884
Deferred income taxes			2,592			—		—			—			—			—			2,592
	Total current assets		92,143			4,578		(45,678	)		20,291			(97,855	)		129,309			102,788
Property and equipment, net			74,521			9,248		1,897	(11)		18,039			—			—			103,705
Landfill sites, net			117,541			—		—			—			—			—			117,541
Deferred income taxes			1,135			—		—			601			(601	)(11)		—			1,135
Other assets			22,278			4		(4	)(11)		18			(9,568	)(10)		9,250	(13)		21,978
Goodwill and other intangible assets			163,380			31,370		(31,370	)(11)		627			(627	)(11)		—			318,869
								22,094	(12)					27,156	(12)
								8,991	(12)					97,248	(12)
	Total assets	$	470,998		$	45,200	$	(44,070	)	$	39,576		$	15,753		$	138,559		$	666,016
Liabilities and Shareholders’ Equity
Accounts payable		$	12,074		$	2,336	$	100	(12)	$	6,555		$	1,340	(12)	$	—		$	20,069
								(2,336	)(11)
Accrued expenses and other liabilities			25,401			1,479		(449	)(11)		2,656			—			—			29,087
Current portion of long-term debt and short-term financing			172,280			2		(2	)(11)		22,928			(22,928	)(11)		(172,125	)(13)		155
	Total current liabilities		209,755			3,817		(2,687	)		32,139			(21,588	)		(172,125	)		49,311
Long-term debt			3,130			—		—			12,060			(12,060	)(11)		260,000	(13)		263,130
Due to affiliate			—			20,547		(20,547	)(11)		—			—			—			—
Accrued closure, post-closure and other obligations			8,791			—		—			—			—			—			8,791
Cumulative mandatorily redeemable shares of preferred stock of Waste Services			48,205			—		—			—			—			—			48,205
	Total liabilities		269,881			24,364		(23,234	)		44,199			(33,648	)		87,875			369,437
Common stock			215,395			—		—			100			51,208	(10)		48,467	(13)		308,640
														(100	)(10)
														(6,430	)(10)
Other additional paid-in-capital			—			—		—			11,670			(11,670	)(10)		—			—
Investment by parent			—			20,836		(20,836	)(10)		—			—			—			—
Options, warrants and deferred stock-based compensation			25,828			—		—			—			—			2,217	(13)		28,045
Accumulated other comprehensive income			15,952			—		—			—			—			—			15,952
Accumulated deficit			(56,058	)				—			(16,393	)		16,393	(10)		—			(56,058	)
	Total shareholders’ equity		201,117			20,836		(20,836	)		(4,623	)		49,401			50,684			296,579
	Total liabilities and shareholders’ equity	$	470,998		$	45,200	$	(44,070	)	$	39,576		$	15,753		$	138,559		$	666,016

The accompanying notes are an integral part of these financial statements.

3

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

      The following notes are a summary of the pro forma adjustments reflected in, and form an integral part of, the unaudited pro forma condensed consolidated financial statements.

(1)	Reflects the removal of rent expense from cost of operations for trucks and containers leased from other subsidiaries of Allied Waste Industries, Inc. (“Allied”). These trucks and containers were acquired or are to be acquired as part of the acquisition of the Allied Assets. Rent expense being removed for the entire Allied northern and central Florida operations was $1.5 million for the year ended December 31, 2003. Depreciation relating to the assets being acquired was $0.5 million for the year ended December 31, 2003.
(2)	Reflects the elimination of Florida Recycling management fees related to agreements not being assumed approximating $3.1 million for the year ended December 31, 2003, offset by new employment and consulting agreements approximating $0.6 million.
(3)	Reflects the removal of losses on the sale of receivables to another subsidiary of Allied. These receivables were acquired or are to be acquired as part of the acquisition of the Allied Assets. Loss on the sale of receivables being removed was $1.4 million for the year ended December 31, 2003.
(4)	Reflects the amortization of intangible assets exclusive of goodwill, based on an estimate of intangible asset values. These intangible assets include customer relationships and contracts and covenants not-to-compete and are amortized over the expected benefit to be received by such intangibles, which ranges from 3 to 20 years. The estimated amortizable intangibles for the Allied Assets and Florida Recycling acquisitions approximates $51.5 million resulting in first year amortization of approximately $6.7 million.
(5)	Reflects the elimination of goodwill impairment losses recognized by Allied for the year ended December 31, 2003.
(6)	Reflects the elimination of interest income of $5.2 million received on balances due from affiliates not being acquired as part of the Allied Assets acquisition as well as the elimination of Florida Recycling interest expense of $1.9 million for the year ended December 31, 2003 related to debt not assumed.
(7)	Reflects interest expense of approximately $5.1 million from $100.0 million of a term loan portion of our new Senior Secured Credit Facilities and $15.7 million from the $160.0 million of the Senior Subordinated Notes. The stated interest rate is assumed to be 9.5% for the Senior Subordinated Notes and 4.5% for the term loan portion of the Senior Secured Credit Facilities. For each additional 100 basis point change in the actual borrowing rate from the assumed rate, interest expense would increase or decrease by approximately $2.6 million. Also reflected is the removal of $7.3 million of interest expense on our previous credit facility that would have been avoided had the financing described been in place as of January 1, 2003.
	Separately, as of December 31, 2003, the Company entered into a $220.0 million existing credit facility the proceeds of which were used to finance the initial acquisition of certain assets of Allied and to repay the Company’s previous senior credit facility. Excluded from the pro forma adjustments is approximately $8.8 million of estimated fees and expenses related to the existing credit facilities that will fully amortize upon the refinancing.
(8)	Reflects the elimination of U.S. income taxes otherwise payable as a result of the pro forma adjustments previously described. The Company has not assumed any additional benefit of the tax losses attributed to the pro forma adjustments because it does not expect to benefit from such losses at this time.
(9)	Reflects the dilutive effect of the 9,250,000 Common Shares issued to Florida Recycling in connection with the Florida Recycling acquisition less the effect of the original 1,000,000 Common Shares deposited on a weighted average basis and the private placement of 13,400,000 Common Shares.

(10)  Reflects the payment of $45.7 million of cash purchase price for the remaining Allied Assets as well as the elimination of the investment by the former owner of the Allied Assets of $20.8 million. Additionally

4

	reflected is the payment of cash purchase price for Florida Recycling of approximately $97.0 million, ($98.5 million purchase price less $3.0 million of advances plus $1.5 million of transaction related fees), the issuance of 9,250,000 Common Shares of the Company at a fair market value of $5.54 per share, the elimination of previous cash, warrants and Common Share deposits of approximately $9.6 million and the elimination of predecessor equity components.
(11)	Reflects the elimination of assets not acquired and liabilities not assumed as part of the acquisitions. The assets not being acquired primarily relate to predecessor entity goodwill and certain tax assets. The liabilities not assumed primarily relate to indebtedness of Florida Recycling and accounts payable and accrued expenses of Allied. Additionally, we are acquiring certain trucks and containers from other Allied entities. Also, refer to Note (12) for further details concerning the allocation of purchase price.
(12)	Reflects the preliminary allocation of purchase price based upon a preliminary estimate of the fair value of assets being acquired and liabilities being assumed by us as follows:

				Remaining			Florida
				Allied Assets			Recycling			Total
Purchase price:
	Cash			$	45,678		$	98,500		$	144,178
	Common shares issued				—			51,208			51,208
	Warrants issued				—			138			138
	Transaction fees and other				—			1,500			1,500
		Total purchase price			45,678			151,346			197,024
Allocated as follows:
	Net book value of assets acquired/(liabilities) assumed				20,836			(4,623	)		16,213
	Adjustments to net book value:
		Trucks and containers acquired			1,897			—			1,897
		Accounts payable and accrued expenses not assumed			2,785			—			2,785
		Indebtedness not assumed			2			34,988			34,990
		Due to affiliate not assumed			20,547			—			20,547
		Historical goodwill and intangible assets			(31,370	)		(627	)		(31,997	)
		Additional liability assumed			(100	)		(1,340	)		(1,440	)
		Other assets not acquired			(4	)		(855	)		(859	)
		Deferred income tax asset not acquired			—			(601	)		(601	)
			Adjusted net book value of assets/(liabilities)		14,593			26,942			41,535
Excess purchase price to be allocated				$	31,085		$	124,404		$	155,489
Allocated as follows:
	Goodwill			$	22,094		$	97,248		$	119,342
	Customer relationships and contracts and covenants not to compete				8,991			27,156			36,147
Total allocated				$	31,085		$	124,404		$	155,489

The allocation of purchase price is considered preliminary until the Company has acquired all necessary information to finalize the allocation of purchase price. Although the time required to obtain the necessary information will vary with the circumstances specific to an individual acquisition, the “allocation period” for finalizing purchase price allocations generally does not exceed one year from the date of consummation of an acquisition. Adjustments to the allocation of purchase price may decrease those amounts allocated to goodwill and, as such, may increase those amounts allocated to other tangible or intangible assets, which may result in higher depreciation or amortization expense in future periods.

(13)

Reflects the issuance by the Company of $160.0 million of the Senior Subordinated Notes, $100.0 million of our new Senior Secured Credit Facilities and the issuance and registration of 13,400,000

5

Common Shares of the Company at $4.00 per share and warrants to purchase 1,340,000 Common Shares of the Company at $4.00 per share, net of aggregate underwriting, professional and legal fees of approximately $12.2 million. The proceeds of the Common Shares and warrants issuance were allocated based on the relative fair values of the Common Shares and warrants, resulting in an allocation of the net proceeds of $48.5 million to the Common Shares and $2.2 million to the warrants.

The Company entered into an agreement with the investors under the equity placement in which it agreed to file a registration statement with respect to the Common Shares and the Common Shares issuable upon exercise of the warrants and have that registration statement declared effective within 120 days from the date of original issuance of the Common Shares. If the Company does not comply with these registration requirements, it will be required to pay liquidated damages equal to 1% of the value, as defined in the agreement, of the unregistered Common Shares for each month until the Common Shares are registered. Because these damages would be payable in cash, until the Common Shares are registered, the proceeds from the financing will be classified outside of shareholders’ equity until the common shares are registered.

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EX-99.2

CONSOLIDATED FINANCIAL STATEMENTS

EX-99.3

PRO FORMA COMBINED FINANCIAL STATEMENTS