20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934

OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to     
Commission file number      

VITRAN CORPORATION INC.

(Exact name of Registrant as specified in its charter)

ONTARIO, CANADA

(Jurisdiction of incorporation or organization)

185 The West Mall, Suite 701, Toronto, Ontario, Canada M9C 5L5

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each	Name of each exchange
class	on which registered
None	Not Applicable

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Class A Voting Shares (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None (Title of Class)

Number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2002.

9,559,818 Class A Voting Shares

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17    x Item 18   o Yes    x No    o

Page 1 of 50 Pages
Exhibit Index on Page 49

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TABLE OF CONTENTS

PART I	4
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT and ADVISORS	4
ITEM 2. OFFER STATISTICS and EXPECTED TIMETABLE	5
ITEM 3. KEY INFORMATION	5
ITEM 4. INFORMATION ON THE COMPANY	8
ITEM 5. OPERATING and FINANCIAL REVIEW and PROSPECTS	22
ITEM 6. DIRECTORS, SENIOR MANAGEMENT and EMPLOYEES	30
ITEM 7. MAJOR SHAREHOLDERS and RELATED PARTY TRANSACTIONS	38
ITEM 8. FINANCIAL INFORMATION	39
ITEM 9. THE OFFERING and LISTING	40
ITEM 10. ADDITIONAL INFORMATION	42
ITEM 11. QUANTITATIVE and QUALITATIVE DISCLOSURES ABOUT MARKET RISK	45
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	47
PART II	47
ITEM 13. DEFAULTS, DIVIDENDS ARREARAGES and DELINQUENCIES	47

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ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS and USE OF PROCEEDS	47
ITEM 15. CONTROL and PROCEDURES	47
ITEM 17. FINANCIAL STATEMENTS	47
ITEM 18. FINANCIAL STATEMENTS	48
ITEM 19 EXHIBITS	48
SCHEDULE A 302 CERTIFICATIONS	52
SCHEDULE B CODE OF ETHICS	54
FINANCIAL STATEMENTS	F-1

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT and ADVISORS

The names and municipalities of their employment of the directors, officers and senior management of the Company, their positions with the Company and their principal occupations during the past five years are as follows:

	Position with the
Name and Municipality	Company and	Director		Officer
of Residence	Principal Occupation	Since		Since
Anthony F. Griffiths Toronto, Ontario	Director (Corporate Director)		1987	—
Albert Gnat, Q.C Caledon, Ontario	Director (Senior Partner in the law firm Lang Michener)		1987	—
Richard D. McGraw Toronto, Ontario	Chairman of the Board and Director (President of the Lochan Ora Group of Companies)		1987	1987
Carl Cook Indianapolis, Indiana	Director (Principal, Decisions Inc.)		1995	—
G. Mark Curry Toronto, Ontario	Director (President, Revmar Inc.)		1987	—
Rick E. Gaetz Mississauga, Ontario	Director (President and Chief Executive Officer, Vitran Corporation Inc.)		1995	1989
Graham Savage Mississauga, Ontario	Director (Managing Director, Callisto Capital LP)		1987	—
Kevin Glass Etobicoke, Ontario	Vice President Finance and Chief Financial Officer, Vitran Corporation Inc.			1998

Principal Bankers
Bank of Nova Scotia
44 King Street West,
14th Floor
Toronto, Ontario
M5H 1H1
Canada Legal Advisors
Lang, Michener
BCE Place, PO Box 747
Suite 2500, 181 Bay St.
Toronto, Ontario
M5J 2T7
Canada Auditors
KPMG, LLP
4100 Yonge St.
Suite 200
Toronto, Ontario
M2P 2H3
Canada Tax Counsel
PriceWaterhouseCoopers LLP
One Robert Speck Parkway
Suite 1100
Mississauga, Ontario
L4Z 3M3
Canada

REMUNERATION OF AUDITOR

KPMG LLP has served as the Corporation’s auditors since 1989. For the fiscal year ended December 31, 2002 no fees were billed by KPMG LLP to the Corporation for services other than audit related services.

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ITEM 2. OFFER STATISITICS and EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

EXCHANGE RATE INFORMATION

     Vitran’s accounts are maintained in Canadian dollars. In this Annual Report, all dollar amounts are expressed in Canadian dollars except where otherwise indicated.

     The following tables set forth, for the periods indicated, the high and low rates of exchange of Canadian dollars into United States dollars, the average of such exchange rates on the last day of each month during the periods, and the end of period rates. Such rates are shown as, or are derived from, the reciprocals of the noon buying rates in New York City for cable transfers payable in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York.

	Month		Month		Month		Month		Month		Month
	ended		ended		ended		ended		ended		ended
	May		April		March		February		January		December
	30,		30,		31,		28,		31,		31,
	2003		2003		2002		2003		2003		2002
High		0.7437		0.6975		0.6822		0.6720		0.6570		0.6461
Low		0.7032		0.6737		0.6709		0.6530		0.6349		0.6329

	12 months		12 months		12 months		12 months		12 months
	ended		ended		ended		ended		ended
	December 31,		December 31,		December 31,		December 31,		December 31,
	2002		2001		2000		1999		1998
High		0.6619		0.6697		0.6969		0.6925		0.7105
Low		0.6200		0.6241		0.6410		0.6535		0.6321
Average		0.6368		0.6457		0.6732		0.6704		0.6738
Period End		0.6329		0.6279		0.6689		0.6925		0.6534

     At June 10 2003, one Canadian dollar, as quoted by Federal Reserve Bank of New York was 0.7327 in U.S. dollars.

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FINANCIAL INFORMATION

		(Canadian dollars in thousands, except per share amounts)
		Year			Year			Year			Year			Year
		ended			ended			ended			ended			ended
		December 31,			December 31,			December 31,			December 31,			December 31,
		2002(1)			2001(1)			2000(1)			1999(1)			1998((1)
Statement of Income Data:
	Revenue	$	476,016		$	481,673		$	480,988		$	463,110		$	404,197
	Gross profit		77,097			72,865			81,982			81,692			78,023
	Gross profit as a % of revenue		16.2	%		15.1	%		17.0	%		17.6	%		19.3	%
	Income from operations before depreciation	$	28,351		$	22,854		$	34,850		$	33,470		$	28,352
	Income from continuing operations		20,024			13,002			24,574			23,438			20,080
	Income from continuing operations as a % of revenue		4.2	%		2.7	%		5.1	%		5.1	%		5.0	%
	Net income from continuing operations		10,854			3,701			9,918			8,919			8,663
	Net income (loss) from discontinued operations		—			(5,614	)		(414	)		507			20
	Net income	$	10,854		$	(1,913	)	$	9,504		$	9,426		$	8,683
	Per share:
	Basic — continuing operations	$	1.12		$	0.38		$	1.00		$	0.90		$	0.90
	Basic — net income (loss)		1.12			(0.19	)		0.96			0.95			0.90
	Diluted — continuing operations		1.11			0.38			1.00			0.87			0.88
	Diluted — net income (loss)		1.11			(0.19	)		0.96			0.92			0.88
	Dividends (regular)	Nil				0.035			0.070			0.070			0.070
	Dividends (US$)	Nil				0.023			0.047			0.047			0.047
Amounts under US GAAP(2):
	Net income (loss) before accounting change	$	10,158		$	(2,555	)	$	9,504		$	9,426		$	8,683
	Cumulative effect of change in method of accounting for goodwill		(4,796	)	Nil			Nil			Nil			Nil
	Net income	$	5,362		$	(2,555	)	$	9,504		$	9,426		$	8,683
	Per share:
	Basic — continuing operations	$	1.05		$	0.31		$	1.00		$	0.90		$	0.90
	Basic — net income (loss)		0.55			(0.26	)		0.96			0.95			0.90
	Diluted — continuing operations		1.04			0.31			1.00			0.87			0.88
	Diluted — net income (loss)		0.55			(0.26	)		0.96			0.92			0.88

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		Year		Year		Year		Year		Year
		ended		ended		ended		ended		ended
		December 31,		December 31,		December 31,		December 31,		December 31,
		2002(1)		2001(1)		2000(1)		1999(1)		1998 (1)
Balance Sheet Data (at period end):
	Total assets	$	191,526	$	209,364	$	213,307	$	203,973	$	207,254
	Long-term debt		59,176		74,703		72,598		81,104		94,212
	Shareholders’ equity		82,146		78,013		79,564		70,658		64,755
Issued number of Class A Voting At the end of year			9,559,818		9,847,278		9,859,778		9,973,565		9,878,158

	Footnotes:
(1)	The selected consolidated financial information the years ended December 31, 1998 to 2002 are derived from the audited consolidated financial statements of the Company. See the Consolidated Financial Statements of the Company and the notes thereto.
(2)	In certain respects, generally accepted accounting principles as applied in Canada differ from generally accepted accounting principles as applied in the United States. See note 14 to the Consolidated Financial Statements of the Company.

Risk Factors

     The Company is exposed to a number of general risks and uncertainties that could impact the results.

     The nature of the Company’s business means that it is sensitive to general economic conditions and seasonal fluctuations, although this is mitigated somewhat by the variable nature of many of the Company’s costs. In the trucking industry for a typical year, the months of September and October usually have the highest business levels, while the months of December and January generally have the lowest business levels. The Company is not dependent on any particular industry or customer. Adverse weather conditions such as heavy snow and ice storms have a negative impact on operating results. Labour represents Vitran’s most significant cost and key to service quality. The Company has a history of positive labour relations that will continue to be important to future success. While diesel fuel represents an important cost component to Vitran, the extensive use of owner/operators and the ability to share significant fuel increases with customers reduces this risk.

     Measures taken by the U.S. and Canadian governments to strengthen border security could impact service levels. Vitran’s cross-border activity represents less than 5% of the LTL segment revenue, and the Company has responded to the new requirements to ensure compliance and safety without jeopardizing the quality of service.

     As at December 31, 2002, 57.1% of debt was at fixed exchange rates, mitigating the exposure of the Company’s earnings to fluctuations in variable interest rates. The Company’s US$21.0 million

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8.95% fixed interest rate swap expired January 26, 2003, and management is investigating future alternatives. Furthermore, the $37.1 million of U.S. dollar-denominated long-term debt acts as a hedge to the foreign currency exposure generated by the Company’s U.S. operations. Net U.S. dollar-denominated assets at December 31, 2002 were US$89.2 million.

ITEM 4. INFORMATION ON THE COMPANY

Glossary

Backhaul	The less advantageous lane from an operational and financial standpoint. A carrier’s profitability is often contingent on how well the backhaul lane is managed from an operational and financial standpoint.
Breakbulk Terminal	Consolidation and distribution centre; a facility which unloads and consolidates shipments received from its satellite terminals as well as from other breakbulk terminals.
Carrier	Any person engaged in the transport of goods whether or not for hire or reward.
Consignee	A person to whom a shipment is being or is intended to be transported (i.e., the final receiving person in the transportation process).
Contract logistics	The outsourcing to a transportation company by a customer on a contractual basis of the management of all or a portion of the customer’s transportation and distribution work. The services provided by the transportation company typically include the coordination of most modes of transportation (truckload, less-than-truckload, rail and intermodal), freight consolidation, dedicated fleet management, warehousing, management assistance and staff training.
Frontier	Frontier Transport a wholly owned subsidiary of Vitran Inc.
FTA	Canada-U.S. Free Trade Agreement.
ICC	The United States Interstate Commerce Commission.
Intermodal	The movement of freight by more than one mode of

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	transportation, principally by a combination of truck and rail.
Less-than-truckload or LTL	Shipments that utilize less than the capacity (by volume or weight) of a container or trailer.
Linehaul	The physical transportation over the road or by rail from the origin terminal to the destination terminal.
Longhaul	Shipments across distances greater than 1,000 miles (1,600 kilometers).
NAFTA	North American Free Trade Agreement.
Owner-operator	An independent contractor that provides services and equipment, generally under exclusive use contract, to a carrier for both local and linehaul transport.
Revenue Equipment	Tractors with either trailers or with containers and chassis used by a carrier to transport freight for compensation.
Rolling Stock	Tractors, trailers and containers on chassis used by a carrier to transport freight for compensation.
Shipper or Consignor	A person and/or party who offers freight for transport.
Shorthaul	Shipments across distances less than 1,000 miles (1,600 kilometers).
Tractor	The power unit that pulls the trailer.
Truckload or TL	Shipments which utilize the entire capacity (by volume or weight) of a container or trailer.
Unit	A trailer or container pulled behind the tractor, a railway boxcar pulled by a train or a trailer or container on a railway flat car pulled by a train.
Vitran Express	A wholly owned subsidiary of Vitran Corporation that was established when Overland Transportation and Quast Transfer were combined in March of 1999.
Vitran Express Canada	A wholly owned subsidiary of Vitran Corporation offering LTL freight services in Canada.

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Overview

     Vitran Corporation Inc. (“Vitran” or the “Company”) is a freight services organization offering distribution services throughout Canada and several regions of the United States. Vitran offers a broad range of logistics services to address shippers’ increasingly complex and diverse transportation and distribution requirements.

     Vitran provides a broad range of services for the movement of freight throughout North America utilizing both highway and rail modes. The Company’s services include (1) less-than-truckload (LTL), (2) logistics services (TL) and (3) truckload. They are provided by standalone business units that operate independently or in concert to provide customers with customized cost-effective logistical solutions.

     LTL services represents the largest portion of Vitran’s revenues and involves the consolidation of smaller shipments to fill a container, trailer or railway box car to capacity (either by volume or weight). Typically, LTL carriers transport freight along scheduled routes utilizing a network of terminals with transportation (i.e. linehaul) between terminals provided by either rail or highway modes of carriage. At the origin and destination terminals freight is organized for loading onto a linehaul unit or for delivery to local consignees.

     Segmented sales and revenue and other financial information on the Vitran Corporation Inc., broken down between the United States and Canada, appears in Note 9 to the Consolidated Financial Statements of Vitran. See page F-20.

Corporate History

     Vitran was incorporated under the laws of Ontario by certificate of incorporation effective April 29, 1981 under the name Molon Management Inc. Until May 27, 1987, it was a private management and investment holding company owned by unrelated third parties when it was acquired by companies controlled by each of Richard D. McGraw, Albert Gnat and Anthony F. Griffiths (collectively, the “Original Shareholders”). By certificate of amendment effective May 27, 1987, Vitran’s capital was reorganized into unlimited numbers of Class A Voting Shares, Class B Non-Voting Shares and First Preference Shares, of which 700 Class A Voting Shares were issued, and the corporate name was changed to Vitran Corporation Inc.

     Concurrently with its initial public offering on August 5, 1987, Vitran acquired All-Way Transportation Corporation and its affiliated company, STM Specialized Transit Management Corporation (“All-Way” or the “Passenger Services Group”), G&W Freightways Ltd. and certain affiliated companies from the Original Shareholders. All-Way and its affiliates provided school bus services to school boards and other organizations in Ontario. All-Way was sold in February 1991 for $37 million including debt assumed and a special distribution of $4.74 per share was paid to shareholders. In connection with the sale of All-Way, the Company entered into a Plan of Arrangement and by Articles of Arrangement dated February 5, 1991, certain attributes of the Company’s capital were amended.

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     In October 1991, the Company established the Environmental Services Group by purchasing all of the shares of ETL Environmental Technology Ltd. (“ETL”), a Vancouver, British Columbia-based company engaged in the recycling of pre-sorted and co-mingled non-hazardous dry waste. During the 2001 fiscal year the Company decided to divest the Environmental Services Group and sale was completed effective January 2, 2002.

     On March 2, 1995, the Company completed the acquisition of the Overland Group. The acquisition of Overland was a major step in Vitran’s strategy to develop a significant service capability in the United States and provide a North American service. The acquisition of Overland not only strengthened the Company’s position as an integrated provider of freight transportation and logistics solutions and services, but also diversified the Company’s revenues and earnings stream geographically into the more densely populated U.S. Midwest.

     On September 9, 1998 the Company acquired Quast Transfer which further expanded its LTL operations in the Central States. Quast Transfer was a premium carrier providing overnight service throughout 9 states including Minnesota, Wisconsin, Illinois, Missouri, Iowa, Kansas, Nebraska, South Dakota and North Dakota. The organizations of Overland and Quast were combined to form Overland Quast. The integration was completed in April of 1999 and the name was changed to Vitran Express. The service was also expanded on a unique guaranteed satisfaction basis to provide next day service throughout 18 central states.

     The Company is primarily engaged in providing a broad range of freight services that is composed of the following subsidiaries and operating divisions: Vitran Express Canada, Vitran Express, Vitran Logistics, and Frontier Transport.

Corporate Structure

     The Company’s business is carried on through its subsidiaries with a number of these affiliated corporations holding the relevant licenses that permit the operations of the Company’s business. The following chart sets forth Vitran’s principal operating subsidiaries (including their jurisdiction of incorporation) as at December 31, 2002. Unless otherwise noted, all subsidiaries are wholly owned.

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Management Strategy

     Vitran’s management strategy is to develop a professionally managed and solutions oriented freight services organization, capable of controlled and sustained growth. Having focused its investment in people, computer systems and non-motorized rolling stock (i.e. trailers, containers and chassis), the Company is now one of North America’s major freight services organizations. The Company’s objectives are to:

• develop and/or acquire freight related businesses complementary to the Company’s present operations which will broaden its services to customers, extend its geographic reach and enhance its overall competitive position in a North American context;

• develop low cost solutions to the full range of distribution needs of Vitran’s customers;

• continue to develop computer applications to enhance the level of customer service and improve cost containment and management controls;

• maximize the return on invested capital by minimizing capital investment in motorized rolling stock (i.e. trucks and tractors) and concentrating on freight handling and forwarding and/or owning equipment where the utilization of equipment is high.

     In order to focus entirely on freight services, management decided to divest the non-core Environmental Services Group during 2001 and closed the sale of the business effective January 2, 2002.

Background

     Vitran commenced operations with the acquisition of G&W Freightways Ltd. (“G&W”) in 1983. G&W provided services for the local pick-up, consolidation and forwarding of LTL amounts of general freight to destination terminals for subsequent deconsolidation and delivery, between Toronto and Montreal. This business was expanded over the next few years by adding terminals in Hull and Quebec City in the province of Quebec and Kitchener and London in Ontario. In addition, G&W began contracting directly with independent owner-operators to handle the carriage of freight between origin and destination terminals and for local pick-up and delivery rather than utilizing third party trucking companies. With these developments, G&W has evolved into a system of terminals servicing some of the highest volume markets in Canada.

     In August 1989, Vitran acquired Northern Pool Express Limited (“NPEL”). NPEL and certain subsidiaries operating under the name Trans Western Express and provided a freight forwarding operation which specialized in LTL amounts of general freight primarily from Ontario and Quebec to all parts of Western Canada. NPEL offered a national system (excluding the Atlantic provinces) of terminals which complemented the G&W system by extending the type and geographic area of service. NPEL was amalgamated with Trans Western Express Limited, a wholly-owned subsidiary of the Company, under the name Trans Western Express Inc., on December 1, 1991. On January 1, 2003 Trans Western Express Limited and G&W Freightways Ltd. were amalgamated to form Vitran Express Canada Inc.

     In July 1990, the Company acquired certain assets of Frontier Intermodal Systems Inc., including the trade name Can-Am. These assets were acquired by a wholly-owned subsidiary of the Company, Borcross Limited (operating as the Can-Am Group). Originally, the Can-Am Group’s

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services included LTL, TL and container movement of general freight between Ontario and Quebec and the continental United States (except Alaska). The Company sold the Can-Am Roadlink division (the TL business of the Can-Am Group) effective March 28, 1993.

     In October 1991, the Company acquired certain assets of Imperial Roadways Limited (“Imperial”), a carrier with LTL and TL services operating across Canada. The assets acquired from Imperial included Imperial’s customer lists, pricing schedules and trailers. The Company also hired certain management, sales and dispatch staff. Trans Western Express’ existing terminal network services Imperial’s customers.

     In November 1991, the Company acquired the shares of Warehouser Storage & Distribution Services Inc. (“Warehouser”). Warehouser was amalgamated with Trans Western Express Inc. on January 1, 1995. Some services previously offered by Warehouser are now marketed in conjunction with Vitran Logistics. Through Vitran Logistics, the Company also provides contract services whereby the appropriate Vitran services are organized to provide cost effective solutions to its customers.

     On July 16, 1993, Vitran acquired 67% of the shares of The Freight Connection, Inc. (“TFC”), a public company, the shares of which are quoted on the National Association of Securities Dealers Over-the-Counter Bulletin Board Market under the symbol FTCN. TFC, located in Atlanta, Georgia, is an intermodal marketing company that coordinates services to facilitate the movement of full container or trailer loads by more than one mode of transportation (i.e., highway and rail) utilizing other companies’ equipment. The value of the net assets of TFC acquired was $1.3 million. The acquisition of the Company’s interest in TFC was financed from working capital. In 1997, Vitran Corporation increased its ownership to 81.1% of the outstanding shares. In 2001, Vitran Corporation purchased the remainder of the shares of TFC that it did not already own, delisted and restructured TFC as a private company. In 2002 TFC changed its name to Vitran Logistics Corp. merged with Vitran Logistics and redesigned the business model whereby all management and information systems were integrated under a common umbrella and all customer relationships were streamlined to focus on profitable long-term relationships.

     On March 2, 1995, Vitran acquired all of the outstanding shares of the Overland Group for U.S. $25.75 million. Consideration for the acquisition comprised U.S.$14 million in cash, the issuance by Vitran of a note for U.S. $7.75 million due June 1, 1995 (the “Overland Note”) and the issuance of U.S. $4.0 million equivalent of Vitran shares (799,984 Vitran Class A Voting Shares at $7.00 per share). The Overland Note paid interest at the U.S. prime rate and has been repaid in its entirety. The repayment of the Overland Note was accomplished as part of a restructuring of Vitran’s debt whereby Vitran issued on July 25, 1995, U.S. $45 million of Senior Notes at a rate of 9.04%. Based in Indianapolis, Indiana and operating in the U.S. Midwest and Southeast, the Overland Group is primarily an over-the-road short haul regional LTL carrier, which also provides TL and logistics services. Its primary service area includes 12 states in the U.S. Midwest directly south of Vitran’s traditional primary service area in Ontario and Manitoba.

     On September 9, 1998 Vitran acquired Quast. Quast is a Minnesota-based regional overnight LTL carrier operating in nine states in the U.S. Midwest. Consideration for the total purchase price of U.S. $32.9 million in cash and the issuance of U.S. $2.0 million shares of Vitran Corporation Inc. (365,631 Vitran Class A Voting Shares at U.S. $5.47 per share.) The cash portion

14

of the consideration was funded by cash on hand, as well as the issuance of a non-revolving term bank credit facility of U.S. $19.7 million, due 2000, bearing interest at Canadian bank prime plus 1% payable monthly. In April of 1999 Quast and Overland were amalgamated and the name was changed to Vitran Express.

Overview

     Vitran has developed into a broad integrated transportation system which provides a range of services for the movement of general freight to all provinces of Canada and the U.S. Midwest as well as providing and coordinating services to and from, and within the continental United States (except Alaska). Vitran primarily provides LTL services, as well as TL and logistics services. Freight can be handled in railway box cars, trailers or containers that may move by rail or over the road. The Company provides the service and combination of equipment and mode of transport for cost-effective solution to a customer’s transportation and logistics needs.

     Vitran transports and manages general merchandise inventories. Its customer base is broadly diversified. Vitran has approximately 25,000 accounts with no one customer representing more than 1.5% of revenues.

     While each segment has a particular set of competitors, the Company, as a whole, faces competition from a broad cross-section of competitors ranging from independent operators to large, integrated transportation companies. Vitran endeavors to offer a high quality and reliable multi-modal service through its geographically diverse system of terminals. Price is a major competitive factor, especially on larger volume accounts. Other competitive factors include a company’s financial viability, its ability to pick up and deliver goods on time and on a claim free basis, its capacity to interface with customers electronically and its ability to maintain strict cost controls. Management believes that marketing the combination of operations is important in helping the Company to provide the increasingly broader and more complex range of transportation services demanded by shippers.

     Vitran and the motor carrier industry in general are dependent upon the availability of diesel fuel. The divisions of the Company that utilize rail intermodal services could also be affected indirectly. The Company has not experienced any difficulty in maintaining fuel supplies sufficient to support its operations. The Company is generally able to recover increases in fuel costs or fuel taxes from its customers in the form of higher rates or in the case of rapidly increasing fuel prices by implementing a temporary fuel surcharge.

Safety is a top priority for Vitran. Each operating group employs safety specialists and maintains safety programs designed to meet industry and government standards in addition to Company policies. In addition, specialists are employed to perform compliance checks and conduct safety tests throughout the Company’s operations.

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Less-Than-Truckload (LTL) Services

General

     Vitran operates as an integrated provider of freight services with the largest portion of its revenues coming from LTL services. The acquisition of the Overland Group in 1995 and Quast Transfer in 1998 continued this trend, as the company continued its plan to develop a North American LTL infrastructure. The LTL segment consists of two main business units: Canadian LTL and U.S. LTL. The main operating companies within those units are Vitran Express Canada Inc. and Vitran Express Inc. respectively.

     LTL services generally involve the pick-up of goods from a number of shippers that are combined to make up one full trailer, container or railway boxcar load. Typically, LTL carriers transport freight along scheduled routes from multiple shippers to multiple consignees utilizing a network of terminals together with linehaul units whether over the road with tractors, trailers or containers or by rail with railway box cars or trailers or containers on a flat rail car. LTL carriers use local units to provide pick-up and delivery service at the origin and destination terminals.

     Once a customer places an order, an LTL carrier uses local units to pick up freight from the customer to transport it to the origin terminal. This freight is then organized with other freight brought in from other parts of the local market being serviced by that terminal. Terminal operations (often referred to as a “cross-dock” since goods come in one door and are moved across the dock and loaded into trailers, containers or railway box cars destined for various destination terminals) involve the organization of the freight into groupings by destination which will ultimately be loaded together into a railway box car, trailer or container for transport to a destination terminal. Terminal operators focus on maximizing the cubic space of the linehaul unit while at the same time maximizing the weight allowed. The linehaul unit is then transported either over the road or on the railway to its destination terminal. The same process of cross-docking occurs at the destination terminal. Local units then deliver the freight to consignees in the destination market.

Canadian LTL Operation

     The Canadian LTL operation, which includes Vitran Express Canada Inc., Expéditeur T.W. Ltée, and Can Am LTL, services the entire Canadian market place as well as Washington and Oregon on the west coast of the United States. It utilizes 13 terminal facilities from Montreal to Vancouver and has contracted agents in the most eastern provinces for Canada. Within this large geographic area, customers are offered a choice of linehaul by either railway or highway modes. Trans Western Express transports freight across Canada over-the-road or by rail in equipment owned by CN North America and in company-owned trailers and containers. Trans Western Express utilizes terminals in Montreal, Toronto, Winnipeg, Saskatoon, Regina, Calgary, Edmonton, Kelowna, Vancouver, Victoria, Seattle and Portland. In addition the Canadian LTL operation has a unique relationship with Saia Motor Freight allowing them access to the U.S. states not otherwise covered by Vitran Corporation Inc. Vitran Express Canada contracts with a total of approximately 186 independent owner-operators or cartage companies to provide pick-up and delivery service and

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linehaul freight services. Owner-operators operating intra-city are paid on a weight basis and those operating inter-city are paid on a mileage or percent of revenue basis.

     There are three other companies in Canada that compete directly with Vitran Express Canada in that they primarily utilize railway equipment to transport freight across Canada. Vitran Express Canada tends to have a higher proportion of business using over-the-road service, resulting in a greater use of its own equipment. In addition, Vitran Express Canada competes with other freight companies that provide nationwide highway-only freight services.

     Short haul freight moving in primarily in the provinces of Ontario and Quebec is also handled by Vitran Express Canada. This freight is primarily delivered on an overnight basis through a terminal network located in 7 major cities in the two provinces. Longer transit times are involved for freight moving to the eastern provinces.

     Vitran Express Canada also provides transborder services and a Canadian expedited service called ‘Maxximum’ in cooperation with Vitran Express.

     Like the longer haul operation, the regional business contracts with owner operators for linehaul and pick-up and delivery functions. The market place for freight services is very competitive.

     The Canadian LTL operation owns or leases approximately 1,276 trailers and containers, and 289 chassis. It employs over 480 people, including approximately 415 full time employees, 134 of which are covered by labour union contracts. The three labour union contracts are for dock workers at three of the company’s terminals; one expiring on March 31, 2008, one on February 28, 2008, and the third is currently in negotiation.

US LTL Operation

     Vitran Express, which is the only operating company for US LTL operations, provides next day and second day service throughout 18 central states.

     All LTL service is over-the-road and no intermodal transportation is used because of the short distances traveled. Other than short-term rentals used to service seasonal peaks, all the freight transported is shipped in owned or leased equipment. Vitran Express services 18 states in the U.S. including Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, Ohio, Pennsylvania, South Dakota, Tennessee, West Virginia, and Wisconsin. Vitran Express also provides an LTL service between the U.S. Midwest and 10 states in the U.S. Northeast as well the District of Columbia and Puerto Rico, via a dedicated strategic partnership with New England Motor Freight. Vitran Express also has a special relationship with Saia Motor Freight, which extends to the remainder of the U.S. Vitran Express transports general commodities, including raw materials and manufactured and packaged goods with no dominant industry focus.

     Vitran Express has approximately 1,532 employees as well as operating agreements with approximately 11 owner-operators. Vitran Express utilizes over 2,075 trailers and operates approximately 55 terminals.

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Truckload (TL) Services

     Truckload (TL) services generally involve the pickup of a full trailer or container load of goods from one shipper. TL freight is typically not rehandled as the complete full load remains in its original trailer or container for the duration of the shipping move from shipper to consignee.

Frontier Transport Corporation

     Frontier Transport Corporation (“Frontier”) provides truckload service in the U.S. Midwest and in the Southeast. Frontier principally utilizes company-owned or leased equipment and owner-operators. Frontier’s Midwest operation services the states of Indiana, Ohio, Michigan, Illinois, Kentucky, Missouri, Tennessee, Wisconsin, Pennsylvania, Arizona, and in the south, Georgia, North Carolina, South Carolina, Alabama, Florida, and Tennessee. A vast majority of the business is dry van but it does provide a temperature controlled service in the mid west.

     Frontier Transport operates out of two terminals in Atlanta, Georgia and Indianapolis, Indiana where the main administration office is located. The truckload (TL) group contracts with approximately 262 owner operators and employs 52 people in administrative, recruiting and safety functions. The TL group also utilizes over 936 trailers.

Vitran Logistics

     During 2002 the operations of the freight brokerage operation and the logistics services operation were merged under common management and information systems to form Vitran Logistics. The industry is highly competitive as there are many shippers’ agents and logistic service companies that compete directly and indirectly with Vitran Logistics.

Logistics Services

     Logistics involves the transportation and management of goods and the provision of information about them as they pass through the supply chain from vendor to consumer. Vitran Logistics’ role is to design a logistics network for a customer, contract with the necessary suppliers (including services of Vitran Express and Vitran Express Canada), and then implement the design and manage the logistical system. Demand for logistics services continues to grow as more customers outsource the management of the transportation and distribution function in order to reduce their own logistics costs, or to concentrate on their core business or to improve customer service.

     The logistics services unit provides a range of services in Canada and the United States including warehousing, inventory management and flow through distribution facilities. In addition to public warehousing facilities, Vitran Logistics maintains two dedicated flow through distribution facilities for significant customers in Canada and in the United States. The logistics services unit employs over 111 people.

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Freight Brokerage

     The freight brokerage unit is headquartered in Toronto, Ontario, with sales offices in Toronto, Los Angeles and Atlanta, to capitalize on international traffic flows. Vitran Logistics can coordinate the transport of full load freight in the most cost-efficient manner, directly from a customer’s facility to the customer’s consignee, anywhere in North America. The freight brokerage unit offers both intermodal and highway solutions to clients with any type of full load requirement. Vitran Logistics supports the movement of freight through direct computer links with both its carriers and customers. It provides customers with real-time tracking, customer support information and expediting as required. As the industry trend is for railways to require large minimum volumes to establish or retain contracts with them, small agents will be at a competitive disadvantage. Vitran Logistics has contracts with all major railways in the United States. The freight brokerage unit employs over 44 people.

The Canadian Freight Services Industry

     The Canadian freight industry is made up of a small number of national carriers competing for freight business across the country. A larger number of regional carriers and numerous local carriers also exist. Each of these carriers may employ different operating strategies with respect to equipment and employment.

     Two main issues have impacted the Canadian freight industry in the last 13 years: deregulation and free trade.

     Beginning in 1988, deregulation transformed the Canadian transportation industry. Deregulation affected market entry/exit procedures that gave rise to an increased number of new entrants into the freight industry. As a result, the industry soon had excess capacity that was exacerbated by the recession that followed. These factors led to severe price competition in the industry. In recent years, the industry has experienced unprecedented consolidation and failure of companies that were unprepared for the shifts in technology and were unable to adjust their operations to meet changing customer requirements. Vitran has continued to make selective investments to improve efficiency and customer service and has grown through this period as a result.

     Before NAFTA and the FTA, the geographic flow of goods and materials being transported in Canada was primarily East-West. However, with the FTA and later with NAFTA, the importance of the North-South orientation was firmly established.

     Since 1994 Vitran has focused on expanding its LTL infrastructure as well as its other businesses to provide more coverage of the North American market. The growth and development of its US based business has been very significant in the past several years. Internally and by acquisition the LTL segment now represents approximately 80% of total revenues.

     The Canadian freight industry has benefited from improvements in technology to enhance transportation services. Technologies such as electronic data interchange (“EDI”) allow for greater efficiency in the transportation marketplace and enhance the more efficient transfer of information

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between customer and carrier. Advances in information systems including the internet, have facilitated tracking of specific shipments and have improved customer interface. Improved rail equipment has minimized the damage occurring to freight in transit thereby making it more feasible to transport freight longhaul by rail. Moreover, greater use of containers transported by rail has resulted from the efficiencies and economies of “double stack” rail service.

Regulation

     In all jurisdictions where Vitran operates, Vitran or its subsidiaries have obtained necessary licenses if they are required to carry goods for compensation. In Canada, a license to carry goods extra-provincially is issued by each provincial transport board under the provisions of the Motor Vehicle Transport Act, 1987 (Canada) (“MVTA”). Within each province, truck transportation licensing is required under provincial legislation. Vitran or its subsidiaries hold licenses issued in all provinces of Canada which permit general freight services, between the provinces, within certain of the provinces, and internationally between the provinces and the United States.

     Vitran also holds cartage licenses as required for the transportation of freight in and around the municipalities where the Company has terminals.

     Effective January 1, 1988, the federal government substantially deregulated the transportation industry in Canada through the passage of the National Transportation Act and the MVTA. Since that time, the market has become highly competitive.

     The Company’s operations are subject to federal, provincial, state and local environmental laws, including laws dealing with transport of hazardous materials. The Company believes that it is in material compliance with these requirements.

The U.S. Freight Services Industry

     The fundamental business of the U.S. LTL industry is similar to Canadian LTL operations. U.S. LTL operators are generally categorized as either regional, inter-regional or long haul carriers, depending on the distance freight travels. Vitran Express is considered a regional carrier. Regional carriers usually have average lengths of haul of 600 miles or less and tend to provide either overnight or second-day service. Regional LTL carriers usually are able to load freight for direct transport to a destination terminal, thereby avoiding the costly and time-consuming use of breakbulk terminals. In contrast, long-haul LTL carriers (average lengths of haul in excess of 1,000 miles) operate networks of breakbulk and satellite terminals (hub-spoke systems where freight is rehandled and reloaded to its ultimate destination) and rely heavily on interim handling of freight. Inter-regional carriers (500 to 1,000 miles per average haul) also rely on breakbulk terminals but to a lesser degree than long-haul carriers.

     In general, the more business an LTL carrier has within a given geographical area, the lower its incremental operating costs as a result of higher equipment and personnel utilization. This is particularly true with respect to its pick-up and delivery operation where there is less distance between stops. Similarly, the more business a carrier experiences in a given traffic lane (or route), resulting in greater linehaul density, the lower its incremental costs. Other areas such as sales,

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collections, computer operations, purchases of equipment, fuel, tires, parts, insurance, supplies, and corporate management also lend themselves to economies of scale.

Regulation

     In common with other interstate motor carriers, Vitran Express is subject to various government regulations for operation and safety. Over the last 8 years the amount of regulation governing operations has been dramatically reduced with the demise of the ICC and the elimination of state regulation however there are still various agencies that rule on the issuance of securities, and mergers.

     Vitran Express, like other interstate motor carriers, is subject to certain safety requirements governing interstate operations prescribed by the United States Department of Transportation (“DOT”). The DOT has jurisdiction over the qualification and the maximum hours of service of drivers and the general safety of operations and equipment. The various requirements increase the safety standards for conducting operations, but add administrative costs and may affect the availability of qualified drivers throughout the trucking industry.

     The operations of Vitran Express are subject to federal, state and local environmental laws, including laws dealing with transport of hazardous materials.

Competition

     Regional LTL carriers compete with other regional carriers and to a lesser extent, interregional and national LTL carriers. To an even lesser degree, regional LTL transportation companies compete against truckload carriers, overnight package companies, railroads and airlines. A large number of regional LTL carriers of various sizes operate within the same geographic areas served by Vitran Express. Some of the competing carriers are larger than Vitran Express in terms of tonnage handled and financial capacity.

     After deregulation of the U.S. transportation industry in 1980, the industry went through a period of intense competition which involved most LTL carriers adopting discounting programs that severely reduced rates for some shippers. Such attempts to gain market share through price reduction programs exerted substantial downward pressure on the industry’s price structure and profit margins and caused many LTL carriers to cease operations. Although the transportation industry has benefited from an improvement in economic conditions in recent years, the industry remains highly competitive and sensitive to changes in the economic conditions affecting its customers and the geographic regions in which Vitran Express operates.

Environmental Services Group (Discontinued Operation)

     The Environmental Services Group was established as a division of the Company to provide solutions to the environmental/waste management industries. The Environmental Services Group operates through its wholly-owned subsidiary, ETL Environmental Technology Ltd. (“ETL”). Effective January 2, 2002 this non-core business was sold for cash proceeds.

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Description of Property

     The Company utilizes 91 facilities as of March 10, 2003, of which 26 are owned, 52 are leased, and 13 are operated by agents.

     Vitran utilizes 91 facilities located in Ontario, Quebec, Manitoba, Saskatchewan, Alberta, British Columbia, New Brunswick, Nova Scotia, Oregon, Indiana, Illinois, Michigan, Ohio, Kentucky, Missouri, Georgia, Minnesota, Wisconsin, Pennsylvania, Iowa, North Dakota, South Dakota, Nebraska, Washington, California, and Tennessee.

     The nature of the freight transportation industry requires a network of terminals. Some are more important than others but no single property is considered material to Vitran. On an ongoing basis, The Company also experiences turnover in properties depending on capacity requirements, expansion initiatives and availability of locations.

     Vitran’s leases office space for its corporate head quarters in a building in Toronto. The corporate office provides management services to its groups and is responsible for corporate development, administration and finance.

ITEM 5. OPERATING and FINANCIAL REVIEW and PROSPECTS

SAFE HARBOUR CLAUSE

     Information in this document relating to projected growth, improvements in productivity and future results constitute forward-looking statements. Actual results in future periods may differ materially from the forward-looking statements because of a number of risks and uncertainties, including but not limited to economic factors, demand for the Company’s services, fuel price fluctuations, the availability of employee drivers and independent contractors, risk associated with geographic expansion, capital requirements, claims exposure and insurance costs competition and environmental hazards.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The company prepares its financial statements in accordance with generally accepted accounting principles in (GAAP) in Canada with a reconciliation to United States GAAP, as disclosed in note 14 to the Consolidated Financial Statements.

     The preparation 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 disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant accounting policies and methods used in preparation of the financial statements are described in note 1 to the Consolidated Financial Statements. The Company evaluates its estimates and assumptions on a regular basis, based on historical experience and other relevant factors. Significant estimates are used in determining, but not limited to, the allowance for doubtful accounts, income tax valuation allowances and the fair value of reporting

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units for purposes of goodwill impairment tests. Actual results could differ materially from those estimates and assumptions.

Revenue Recognition

     The Company’s less-than-truckload, truckload business units and freight brokerage operations recognize revenue and direct shipment costs upon the delivery of the related freight. Revenue for the logistics operations is recognized as the management services are provided.

Allowance for Doubtful Accounts

     The Company records an allowance for doubtful accounts related to accounts receivable that are considered to be impaired. The allowance is based on the Company’s knowledge of the financial condition of its customers, the aging of the receivables, current business environment, customer and industry concentrations, and historical experience. A change to these factors could impact the estimated allowance and the provision for bad debts recorded in selling, general and administrative expenses.

Income Tax Valuation Allowance

     The Company records a valuation allowance against future income tax assets generated when management believes it is more likely than not that some portion or all of the future income tax assets will not be realized. Management considers such factors as projected future taxable income and tax planning strategies. A change to these factors could impact the estimated valuation allowance and income tax expense.

Goodwill

     The Company performs its annual goodwill impairment tests in the third quarter of each year, and more frequently if events or changes in circumstances indicate that an impairment loss may have been incurred. Impairment is tested at the reporting unit level by comparing the reporting unit’s carrying amount to its fair value. The process of determining fair values is subjective and requires management to exercise judgment in making assumptions about future results, including revenue and cash flow projections at the reporting unit level. Vitran recorded an impairment loss in the third quarter of 2002. Future goodwill impairment tests may result in further impairment charges.

OPERATING and FINANCIAL REVIEW and REPORTS
YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2001

Overview

     The economic environment in 2002 continued to be depressed and posed considerable challenges to Vitran. These challenges were effectively dealt with by operating initiatives that were put in place in 2001 and the continued disciplined focus on costs and efficiencies by operating management in 2002. This allowed Vitran to maintain the positive earnings momentum that was created in the second half of 2001, and the Company posted four successive quarters of improved year-over-year results.

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     Vitran generated significant improvement in consolidated operating results, with the U.S. LTL and Freight Brokerage business units posting the most significant gains. The Company also finished the year with a strengthened balance sheet, reflecting materially lower net debt.

Consolidated Results

     Revenue from continuing operations decreased 1.2% to $476.0 million in 2002 from $481.7 million in 2001. This is partly due to the continued subdued North American economic environment, particularly in the United States, but is mainly a result of reduced revenue at the Logistics segment where the Freight Brokerage business unit has been merged with Vitran Logistics and restructured to focus on profitable long-term business.

     The gross profit of $77.1 million is 5.8% higher than 2001, reflecting an improvement in the margin to 16.2% in 2002 from 15.1% in 2001. Operating efficiencies were achieved throughout the Company, but the largest improvements were recorded in the U.S. LTL and Logistics business units.

     Selling, general and administrative (SG&A) expenses for 2002 were $48.7 million, 2.5% less than 2001. Redundancies eliminated by merging the Freight Brokerage business unit and cost cutting programs put in place at the U.S. LTL business unit contributed to the reduction in SG&A. Foreign exchange gains included in SG&A of $1.0 million were generated on the repatriation of capital from a foreign subsidiary both in 2002 and in 2001. SG&A in the current year was also $0.8 million higher than last year due to the special retirement bonus to the founding President and Chief Executive Officer. Income from continuing operations before depreciation expense increased by 24.1% to $28.4 million, from $22.9 million in 2001. This improvement is driven by the significant increase in gross profit, augmented by the decline in SG&A expenses. Depreciation expense as a percentage of revenue was 1.7% for 2002 compared to 2.0% for 2001 due to the continued reduction of older redundant equipment and improved asset utilization. As a result of the operating improvements, the consolidated operating ratio improved to 95.8% in 2002 from 97.3% in 2001.

     Interest expense, net of interest income, was $5.2 million for 2002 compared to $5.9 million for 2001. The decline is attributable to the Company making its final payment of US$5.7 million on its 9.04% senior notes and further reducing its other debt obligations by $10.8 million during the year. In addition, the Company met certain financial covenants that reduced its interest rate on floating rate debt by 50 basis points during 2002. Income tax expense for the year was $3.6 million versus $0.2 million in 2001, reflecting improved profitability.

     Net income was $10.9 million in 2002, yielding a $1.12 earnings per share basic compared to a net loss of $1.9 million in 2001 and $0.19 loss per share basic. The 2001 results include a net loss of $5.6 million on the sale of the Company’s non-core environmental business. The weighted average number of shares outstanding decreased from 9.9 million in 2001 to 9.7 million in 2002 as a result of the repurchase of 298,100 shares for cancellation. From a continuing operations perspective, net income increased by 193.3% to $10.9 million for 2002 versus $3.7 million for 2001. This improvement is even more noteworthy given the unfavourable economic conditions under which it was achieved.

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Segmented Results

Less-Than-Truckload (LTL)

     Notwithstanding the sluggish North American economy, revenue at the LTL segment increased slightly from $375.6 million last year to $379.3 million in the current year. The gross profit, however, increased significantly by 7.5% to $63.4 million in 2002 due to operating efficiencies achieved in both Canada and the U.S., but more particularly at the U.S. LTL business unit. Fuel price pressure that persisted throughout 2002 was offset by the Company’s ability to pass through fuel price increases to its customers.

     The Canadian LTL unit continued its stalwart performance in 2002, improving both revenue and operating ratio year-over-year. Revenue and income from operations gains were most notable in the expedited and cross-border markets, offset slightly by declines in the national market. However, the national business finished strongly in the fourth quarter with the addition of new customers. Another notable achievement was yield improvement, where revenue per hundredweight improved by 8.5%.

     Revenue at the U.S. LTL unit of $236.0 million was essentially in line with the 2001 figure of $237.6 million. While revenue per hundredweight declined by 6.5%, tonnage and shipments increased by 5.5% and 1.3%, respectively. Operating initiatives have led to improved earnings momentum, and U.S. LTL more than doubled income from operations in 2002. The most significant improvements were a 19.3% reduction in maintenance, a 9.6% reduction in claims expense and other initiatives that reduced total SG&A by 10.0% for 2002 compared to 2001. The improvement in earnings has been achieved not only under difficult economic conditions, but also in the face of significantly rising liability insurance and health care costs.

Logistics

     Revenues for the Logistics segment were down 23.5%, primarily the result of a 30.3% reduction of revenue at the Freight Brokerage business unit. This reduction resulted from the redesign of the business model whereby all management and information systems were integrated under a common umbrella and unprofitable customer relationships were eliminated. As a result of the success of these initiatives and the continued superior performance at the rest of the Logistics segment, the operating ratio improved from 99.8% in 2001 to 96.6% in 2002, and income from operations increased dramatically from $0.1 million to $1.5 million.

Truckload (TL)

     Revenue for the TL segment increased in 2002 by 7.9% to $53.3 million from $49.4 million in 2001. Significant growth was achieved at the southern region but was somewhat offset by a competitive market in the northern region with overall revenue per trailer increasing 6.8% year-over-year. Income from operations declined 8.6% in 2002 compared to 2001, primarily due to a 92.9% increase in liability insurance and 114.2% increase in health care insurance. These large increases were somewhat offset by operating efficiency gains in trailer utilization, reduced empty miles driven, and driver safety programs.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED
DECEMBER 31, 2000

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Overview

     The economic environment in 2001 was extremely challenging which had a negative impact on operating results, as it did with all of our major competitors. Management changes implemented during the second quarter to more aggressively deal with the economic downturn started to bear fruit later in the year and the company finished 2001 with a stronger final quarter than in 2000.

     On a consolidated basis, our core transportation group generated profitable results and positive cash flow, albeit at levels less than in 2000. Revenue from continuing operations was slightly higher than the prior year but increased operating costs resulted in a lower gross margin and operating income. On a net income basis the company lost money for the year, but this was due to the write-off necessitated by disposing of the non-core Environmental Services business.

Consolidated Results

     Vitran’s revenue from continuing operations of $481.7 million was in line with the prior year despite a slower economy and a tougher, more challenging operating environment. While overall tonnage from the Company’s asset-based segments declined on a year-over-year basis, a stable pricing environment meant that our yield increased to offset the volume decrease.

     Gross profit for the full year declined $9.1 million, or 11.1% to $72.9 million. This resulted in a gross profit margin of 15.1% compared to 17.0% in 2000. Operating efficiencies achieved in the second half of the year resulted in a gross margin of 15.6% compared to 14.7% in the first half of the year.

     Selling, general and administrative (SG&A) expenses increased $2.9 million, or 6.1% to $50.0 million in 2001 compared to $47.1 million in 2000. The increase can be primarily attributed to reorganization expenses recorded during the year, the benefits of which started materializing in the latter part of 2001.

     Income from continuing operations before depreciation expense declined to $22.9 million from $34.9 million in 2000. This decrease was driven by higher operating costs on a stable revenue base. Depreciation expense as a percentage of revenue was 2.0% for 2001 compared to 2.1% for 2000, representing a $0.4 million decrease. This decrease was due to the sale of redundant equipment as management focused on cost control and capital efficiency in the slowing economy. The consolidated operating ratio before goodwill amortization increased from 94.9% in 2000 to 97.3% in 2001.

     Interest expense net of interest income was $5.9 million for 2001 compared to $7.2 million for 2000. The decline was the result of lower interest rates on the Company’s floating rate debt.

     Income taxes for the year were $0.2 million, resulting in an effective tax rate of 4.0% compared to 28.6% for 2000. This decrease was due to a greater percentage of the Company’s income being earned in lower tax jurisdictions and non-taxable foreign exchange gains.

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     During the year the Company decided to divest the Environmental Services business and provided for losses on disposition amounting to $4.1 million. This operation was not involved in the freight business and was considered non-core. On January 2, 2002 substantially all the capital assets of the business were sold for cash proceeds of $2.7 million. The loss from discontinued operation for 2001, including the provision for loss on disposition, was $5.6 million. In 2000 the Environmental Services business had a net loss of $0.4 million.

     Basic earnings from continuing operations before amortization expense was $0.59 per share for 2001 compared to $1.18 per share in 2000. As a result of the loss from discontinued non-core operations, the Company had a net loss of $0.19 per share basic compared to net income of $0.96 per share basic for 2000.

Segmented Results

Less-than-truckload (LTL)

     Notwithstanding the adverse economic conditions, the LTL segment generated revenue in 2001 of $375.6 million, which was in line with the $376.1 million recorded in 2000. Operating income declined by $10.6 million to $13.7 million in 2001 as a result of higher operating costs on a stable revenue base.

     The Canadian LTL division maintained its reliable performance in 2001 increasing revenues 1.1% over 2000 revenues. Revenue per hundredweight increased 10.5% while tonnage and shipments declined 8.5% and 4.1% respectively, compared to the prior year. Operating costs at the Canadian LTL unit were higher on a year-over-year basis primarily due to increased linehaul costs.

     Revenue at the US LTL business declined 0.9% in 2001 compared to 2000. Revenue per hundredweight increased 0.8% while tonnage and shipments declined 5.7% and 4.6% compared to 2000. Operating income declined 67.0% for the full year compared with fiscal 2000; however, year-over-year the decline in the second half of the year was only 24.0% as a result of management and operational changes. A realigned management structure and cost controls reduced SG&A expenses, but the most important gains were made in reducing terminal, dock and cartage costs where management focus significantly reduced salaries and wages on a per-shipment basis.

Logistics

     Revenues for the Logistics segment, including Intermodal and Highway Brokerage, were down 1.0% to $56.7 million from $57.3 million in 2000. The Logistics business unit recorded its third consecutive year of record setting revenue and operating income as a result of a significant increase in activity. However, these gains were more than offset by shortfalls in the Intermodal and Highway Brokerage business. During the year Vitran purchased the remaining shares of The Freight Connection that it did not already own and privatized the public company so that it could be integrated with Vitran Logistics. This initiative, along with other changes, are expected to improve operating results in 2002.

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Truckload (TL)

     Revenue for the TL segment increased in 2001 by 3.7% to $49.4 million from $47.7 million recorded in 2000. The TL segment had a disappointing year at the operating income line as results decreased from $2.4 million in 2000 to $1.5 million in 2001. A significant portion of the decline can be attributed to an increase in insurance and contract hauling costs.

OUTLOOK

     While freight volumes improved slightly during the year, the operating environment remains challenging, with cost pressure continuing in a number of areas and no material improvement expected in the economy. Having said that, management used 2002 to consolidate the operating efficiency programs that were started in 2001 and significantly improved operating results in a sluggish freight environment. It is anticipated that these initiatives will continue to bear fruit in 2003 and resume the improving operating ratio trend.

     The focus at the Canadian LTL unit will be to build on the excellent yield and sales successes that were achieved in 2002, while at the same time maintaining the existing operating ratio. At U.S. LTL the focus will be to continue enhancing operating margins by generating more cost reductions and improving density throughout the system. Cross-border activity, which increased at a double digit pace in 2002, will also be a critical focus as this represents a significant opportunity for both LTL units.

     The management, operations and systems at the Logistics unit have been fully integrated, and operating margins in 2003 should improve as the full year effect of these successes are realized.

     The Truckload unit will aim to build on the sales successes achieved in 2002, with the objective being to improve margins by achieving a better balance of inbound and outbound freight.

     While all segments of the business should improve in 2003, the biggest opportunity continues to be the U.S. LTL operation, where cost reduction and density improvement provide significant upside potential.

LIQUIDITY AND CAPITAL RESOURCES

     While the economic environment continued to be very challenging in 2002, the Company generated significantly improved cash flow and reduced debt net of cash on hand to a five-year low.

     Cash flow from continuing operations before working capital changes for the year was $18.8 million compared to $15.3 million in 2001. There was a reduction of $6.6 million in non-cash working capital in 2002. The majority of the working capital improvement was due to Vitran’s continued effort to improve its collection of accounts receivable, which contributed $3.3 million over 2001.

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     Interest-bearing debt, net of cash on hand of $12.6 million, decreased to $46.6 million in 2002, from $66.8 million at the end of 2001. The interest-bearing debt is comprised of US$37.1 million drawn under the term credit facility and other debt of $0.6 million. Interest-bearing debt, net of cash on hand, as a percentage of total capital decreased from 47.2% in 2001 to 36.2% in 2002. During the year, the Company repaid US$5.7 million of the Senior Notes and $10.8 million of other debt. At December 31, the Company utilized the revolving credit facility for a standby letter of credit of US$2.2 million. At December 31, 2002, the Company had $6.5 million of available unused revolving credit facilities and $12.6 million of cash on hand.

     Capital expenditures for the year amounted to $7.2 million compared to $5.6 million in 2001. Of this, $4.0 million was used in leasehold improvements and building construction while the remaining $3.2 million was invested in tractors and trailers, information technology, and other machinery and equipment. The construction expenditure represented the final payments for the new Vancouver terminal constructed for the Canadian LTL operation. The Company also added $9.3 million of new tractors and $13.4 million of trailing equipment to the fleet using lease financing during the year. This compares to $nil and $11.4 million in 2001 respectively. The average age of the tractor fleet is 3.7 years and of the trailing fleet is 5.2 years.

     Management expects that the existing working capital, together with available revolving facilities, is sufficient to fund operating and capital requirements in 2003, as well as service principal debt repayment requirements of $11.1 million.

29

ITEM 6. DIRECTORS, SENIOR MANAGEMENT and EMPLOYEES

     The term of a director is the lessor of one year or until the next annual meeting. The directors were last elected at the annual meeting held April 29, 2003 and will hold office until the next annual meeting. The next annual meeting is scheduled for April 2004. The names and municipalities of residence of the directors and officers of the Company, their positions with the Company and their principal occupations during the past five years are as follows:

						Approximate Number
						of Class A Voting
	Position with the					Shares Beneficially
Name and Municipality	Company and	Director		Officer		Owned as of March
of Residence	Principal Occupation	Since		Since		10, 2003
Anthony F. Griffiths(2)(3) Toronto, Ontario	Director (Corporate Director)		1987		1987		807,427
Albert Gnat, Q.C(3)(4)(5) Caledon, Ontario	Vice-Chairman of the Board and Director (Senior Partner in the law firm Lang Michener)		1987		1987		957,421
Richard D. McGraw (1)(2)(3)(4)(5) Toronto, Ontario	Chairman of the Board and Director (President of Lochan Ora Group of Companies)		1987		1987		1,314,839
Carl Cook(4) Indianapolis, Indiana	Director (Principal, Decisions Inc.)		1995		-		376,421
G. Mark Curry(1)(2) Toronto, Ontario	Director (President, Revmar Inc.)		1987		-		50,000
Rick E. Gaetz Mississauga, Ontario	Director (President and Chief Executive Officer, Vitran Corporation Inc.)		1995		1989		69,120
Graham Savage (1)(3)(5) Mississauga, Ontario	Director (Managing Director, Callisto Capital LP)		1987		-		0
Kevin Glass Etobicoke, Ontario	Vice President Finance and Chief Financial Officer, Vitran Corporation Inc.				1998		30,000

(1)	Member of the Audit Committee
(2)	Member of the Compensation Committee
(3)	Member of the Executive Committee
(4)	Member of the Capital Expenditure Committee
(5)	Member of the Corporate Governance Committee

     Except as otherwise noted below, the directors and officers of the Company have held their present or similar positions with the same or predecessor firms for the past five years, with the following exceptions:

     Mr. Griffiths was the President, CEO, and Chairman of the Board of Mitel Corporation from January 1991 to January 1993. From January 1993 to March 1996, Mr. Griffiths was an independent consultant.

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     Mr. Savage was the Senior Vice-President, Finance and Chief Financial Officer of Rogers Communications Inc. from 1989 to 1996.

     The Board of Directors of the Company has established five Board committees that are comprised of:

     1.     The Executive Committee, composed of Mr. McGraw and four unrelated directors, has a mandate to examine operating performance, strategies, policies and procedures of the Corporation and other matters that require attention prior to the next Board meeting. It acts in a consultative capacity and does not have approval authority.

     2.     The Audit Committee, is composed only of outside, unrelated directors. In accordance with the Audit Committee Charter, each member is financially literate and one member of the Audit Committee, Mr. Savage, has been designated by the Board as having financial expertise. The roles of the Audit Committee include ensuring that the Corporation’s audited financial statements present the financial position and results of operations fairly in accordance with generally accepted accounting principles, that accounting principles are appropriate in the circumstances, and that any issues arising between Management and the auditors are either resolved or a course of action put in place that will lead to resolution. The Committee also ensures that action is taken regarding the auditor’s report to Management on internal controls and accounting systems, and the procedures for reviewing financial information prior to distribution to shareholders are adequate.

     3.     The Capital Expenditures Committee, composed of Mr. McGraw and two unrelated directors with one acting as Chairman, reviews planned capital expenditures for the Corporation. The Board of Directors has established a procedure whereby the Capital Expenditure Committee may approve capital expenditures up to $200,000 on behalf of the Board with the requirement to report these capital expenditure approvals to the full Board at its next meeting.

     4.     The Compensation Committee, composed solely of outside, unrelated directors, reviews compensation policies to ensure that they are consistent with corporate objectives and administers the Corporation’s executive compensation program. Recommendations with respect to the remuneration of senior executive staff and the CEO are made by the Committee to the full Board. The Committee also evaluates the performance of the Corporation’s executive officers relative to expectations.

     5.     The Corporate Governance Committee, composed solely of outside, unrelated directors, reviews the corporate governance policies to ensure that they are consistent with corporate objectives. In addition the Committee reviews the effectiveness of the Board as a whole, the committees of the Board and the contribution of individual directors. Recommendations with respect to corporate governance policies are made by the Committee to the full Board.

     The Board of Directors of the Company may also establish other committees from time to time to assist in the discharge of its responsibilities.

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Compensation of Directors

     Director and committee fees are paid to unrelated directors. For the financial year ended December 31, 2002, directors fees were paid to six of the seven directors of the Corporation on the basis of a retainer of $7,500 plus $1,000 for each meeting of the Board of Directors which he attended and an additional fee of $6,685 was paid to Mr. Griffiths as Chairman of the Board. Mr. McGraw was paid $10,000 per month commencing May 2, 2002 when he assumed the position of Chairman of the Board. Fees for the Audit, Compensation, Capital Expenditures and Corporate Governance Committees were paid to six of seven directors on the basis of a retainer of $2,000 to the chair of each committee plus $750 for each meeting. Fees for the Executive Committee were paid to four of the seven directors on the basis of $750 for each meeting.

     During the 2002 fiscal year of the Corporation, the Corporation made lease and operating cost payments totalling $10,355 with respect to an automobile used by Mr. Gnat, a director of the Corporation.

     Nothing has been accrued for the pension or retirement of the directors.

D&O Insurance

     The Corporation has purchased a policy of insurance for the benefit of its directors and officers, and the directors and officers of its subsidiaries, against liability incurred by them in the performance of their duties as directors and officers of the Corporation, or its subsidiaries, as the case may be. The amount of premium paid with respect to this policy for the financial year ended December 31, 2002 was $90,815. The policy does not specify that any part of the premium is paid in respect of either directors as a group or officers as a group. The entire premium is paid by the Corporation. The current annual policy limit is $25.0 million subject to a deductible of $0.5 million per. There have been no claims under the directors and officers insurance.

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Compensation of Officers

Summary Compensation Table

     The following table sets forth all compensation for the periods indicated, paid in respect of the individuals (the “Named Executive Officers”) who were, at December 31, 2002, the Chief Executive Officer and the two most highly compensated executive officers (as defined in the Regulation to the Securities Act (Ontario)) of the Corporation.

Annual Compensation

Long-Term Compensation

Awards

Payouts

Restricted

Shares

or

Other

Securities Under

Restricted

(2)

Annual

Options

Share

LTIP

All Other

Name and Principal

Salary

Bonus

Compensation

Granted

Units

Payouts

Compensation

Position

Year

($)

($)

($)

(#)

($)

($)

($)

Richard D. McGraw Chairman of the Board (President & Chief Executive Officer until May 2, 2002)

2002 2001 2000

99,275 297,825 285,000

Nil Nil 150,000

(1

)

Nil 15,000 Nil

Nil Nil Nil

Nil Nil Nil

830,000 Nil Nil

Rick E. Gaetz President & Chief Executive Officer (Chief Operating Officer until May 2, 2002)

2002 2001 2000

350,000 303,121 275,000

350,000 141,456 160,000

(1

)

50,000 15,000 Nil

Nil Nil Nil

Nil Nil Nil

Nil Nil Nil

Kevin A. Glass Vice President Finance & Chief Financial Officer

2002 2001 2000

240,000 224,675 215,000

120,000 59,912 65,000

(1

)

14,000 15,000 Nil

Nil Nil Nil

Nil Nil Nil

Nil Nil Nil

     (1)  For each of the above named executive officers, perquisites and other personal benefits were no greater than the lesser of $50,000 and 10% of the total annual salary and bonus of such Named Executive Officers for the 2002 financial year.

     (2)  On May 2, 2002, Mr. Richard McGraw resigned as President and Chief Executive Officer of Vitran Corporation Inc., to become the non-executive Chairman of the Board, replacing Anthony F. Griffiths, also a co-founder of the Company, who remains on Vitran’s Board of Directors. Mr. McGraw was awarded a special one-time retirement bonus of $830,000 for his achievements as founding President and Chief Executive Officer.

Employment Arrangements

     The Corporation has entered into arrangements effective February 25, 2003 with each of Messrs. Gaetz and Glass providing for termination payments to each of these individuals in the event that their employment with the Corporation is terminated as a result of a change of control. In the case of Mr. Gaetz, the termination payment will be two and half times his average last

33

three years salary and bonus and in the case of Mr. Glass, one and half times his average last three years salary and bonus. In addition, in the event of a change of control of the Corporation or a sale of all or substantially all of its assets, each of Messrs Gaetz and Glass may be entitled to a bonus based on the transaction value.

Share Compensation Arrangements

     The Company’s existing Option Plan authorizes the granting to directors, full-time officers and employees of the Company of options to purchase Class A Shares. Such options may be granted by the directors of the Company at their discretion. The current policy is to grant options at the market value of the securities underlying the options on the date of the grant. The options vest over the first 6 years and expire at the end of 10 years. Such options are to contain provisions whereby, in the event of retirement on or after attaining the age of 65 years, or, with the consent of the Board of Directors of the Company, on or after attaining the age of 55 years, or due to disability to an extent and in a manner as determined by the Board of Directors or the death of the optionee prior to the expiry of his options, the right to exercise such options is to continue in the hands of the optionee or his legal personal representatives for a period of 6 months after the date of such retirement or death. An optionee may not exercise any options prior to the first anniversary of their issuance. On the first anniversary of the issuance of such options and on each subsequent anniversary of their issuance, the optionee acquires the right to exercise either one fifth of the total number of options (in the case of options with a six year vesting period) or one third of the total number of options (in the case of options with a four year vesting period). All rights of exercise under the Option Plan are cumulative.

(a) Options/SARs Granted to Named Executive Officers During the Most Recently Completed Financial Year

     Details of options granted the Named Executive Officers during the financial year ended December 31, 2002, are shown in the table set out below. During the financial year ended December 31, 2002, no stock appreciation rights (“SAR”) were granted to Named Executive Officers and, as of December 31, 2002, no SARs were outstanding.

			% of Total					Market Value
			Options					of Securities
	Securities		Granted to					Underlying
	Under		Employees					Options on the Date
	Options		in Financial			Exercise		of Grant		Expiration
Name	(#)		Year			($/Security)		($/Security)		Date
Richard D. McGraw	Nil			0	%		N/A		N/A		N/A
Rick E. Gaetz		50,000		28.6	%	$	3.50	$	3.50	Feb. 20, 2112
Kevin A. Glass		14,000		8.0	%	$	3.50	$	3.50	Feb. 20, 2112

(b) Options Exercised by Named Executive Officers During the Most Recently Completed Financial Year and Financial Year-End Option Value

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     Details of options exercised by the Named Executive Officers of the Company during the financial year ended December 31, 2002 and the number and value of unexercised options as at December 31, 2002, are shown in the table set out below.

	Securities	Aggregate					Value of Unexercised
	Acquired on	Value	Unexercised Options at				In-the-Money Options at
Name and Principal	Exercise	Realized	December 31, 2002				December 31, 2002
Position	(#)	($)	(#)				($)
			Exercisable		Unexercisable		Exercisable		Unexercisable
Richard D. McGraw Chairman of the Board	Nil	Nil		185,500		37,000	$	441,440	$	77,660
Rick E. Gaetz President and Chief Executive Officer	Nil	Nil		185,500		87,000	$	547,440	$	314,660
Kevin A. Glass Vice President Finance & Chief Financial Officer	Nil	Nil		64,000		45,000	$	133,640	$	139,320

	Note:
(1)	All Securities granted in 2002 were of options to purchase Class A Voting Shares.
(2)	Options are granted at the market value of Class A Voting Shares at the time of grant.

     The closing price of Vitran Corporation Inc. Class A Voting Shares on The Toronto Stock Exchange on December 31, 2002 was $8.24.

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Options to Purchase

     From time to time, the Board of Directors may grant, at its discretion, stock options to the Directors, officers and employees of the Company, in accordance with the rules of and subject to the approval of The Toronto Stock Exchange.

     The following table sets out information relating to outstanding options to purchase Class A Voting Shares issued by the Company that were outstanding as of March 10, 2003 with the number of persons in each category shown in parentheses:

	Number of					Exercise Price Per
	Class A Voting					Class A Voting
	Shares Optioned		Date of Grant	Share		Expiry Date
Executive Officers (two)		12,500	March 9, 1999	$	8.25	March 9, 2009
		75,000	October 1, 1999	$	7.00	October 1, 2009
		50,000	October 19,1998	$	6.00	October 19, 2008
		10,000	March 1, 1998	$	7.25	March 1, 2008
		40,000	March 1, 1997	$	4.25	March 1, 2007
		50,000	May 6, 1994	$	5.88	May 6, 2004
		50,000	August 7, 1996	$	4.00	August 7, 2006
		30,000	February 19, 2001	$	4.00	February 19, 2011
		64,000	February 20, 2002	$	3.50	February 20, 2012
Directors (including Chairman and		100,000	April 21, 1994	$	6.00	April 21, 2004
Vice-Chairman but excluding		40,000	March 1, 1997	$	4.25	March 1, 2007
Executive Officers)(six)		135,000	March 1, 1998	$	7.25	March 1, 2008
		7,500	March 9, 1999	$	8.25	March 9, 2009
		50,000	October 1, 1999	$	7.00	October 1, 2009
		15,000	February 11, 2001	$	4.00	February 11. 2011
		50,000	February 20, 2002	$	3.50	February 20, 2012
Other employees of subsidiaries (thirty one)		9,500	March 9, 1999	$	8.25	March 9, 2009
		20,000	December 10, 1998	$	7.50	December 10, 2008
		30,000	August 4, 1998	$	7.60	August 4, 2008
		9,500	March 1, 1998	$	7.25	March 1, 2008
		27,000	March 1, 1997	$	4.25	March 1, 2007
		22,700	April 21, 1994	$	6.00	April 21, 2004
		6,960	May 6, 1994	$	5.88	July 19, 2004
		15,000	August 19, 1994	$	7.00	August 19, 2004
		20,000	October 31, 1994	$	7.00	October 31, 2004
		5,000	April 5, 1995	$	7.75	April 5, 2005
		5,000	June 1, 1995	$	8.75	June 1, 2005
		22,500	August 7, 1996	$	4.00	August 7, 2006
		10,000	May 6, 1999	$	8.50	May 6, 2009
		65,000	October 1,1999	$	7.00	October 1, 2009
		15,000	May 2, 2000	$	5.25	May 2, 2010
		10,000	September 5, 2000	$	6.20	September 5, 2010
		25,000	January 19, 2001	$	5.10	January 19, 2011
		25,000	February 19, 2001	$	4.00	February 19, 2011
		61,000	February 20, 2002	$	3.50	February 20, 2012

     As of March 10, 2003 options to purchase 779,000 Class A Voting Shares were held by the directors and executive officers of the Company as a group. No options to purchase Class A Voting Shares were exercised by officers but, 10,640 options to purchase Class A. Voting Shares were exercised by employees of the Company during the year ended December 31, 2002. For the period January 1, 2003 to March 10, 2003, 21,000 options to purchase Class A. Voting shares were exercised by employees of the Company.

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Employee Stock Option Plan

     The Employee Stock Option Plan was presented by the Company for approval at the May 17, 1995 Annual Meeting because the Toronto Stock Exchange has promulgated new rules governing the content of employee stock option plans and the Company wished to enact a new plan which would be congruous with these new rules. The adoption of the Employee Stock Option Plan was approved at the May 17, 1995 Annual Meeting. Pursuant to the Employee Stock Option Plan, the Board of Directors is authorized to issue, from time to time in its discretion, options to employees, officers and directors of the Company to acquire Class A Voting Shares of the Company at such prices as may be fixed by the Board of Directors at that time, provided that the price shall not be less than the minimum price then permitted by regulatory authorities having jurisdiction, currently the market price at the date the option is granted. Options granted under the plan shall be non-assignable and non-transferable and shall be for a term not exceeding 10 years. The number of Class A Voting Shares issuable pursuant to the Employee Stock Option Plan was initially set at 150,000. An amendment to the Vitran Employee Stock Option Plan was approved at the May 22, 1996 Annual Meeting to increase the number of Class A Voting Shares issuable from 150,000 to 650,000. An amendment to the Vitran Employee Stock Option Plan was approved at the May 4, 1999 Annual Meeting to increase the number of Class A Voting Shares issuable from 650,000 to 1,000,000. A further amendment to the Vitran Employee Stock Option Plan was approved at the May 3, 2000 Annual Meeting extending the term of existing options under the plan to ten years. The Company continues to have approximately 1,000,000 Class A Voting Shares issuable under the existing Option Plan, resulting in a total for the Class A Voting Shares issuable under employee stock option plans of approximately 10% of the Class A Voting Shares outstanding as of the record date for the Annual Meeting.

     No option may be granted to insiders (as defined in the Securities Act (Ontario)) if such options, together with any other options previously granted by the Company (collectively the “Share Compensation Arrangements”) could result in:

(i)	the number of Class A Voting Shares reserved for issuance pursuant to Share Compensation Arrangements to insiders collectively exceeding 12% of the number of Class A Voting Shares then issued and outstanding less Class A Voting Shares issued within the previous 12 months pursuant to Share Compensation Arrangements (the “Outstanding Issue”);
(ii)	the issuance to insiders collectively, within the 12 months immediately preceding or 12 months immediately following the date of grant of such options, of a number of Class A Voting Shares exceeding 5% of the Outstanding Issue; or
(iii)	the issuance to any one insider, within the 12 months immediately preceding or 12 months immediately following the date of grant of such options, of a number of Class A Voting Shares exceeding 5% of the Outstanding Issue.

     The number of Class A Voting Shares reserved for issuance at any time to any one person pursuant to Share Compensation Arrangements shall not exceed 5% of the number of Class A Voting Shares then issued and outstanding.

37

     For simplicity, holders of options under the original Option Plan of the Company will continue to hold their options subject to the terms of the Option Plan and will not have their options replaced by options under the Employee Stock Option Plan. The terms of the options existing under the Option Plan conform to the terms of the Employee Stock Option Plan in all material respects. No new options will be granted under the Option Plan.

ITEM 7. MAJOR SHAREHOLDERS and RELATED PARTY TRANSACTIONS

     To the knowledge of the directors and officers of the Company, as of March 10, 2003 the only persons or companies beneficially owning, directly or indirectly, or exercising control or direction over more than 10% of the outstanding Class A Voting Shares of the Company are as follows (1):

		Number of Class A
		Voting Shares (1)		% of Outstanding
Title of Class	Identity of Person or Group	Shares		Class A Voting
Class A voting shares	Richard D. McGraw	1,314,839	(2)	13.8%
Class A voting shares	Fidelity Investments	986,000	(3)	10.3%
Class A voting shares	Officers and Directors as a class	3,605,228		37.8%

	NOTES:
(1)	The information as to Class A Voting Shares beneficially owned directly or indirectly by each shareholder or over which each shareholder exercises control or direction, not being within the knowledge of the Company, has been furnished by the respective shareholders individually.
(2)	These shares are presently registered in the name of Lochan Ora Investments Limited (100,000 shares) Waterstone Investments Corporation (1,018,396) and Parkway Automotive Investments Limited (196,443 shares), companies controlled by Richard D. McGraw, President, Chief Executive Officer and a director of the Company.
(3)	In the fourth quarter of 2001 Vitran Corporation Inc. received notification from Fidelity Investment that they had acquired shares exceeding the 10% ownership threshold.

     To the best of management’s knowledge, the Company is not owned or controlled directly or indirectly by any other company or foreign governments.

     As of December 31, 2002 there were 8,464,883 Class A Voting Shares held by residents in the Canada, representing 88.5% of the outstanding Class A Voting Shares. The computation of the number and percentage of Class A Voting Shares held in the Canada is based upon the number of Class A Voting Shares held of record by holders with Canadian addresses. Residents of the Canada may beneficially own Class A Voting Shares that are held of record by non-residents of the Canada.

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ITEM 8. FINANCIAL INFORMATION

Financial Statements

     Consolidated Balance Sheets as at December 31, 2002, and 2001 and the Consolidated Statements of Income, Retained Earnings and Cash Flow for the years ended December 31, 2002, 2001, and 2000, reported on by KPMG LLP, Chartered Accountants. These statements are prepared in accordance with generally accepted accounting principles in Canada, which differ from generally accepted accounting principles in the United States. See Note 14 to the financial statements. Page F-27.

Dividend Policy

     On November 6, 2001 Vitran announced that its Board of Directors has voted to suspend payment of the semi-annual dividend of $0.035 per share, effective immediately. The change in policy has been made so that all internally generated funds will be used to repay debt and support future capital expenditure programs.

     There have been no changes to the Dividend Policy since November 6, 2001.

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ITEM 9. THE OFFERING and LISTING

     The Class A Voting Shares are listed for trading under the symbol “VTN.A” on The Toronto Stock Exchange (the “TSE”) and on the American Stock Exchange (‘AMEX”), effective April 6, 2000, under the symbol “VNN”. The following table sets forth the market price range and trading volume of the Class A Voting Shares on the TSE and AMEX for the periods indicated (the quarterly information is based on a December 31 fiscal year end).

	High		Low		Volume
Toronto Stock Exchange (CDN$)
2003
First Quarter	$	9.08	$	7.96		1,375,700
2002
Fourth Quarter	$	8.24	$	6.83		77,700
Third Quarter	$	7.95	$	6.07		98,300
Second Quarter	$	8.20	$	4.26		217,100
First Quarter	$	5.35	$	3.25		217,300
2001
Fourth Quarter	$	3.94	$	3.20		765,000
Third Quarter	$	4.24	$	2.99		39,000
Second Quarter	$	4.75	$	3.50		49,500
First Quarter	$	5.50	$	4.00		180,400
American Stock Exchange (US$)
2003
First Quarter	$	6.00	$	5.05		521,000
2002
Fourth Quarter	$	5.29	$	4.55		104,600
Third Quarter	$	5.12	$	3.80		117,000
Second Quarter	$	5.43	$	2.80		179,400
First Quarter	$	3.48	$	1.98		61,800
2001
Fourth Quarter	$	2.45	$	2.00		102,400
Third Quarter	$	2.95	$	2.35		94,600
Second Quarter	$	3.00	$	2.15		172,600
First Quarter	$	3.63	$	2.90		207,900

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	High		Low
Five Year Annual Information
Toronto Stock Exchange (CDN$)
2002	$	8.24	$	3.25
2001	$	5.50	$	2.99
2000	$	7.25	$	4.25
1999	$	10.00	$	7.00
1998	$	8.95	$	4.75
American Stock Exchange (US$)
2002	$	5.43	$	1.98
2001	$	3.63	$	2.00
2000	$	5.13	$	2.63
1999	$	6.75	$	4.84
1998	$	6.50	$	1.63

	High		Low
Recent Six Month Information
Toronto Stock Exchange (CDN$)
May 2003	$	8.87	$	8.45
April	$	8.50	$	8.20
March	$	8.85	$	8.50
February	$	9.03	$	8.50
January	$	9.08	$	7.96
December 2002	$	8.24	$	7.85
American Stock Exchange (US$)
May 2003	$	6.50	$	5.88
April	$	5.94	$	5.65
March	$	6.00	$	5.70
February	$	5.95	$	5.67
January	$	5.90	$	5.05
December 2002	$	5.40	$	5.00

     The Toronto Stock Exchange approved a normal course issuer bid that allowed the Corporation, through the exchange, to acquire for cancellation, up to 5% of outstanding Class A voting shares from November 1996 to November 1997. During that period, 23,500 shares were repurchased.

     In March 1998, The Toronto Stock Exchange approved a normal course issuer bid that allowed the Corporation to acquire through the exchange, up to 5% of outstanding Class A voting shares over a twelve-month period ending March 16, 1999. During that period, 39,500 shares were repurchased.

     In September of 1999, the Toronto Stock Exchange approved a normal course issuer bid that allowed the Corporation to acquire through the exchange, up to 5% of outstanding Class A voting shares over a twelve-month period ending September 16, 2000. During that period, 111,000 shares were repurchased.

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     A normal course issuer bid was approved by The Toronto Stock Exchange in October 2000, that allows the Company to acquire through the exchange, up to 5% of outstanding Class A voting shares over a twelve-month period ending October 2, 2001. Over the twelve-month period ended 23,500 shares had been repurchased.

     A normal course issuer bid was approved by The Toronto Stock Exchange in October 2001, that allows the Company to acquire through the exchange, up to 5% of outstanding Class A voting shares over a twelve-month period ending October 2, 2002. Over the twelve-month period ended 285,400 shares had been repurchased.

     A normal course issuer bid was approved by The Toronto Stock Exchange in October 2002, that allows the Company to acquire through the exchange, up to 5% of outstanding Class A voting shares over a twelve-month period ending October 2, 2003. As of December 31, 2002, 25,200 shares have been repurchased.

ITEM 10. ADDITIONAL INFORMATION

Material Contracts, Documents on Display

     Please refer to Item 19 (D) Exhibits for list of documents on display at the Securities Exchange Commission.

Exchange of Controls and Other Limitations Affecting Security Holders

     There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of Class A Voting Shares, other than withholding tax requirements. See Item 7.

     There is no limitation imposed by the laws of Canada, the laws of Ontario or by the charter or other constituent documents of Vitran on the right of a non-resident to hold or vote Class A Voting Shares, other than as provided in the Investment Canada Act (Canada) (the “Investment Act”). The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire Class A Voting Shares. It is general only, it is not a substitute for independent advice from an investor’s own advisor, and it does not anticipate statutory or regulatory amendments.

     The Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture that is not a “Canadian” as defined in the Investment Act (a “non-Canadian”), unless after review the minister responsible for the Investment Act (the “Minister”) is satisfied that the investment is likely to be of net benefit to Canada. An investment in Class A Voting Shares by a non-Canadian other than a “World Trade Organization Investor” (as that term is defined in the Investment Act and which term includes United States citizens) when Vitran is not controlled by a World Trade Organization Investor, would be reviewable under the Investment Act if it is an investment to acquire control of Vitran and the value of the assets of Vitran as shown on its financial statements is $5 million or

42

more, or if an order for review is made by the federal cabinet on the grounds that the investment related to Canada’s cultural heritage or national identity.

     The acquisition by a World Trade Organization Investor of control of a Canadian business in any of the following sectors is also subject to review if the value of the assets of the Canadian business exceeds $5 million (as shown on its financial statements): oil, gas, uranium, financial services (except insurance), transportation services (as shown on Standard Industrial Classification coding) and cultural businesses, which include broadcast media (publication, distribution or sale of books, magazines, periodicals, newspapers, music, film and video products and the exhibition of film and video products), television and radio services.

     As Vitran’s business is coded for Standard Industrial Classification purposes under transportation services and the value of its assets exceeds $5 million (as shown on its financial statements), acquisition of control of Vitran by a non-Canadian would require approval under the Investment Act.

     A non-Canadian would acquire control of Vitran for the purposes of the Investment Act if the non-Canadian acquired a majority of the Class A Voting Shares. The acquisition of less than a majority but one-third or more of the Class A Voting Shares would be presumed to be an acquisition of control of Vitran unless it would be established that, on the acquisition, Vitran was not controlled in fact by the acquirer through the ownership of Class A Voting Shares.

     Certain transactions relating to Class A Voting Shares would be exempt from the Investment Act, including:

(a)	an acquisition of Class A Voting Shares by a person in the ordinary course of that person’s business as a trader or dealer in securities;
(b)	an acquisition of control of Vitran in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act; and
(c)	an acquisition of control of Vitran by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of Vitran, through the ownership of Class A Voting Shares, remained unchanged.

     Subject to the restrictions noted above in respect of certain sectors, including transportation services, generally, an investment in a Canadian business by a World Trade Organization Investor, or by a non-Canadian when a Canadian business is controlled by a World Trade Organization Investor, would be reviewable under the Investment Act if it is an investment to acquire control of such Canadian business and the value of its assets is not less than a specified amount, which is $160 million.

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Taxation

Certain Canadian Federal Income Tax Considerations for Holders of Class A Voting Shares

     The following summary describes the principal Canadian federal income tax considerations generally applicable to a holder of Class A Voting Shares who, for purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”) and the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital (the “Convention”) and at all relevant times, is resident in the United States and not resident in Canada, deals at arm’s length with Vitran, holds Class A Voting Shares as capital property and does not use or hold and is not deemed to use or hold Class A Voting Shares in or in the course of carrying on business in Canada (a “United States Holder”).

     The following summary is based upon the current provisions of the Canadian Tax Act, the regulations thereunder, all specific proposals to amend the Canadian Tax Act and the regulations announced by the Minister of Finance (Canada) prior to the date hereof and the Company’s understanding of the published administrative practices of Revenue Canada, Customs, Excise and Taxation. This summary does not take into account or anticipate any other changes in the governing law, whether by judicial, governmental or legislative decision or action, nor does it take into account the tax legislation or considerations of any province, territory or non-Canadian (including U.S.) jurisdiction, which legislation or considerations may differ significantly from those described herein.

     This summary is of a general nature only and is not intended to be, and should not be interpreted as legal or tax advice to any prospective purchaser or holder of Class A Voting Shares and no representation with respect to the Canadian federal income tax consequences to any such prospective purchaser is made. Accordingly, prospective purchasers of Class A Voting Shares should consult their own tax advisors with respect to their individual circumstances.

Dividends on Class A Voting Shares

     Dividends and amounts deemed for purposes of the Canadian Tax Act to be dividends, paid or credited on Class A Voting Shares to non-residents of Canada will be subject to Canadian withholding tax at the rate of 25% of the gross amount of such dividends. In the case of United States Holders, under the Convention, the rate of withholding tax is reduced to 15% of the gross amount of such dividends, unless the holder is a corporation resident in the United States which owns at least 10% of the voting shares of Vitran, in which case the withholding tax is levied at the rate of 10% of the gross amount of such dividends. Pursuant to a Protocol executed on November 9, 1995, the aforementioned rate of 10% was reduced to 6% in 1996 and 5% in 1997.

     Pursuant to the Convention, certain tax-exempt entities resident in the United States may be exempt from Canadian withholding taxes, including any withholding tax levied in respect of dividends received on the Class A Voting Shares.

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Disposition of Class A Voting Shares

     In general, a United States Holder will not be subject to Canadian income tax on capital gains arising on the disposition of Class A Voting Shares, unless: (i) at any time in the five year period immediately preceding the disposition, not less than 25% of the issued shares of any series or class (including any interest in, option in respect of or right of conversion into such shares) of the capital stock of Vitran belonged to the United States Holder, to persons with whom the United States Holder did not deal at arm’s length or to the United States Holder and persons with whom the United States Holder did not deal at arm’s length; and (ii) the United States Holder is not entitled to relief under the Convention. Under the Convention, capital gains arising on the disposition of Class A Voting Shares by a United States Holder will not be subject to Canadian tax provided that the value of the Class A Voting Shares at the time of the disposition is not derived principally from real property (as defined in the Convention) situated in Canada.

Memorandum and Articles of Association

Please refer to Item 19 Exhibits.

ITEM 11. QUANTITATIVE and QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company’s primary market risk exposures are interest rate risk and foreign currency risk. The Company is exposed to interest rate risk on its cash and short-term deposits and floating rate long-term debt obligations, which are principally comprised of borrowings under a revolving and non-revolving term bank credit facility entered into in October 1999. These borrowings bear interest at the LIBOR rate plus 1.75%. The Company estimates that based on balances outstanding at December 31, 2002, a one percent change in interest rates would result in a change in interest expense and income before income taxes of approximately $235,551. The Company has entered into an interest rate swap contract to fix its funding costs on US$21.0 million of the term bank facility. The interest rate swap reduces the Company’s exposure to fluctuation on short-term interest.

     The Company’s reporting currency is the Canadian dollar. The Company is exposed to foreign exchange risk associated with its investment in and the operation of its U.S. subsidiaries. This risk is partially offset by certain long-term debt obligations denominated in U.S. dollars, $37.1 million outstanding under the revolving facility and term bank credit facility. Other than these borrowings denominated in U.S. dollars, the Company does not hedge its exposure to foreign exchange risk. Gains and losses resulting from the effects of changes in the U.S. dollar to Canadian dollar exchange rate on the net assets of self-sustaining U.S. operations are accumulated in a separate component of shareholders’ equity.

     At December 31, 2002, the Company had an interest rate swap agreement in place on $U.S. $21,000,000 drawn under the term bank facility. See note 10 to the Consolidated Financial Statements of the Company for more information.

45

Interest Rate Risk

     The following table sets out the weighted average interest rates and maturities of the Company’s cash, bank indebtedness and long-term debt at December 31, 2002:

				Expected to mature in
				2003			2004			2005			2006			Total
Cash on hand
		Canadian dollars			251,648												251,648
		U.S. dollars			7,842,433												7,842,423
Long-term debt:
Term Bank Loan
	(U.S.$) 20,600,000
	Interest rate-fixed 8.95% to Jan 27, 03
	Interest rate-floating 3.85% after Jan. 27, 03
	(U.S.$) 14,500,000
	Interest rate-floating 3.92%
	(US$) 2,000,000
	Interest rate-floating 4.33%
	Repayments (CDN$)				10,937,500			19,531,250			24,218,750			3,841,460
Average interest rate					4.17	%		4.17	%		4.17	%		4.17	%		58,528,960
		Term bank loans (U.S.$)			26,859
			Interest rate-fixed		10.75	%											26,859
		Mortgages payable (U.S.$)			45,749			49,588			53,919			58,539
			Interest rate-fixed		8.25	%		8.25	%		8.25	%		8.25	%		383,278

Exchange Rate Sensitivity

     The Company’s material assets and liabilities at December 31, 2002, which are denominated in U.S. dollars and subject to exchange rate risk, are set forth below.

	($CDN in thousands)
Assets	$	140,692
Liabilities	$	112,176

Foreign Currency Translation

     The assets and liabilities denominated in a foreign currency of self-sustaining operations are translated at exchange rates in effect at the balance sheet date. The resulting gains and losses are accumulated in a separate component of shareholders’ equity. Revenue and expense items are translated at average exchange rates prevailing during the year. The Corporations’ foreign currency denominated debt is designated as a hedge to the foreign currency exposure generated by the self-sustaining foreign operations. As such the translation gain and losses are also accumulated in the separate component of shareholders’ equity.

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Financial Instruments

     Please refer to note 9 and note 10 in the attached financial statements.

Limitations

     The above discussion includes only those exposures that exist as of December 31, 2002 and, as a result, does not consider exposures or positions that could arise after that date. The Company’s ultimate realized gain or loss with respect to interest rate and exchange rate fluctuations will depend on the exposures that arise during the period, the Company’s hedging strategies at the time and interest and foreign exchange rates.

Off-Balance Sheet Transactions

     The Company has disclosed all significant off-balance sheet transactions on Note 11 in the attached financial statements.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

N/A

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES and DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS and USE OF PROCEEDS

None.

ITEM 15. CONTROLS and PROCEDURES

     Based on their evaluation of Vitran’s disclosure controls and procedures as of a date within 90 days of the filing of this Annual Report, the Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures are effective.

     There were no significant changes in Vitran’s internal controls or in other factors that could significantly affect such controls subsequent to the date of their evaluation.

ITEM 17. FINANCIAL STATEMENTS

     Report and Consolidated Balance Sheets as at December 31, 2002, and 2001 and the Consolidated Statements of Income, Retained Earnings and Cash Flow for the years ended

47

December 31, 2002, 2001, and 2000, reported on by KPMG LLP, Chartered Accountants. These statements are prepared in accordance with generally accepted accounting principles in Canada, which differ from generally accepted accounting principles in the United States. See Note 14 to the financial statements. Page F-27

ITEM 18. FINANCIAL STATEMENTS

     See “Item 17. Financial Statements.”

ITEM 19. EXHIBITS

A)	Financial Statements
	Report and Consolidated Balance Sheet as at December 31, 2002 and 2001, and the Consolidated Statements of Income, Retained Earnings and Cash Flow for the years ended December 31, 2002, 2001 and 2000, reported on by KPMG LLP, Charted Accountants. These statements are prepared in accordance with generally accepted accounting principles in Canada which differ from generally accepted accounting principles in the United States. See Note 14 to the financial statements Page F-27
B)	Management Certifications
	In accordance with the Sarbanes Oxley Act of 2002, Section 302 Corporate Responsibility for Financial Reports, the Chief Executive Officer and the Chief Financial Officer have signed the attached certifications that the report is accurate, complete and fairly presented. Please refer to Schedule A.
C)	Code of Ethics
	The Corporation together with the Corporate Governance Committee has established a Code of Ethics and Professional Conduct.This Code of Ethics and Professional Conduct signifies voluntary assumption by Vitran Corporation Inc. (“Vitran”) employees and directors of the obligation of self-discipline above and beyond the requirements of the law. All Vitran employees and directors should deal fairly with customers, suppliers, fellow employees, and the general public. Acceptance of this Code is mandatory for Vitran employees and directors. Failure to abide by the Code will serve as a basis for disciplinary action. The Corporation’s Code of Ethics and Professional Conduct can be reviewed in Schedule B.

48

D) Exhibits

(Reference is made to “Vitran Corporation Inc. — Registration Statement on Form 20-F,” dated June 14, 1995, filed with the S.E.C. on June 15, 1995 for Exhibits 1.1 through 1.5, 2.1 through 2.8, and 3.1 through 3.12. Reference is made to “Vitran Corporation Inc. — Amendment Number 1 to Registration Statement on Form 20-F/A”, dated September 27, 1995, filed with the S.E.C. on September 28, 1995 for Exhibits 2.9 and 2.10. Reference is made to “Vitran Corporation Inc. — Annual Report on Form 20-F,” dated May 20, 1997 filed with the S.E.C. on May 21, 1997 for Exhibits 2.11. Reference is made to “Vitran Corporation Inc. — Annual Report on Form 20-F,” dated May 20, 1998 filed with the S.E.C. on May 21, 1998 for Exhibit 2.12. Reference is made to “Vitran Corporation Inc. — Annual Report on Form 20-F,” dated May 19, 1999 filed with the S.E.C. on May 20, 1999 for Exhibit 2.9.1, 2.9.2, 2.13, 3.13, and 3.14.)

Exhibit No.	Document
1.1*	Articles of Incorporation effective, April 29, 1981
1.2*	Articles of Amendment effective, May 27, 1987
1.3*	Articles of Amendment effective, July 16, 1987
1.4*	Articles of Amendment effective, February 5, 1991
1.5*	By-laws effective, May 27, 1987
1.6*	By-law to authorize the directors to borrow and give security effective, July 16, 1987
2.1*	Credit Agreement between the registrant, its subsidiaries and the Royal Bank, dated April 25, 1995
2.2*	Credit Agreement between the Overland Group and Bank One, dated February 4, 1994 (the “Overland Credit Agreement”)
2.3*	First Amendment to the Overland Credit Agreement, effective July 1, 1994
2.4*	Second Amendment to the Overland Credit Agreement, effective September 30, 1994
2.5*	Third Amendment to the Overland Credit Agreement, dated December 14, 1994
2.6*	Fourth Amendment to the Overland Credit Agreement, dated February 1, 1995
2.7*	Fifth Amendment to the Overland Credit Agreement, effective December 31, 1994
2.8*	Sixth Amendment to the Overland Credit Agreement, dated March 2, 1995
2.9*	Operating Credit Agreement between Trans Western Express Inc. and The Bank of Nova Scotia, dated July 25, 1995
2.9.1*	First Amending Agreement to Credit Agreement between Trans Western Express Inc. and The Bank of Nova Scotia, dated September 3, 1998
2.9.2*	Second Amending Agreement to Credit Agreement between Trans Western Express Inc. and The Bank of Nova Scotia, dated January 8, 1999
2.9.3	Amended and Restated Credit Agreement between Vitran Corporation Inc. and Trans Western Express Inc. and The Bank of Nova Scotia, dated January 31, 2002

49

Exhibit No.	Document
2.10*	Note Purchase Agreement between Trans Western Express Inc., the registrant and certain purchasers, dated July 25, 1995.
2.11*	Amendment No. 1 to Note Agreement (“Amending Agreement”, dated June 28, 1996
2.12*	Amendment No. 2 to Note Agreement (“Amending Agreement”, dated May 13, 1997
2.13*	Credit Agreement between the registrant and The Bank of Nova Scotia, dated September 3, 1998
2.14*	Credit Agreement between the registrant and The Bank of Nova Scotia and Laurentian Bank of Canada, dated October 13, 1999
3.1*	Underwriting Agreement dated December 16, 1994 between the registrant and Midland Walwyn Capital Inc. and ScotiaMcLeod Inc.
3.2*	Special Warrant Indenture dated December 16, 1994 between the registrant and Montreal Trust Company for Canada, as trustee
3.3*	Escrow agreement dated December 16, 1994 between the registrant and Messrs. Morris/Rose/Ledgett, Barristers and Solicitors, as trustee
3.4*	Subscription Agreements:
3.4.1*	Alcan Master Trust
3.4.2*	Deans Knight Capital Management
3.4.3*	Fiducie Desjardins A/C 900111.6.42
3.4.4*	Montreal Trust Company of Canada A/C 985630009
3.4.5*	Montreal Trust Company of Canada A/C 977050009
3.4.6*	Ontario Municipal Employees Retirement Board
3.4.7*	Royal Trust Corporation of Canada in Trust 0115977001
3.4.8*	Royal Trust Corporation of Canada in Trust 088665001
3.4.9*	Roytor & Co.
3.5*	Stock Option Plan dated July 16, 1987
3.6*	Employee Stock Option Plan approved May 17, 1995
3.7*	Purchase and Sale agreement dated November 2, 1994 between the Registrant and Carl Cook and Daniel L. Cook
3.8*	Stock Voting Agreement dated July 15, 1987 between Richard D. McGraw, Albert Gnat and Anthony F. Griffiths
3.9*	Confidential Transportation Contract dated January 1, 1993 between Trans Western Express Inc. and Canadian National Railway Company
3.10*	Agreement dated April 24, 1995 between the registrant, Borcross Limited, Carl Cook and Daniel L. Cook amending the terms of the Overland Note
3.11*	Engagement Letter dated April 28, 1995 between the registrant and Banc One Capital Corporation
3.13* 3.14*	Offer of Employment dated September 30, 1998 from the registrant to Kevin Glass Share Purchase Agreement between the registrant and Randall Quast, dated July 21, 1998
3.15	Cancellation of Stock Voting Agreement dated February 1, 2003 between Richard D. McGraw, Albert Gnat and Anthony F. Griffiths

* Previously filed

50

SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this annual report to its registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	Vitran Corporation Inc.
	/s/ Richard E. Gaetz
Date June 11, 2003	Richard E. Gaetz President & Chief Executive Officer
	/s/ Kevin A. Glass
Date June 11, 2003	Kevin A. Glass Vice President Finance & Chief Executive Officer

51

Schedule A

302 Certification

I, RICK E. GAETZ, certify that:

1.	I have reviewed this annual report on Form 20-F of Vitran Corporation Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial conditions, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date:
5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.	The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: Feb. 20, 2002	/s/ Richard E. Gaetz
	Rick E. Gaetz Chief Executive Officer

52

Schedule A

302 Certification

I, KEVIN A. GLASS, certify that:

1.	I have reviewed this annual report on Form 20-F of Vitran Corporation Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial conditions, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date:
5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.	The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: Feb. 18, 2003	/s/ Kevin A. Glass
	Kevin A. Glass Chief Financial Officer

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Schedule B
Code of Ethics and Professional Conduct
for Directors and Senior Executives

     This Code of Ethics and Professional Conduct signifies voluntary assumption by Vitran Corporation Inc. (“Vitran”) employees and directors of the obligation of self-discipline above and beyond the requirements of the law. All Vitran employees and directors should deal fairly with customers, suppliers, fellow employees, and the general public. Acceptance of this Code is mandatory for Vitran employees and directors. Failure to abide by the Code will serve as a basis for disciplinary action.

1.	I will at all times observe the highest principles of honesty and fair practice.
2.	I will conduct my professional life in accordance with the interest of Vitran.
3.	I will treat all information concerning the affairs of customers and suppliers while employed by Vitran, as strictly confidential.
4.	I will not accept any other employment, fee, commission, or other valuable consideration for my services, from any one other than the Vitran without prior consent of my supervisor.
5.	I will not voluntarily supply a competitor or competitors with sensitive information.
6.	I will maintain accurate books and records.
7.	I will appropriately use Vitran property.
8.	I will avoid insider trading.
9.	I will respond appropriately to government investigations.
10.	I will ensure safety and healthful workplace.
11.	I will not permit or cause any employee or agent acting on my behalf to do anything which, if done by me, would constitute a violation of this Code.

54

Consolidated Financial Statements of

VITRAN CORPORATION INC.

Years ended December 31, 2002, 2001 and 2000
(Amounts in Canadian dollars)

KPMG LLP
Chartered Accountants
Yonge Corporate Centre
4100 Yonge Street Suite 200
Toronto ON M2P 2H3 Telephone (416) 228-7000
Telefax (416) 228-7123
www.kpmg.ca

AUDITORS’ REPORT

To the Board of Directors of Vitran Corporation Inc.

We have audited the consolidated balance sheets of Vitran Corporation Inc. as at December 31, 2002 and 2001 and the consolidated statements of income, retained earnings and cash flows for each of the years in the three-year period ended December 31, 2002. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and United States generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as at December 31, 2002 and 2001 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2002 in accordance with Canadian generally accepted accounting principles.

KPMG LLP (signed)

Chartered Accountants

Toronto, Canada
January 31, 2003

F-1

VITRAN CORPORATION INC.
Consolidated Balance Sheets
(Amounts in thousands of Canadian dollars)

December 31, 2002 and 2001

		2002			2001
Assets
Current assets:
	Cash	$	12,624		$	12,879
	Accounts receivable		46,748			49,999
	Net assets of discontinued operations (note 2)		—			3,000
	Inventory, deposits and prepaid expenses		9,774			8,702
	Income taxes recoverable		—			4,505
	Future income tax assets (note 5)		4,602			4,597
			73,748			83,682
Capital assets (note 3)			48,570			51,021
Goodwill, net of accumulated amortization			69,208			74,661
		$	191,526		$	209,364
Liabilities and Shareholders’ Equity
Current liabilities:
	Revolving credit facility	$	—		$	4,936
	Accounts payable and accrued liabilities		43,091			40,083
	Income and other taxes payable		2,747			4,527
	Current portion of long-term debt (note 4)		11,052			10,970
			56,890			60,516
Long-term debt (note 4)			48,124			63,733
Future income tax liabilities (note 5)			4,366			5,737
Shareholders’ equity:
	Capital stock (note 6)		37,655			38,794
	Retained earnings		44,528			39,204
	Cumulative translation adjustment (note 7)		(37	)		1,380
			82,146			79,378
		$	191,526		$	209,364

Lease commitments (note 11)
Contingent liabilities (note 12)

On behalf of the Board:

Rick Gaetz	Director	Graham Savage	Director
[Signed]		[Signed]

See accompanying notes to consolidated financial statements.

F-2

VITRAN CORPORATION INC.
Consolidated Statements of Income
(Amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

		2002			2001			2000
Revenue		$	476,016		$	481,673		$	480,988
Operating expenses			398,919			408,808			399,006
Gross profit			77,097			72,865			81,982
Selling, general and administrative expenses			48,746			50,011			47,132
Income from continuing operations before depreciation			28,351			22,854			34,850
Depreciation			8,327			9,852			10,276
Income from continuing operations before the undernoted			20,024			13,002			24,574
Interest on long-term debt			(5,331	)		(6,181	)		(7,510	)
Interest income			174			240			280
Loss on sale of capital assets			(453	)		(1,160	)		(1,002	)
			(5,610	)		(7,101	)		(8,232	)
Income from continuing operations before income taxes, minority interest and amortization of goodwill			14,414			5,901			16,342
Income taxes (recovery) (note 5):
	Current		3,654			1,247			5,484
	Future		(94	)		(1,009	)		(813	)
			3,560			238			4,671
Income from continuing operations before minority interest and amortization of goodwill			10,854			5,663			11,671
Minority interest			—			132			49
Income from continuing operations before amortization of goodwill			10,854			5,795			11,720
Amortization of goodwill, net of income taxes of nil (2001 - $291; 2000 - $278)			—			2,094			1,802
Net income from continuing operations			10,854			3,701			9,918
Loss from discontinued operations (note 2)			—			(5,614	)		(414	)
Net income (loss)		$	10,854		$	(1,913	)	$	9,504

F-3

VITRAN CORPORATION INC.
Consolidated Statements of Income (continued)
(Amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

		2002		2001			2000
Earnings (loss) per share:
	Basic — continuing operations before amortization of goodwill	$	1.12	$	0.59		$	1.18
	Basic — continuing operations		1.12		0.38			1.00
	Basic — discontinued operations		—		(0.57	)		(0.04	)
	Basic — net income (loss)		1.12		(0.19	)		0.96
	Diluted — continuing operations before amortization of goodwill		1.11		0.59			1.18
	Diluted — continuing operations		1.11		0.38			1.00
	Diluted — discontinued operations		—		(0.57	)		(0.04	)
	Diluted — net income (loss)		1.11		(0.19	)		0.96
Weighted average number of shares:
	Weighted average number of shares outstanding		9,691,041		9,859,296			9,894,727
	Potential exercise of options		93,025		—			—
	Diluted shares		9,784,066		9,859,296			9,894,727
	Diluted earnings per share for 2002 exclude the effect of 464,000 (2001 - 901,300; 2000 - 829,300) “out of the money” options

See accompanying notes to consolidated financial statements.

F-4

VITRAN CORPORATION INC.
Consolidated Statements of Retained Earnings
(Amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

	2002			2001			2000
Retained earnings, beginning of year	$	39,204		$	41,463		$	32,873
Effect of adoption of new goodwill accounting standard (note 1(f))		(4,796	)		—			—
		34,408			41,463			32,873
Net income (loss)		10,854			(1,913	)		9,504
Dividends — nil per share (2001 - $0.035; 2000 - $0.07 per share)		—			(346	)		(694	)
Cost of repurchase of Class A voting shares in excess of book value		(734	)		—			(220	)
Retained earnings, end of year	$	44,528		$	39,204		$	41,463

See accompanying notes to consolidated financial statements.

F-5

VITRAN CORPORATION INC.
Consolidated Statements of Cash Flows
(Amounts in thousands of Canadian dollars)

Years ended December 31, 2002, 2001 and 2000

			2002			2001			2000
Cash provided by (used in):
Operations:
	Net income from continuing operations		$	10,854		$	3,701		$	9,918
	Items not involving cash from operations:
		Depreciation and amortization		8,327			12,237			12,356
		Future income taxes		(94	)		(1,009	)		(813	)
		Loss on sale of capital assets		453			1,160			1,002
		Foreign exchange gains		(696	)		(642	)		—
		Minority interest		—			(132	)		(49	)
				18,844			15,315			22,414
	Change in non-cash working capital components			6,630			1,113			254
				25,474			16,428			22,668
Investments:
	Purchase of capital assets			(7,158	)		(5,613	)		(8,181	)
	Proceeds on sale of capital assets			1,121			4,667			779
	Proceeds on sale of discontinued operations			2,685			—			—
				(3,352	)		(946	)		(7,402	)
Financing:
	Change in revolving credit facility			(4,936	)		(2,740	)		2,077
	Repayment of long-term debt			(14,501	)		(8,826	)		(40,235	)
	Issue of long-term debt			—			7,186			28,422
	Dividends			—			(346	)		(694	)
	Issue of Class A voting shares			51			—			39
	Repurchase of Class A voting shares			(1,924	)		(43	)		(693	)
				(21,310	)		(4,769	)		(11,084	)
Cash used in discontinued operations (note 2)				—			(2,265	)		(3,091	)
Effect of translation adjustment on cash				(1,067	)		(450	)		677
Increase (decrease) in cash and cash equivalents				(255	)		7,998			1,768
Cash and cash equivalents, beginning of year				12,879			4,881			3,113
Cash and cash equivalents, end of year			$	12,624		$	12,879		$	4,881
Change in non-cash working capital components:
	Accounts receivable		$	3,251		$	8,451		$	(656	)
	Inventory, deposits and prepaid expenses			(1,072	)		(1,975	)		(1,816	)
	Income and other taxes recoverable/payable			1,443			(2,018	)		1,012
	Accounts payable and accrued liabilities			3,008			(3,345	)		1,714
			$	6,630		$	1,113		$	254
Supplemental cash flow information:
	Cash paid for:
		Interest	$	5,233		$	6,873		$	6,655
		Taxes		2,781			4,348			4,775

See accompanying notes to consolidated financial statements.

F-6

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies:

(a)	Basis of presentation:
	These consolidated financial statements include the accounts of the Corporation and its subsidiary companies, all of which are wholly owned. All material intercompany transactions and balances have been eliminated on consolidation.
	All amounts in these consolidated financial statements are expressed in Canadian dollars, unless otherwise stated.
(b)	Revenue recognition:
	The Corporation’s less-than-truckload, truckload business units and freight brokerage operations recognize revenue and direct shipment costs upon the delivery of the related freight. Revenue for the logistics operations is recognized as the management services are provided.
(c)	Cash and cash equivalents:
	Cash and cash equivalents include cash on account and short-term investments with original maturities of three months or less and are stated at cost, which approximates market value.
(d)	Inventory:
	Inventory consists of tires and spare parts and is valued at the lower of cost and replacement cost.

F-7

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):

(e)	Capital assets:
	Capital assets are recorded at cost. Depreciation of capital assets is provided from the date assets are put in service over their estimated useful lives as follows:

Asset		Basis	Rate
Buildings		Straight line	20 - 31.5 years
Leasehold interests and improvements		Straight line	Over term of lease
Vehicles:
	Trailers and containers	Straight line	10 years
	Trucks	Straight line	7 years
Machinery and equipment		Straight line	5 - 10 years

	Tires purchased as part of a vehicle are capitalized as a cost of the vehicle. Replacement tires are expensed when placed in service.
(f)	Goodwill:
	Goodwill represents the excess of acquisition cost over the fair value of net assets of businesses acquired. Prior to January 1, 2002, goodwill was amortized over 40 years on a straight-line basis.
	Effective January 1, 2002, the Corporation adopted The Canadian Institute of Chartered Accountants (“CICA”) new accounting standard for goodwill and other intangible assets. The Corporation no longer amortizes goodwill but annually compares the fair value of its reporting units to the carrying value to determine if an impairment loss has occurred. Any transitional impairment would be recognized as an effect of a change in accounting policy and would be charged to opening retained earnings as of January 1, 2002.

F-8

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):

	As at June 30, 2002, the Corporation completed its initial goodwill impairment test and concluded that an impairment existed. As at September 30, 2002, the amount of the charge was quantified. Charges of $1.3 million and $3.5 million, respectively, were recorded in the freight brokerage and the truckload reporting units to adjust the carrying value of goodwill for each reporting unit to its implied fair value. Such amount has been reflected as a direct charge to retained earnings effective January 1, 2002 without restatement of prior period figures.
(g)	Foreign currency translation:
	The assets and liabilities denominated in a foreign currency of self-sustaining foreign operations are translated into Canadian dollars at exchange rates in effect at the balance sheet date. Revenue and expense items are translated at average exchange rates prevailing during the year. The resulting translation gains and losses are accumulated in a separate component of shareholders’ equity. Certain of the Corporation’s foreign currency-denominated debt acts as a hedge to the foreign currency exposure generated by the self-sustaining foreign operations. As such, the translation gain and losses related to this debt are also accumulated in the separate component of shareholders’ equity.
	In respect of other transactions denominated in foreign currencies, the monetary assets and liabilities of the Corporation which are denominated in foreign currencies are translated at the year-end exchange rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in income.

F-9

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):

(h)	Income taxes:
	The Corporation uses the asset and liability method of accounting for income taxes. Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the date of enactment or substantive enactment.
(i)	Stock-based compensation:
	The CICA has issued changes to accounting standards for stock-based compensation. Under this new standard, effective January 1, 2002, all stock-based compensation to non-employees and direct awards of stock to employees will be accounted for using the fair value method. The Corporation has not granted any such awards. The Corporation has a stock option plan for employees and directors. In accordance with the new standard, the Corporation has elected to use the settlement method for stock options granted to employees and no compensation expense has been recorded. Consideration paid by employees on the exercise of options is recorded as share capital. Note 6(d) provides supplemental fair value, pro forma net income and pro forma earnings per share disclosure as though the fair valued based accounting method had been used to account for stock options.

F-10

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1. Significant accounting policies (continued):

(j)

Use of estimates:

The preparation 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 revenue and expenses during the year. Actual results could differ from those estimates.

2. Acquisitions and divestitures:

The Freight Connection Inc.:

During the third quarter 2001, the Corporation acquired the remaining 18.9% of the voting shares of The Freight Connection Inc. (“TFCI”). There was no goodwill recorded on the transaction. Subsequent to the purchase of shares, the Corporation delisted and restructured TFCI as a private company.

Environmental Services Group:

On May 15, 2001, the Corporation determined that it planned to divest its Environmental Services Business. A provision for the loss on sale of discontinued business was recorded to account for the sale of capital assets and estimated realizable value of the remaining assets and liabilities. Effective January 2, 2002, the Corporation sold substantially all the capital assets of the business to Metro Waste Paper Recovery Inc. for cash proceeds of $2.7 million.

As a result of the plan of disposal, the results of operations for discontinued operations were reported as discontinued operations and previously reported financial statements were restated. Interest was allocated to discontinued operations based on the debt directly attributable to the business and for debt not directly attributable to the business based on its share of the Corporation’s net assets. Income taxes were allocated based on the effective tax rate of the discontinued operations.

F-11

VITRAN CORPORATION INC. Notes to Consolidated Financial Statements (continued) (Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

2. Acquisitions and divestitures (continued):

The summarized statement of operations for discontinued operations is as follows:

	2001			2000
Revenue	$	19,687		$	27,486
Loss from operations	$	(2,097	)	$	(110	)
Interest expense		(564	)		(480	)
Other income (loss)		(85	)		1
Loss before income taxes		(2,746	)		(589	)
Income tax recovery		(1,182	)		(175	)
Loss before provision for loss on sale of discontinued operations		(1,564	)		(414	)
Provision for loss on sale of discontinued operations		(4,050	)		—
Net loss from discontinued operations	$	(5,614	)	$	(414	)

The summarized balance sheet for discontinued operations is as follows:

	2001
Current assets	$	2,785
Capital assets		3,661
Goodwill		848
Future income taxes		1,282
		8,576
Current liabilities		2,273
Non-current liabilities		1
Net assets of discontinued operations before provision		6,302
Provision for exit costs and loss on discontinued business		(3,302	)
Net assets of discontinued operations	$	3,000

F-12

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

2. Acquisitions and divestitures (continued):

Cash provided by (used in) discontinued operations is as follows:

	2001			2000
Operating activities	$	(1,934	)	$	(459	)
Investing activities		(257	)		(2,689	)
Financing activities		(74	)		57
Cash used in discontinued operations	$	(2,265	)	$	(3,091	)

3. Capital assets:

	2002		2001
Land	$	8,292	$	8,318
Buildings		31,963		28,482
Leasehold interests and improvements		3,028		2,654
Vehicles		29,906		33,199
Machinery and equipment		21,515		21,542
		94,704		94,195
Less accumulated depreciation		46,134		43,174
	$	48,570	$	51,021

F-13

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

4. Long-term debt:

	2002		2001
(a) Guaranteed Senior Notes, due 2002	$	—	$	9,079
(b) Term bank credit facility		58,529		64,685
(c) Mortgages payable		647		939
		59,176		74,703
Less current portion		11,052		10,970
	$	48,124	$	63,733

(a)	The Guaranteed Senior Notes, due 2002 (the “Senior Notes”), bear interest at 9.04% per annum payable quarterly. During 2002, U.S. $5.7 million (2001 — U.S. $5.6 million) of the Senior Notes was repaid in accordance with the terms. Upon full repayment in 2002, the Senior Note holders released security on accounts receivable and the general security agreements of the Corporation and all of its Canadian subsidiaries.
(b)	The term bank credit facility is secured by accounts receivable and general security agreements of the Corporation and of all its subsidiaries.
	During 2002, $4.0 million of Canadian dollar denominated borrowings and U.S. $1.0 million of foreign currency-denominated borrowings were repaid. At December 31, 2002, U.S. $37.1 million (2001 — $38.1 million) of foreign currency-denominated borrowings bearing interest at LIBOR plus 1.75% were drawn under this facility. The agreement requires 17.5% of the total principal to be repaid in 2003, with escalating annual repayments, payable in quarterly instalments to January 31, 2006. The provisions of the term facility impose certain financial maintenance tests.

F-14

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

4. Long-term debt (continued):

(c)	The mortgages are secured by certain land and buildings, bear interest at rates ranging from 8.25% to 10.75% and are repayable over various terms. At December 31, 2002, mortgages include U.S. $410,000 of foreign currency-denominated borrowings (2001 — U.S. $589,000).
(d)	The Corporation has a revolving credit facility of up to $10.0 million, of which letters of credit of $3.5 million were outstanding at December 31, 2002.
	At December 31, 2002, the required future principal repayments on all long-term debt are as follows:

Year ending December 31:
2003	$	11,052
2004		19,609
2005		24,304
2006		3,934
2007		100
Thereafter		177
	$	59,176

F-15

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

5. Income taxes:

Income tax expense differs from the amount which would be obtained by applying statutory federal and provincial income tax rates to the respective year’s income from continuing operations before income taxes, minority interest and amortization of goodwill as follows:

		2002			2001			2000
Effective statutory federal and provincial income tax rate			38.62	%		41.75	%		43.90	%
Effective tax expense on income before income taxes and minority interest		$	5,566		$	2,435		$	7,106
Increase (decrease) results from:
	Capital losses on asset disposition		—			234			—
	Non-taxable foreign exchange gain		(384	)		(428	)		—
	Deductible foreign exchange loss		(174	)		(88	)		(432	)
	Income taxed at different rates in foreign jurisdictions		(2,158	)		(2,538	)		(2,400	)
	Effect of tax rate changes on loss carryforwards		—			396			—
	Other		710			227			397
Actual income tax expense		$	3,560		$	238		$	4,671

F-16

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

5. Income taxes (continued):

A summary of the principal components of future income tax assets and liabilities is as follows:

		2002		2001
Future income tax assets:
	Losses carried forward (net of valuation allowance)	$	2,227	$	1,741
	Allowance for doubtful accounts		895		1,053
	Insurance reserves		1,188		1,389
	Other		292		414
		$	4,602	$	4,597
Future income tax liabilities:
	Capital assets	$	1,542	$	2,653
	Goodwill amortization		2,216		2,689
	Other		608		395
		$	4,366	$	5,737

The Corporation has Canadian non-capital tax loss carryforwards of approximately $6.6 million (2001 — $5.3 million) expiring over the next seven years and for which the tax benefit has been recognized as set out above.

F-17

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock:

(a)	Authorized:
	The Corporation’s capital stock consists of an unlimited number of Class A voting shares, Class B non-voting shares and first preference shares, issuable in series.
(b)	Issued:

	2002						2001
Class A voting shares	Number			Amount			Number			Amount
Balance, beginning of year		9,847,278		$	38,794			9,859,778		$	38,837
Shares repurchased for cancellation		(298,100	)		(1,190	)		(12,500	)		(43	)
Shares issued upon exercise of employees stock options		10,640			51			—			—
Balance, end of year		9,559,818		$	37,655			9,847,278		$	38,794

(c)	Normal course issuer bid:
	The Corporation repurchased for cancellation 298,100 Class A voting shares during 2002 (2001 — 12,500) under a normal course issuer bid, at a total cost of $1,924,000 (2001 — $43,000). The cost of the repurchase in 2002 was $734,000 (2001 — nil) in excess of the book value of the shares.

F-18

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock (continued):

(d)	Stock options:
	The Corporation provides a stock option plan to key employees, officers and directors to encourage executives to acquire a meaningful equity ownership interest in the Corporation over a period of time and, as a result, reinforce executives’ attention on the long-term interest of the Corporation and its shareholders. Under the plan, options to purchase Class A voting shares of the Corporation may be granted to key employees, officers and directors of the Corporation and its affiliates by the Board of Directors or by the Corporation’s Compensation Committee. There are 1,240,300 options authorized under the plan. The term of each option is 10 years and the vesting period is generally five years. The exercise price for options is the trading price of the Class A voting shares of the Corporation on The Toronto Stock Exchange on the day of the grant.
	The following tables outline the impact and assumptions used if the compensation cost for the Corporation’s stock options was determined under the fair value-based method. The Corporation has applied the pro forma disclosure provisions of the new standard to awards granted on or after January 1, 2002. The pro forma effect of awards granted prior to January 1, 2002 has not been included.

Net income, as reported	$	10,854
Pro forma net income		10,802
Pro forma income per share — basic		1.11
Pro forma income per share — diluted		1.10

F-19

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock (continued):

The fair value of each option granted was estimated on the date of grant using the Black-Scholes fair value option-pricing model with the following assumptions:

Risk-free interest rate		5.3	%
Dividend yield		0.0	%
Volatility factor of the future expected market price of the Corporation’s common shares		33.8	%
Expected life of the options	10 years

Details of stock options are as follows:

	2002					2001
				Weighted					Weighted
				average					average
				exercise					exercise
	Shares			price		Shares			price
Outstanding, beginning of year		1,049,800		$	6.08		1,109,800		$	6.26
Granted		175,000			3.50		100,000			4.28
Forfeited		(25,000	)		6.55		(160,000	)		6.33
Exercised		(10,640	)		4.82		—			—
Outstanding, end of year		1,189,160			5.70		1,049,800			6.08
Exercisable, end of year		774,460		$	6.06		698,960		$	6.01

F-20

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

6. Capital stock (continued):

At December 31, 2002, the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life are as follows:

	Options outstanding						Options exercisable
			Weighted
			average
			remaining		Weighted				Weighted
			contractual		average				average
Range of exercise	Number		life		exercise		Number		exercise
prices	outstanding		(years)		price		exercisable		price
$3.50 - $6.20		725,160		5.47	$	4.69		447,160	$	5.15
$7.00 - $8.75		464,000		5.87		7.28		327,300		7.29
$3.50 - $8.75		1,189,160		5.63		5.70		774,460		6.06

Compensation expense related to stock options was nil for each of the years ended December 31, 2002, 2001 and 2000.

7. Cumulative translation adjustment:

The cumulative translation adjustment represents the unrealized foreign currency translation gain on the Corporation’s net investment in self-sustaining foreign operations in the United States arising from changes in the foreign exchange rate between the Canadian dollar and the United States dollar, net of the translation gain or loss on the $37.1 million (2001 — $45.8 million) United States dollar-denominated debt that is designated as a hedge to the foreign currency exposure generated by the self-sustaining foreign operations.

F-21

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information:

The Corporation’s business operations are grouped into three operating segments: less-than-truckload, logistics and truckload, which provide transportation services in Canada and the United States.

Segmented information is presented below for each of the years ended December 31, 2002, 2001 and 2000:

	Less-than-								Corporate			Consolidated
Year ended December 31, 2002	truckload		Logistics		Truckload		Total		office and other			totals
Revenue	$	379,309	$	43,376	$	53,331	$	476,016	$	—		$	476,016
Operating, selling, general and administrative expenses		351,440		41,542		51,423		444,405		3,260			447,665
Income (loss) from continuing operations before depreciation		27,869		1,834		1,908		31,611		(3,260	)		28,351
Depreciation		7,450		338		522		8,310		17			8,327
Income (loss) from continuing operations before the undernoted	$	20,419	$	1,496	$	1,386	$	23,301	$	(3,277	)		20,024
Interest expense, net													(5,157	)
Other items, net													(453	)
Income taxes													(3,560	)
Income from continuing operations before amortization of goodwill													10,854
Amortization of goodwill													—
Income from continuing operations													10,854
Loss from discontinued operations													—
Net income												$	10,854
Capital expenditures	$	6,446	$	379	$	216	$	7,041	$	117		$	7,158
Goodwill	$	60,026	$	1,664	$	7,517	$	69,208	$	—		$	69,208
Total assets from continuing operations	$	162,564	$	11,553	$	17,127	$	191,244	$	282		$	191,526
Net assets of discontinued operations													—
Total assets												$	191,526

F-22

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information (continued):

	Less-than-								Corporate			Consolidated
Year ended December 31, 2001	truckload		Logistics		Truckload		Total		office and other			totals
Revenue	$	375,551	$	56,688	$	49,434	$	481,673	$	—		$	481,673
Operating, selling, general and administrative expenses		353,094		56,215		47,276		456,585		2,234			458,819
Income (loss) from continuing operations before depreciation		22,457		473		2,158		25,088		(2,234	)		22,854
Depreciation		8,755		371		641		9,767		85			9,852
Income (loss) from continuing operations before the undernoted	$	13,702	$	102	$	1,517	$	15,321	$	(2,319	)		13,002
Interest expense, net													(5,941	)
Other items, net													(1,028	)
Income taxes													(238	)
Income from continuing operations before amortization of goodwill													5,795
Amortization of goodwill													(2,094	)
Income from continuing operations													3,701
Loss from discontinued operations													(5,614	)
Loss for the year												$	(1,913	)
Capital expenditures	$	4,725	$	609	$	192	$	5,526	$	87		$	5,613
Goodwill	$	60,362	$	3,164	$	11,135	$	74,661	$	—		$	74,661
Total assets (liabilities) of continuing operations	$	174,202	$	12,902	$	21,161	$	208,265	$	(1,901	)	$	206,364
Net assets of discontinued operations													3,000
Total assets												$	209,364

F-23

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information (continued):

	Less-than-								Corporate			Consolidated
Year ended December 31, 2000	truckload		Logistics		Truckload		Total		office and other			totals
Revenue	$	376,058	$	57,280	$	47,650	$	480,988	$	—		$	480,988
Operating, selling, general and administrative expenses		342,583		56,205		44,554		443,342		2,796			446,138
Income (loss) from continuing operations before depreciation		33,475		1,075		3,096		37,646		(2,796	)		34,850
Depreciation		9,159		348		688		10,195		81			10,276
Income (loss) from continuing operations before the undernoted	$	24,316	$	727	$	2,408	$	27,451	$	(2,877	)		24,574
Interest expense, net													(7,230	)
Other items, net													(953	)
Income taxes													(4,671	)
Income from continuing operations before amortization of goodwill													11,720
Amortization of goodwill													(1,802	)
Income from continuing operations													9,918
Loss from discontinued operations													(414	)
Net income												$	9,504
Capital expenditures	$	7,604	$	417	$	117	$	8,138	$	43		$	8,181

F-24

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

8. Segmented information (continued):

Geographic information for revenue and total assets, is as follows:

		2002		2001		2000
Revenue:
	Canada	$	163,324	$	157,098	$	153,682
	United States		312,692		324,575		327,306
		$	476,016	$	481,673	$	480,988

		2002		2001
Total assets:
	Canada	$	50,834	$	60,746
	United States		140,692		148,618
		$	191,526	$	209,364

9. Derivative financial instruments:

The Corporation has entered into an interest rate swap contract to fix funding costs and manage interest rate exposures.

	Notional		Fixed interest
	amount		rate			Maturity
Interest rate swap		U.S. $21,000		8.95	%		January 26, 2003

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts on a net basis, which was minimal on December 31, 2002.

The fair value of the derivative instrument represents an approximation of amounts the Corporation would have paid to or received from counterparties to unwind its positions prior to maturity. At December 31, 2002, the Corporation’s fair value obligation for the interest rate swap is $0.3 million. The Corporation has no plans to unwind this position prior to maturity.

F-25

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

10. Financial instruments:

The fair values of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximate the carrying values because of the short-term nature of these instruments. The fair value of the Corporation’s long-term debt, determined based on the future cash flows associated with each debt instrument discounted using an estimate of the Corporation’s current borrowing rate for similar debt instruments of comparable maturity, is approximately equal to the carrying value at December 31, 2002.

11. Lease commitments:

At December 31, 2002, future minimum rental payments relating to operating leases for premises and equipment are as follows:

Year ending December 31:
2003	$	24,968
2004		20,567
2005		15,444
2006		10,611
2007		7,244
Thereafter		11,839
	$	90,673

12. Contingent liabilities:

There exist certain legal actions against the Corporation, none of which is expected to have a material adverse effect on the consolidated financial position or results of operations of the Corporation.

13. Comparative figures:

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted in the current year.

F-26

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences:

(a)	Consolidated statements of changes in shareholders’ equity:
	United States GAAP requires the inclusion of a consolidated statement of changes in shareholders’ equity for each statement of income year. Shareholders’ equity under United States GAAP is as follows:

							Other
	Capital			Retained			comprehensive
	stock			earnings			income			Total
Balance, December 31, 1999	$	39,271		$	32,873		$	(1,486	)	$	70,658
Net income		—			9,504			—			9,504
Dividends		—			(694	)		—			(694	)
Shares repurchased for cancellation		(473	)		(220	)		—			(693	)
Shares issued from treasury		39			—			—			39
Unrealized foreign currency gain		—			—			1,193			1,193
Change in obligation for derivative instruments		—			—			(443	)		(443	)
Balance, December 31, 2000		38,837			41,463			(736	)		79,564
Loss for the year		—			(2,555	)		—			(2,555	)
Dividends		—			(346	)		—			(346	)
Shares repurchased for cancellation		(43	)		—			—			(43	)
Unrealized foreign currency gain		—			—			1,673			1,673
Foreign exchange adjustment		—			—			642			642
Change in obligation for derivative instruments		—			—			(922	)		(922	)
Balance, December 31, 2001		38,794			38,562			657			78,013
Net income		—			5,362			—			5,362
Shares repurchased for cancellation		(1,190	)		(734	)		—			(1,924	)
Unrealized foreign currency loss		—			—			(1,417	)		(1,417	)
Foreign exchange adjustment		—			—			696			696
Change in obligation for derivative instruments		—			—			1,183			1,183
Shares issued upon exercise of options		51			—			—			51
Balance, December 31, 2002	$	37,655		$	43,190		$	1,119		$	81,964

F-27

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):

(b) Consolidated statements of cash flows:

(i) Canadian GAAP permits the disclosure of a subtotal of the amount of cash provided by operations before changes in non-cash working capital items in the consolidated statements of cash flows. United States GAAP does not permit this subtotal to be included.

(c)	Statement of net income (loss) and comprehensive income (loss):
	The following table reconciles net income for the year as reported in the consolidated statement of operations to what would have been reported had the statements been prepared in accordance with United States GAAP:
	United States GAAP requires the disclosures of a Statement of Comprehensive Income. Comprehensive income generally encompasses all changes in shareholders’ equity, except those arising from transactions with shareholders.

		2002			2001			2000
Net income (loss) based on Canadian GAAP		$	10,854		$	(1,913	)	$	9,504
Foreign exchange adjustment (i)			(696	)		(642	)		—
Net income (loss) before effect of change in accounting principle			10,158			(2,555	)		9,504
Cumulative effect of change in method of accounting for goodwill (iii)			(4,796	)		—			—
Net income (loss) based on United States GAAP			5,362			(2,555	)		9,504
Other comprehensive income:
	Change in cumulative translation adjustment		(1,417	)		1,673			1,193
	Foreign exchange adjustment (i)		696			642			—
	Obligation for derivative instruments (ii)		1,183			(922	)		(443	)
Comprehensive income (loss) based on United States GAAP		$	5,824		$	(1,162	)	$	10,254

F-28

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):

		2002			2001			2000
Earnings (loss) per share under United States GAAP:
	Basic — continuing operations	$	1.05		$	0.31		$	1.00
	Basic — discontinued operations		—			(0.57	)		(0.04	)
	Basic — net before cumulative effect of accounting change		1.05			(0.26	)		0.96
	Basic — cumulative effect of change in method of accounting for goodwill		(0.50	)		—			—
	Basic — net income (loss)		0.55			(0.26	)		0.96
	Diluted — continuing operations		1.04			0.31			1.00
	Diluted — discontinued operations		—			(0.57	)		(0.04	)
	Diluted — net before cumulative effect of accounting change		1.04			(0.26	)		0.96
	Diluted — cumulative effect of change in method of accounting for goodwill		(0.49	)		—			—
	Diluted — net income (loss)		0.55			(0.26	)		0.96
Weighted average number of shares:
	Weighted average number of shares outstanding		9,691,041			9,859,296			9,894,727
Potential exercise of stock options			93,025			—			—
Diluted shares			9,784,066			9,859,296			9,894,727

(i) A foreign exchange gain amounting to $1 million (2001 — $1 million; 2000 — nil) was included in selling, general and administration expenses in 2002. This gain on repatriation of capital from a subsidiary arose from the difference between the exchange rate in effect on the date the capital was returned to Canada compared to the historical rate in effect when the capital was invested. Of this gain, $696 was recognized upon the transfer into income of the related cumulative translation adjustment. Under United States GAAP there is no reduction of the cumulative translation adjustment account, nor recognition of associated income resulting from such capital restructurings. This transaction was not subject to income tax.

F-29

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):

(ii)

The change in the fair value of the Corporation’s obligation for its interest rate swap (note 9), which is designated as a cash flow hedge, has been included net of the income tax effect of $744 (2001 - $661; 2000 — $346).

(iii)

A non-cash charge of $4.8 million, to adjust the carrying value of goodwill to its implied value was included in opening retained earnings without the restatement of prior period figures. This charge was the result of the Corporation’s adoption of the new Canadian accounting standard for goodwill and other intangibles. Under US GAAP, FAS 142, the non-cash charge, is not recorded to opening retained earnings but as an income statement expense.

(d)	Income from operations before depreciation and amortization:
	United States GAAP requires that depreciation and amortization be included in the determination of income from operations and does not permit the disclosure of a subtotal of the amount of income from continuing operations before this item and goodwill amortization to be disclosed separately net of tax. Canadian GAAP permits the disclosure of a subtotal of the amount of income from operations before this item.
(e)	Stock-based compensation:
	The Corporation accounts for its stock-based compensation plans under APB Opinion No. 25 and related interpretations, under which no compensation costs have been recognized in the financial statements for share options granted to employees and directors.

F-30

VITRAN CORPORATION INC.
Notes to Consolidated Financial Statements (continued)
(Tabular amounts in thousands of Canadian dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

14. Canadian and United States accounting policy differences (continued):

(f)	Other disclosures:
	United States GAAP requires certain additional disclosures in the consolidated financial statements, as follows:

(i)	The total allowance for doubtful accounts at December 31, 2002 was $2.9 million (2001 — $3.7 million).
(ii)	Total rental expense under operating leases was $26.5 million for the year ended December 31, 2002 (2001 — $25.1 million; 2000 — $19.2 million).
(iii)	At December 31, 2002, the Corporation had an aggregate of $6.5 million in unused bank credit facilities.
(iv)	At December 31, 2002, the Corporation has $10.2 million of foreign exchange losses net in the cumulative translation adjustment, offsetting the foreign exchange gains from its net investment in self-sustaining foreign operation (note 7).

(g) New United States accounting pronouncements:

(i)

In August 2001, SFAS No. 143, “Accounting for Asset Retirement Obligations” was approved and requires that the fair value of an asset’s retirement obligation be recorded as a liability, at fair value, in the period in which the Corporation incurs the obligation. SFAS No. 143 is effective for the Corporation’s fiscal year commencing January 1, 2003. The Corporation expects the adoption of this standard will have no material impact on its financial position, results of operations or cash flows.

(ii)

In November of 2002, FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45) which requires certain disclosures of obligations under guarantees. The Corporation does not have guarantees that require measurement and disclosure under this interpretation.

F-31 EX-2.9.3 3 t10128exv2w9w3.htm EXHIBIT 2.9.3

AMENDED AND RESTATED CREDIT AGREEMENT

between

THE BANK OF NOVA SCOTIA

as Agent

and

THE BANK OF NOVA SCOTIA, LAURENTIAN BANK OF CANADA
and other financial institutions

as Lenders

and

VITRAN CORPORATION INC. and TRANS WESTERN EXPRESS INC.

as Borrowers

January 31, 2002

TABLE OF CONTENTS

ARTICLE 1
	1.01 Defined Terms	2
	1.02 Other Usages	17
	1.03 Plural and Singular	17
	1.04 Headings	17
	1.05 Currency	17
	1.06 Applicable Law	17
	1.07 Time of the Essence	17
	1.08 Non-Banking Days	17
	1.09 Consents and Approvals	18
	1.10 Amount of Credit	18
	1.11 Schedules	18
	1.12 Extension of Credit	18
	1.13 Joint and Several Obligations	18
ARTICLE 2
	2.01 Establishment of Credit Facilities	18
	2.02 Credit Restrictions	19
	2.03 Lenders’ Commitments	19
	2.04 Reduction of Credit Facilities	19
	2.05 Termination of Credit Facilities	20
ARTICLE 3
	3.01 Types of Credit Availments	20
	3.02 Funding of Loans	21
	3.03 Failure of Lender to Fund Loan	21
	3.04 Funding of Bankers’ Acceptances	22
	3.05 BA Rate Loans	24
	3.06 Inability to Fund U.S. Dollar Advances in Canada	24
	3.07 Timing of Credit Availments	26
	3.08 Time and Place of Payments	26
	3.09 Remittance of Payments due to Lenders	26
	3.10 Evidence of Indebtedness	26
	3.11 Notice Periods	27
	3.12 Overdraft Loans	27
	3.13 General Provisions Relating to All Letters	29
	3.14 Security	31
ARTICLE 4
	4.01 Drawdown Notice	31
ARTICLE 5
	5.01 Bankers’ Acceptances	32
	5.02 LIBOR Loans	32

-2-

	5.03 Rollover Notice	32
ARTICLE 6
	6.01 Converting Loan to Other Type of Loan	33
	6.02 Converting Loan to Bankers’ Acceptances	33
	6.03 Converting Bankers’ Acceptances to Loan	33
	6.04 Conversion Notice	34
	6.05 Absence of Notice	34
	6.06 Conversion After Default	34
ARTICLE 7
	7.01 Interest Rates	35
	7.02 Calculation and Payment of Interest	35
	7.03 General Interest Rules	36
	7.04 Selection of Interest Periods	36
	7.05 Acceptance Fees	37
	7.06 Standby Fees	37
	7.07 Waiver	37
	7.08 Maximum Rate Permitted by Law	37
	7.09 Letter Fees	37
ARTICLE 8
	8.01 Conditions of Credit	38
	8.02 Change of Circumstances	38
	8.03 Assignment as a Result of Change of Circumstances	39
	8.04 Indemnity Relating to Credits	40
	8.05 Indemnity for Transactional and Environmental Liability	40
	8.06 Payments Free and Clear of Taxes	41
ARTICLE 9
	9.01 Repayment under Credit Facility 1	42
	9.02 Repayment under Credit Facility 2	43
	9.03 Extension of Credit Facility 2 Maturity Date	43
	9.04 Voluntary Prepayments	44
	9.05 Mandatory Prepayments under the Credit Facilities	44
	9.06 Mandatory Prepayments under Credit Facility 1	44
	9.08 Repayments of Credit Excess	45
	9.09 Reimbursement or Conversion on Presentation of Letters	45
	9.09 Letters Subject to an Order	46
ARTICLE 10
	10.01 Representations and Warranties	46
	10.02 Survival of Representations and Warranties	50
ARTICLE 11
	11.01 Affirmative Covenants	50
	11.02 Restrictive Covenants	55
ARTICLE 12

-3-

	12.01 Conditions Precedent to All Credit	56
	12.02 Conditions Precedent to Initial Drawdown	57
	12.03 Waiver	58
ARTICLE 13
	13.01 Events of Default	58
	13.02 Bankers’ Acceptances	60
	13.03 Letters	60
	13.04 Refund of Overpayments	61
	13.05 Remedies Cumulative	61
	13.06 Set-Off	61
ARTICLE 14
	14.01 Appointment and Authorization of Agent	62
	14.02 Interest Holders	62
	14.03 Consultation with Counsel	62
	14.04 Documents	62
	14.05 Agent as Lender	62
	14.06 Responsibility of Agent	62
	14.07 Action by Agent	63
	14.08 Notice of Events of Default	63
	14.09 Responsibility Disclaimed	63
	14.10 Indemnification	64
	14.11 Credit Decision	64
	14.12 Successor Agent	64
	14.13 Delegation by Agent	65
	14.14 Waivers and Amendments	65
	14.15 Determination by Agent Conclusive and Binding	66
	14.16 Redistribution of Payment	66
	14.17 Distribution of Notices	67
	14.18 Non-Resident Status of Lender	67
ARTICLE 15
	15.01 Waivers	67
	15.02 Notices	67
	15.03 Severability	67
	15.04 Counterparts	68
	15.05 Successors and Assigns	68
	15.06 Assignment	68
	15.07 Entire Agreement	69
	15.08 Further Assurances	69
	15.09 Judgment Currency	70

-4-

Schedule A — Pricing Grid
Schedule B — Individual Commitments
Schedule C — Compliance Certificate
Schedule D — Form of Assignment
Schedule E — Form of Drawdown/Rollover/Conversion Notice
Schedule F — Form of Power of Attorney
Schedule G — Litigation
Schedule H — Permitted Liens
Schedule I — Freehold Parcels
Schedule J — Leasehold Parcels
Schedule K — Issued Capital

-5-

AMENDED AND RESTATED CREDIT AGREEMENT

     THIS AGREEMENT made as of the 31st day of January, 2002.

B E T W E E N:

THE BANK OF NOVA SCOTIA, a Canadian chartered bank

(herein, in its capacity as agent of the Lenders, called the “Agent”)

- and -

THE BANK OF NOVA SCOTIA, LAURENTIAN BANK OF CANADA and one or more financial institutions to whom any of the foregoing or their assigns may from time to time assign an undivided interest in the Loan Documents (as defined herein) and who agree to be bound by the terms hereof as a Lender (as defined herein)

(herein, in their capacities as lenders to the Borrowers under the Credit Facilities, collectively called the “Lenders” and
individually called a “Lender”)

- and -

VITRAN CORPORATION INC., a corporation incorporated under the laws of the Province of Ontario

(herein called “Vitran”)

- and -

TRANS WESTERN EXPRESS INC., a corporation incorporated under the laws of Canada

(herein called “TWE”).

     WHEREAS the Lenders established in favour of Vitran and TWE (collectively, the “Borrowers”) a certain revolving/non-revolving term credit facility and a certain revolving term credit facility pursuant to a credit agreement made as of the 13th day of October, 1999 between the Agent, the Lenders and the Borrowers (as amended, the “Original Credit Agreement”);

     AND WHEREAS the parties hereto wish to amend and restate the Original Credit Agreement upon the terms and conditions contained herein;

     NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree to amend and restate the Original Credit Agreement as follows:

ARTICLE 1
INTERPRETATION

1.01   Defined Terms. The following defined terms shall for all purposes of this agreement, or any amendment, substitute, supplement, replacement or addition hereto, have the following respective meanings unless the context otherwise specifies or requires or unless otherwise defined herein:

“Accounts” of a particular U.S. Guarantor means all accounts, contract rights, instruments, documents, chattel papers, certified and uncertified, certificates and general intangibles, whether secured or unsecured, now existing or hereafter created or owned by such U.S. Guarantor, together with any and all proceeds of any of the foregoing.

“affiliate” when used with respect to a Person, means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person. The term “control” (including the correlative term “controlled”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting stock, by contract and otherwise.

“Alternate Base Rate Canada” means, for any particular day, the variable rate of interest per annum, calculated on the basis of a 360-day year, which is equal to the greater of (a) the Base Rate Canada for such day and (b) the aggregate of (i) the Federal Funds Effective Rate for such day and (ii) 1/2 of 1% per annum.

“Applicable Law” means all public laws, statutes, ordinances, decrees, judgments, codes, standards, acts, orders, by-laws, rules, regulations, Official Body consents, permits, binding policies and guidelines, and requirements of all Official Bodies, which now or hereafter may be lawfully applicable to and enforceable against any Company or its property or any part thereof.

“Applicable Margin” means the applicable margin set forth in Schedule A hereto. Changes in Applicable Margin are effective from the date on which Vitran is required to deliver the compliance certificate certifying the Debt to EBITDA Ratio for the most recently completed Fiscal Quarter.

“Available Credit” means, at any particular time, the amount, if any, by which the amount of Credit Facility 2 at such time exceeds the aggregate amount of credit outstanding under Credit Facility 2 at such time.

-2-

“BA Discounted Proceeds” means, in respect of any Bankers’ Acceptances to be accepted by a Lender on any day, an amount (rounded to the nearest whole cent and with one-half of one cent being rounded up) calculated on such day by multiplying:

(i)	the aggregate face amount of such Bankers’ Acceptances; by
(ii)	the price, where the price is determined by dividing one by the sum of one plus the product of:

(a)	the BA Rate which is applicable to such Bankers’ Acceptance (expressed as a decimal); and
(b)	a fraction, the numerator of which is the number of days remaining in the term of such Bankers’ Acceptances and the denominator of which is 365;

with the price as so determined being rounded up or down to the fifth decimal place and .000005 being rounded up.

“BA Proceeds” means, with respect to a particular Bankers’ Acceptance, the BA Discounted Proceeds with respect thereto less the amount of the acceptance fees in respect of such Bankers’ Acceptance calculated in accordance with Section 7.05.

“BA Rate” means, with respect to an issue of Bankers’ Acceptances with the same maturity date to be accepted by a Lender hereunder, the discount rate per annum, calculated on the basis of a year of 365 days, (i) equal to, as determined by the Agent, the arithmetic average (rounded upwards to the nearest multiple of 0.01%) of the discount rates of the Reference Lenders that appear on the Reuters Screen CDOR Page for the Reference Lenders at or about 10:00 a.m. (Toronto time) on the date of issue and acceptance of such Bankers’ Acceptances, for bankers’ acceptances having a comparable face value and an identical maturity date to the face value and maturity date of such issue of Bankers’ Acceptances or (ii) if such rate does not appear on such Page for any Reference Lender, equal to the rate per annum for Canadian dollar bankers’ acceptances having such term which is quoted by such Reference Lender at such time.

“BA Rate Loans” shall have the meaning ascribed thereto in Section 3.05.

“Bankers’ Acceptance” means a depository bill or bill of exchange (a) drawn by the Borrowers and accepted by a Lender, (b) denominated in Canadian dollars, (c) having a term of 30 to 180 days, (d) issued and payable only in Canada and (e) having a face amount of at least $200,000 and otherwise in an integral multiple of $1,000.

“Banking Day” means, when used in respect of Prime Rate Loans, Bankers’ Acceptances and Letters, any day other than a Saturday or a Sunday on which banks generally are open for normal banking business in Toronto, Ontario and, when used in respect of LIBOR Loans, means

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any day other than a Saturday or a Sunday on which banks generally are open for normal banking business in Toronto, Ontario, New York, New York, and London, England and, on which transactions may be undertaken in the London interbank market and when used in respect of all other Loans, means any day other than a Saturday or Sunday on which banks generally are open for normal banking business in Toronto, Ontario and New York, New York.

“Base Rate Canada” means the variable rate of interest per annum, calculated on the basis of a 360-day year for the actual number of days elapsed, equal to the rate of interest determined by the Agent from time to time as the base rate of the Agent for United States dollar loans made by the Agent in Canada from time to time, being a variable per annum reference rate of interest adjusted automatically upon change by the Agent.

“Base Rate Canada Loan” means monies lent by the Lenders to the Borrowers hereunder in United States dollars and upon which interest accrues at a rate referrable to the Alternate Base Rate Canada.

“BIS Guidelines” means Guideline No. A, dated October 1995, entitled “Subject: Capital Adequacy Requirements” issued by the Office of the Superintendent of Financial Institutions Canada (which encompasses the guidelines contained in the report dated July 1988 and entitled “International Convergence of Capital Measurement and Capital Standards” released by the Basle Committee on Banking Regulations and Supervisory Practices of the Bank for International Settlements), as amended, modified, reissued or replaced from time to time.

“Borrowers” means Vitran and TWE.

“Branch of Account” means the Toronto Main branch of The Bank of Nova Scotia located at Scotia Plaza, 44 King Street West, Toronto, Ontario or such other branch or office of the Agent located in Canada as the Borrowers and the Agent may agree upon.

“Canadian Dollar Equivalent” means the Exchange Equivalent in Canadian dollars of any amount of United States dollars.

“Canadian Guarantors” means those Guarantors whose jurisdiction of incorporation is Canada or one of the provinces or territories thereof.

“Capital Expenditures” means, for any particular period, the amount which would, in accordance with generally accepted accounting principles and on a consolidated basis, be considered to be capital expenses of Vitran for such period (specifically including those financed through capital leases but specifically excluding capital expenses of up to $10,000,000 incurred to acquire the land for and to construct the Toronto Intermodal Facility and which are funded by Debt other than indebtedness hereunder), net of any proceeds of disposition of capital assets during such period up to a maximum of $2,000,000 per annum.

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“Cash Collateral Account” means a special purpose deposit account established by the Borrowers with the Agent to deal with prepayments of outstanding Letters hereunder in the manner set forth herein.

“Companies” means the Borrowers and the Subsidiaries.

“Conversion Notice” shall have the meaning ascribed thereto in Section 6.04.

“Credit Excess” means, as at a particular date and with respect to a particular Credit Facility, the amount, if any, by which the aggregate amount of credit outstanding under such Credit Facility as at the close of business on such date exceeds the amount of such Credit Facility (as such amount may be reduced from time to time pursuant to the terms hereof) as at the close of business on such date.

“Credit Facilities” means Credit Facility 1 and Credit Facility 2 and “Credit Facility” means either of the Credit Facilities.

“Credit Facility 1” means the non-revolving term credit facility established by the Lenders in favour of the Borrowers pursuant to Section 2.01(a).

“Credit Facility 1 Maturity Date” means January 30, 2006.

“Credit Facility 2” means the revolving term credit facility established by the Lenders in favour of the Borrowers pursuant to Section 2.01(b).

“Credit Facility 2 Maturity Date” means January 30, 2003, as such date may be extended pursuant to Section 9.03.

“Current Assets” and “Current Liabilities” mean the consolidated current assets and consolidated current liabilities, respectively, of Vitran determined in accordance with generally accepted accounting principles as the same would be set forth or reflected in a consolidated statement of financial position of Vitran.

“Debt” means, at any particular time, with respect to any Company, the aggregate of the amounts which would, in accordance with generally accepted accounting principles, be classified on the consolidated balance sheet of such Company at such time as indebtedness for borrowed money of such Company (including all obligations of such Company in respect of bankers’ acceptances issued or created for the account of such Company and then outstanding and in respect of letters of credit and letters of guarantee issued for the account of such Company and then outstanding) and as capital leases of such Company.

“Debt to EBITDA Ratio” means, for a particular Fiscal Quarter, the ratio of (i) Debt of Vitran as at the last day of such Fiscal Quarter to (ii) Rolling EBITDA for such Fiscal Quarter.

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

“Designated Account” means, with respect to transactions in a particular currency under the Credit Facilities, an account of the Borrowers maintained by the Agent at the Branch of Account for the purposes of transactions in such currency under the Credit Facilities.

“Direct Credit Substitutes” means Letters which are determined by the Issuing Lender to be “direct credit substitutes” within the meaning of the BIS Guidelines, including, without limitation, standby letters of credit serving as financial guarantees for, or supporting, loans and securities.

“Draft” means any draft, bill of exchange, receipt, acceptance, demand or other request for payment drawn or issued under or in respect of a Letter.

“Drawdown Notice” shall have the meaning ascribed thereto in Section 4.01.

“EBITDA” means, for any particular period, Net Income for such period plus, to the extent deducted in determining Net Income, the aggregate of:

(a)	Interest Expenses for such period;
(b)	consolidated income tax expenses of Vitran for such period; and
(c)	consolidated depletion, depreciation and amortization expenses and other non-cash expenses of Vitran for such period.

“EBITDA to Capital Expenditures and Interest Expenses Ratio” means, for a particular Fiscal Quarter, the ratio of (i) Rolling EBITDA for such Fiscal Quarter to (ii) the aggregate of Rolling Interest Expenses and Rolling Capital Expenditures for such Fiscal Quarter.

“Environmental Laws” means all applicable federal, state, provincial or local statutes, laws, ordinances, codes, rules, regulations, consent decrees and administrative orders having the force of law and relating to public health or the protection of the environment.

“Equity” means, at any particular time, the amount which would, in accordance with generally accepted accounting principles, be classified upon the consolidated balance sheet of Vitran at such time as shareholders’ equity of Vitran.

“Event of Default” means any one of the events set forth in Section 13.01.

“Excess Cash Flow” means, for any particular Fiscal Year, EBITDA for such Fiscal Year less the aggregate of the following amounts for such Fiscal Year:

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(a)	repayments of outstanding credit under Sections 9.01 and 9.02, prepayments of outstanding credit under Credit Facility 1 pursuant to Section 9.04 and 9.05 and prepayments of outstanding credit under Credit Facility 2 pursuant to Sections 9.04 and 9.05 to the extent of the amount of any permanent reduction in the amount of Credit Facility 2 coincident with such prepayment;
(b)	Interest Expenses;
(c)	Capital Expenditures;
(d)	consolidated cash income tax expenses of Vitran, determined in accordance with generally accepted accounting principles; and
(e)	increases in Working Capital (if any);

plus reductions in Working Capital (if any).

“Exchange Equivalent” means, as of any particular date, with reference to any amount (the “original amount”) expressed in either Canadian or United States dollars (the “original currency”), the amount expressed in the other currency which would be required to buy the original amount of the original currency using the noon spot rate of exchange for Canadian interbank transactions applied in converting the other currency into the original currency published by the Agent for such date.

“Federal Funds Effective Rate” means, for any particular day, the variable rate of interest per annum, calculated on the basis of a 360-day year and for the actual number of days elapsed, equal to the weighted average of the rates on overnight federal funds transactions in United States dollars with members of the Federal Reserve System arranged by United States federal funds brokers as published for such day (or, if such day is not a Banking Day, for the next preceding Banking Day) by the Federal Reserve Bank of New York or, for any Banking Day on which such rate is not so published by the Federal Reserve Bank of New York, the average of the quotations for such day for such transactions received by the Agent from three United States federal funds brokers of recognized standing selected by the Agent.

“Fee Letter” means the fee letter of even date herewith between the Lenders and the Borrowers and pursuant to which the Borrowers agree to pay certain fees to the Agent and the Lenders.

“Financial Statements” means the audited financial statements of Vitran for the fiscal period ended on December 31, 2000.

“Fiscal Quarter” means any of the three-month periods ending on the last day of March, June, September or December in each year.

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“Fiscal Year” means any of the twelve-month periods ending on the last day of December in each year.

“generally accepted accounting principles” means generally accepted accounting principles in effect in Canada from time to time.

“Guarantee” means the guaranty agreement entered into as of October 13, 1999 by the Guarantors in favour of the Agent and the Lenders, as the same may be amended, modified, supplemented or replaced from time to time, and pursuant to which the Guarantors jointly and severally guaranteed the payment and performance of the indebtedness, liabilities and obligations of Vitran hereunder.

“Guarantors” means, collectively, G&W Freightways Limited, D.M.R. Transport (1975) Ltd., Freight Connection Canada Inc., Expéditeur T.W. Ltée, 1124708 Ontario Inc., 1124709 Ontario Inc., Can-Am Logistics Inc., 1098304 Ontario Inc., Doney Holdings Inc., Rout-Way Express Lines Limited, Southern Express Lines of Ontario Limited, Southwestern Freight Service Corp., ETL Recycling Services Inc. (formerly called ETL Environmental Technology Ltd.), ETL Management Services Inc., ETL Transportation Services Inc., ETL Depot Services Inc., ETL Processing Services Inc. (formerly called ETL Recycling Services Inc.), Vitran Environmental Systems Inc., Vitran Corporation, T.W. Express, Inc., Borcross LTL Freight Services Corporation, Vitran Express, Inc., Pioneer Express, Inc., Frontier Transport Corporation, Vitran Logistics, Inc. and any Subsidiaries who become Guarantors pursuant to Section 11.01(o), and "Guarantor” means any one of the foregoing.

“Hazardous Materials” means any pollutant or contaminant or hazardous or toxic chemical, material or substance within the meaning of any applicable federal, state, provincial or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous or toxic waste, substance or material or concerning the environment or public health, all as in effect on the applicable date.

“Immoveable Hypothec” means the deed of hypothec to secure titles of indebtedness (immoveables, leases, rents and insurance) entered into on October 20, 1999 by Expéditeur T.W. Ltée in favour of Montreal Trust Company, as the same may be amended, modified, supplemented or replaced from time to time, and pursuant to which Expéditeur T.W. Ltée granted to Montreal Trust Company, for the benefit of the Agent and the Lenders, a hypothec of all of its immoveable property located at 3333 Joseph Dubreuil, Lachine, Quebec as continuing collateral security for all present and future indebtedness, obligations and liabilities of Expéditeur T.W. Ltée to the Agent and the Lenders under the Loan Documents to which Expéditeur T.W. Ltée is a party.

“Individual Commitment” means, with respect to a particular Lender and a particular Credit Facility, the amount set forth in Schedule B attached hereto, as reduced or amended from time to

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time pursuant to Sections 2.03, 8.03 and 15.06, as the individual commitment of such Lender under such Credit Facility.

“Inter-Creditor Agreement” means the inter-creditor agreement dated October 13, 1999 between the Agent, the Lenders, the Noteholders and the Borrowers and pursuant to which the Agent, the Lenders and the Noteholders agree on, among other things, the priorities of their respective security interests in the assets of the Borrowers and the Canadian Guarantors.

“Interest Expenses” means, for any period, the amount which would, in accordance with generally accepted accounting principles, be classified on the consolidated statement of earnings of Vitran for such period as the cash interest expense of Vitran (including, without limitation, interest on amounts under capital leases).

“Interest Period” means, in the case of any LIBOR Loan, the applicable period for which interest on such Loan shall be calculated pursuant to Article 7.

“Issuing Lender” means The Bank of Nova Scotia or any other Lender selected by the Agent and acceptable to the Borrowers who assumes in writing with Borrowers, the Lenders and the Agent the obligation of issuing Letters under Credit Facility 2 on behalf of the Lenders.

“Letter” means a letter of credit or a letter of guarantee which is a Direct Credit Substitute, in form satisfactory to and issued by the Issuing Lender for a term not exceeding one year, whereby the Issuing Lender, acting at the request of and in accordance with the instructions of either Borrower, is to make payment in accordance with the terms and conditions thereof of an amount to or to the order of a third party.

“LIBOR” means the interest rate per annum, calculated on the basis of a 360-day year, determined by the Agent for a particular Interest Period to be the rate of interest per annum, which appears on the Telerate Page 3750 at approximately 11:00 a.m. (London time) two Banking Days before the first day of such Interest Period for borrowings in United States dollars for a period comparable to such Interest Period and in an amount approximately equal to the amount of the LIBOR Loan to be outstanding during such Interest Period.

“LIBOR Loan” means monies lent by the Lenders to the Borrowers hereunder in United States dollars and upon which interest accrues at a rate referrable to LIBOR.

“Lien” means any deed of trust, mortgage, charge, hypothec, assignment, pledge, lien, vendor’s privilege, supplier’s right of reclamation or other security interest or encumbrance of whatever kind or nature, regardless of form and whether consensual or arising by law (statutory or otherwise), that secures the payment of any indebtedness or liability or the observance or performance of any obligation.

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“Loan Documents” means this agreement, the Fee Letter, the Guarantee and the Security Documents.

“Loans” means LIBOR Loans, Base Rate Canada Loans, Prime Rate Loans and BA Rate Loans.

“Majority Lenders” means, at any particular time, such group of at least two Lenders which, in the aggregate, have extended at least two-thirds of the total amount of credit outstanding under the Credit Facilities at such time or, if no credit is then outstanding, such group of at least two Lenders which, in the aggregate, have Individual Commitments which are equal to at least two-thirds of the total amount of the Individual Commitments of all of the Lenders at such time.

“Material Adverse Change” means any change of circumstances or any event which would have a Material Adverse Effect.

“Material Adverse Effect” means an adverse effect on the financial condition or operations of the Borrowers on a consolidated basis which, individually or as part of a series of adverse effects, would have a material adverse effect on the ability of the Borrowers to perform any of their payment obligations hereunder.

“Material Subsidiaries” means any Subsidiary whose total assets (as recorded on its consolidated balance sheet in accordance with generally accepted accounting principles) exceed 5% of the total assets of Vitran and its Subsidiaries on a consolidated basis (as recorded on Vitran’s consolidated balance sheet in accordance with generally accepted accounting principles).

“Mortgages” means (i) the collateral mortgage entered into as of October 13, 1999 by TWE in favour of the Agent, as the same may be amended, modified, supplemented or replaced from time to time, and pursuant to which TWE mortgaged and charged in favour of the Agent for the benefit of the Lenders in the maximum principal amount of $4,000,000 the freehold parcel of real property located at 18204 — 111th Avenue, Edmonton, Alberta as continuing collateral security for all present and future indebtedness, obligations and liabilities of TWE to the Agent and the Lenders under the Loan Documents to which TWE is a party (the “TWE Alberta Mortgage”), (ii) the collateral mortgages to be entered into by the U.S. Guarantors in favour of the Agent for the benefit of the Lenders pursuant to Section 11.01(p), in form and substance satisfactory to the Agent and as the same may be amended, modified, supplemented or replaced from time to time, and pursuant to which each of the U.S. Guarantors would mortgage and charge in favour of the Agent for the benefit of the Lenders all freehold and leasehold parcels of real property owned by such U.S. Guarantor which are designated in the sole discretion of the Lenders as continuing collateral security for all present and future indebtedness, obligations and liabilities of each to the U.S. Guarantors to the Agent and the Lenders under the Loan Documents to which the U.S. Guarantors are a party and (iii) the collateral mortgage to be entered into by TWE in favour of the Agent for the benefit of the Lenders pursuant to Section 11.01(q)(i).

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“Moveable Hypothecs” means the deeds of moveable hypothec to secure titles of indebtedness entered into on October 20, 1999 by TWE and each Quebec Guarantor in favour of Montreal Trust Company, as the same may be amended, modified, supplemented or replaced from time to time, together with the bonds issued by TWE and each Quebec Guarantor to the Lenders pursuant thereto and the moveable hypothec entered into on October 20, 1999 by TWE and each Quebec Guarantor in favour of Montreal Trust Company, as amended, and pursuant to which the aforesaid bonds were hypothecated to Montreal Trust Company as continuing collateral security for all present and future indebtedness, obligations and liabilities of TWE and each such Quebec Guarantor, as the case may be, under the Loan Documents to which it is a party.

“Net Income” means, for any period, the amount which would, in accordance with generally accepted accounting principles, be classified on the consolidated statement of earnings of Vitran for such period as the net income of Vitran, before extraordinary or unusual items.

“Noteholders” means the registered owners of Senior Notes.

“Obligors” means, collectively, the Borrowers and the Guarantors.

“Official Body” means any national government or government of any political subdivision thereof, or any agency, authority, board, central bank, monetary authority, commission, department or instrumentality thereof, or any court, tribunal, grand jury, mediator or arbitrator, whether foreign or domestic, or any non-governmental regulating authority to the extent that the rules, regulations and orders of such body have the force of law.

“Order” means an order, judgment, injunction or other determination by an Official Body restricting payment by the Issuing Lender under and in accordance with a Letter or extending the Issuing Lender’s liability under a Letter beyond the expiration date stated therein.

“Original Credit Agreement” shall have the meaning ascribed thereto in the first recital hereto.

“Overdraft Lender” means The Bank of Nova Scotia or any other Lender selected by the Agent and acceptable to the Borrowers who assumes in writing with the Borrowers, the Lenders and the Agent the obligation of making Overdraft Loans under Credit Facility 2.

“Overdraft Loan” shall have the meaning ascribed thereto in Section 3.12(a).

“Permitted Debt” means, with respect to the Companies:

(a)	indebtedness of the Borrowers under this agreement;
(b)	indebtedness of the Borrowers in connection with the Senior Notes;
(c)	accounts payable and accrued liabilities incurred by the Companies in the ordinary course of business;

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(d)	indebtedness of the Companies which is secured by a Permitted Lien;
(e)	indebtedness of any Company to an affiliate of such Company;
(f)	existing indebtedness to be determined which is satisfactory to the Lenders, including without limitation, indebtedness which may be incurred from time to time under the U.S. $2,000,000 credit facilities in favour of The Freight Connection, Inc.; and
(g)	other indebtedness of any of the Companies approved by the Lenders.

“Permitted Disposition” means (i) any sale, lease or other disposition of the shares or assets of The Freight Connection Inc. or (ii) any other disposition of assets of any of the Companies out of the ordinary course of business which is expressly consented to in writing by all of the Lenders.

“Permitted Liens” means any one or more of the following with respect to the assets of the Companies:

(a)	inchoate or statutory Liens for taxes, assessments and other governmental charges or levies which are not delinquent (taking into account any relevant grace periods) or the validity of which are currently being contested in good faith by appropriate proceedings and in respect of which there shall have been set aside a reserve (segregated to the extent required by generally accepted accounting principles) in an amount which is adequate therefor;
(b)	inchoate or statutory Liens of contractors, subcontractors, mechanics, workers, suppliers, materialmen, carriers and others in respect of construction, maintenance, repair or operation of assets of the Companies, provided that such Liens are related to obligations not due or delinquent (taking into account any applicable grace or cure periods), are not registered as encumbrances against title to any assets of the Companies and adequate holdbacks are being maintained as required by applicable legislation or such Liens are being contested in good faith by appropriate proceedings and in respect of which there shall have been set aside a reserve (segregated to the extent required by generally accepted accounting principles) in an amount which is adequate with respect thereto and provided further that such Liens do not in the aggregate materially detract from the value of the assets of the Companies encumbered thereby or materially interfere with the use thereof in the operation of the business of the Companies;
(c)	easements, rights-of-way, servitudes, restrictions and similar rights in real property comprised in the assets of the Companies or interests therein granted or reserved to other persons, provided that such rights do not in the aggregate materially detract from the value of the assets of the Companies subject thereto or

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	materially interfere with the use thereof in the operation of the business of the Companies;
(d)	title defects or irregularities which are of a minor nature and which do not in the aggregate materially detract from the value of the assets of the Companies encumbered thereby or materially interfere with the use thereof in the operation of the business of the Companies;
(e)	Liens incidental to the conduct of the business or the ownership of the assets of the Companies (other than those described in clauses (f) and (g) of this definition) which were not incurred in connection with the borrowing of money or the obtaining of advances or credit (including, without limitation, unpaid purchase price), and which do not in the aggregate materially detract from the value of the assets of the Companies encumbered thereby or materially interfere with the use thereof in the operation of the business of the Companies;
(f)	Liens securing appeal bonds and other similar Liens arising in connection with court proceedings (including, without limitation, surety bonds, security for costs of litigation where required by law and letters of credit) or any other instruments serving a similar purpose;
(g)	attachments, judgments and other similar Liens arising in connection with court proceedings; provided, however, that such Liens are in existence for less than 30 days after the entry therefor or the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;
(h)	the reservations, limitations, provisos and conditions, if any, (i) expressed in any original grant from the Crown of any real property or any interest therein or in any comparable grant in jurisdictions other than Canada;
(i)	Liens, charges or other security interests given to a public utility or any municipality or governmental or other public authority when required by such utility or other authority in connection with the operation of the business or the ownership of the assets of the Companies, provided that such Liens do not in the aggregate reduce the value of the assets of the Companies or materially interfere with the use thereof in the operation of the business of the Companies;
(j)	servicing agreements, development agreements, site plan agreements, and other agreements with governmental or public authorities pertaining to the use or development of any of the assets of the Companies, provided same are complied with including, without limitation, any obligations to deliver letters of credit and other security as required;

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(k)	applicable municipal and other governmental restrictions, including municipal by-laws and regulations, affecting the use of land or the nature of any structures which may be erected thereon, provided such restrictions have been complied with;
(l)	Purchase Money Obligations arising in the ordinary course of business and in an aggregate outstanding principal amount not exceeding $3,000,000, where “Purchase Money Obligations” means any Lien created, issued or assumed by the Companies to secure indebtedness assumed as part of, or issued or incurred to pay or provide funds to pay, all or a part of the purchase price of any property, provided that such Lien is limited to the property so acquired and is created, issued or assumed substantially concurrently with the acquisition of such property and provided that such property is not a replacement of a similar asset owned or held by a Company prior to the date of such acquisition;
(m)	Liens identified in Schedule H hereto;
(n)	the right reserved to or vested in any Official Body by any statutory provision, or by the terms of any lease, licence, franchise, grant or permit of any of the Companies, to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof;
(o)	Liens existing on any asset at the time of its acquisition provided that such asset is not a replacement of a similar asset owned or held by a Company prior to the date of such acquisition;
(p)	the Security;
(q)	Liens granted to the Noteholders and existing as of the date hereof as disclosed in Schedule B to the Inter-Creditor Agreement; and
(r)	the extension, renewal or refinancing of any Permitted Lien, provided that the amount so secured does not exceed the original amount secured immediately prior to such extension, renewal or refinancing.

“Person” means any natural person, corporation, firm, partnership, joint venture, joint stock company, incorporated or unincorporated association, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.

“Prime Rate” means the greater of (a) the variable rate of interest per annum equal to the rate of interest determined by the Agent from time to time as the prime rate of the Agent for Canadian dollar loans made by the Agent in Canada from time to time, being a variable per annum reference rate of interest adjusted automatically upon change by the Agent, calculated on the

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basis of a year of 365 days or 366 days in the case of a leap year and (b) the sum of (i) the average rate per annum for Canadian dollar bankers’ acceptances for Reference Lenders having a term of 30 days that appears on the Reuters Screen CDOR Page as of 10:00 a.m. (Toronto time) on the date of determination, as reported by the Agent and (ii) 5/8 of 1% per annum.

“Prime Rate Loan” means monies lent by the Lenders to the Borrowers hereunder in Canadian dollars and upon which interest accrues at a rate referrable to the Prime Rate.

“Property” means all of the property owned, operated or used by the Companies.

“Pro Rata Share” means, at any particular time with respect to a particular Lender and a particular Credit Facility, the ratio of the Individual Commitment of such Lender under such Credit Facility at such time to the aggregate of the Individual Commitments of all of the Lenders under such Credit Facility at such time.

“Quebec Guarantors” means Expéditeur T.W. Ltée, Can-Am Logistics Inc, G&W Freightways Ltd./Transport-Fret. G&W Ltée, Rout-Way Express Lines Ltd./Les Services Routier Express Rout Ltée and Southern Express Lines of Ontario Limited.

“Reference Lenders” means The Bank of Nova Scotia.

“Rolling Capital Expenditures” means, for any Fiscal Quarter, the aggregate of Capital Expenditures for such Fiscal Quarter and for each of the three immediately preceding Fiscal Quarters.

“Rolling EBITDA” means, for any Fiscal Quarter, the aggregate of EBITDA for such Fiscal Quarter and for each of the three immediately preceding Fiscal Quarters.

“Rolling Interest Expenses” means for any Fiscal Quarter, the aggregate of Interest Expenses for such Fiscal Quarter and for each of the three immediately preceding Fiscal Quarters.

“Rollover Notice” shall have the meaning ascribed thereto in Section 5.03.

“Security” means the collateral security constituted by the Security Documents.

“Security Agreements” means (i) the general security agreement entered into by Vitran, the general security agreement entered into by TWE and the general security agreement entered into by the Canadian Guarantors (other than those exempted by the Lenders), each dated October 13, 1999 and in favour of the Agent for the benefit of the Lenders, as each may be amended, modified, supplemented or replaced from time to time, and pursuant to which each of the Borrowers and such Canadian Guarantors granted to the Agent for the benefit of the Lenders a security interest in all of its personal property and assigned to the Agent for the benefit of the Lenders all of its book debts as continuing collateral security for all present and future indebtedness, obligations and liabilities of each of the Borrowers and such Canadian Guarantors

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to the Agent and the Lenders under the Loan Documents to which the Borrowers and such Canadian Guarantors are a party, and (ii) the general security agreements which may hereafter be entered into by the U.S. Guarantors in favour of the Agent for the benefit of the Lenders pursuant to Section 11.01(p), in form and substance satisfactory to the Agent and as the same may be amended, modified, supplemented or replaced from time to time, and pursuant to which each of the U.S. Guarantors would grant to the Agent for the benefit of the Lenders a security interest in all of its Accounts and/or equipment as continuing collateral security for all present and future indebtedness, obligations and liabilities of each of the U.S. Guarantors to the Agent and the Lenders under the Loan Documents to which the U.S. Guarantors are a party.

“Security Documents” means the Mortgages, the Security Agreements, the Moveable Hypothecs and the Immoveable Hypothec.

“Senior Notes” means the 9.04% Guaranteed Senior Notes due 2002 of TWE issued pursuant to the Senior Note Agreement in the original aggregate principal amount of U.S. $45,000,000, of which U.S. $5,700,000 remains outstanding on the date hereof.

“Senior Note Agreement” means the Note Purchase Agreement, dated as of July 25, 1995, between TWE and Vitran, on the one hand, and the Noteholders party thereto, on the other hand, as amended to the date hereof and pursuant to which the Senior Notes were issued by TWE and guaranteed by Vitran.

“Subsidiaries” means any corporation, partnership, joint venture, or other entity of which more than 50% of the outstanding voting capital stock or other ownership interest (irrespective of whether or not at the time capital stock or other equity interest of any other class or classes of such corporation, partnership, joint venture, or other entity shall or might have voting power upon the happening of any contingency) is at the time owned directly or indirectly by either of the Borrowers; provided that no corporation shall be deemed a Subsidiary until the applicable Borrower directly or indirectly acquires more than 50% of the outstanding voting stock thereof and has elected a majority of its board of directors.

“Toronto Intermodal Facility” means the truck terminal and related office space to be established to replace the existing facility in Concord, Ontario.

“TWE Alberta Mortgage” shall have the meaning ascribed thereto in the definition of Mortgages.

“TWE Alberta Mortgage Amending Agreement” means the amending agreement to be entered into between TWE and the Agent, in form and substance satisfactory to the Lenders, and pursuant to which the TWE Mortgage is amended to expand the obligations that are secured thereby.

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“U.S. Dollar Equivalent” means the Exchange Equivalent in United States of any amount of Canadian dollars.

“U.S. Guarantors” means Frontier Transport Corporation and Vitran Express, Inc.

“Working Capital” means the excess of Current Assets other than cash or liquid assets of Vitran over Current Liabilities.

1.02   Other Usages.    References to “this agreement”, “the agreement”, “hereof”, “herein”, “hereto” and like references refer to this Amended and Restated Credit Agreement and not to any particular Article, Section or other subdivision of this agreement. Any references herein to any agreements (including, without limitation, this agreement) or documents shall mean such agreements or documents as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof.

1.03   Plural and Singular.    Where the context so requires, words importing the singular number shall include the plural and vice versa.

1.04   Headings.    The division of this agreement into Articles and Sections and the insertion of headings in this agreement are for convenience of reference only and shall not affect the construction or interpretation of this agreement.

1.05   Currency.    Unless otherwise specified herein, all statements of or references to dollar amounts in this agreement shall mean lawful money of Canada.

1.06   Applicable Law.    This agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Any legal action or proceeding with respect to this agreement may be brought in the courts of the Province of Ontario and, by execution and delivery of this agreement, the parties hereby accept for themselves and in respect of their property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Each party irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party to the address prescribed by Section 15.02, such service to become effective when received. Nothing herein shall limit the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction.

1.07   Time of the Essence.    Time shall in all respects be of the essence of this agreement.

1.08   Non-Banking Days.    Subject to Section 7.04(c), whenever any payment to be made hereunder shall be stated to be due or any action to be taken hereunder shall be stated to be required to be taken on a day other than a Banking Day, such payment shall be made or such action shall be taken on the next succeeding Banking Day and, in the case of the payment of any

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amount, the extension of time shall be included for the purposes of computation of interest, if any, thereon.

1.09   Consents and Approvals.    Whenever the consent or approval of a party hereto is required in a particular circumstance, unless otherwise expressly provided for herein, such consent or approval shall not be unreasonably withheld or delayed by such party.

1.10   Amount of Credit.    Any reference herein to the “amount of credit outstanding” or “outstanding amount of credit” or any similar phrase shall mean, at any particular time:

(a)	in the case of a Prime Rate Loan or a BA Rate Loan, the principal amount thereof;
(b)	in the case of a Bankers’ Acceptance, the face amount of the Bankers’ Acceptance;
(c)	in the case of a Base Rate Canada Loan or a LIBOR Loan, the Canadian Dollar Equivalent of the principal amount thereof;
(d)	in the case of a Letter denominated in Canadian dollars, the contingent liability of the Issuing Lender thereunder at such time; and
(e)	in the case of a Letter denominated in United States dollars, the Canadian Dollar Equivalent of the contingent liability of the Issuing Lender thereunder at such time.

1.11   Schedules.    Each and every one of the schedules which is referred to in this agreement and attached to this agreement shall form a part of this agreement.

1.12   Extension of Credit.    For the purposes hereof, each drawdown, rollover and conversion shall be deemed to be an extension of credit to the Borrowers hereunder.

1.13   Joint and Several Obligations.    All obligations hereunder which are stated to be obligations of the Borrowers or either one of them shall, to the extent permitted by applicable law, be joint and several obligations of Vitran and TWE.

ARTICLE 2
CREDIT FACILITIES

2.01   Establishment of Credit Facilities.    Subject to the terms and conditions hereof, the Lenders hereby establish in favour of the Borrowers:

(a) a non-revolving term credit facility (“Credit Facility 1”) in the amount of $62,500,000 or the U.S. Dollar Equivalent thereof; and

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(b) a revolving term credit facility (“Credit Facility 2”) in the amount of $10,000,000 or the U.S. Dollar Equivalent thereof.

2.02   Credit Restrictions.    Notwithstanding any other provision hereof, the Borrowers shall be entitled to obtain credit by way of LIBOR Loans or Bankers’ Acceptances only in such amounts so as to ensure that the Lenders are not required to make a LIBOR Loan for a principal amount other than U.S. $200,000 or an integral multiple of U.S. $100,000 in excess thereof or to accept a Bankers’ Acceptance having a face amount other than $500,000 or an integral multiple of $1,000 in excess thereof.

2.03   Lenders’ Commitments.    Subject to the terms and conditions hereof, the Lenders severally agree to extend credit to the Borrowers hereunder from time to time provided that the aggregate amount of credit extended by each Lender under the Credit Facilities shall not at any time exceed the Individual Commitment of such Lender and further provided that the aggregate amount of credit outstanding under the Credit Facilities shall not at any time exceed the amount of the Credit Facilities referred to in Section 2.01 as the same may be reduced pursuant to Section 2.04. All credit requested under the Credit Facilities by a particular Borrower shall be made available to such Borrower contemporaneously by all of the Lenders who have made an Individual Commitment with respect to such Credit Facility. Each such Lender shall provide to the applicable Borrower its Pro Rata Share of each credit under such Credit Facility, whether such credit is extended by way of drawdown, rollover or conversion. No Lender shall be responsible for any default by any other Lender in its obligation to provide its Pro Rata Share of any credit nor shall the Individual Commitment of any Lender with respect to any of the Credit Facilities be increased as a result of any such default of another Lender. The failure of any Lender to make available to a Borrower its Pro Rata Share of any credit shall not relieve any other Lender of its obligation hereunder to make available to such Borrower its Pro Rata Share of such credit. Notwithstanding any other provision hereof, the Agent is authorized by the Borrowers and the Lenders to allocate amongst the Lenders the Bankers’ Acceptances to be issued and the LIBOR Loans to be advanced under the Credit Facilities in such manner and amounts as the Agent may, in its sole and unfettered discretion acting reasonably, consider necessary, rounding up or down, so as to ensure that no Lender is required to accept a Bankers’ Acceptance for a fraction of $100,000 or advance a LIBOR Loan for a fraction of U.S. $200,000 and, in such event, the Lenders’ Pro Rata Shares with respect to such Bankers’ Acceptances and LIBOR Loans shall be adjusted accordingly. It is acknowledged that such rounding may result in a Lender’s Pro Rata Share with respect to such Bankers’ Acceptances and LIBOR Loans exceeding its Individual Commitment.

2.04   Reduction of Credit Facilities.    The Borrowers may, from time to time and at any time, by 5 Banking Days notice in writing to the Agent, permanently reduce either Credit Facility to the extent it is not utilized, provided, however, that any such permanent reduction of the amount of such Credit Facility shall be by an amount of no less than $2,000,000 and otherwise in multiples of $500,000. The amount of Credit Facility 1 will be permanently reduced at the time of and by the amount of each scheduled repayment pursuant to Section 9.01

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and any prepayment pursuant to Sections 9.04, 9.05 and 9.06. The amount of Credit Facility 2 will be permanently reduced at the time of and by the amount of the scheduled repayment pursuant to Section 9.02. Any prepayment of Credit Facility 2 shall not cause a reduction in the amount of Credit Facility 2. Any repayment of outstanding credit which forms part of any conversion from one type of credit to another type of credit under Article 3 or Article 6 shall not cause any reduction in the amount of the applicable Credit Facility. Upon any reduction in the amount of either Credit Facility, the Individual Commitment of each Lender with respect to such Credit Facility shall thereupon be reduced by an amount equal to such Lender’s Pro Rata Share of the amount of such reduction in the amount of such Credit Facility.

2.05   Termination of Credit Facilities.

(a) Credit Facility 1 shall terminate upon the earliest to occur of:

(i)	the Credit Facility 1 Maturity Date;
(ii)	the termination of Credit Facility 1 in accordance with Section 13.01; and
(iii)	the date on which Credit Facility 1 has been permanently reduced to zero pursuant to Section 2.04.

(b) Credit Facility 2 shall terminate upon the earliest to occur of:

(i)	the Credit Facility 2 Maturity Date;
(ii)	the termination of Credit Facility 2 in accordance with Section 13.01; and
(iii)	the date on which the amount of Credit Facility 2 has been permanently reduced to zero pursuant to Section 2.04.

(c) Upon the termination of any Credit Facility, the right of the Borrowers to obtain or maintain credit under such Credit Facility and all of the obligations of the Lenders to make credit available under such Credit Facility shall automatically terminate.

ARTICLE 3
GENERAL PROVISIONS RELATING TO CREDITS

3.01   Types of Credit Availments.    Subject to the terms and conditions hereof, the Borrowers may obtain credit under Credit Facility 1 by way of Bankers’ Acceptances, Prime Rate Loans, BA Rate Loans, Base Rate Canada Loans and LIBOR Loans and may obtain credit under Credit Facility 2 by way of Bankers’ Acceptances, Prime Rate Loans, BA Rate Loans,

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Base Rate Canada Loans, LIBOR Loans and Letters; provided that the aggregate amount of credit outstanding by way of Letters shall not at any time exceed $7,500,000.

3.02   Funding of Loans.    Each Lender which has made an Individual Commitment under a particular Credit Facility shall make available to the Agent its Pro Rata Share of the principal amount of each Loan under such Credit Facility, in the appropriate currency, prior to 11:00 a.m. (Toronto time) on the date of the extension of credit. The Agent shall, upon fulfilment by the Borrowers of the terms and conditions set forth in Article 12, make such funds available to the applicable Borrower on the date of the extension of credit by crediting the Designated Account (or causing such account to be credited) unless otherwise irrevocably authorized and directed in the Drawdown Notice. Unless the Agent has been notified by a Lender at least two Banking Days prior to the date of the extension of credit that such Lender will not make available to the Agent its Pro Rata Share of such Loan, the Agent may assume that such Lender has made such portion of the Loan available to the Agent on the date of the extension of credit in accordance with the provisions hereof and the Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount. If the Agent has made such assumption, to the extent such Lender shall not have so made its Pro Rata Share of the Loan available to the Agent, such Lender agrees to pay to the Agent, forthwith on demand, such Lender’s Pro Rata Share of the Loan and all reasonable costs and expenses incurred by the Agent in connection therewith together with interest thereon at the rate payable hereunder by such Borrower in respect of such Loan for each day from the date such amount is made available to such Borrower until the date such amount is paid or repaid to the Agent; provided, however, that notwithstanding such obligation, if such Lender fails so to pay, such Borrower shall, without prejudice to any rights that such Borrower might have against such Lender, repay such amount to the Agent forthwith after demand therefor by the Agent. The amount payable to the Agent pursuant hereto shall be set forth in a certificate delivered by the Agent to such Lender and the Borrowers (which certificate shall contain reasonable details of how the amount payable is calculated) and shall constitute prima facie evidence of such amount payable. If such Lender makes the payment to the Agent required herein, the amount so paid shall constitute such Lender’s Pro Rata Share of the Loan for purposes of this agreement and shall entitle the Lender to all rights and remedies against the Borrowers in respect of such Loan. The failure of any Lender to make available to the Agent its Pro Rata Share of a Loan shall not relieve any other Lender of its obligation hereunder to make available to the Agent its Pro Rata Share of the Loan on the date of the credit.

3.03   Failure of Lender to Fund Loan.    If any Lender fails to make available to the Agent its Pro Rata Share of any Loan as required (such Lender being herein called the “Defaulting Lender”) and the Agent has not funded pursuant to Section 3.02, the Agent shall forthwith give notice of such failure by the Defaulting Lender to the Borrowers and the other Lenders. The Agent shall then forthwith give notice to the other Lenders that any Lender may make available to the Agent all or any portion of the Defaulting Lender’s Pro Rata Share of such Loan (but in no way shall any other Lender or the Agent be obliged to do so) in the place and stead of the

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Defaulting Lender. If more than one Lender gives notice that it is prepared to make funds available in the place and stead of a Defaulting Lender in such circumstances and the aggregate of the funds which such Lenders (herein collectively called the “Contributing Lenders” and individually called the “Contributing Lender”) are prepared to make available exceeds the amount of the advance which the Defaulting Lender failed to make, then each Contributing Lender shall be deemed to have given notice that it is prepared to make available its pro rata share of such advance based on the Contributing Lenders’ relative commitments to advance in such circumstances. If any Contributing Lender makes funds available in the place and stead of a Defaulting Lender in such circumstances, then the Defaulting Lender shall pay to any Contributing Lender making the funds available in its place and stead, forthwith on demand, any amount advanced on its behalf together with interest thereon at the rate applicable to such Loan from the date of advance to the date of payment, against payment by the Contributing Lender making the funds available of all interest received in respect of the Loan from the Borrowers. In addition to interest as aforesaid, the Borrowers shall pay all amounts owing by the Borrowers to the Defaulting Lender hereunder to the Contributing Lenders until such time as the Defaulting Lender pays to the Contributing Lenders all amounts advanced by the Contributing Lenders on behalf of the Defaulting Lender.

3.04   Funding of Bankers’ Acceptances.

     (a)   If the Agent receives a Drawdown Notice, Rollover Notice or Conversion Notice requesting a drawdown of, a rollover of or a conversion into Bankers’ Acceptances under a particular Credit Facility, the Agent shall notify each of the Lenders which has made an Individual Commitment under such Credit Facility prior to 11:00 a.m. (Toronto time) on the second Banking Day prior to the date of such extension of credit of such request and of each Lender’s Pro Rata Share of such extension of credit. The Agent shall also at such time notify the Borrowers of each Lender’s Pro Rata Share of such extension of credit. Each Lender shall, not later than 11:00 a.m. (Toronto time) on the date of each extension of credit by way of Bankers’ Acceptance, accept drafts of the applicable Borrower which are presented to it for acceptance and which have an aggregate face amount equal to such Lender’s Pro Rata Share of the total extension of credit being made available by way of Bankers’ Acceptances on such date, as advised by the Agent. Each Lender shall purchase the Bankers’ Acceptances which it has accepted for a purchase price equal to the BA Discounted Proceeds therefor. Each Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any and all Bankers’ Acceptances accepted and purchased by it.

     (b)   The Borrowers shall provide for payment to the accepting Lenders of the face amount of each Bankers’ Acceptance at its maturity, either by payment of such amount or through an extension of credit hereunder or through a combination of both. The Borrowers hereby waive presentment for payment of Bankers’ Acceptances by the Lenders and any defence to payment of amounts due to a Lender in respect of a Bankers’ Acceptance which might exist by reason of such Bankers’ Acceptance being held at maturity by the Lender which accepted it

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and agrees not to claim from such Lenders any days of grace for the payment at maturity of Bankers’ Acceptances.

     (c)   In the case of a drawdown by way of Bankers’ Acceptance, each Lender shall, forthwith after the acceptance of drafts of the applicable Borrower as aforesaid, make available to the Agent the BA Proceeds with respect to the Bankers’ Acceptances accepted by it. The Agent shall, upon fulfilment by the Borrowers of the terms and conditions set forth in Article 12, make such BA Proceeds available to the applicable Borrower on the date of such extension of credit by crediting the Designated Account. In the case of a rollover of or conversion into Bankers’ Acceptances, each Lender shall retain the Bankers’ Acceptance accepted by it and shall not be required to make any funds available to the Agent for deposit to the Designated Account; however, forthwith after the acceptance of drafts of the applicable Borrower as aforesaid, the Borrowers shall pay to the Agent on behalf of such Lenders an amount equal to the aggregate amount of the acceptance fees in respect of such Bankers’ Acceptances calculated in accordance with Section 7.05 plus the amount by which the aggregate face amount of such Bankers’ Acceptances exceeds the aggregate BA Discounted Proceeds with respect thereto.

     (d)   Any Bankers’ Acceptance may, at the option of a particular Borrower, be executed in advance by or on behalf of such Borrower (as otherwise provided herein), by mechanically reproduced or facsimile signatures of any two officers of such Borrower who are properly so designated and authorized by such Borrower from time to time. Any Bankers’ Acceptance so executed and delivered by such Borrower to the Lenders shall be valid and shall bind such Borrower and may be dealt with by the Lenders to all intents and purposes as if the Bankers’ Acceptance had been signed in the executing officers’ own handwriting.

     (e)   Each Borrower shall notify the Lenders as to those officers whose signatures may be reproduced and used to execute Bankers’ Acceptances in the manner provided in Section 3.04(d). Bankers’ Acceptances with the mechanically reproduced or facsimile signatures of designated officers may be used by the Lenders and shall continue to be valid, notwithstanding the death, termination of employment or termination of authorization of either or both of such officers or any other circumstance until such time as such Borrower shall otherwise notify the Lenders.

     (f)   The Borrowers hereby indemnify and agree to hold harmless the Lenders against and from all losses, damages, expenses and other liabilities caused by or attributable to the use of the mechanically reproduced or facsimile signature instead of the original signature of an authorized officer of the applicable Borrower on a Banker’s Acceptance prepared, executed, issued and accepted pursuant to this agreement, except to the extent determined by a court of competent jurisdiction to be due to the negligence or wilful misconduct of the Lenders.

     (g)   Each of the Lenders agrees that, in respect of the safekeeping of executed depository bills of the Borrowers which are delivered to it for acceptance hereunder, it shall

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exercise the same degree of care which it gives to its own property, provided that it shall not be deemed to be an insurer thereof.

     (h)   All Bankers’ Acceptances shall be issued in the form of depository bills made payable originally to and deposited with The Canadian Depository for Securities Limited pursuant to the Depository Bills and Notes Act (Canada).

     (i)   The Borrowers may, at their option, execute and deliver to each Lender a power of attorney in favour of such Lender in the form of Schedule F hereto.

3.05   BA Rate Loans.    If, in the sole judgement of a Lender, such Lender is unable to extend credit by way of Bankers’ Acceptances in accordance with this agreement, such Lender shall give an irrevocable notice to such effect to the Agent and the Borrowers prior to 10:00 a.m. (Toronto time) on the date of the requested credit extension and shall make available to the applicable Borrower prior to 11:00 a.m. (Toronto time) on the date of such requested credit extension a Canadian dollar loan (a “BA Rate Loan”) in the principal amount equal to such Lender’s Pro Rata Share of the total credit to be extended by way of Bankers’ Acceptances, such BA Rate Loan to be funded in the same manner as a Loan is funded pursuant to Section 3.02 and 3.03. Such BA Rate Loan shall have the same term as the Bankers’ Acceptances for which it is a substitute and shall bear such rate of interest per annum throughout the term thereof as shall permit such Lender to obtain the same effective rate as if such Lender had accepted and purchased a Bankers’ Acceptance at the same acceptance fee and pricing at which the Reference Lenders would have accepted and purchased such Bankers’ Acceptance at approximately 11:00 a.m. (Toronto time) on the date such BA Rate Loan is made, on the basis that, and the Borrowers hereby agree that, for such a BA Rate Loan, interest shall be payable in advance on the date of the extension of credit by the Lender deducting the interest payable in respect thereof from the principal amount of such BA Rate Loan. All BA Rate Loans shall be evidenced by a promissory note in the form of a depository note made payable originally to and deposited with The Canadian Depository for Securities Limited pursuant to the Depository Bills and Notes Act (Canada).

3.06   Inability to Fund U.S. Dollar Advances in Canada.    If a Lender determines in good faith, which determination shall be final, conclusive and binding on the Borrowers, and the Agent notifies the Borrowers that (i) by reason of circumstances affecting financial markets inside or outside Canada, deposits of United States dollars are unavailable to such Lender in Canada, (ii) adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided in the definition of LIBOR or Alternate Base Rate Canada, as the case may be, (iii) the making or continuation of United States dollar advances in Canada has been made impracticable by the occurrence of a contingency (other than a mere increase in rates payable by such Lender to fund the advance) which materially and adversely affects the funding of the advances at any interest rate computed on the basis of LIBOR or the Alternate Base Rate Canada, as the case may be, or by reason of a change in any applicable law or government regulation, guideline or order (whether or not having the force of law but, if not having the force

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of law, one with which a responsible bank would comply) or in the interpretation thereof by any Official Body affecting such Lender or any relevant financial market, which results in LIBOR or the Alternate Base Rate Canada, as the case may be, no longer representing the effective cost to such Lender of deposits in such market for a relevant Interest Period, or (iv) any change to present law or any future law, regulation, order, treaty or official directive (whether or not having the force of law but, if not having the force of law, one with which a responsible bank would comply) or any change therein or any interpretation or application thereof by any Official Body has made it unlawful for such Lender to make or maintain or give effect to its obligations in respect of United States dollar advances in Canada as contemplated herein, then

(a)	the right of the Borrowers to obtain any affected type of credit from such Lender shall be suspended until such Lender determines that the circumstances causing such suspension no longer exist and the Agent so notifies the Borrowers and the other Lenders;
(b)	if any affected type of credit is not yet outstanding, any applicable Drawdown Notice, Rollover Notice or Conversion Notice shall be cancelled and the advance requested therein shall not be made;
(c)	if any LIBOR Loan is already outstanding at any time whe n the right of the Borrowers to obtain extension of credit by way of a LIBOR Loan is suspended, it shall, subject to the Borrowers having the right to obtain credit by way of a Base Rate Canada Loan at such time, be converted on the last day of the Interest Period applicable thereto (or on such earlier date as may be required to comply with any applicable law) to a Base Rate Canada Loan in the principal amount equal to the principal amount of the LIBOR Loan or, if the Borrowers do not have the right to obtain credit by way of a Base Rate Canada Loan at such time, such LIBOR Loan shall be converted on the last day of the Interest Period applicable thereto (or on such earlier date as may be required to comply with any applicable law) to a Prime Rate Loan in the principal amount equal to the Canadian Dollar Equivalent of the principal amount of such LIBOR Loan; and
(d)	if any Base Rate Canada Loan is already outstanding at any time when the right of the Borrowers to obtain credit by way of a Base Rate Canada Loa n is suspended, it shall, subject to the Borrowers having the right to obtain extension of credit by way of a LIBOR Loan at such time, be immediately converted to a LIBOR Loan in the principal amount equal to the principal amount of the Base Rate Canada Loan and having an Interest Period of one month or, if the Borrowers do not have the right to obtain credit by way of a LIBOR Loan at such time, it shall be immediately converted to a Prime Rate Loan in the principal amount equal to the Canadian Dollar Equivalent of the principal amount of the Base Rate Canada Loan.

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If the Borrowers are notified by the Agent as aforesaid, then the Borrowers may indicate to the Agent in writing that they desire to replace the aforesaid Lender and, in such event, the provisions of Section 8.03 shall apply mutatis mutandis to such Lender as if such Lender were the Affected Lender.

3.07   Timing of Credit Availments.    No Bankers’ Acceptance, LIBOR Loan or BA Rate Loan under Credit Facility 1 may have a maturity date later than the Credit Facility 1 Maturity Date or that would prevent the Borrowers from paying the scheduled instalments under Credit Facility 1 pursuant to Section 9.01. No Bankers’ Acceptance, LIBOR Loan or BA Rate Loan under Credit Facility 2 may have a maturity date later than the Credit Facility 2 Maturity Date.

3.08   Time and Place of Payments.    Except as otherwise provided herein, the Borrowers shall make all payments pursuant to this agreement or pursuant to any document, instrument or agreement delivered pursuant hereto by deposit to the applicable Designated Account before 1:00 p.m. (Toronto time) on the day specified for payment and the Agent shall be entitled to withdraw the amount of any payment due to the Agent or the Lenders from such account on the day specified for payment.

3.09   Remittance of Payments due to Lenders.    Forthwith after receipt by the Agent of any payment of principal, interest, fees or other amounts for the benefit of the Lenders pursuant to Section 3.08, the Agent shall, subject to Section 8.03, remit to each Lender entitled thereto, in immediately available funds, such Lender’s Pro Rata Share of such payment; provided that if the Agent, on the assumption that it will receive, on any particular date, a payment of principal (including, without limitation, a prepayment), interest, fees or other amount hereunder, remits to each Lender entitled thereto its Pro Rata Share of such payment and the Borrowers fail to make such payment, each of the Lenders agrees to repay to the Agent, forthwith on demand, to the extent that such amount is not recovered from the Borrowers on demand and after reasonable efforts by the Agent to collect such amount (without in any way obligating the Agent to take any legal action with respect to such collection), such Lender’s Pro Rata Share of the payment made to it pursuant hereto together with interest thereon at the then prevailing interbank rate for each day from the date such amount is remitted to the Lenders until the date such amount is paid or repaid to the Agent, the exact amount of the repayment required to be made by the Lenders pursuant hereto to be as set forth in a certificate delivered by the Agent to each Lender, which certificate shall constitute prima facie evidence of such amount of repayment.

3.10   Evidence of Indebtedness.

     (a)   The Agent shall open and maintain accounts wherein the Agent shall record the amount and type of credit outstanding, each advance and each payment of principal and interest on account of each Loan, each Bankers’ Acceptance accepted and cancelled and all other amounts becoming due to and being paid to the Lenders or the Agent under Credit Facility 1 and Credit Facility 2. The Agent’s accounts constitute, in the absence of manifest error, prima facie

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evidence of the indebtedness of the Borrowers to the Lenders and the Agent under Credit Facility 1 and Credit Facility 2.

     (b)   The Overdraft Lender shall open and maintain accounts wherein it shall record the amount and currency of each Overdraft Loan, each payment of principal and interest on account of each Overdraft Loan and all other amounts becoming due to and being paid to the Overdraft Lender. The Overdraft Lender’s accounts constitute, in the absence of manifest error, prima facie evidence of the indebtedness of the Borrowers to the Overdraft Lender.

     (c)   The Issuing Lender shall open and maintain accounts wherein it shall record the amount and currency of each Letter issued and drawn upon and all other amounts becoming due to and being paid to the Issuing Lender. The Issuing Lender’s accounts constitute, in the absence of manifest error, prima facie evidence of the indebtedness of the Borrowers to the Issuing Lender.

3.11   Notice Periods.    Each Drawdown Notice, Rollover Notice and Conversion Notice shall be given to the Agent:

(a)	prior to 11:00 a.m. (Toronto time) on the third Banking Day prior to the date of drawdown of, rollover of or conversion into a LIBOR Loan;
(b)	prior to 11:00 a.m. (Toronto time) on the second Banking Day prior to the date of a drawdown of or conversion into a Base Rate Canada Loan or a Prime Rate Loan or a drawdown of, rollover of or conversion into a Bankers’ Acceptance; and
(c)	prior to 11:00 a.m. (Toronto time) on the first Banking Day prior to the date of any other drawdown, rollover or conversion.

3.12   Overdraft Loans

     (a)   Subject to the following provisions of this Section, overdrafts arising from clearance of cheques or drafts drawn on the accounts of the Borrowers maintained with the Overdraft Lender, and designated by the Overdraft Lender for such purpose, shall be deemed to be outstanding as extensions of credit to the respective Borrowers from the Overdraft Lender under Credit Facility 2 (each, an “Overdraft Loan”) as follows:

(i)	in the case of overdrafts in Canadian dollars, as Prime Rate Loans; and
(ii)	in the case of overdrafts in United States dollars, as Base Rate Canada Loans.

For certainty, notwithstanding Section 4.01, no Drawdown Notice need be delivered by the Borrowers in respect of Overdraft Loans.

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     (b)   Except as otherwise specifically provided herein, all references to Prime Rate Loans and Base Rate Canada Loans shall include Overdraft Loans made in Canadian and United States dollars, respectively.

     (c)   Overdraft Loans shall be made by the Overdraft Lender alone, without assignment to or participation by the other Lenders.

     (d)   The aggregate principal amount of the outstanding Overdraft Loans shall not exceed the lesser of:

(i)	Cdn. $5,000,000 or the U.S. Dollar Equivalent thereof; and
(ii)	the amount, if any, by which the amount of Credit Facility 2 exceeds the aggregate amount of credit outstanding under Credit Facility 2 other than by way of Overdraft Loans.

     (e)   The Borrowers may make repayments of Overdraft Loans (together with accrued interest thereon) from time to time without penalty.

     (f)   All interest payments and principal repayments of or in respect of Overdraft Loans shall be solely for the account of the Overdraft Lender. Subject to Section 3.12(g), all costs and expenses relating to the Overdraft Loans shall be solely for the account of the Overdraft Lender.

     (g)   Notwithstanding anything to the contrary herein contained, or the contrary provisions of Applicable Law, (i) if an Event of Default occurs or (ii) if the Overdraft Lender so requires (and the Overdraft Lender agrees to so require if there have been outstanding Overdraft Loans for seven consecutive days), and there are then outstanding any Overdraft Loans, then, effective on the day of notice to that effect from the Overdraft Lender to the Lenders who have made Individual Commitments under Credit Facility 2, the Borrowers shall be deemed to have requested, and hereby request, extensions of credit by way of drawdown of an amount of Loans under Credit Facility 2, in the currency or currencies of the Overdraft Loans, sufficient to repay the Overdraft Loans and accrued and unpaid interest in respect thereof, and on the day of receipt of such notice, each of such Lenders shall disburse to the Overdraft Lender its respective Pro Rata Share of such amounts and such amounts shall thereupon be deemed to have been advanced by such Lenders to the Borrowers and to constitute Loans under Credit Facility 2 (by way of Base Rate Canada Loans if the Overdraft Loans were so denominated or Prime Rate Loans if the Overdraft Loans were so denominated, or both). Such Loans under Credit Facility 2 shall be deemed to be comprised of principal and accrued and unpaid interest in the same proportions as the corresponding Overdraft Loans.

     (h)   For certainty, it is hereby acknowledged and agreed that the Lenders who made Individual Commitments under Credit Facility 2 shall be obligated to advance their Pro Rata

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Share of an extension of credit by way of drawdown contemplated by section 3.12(g) and to disburse to the Overdraft Lender their Pro Rata Shares of the Loan referenced therein irrespective of:

(i)	whether a Default or Event of Default is then continuing or whether any other condition in Article 12 is met; and
(ii)	whether or not the Borrowers have in fact actually requested such extension of credit by way of drawdown (by delivery of a Drawdown Notice or otherwise).

3.13   General Provisions Relating to All Letters.

(a)	The Borrowers shall indemnify and save harmless the Lenders, the Issuing Lender and the Agent against all claims, losses, costs, expenses or damages to the Lenders, the Issuing Lender and the Agent arising out of or in connection with any Letter, the issuance thereof, any payment thereunder or any action taken by the Lenders, the Issuing Lender or the Agent or any other person in connection therewith, including, without limitation, all costs relating to any legal process or proceeding instituted by any party restraining or seeking to restrain the Issuing Lender from accepting or paying any Draft or any amount under any such Letter.
(b)	The Borrowers hereby acknowledge and confirm to the Issuing Lender that the Issuing Lender shall not be obliged to make any inquiry or investigation as to the right of any beneficiary to make any claim or Draft or request any payment under a Letter and payment by the Issuing Lender pursuant to a Letter shall not be withheld by the Issuing Lender by reason of any matters in dispute between the beneficiary thereof and the relevant Borrower. The sole obligation of the Issuing Lender with respect to Letters is to cause to be paid a Draft drawn or purporting to be drawn in accordance with the terms of the applicable Letter and for such purpose the Issuing Lender is only obliged to determine that the Draft purports to comply with the terms and conditions of the relevant Letter.
(c)	The Issuing Lender shall not have any responsibility or liability for or any duty to inquire into the form, sufficiency (other than to the extent provided in the preceding paragraph), authorization, execution, signature, endorsement, correctness (other than to the extent provided in the preceding paragraph), genuineness or legal effect of any Draft, certificate or other document presented to it pursuant to a Letter and the Borrowers unconditionally assume all risks with respect to the same. The Borrowers agree that they assume all risks of the acts or omissions of the beneficiary of any Letter with respect to the use by such beneficiary of the relevant Letter.

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(d)	The obligations of the Borrowers hereunder with respect to Letters shall be absolute, unconditional and irrevocable and shall not be reduced by any event or occurrence including, without limitation, any lack of validity or enforceability of any such Letter, or any Draft with respect thereto paid or acted upon by the Issuing Lender or any of its correspondents being fraudulent, forged, invalid or insufficient in any respect, or any claims which the Borrowers may have against any beneficiary or transferee of any such Letter; provided, however, that nothing herein shall adversely affect the rights of the Borrowers to commence any proceeding against the Issuing Lender for any wrongful payments made by the Issuing Lender under a Letter as a result of acts or omissions constituting gross negligence or wilful misconduct on the part of the Issuing Lender. The obligations of the Borrowers hereunder with respect to Letters shall remain in full force and effect and shall apply to any amendment to or extension of the expiration date of any such Letter.
(e)	Any action, inaction or omission taken or suffered by the Issuing Lender or any of the Issuing Lender’s correspondents under or in connection with a Letter or any Draft made thereunder, if in good faith and in conformity with foreign or domestic laws, regulations or customs applicable thereto, shall be binding upon the Borrowers and shall not place the Issuing Lender or any of its correspondents under any resulting liability to the Borrowers. Without limiting the generality of the foregoing, the Issuing Lender and its correspondents may receive, accept or pay as complying with the terms of a Letter, any Draft thereunder, otherwise in order which may be signed by, or issued to, the administrator or any executor of, or the trustee in bankruptcy of, or the receiver for any property of, or other person or entity acting as the representative or in the place of, such beneficiary or its successors and assigns. The Borrowers covenant that they will not take any steps, issue any instructions to the Issuing Lender or any of its correspondents or institute any proceedings intended to derogate from the right or ability of the Issuing Lender or its correspondents to honour and pay any Draft or Drafts.
(f)	The Borrowers agree that the Lenders, the Issuing Lender and the Agent shall have no liability to them for any reason in respect of or in connection with any Letter, the issuance thereof, any payment thereunder, or any other action taken by the Lenders, the Issuing Lender or the Agent or any other person in connection therewith, other than on account of the Issuing Lender’s gross negligence or wilful misconduct and other than to the extent not in compliance with (b) above.

The Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce (the “UCP”) shall in all respects apply to each Letter and shall be deemed for such purpose to be a part hereof as if fully incorporated herein. In the event of any conflict between the UCP and the laws of the Province of Ontario, the UCP shall prevail to the extent necessary to remove the conflict.

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3.14   Security.    The present and future indebtedness, obligations and liabilities of the Obligors under the Loan Documents shall be collaterally secured by the Security.

ARTICLE 4
DRAWDOWN

4.01   Drawdown Notice.    Subject to Sections 2.01, 3.05 and 3.06 and provided that all of the applicable conditions precedent set forth in Article 12 have been fulfilled by the Borrowers or waived in accordance with Section 14.14, the Borrowers may have credit extended to them hereunder by giving to the Agent an irrevocable notice (“Drawdown Notice”) in substantially the form of Schedule E hereto and specifying

(a)	the applicable Borrower;
(b)	the Credit Facility under which the Credit is to be extended;
(c)	the date the credit is to be extended;
(d)	whether the credit is to be extended by way of a Prime Rate Loan, a Base Rate Canada Loan, a LIBOR Loan or a Bankers’ Acceptance;
(e)	if the credit is to be extended by way of a Loan, the principal amount of the Loan;
(f)	if the credit is to be extended by way of a LIBOR Loan, the applicable Interest Period;
(g)	if the credit is to be extended by way of Bankers’ Acceptances, the aggregate face amount of the Bankers’ Acceptances to be issued and the term of the Bankers’ Acceptances;
(h)	if the credit is to be obtained by way of Letter, the date of issuance of the Letter, whether the Letter is to be a letter of credit or a letter of guarantee, the named beneficiary of the Letter, the maturity date and amount of the Letter, the currency in which the Letter is to be denominated and all other terms of the Letter;
(i)	the details of any irrevocable authorization and direction pursuant to Section 3.02; and
(j)	any further information required pursuant to the Power of Attorney in the form attached as Schedule F hereto which the Borrowers may have delivered to the Lenders.

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ARTICLE 5
ROLLOVERS

5.01   Bankers’ Acceptances.    Subject to Section 3.05 and provided that the applicable Borrower has, by giving notice to the Agent in accordance with Section 5.03, requested the Lenders to accept its drafts to replace all or a portion of outstanding Bankers’ Acceptances as they mature, each Lender shall, on the maturity of such Bankers’ Acceptances and concurrent with the payment by the Borrowers to such Lender of the face amount of such Bankers’ Acceptances or the portion thereof to be replaced, accept such Borrower’s draft or drafts having an aggregate face amount equal to its Pro Rata Share of the aggregate face amount of the matured Bankers’ Acceptances or the portion thereof to be replaced.

5.02   LIBOR Loans.    Subject to Section 3.06 and provided that the applicable Borrower has, by giving notice to the Agent in accordance with Section 5.03, requested the Lenders to continue to make credit available by way of LIBOR Loans to replace all or a portion of an outstanding LIBOR Loan at the end of its Interest Period, each Lender shall, at the end of the Interest Period of such LIBOR Loan, continue to make credit available to such Borrower by way of a LIBOR Loan (without a further advance of funds to such Borrower) in the principal amount equal to its Pro Rata Share of the principal amount of the LIBOR Loan to be replaced or the portion thereof to be replaced.

5.03   Rollover Notice.    The notice to be given to the Agent pursuant to Section 5.01 or 5.02 (“Rollover Notice”) shall be irrevocable, shall be given in accordance with Section 3.11, shall be substantially in the form of Schedule E hereto and shall specify:

(a)	the applicable Borrower;
(b)	the relevant Credit Facility;
(c)	the maturity date of the maturing Bankers’ Acceptances or the expiry date of the Interest Period of the LIBOR Loan to be replaced, as the case may be;
(d)	the face amount of the maturing Bankers’ Acceptances or the principal amount of the LIBOR Loan to be replaced, as the case may be, and the portion thereof to be replaced;
(e)	the aggregate face amount of the new Bankers’ Acceptances and the term or terms of the new Bankers’ Acceptances or the principal amount of the new LIBOR Loans, as the case may be, and the Interest Period or Interest Periods of the new LIBOR Loans; and

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(f) any further information required pursuant to the Power of Attorney in the form attached as Schedule F hereto which the Borrowers may have delivered to one or more Lenders.

ARTICLE 6
CONVERSIONS

6.01   Converting Loan to Other Type of Loan.    Subject to Section 3.06 and provided that the applicable Borrower has, by giving notice to the Agent in accordance with Section 6.04, requested that all or a portion of an outstanding Loan of a particular type be converted into another type of Loan, each Lender shall, on the date of conversion (which, in the case of the conversion of all or a portion of an outstanding LIBOR Loan, shall be the last day of the Interest Period of such Loan), continue to make credit available to such Borrower by way of the type of Loan into which the outstanding Loan or a portion thereof is converted (with a repayment and a subsequent advance of funds to such Borrower) in the aggregate principal amount equal to its Pro Rata Share of the principal amount as provided in the Conversion Notice.

6.02   Converting Loan to Bankers’ Acceptances.    Subject to Sections 3.01 and 3.05 and provided that the applicable Borrower has, by giving notice to the Agent in accordance with Section 6.04, requested the Lenders to accept its drafts to replace all or a portion of an outstanding Loan and, if a LIBOR Loan or a BA Rate Loan is to be replaced, the date of conversion is the date on which such Loan matures, each Lender shall, on the date of conversion and concurrent with the payment by the Borrowers to each Lender of the principal amount of such outstanding Loan or the portion thereof which is being converted, accept such Borrower’s draft or drafts having an aggregate face amount as provided in the Conversion Notice.

6.03   Converting Bankers’ Acceptances to Loan.    Each Lender shall, on the maturity date of a Bankers’ Acceptance which such Lender has accepted, pay to the holder thereof the face amount of such Bankers’ Acceptance. Subject to Section 3.06 and provided that the applicable Borrower has, by giving notice to the Agent in accordance with Section 6.04, requested the Lenders to convert all or a portion of outstanding maturing Bankers’ Acceptances into a particular type of Loan, each Lender shall, upon the maturity date of such Bankers’ Acceptances and the payment by such Lender to the holders of such Bankers’ Acceptances of the aggregate face amount thereof, make credit available to such Borrower by way of the Loan into which the matured Bankers’ Acceptances or a portion thereof are converted in the aggregate principal amount as provided in the Conversion Notice. Where a particular Lender has funded the Borrowers by way of a BA Rate Loan rather than by way of Bankers’ Acceptances, the provisions of this Section 6.03 as they relate to Bankers’ Acceptances shall apply mutatis mutandis to such BA Rate Loan.

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6.04   Conversion Notice.    The notice to be given to the Agent pursuant to Section 6.01, 6.02 or 6.03 (“Conversion Notice”), shall be irrevocable, shall be given in accordance with Section 3.11, shall be substantially in the form of Schedule E hereto and shall specify:

(a)	the applicable Borrower;
(b)	the relevant Credit Facility;
(c)	whether an outstanding Loan or Bankers’ Acceptances are to be converted and, if an outstanding Loan is to be converted, the type of Loan to be converted;
(d)	the date on which the conversion is to take place;
(e)	the face amount of the Bankers’ Acceptances or the portion thereof which is to be converted or the principal amount of the Loan or the portion thereof which is to be converted;
(f)	the type and amount of the Loan or Bankers’ Acceptances into which the outstanding Loan or Bankers’ Acceptances are to be converted;
(g)	if outstanding extension of credit is to be converted into a LIBOR Loan, the applicable Interest Period;
(h)	if an outstanding Loan is to be converted into Bankers’ Acceptances, the aggregate face amount of the new Bankers’ Acceptances to be issued, the term or terms of the new Bankers’ Acceptances; and
(i)	any further information required pursuant to the Power of Attorney in the form attached as Schedule F hereto which the Borrowers may have delivered to the Lenders.

6.05   Absence of Notice.    Subject to Section 3.06, in the absence of a Rollover Notice or Conversion Notice within the appropriate time periods referred to herein, a maturing Bankers’ Acceptance or BA Rate Loan shall be automatically converted to a Prime Rate Loan and a maturing LIBOR Loan shall be automatically converted to a Base Rate Canada Loan as though a notice to such effect had been given in accordance with Section 6.04.

6.06   Conversion After Default.    Subject to Section 3.06, if an Event of Default has occurred and is continuing at 10:00 a.m. (Toronto time) on the third Banking Day prior to the maturity date of a Bankers’ Acceptance, BA Rate Loan or a LIBOR Loan, such Bankers’ Acceptances or BA Rate Loan shall be automatically converted to a Prime Rate Loan and such LIBOR Loan shall be automatically converted to a Base Rate Canada Loan as though a notice to such effect had been given in accordance with Section 6.04.

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ARTICLE 7
INTEREST AND FEES

7.01   Interest Rates.    The Borrowers shall pay to the Agent for the account of the Lenders, in accordance with Section 3.08, interest on the outstanding principal amount from time to time of each Loan and on overdue interest thereon at the rate per annum equal to:

(a)	the Prime Rate plus the Applicable Margin, in the case of each Prime Rate Loan;
(b)	the Alternate Base Rate Canada plus the Applicable Margin, in the case of each Base Rate Canada Loan; and
(c)	LIBOR plus the Applicable Margin, in the case of each LIBOR Loan.

7.02   Calculation and Payment of Interest.

     (a)   Interest on the outstanding principal amount from time to time of each Prime Rate Loan and on overdue interest thereon shall accrue from day to day from and including the date on which credit is made available by way of such Loan or on which such overdue interest is due, as the case may be, to but excluding the date on which such Loan or overdue interest, as the case may be, is repaid in full (both before and after maturity and before and after judgment) and shall be calculated on the basis of the actual number of days elapsed divided by 365 or 366 in the case of a leap year.

     (b)   Interest on the outstanding principal amount from time to time of each LIBOR Loan and Base Rate Canada Loan and on overdue interest thereon shall accrue from day to day from and including the date on which credit is made available by way of such Loan or on which such overdue interest is due, as the case may be, to but excluding the date on which such Loan or overdue interest, as the case may be, is repaid in full (both before and after maturity and before and after judgment) and shall be calculated on the basis of the actual number of days elapsed divided by 360.

     (c)   Accrued interest shall be paid,

(i)	in the case of interest on Prime Rate Loans and Base Rate Canada Loans, quarterly in arrears on the last Banking Day of each Fiscal Quarter, on the date of each scheduled instalment under Section 9.01 and on the termination of the applicable Credit Facility; and
(ii)	in the case of interest on LIBOR Loans, on the last day of the applicable Interest Period and, where the Interest Period is longer than three months, three months after the beginning of such Interest Period and on the termination of the applicable Credit Facility.

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7.03   General Interest Rules.

     (a)   For the purposes hereof, whenever interest is calculated on the basis of a year of 360 days, each rate of interest determined pursuant to such calculation expressed as an annual rate for the purposes of the Interest Act (Canada) is equivalent to such rate as so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360.

     (b)   Interest on each Loan and on overdue interest shall be payable in the currency in which such Loan is denominated during the relevant period.

     (c)   If the Borrowers fail to pay any fee or other amount (other than principal or interest) of any nature payable by them hereunder on the due date therefor, the Borrowers shall pay to the Lenders to whom such amount is due interest on such overdue amount in the same currency as such overdue amount is payable from and including such due date to but excluding the date of actual payment (as well after as before judgment) at the rate per annum, calculated and compounded monthly, which is equal to:

(i)	the Alternate Base Rate Canada plus 3% in the case of overdue amounts denominated in U.S. dollars; and
(ii)	the Prime Rate plus 3% in the case of all other overdue amounts.

7.04   Selection of Interest Periods.    With respect to each LIBOR Loan, the Borrowers shall specify in the Drawdown Notice, Rollover Notice or Conversion Notice, the duration of the Interest Period provided that:

(a)	no LIBOR Loan may have an Interest Period that would end after the Credit Facility 1 Maturity Date in the case of Credit Facility 1 or the Credit Facility 2 Maturity Date in the case of Credit Facility 2;
(b)	Interest Periods for LIBOR Loans shall have a duration of one, two, three or six months;
(c)	the first Interest Period for a LIBOR Loan shall commence on and include the day on which credit is made available by way of such Loan and each subsequent Interest Period applicable thereto shall commence on and include the date of the expiry of the immediately preceding Interest Period applicable thereto; and
(d)	if any Interest Period would end on a day which is not a Banking Day, such Interest Period shall be extended to the next succeeding Banking Day unless such next succeeding Banking Day falls in the next calendar month, in which case

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such Interest Period shall be shortened to end on the immediately preceding Banking Day.

7.05   Acceptance Fees.    With respect to each draft of the Borrowers accepted pursuant hereto, the Borrowers shall pay to the Lenders, in advance, an acceptance fee calculated at the applicable rate per annum, on the basis of a year of 365 days, set forth in Schedule A hereto, on the face amount of such Bankers’ Acceptance for its term, being the actual number of days in the period commencing on the date of acceptance of the applicable Borrower’s draft and ending on but excluding the maturity date of the Bankers’ Acceptance. Such acceptance fees shall be nonrefundable and shall be fully earned when due.

7.06   Standby Fees.    Upon the first Banking Day immediately following the completion of each Fiscal Quarter and upon the termination of Credit Facility 2, the Borrowers shall pay to the Bank, in arrears, a standby fee, calculated and accruing daily from the date of the execution and delivery of this agreement at the rate equal to the Applicable Margin set forth in Schedule A hereto, calculated on the basis of a year of 365 days, on the Available Credit during such Fiscal Quarter or other period as the case may be.

7.07   Waiver. To the extent permitted by Applicable Law, the covenant of the Borrowers to pay interest at the rates provided herein shall not merge in any judgment relating to any obligation of the Borrowers to the Lenders and any provision of the Interest Act (Canada) which restricts any rate of interest set forth herein shall be inapplicable to this agreement and is hereby waived by the Borrowers.

7.08    Maximum Rate Permitted by Law. No interest or fee to be paid hereunder shall be paid at a rate exceeding the maximum rate permitted by Applicable Law. In the event that such interest or fee exceeds such maximum rate, such interest or fees shall be reduced or refunded, as the case may be, so as to be payable at the highest rate recoverable under Applicable Law.

7.09    Letter Fees.

(a)   The Borrowers shall pay to the Agent for the account of all Lenders an issuance fee (in the currency which the Letter is denominated) in advance on the date each Letter is issued or renewed calculated at a rate per annum equal to the Applicable Margin and on the amount of each such Letter for the number of days in the term of such Letter in the year of 365 or 366 days, as the case may be, in which the Letter is issued or renewed. In addition, with respect to all Letters, the Borrowers shall from time to time pay to the Agent for the account of the Issuing Lender its usual and customary fees (at the then prevailing rates) for the amendment, delivery and administration of letters of credit and letters of guarantee such as the Letters.

(b)   The Borrowers shall pay to the Agent for the account of the Issuing Lender a fee (in the currency in which the Letter is denominated) in advance on the date each Letter is issued or renewed and calculated at a rate of 0.125% per annum on the amount of each such Letter for the

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number of days in the term of such Letter in the year of 365 or 366 days, as the case may be, in which the Letter is issued or renewed.

ARTICLE 8
RESERVE, CAPITAL, INDEMNITY AND TAX PROVISIONS

8.01   Conditions of Credit.    The obtaining or maintaining of credit hereunder shall be subject to the terms and conditions contained in this Article 8.

8.02   Change of Circumstances.

     (a)   If, after the date hereof, the introduction of or any change in or in the interpretation of, or any change in its application to any Lender of, any law or any regulation or guideline issued by any Official Body, including, without limitation, any reserve or special deposit requirement or any tax (other than tax on a Lender’s general income) or any capital requirement, has, due to a Lender’s compliance, the effect, directly or indirectly, of (i) increasing the cost to such Lender of performing its obligations hereunder; (ii) reducing any amount received or receivable by such Lender hereunder or its effective return hereunder or on its capital; or (iii) causing such Lender to make any payment or to forego any return based on any amount received or receivable by such Lender hereunder, then the Lender shall deliver to the Borrowers a certificate stating that such costs have been incurred because of the existence of this Agreement or the Loans and setting out the reason for and the calculation of the relevant amount and shall document that such costs are generally being charged by such Lender to other similarly situated Borrowers under similar credit facilities and, upon demand from time to time, the Borrowers shall pay such amount as shall compensate such Lender for any such cost, reduction, payment or foregone return (but no earlier than the amount to which it pertains would have been required to be paid hereunder) provided that the Borrowers shall be obligated under this Section 8.02(a) to compensate such Lender for capital adequacy requirements measured against its outstanding obligations hereunder only to the extent such capital adequacy requirements are in excess of the capital adequacy requirements as of the date hereof. Any certificate of a Lender in respect of the foregoing will be conclusive and binding upon the Borrowers, except for manifest error, provided that such Lender shall determine the amounts owing to it in good faith using any reasonable averaging and attribution methods.

     (b)   Each Lender agrees that, as promptly as practicable after it becomes aware of the occurrence of an event or the existence of a condition that would cause it to seek additional amounts from the Borrowers pursuant to Section 8.02(a), it will use reasonable efforts to make, fund or maintain the affected credit through another lending office or take such other actions as it deems appropriate if as a result thereof the additional moneys which would otherwise be required to be paid in respect of such credit pursuant to Section 8.02(a) would be reduced and if, as determined by such Lender in its sole discretion, the making, funding or maintaining of such credit through such other lending office or the taking of such other actions would not otherwise

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adversely affect such credit or such Lender and would not, in such Lender’s sole discretion, be commercially unreasonable.

     (c)   Notwithstanding Section 8.02(a), the Borrowers shall not be liable to compensate a Lender for any such cost, reduction, payment or foregone return:

(i)	resulting from any law, regulation or guideline now in effect;
(ii)	occurring more than 60 days before receipt by the Borrowers of the certificate described in Section 8.02(a); or
(iii)	if such compensation is not being claimed as a general practice from customers of such Lender who by agreement are liable to pay such or similar compensation.

In determining the amount of compensation payable by the Borrowers under Section 8.02(a), such Lender shall use all reasonable efforts to minimize the compensation payable by the Borrowers including, without limitation, using all reasonable efforts to obtain refunds or credits, and any compensation paid by the Borrowers which is later determined not to have been properly payable or in respect of which a refund, credit or compensation has been received shall forthwith be reimbursed by such Lender to the Borrowers.

8.03   Assignment as a Result of Change of Circumstances.    If any Lender but not all of the Lenders seeks additional compensation pursuant to Section 8.02(a) (the “Affected Lender”), then the Borrowers may indicate to the Agent in writing that they desire the Affected Lender to be replaced with one or more of the other Lenders, and the Agent shall then forthwith give notice to the other Lenders that any Lender or Lenders may, in the aggregate, assume all (but not part) of the Affected Lender’s Individual Commitment and obligations hereunder and acquire all (but not part) of the rights of the Affected Lender and assume all (but not part) of the obligations of the Affected Lender under each of the other agreements and instruments delivered pursuant hereto (but in no event shall any other Lender or the Agent be obliged to do so). If one or more Lenders shall so agree in writing (herein collectively called the “Assenting Lenders” and individually called an “Assenting Lender”) with respect to such acquisition and assumption, the Individual Commitment and the obligations of such Assenting Lender under this agreement and the rights and obligations of such Assenting Lender under each of the other agreements and instruments delivered pursuant hereto shall be increased by its respective pro rata share (based on the relative Individual Commitments of the Assenting Lenders) of the Affected Lender’s Pro Rata Share of outstanding credit and Individual Commitment and obligations under this agreement and rights and obligations under each of the other agreements and instruments delivered pursuant hereto on a date mutually acceptable to the Assenting Lenders and the Borrowers. On such date, the Assenting Lenders shall pay to the Affected Lender the amount of the outstanding credit which it has made available to the Borrowers and the Affected Lender shall cease to be a “Lender” for purposes of this agreement and shall no longer have any

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obligations hereunder. Upon the assumption of the Affected Lender’s Individual Commitment as aforesaid by an Assenting Lender, Schedule A hereto shall be deemed to be amended to increase the Individual Commitment of such Assenting Lender by the respective amounts of such assumption. If there are no Assenting Lenders, the Borrowers may, subject to Section 14.18, designate to the Agent by written notice a Canadian chartered bank which is not a Lender and, for all purposes of this Section 8.03, such bank shall be the sole Assenting Lender.

8.04   Indemnity Relating to Credits.    Upon notice from the Agent to the Borrowers (which notice shall be accompanied by a detailed calculation of the amount to be paid by the Borrowers), the Borrowers shall pay to the Agent or the Lenders such amount or amounts as will compensate the Agent or the Lenders for any loss, cost or expense incurred by them:

(a) in the liquidation or redeposit of any funds acquired by the Lenders to fund or maintain any portion of a LIBOR Loan or a BA Rate Loan as a result of:

(i)	the failure of either Borrower to borrow or make repayments on the dates specified under this agreement or in any notice from either Borrower to the Agent; or
(ii)	the repayment or prepayment of any amounts on a day other than the payment dates prescribed herein or in any notice from either Borrower to the Agent; or

(b) with respect to any Bankers’ Acceptance, arising from claims or legal proceedings, and including reasonable legal fees and disbursements, respecting the collection of amounts owed by the Borrowers hereunder in respect of such Bankers’ Acceptance or the enforcement of the Agent’s or Lenders’ rights hereunder in respect of such Bankers’ Acceptance including, without limitation, legal proceedings attempting to restrain the Agent or the Lenders from paying any amount under such Bankers’ Acceptance.

8.05   Indemnity for Transactional and Environmental Liability.

     (a)   The Borrowers hereby agree to indemnify, exonerate and hold the Agent and each Lender and each of their respective officers, directors and agents (collectively, the “Indemnified Parties”) free and harmless from and against any and all claims, demands, actions, causes of action, suits, losses, costs (including, without limitation, all documentary, recording, filing, mortgage or other stamp taxes or duties), liabilities (other than contingent liabilities and/or related accounts) and damages, and expenses in connection therewith (irrespective of whether such Indemnified Party is a party to the action for which indemnification hereunder is sought), and including, without limitation, reasonable legal fees and out of pocket disbursements (collectively, in this Section 8.05(a), the “Indemnified Liabilities”), paid, incurred or suffered by the Indemnified Parties or any of them as a result of, or arising out of, or relating to (i) any

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transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any extension of credit obtained hereunder, or (ii) the execution, delivery, performance or enforcement of this agreement and any instrument, document or agreement executed pursuant hereto, except for any such Indemnified Liabilities that a court of competent jurisdiction determined arose on account of the relevant Indemnified Party’s gross negligence or willful misconduct.

     (b)   Without limiting the generality of the indemnity set out in Section 8.05(a), the Borrowers hereby further agree to indemnify, exonerate and hold the Indemnified Parties free and harmless from and against any and all claims, demand, actions, causes of action, suits, losses, costs, liabilities (other than contingent liabilities and/or related accounts) and damages, and expenses in connection therewith, including, without limitation, reasonable legal fees and out of pocket disbursements, of any and every kind whatsoever (collectively, in this Section 8.05(b), the “Indemnified Liabilities”), paid, incurred or suffered by the Indemnified Parties or any of them for, with respect to, or as a direct or indirect result of, (i) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission or release from, any Property of any Hazardous Material or (ii) the breach or violation of any Environmental Law by any of the Companies, except for any such Indemnified Liabilities that a court of competent jurisdiction determined arose on account of the relevant Indemnified Party’s gross negligence or willful misconduct.

     (c)   All obligations provided for in this Section 8.05 shall survive any termination of the Credit Facilities or this agreement and shall not be reduced or impaired by any investigation made by or on behalf of the Agent or any of the Lenders.

     (d)   The Borrowers hereby agree that, for the purposes of effectively allocating the risk of loss placed on the Borrowers by this Section 8.05, the Agent and each of the Lenders shall be deemed to be acting as the agent or trustee on behalf of and for the benefit of its officers, directors and agents.

     (e)   If, for any reason, the obligations of the Borrowers pursuant to this Section 8.05 shall be unenforceable, the Borrowers agree to make the maximum contribution to the payment and satisfaction of each obligation that is permissible under applicable law, except to the extent that a court of competent jurisdiction determines such obligations arose on account of the gross negligence or willful misconduct of any Indemnified Party.

8.06   Payments Free and Clear of Taxes.    The Borrowers hereby agree, in favour of the Agent and each Lender, subject to compliance by the relevant Lender with the provisions of Section 14.18, that:

     (a)   Any and all payments made by the Borrowers under or pursuant to this agreement or any agreement or instrument delivered pursuant hereto shall be made free and clear of, and without deduction for, any and all present or future taxes, levies, imposts, deductions, charges,

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fees, duties or withholding or other charges of any nature imposed by any taxing authority in Canada, and all liabilities with respect thereto, imposed as a consequence of the making of any payment under or pursuant to this agreement or any agreement or instrument delivered pursuant hereto excluding, in the case of the Agent or any Lender, taxes imposed on its net income or capital taxes or receipts and franchise taxes (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If the Borrowers shall be required by law to deduct any Taxes from or in respect of any sum payable to the Agent or any Lender under or pursuant to this agreement or any agreement or instrument delivered pursuant hereto, the sum so payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.06) the Agent or such Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made.

     (b)   The Borrowers hereby indemnify and hold harmless the Agent and each Lender for the full amount of Taxes, and for any incremental Taxes due to the Borrowers’ failure to remit to the Agent and the Lenders the required receipts or other required documentary evidence or due to the Borrowers’ failure to pay any Taxes when due to the appropriate taxing authority (including, without limitation, any Taxes imposed by any jurisdiction on amounts payable under this Section 8.06) which are paid by the Agent or any Lender, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally assessed. The Agent or any Lender who pays any Taxes shall promptly notify the Borrowers of such payment and, if such payment was made pursuant to an incorrect or illegal assessment, shall reasonably cooperate with the Borrowers, at the expense of the Borrowers, in any dispute of such assessment. Payment pursuant to this indemnification shall be made within 30 days from the date the Agent or such Lender, as the case may be, makes written demand therefor.

     (c)   Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 8.06 shall survive the repayment of the outstanding credit hereunder and the termination of the Credit Facilities or this agreement.

ARTICLE 9
REPAYMENTS AND PREPAYMENTS

9.01   Repayment under Credit Facility 1.    The aggregate credit outstanding under Credit Facility 1 as of the date hereof shall be repaid by the Borrowers to the Lenders in the following amounts on the following dates:

Amount	Date
$1,562,500	December 31, 2002
$1,562,500	March 31, 2003

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Amount	Date
$3,125,000	June 30, 2003
$3,125,000	September 30, 2003
$3,125,000	December 31, 2003
$3,125,000	March 31, 2004
$5,468,750	June 30, 2004
$5,468,750	September 30, 2004
$5,468,750	December 31, 2004
$5,468,750	March 31, 2005
$6,250,000	June 30, 2005
$6,250,000	September 30, 2005
$6,250,000	December 31, 2005
$6,250,000	January 30, 2006

Amounts which are repaid as aforesaid may not be reborrowed.

9.02   Repayment under Credit Facility 2.    Subject to Section 9.03, the aggregate credit outstanding under Credit Facility 2, together with all accrued and unpaid interest thereon and all accrued and unpaid fees with respect thereto, shall be repaid by the Borrowers to the Lenders on the Credit Facility 2 Maturity Date. Amounts which are repaid as aforesaid may not be reborrowed. As concerns any Letter which, on the Credit Facility 2 Maturity Date, has an expiry date later than the Credit Facility 2 Maturity Date, the Borrowers shall pay to the Agent for deposit to the Ca sh Collateral Account, on the Credit Facility 2 Maturity Date, the then contingent liability of the Issuing Lender thereunder; following such deposit by the Borrowers to the Cash Collateral Account, the Agent shall apply funds in the Cash Collateral Account to (a) satisfy any reimbursement obligations of the Borrowers to the Issuing Lender under Section 9.08, or (b) refund to the Borrowers any amounts payable by the Issuing Lender to the Borrowers under Section 13.04.

9.03   Extension of Credit Facility 2 Maturity Date.

     (a)   The Borrowers may, by written request given to the Agent (for purposes of this Section 9.04, the “Extension Request”) not earlier than 90 days nor later than 60 days prior to the then current Credit Facility 2 Maturity Date, request that this agreement be amended to extend the Credit Facility 2 Maturity Date to a date 364 days later than the effective date of such amendment (for purposes of this Section 9.04, the “Extension Amendment”). A copy of the Extension Request shall be provided by the Agent to each of the Lenders. Each Lender shall notify the Agent as to whether or not it consents to the Extension Amendment within 30 days following receipt of the Extension Request. If any Lender does not provide such notice within such time, such Lender shall be deemed to have consented to the Extension Amendment. Where the Extension Amendment has been consented to by a group of Lenders whose Individual Commitments aggregate at least 66 2/3% of the aggregate of the Individual Commitments of all the Lenders but has not been consented to by all of the Lenders, then on or before the second

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Banking Day following the aforesaid 30 day period, the Agent shall give written notice to the Borrower and the Lenders advising as to those Lenders who have consented to or are deemed to have consented to the Extension Amendment (for purposes of this Section 9.04, the “Consenting Lenders”) and those Lenders who have not consented to the Extension Amendment (for purposes of this Section 9.04, the “Dissenting Lenders”).

     (b)   If the Borrowers have requested the Extension Amendment and the Extension Amendment has been consented to by at least 66 2/3, but not all, of the Lenders, then the Borrowers may locate one or more other financial institutions (for purposes of this Section 9.04, “Substitute Lenders”), satisfactory to the Agent acting reasonably, to become Lenders under the Loan Documents and to acquire all or a rateable portion of the rights and obligations of the Dissenting Lenders under the Loan Documents. If not all of the rights and obligations of the Dissenting Lenders have been acquired by Substitute Lenders on or before the then current Credit Facility 2 Maturity Date, the Borrower shall repay the aggregate credit outstanding under Credit Facility 2, together with all accrued and unpaid interest thereon and all accrued and unpaid fees with respect thereto, as provided in Section 9.03.

     (c)   Amounts which are repaid as aforesaid may not be reborrowed.

9.04   Voluntary Prepayments. The Borrowers shall be entitled, at their option and on five Banking Days notice to the Agent, to prepay all or any portion of the outstanding credit under Credit Facility 1 and Credit Facility 2 without penalty; provided that (i) Section 8.04(b) shall be complied with in connection with any such prepayment and (ii) any such prepayment of all or any portion of any outstanding Loan shall be in an amount of no less than $500,000 and otherwise in multiples of $100,000. Amounts under Credit Facility 2 which have been prepaid as aforesaid may be reborrowed. Amounts under Credit Facility 1 which have been prepaid as aforesaid may not be reborrowed. Any such prepayments under Credit Facility 1 shall be applied in inverse order of maturity.

9.05   Mandatory Prepayments under the Credit Facilities.    Fifty percent of the proceeds of any issues of equity securities of the Borrowers (net of all expenses of issue) and 100% of the proceeds of any Permitted Disposition (net of all expenses of disposition and all taxes related thereto) (or 75% of such proceeds if, at the time of such Permitted Disposition, the Debt to EBITDA Ratio for the most recently completed Fiscal Quarter is less than 2.5 to 1) shall be applied as a mandatory prepayment of Credit Facilities on the completion of each such issue or Permitted Disposition, as the case may be. Each such prepayment shall be applied pro rata to the Credit Facilities and, in the case of Credit Facility 1, in inverse order of maturity. Amounts which are prepaid under Credit Facility 2 as aforesaid may be reborrowed. Amounts which are prepaid under Credit Facility 1 as aforesaid may not be reborrowed.

9.06   Mandatory Prepayments under Credit Facility 1.    With respect to each Fiscal Year, the Borrowers shall prepay outstanding credit under Credit Facility 1 in an amount equal to fifty percent of Excess Cash Flow for such Fiscal Year in excess of $5,000,000, calculated at the end

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of such Fiscal Year and payable within 120 days of the end of such Fiscal Year. Amounts which are so repaid may not be reborrowed. Amounts prepaid under Credit Facility 1 as aforesaid shall be applied in inverse order of maturity.

9.07   Repayments of Credit Excess.    In the event that the Credit Excess with respect to a particular Credit Facility at any time exceeds 3% of the aggregate amount of credit outstanding under such Credit Facility at such time, the Borrowers shall repay to the relevant Lenders, upon the demand of the Agent, the amount of the Credit Excess with respect to such Credit Facility at such time.

9.08   Reimbursement or Conversion on Presentation of Letters.

(a) On presentation of a Letter and payment thereunder by the Issuing Lender, the Borrowers shall forthwith pay to the Agent for the account of the Issuing Lender, and thereby reimburse the Issuing Lender for, all amounts paid by the Issuing Lender pursuant to such Letter; failing such payment, the Borrowers shall be deemed to have effected a conversion of such Letter into: (i) a Prime Rate Loan in the case of a Letter denominated in Canadian dollars or (ii) a Base Rate Canada Loan, in the case of a Letter denominated in United States dollars, in each case to the extent of the payment of the Issuing Lender thereunder.

(b) (i) If the Issuing Lender makes payment under any Letter and the Borrowers do not fully reimburse the Issuing Lender on or before the date of payment, then Section 9.08(a) shall apply to deem a Loan to be outstanding to the relevant Borrower under this agreement in the manner therein set out. Each Lender shall, on request by the Issuing Lender, immediately pay to the Issuing Lender an amount equal to such Lender’s Pro Rata Share of the amount paid by the Issuing Lender such that each Lender is participating in the deemed Loan in accordance with its Pro Rata Share;

(ii)	Each Lender shall immediately on demand indemnify the Issuing Lender to the extent of such Lender’s Pro Rata Share of any amount paid or liability incurred by the Issuing Lender under each Letter issued by it to the extent that the Borrower does not fully reimburse the Issuing Lender therefor.
(iii)	For certainty, the obligations in this Section 9.08(b) shall continue as obligations of the Persons who were Lenders at the time each such Letter was issued notwithstanding that such Lender may assign its rights and obligations hereunder, unless the Issuing Lender specifically releases such Lender from such obligations in writing.

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9.09   Letters Subject to an Order.    The Borrowers shall pay to the Agent for deposit to the Cash Collateral Account an amount equal to the maximum amount available to be drawn under any unexpired Letter which becomes the subject of any Order; payment in respect of each such Letter shall be due forthwith upon demand in the currency in which such Letter is denominated. The Agent shall apply funds in the Cash Collateral Account to (a) satisfy any reimbursements obligations of the Borrowers to the Issuing Lender under Section 9.08, or (b) refund to the Borrowers any amounts payable by the Issuing Lender to the Borrowers under Section 13.04.

ARTICLE 10
REPRESENTATIONS AND WARRANTIES

10.01   Representations and Warranties.    To induce the Lenders and the Agent to enter into this agreement and to make credit available to the Borrowers hereunder from time to time, the Borrowers hereby represent and warrant to the Lenders and the Agent, as at the date hereof and, as at the date of each extension of credit as set forth in Article 12 as follows and acknowledge and confirm that the Lenders and the Agent are relying upon such representations and warranties in executing this agreement and in extending credit hereunder:

(a)	Status and Power.    Each Company is a corporation duly incorporated or amalgamated and organized and validly existing under the laws of its respective jurisdiction of incorporation or amalgamation. Each Company is duly qualified, registered or licensed in all jurisdictions where such qualification, registration or licensing is required for such Company to carry on its business, except where failure to do so could not reasonably be expected to have a Material Adverse Effect. Each Company has all requisite capacity, power and authority to own, hold under licence or lease its properties, to carry on its business and to otherwise enter into, and carry out the transactions contemplated by, the Loan Documents to which it is a party.
(b)	Authorization and Enforcement of Loan Documents.    All necessary action, corporate or otherwise, has been taken to authorize the execution, delivery and performance by each Company of the Loan Documents to which it is a party. Each Company has duly executed and delivered the Loan Documents to which it is a party. The Loan Documents to which each Company is a party are legal, valid and binding obligations of such Company, enforceable against such Company by the Agent and the Lenders in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, moratorium, reorganization and other laws of general application limiting the enforcement of creditors’ rights generally and (ii) the fact that the courts may deny the granting or enforcement of equitable rights.
(c)	Compliance with Other Instruments.    The execution, delivery and performance by each Company of the Loan Documents to which it is a party, and

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	the consummation of the transactions contemplated herein and therein, do not and will not conflict with, result in any breach or violation of, or constitute a default under the terms, conditions or provisions of the articles of incorporation or bylaws of the Companies, any Applicable Law or any agreement, lease, licence, permit or other instrument to which any Company is a party or is otherwise bound or by which any Company benefits or to which its property is subject and do not require the consent or approval of any Official Body or any other Person except as has been obtained. Each Company has complied with all Applicable Law in respect of the Loan Documents and the transactions contemplated herein.
(d)	Compliance with Laws.    None of the Companies are in violation of any agreement, employee benefit plan, pension plan, mortgage, franchise, licence, judgment, decree, order, statute, rule or regulation relating in any way to itself, to the operation of its business or to its property or assets and which could reasonably be expected to have a Material Adverse Effect.
(e)	Litigation.    Except as disclosed in Schedule G hereto, there are no actions, suits, investigations, claims or proceedings which have been commenced or have been threatened in writing against or affecting any of the Companies before any Official Body in respect of which there is a reasonable possibility of a determination adverse to the relevant Company and which, if determined adversely, could reasonably be expected to have a Material Adverse Effect.
(f)	Environmental Compliance.

(i)

All facilities and property (including underlying groundwater) owned, leased, use d or operated by the Companies have been, and continue to be, owned, leased, used or operated by the Companies in compliance with all Environmental Laws in effect at the time and from time to time of such ownership, leasing or usage, except where failure to do so could not reasonably be expected to have a Material Adverse Effect.

(ii)

There are no pending or threatened (in writing):

(A)	claims, complaints, notices or requests for information received by the Companies with respect to any alleged violation of any Environmental Law, except such as could not reasonably be expected to have a Material Adverse Effect, or
(B)	complaints, notices or inquiries to the Companies regarding potential liability under any Environmental Law which liability could reasonably be expected to have a Material Adverse Effect;

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(iii)	There has been no escape, seepage, leakage, spillage, discharge, emission or release of Hazardous Materials at, on, under or from any property now or previously owned, leased, used or operated by the Companies that, singly or in the aggregate, have, or could reasonably be expected to have, a Material Adverse Effect.
(iv)	The Companies have been issued and are in compliance with all Environmental Permits, except where failure to do so could not reasonably be expected to have a Material Adverse Effect.
(v)	No conditions exist at, on or under any property now or previously owned, leased, used or operated by the Companies which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law in effect at the time, which liability could reasonably be expected to have a Material Adverse Effect.
(vi)	The Companies have not within the immediately preceding 10 years been convicted of an offence for non-compliance with any Environmental Laws, Environmental Permits or Environmental Orders or been fined or otherwise sentenced or settled such prosecution short of conviction.
(vii)	The Companies have in effect a management structure and policies and procedures that will permit them to effectively management environmental risk and respond in a timely manner in compliance with the Environmental Laws, Environmental Orders and Environmental Permits in the event of Release of Hazardous Materials in, on or under their property.

(g)

Financial Statements.    The Financial Statements were prepared in accordance with generally accepted accounting principles consistently applied in accordance with past practice. The balance sheets contained in the Financial Statements fairly present the consolidated financial condition of the Borrowers as at the respective dates thereof and the statements of income contained in the Financial Statements fairly present the consolidated results of operations of the Borrowers during the respective fiscal periods covered thereby.

(h)

Tax Returns and Taxes.    Each Company has filed all tax returns and tax reports required by law to have been filed by it and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with generally accepted accounting principles shall have been set aside on its books.

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(i)	Subsidiaries and Partnerships.    There are no Subsidiaries other than the Guarantors, Vitran Ireland Finance, The Freight Connection Inc., Multimodal Finance L.L.C., Vitran Rt (Hungary), Encore Hy-Grade Paper Recyclers Inc. and those which have become Subsidiaries pursuant to Section 11.01(o) and no Company is a member of, or a partner or participant in, any partnership, joint venture or syndicate. All of the Subsidiaries are wholly-owned Subsidiaries.
(j)	Outstanding Defaults.    No event has occurred which constitutes or which, with the giving of notice, lapse of time or both, would constitute a default under or in respect of any agreement, undertaking or instrument under which any of the Companies have outstanding indebtedness, including the Senior Note Agreement, except that neither of Vitran Ireland Finance or Logistic Methods (with the consent of the holders of the Senior Notes) has provided a guarantee to the holders of the Senior Notes as required by the Senior Note Agreement.
(k)	Solvency Proceedings.    None of the Companies has:

(i)	admitted its inability to pay its debts generally as they become due or failed to pay its debts generally as they become due;
(ii)	in respect of itself, filed an assignment or petition in bankruptcy or a petition to take advantage of any insolvency statute;
(iii)	made an assignment for the benefit of its creditors;
(iv)	consented to the appointment of a receiver of the whole or any substantial part of its assets;
(v)	filed a petition or answer seeking a reorganization, arrangement, adjustment or composition in respect of itself under applicable bankruptcy laws or any other applicable law or statute of Canada or any subdivision thereof; or
(vi)	been adjudged by a court having jurisdiction a bankrupt or insolvent, nor has a decree or order of a court having jurisdiction been entered for the appointment of a receiver, liquidator, trustee or assignee in bankruptcy of such Company with such decree or order having remained in force and undischarged or unstayed for a period of thirty days.

(l) Freehold Interests.    None of the Borrowers or Canadian Guarantors own any freehold interest in any real estate other than the parcels which are described by their municipal addresses in Schedule I hereto.

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(m)	Leasehold Interests.    None of the Borrowers or Canadian Guarantors own any leasehold interest in any real estate other than the parcels which are described by their municipal addresses in Schedule J hereto.
(n)	Issued Capital.    The classes and numbers of and the registered owners of the issued and outstanding shares of TWE, each of the Canadian Guarantors and Vitran Corporation as of the date hereof is as set forth in Schedule K hereto.
(o)	Noteholders.    As of the date hereof, the registered holders of the Senior Notes are Teachers Insurance and Annuity Association of America, Principal Life Insurance Company, Combined Capital Life Insurance Company of America and Alexander Hamilton Life Insurance Company of America.
(p)	No Omissions.    None of the representations and statements of fact set forth in this Section 10.01 omits to state any material fact necessary to make such representation or statement of fact not misleading in any material respect.

10.02   Survival of Representations and Warranties.    All of the representations and warranties of the Borrowers contained in Section 10.01 shall survive the execution and delivery of this agreement and shall continue (with reference to the actual dates at which such representations and warranties are made) until all outstanding credit hereunder has been repaid and the Credit Facilities have been terminated notwithstanding any investigation made at any time by or on behalf of the Agent or any of the Lenders.

ARTICLE 11
COVENANTS

11.01   Affirmative Covenants.    The Borrowers hereby covenant and agree with the Agent and the Lenders that, until all outstanding credit hereunder has been repaid in full and the Credit Facilities have been terminated, and unless the Lenders otherwise expressly consent in writing in accordance with Section 14.14:

(a) Financial Reporting.    The Borrowers shall furnish the Agent with the following documents, statements and reports:

(i)	within 120 days after the end of each Fiscal Year, a copy of the audited consolidated financial statements of Vitran and the auditors’ certification thereof and unaudited financial statements of each of the Material Subsidiaries prepared in accordance with generally accepted accounting principles;
(ii)	within 60 days after the end of each Fiscal Quarter, a copy of the unaudited consolidated financial statements of Vitran and each of the

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	Material Subsidiaries with respect thereto prepared in accordance with generally accepted accounting principles;
(iii)	concurrently with the delivery of the financial statements of Vitran and the Material Subsidiaries pursuant to (i) and (ii) above, a compliance certificate of Vitran in the form of Schedule C hereto;
(iv)	such additional financial or operating reports or statements as the Agent on the instructions of any Lender may, from time to time, reasonably require.

(b) Debt to EBITDA Ratio.    Vitran shall at all times maintain the Debt to EBITDA Ratio at:

(i)	less than or equal to 3.25 to 1 for the Fiscal Quarter ending March 31, 2002;
(ii)	less than or equal to 3.00 to 1 for the Fiscal Quarters ending June 30, 2002 and September 30, 2002;
(iii)	less than or equal to 2.75 to 1 for the Fiscal Quarters ending December 31, 2002 and March 31, 2003;
(iv)	less than or equal to 2.50 to 1 for the Fiscal Quarters ending June 30, 2003 and September 30, 2003;
(v)	less than or equal to 2.25 to 1 for the Fiscal Quarter ending December 31, 2003 and for each Fiscal Quarter in the calendar year 2004; and
(vi)	less than or equal to 2.0 to 1 for each Fiscal Quarter thereafter.

(c)	EBITDA to Capital Expenditures and Interest Expenses Ratio.    Vitran shall at all times maintain the EBITDA to Capital Expenditures and Interest Expenses Ratio at greater than or equal to 1.25 to 1.
(d)	Equity.    Equity shall at all times exceed the aggregate of:

(i)	$60,000,000; and
(ii)	the aggregate of 50% of Net Income for each Fiscal Quarter beginning January 1, 1999 and for each Fiscal Quarter thereafter which has been completed on or before the date of determination and, if Net Income for any such period is a negative amount, it shall be deemed to be equal to zero.

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(e)	Corporate Existence.    The Borrowers shall, and shall cause each of the Subsidiaries to, maintain their corporate existence in good standing and shall, and shall cause each of the Subsidiaries to, qualify and remain duly qualified to carry on business and own property in each jurisdiction in which such qualification is necessary to the extent that a failure to so qualify could reasonably be expected to have a Material Adverse Effect; provided that nothing herein shall prohibit the merger, consolidation, wind-up or amalgamation of any Subsidiary into any another Subsidiary or into the Borrowers or the discontinuance of the operations of any Subsidiary if such merger, consolidation or discontinuance could not reasonably be expected to have a Material Adverse Effect.
(f)	Conduct of Business.    The Borrowers shall, and shall cause each of the Subsidiaries to, conduct their business in such a manner so as to comply in all respects with all Applicable Laws, so as to observe and perform all its obligations under leases, licences and agreements necessary for the proper conduct of its business and so as to preserve and protect its property and assets and the earnings, income and profits therefrom (including, without limitation, Environmental Laws and laws relating to the discharge, spill, disposal or emission of Hazardous Materials) to the extent that such non-compliance, non-observance or nonperformance could reasonably be expected to have a Material Adverse Effect. The Borrowers shall, and shall cause each of the Subsidiaries to, obtain and maintain all material licenses, certificates of approval, consents, registrations, permits, government approvals, franchises, authorizations and other rights necessary for the operation of their business to the extent that a failure to do so could reasonably be expected to have a Material Adverse Effect.
(g)	Use of Proceeds.    The Borrowers shall apply all of the proceeds of the credit obtained under Credit Facility 2 to finance the working capital requirements of the Borrowers and to repay Overdraft Loans.
(h)	Insurance.    The Borrowers shall, and shall cause each of the Subsidiaries to, maintain insurance with reputable insurers with respect to their properties and business against loss or damage of the kind customarily insured against by companies engaged in the same or similar business, of such types and in such amounts as are customarily carried under such circumstances by such other companies.
(i)	Taxes.    The Borrowers shall, and shall cause each of the Subsidiaries to, file all tax returns and tax reports required by law to be filed by them and pay all material taxes, rates, government fees and dues levied, assessed or imposed upon them and upon their property or assets or any part thereof, as and when the same become due and payable (except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate

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	reserves in accordance with generally accepted accounting principles shall have been set aside on its books), where the failure to file such tax returns and tax reports or to pay such taxes, rates, government fees or duties could reasonably have a Material Adverse Effect.
(j)	Reimbursement of Expenses.    The Borrowers shall reimburse the Agent, on demand, for all reasonable out-of-pocket costs, charges and expenses incurred by or on behalf of the Agent (including, without limitation, travel costs and the reasonable fees and out-of-pocket disbursements of its counsel) in connection with:

(i)	the development, negotiation, preparation, execution, syndication, delivery, interpretation and enforcement of this agreement and all other documentation ancillary to the completion of the transactions contemplated hereby and any amendments hereto or thereto and any waivers of any provisions hereof or thereof (whether or not consummated or entered into); and
(ii)	any lien search fees relating to the transactions contemplated hereby; and the Borrowers may contest the reasonableness of such costs, charges and expenses in good faith. The Borrowers shall also reimburse each Lender for reasonable fees and out-of-pocket disbursements of its counsel in connection with the enforcement of this agreement.

and the Borrowers may contest the reasonableness of such costs, charges and expenses in good faith. The Borrowers shall also reimburse each Lender for reasonable fees and out-of-pocket disbursements of its counsel in connection with the enforcement of this agreement.

(k)

Books and Records.    The Borrowers shall, and shall cause each of the Subsidiaries to, keep proper books of account and records covering all their business and affairs on a current basis, make full, true and correct entries in all material respects of their transactions in such books, set aside on their books from their earnings all such proper reserves as required by generally accepted accounting principles and permit representatives of the Agent to inspect such books of account, records and documents and to make copies therefrom during reasonable business hours and upon reasonable notice and to discuss the affairs, finances and accounts of the Companies with the officers of the Companies and their auditors during reasonable business hours and upon reasonable notice.

(l)

Notice of Litigation.    The Borrowers shall promptly notify the Agent of any actions, suits, inquiries, claims or proceedings (whether or not purportedly on behalf of any of the Companies) commenced or threatened in writing against or affecting any of the Companies before any government, parliament, legislature, regulatory authority, agency, commission, board or court or before any private arbitrator, mediator or referee which in any case or in the aggregate could reasonably be expected to have a Material Adverse Effect.

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(m)	Environmental Matters.    The Borrowers shall, as soon as practicable and in any event within 30 days, notify the Agent and provide copies upon receipt of all written claims, complaints, notices or inquiries from an Official Body relating to the condition of the facilities and properties of the Companies or compliance with Environmental Laws, which claims, complaints, notices or inquiries relate to matters which would have, or may reasonably be expected to have, a Material Adverse Effect, and shall, and shall cause each of the Subsidiaries to, proceed diligently to resolve any such claims, complaints, notices or inquiries relating to compliance with Environmental Laws and provide such information and certifications which the Agent may reasonably request from time to time to evidence compliance with this provision.
(n)	Notice of Default or Event of Default.    Upon the occurrence of a Default or an Event of Default, the Borrowers shall promptly deliver to the Agent a notice specifying the nature and date of occurrence of such Default or Event of Default and the action which the Borrowers propose to take with respect thereto.
(o)	Future Subsidiaries to Become Guarantors.    The Borrowers will cause any Person becoming a Subsidiary after the date hereof to execute and deliver counterparts to the Guarantee thereby becoming a Guarantor thereunder. In addition, in connection therewith, each such new Subsidiary will be required to execute and deliver, or cause to be executed and delivered, all other relevant documentation (including opinions of counsel and corporate organizational and authorizing documents) as the Agent shall reasonably request.
(p)	Additional Security.   On the earlier to occur of the repayment in full of the Senior Notes and December 31, 2002:

(i)

Vitran shall cause each of the U.S. Guarantors to execute and deliver to the Agent a Security Agreement and all other relevant documentation (including opinions of counsel and corporate organizational and authorizing documents) to ensure that the Lenders have a first-ranking security interest in all of the Accounts of the U.S. Guarantors; and

(ii)

if the Debt to EBITDA Ratio for the most recently completed Fiscal Quarter was greater than or equal to 2.5 to 1, Vitran shall cause each of the U.S. Guarantors to execute and deliver to the Agent a Security Agreement, one or more Mortgages and all other relevant documentation (including opinions of counsel and corporate orga nizational and authorizing documents) to ensure that the Lenders have a first-ranking security interest in the Accounts and equipment of each U.S. Guarantor and a first-ranking mortgage and charge on the real property of each U.S. Guarantor which is designated in the sole discretion of the Lenders.

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(q) Post-Amendment Compliance.    On or before February 28, 2002, the Borrowers shall:

(i)	cause TWE to grant to the Agent, for and on behalf of the Lenders, a first mortgage and charge over the freehold parcel of real property located at 10079 Grace Rd. Surrey, B.C., in form and substance satisfactory to the Agent, as continuing collateral security for all present and future indebtedness, obligations and liabilities of TWE to the Agent and the Lenders under the Loan Documents, and to provide to the Agent all other relevant documentation (including opinions of counsel and corporate organizational and authorizing documents) as the Agent shall reasonably request;
(ii)	comply with the provisions of Section 11.01(o) as they relate to Encore Hy-Grade Paper Recyclers, Inc. and The Freight Connection Inc. as new Subsidiaries; and
(iii)	cause TWE to execute and deliver to the Agent the TWE Alberta Mortgage Amending Agreement.

11.02   Restrictive Covenants.    The Borrowers hereby covenant and agree with the Agent and the Lenders that, until all outstanding credit hereunder has been repaid in full and the Credit Facilities have been terminated, and unless the Lenders otherwise expressly consents in writing in accordance with Section 14.14:

(a)	Encumbrances.    The Borrowers shall not, and shall not suffer or permit any of the Subsidiaries to, enter into or grant, create, assume or suffer to exist any Lien affecting any of their property, assets or undertaking, save and except only for the Permitted Liens.
(b)	Corporate Existence.    The Borrowers shall not, and shall not suffer or permit any of the Subsidiaries to, take part in any amalgamation, merger, winding-up, dissolution, capital or corporate reorganization or simi lar proceeding or arrangement, except that any of them may amalgamate or merge with any Subsidiary which is a direct or indirect wholly-owned subsidiary of the Borrowers and any Subsidiary may wind up into any other Subsidiary or either Borrower if it is a wholly-owned subsidiary of the entity or entities into which it is winding up and any of them may transfer any or all of its assets to any Subsidiary which is a direct or indirect wholly-owned subsidiary of the Borrowers.
(c)	Debt.    The Borrowers shall not, and shall not suffer or permit any of the Subsidiaries to, incur or permit or suffer to exist any Debt other than Permitted Debt.

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(d)	Senior Note Agreement.    The Borrowers shall not amend, or consent to any waiver of, the Senior Notes or the Senior Note Agreement without the prior written consent of the Lenders, which consent shall not be unreasonably withheld, if such amendment or consent relates to the principal amount thereof, the interest rate provided for therein or the timing of any payments of principal or interest thereunder. The Borrowers shall provide the Agent forthwith with a copy of all written amendments to the Senior Note Agreement. In the event the Borrowers grant security in favour of the Noteholders with respect to the Senior Note Agreement, the Borrowers shall forthwith grant equivalent ranking security to the Bank with respect to the indebtedness, liabilities and obligations of the Borrowers hereunder.
(e)	Investments.    The Borrowers shall not, and shall not suffer or permit any of the Subsidiaries to, (i) invest in any other entity or entities, singly or in the aggregate, by way of equity investment or otherwise or (ii) provide any financial assistance (by way of loan, guarantee or otherwise) to any other entity, in an aggregate amount greater than $2,000,000, other than by way of investments in or financial assistance to any of the Subsidiaries.
(f)	Dividends.    Vitran shall not pay dividends in an amount greater than 10% of Net Income for the period of four consecutive Fiscal Quarters immediately preceding the date of such payment.
(g)	Finance Subsidiaries.    The Borrowers shall not suffer or permit Multimodal Finance L.L.C. to own any assets other than assets of nominal value, to incur any liabilities other than nominal liabilities or to carry on any business.
(h)	Dispositions of Assets.    The Borrowers shall not, and shall not suffer or permit any of the Subsidiaries to, sell, assign, transfer, convey, lease (as lessor) or otherwise dispose of any of their respective assets out of the ordinary course of business other than Permitted Dispositions.

ARTICLE 12
CONDITIONS PRECEDENT TO EXTENSION OF CREDIT

12.01   Conditions Precedent to All Credit.    The obligation of the Lenders to extend credit hereunder is subject to fulfilment of the following conditions precedent at the time such credit is made available:

(a) no Default has occurred and is continuing or would arise immediately after giving effect to or as a result of such extension of credit;

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(b)	the Borrowers shall have complied with the requirements of Article 4, 5 or 6, as the case may be, in respect of the relevant extension of credit; and
(c)	the representations and warranties of the Borrowers contained in Section 10.01 and of the Obligors under the Guarantee and the Security Documents shall be true and correct in all material respects on the date such credit is made available as if such representations and warranties were made on such date.

12.02   Conditions Precedent to Effectiveness of Agreement.    The effectiveness of this agreement is subject to fulfilment of the following conditions precedent:

(a)	the conditions precedent set forth in Section 12.01 have been fulfilled;
(b)	the Fee Letter shall have been executed and delivered by the parties thereto and the Borrowers shall have paid the fees due thereunder;
(c)	the Guarantors shall have confirmed in writing that the Guarantee and their liability thereunder remains in full force and effect notwithstanding the amendments to the Original Credit Agreement contained herein;
(d)	the Agent has received, in form and substance satisfactory to the Agent and Agent’s counsel:

(i)	a certificate of status or good standing for each Borrower issued by the appropriate governmental body or agency of the jurisdiction in which such Borrower is incorporated; and
(ii)	a certificate of a senior officer of Vitran, in such capacity, certifying that, to the best of his knowledge after due inquiry, no Default has occurred and is continuing or would arise immediately after this agreement becomes effective.

(e)

the Agent and its counsel shall be satisfied that all Applicable Laws have been complied with, all material agreements have been entered into and all necessary governmental, corporate and other third party consents and approvals have been obtained with respect to this agreement and the transactions contemplated herein;

(f)

all documents and instruments shall have been properly registered, recorded and filed in all places which, searches shall have been conducted in all jurisdictions which, and deliveries of all consents, approvals, acknowledgments, undertakings, directions, negotiable documents of title and other documents and instruments to the Agent shall have been made which, in the opinion of the Agent’s counsel, are necessary to make effective the Security created or intended to be created by the

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	Companies pursuant to the Security Documents and to ensure the perfection and the intended first ranking priority (subject to Permitted Liens) of such security; and
(g)	no Material Adverse Change has occurred.

12.03   Waiver.    The terms and conditions of Sections 12.01 and 12.02 are inserted for the sole benefit of the Agent and the Lenders and the Agent with the approval of the Lenders in accordance with Section 14.14 may waive such terms and conditions in whole or in part, with or without terms or conditions, in respect of any extension of credit, without prejudicing their right to assert them in whole or in part in respect of any other extension of credit.

ARTICLE 13
DEFAULT AND REMEDIES

13.01   Events of Default.    Upon the occurrence of any one or more of the following events, unless expressly waived in accordance with Section 14.14:

(a)	the Borrowers default in payment of any amount which is payable by the Borrowers under the Loan Documents when the same is due and payable;
(b)	the commencement by any Company of proceedings for the dissolution, liquidation or winding-up of such Company or any such proceedings are commenced against any Company by a third party and such proceedings commenced by a third party are not being contested in good faith and by appropriate proceedings or, if so contested, such proceedings continue, without being stayed, for more than 20 Banking Days;
(c)	any Company ceases or threatens to cease to carry on its business or is adjudged or declared bankrupt or insolvent or admits its inability to pay its debts generally as they become due or fails to pay its debts generally as they become due or files an assignment or petition in bankruptcy or a petition to take advantage of any insolvency statute or makes an assignment for the general benefit of its creditors, petitions or applies to any tribunal for, or consents to, the appointment of a receiver or trustee for it or for any part of its property (or such a receiver or trustee is appointed for it or any part of its property), or files a notice of intention to file a proposal, or commences (or any other Person commences) any proceedings relating to it under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction whether now or hereafter in effect (provided that, if such proceedings are commenced by another Person, such proceedings are being diligently defended and have not been discharged, vacated or stayed within 20 Banking Days after commencement), or by any act indicates its consent to, approval of, or

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	acquiescence in, any such proceeding for it or for any part of its property, or suffers the appointment of any receiver or trustee, sequestrator or other custodian;
(d)	any representation or warranty made by any Company in any Loan Document or in any other document, agreement or instrument delivered pursuant hereto or referred to herein proves to have been incorrect in any material respect when made or furnished;
(e)	a writ, execution, attachment or similar process is issued or levied against all or any portion of any property or asset of any Company in connection with any judgment against such Company in an amount exceeding $1,000,000 or the U.S. Dollar Equivalent thereof and such writ, execution, attachment or similar process is not released, bonded, satisfied, discharged, vacated or stayed;
(f)	the breach or failure of due observance or performance by any Company of any covenant or provision of any of the Loan Documents, other than those heretofore or hereafter dealt with in this Section 13.01, which is not remedied within five Banking Days after written notice of such breach or failure has been given by the Agent to the Borrowers;
(g)	one or more encumbrancers, lienors or landlords take possession of any property, assets or undertaking of any Company having a fair market value in excess of $1,000,000 or the U.S. Dollar Equivalent thereof or enforce their security or other remedies against any part of the assets, property and undertaking of any Company having a fair market value in excess of $1,000,000 or the U.S. Dollar Equivalent thereof and such action is not being contested in good faith and by appropriate proceedings or, if so contested, such possession or enforcement proceedings continue, without being discharged, vacated or stayed, for more than 20 Banking Days;
(h)	an event of default (after the giving of all applicable notices or the expiry of all applicable grace periods) under the Senior Note Agreement by either Borrower;
(i)	an event of default (after the giving of all applicable notices or the expiry of all applicable grace periods) under any one or more agreements, indentures or instruments under which any Company has outstanding Debt in excess of $1,000,000 or the U.S. Dollar Equivalent thereof or under which Debt in excess of $1,000,000 or the U.S. Dollar Equivalent thereof is outstanding which is guaranteed by any Company shall happen and be continuing, or Debt of or guaranteed by any Company in excess of $1,000,000 or the U.S. Dollar Equivalent thereof which is payable on demand is not paid on demand;
(j)	the occurrence of a Material Adverse Change;

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(k)	any one or more of the Loan Documents is determined by a court of competent jurisdiction not to be a legal, valid and binding obligation of the Company which is a party thereto, enforceable by the Agent against such Company and such Loan Document has not been replaced by a legal, valid, binding and enforceable document which is equivalent in effect to such Loan Document, assuming such Loan Document had originally been legal, valid, binding and enforceable, in form and substance acceptable to the Agent, within 30 days of such determination, provided, however, that such grace period shall only be provided if the applicable Company actively cooperates with the Agent to so replace such Loan Document;
(l)	TWE or any of the Guarantors ceases to be a Subsidiary; or
(m)	any Person or group of Persons acting in concert acquires beneficial ownership of shares of Vitran having attached thereto at least 20% of the voting rights attached to all of the shares of Vitran;

the Agent, at the direction of the Majority Lenders, by notice to the Borrowers and subject to Section 14.08, may terminate the Credit Facilities and, by such notice or by further notice, may declare all indebtedness of the Borrowers to the Lenders pursuant to this agreement (inc luding all accrued and unpaid interest and fees hereunder) to be immediately due and payable whereupon all such indebtedness shall immediately become and be due and payable and the Security shall immediately become enforceable without further demand or other notice of any kind, all of which are expressly waived by the Borrowers to the extent permitted by Applicable Laws (provided, however, that the Credit Facilities shall terminate and all such indebtedness of the Borrowers to the Lenders shall automatically become due and payable, without notice of any kind, upon the occurrence of an event described in clause (b) or (c) above). The repayment of the aforesaid indebtedness shall include, without limitation, the prepayment of all outstanding Bankers’ Acceptances and Letters.

13.02   Bankers’ Acceptances.    If any repayment or prepayment by the Borrowers hereunder shall require the prepayment of a Bankers’ Acceptance on any day other than the last day of its term, the amount of such repayment or prepayment of a Bankers’ Acceptance shall be the present value of the face amount of such Bankers’ Acceptance based on its maturity date, such present value to be calculated using a discount rate equal to the yield of Government of Canada treasury bills having a similar maturity date. Upon the payment by the Borrowers to the Lenders of the present value of the face amount of all Bankers’ Acceptances issued and outstanding hereunder as aforesaid, the Borrowers shall have no further liability to the Lenders with respect to such Bankers’ Acceptances.

13.03   Letters.    If any repayment or prepayment by the Borrowers hereunder shall require the prepayment of a Letter on any day other than the day of payment thereunder by the Issuing Lender, the amount of such repayment or prepayment of a Letter shall be the then contingent liability of the Issuing Lender thereunder. Upon the payment by the Borrowers to the Agent of

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the then contingent liability of the Issuing Lender under all outstanding Letters, the Agent shall deposit such payment to the Cash Collateral Account and shall apply funds in the Cash Collateral Account to (a) satisfy any reimbursement obligations of the Borrowers to the Issuing Lender under Section 9.08 or (b) refund to the Borrowers any amounts payable by the Issuing Lender to the Borrower under Section 13.04.

13.04   Refund of Overpayments.    With respect to each Letter for which the Issuing Lender has been paid all of its contingent liability pursuant to Section 9.02, 9.09 or 13.01 and provided that all amounts due by the Borrowers to the Agent under Section 9.02, 9.09 or 13.01 have been paid, the Issuing Lender agrees to pay to the Borrowers, upon the earlier of:

(a)	the date on which either the original counterpart of such Letter is returned to the Issuing Lender for cancellation or the Issuing Lender is released by the beneficiary thereof from any further obligations in respect of such Letter;
(b)	the expiry of such Letter; and
(c)	the Issuing Lender is permanently enjoined by a court of competent jurisdiction from honouring such Letter pursuant to a final Order;

an amount equal to any excess of the amount received by the Issuing Lender hereunder in respect of its contingent liability under such Letter over the total of amounts applied to reimburse the Issuing Lender for amounts paid by it under or in connection with such Letter (the Issuing Lender having the right to so appropriate such funds).

13.05   Remedies Cumulative.    The Borrowers expressly agree that the rights and remedies of the Agent and the Lenders under this agreement are cumulative and in addition to and not in substitution for any rights or remedies provided by law. Any single or partial exercise by the Agent or any of the Lenders of any right or remedy for a default or breach of any term, covenant or condition in this agreement does not waive, alter, affect or prejudice any other right or remedy to which the Agent or such Lender may be lawfully entitled for the same default or breach. Any waiver by the Agent with the approval of the Majority Lenders of the strict observance, performance or compliance with any term, covenant or condition of this agreement is not a waiver of any subsequent default and any indulgence by the Lenders with respect to any failure to strictly observe, perform or comply with any term, covenant or condition of this agreement is not a waiver of the entire term, covenant or condition or any subsequent default.

13.06   Set-Off.    In addition to any rights now or hereafter granted under applicable law, and not by way of limitation of any such rights, after the occurrence of an Event of Default which is continuing, the Agent and each Lender is authorized, without notice to the Borrowers or to any other person, any such notice being expressly waived by the Borrowers, to set-off, appropriate and apply any and all deposits, matured or unmatured, general or special, and any other indebtedness at any time held by or owing by the Agent or such Lender, as the case may be, to or

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for the credit of or the account of either Borrower against and on account of the obligations and liabilities of such Borrower which are due and payable to the Agent or such Lender, as the case may be, under this agreement.

ARTICLE 14
THE AGENT

14.01   Appointment and Authorization of Agent.    Each Lender hereby appoints and authorizes, and hereby agrees that it will require any assignee of any of its interests herein (other than the holder of a participation in its interests herein) to appoint and authorize the Agent to take such actions as agent on its behalf and to exercise such powers hereunder as are delegated to the Agent by such Lender by the terms hereof, together with such powers as are reasonably incidental thereto. Neither the Agent nor any of its directors, officers, employees or agents shall be liable to any of the Lenders for any action taken or omitted to be taken by it or them hereunder or in connection herewith, except for its own gross negligence or wilful misconduct and each Lender hereby acknowledges that the Agent is entering into the provisions of this Section 14.01 on its own behalf and as agent and trustee for its directors, officers, employees and agents.

14.02   Interest Holders.    The Agent may treat each Lender set forth in Schedule B hereto or the person designated in the last notice delivered to it under Section 15.06 as the holder of all of the interests of such Lender hereunder.

14.03   Consultation with Counsel.    The Agent may consult with legal counsel selected by it as counsel for the Agent and the Lenders and shall not be liable for any action taken or not taken or suffered by it in good faith and in accordance with the advice and opinion of such counsel.

14.04   Documents.    The Agent shall not be under any duty to the Lenders to examine, enquire into or pass upon the validity, effectiveness or genuineness of this agreement or any instrument, document or communication furnished pursuant to or in connection herewith and the Agent shall, as regards the Lenders, be entitled to assume that the same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be.

14.05   Agent as Lender.    With respect to those portions of the Credit Facilities made available by it, the Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not the Agent. The Agent and its affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrowers and their affiliates and persons doing business with the Borrowers and/or any of their affiliates as if it were not the Agent and without any obligation to account to the Lenders therefor.

14.06   Responsibility of Agent.    The duties and obligations of the Agent to the Lenders hereunder are only those expressly set forth herein. The Agent shall not have any duty to the

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Lenders to investigate whether a Default or an Event of Default has occurred. The Agent shall, as regards the Lenders, be entitled to assume that no Default or Event of Default has occurred and is continuing unless the Agent has actual knowledge or has been notified by the Borrowers of such fact or has been notified by a Lender that such Lender considers that a Default or Event of Default has occurred and is continuing, such notification to specify in detail the nature thereof.

14.07   Action by Agent.    The Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it on behalf of the Lenders by and under this agreement; provided, however, that the Agent shall not exercise any rights under Section 13.01 or expressed to be on behalf of or with the approval of the Majority Lenders without the request, consent or instructions of the Majority Lenders. Furthermore, any rights of the Agent expressed to be on behalf of or with the approval of the Majority Lenders shall be exercised by the Agent upon the request or instructions of the Majority Lenders. The Agent shall incur no liability to the Lenders hereunder with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment or which may seem to it to be necessary or desirable in the circumstances, except for its gross negligence or wilful misconduct. The Agent shall in all cases be fully protected in acting or refraining from acting hereunder in accordance with the instructions of the Majority Lenders and any action taken or failure to act pursuant to such instructions shall be binding on all Lenders. In respect of any notice by or action taken by the Agent hereunder, the Borrowers shall at no time be obliged to enquire as to the right or authority of the Agent to so notify or act.

14.08   Notice of Events of Default.    In the event that the Agent shall acquire actual knowledge or shall have been notified of any Default or Event of Default, the Agent shall promptly notify the Lenders and shall take such action and assert such rights under Section 13.01 of this agreement as the Majority Lenders shall request in writing and the Agent shall not be subject to any liability by reason of its acting pursuant to any such request. If the Majority Lenders shall fail for five Banking Days after receipt of the notice of any Default or Event of Default to request the Agent to take such action or to assert such rights in respect of such Default or Event of Default, the Agent may, but shall not be required to, and subject to subsequent specific instructions from the Majority Lenders, take such action or assert such rights (other than rights under Section 13.01 of this agreement and other than giving an express waiver of any Default or any Event of Default) as it deems in its discretion to be advisable for the protection of the Lenders except that, if the Majority Lenders have instructed the Agent not to take such action or assert such rights, in no event shall the Agent act contrary to such instructions unless required by law to do so.

14.09   Responsibility Disclaimed.    The Agent shall be under no liability or responsibility whatsoever as agent hereunder:

(a) to the Borrowers or any other person as a consequence of any failure or delay in the performance by, or any breach by, any other Lender or Lenders of any of its or their obligations hereunder;

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(b)	to any Lender or Lenders as a consequence of any failure or delay in performance by, or any breach by, the Borrowers of any of their obligations hereunder; or
(c)	to any Lender or Lenders for any statements, representations or warranties herein or in any other documents contemplated hereby or in any other information provided pursuant to this agreement or any other documents contemplated hereby or for the validity, effectiveness, enforceability or sufficiency of this agreement or any other document contemplated hereby.

14.10   Indemnification.    The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrowers) pro rata according to the Pro Rata Share of each of them from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this agreement or any other document contemplated hereby or any action taken or omitted by the Agent under this agreement or any document contemplated hereby, except that no Lender shall be liable to the Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or wilful misconduct of the Agent.

14.11   Credit Decision.    Each Lender represents and warrants to the Agent that:

(a)	in making its decision to enter into this agreement and to make its Pro Rata Share of an extension of credit available to the Borrowers, it is independently taking whatever steps it considers necessary to evaluate the financial condition and affairs of the Borrowers and that it has made an independent credit judgment without reliance upon any information furnished by the Age nt; and
(b)	so long as any portion of the Credit Facilities is being utilized by the Borrowers, it will continue to make its own independent evaluation of the financial condition and affairs of the Borrowers.

14.12   Successor Agent.

     (a)     Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving 30 days written notice thereof to the Lenders. Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Agent who shall be one of the Lenders unless none of the Lenders wishes to accept such appointment. If no successor Agent shall have been so appointed and shall have accepted such appointment by the time of such resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank listed in Schedule 1 to the Bank Act (Canada) which has an office in Toronto. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become

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vested with all the rights, powers, privileges, duties and obligations of the retiring Agent (in its capacity as Agent but not in its capacity as a Lender) and the retiring Agent shall be discharged from its duties and obligations hereunder (in its capacity as Agent but not in its capacity as a Lender). After any retiring Agent’s resignation or removal hereunder as the Agent, provisions of this Article 14 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent.

     (b)     The Lenders (other than the Agent in its capacity as Lender) shall have the right, upon unanimous agreement of such Lenders, to terminate by notice in writing to the Agent the appointment of the Agent hereunder in the event of the wilful misconduct or gross negligence by the Agent of its obligations as Agent hereunder. Upon such termination, such Lenders may appoint a successor Agent in the same manner as set out in Section 14.12(a) above.

14.13   Delegation by Agent.    With the prior approval of the Majority Lenders, the Agent shall have the right to delegate any of its duties or obligations hereunder as Agent to any affiliate of the Agent so long as the Agent shall not thereby be relieved of such duties or obligations.

14.14   Waivers and Amendments.

     (a)     Subject to Sections 14.14(b) and (c), any term, covenant or condition of this agreement may only be amended with the consent of the Borrowers and the Majority Lenders or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively) by the Majority Lenders and in any such event the failure to observe, perform or discharge any such covenant, condition or obligation, so amended or waived (whether such amendment is executed or such consent or waiver is given before or after such failure), shall not be construed as a breach of such covenant, condition or obligation or as a Default or Event of Default.

     (b)     Notwithstanding Section 14.14(a), without the prior written consent of each Lender, no such amendment or waiver shall directly:

(i)	increase the amount of any Credit Facility or the amount of the Individual Commitment of any Lender;
(ii)	extend the Credit Facility 1 Maturity Date or the Credit Facility 2 Maturity Date;
(iii)	extend the time for the payment of the interest on any Loan, forgive any portion of principal thereof, reduce the amount of any instalment under Section 9.01, reduce the stated rate of interest thereon or amend the requirement of pro rata application of all amounts received by the Agent in respect thereof;

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(iv)	change the percentage of the Lenders’ requirement to constitute the Majority Lenders or otherwise amend the definition of Majority Lenders;
(v)	reduce the stated amount of any fees to be paid pursuant to Article 7 of this agreement;
(vi)	permit any subordination of the indebtedness hereunder;
(vii)	release the Guarantee or any Security Documents in whole or in part; or
(viii)	alter the terms of this Section 14.14.

(c)	Without the prior written consent of the Agent, no amendment to or waiver of Sections 14.01 through 14.13 or any other provision hereof to the extent it affects the rights or obligations of the Agent shall be effective.
(d)	Without the prior written consent of the Issuing Lender, no amendment to or waiver of Article 14 or any other provision hereof to the extent it affects the rights or obligations of the Issuing Lender shall be effective.
(e)	Notwithstanding Section 14.14(b)(vii), the Agent shall be entitled, without the consent of any Lender, to execute and deliver a release or discharge of any Security over any assets of the Obligors at the time of any Permitted Disposition with respect to such assets.

14.15   Determination by Agent Conclusive and Binding.    Any determination to be made by the Agent on behalf of or with the approval of the Lenders or the Majority Lenders under this agreement shall be made by the Agent in good faith and, if so made, shall be binding on all parties, absent manifest error.

14.16   Redistribution of Payment.    If a Lender shall receive payment of a portion of the aggregate amount of principal and interest due to it under the Credit Facilities which is greater than the proportion received by any other Lender in respect of the aggregate amount of principal and interest due in respect of the Credit Facilities (having regard to the respective Individual Commitments of the Lenders with respect to the Credit Facilities), the Lender receiving such proportionately greater payment shall purchase a participation (which shall be deemed to have been done simultaneously with receipt of such payment) in that portion of the aggregate outstanding credit of the other Lender or Lenders under the Credit Facilities so that the respective receipts shall be pro rata to their respective participation in the extensions of credit under the Credit Facilities; provided, however, that if all or part of such proportionately greater payment received by such purchasing Lender shall be recovered from the Borrowers, such purchase shall be rescinded and the purchase price paid for such participation shall be returned by such selling Lender or Lenders to the extent of such recovery, but without interest.

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14.17   Distribution of Notices.    Within one Banking Day of receipt by the Agent of any notice or other document which is delivered to the Agent hereunder on behalf of the Lenders, the Agent shall provide a copy of such notice or other document to each of the Lenders.

14.18   Non-Resident Status of Lender.    No person who is a non-resident of Canada for purposes of the Income Tax Act (Canada) shall, at any time, be or become a Lender.

ARTICLE 15
MISCELLANEOUS

15.01   Waivers.    No failure or delay by the Agent, the Le nders or the Majority Lenders in exercising any remedy, right or power hereunder or otherwise shall operate as a waiver thereof, except a waiver which is specifically given in writing by the Agent, and no single or partial exercise of any power, right or privilege hereunder will preclude any other or further exercise thereof or the exercise of any other power, right or privilege.

15.02   Notices.    Subject to Section 1.06, all notices, demands and other communications provided for herein shall be in writing and shall be personally delivered to an officer or other responsible employee of the addressee or sent by telefacsimile, charges prepaid, at or to the applicable addresses or telefacsimile numbers, as the case may be, set opposite the party’s name on the signature page hereof or at or to such other address or addresses or telefacsimile number or numbers as any party hereto may from time to time designate to the other parties in such manner (except in the case of the giving of the copies of Drawdown Notices, Rollover Notices and Conversion Notices by the Agent to the Lenders which shall be effected in accordance with instructions given by the Lenders to the Agent). Notwithstanding the foregoing, any Drawdown Notice, Rollover Notice or Conversion Notice may be given by the Borrowers to the Agent verbally by telephone provided that such verbal notice is promptly confirmed in writing, such confirmation to be provided in accordance with this Section 15.02. Any communication which is personally delivered as aforesaid shall be deemed to have been validly and effectively given on the date of such delivery if such date is a Banking Day and such delivery was made during normal business hours of the recipient; otherwise, it shall be deemed to have been validly and effectively given on the Banking Day next following such date of delivery. Any communication which is transmitted by telefacsimile as aforesaid shall be deemed to have been validly and effectively given on the date of transmission if such date is a Banking Day and such transmission was made during normal business hours of the recipient; otherwise, it shall be deemed to have been validly and effectively given on the Banking Day next following such date of transmission.

15.03   Severability.    Any provision hereof which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

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15.04   Counterparts.    This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument.

15.05   Successors and Assigns.    This agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and permitted assigns.

15.06   Assignment.

     (a)     Neither this agreement nor the benefit hereof may be assigned by the Borrowers.

     (b)     No Lender shall sell, assign, transfer or grant a participation in the Credit Facilities to any person which is a “non-resident” of Canada within the meaning of the Income Tax Act (Canada).

     (c)     Subject to the consent of the Borrowers, such consent not to be unreasonably withheld, and which consent is not required if an Event of Default exists, and subject to Section 15.06(b), a Lender may at any time sell to one or more other persons (“Participants”) participating interests in any extension of credit outstanding hereunder, any commitment of the Lender hereunder or any other interest of the Lender hereunder or under the Guarantee. In the event of any such sale by a Lender of a participating interest to a Participant, the Lender’s obligations under this agreement to the Borrowers shall remain unchanged, the Lender shall remain solely responsible for the performance thereof and the Borrowers shall continue to be obligated to the Lender in connection with the Lender’s rights under this agreement. The Borrowers agree that if amounts outstanding under this agreement are due and unpaid, or shall have been declared to be or shall have become due and payable further to the occurrence of an Event of Default, each Participant shall 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 the Lender under this agreement. The Borrowers also agree that each Participant shall be entitled to the benefits of Section 8.06 with respect to its participation hereunder except in the event of and to the extent of a breach of or non-compliance with Section 15.06(b) (without limiting any further rights or remedies of the Borrowers); provided, that no Participant shall be entitled to receive any greater amount pursuant to such Section than the Lender would have been entitled to receive in respect of the amount of the participation transferred by the Lender to such Participant had no such transfer occurred.

     (d)     Subject to the consent of the Borrowers, such consent not to be unreasonably withheld, and the consent of the Issuing Lender, which consent may be arbitrarily withheld, and subject to Section 15.06(b), a Lender may at any time sell all or any part of its rights and obligations under the Credit Facilities to one or more persons (“Purchasing Lenders”) provided that (i) such sale must be in a minimum amount of $5,000,000, (ii) immediately after such sale, the aggregate Individual Commitments of such Lender must be either nil or at least $5,000,000 and (iii) the consent of the Borrowers shall not be required if an Event of Default has occurred

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and is continuing or if such sale is to an affiliate of such Lender. Upon such sale, the Lender shall, to the extent of such sale, be released from its obligations under the Credit Facilities and each of the Purchasing Lenders shall become a party hereto to the extent of the interest so purchased. Upon such sale, such Lender shall pay to the Agent an assignment fee in the amount of $2,500 for each Purchasing Lender. Any such assignment by a Lender shall not be effective unless and until the assignee has executed an instrument substantially in the form of Sc hedule D hereto whereby such assignee has agreed to be bound by the terms hereof as a Lender and has agreed to a specific Individual Commitment with respect to the Credit Facilities and a specific address and telefacsimile number for the purpose of notices as provided in Section 15.02. A copy of a fully executed copy of such instrument shall be promptly delivered to each of the Agent and the Borrowers by the Purchasing Lender. Upon any such assignment becoming effective, Schedule D hereto shall be deemed to be amended to include the assignee as a Lender with the specific Individual Commitment, address and telefacsimile number as aforesaid and the Individual Commitment of the Lender making such assignment shall be deemed to be reduced by the amount of the Individual Commitment of the assignee. The Borrowers also agree that each Purchasing Lender shall be entitled to the benefits of Section 8.06 with respect to its purchase hereunder except in the event of and to the extent of a breach of or non-compliance with Section 15.06(b) (without limiting any further rights or remedies of the Borrowers); provided that no Purchasing Lender shall otherwise be entitled to receive any greater amount pursuant to such Section then the Lender would have been entitled to receive in respect of the amount sold by the Lender to such Purchasing Lender had no such sale occurred.

     (e)     The Borrowers authorize the Agent and the Lenders to disclose to any Participant or Purchasing Lender (each, a “Transferee”) and any prospective Transferee and authorizes each of the Lenders to disclose to any other Lender any and all financial information in their possession concerning the Borrowers (other than information which the Borrowers have designated as confidential) which has been delivered to them by or on behalf of the Borrowers pursuant to this agreement or which has been delivered to them by or on behalf of the Borrowers in connection with their credit evaluation of the Borrowers prior to becoming a party to this agreement, so long as any suc h Transferee agrees not to disclose any confidential, non-public information to any person other than its non-brokerage affiliates, employees, accountants or legal counsel, unless required by law.

15.07   Entire Agreement.    This agreement and the agreements referred to herein and delivered pursuant hereto constitute the entire agreement between the parties hereto and supersede any prior agreements, commitment letters, undertakings, declarations, representations and understandings, both written and verbal, in respect of the subject matter hereof.

15.08   Further Assurances.    The Borrowers shall from time to time and at all times hereafter, upon every reasonable request of the Agent, make, do, execute, and deliver or cause to be made, done, executed and delivered all such further acts, deeds, assurances and things as may be necessary in the opinion of the Agent for more effectually implementing and carrying out the

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true intent and meaning of this agreement or any agreement delivered pursuant thereto as the Agent may from time to time request, in form and substance satisfactory to the Agent.

15.09   Judgment Currency.

     (a)     If, for the purpose of obtaining or enforcing judgment against either Borrower in any court in any jurisdiction, it becomes necessary to convert into a particular currency (such currency being hereinafter in this Section 15.09 referred to as the “Judgment Currency”) an amount due in another currency (such other currency being hereinafter in this Section 15.09 referred to as the “Indebtedness Currency”) under this agreement, the conversion shall be made at the rate of exchange prevailing on the Banking Day immediately preceding:

(i)	the date of actual payment of the amount due, in the case of any proceeding in the courts of the Province of Ontario or in the courts of any other jurisdiction that will give effect to such conversion being made on such date; or
(ii)	the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 15.09(a)(ii) being hereinafter in this Section 15.09 referred to as the “Judgment Conversion Date”).

     (b)     If, in the case of any proceeding in the court of any jurisdiction referred to in Section 15.09(a)(ii), there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the Borrowers shall pay to the appropriate judgment creditor or creditors such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Indebtedness Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date.

     (c)     Any amount due from the Borrowers under the provisions of Section 15.09(b) shall be due to the appropriate judgment creditor or creditors as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this agreement.

     (d)     The term “rate of exchange” in this Section 15.09 means the noon spot rate of exchange for Canadian interbank transactions applied in converting the Indebtedness Currency into the Judgment Currency published by the Bank of Canada for the day in question.

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     IN WITNESS WHEREOF the parties hereto have executed this agreement.

Vitran Corporation Inc. 70 University Avenue Suite 350 Toronto, Ontario M5J 2M4		VITRAN CORPORATION INC. By:
Attention: Telefax:	President (416) 596-8039		Name: Kevin Glass Title: Vice-President, Finance & CFO
Trans Western Express Inc. 70 University Avenue Suite 350 Toronto, Ontario M5J 2M4		TRANS WESTERN EXPRESS INC. By:
Attention: Telefax:	President (416) 596-8039		Name: Kevin Glass Title: Secretary

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In the case of Drawdown, Rollover and Conversion Notices sent by mail:		THE BANK OF NOVA SCOTIA, as Agent
The Bank of Nova Scotia		By:
WBO — Loan Operations
44 King Street West, Central Mail Room			Name:
Toronto, Ontario, M5H 1H1			Title:
Attention:	Vice President & Unit Head	By:
Telefax:	(416) 866-5991
			Name:
			Title:
In the case of Drawdown, Rollover and Conversion Notices sent by courier or personally delivered:
The Bank of Nova Scotia WBO — Loan Operations 720 King Street West, 4 th Floor Toronto, Ontario M5V 2T3
Attention: Telefax:	Vice President & Unit Head (416) 866-5991
In the case of all other notices:
The Bank of Nova Scotia Corporate Finance & Syndications 40 King Street West, 62nd Floor Toronto, Ontario M5W 2X6
Attention: Telefax:	Managing Director (416) 866-3329

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The Bank of Nova Scotia Corporate Banking — Industrial Products 40 King Street West, 62nd Floor Toronto, Ontario M5W 2X6		THE BANK OF NOVA SCOTIA, as Lender
Attention:	Managing Director	By:
Telefax:	(416) 866-2009
			Name:
			Title:
		By:
			Name:
			Title:
Laurentian Bank of Canada 130 Adelaide Street West, Suite 200 Toronto, Ontario M5H 3P5		LAURENTIAN BANK OF CANADA
Attention:	William A. Galbraith	By:
Telefax:	(416) 865-5717
			Name: William A. Galbraith
			Title: Vice President

-73-

Schedule A

Pricing Grid

Applicable Margin

	Debt to EBITDA Ratio
Availment	< 1.5 to 1	= 1.5 to 1 and	= 2.25 to 1	= 2.75 to 1
		< 2.25 to 1	and < 2.75 to
			1
LIBOR Loans and Banker’s Acceptances	1.00% p.a	1.5% p.a.	2.25% p.a.	2.75% p.a.
Prime Rate and Base Rate Loans	0.25% p.a	0.50% p.a.	1.25% p.a.	1.75% p.a.
Standby Fee	0.25% p.a	0.375% p.a.	0.50% p.a.	0.50% p.a.
Letter Fee	0.875% p.a	1.375% p.a.	2.125% p.a.	2.625% p.a.

Schedule B

Individual Commitments

	Individual Commitment
Name of Lender	Credit Facility 1		Credit Facility 2
The Bank of Nova Scotia	$	41,827,000	$	6,923,077
Laurentian Bank of Canada	$	20,673,000	$	3,076,923

Schedule C

Compliance Certificate

TO: THE BANK OF NOVA SCOTIA

     I,________________________________________, a senior officer of Vitran Corporation Inc. (“Vitran”), in such capacity and not personally, hereby certify that:

1.     I am the duly appointed ____________________ of Vitran, a borrower named in the amended and restated credit agreement made as of January 31, 2002 between the Vitran, Trans Western Express Inc., The Bank of Nova Scotia, as agent, and the Lenders referred to therein (the “Credit Agreement”) and as such I am providing this certificate for and on behalf of Vitran pursuant to the Credit Agreement.

2.     I am familiar with and have examined the provisions of the Credit Agreement including, without limitation, those of Articles 10, 11 and 13 therein.

3.     As of the last day of or for the Fiscal Quarter ending ___________________, the financial ratios and amounts referred to in Sections 11.01(b), 11.01(c) and 11.01(d) of the Credit Agreement are as follows:

	Actual Amount		Required Limit
(a) Debt to EBITDA Ratio		____:1	See Section 11.01(b)
(b) EBITDA to Capital Expenditures and Interest Expenses Ratio		____:1	See Section 11.01(c)
(c) Equity	$	____	See Section 11.01(d)

Attached hereto are detailed calculations of the foregoing financial ratios and amounts.

4.     Attached as a schedule hereto is a true and complete list of each serial numbered good which was acquired and disposed of by each Obligor during the Fiscal Quarter ending ____________________, setting forth the year, the make, the model, the serial number or vehicle identification number and the location of each such serial numbered good.

5.     To the best of my knowledge, information and belief and after due inquiry, no Default has occurred and is continuing as at the date hereof.

6.     Unless the context otherwise requires, capitalized terms in the Credit Agreement which appear herein without definitions shall have the meanings ascribed thereto in the Credit Agreement.

DATED this _________ day of _______________________________________, ______________________.

Name:
Title:

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Schedule D

Form of Assignment

Dated ________, ___

     Reference is made to the Amended and Restated Credit Agreement made as of January 31, 2002 (the “Credit Agreement”), between Vitran Corporation Inc., Trans Western Express Inc., The Bank of Nova Scotia, as agent (in that capacity, the “Agent”) and the Lenders referred to therein. Terms defined in the Credit Agreement are used herein as therein defined.

     ___________________________________________________ (the “Assignor”) and _________________________________________ (the “Assignee”) agree as follows:

1.        The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, a ___% interest in and to all of the Assignor’s rights and obligations under the Credit Facilities under the Credit Agreement and any agreements, documents and instruments delivered pursuant thereto (collectively, the “Loan Documents”) as of the Effective Date (as defined below) (including, without limitation, such percentage interest in the Assignor’s Individual Commitment with respect to the Credit Facilities as in effect on the Effective Date and the extension of credit made available by the Assignor under the Credit Facilities and outstanding on the Effective Date).

2.        The Assignor (i) represents and warrants that as of the date hereof its Individual Commitment with respect to Credit Facility 1 is $ __________ and with respect to the Credit Facility 2 is $ __________ (without giving effect to assignments thereof which have not yet become effective, including, but not limited to, the assignment contemplated hereby), and the aggregate outstanding amount of credit extended by the Assignor under Credit Facility 1 is $ __________ and under Credit Facility 2 is $ __________ (without giving effect to assignments thereof which have not yet become effective, including, but not limited to, the assignment contemplated hereby); (ii) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Guarantor or any of the Companies or the performance or observance by the Guarantor or the Borrowers of any of their respective obligations under the Loan Documents or any other instrument or document furnished pursuant thereto; and (v) gives notice to the Agent of the assignment to the Assignee hereunder.

3.   The effective date of this Assignment (the “Effective Date”) shall be __________. A copy of a fully executed copy of this Assignment shall be promptly delivered to Vitran Corporation Inc. and the Agent by the Assignee in accordance with Section 15.02 of the Credit Agreement.

4.        The Assignee hereby agrees to the specific Individual Commitment with respect to Credit Facility 1 in the amount of $ __________ and with respect to Credit Facility 2 in the amount of $ __________ and to the address and telefacsimile number set out after its name on the signature page hereof for the purpose of notices as provided in Section 15.02 of the Credit Agreement.

5.        As of the Effective Date (i) the Assignee shall, in addition to any rights and obligations under the Loan Documents held by it immediately prior to the Effective Date, have the rights and obligations under the Loan Documents that have been assigned to it pursuant to this Assignment and (ii) the Assignor shall, to the extent provided in this Assignment, relinquish its rights and be released from its obligations under the Loan Documents.

6.        The Assignor and Assignee shall make all appropriate adjustments in payments under the Loan Documents for periods prior to the Effective Date directly between themselves.

7.        This Assignment shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein. 8. There shall be no novation or recreation of any of the obligations of the Borrowers under any of the Loan Documents by reason of the assignment provided for herein.

[ASSIGNOR]

By:

Title:

[ASSIGNEE]

By:

Title:

Address

Attention:

Telefax:

-2-

Schedule E

Form of Drawdown/Rollover/Conversion Notice

TO:	The Bank of Nova Scotia WBO-Loan Operations Attention: Manager Fax No.: (416) 866-5991
RE:	Amended and Restated Credit Agreement made as of January 31, 2002 (the “Credit Agreement”) between The Bank of Nova Scotia, in its capacity as agent, the Lenders named therein and Vitran Corporation Inc. and Trans Western Express Inc., as borrowers

Ladies and Gentlemen:

Pursuant to the terms of the Credit Agreement, the undersigned requests a [drawdown/rollover/conversion] in the amount of [Cdn./U.S.]$__________ under Credit Facility _____ on __________ , __________. Such [drawdown/rollover/conversion] will be in the form of a [Prime Rate Loan/Base Rate Canada Loan/Libor Loan/Bankers’ Acceptances] [with an Interest Period/Term of __________, maturing on __________, ___________.]

If the proceeds of the drawdown are not to be deposited to the Designated Account, add the following:

You are hereby irrevocably authorized and directed to pay the proceeds of such drawdown to ____________________ nd this shall be your good and sufficient authority for so doing.

Sincerely,
[NAME OF BORROWER]
By:
	Name:
	Title:

cc:	The Bank of Nova Scotia Corporate Banking 40 King Street West, 62nd Floor Toronto, Ontario M5W 2X6
	Attention: Corporate Finance and Syndications Fax No.: (416) 866-2009

Schedule F

Form of Power of Attorney

Power of Attorney re: Bankers’ Acceptances

     WHEREAS Vitran Corporation Inc. and Trans Western Express Inc. (collectively, the “Borrowers”) wish to facilitate the issuance of Bankers’ Acceptances pursuant to the terms of the amended and restated credit agreement dated January 31, 2002 between the Borrowers, The Bank of Nova Scotia, as agent, and the Lenders named therein (as amended, supplemented and restated from time to time, the “Credit Agreement”).

     NOW THEREFORE, such Borrower hereby appoints (hereinafter called the “Lender”), acting by any authorized signing officer of the Lender, the attorney of such Borrower:

(a)	to sign for and on behalf and in the name of such Borrower as drawer and, if applicable, as endorser, drafts (“Drafts”) drawn on the Lender pursuant to the terms of the Credit Agreement and payable to or to the order of CDS & Co. (or other nominee name of The Canadian Depository for Securities Limited) or payable to or to the order of such Borrower; and
(b)	to fill in the amount, date and maturity date of such Drafts;

provided that such acts in each case are to be undertaken by the Lender in accordance with instructions given to the Lender by or on behalf of the Borrowers as provided in this Power of Attorney. The signatures of any authorized signatory of the Lender may be mechanically or electronically reproduced in facsimile on Drafts in accordance herewith and such facsimile signatures shall be binding and effective as if they had been manually executed by such authorized signatory of the Lender.

     Instructions to the Lender relating to the execution, completion, endorsement, discount and/or delivery by the Lender on behalf of the Borrowers of Drafts which the Borrowers wish to submit to the Lender for acceptance by the Lender shall be communicated by the Borrowers to the Lender in the manner provid ed in Section 15.02 of the Credit Agreement with respect to the applicable Drawdown Notice, Rollover Notice or Conversion Notice, as the case may be, which Drawdown Notice, Rollover Notice or Conversion Notice shall specify the following:

(a)	a Canadian Dollar amount which shall be the aggregate face amount of the Drafts to be accepted by the Lender in respect of a particular borrowing; and
(b)	a specified period of time (not less than 30 days or in excess of 180 days) which shall be the number of days after the date of such Drafts that such Drafts are to be payable, and the dates of issue and maturity of such Drafts.

     The proceeds from the sale of such Drafts shall be delivered to the Agent in the manner provided in the Credit Agreement.

     The communication in writing by the Borrowers to the Lender for the instructions referred to above shall constitute (a) the authorization and instruction of the Borrowers to the Lender to complete and endorse Drafts in accordance with such information as set out above and (b) the request of the Borrowers to the Lender to accept such Drafts and deliver the same against payment as set out in the instructions. The Borrowers acknowledge that the Lender shall not be obligated to accept any such Drafts except in accordance with the provisions of the Credit Agreement.

     The Lender shall be and it is hereby authorized to act on behalf of either Borrower upon and in compliance with instructions communicated to the Lender as provided herein if the Lender reasonably believes them to be genuine.

     The Borrowers agree to indemnify the Lender and its directors, officers, employees, affiliates and agents and to hold it and them harmless from and against any loss, liability, expense or claim or any kind or nature whatsoever incurred by any of them as a result of any action or inaction in any way relating to or arising out of this Power of Attorney or the acts contemplated hereby, provided that this indemnity shall not apply to any such loss, liability, expense or claim which (i) result from the negligence or wilful misconduct of the Lender or any of its directors, officers, employees, affiliates or agents or (ii) result from the Lender or its directors, officers, employees, affiliates or agents failing to use the same standard of care in the custody of such Drafts as the Lender uses in the custody of its own property of a similar nature.

     The Power of Attorney may be revoked at any time upon not less than 5 Banking Days’ written notice served upon the Lender, provided that no such revocation shall reduce, limit or otherwise affect the obligations of the Borrowers in respect of any Draft executed, completed, endorsed, discounted and/or delivered in accordance herewith prior to the time at which such revocation becomes effective.

     This Power of Attorney is in addition to and not in substitution for any agreement to which the Lender and the Borrowers are parties. In the event of a conflict between the provisions of this Power of Attorney and the Credit Agreement, the Credit Agreement shall prevail. Capitalized terms used and not defined herein shall have the meanings given to them in the Credit Agreement.

     This Power of Attorney shall be governed in all respects by the laws of the Province of Ontario and the laws of Canada applicable therein and each of the Borrowers and the Lender hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of such jurisdiction in respect of all matters arising out of this Power of Attorney.

     DATED this __________ day of __________________________ , ____.

-2-

VITRAN CORPORATION INC.
By:
	Name:
	Title:
By:
	Name:
	Title:
TRANS WESTERN EXPRESS INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

-3-

Schedule G

Litigation

None

Schedule H

Permitted Liens

1.        Lien on all present and after-acquired property of TWE in favour of Southwestern Freight Service Corp. and registered in the Personal Property Registry System (Saskatchewan) under Registration No. 100862592, provided such Lien has been postponed and subordinated to the Lien constituted by the Security pursuant to a written instrument in form a nd substance satisfactory to the Agent.

2.        Lien on all present and after-acquired personal property of and floating charge on land of ETL Environmental Technology Ltd. in favour of Vitran and registered under the Personal Property Security Registry (British Columbia) under Base Registration No. 8364290, provided such Lien has been postponed and subordinated to the Lien constituted by the Security pursuant to a written instrument in form and substance to the Agent.

3.        Liens specifically permitted under the terms of any of the Security Documents.

4.        Liens on the land and buildings of Vitran comprising the Toronto Intermodal Facility securing indebtedness incurred (other than hereunder) to purchase the said land and to construct the said buildings.

Schedule I

Freehold Parcels

Company	Municipal Addresses
TWE		1) 18204 - 111th Ave., Edmonton, Alta.
		2) 72 Rothwell Rd., Winnipeg, Manitoba
		3) 10079 Grace Rd., Surrey, B.C.
Expéditeur T.W. Ltée		3333 Joseph Dubreuil, Lachine, Que.

Schedule J

Leasehold Parcels

Company	Municipal Address
TWE		1) 751 Bowes Rd., Concord, Ont.
		2) 1755 Cottrell St., Vancouver, B.C.
		3) 5250 - 36 th St. S.E., Calgary, Alta.
		4) 1425 Pettigrew Ave., Regina, Sask.
		5) 202 Portage Ave., Saskatoon, Sask.
		6) 1545 Hardy Street, Kelowna, B.C.
G&W Freightways Ltd.		1) 420 Industrial Rd., Unit 2, London, Ont.
		2) 85 Webster Rd., Kitchener, Ont.
		3) 20 Adrien Robert St., Hull, Que.
D.M.R. Transport (1975) Ltd.		1) 12677 East Marginal Way South, Seattle, Washington
ETL Recycling Services Inc.		1) 350 David Street, Victoria, B.C.
ETL Processing Services Inc.		1) 7993 Progress Way, Delta, B.C.
Expéditeur T.W. Ltée		1) 5350 Pullman St. Montreal, Que.

Schedule K

Issued Capital

Company	No. and Class of Shares	Registered Owner
TWE	1,219,356 common	Vitran
G&W Freightways Ltd.	10 common	Vitran
	100 special	Southwestern Freight Service Corp.
	1,000 Class A Preference	Southwestern Freight Service Corp.
Doney Holdings Inc.	1,088,420 common	G&W Freightways Ltd.
Rout-Way Express Lines Limited	10 common	Vitran
	10,000 special	Vitran
Southern Express Lines of	10 common	Vitran
Ontario Limited
Southwestern Freight Service Corp.	1 common	Vitran
	10,000 First Preference	Vitran
	Series I
ETL Management Services Inc.	1 common	Vitran
ETL Recycling Services Inc.	2,527,482 common	Vitran
ETL Transportation Services Inc.	100 Class A common	ETL Recycling Services Inc.
	100 Class B common	ETL Recycling Services Inc.
ETL Depot Services Inc.	1 common	ETL Management Services Inc.
ETL Processing Services Inc.	1 common	ETL Management Services Inc.
Vitran Environmental Systems Inc.	100 common	Vitran

Company	No. and Class of Shares	Registered Owner
Vitran Corporation	1,306 common	1127408 Ontario Inc.(263),
		1127409 Ontario Inc. (263)
		and Vitran (780)
D.M.R. Transport (1975) Ltd.	9,533 common	TWE
The Freight Connection Canada Inc.	1 common	D.M.R. Transport (1975) Ltd.
Expéditeur T.W. Ltée	1,360 common	TWE
1124708 Ontario Inc.	12,801,140 common	TWE
1124709 Ontario Inc.	12,801,140 common	TWE
Can-Am Logistics Inc.	100 common	TWE
1098304 Ontario Inc.	100 common	Can-Am Logistics Inc.

-2- EX-3.15 4 t10128exv3w15.htm EXHIBIT 3.15

TERMINATION OF SHAREHOLDERS’ AGREEMENT
RELATING TO VITRAN CORPORATION INC.

     WHEREAS, the undersigned are all of the parties to a Shareholders’ Agreement made as of the 15th day of July, 1987 with respect to Vitran Corporation Inc.; and

     WHEREAS, the undersigned wish to terminate the Shareholders’ Agreement effective as of February 1, 2003.

     NOW THEREFORE, THIS AGREEMENT WITNESSES that for good and valuable consideration, the parties hereto agree as follows:

1.     The Shareholders’ Agreement is hereby terminated effective as of February 1, 2003 and the parties are released from all obligations thereunder.

2.     This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, legal personal representatives, successors and assigns.

3.     This Agreement may be executed in one or more counterparts, each of which when executed by any party hereto shall be deemed to be an original of such counterparts and together shall constitute one and the same instrument.

4.     This Agreement may also be executed by facsimile.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of February 1, 2003.

LOCHAN ORA INVESTMENTS LIMITED

/s/ Richard D. McGraw

PARKWAY AUTOMOTIVE INVESTMENTS LIMITED

/s/ Richard D. McGraw

1

442769 ONTARIO LIMITED

/s/ Anthony Griffiths

ATL FINANCIAL SERVICES INC

/s/ Albert Gnat

/s/ P. Stuart	/s/ Albert Gnat
Witness	ALBERT GNAT
/s/ G. McGraw	/s/ Richard D. McGraw
Witness	RICHARD D. McGRAW
/s/ Mary Keogh	/s/ Anthony Griffiths
Witness	ANTHONY F. GRIFFITHS

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EX-2.9.3

exv2w9w3

EX-3.15

exv3w15