Exhibit 10.42
WHEEL SET COMPONENT AND FINISHED WHEEL SET
STORAGE AGREEMENT
     WHEEL SET COMPONENT AND FINISHED WHEEL SET STORAGE AGREEMENT (this
“Agreement”) made this 13th day of November 2006, between American Railcar
Industries, Inc., a Delaware corporation (“ARI”), and ACF Industries LLC, a
Delaware limited liability company (“ACF”).
RECITALS
     WHEREAS, ARI and ACF are parties to that certain Manufacturing Services
Agreement dated as of October 1, 1994 (the “Manufacturing Agreement”);
     WHEREAS, pursuant to the Manufacturing Agreement, ACF is providing ARI
certain Jobbing Order Services (as defined in the Manufacturing Agreement),
which include, among other things, the assembly of railcar wheel sets;
     WHEREAS, the Manufacturing Agreement contemplates that ARI may supply the
materials for use by ACF in ACF’s performance of its Jobbing Order Services, and
further provides alternative pricing for the Jobbing Order Services depending
upon whether ARI or ACF purchase such materials;
     WHEREAS, ARI is in the business of manufacturing railcars and railcar wheel
sets are a critical component of railcars, and ARI and ACF desire that ARI
control the procurement of and own the components for the railcar wheel sets,
comprising of wheels, axles and bearings (the “Wheel Set Components”), for use
by ACF in performing its Jobbing Order Services;
     WHEREAS, in connection therewith, ACF agrees to provide certain
accommodations to ARI, as provided herein, to ensure the proper care, storage,
use and identification of Wheel Set Components purchased by ARI for use by ACF
in performing its Jobbing Order Services and the railcar wheel sets assembled
using such components (the “Finished Wheel Sets”); and
     WHEREAS, in order to evidence the terms under which ACF will maintain
possession of the Wheel Set Components owned by ARI and the Finished Wheel Sets,
the parties have agreed to enter into this Wheel Set Component and Finished
Wheel Set Storage Agreement;
     NOW, THEREFORE, in consideration of these premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ACF and ARI agree as follows:
     1.     Procurement of Wheel Set Components. ARI shall be responsible for
purchasing the Wheel Set Components for use by ACF in its manufacture of railcar
wheel sets for ARI pursuant to the Manufacturing Agreement. ARI shall also be
responsible for arranging for and payment of delivery of the Wheel Set
Components to ACF in connection therewith. The parties understand that ACF has
previously purchased Wheel Set Components for the manufacture of Finished Wheel
Sets for ARI that, prior to the date hereof, have not been

-1-

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

 

purchased by ARI and are currently owned by ACF. Such Wheel Set Components,
including any Finished Wheel Sets incorporating such Wheel Set Components that
have not yet been purchased by ARI, shall be referred to as the “ACF Wheel Set
Inventory.” ACF hereby represents and warrants that a true and correct list of
the ACF Wheel Set Inventory and the cost thereof (as represented by the purchase
price paid or, as of immediately prior to the date hereof, payable by ACF for
the purchase by ACF of the ACF Wheel Set Inventory) has been provided to ARI
along with a schedule showing the vendor, the purchase order number, the amount
paid and, as of immediately prior to the date hereof, the amounts outstanding
for the payment by ACF of the purchase price for the ACF Wheel Set Inventory.
ACF agrees to pay vendors in full, on the date hereof, all outstanding amounts
payable as of immediately prior to the date hereof for all ACF Wheel Set
Inventory. ARI hereby agrees to purchase from ACF, and ACF herby agrees to sell
to ARI, the ACF Wheel Set Inventory as of the date hereof for a purchase price
equal to said cost of the ACF Wheel Set Inventory to ACF. The purchase price
shall be payable by ARI to ACF (a) on the date hereof as to amounts previously
paid by ACF for such inventory, and (b) promptly upon ARI’s receipt of evidence
reasonably satisfactory to ARI of ACF’s payment in full of all outstanding
amounts payable as of immediately prior to the date hereof. ACF agrees to
provide ARI with such information as ARI reasonably requests to verify the costs
and accounts payable outstanding, as of immediately prior to the date hereof, in
respect of the ACF Wheel Set Inventory. Any such ACF Wheel Set Inventory so
purchased by ARI shall be owned by ARI as of the date hereof, shall be treated
as supplied by ARI for purposes of determining amounts owed to ACF for its
Jobbing Order Services in manufacturing Finished Wheel sets for ARI under the
Manufacturing Agreement (which shall remain payable as set forth in the
Manufacturing Agreement), and shall constitute Specified Goods as further
defined herein.
     2.     Identifying Specified Goods; Documentation.
          (a)     For purposes of this Agreement, the term “Specified Goods”
shall mean each of, and collectively, (i) the Wheel Set Components purchased by
ARI and delivered to ACF pursuant to this Agreement, and (ii) any Finished Wheel
Sets manufactured by ACF from such Wheel Set Components pursuant to the
Manufacturing Agreement.
          (b)     ACF shall cause all Specified Goods to be identified with
appropriate markings and/or stored in designated areas as indicated in clauses
(i) through (iv) below, and ACF shall not at any time identify any goods that
are not Specified Goods as Specified Goods. ACF shall maintain such markings
and/or such designated storage areas at all times that the Specified Goods are
in ACF’s possession. With respect to Wheel Set Components, ACF agrees to
undertake the identification and storage procedures set forth in this Agreement
as soon as practicable upon delivery to ACF of Wheel Set Components. ARI and ACF
agree to cooperate in good faith to revise the identification and storage
procedures set forth below in a manner reasonably satisfactory to ARI upon
either party’s reasonable written request therefor.
               (i)     ACF shall store all items of Specified Goods:
               1.     As to Finished Wheel Sets, on the tracks identified as
“A”, “B”, “C”, “C-1”, “C-2”, “C-3”, “C-4”, “C-5” and “C-6” on the plan attached
as Exhibit A hereto (the “Designated Tracks”); and

-2-

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

 

               2.      As to each type of Wheel Set Component (i.e., wheels,
axles and bearings), in the areas identified for each such type of Wheel Set
Component, designated as “D-1” and “D-2” on the plan attached as Exhibit A
hereto (the “Designated Component Storage Areas” and, together with the
Designated Tracks, the “Designated Locations”), in each case at ACF’s premises
at 2300 Third Avenue, Huntington, West Virginia 25703.
     (ii)     The Designated Locations shall each be used exclusively for
Specified Goods and, as to areas “A” and “B” of the Designated Tracks, those
certain “Specified Goods” as defined in (i) that certain Inventory Storage
Agreement dated July 17, 2006 between ARI and ACF and (ii) that certain
Inventory Storage Agreement dated October 20, 2006 between ARI and ACF. ACF
shall not at any time store any items belonging to ACF or any other person or
entity in or on the Designated Locations or cause any such items ever to be
located in or on the Designated Locations, or remove any Specified Goods from
the Designated Locations other than at ARI’s specific written request or with
ARI’s prior specific written approval.
     (iii)     Finished Wheel Sets. ACF shall install prominent signs (one at
each access point to and end of the Designated Tracks), containing the following
language: “All items located on this track have been purchased by and are owned
by American Railcar Industries, Inc. Do not place items owned by ACF or any
other party on this track or remove items from this track without written
approval from ARI.”
     (iv)     Wheel Set Components.
               1.      Wheels. ACF shall rope off and/or paint lines on the
plant floor to designate, and install prominent signs at (each in a manner
reasonably satisfactory to ARI), each of the Designated Component Storage Areas
where wheels are to be stored in accordance with this Agreement. Such signs
shall contain the following language: “All items located in this marked area
have been purchased by and are owned by American Railcar Industries, Inc. Do not
place items owned by ACF or any other party in this marked area or remove items
from this marked area without written approval from ARI.”
               2.      Axles. ACF shall rope off and/or paint lines on the plant
floor to designate, and install prominent signs at (each in a manner reasonably
satisfactory to ARI), each of the Designated Component Storage Areas where axles
are to be stored in accordance with this Agreement. Such signs shall contain the
following language: “All items located in this marked area have been purchased
by and are owned by American Railcar Industries, Inc. Do not place items owned
by ACF or any other party in this marked area or remove items from this marked
area without written approval from ARI.” In addition, ACF agrees to spray paint
a mark (the “Mark”) on each axle that is a Specified Good, and shall not apply
the Mark to any axles that are not Specified Goods, that shall identify each
such axle as belonging to ARI. The Mark shall be applied to each axle in a
location and manner such that the Mark shall be visible throughout the
manufacturing process and afterwards, once the axle has, together with other
Wheel Set Components, been converted into a Finished Wheel Set. ACF and ARI
shall cooperate to

-3-

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

 

choose a color for the Mark that is not otherwise applied to any axles stored in
or around ACF’s Huntington facility, including without limitation axles intended
for ACF’s other customers. ACF shall consistently apply the Mark to all
applicable axles.
               3.      Bearings. ACF shall rope off and/or paint lines on the
plant floor to designate, and install prominent signs at (each in a manner
reasonably satisfactory to ARI), each of the Designated Component Storage Areas
where bearings are to be stored in accordance with this Agreement. Such signs
shall contain the following language: “All items located in this marked area
have been purchased by and are owned by American Railcar Industries, Inc. Do not
place items owned by ACF or any other party in this marked area or remove items
from this marked area without written approval from ARI.”
          (c)     ACF shall, in a manner satisfactory to ARI, cause all
documents evidencing goods consisting of Specified Goods to be identified with
appropriate language or markings that clearly identify such goods as Specified
Goods that are owned by ARI, and which identify the item number, as well as the
Designated Location (A, B, C, C-1, C-2, C-3, C-4, C-5, C-6, D-1 or D-2) in or on
which the specific Specified Goods are located. In furtherance of the foregoing
sentence, ACF shall: (i) maintain invoices and/or shipping notices for each item
of Specified Goods that is placed in or on the Designated Locations (or moved
among them); (ii) send such invoices and shipping notices by facsimile to ARI;
(iii) store copies of such shipping notices at ACF’s Huntington West Virginia
facility, separately from all other shipping notices; and (iv) reflect in such
documentation any identifying information that may be provided by vendors in
connection with Section 2(f) of this Agreement.
          (d)     Specified Goods shall be owned by ARI, whether or not ACF
complies with the terms and provisions of this Agreement, including, without
limitation, the provisions requiring segregation and identification of the
Specified Goods.
          (e)     Notwithstanding anything to the contrary in this Agreement,
ACF may and ARI authorizes ACF to remove any Wheel Set Components from any
Designated Locations to another location within the premises located at ACF’s
Huntington, West Virginia facility, in order to enable ACF to perform work on
such Wheel Set Components and to complete them into Finished Wheel Set
Components, provided that (i) such Wheel Set Components shall continue to be
identified as provided in Section 2(b)(iv), and (ii) ACF shall maintain a list
available for inspection by ARI of the number and location of any such Wheel Set
Components that are not located in or on a Designated Location.
          (f)     ARI and ACF agree to cooperate in good faith with each other
and with the vendors that from time to time supply Wheel Set Components subject
to this Agreement to attempt to arrange for such vendors to identify such Wheel
Set Components, at the time of their initial shipment from such vendors, as
shipped for ARI’s account (and not for the account of other ACF customers), as
applicable. By way of illustration only and without limitation, the parties
intend to request that such vendors identify Wheel Set Components as shipped for
ARI’s account by (i) consistently marking or tagging such Wheel Set Components
with colored tags, grease paint or other means, and/or (ii) by coordinating
vendor serial or other identification numbers with ACF and ARI invoicing and
documentation procedures. ACF agrees to

-4-

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

 

incorporate, in a manner reasonably satisfactory to ARI, any such mutually
agreed vendor identification techniques in its day-to-day observation of the
segregation and identification of Wheel Set Components in accordance with this
Agreement.
     3.     Delivery, Inspection and Removal.
          (a)     ACF shall cause the Specified Goods to be delivered to ARI as
and when ARI may request from time to time, at ARI’s cost and expense, as per
any purchase orders therefor. It is understood that ACF shall bear the cost of
loading such Specified Goods for shipment to ARI. ARI may request delivery of
all or any portion of the Specified Goods, as it may determine.
          (b)     Upon advance notice and during business hours, ACF hereby
authorizes ARI or its agents or designees, at any time, or from time to time, to
access ACF’s premises: (a) for the purpose of inspecting, testing,
photographing, video-taping, or measuring the Specified Goods or the markings on
the Specified Goods and the Designated Locations, (b) for the purpose of
examining or copying the shipping notices and invoices relating to the Specified
Goods, (c) for the purpose of removing, repairing, or assembling the Specified
Goods, or (d) for any other purpose consistent with this Agreement and ARI’s
ownership of the Specified Goods, or in connection with the enforcement thereof.
Upon advance notice and during business hours, ACF specifically authorizes ARI
to bring onto ACF’s premises any such equipment as ARI may require for the
removal of the Specified Goods at any time or from time to time.
          (c)      In consideration of ARI’s agreements hereunder, ACF shall not
charge ARI any storage fee or rent for the Specified Goods or the documents
relating thereto.
          (d)     In the event ARI performs a physical inventory count that
differs from the shipping notices delivered to ARI, ACF shall provide a credit
or refund (as ARI may elect) to ARI for the amount of the difference, plus a
finance charge of 10% per annum on such amount, such finance charge to accrue
from the date that ARI paid for the missing items until the date such refund is
delivered or credit is applied, as the case may be.
     4.     Notice. ACF hereby authorizes ARI to file a UCC-1 financing
statement naming ACF as debtor and ARI as secured party and the Specified Goods
and their proceeds as collateral, with such additional language as ARI in its
discretion may determine to be appropriate to provide notice of ARI’s ownership
of the Specified Goods. ACF further agrees to execute and deliver any such
notices as ARI may require if ARI determines that any of the Specified Goods
consists of “rolling stock”.
     5.     Effect of Agreement. This Agreement shall remain in full force and
effect until all Specified Goods have been delivered from ACF’s premises to
ARI’s premises. The rights and obligations of ARI and ACF hereunder shall not be
affected by bankruptcy or insolvency.
     6.     Time of Essence. Time is of the essence of this Agreement.
     7.     Miscellaneous. This Agreement shall be governed by the laws of the
State of Missouri and shall be binding and inure to the benefit of the
successors and assigns of the parties

-5-

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

 

hereto. In any action or suit brought by either party to this Agreement arising
out of or relating to this Agreement, each party: (a) consents and submits to
the jurisdiction of the courts of the State of Missouri or the federal courts
located in the State of Missouri; (b) agrees that such court shall be deemed to
be a convenient forum; (c) agrees not to assert (by way of motion, as a defense
or otherwise), in any such action or suit commenced in such court, any claim
that such party is not subject personally to the jurisdiction of such court,
that such action or suit has been brought in an inconvenient forum, that the
venue of such action or suit is improper or that this Agreement or the subject
matter of this Agreement may not be enforced in or by such court; and (d) agrees
that it will not bring any action or suit arising out of or relating to this
Agreement in any court other than a court of the State of Missouri or a federal
court located in the State of Missouri. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original instrument.
Any amendments or modifications to this Agreement shall be in writing signed by
an authorized officer of each of ACF and ARI.
     8.     Existing Inventory Storage Agreements. This Agreement shall be in
addition to, and shall not replace, (i) that certain Inventory Storage Agreement
dated as of July 17, 2006 between ARI and ACF, and (ii) that certain Inventory
Storage Agreement dated October 20, 2006 between ARI and ACF, each of which
shall remain in full force and effect pursuant to the terms thereof.
[Signature Page Follows]

-6-

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

 

Executed as an instrument as of the date first above written.

            ACF INDUSTRIES LLC
      By:   /s/ Mark A. Crinnion        Name:   Mark A. Crinnion        Title:  
Vice President — Treasurer        AMERICAN RAILCAR INDUSTRIES, INC.
      By:   /s/ William P. Benac        Name:   William P. Benac        Title:  
Sr. V.P., CFO and Treasurer     

-7-

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

 

EXHIBIT A
See attached plan.
# 1463674 v7

-8-

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

 

[map]

-9-