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Exhibit 10.4
 
SERVICE AGREEMENT
THIS SERVICE AGREEMENT, dated as of December 30, 2016 (this “Agreement”), is
entered into by and between 19th Capital Group, LLC, a Delaware limited
liability company (“19th Capital”), and Quality Companies, LLC, an Indiana
limited liability company (“Quality”).
WHEREAS, 19th Capital is engaged in the business of, among other matters,
purchasing, financing, leasing and otherwise dealing with tractors, trailers and
other equipment used in the trucking and logistics industry (each a “Vehicle”
and collectively, the “Vehicles”), and in the course of its business, 19th
Capital from time to time purchases and finances Vehicles from original
equipment manufacturers (“OEMs”) and enters into lease/finance arrangements with
independent owners-operators (each an “Independent Operator” and collectively,
“Independent Operators”), either directly or through partner carrier programs
(“PC Managed Fleets”) and commercial trucking companies (each a “Fleet” and
collectively the “Fleets”), for the lease and/or financing of Vehicles for use
in their commercial trucking businesses;
WHEREAS, Quality is engaged in the business of providing certain administrative,
maintenance and other related services with respect to Vehicles and related
lease transactions;
WHEREAS, Quality has a network of Independent Operators, PC Managed Fleets, and
Fleets which from time to time wish to purchase, finance, and/or lease Vehicles
for use in their commercial trucking businesses; and
WHEREAS, the parties desire to enter into this Agreement to set forth the terms
and conditions under which Quality will provide certain administrative,
maintenance and other related services for 19th Capital with respect to Vehicles
acquired by 19th Capital from OEMs, and the related lease transactions entered
into in connection therewith, on the terms and conditions further described in
this Agreement.
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1          Definitions.  For purposes of this Agreement, the following
words and phrases shall have the following meanings, unless the context clearly
requires otherwise:
(a)          “Lease Documents” means, with respect to any Lease Transaction, a
lease and/or financing agreement for the financing, acquisition, or lease of one
or more Vehicles, as the case may be, by and between 19th Capital, as lessor or
lender, and Independent Operators or Fleets, as Lessees/Borrowers, together with
any financing statements, schedules, insurance certificates, and any and all
agreements, titles, instruments and other documents entered into and executed in
connection therewith.

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(b)          “Lease Transaction” means a lease or financing transaction arranged
by Quality under this Agreement between 19th Capital, as the lessor or lender,
and the applicable Independent Operator, PC Managed Fleet, or Fleet, as the
Lessee/Borrower, with respect to one or more Vehicles.
(c)          “Lessee/Borrower” means, with respect to each Lease Transaction,
the applicable Independent Operator either directly or through PC Managed Fleets
or Fleet.
ARTICLE II
LEASING SERVICES
Section 2.1          Vehicle Leasing Plans, Etc.  From time to time during the
term of this Agreement, Quality and 19th Capital may develop vehicle leasing or
financing plans (each a “Lease Plan”) setting forth the terms for the placement
of certain Vehicles under Lease Transactions.  Each Lease Plan shall set forth
(i) the number Vehicles to be placed by Quality under such Lease Plan; (ii) the
make, model, year and VIN of each such Vehicle (the “Vehicle Description”);
(iii) the anticipated timing needs for delivery of such Vehicles; (iv) the names
and other identifying information for the applicable Independent Operators, the
PC Managed Fleets, and/or Fleets, if available; (v) the financing or leasing
terms for the applicable Vehicles, including the term(s) (in months), interest
rate or implied interest rate, as applicable, and the monthly payment streams to
be derived from the applicable leases (collectively, the “Material Terms”); and
(vi) any other material information related to such Lease Plan.  Each Lease Plan
shall be subject to review and approval by 19th Capital in its sole discretion. 
Each Lease Plan shall be governed by and construed in accordance with the terms
of this Agreement; provided, however, that a Lease Plan may contain certain
terms and conditions applicable specifically to such Lease Plan, and in the
event of a conflict between this Agreement and any applicable Lease Plan, the
applicable Lease Plan shall control.  For each approved Lease Plan, 19th Capital
may elect to procure the applicable Vehicles from OEMs, on terms and conditions
satisfactory to 19th Capital in its sole discretion.
Section 2.2          Leasing Services and Related Matters.  During the term of
this Agreement, Quality shall cause the Vehicles acquired by 19th Capital in
connection with each Lease Plan to be leased to qualified Lessees/Borrowers in a
prudent and efficient manner, as approved by 19th Capital, and shall be
responsible for setting up and administering the leasing or financing process,
as applicable, through the performance of the following services:
(a)          Credit Review. For each proposed Lease Transaction with a
Lessee/Borrower, Quality will coordinate and administer the credit review and
application procedures.  Quality shall obtain the following for each Lease
Transaction originated by Quality hereunder: (i) a full and complete Lease
Transaction application (“Application”) from such prospective Lessee/Borrower,
which shall be in substantially the form approved by 19th Capital; (ii) the
Vehicle Description for each Vehicle subject to the proposed Lease Transaction;
(iii) the proposed Material Terms of the proposed Lease Transaction; (iv) upon
request by 19th Capital (and to the extent such information can be reasonably
obtained by Quality), such other credit and financial data as 19th Capital may
reasonably request (e.g., background check, driving history, safety records, or
criminal record investigation); and (v) the credit profile and such other credit
and financial data as 19th Capital may require with respect to each proposed
Fleet and/or any
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owner/operator operating under such the PC Managed Fleet or Fleet.  Without
limiting the foregoing, 19th Capital requires Quality to obtain (x) a complete
driving record and background check to be conducted on each prospective
Independent Operator in accordance with all State and Federal regulations for
over-the-road delivery for each prospective Independent Operator in order to
complete its credit review, and (y) an inquiry on the name(s) of all
Lessees/Borrowers (fictitious and otherwise), principals and guarantors as to
their identification as a “specially designated national” as defined by the
United States Treasury’s Office of Foreign Assets Control (OFAC), utilizing the
most recently published OFAC list of Specially Designated Nationals.
(b)          Risk Acceptance Criteria.  All prospective Lessees/Borrowers shall
be required to meet 19th Capital’s risk acceptance criteria (“RAC”) as
established by 19th Capital from time to time and provided to Quality in
writing.  19th Capital may from time to time modify the requirements for credit
approval of prospective Lessees/Borrowers on such terms as may be determined by
19th Capital in its sole discretion and provide such modifications to Quality in
writing.
(c)          Lease Documents.  With respect to each qualified and approved
Lessee/Borrower, Quality will coordinate and administer the preparation,
execution and delivery of all applicable Lease Documents, which shall
incorporate the terms and conditions for each Lease Transaction (including the
Material Terms) in accordance with the applicable Lease Plan. 19th Capital shall
provide Quality with forms of its standard Lease Documents to be used for all
Lease Transactions. All qualified and approved Lessees/Borrowers shall be
required to execute 19th Capital’s standard forms of Lease Documents and all
other Lease Documents required by 19th Capital in connection therewith.  19th
Capital may from time to time modify its standard forms of Lease Documents as
may be determined by 19th Capital in its sole discretion, and 19th Capital shall
provide the modified forms of Lease Documents to Quality.  If a Lessee/Borrower
requests any material deviation from the standard Lease Documents, all such
adjustments must be approved in writing by 19th Capital.  Lease Documents will
be signed by an authorized representative of 19th Capital or an authorized
representative of Quality, acting as agent of 19th Capital pursuant to a power
of attorney which has been duly executed and approved by 19th Capital.  Quality
shall provide 19th Capital the originally executed copies of all Lease Documents
promptly following the execution thereof and shall maintain an electronic data
base of such documents, accessible by 19th Capital at all times.
Section 2.3          Conditions Precedent to the Acceptance of a Lease
Transaction. The agreement of 19th Capital to accept any Lease Transaction
hereunder shall be subject to the satisfaction of the following conditions
precedent, which conditions may change from time to time in 19th Capital’s sole
discretion upon written notice to Quality:
(a)          19th Capital’s receipt of all required credit information of each
Lessee/Borrower, including, without limitation, a full and complete Application,
and Quality’s credit approval of each Lessee/Borrower;
(b)          19th Capital’s receipt of all Lease Documents, which shall have
been prepared in accordance with and properly reflect the terms of the
applicable Lease Plan, duly executed by the Lessee/Borrower; and
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(c)          19th Capital’s confirmation that the Lessee/Borrower has accepted
the Vehicle(s) subject to the requested Lease Transaction.
Section 2.4          Representations Regarding Lease Transactions. With respect
to each finalized Lease Transaction and the related Lease Documents, Quality
represents, warrants and covenants that the following shall be true and correct:
(a)          Each Lease Transaction shall be originated by Quality in the
ordinary course of Quality’s business in connection with the lease and/or
financing of one or more new or used Vehicles intended for commercial or other
business use.
(b)          All credit information concerning the Lessee/Borrower given to
Quality and relative to Quality’s evaluation of each applicable Application, has
been disclosed to 19th Capital (including information of any fact or
circumstance which would constitute a default, or which, with the passage of
time or giving of notice, or both, would constitute a default, under any Lease
Transaction), and Quality has not altered or withheld any credit information
concerning the Lessee/Borrower given to 19th Capital and relative to Quality’s
evaluation of such Application.
(c)          Quality’s conduct in soliciting or arranging each Lease Transaction
has not violated in any material respect any federal or state law, rule, or
regulation.
(d)          Quality has made no representations or warranties to the applicable
Lessee/Borrower with respect to any Vehicle, Lease Transaction or Lease
Documents, except as may be set forth in the applicable Lease Documents.
Section 2.5          Insurance Matters.  Quality will obtain and provide to 19th
Capital, upon request, proof of insurance from each Lessee/Borrower with respect
to each Vehicle subject to an active Lease Transaction as required in the
applicable Lease Documents.
ARTICLE III
ADMINISTRATIVE SERVICES; MAINTENANCE SERVICES;
REMARKETING AND SALES; REPORTING; ETC.
Section 3.1          Lease Administration.  During the term of this Agreement,
Quality shall be responsible for the administration and performance of all Lease
Transactions and Lease Documents through performance of the following services
according to Quality’s commercially reasonable business judgment:
(a)          administer and enforce all rights and remedies of 19th Capital as
the lessor, lender, secured party, payee, beneficiary, seller or creditor under
and in the Lease Transactions and Lease Documents, however designated; provided,
however, that Quality will not take any action or omit to take any action, which
would cause a breach or default under the applicable Lease Documents by 19th
Capital or which will cause the Lease Transaction or any related document to
become invalid, cancelable, or unenforceable as a result therefrom;
(b)          fulfill and perform all obligations, covenants, liabilities,
warranties and duties of 19th Capital in accordance with the terms of the Lease
Documents;
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(c)          act as billing and collecting agent for the benefit of 19th
Capital, including, without limitation, using commercially reasonable efforts to
collect and receive all payments due and to become due under the Lease Documents
and consistent with the Material Terms of the applicable Lease Plan (including
all lease payments, end of term payments or other remittances) on behalf of 19th
Capital and remitting the same to 19th Capital weekly each Friday (or, if such
day is not a business day, the next business day), in each case by depositing
all such payments received into the specified bank accounts of 19th Capital,
provided, however, in no event will Quality be responsible for remitting to 19th
Capital more than the amounts received by Quality from the Lessees/Borrowers;
(d)          at the direction of 19th Capital, coordinate the payment, as and
when due, of all taxes, levies, imposts, duties, fees, or other charges or
assessments levied, imposed or assessed against each Vehicle, Lease Transaction,
and Lease Document, including any interest, additions or penalties applicable
thereto (collectively, “Taxes”), and the filing of all related tax returns,
reports and filings required in connection therewith (“Tax Filings”);
(e)          ensure that the Vehicles are properly titled at all times,
including the coordination and administration of all titling and retitling
activities with respect to the applicable Vehicles and any applicable lien
applications, releases, etc.;
(f)          assist in the delivery of the Vehicle(s) to the applicable
Lessee/Borrower in connection with each Lease Transaction (including providing
transportation and lodging to owner/operators in connection with the pick-up and
delivery of Vehicle(s), consistent with Quality’s historical practices);
(g)          not agree to any material amendments, waivers or modifications of
the Lease Documents or Material Terms of the Lease Plan, without the prior
written consent of 19th Capital. A material amendment, waiver or modification
includes, without limitation, any amendment, waiver or modification that would
(i) change the amount, due date, interest rate or rental rate or prepayment fee,
(ii) waive any provision of a Lease Transaction (including any change in any
time period) prohibiting prepayment in whole or in part, or reduce the
outstanding principal amount or imputed principal balance, (iii) release, or
agree to the substitution or exchange of any collateral for, any portion of the
Lease Transaction or release the liability of any person or entity liable for
any payment on any Lease Transaction, (iv) release any Lessee/Borrower from any
of its obligations to make any payment with respect to any Lease Transaction, or
(v) in any way extend or otherwise restructure the payment terms or any other
term or condition of any Lease Document;
(h)          not unreasonably impair the rights or breach the quiet enjoyment of
any Lessee/Borrower under the Lease Documents;
(i)          not create any lien, security interest or other encumbrance against
any Vehicle or Lease Document except as may be explicitly permitted by 19th
Capital in writing;
(j)          comply with its credit and collection policies with respect to the
Lease Transactions, which policies shall be commercially reasonable, agreed to
by 19th Capital, including updates from time to time, and in compliance in all
material respects with applicable
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laws and consistent with customary policies of similar companies in the
equipment finance and leasing industries;
(k)          pursue the interests of 19th Capital in the same manner it would
pursue its own interests in the exercise of any remedies available under the
Lease Documents, without discrimination; and
(l)          promptly provide to 19th Capital copies of any notices and material
information received by Quality in connection with any Lease Transaction or
Vehicle.
Section 3.2          Maintenance Services. During the term of this Agreement,
19th Capital will be responsible for ensuring the proper maintenance of Vehicles
and for all costs and expenses relating thereto, with the method of carrying out
such responsibility to be covered in the Business Plan. It is agreed that 19th
Capital may engage Quality to manage the oversight of maintenance services on
commercially reasonable and mutually agreed terms, to the extent approved by the
19th Capital Board of Managers or contained in the Business Plan so approved.
Section 3.3          Remarketing and Sale Services. During the term of this
Agreement, Quality shall be responsible for coordinating the remarketing and
eventual sale of the Vehicles through the performance of the following services
according to Quality’s commercially reasonable business judgment:
(a)          In the event of a default under or termination of a Lease
Transaction, Quality shall promptly notify 19th Capital of such event and
Quality’s proposed course of conduct with respect to such Lease Transaction and
the related Vehicle(s).  At the request of 19th Capital, Quality shall provide
all relevant information with respect to such Lease Transaction and the related
Vehicle(s), including Quality’s calculations of the current fair market value
and the current Net Book Value (as hereinafter defined) of the applicable
Vehicle(s).  Following consultation with Quality, 19th Capital may instruct
Quality in writing to (i) sell the applicable Vehicle(s), (ii) remarket and
re-lease the applicable Vehicle(s), or (iii) take such other action as 19th
Capital may reasonably direct. For purposes of this Agreement, the “Net Book
Value” of a Vehicle shall be the amount carried in the books and records of 19th
Capital.
(b)          If 19th Capital determines that the applicable Vehicle(s) should be
remarketed and re-leased, Quality shall use commercially reasonable efforts on a
basis no less favorable than used for other customers of Quality to remarket
such Vehicle(s) and obtain a new Lessee/Borrower to enter into a Lease
Transaction for the applicable Vehicle(s) on the terms set forth in this
Agreement. When a new Lessee/Borrower is found with respect to a remarketed
Vehicle, the Lessee/Borrower shall enter into a new Lease Transaction with 19th
Capital, as lessor or lender thereunder, and Quality shall deliver all original
Lease Documents evidencing said new Lease Transaction to 19th Capital.
(c)          If 19th Capital determines that the applicable Vehicle(s) should be
sold or otherwise disposed of, then Quality shall cause such Vehicle(s) to be
sold or otherwise disposed of on terms and conditions reasonably satisfactory to
19th Capital. If the Vehicle is sold, the proceeds from the sale of the Vehicle
less any and all unreimbursed out-of-pocket costs and expenses incurred by
Quality not to exceed any limitation contained in the Business Plan without
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19th Capital’s prior written consent to prepare such Vehicle for sale shall be
distributed to 19th Capital within two business days following Quality’s receipt
of such proceeds.
Section 3.4          Reporting Requirements. During the term of this Agreement,
Quality shall provide to 19th Capital the following reports each month, by the
10th business day following the end of the preceding month (each to be in form
and substance reasonably acceptable to 19th Capital):
(a)          a report showing, by Lease Transaction, the actual cash collected
during the month from applicable Lessee/Borrower;
(b)          a delinquency report sorted by Lessee/Borrower;
(c)          a report showing all gains and losses on sales of Vehicles for the
previous month;
(d)          a data file in electronic form reflecting all gross balances due
for each Lease Transaction;
(e)          an inactive report which reflects the Vehicles which are not
subject to a Lease Transaction at the end of each month;
(f)          a maintenance report showing expenses related to repairs and other
maintenance performed by Quality or any other party in such month and year to
date; the report shall also show any out-of-warranty and in-warranty repairs and
any warranty remaining;
(g)          a re-seating report showing all Vehicles that were re-seated during
such month, and all costs and expenses related to such re-seating activities;
and
(h)          such other reports as may be reasonably requested by 19th Capital
from time to time.
Section 3.5          Books and Records; Access; Etc.
(a)          Quality, at Quality’s expense, shall provide access to and furnish
19th Capital with records of collections and remittances in respect of the Lease
Transactions to enable 19th Capital to keep its books and records in accordance
with United States generally accepted accounting principles.  The books of
account and all other records relating to the Lease Transactions (including
files, correspondence, bank statements, accounting books and records, electronic
data, insurance policies, lease documents, credit records, contact information,
payment histories, collection data and other documents and agreements related to
Quality’s services under this Agreement and/or the Lease Transactions
contemplated hereby) (collectively, the “Business Records and Information”)
shall be the property of 19th Capital at all times.  Upon any termination of
this Agreement for any reason, Quality shall promptly turn over all of such
Business Records and Information, in the form in which Quality possesses such
Business Records and Information, to 19th Capital, provided that nothing herein
shall require Quality to destroy, transfer, delete or modify any backup tapes or
other media made pursuant to backup or archival processes in the ordinary course
of business, nor prohibit Quality from keeping an
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archival copy of Business Records and Information for regulatory, legal and
compliance purposes in accordance with its document retention policies designed
to achieve compliance with applicable law and regulation.
(b)          19th Capital shall have the right at all times during normal
business hours, and on reasonable advance notice to Quality, to audit, examine,
and make copies of or extracts from all business records, books, bank accounts,
electronically or otherwise, maintained by Quality with respect to the Lease
Transactions and any other matters contemplated by this Agreement, and such
right may be exercised through any employee, representative, or agent of 19th
Capital, including any designee of Element approved by 19th Capital.  19th
Capital and all of its duly authorized employees, agents and representatives
shall have authority to communicate with the senior management, employees,
accountants and other agents of Quality regarding the Lease Transactions and the
services provided by Quality under this Agreement.
Section 3.6          Other Covenants and Agreements.  In connection with its
services hereunder, Quality shall:
(a)          comply with all laws, rules and regulations applicable to Quality
and or the services to be provided by Quality under this Agreement;
(b)          preserve its existence as a limited liability company, duly
organized, validly existing and in good standing, under the laws of its state of
formation; and
(c)          provide to 19th Capital (i) copies of its audited yearly financial
statements within ninety (90) days after the end of each fiscal year, (ii)
copies of its internally prepared quarterly financial statements within
forty-five (45) days after the end of each fiscal quarter, (iii) copies of its
internally prepared monthly financial statements within thirty (30) days after
the end of each month, and (iv) such other financial statements and reports as
may be reasonably requested by 19th Capital from time to time, including any
information or reports that may be required by 19th Capital’s lenders or other
financing sources.
ARTICLE IV
COSTS AND EXPENSES TO BE PAID BY 19TH CAPITAL
Section 4.1          During the term of this Agreement, 19th Capital shall pay
and/or reimburse Quality, not later than the 15th day of each month (or, if the
15th day is not a business day, the next business day), for all reasonable and
documented out-of-pocket expenses incurred by Quality in connection with (a) the
repair and maintenance of the Vehicles, which are not otherwise covered by
warranty or paid by the applicable Lessee/Borrower, (b) the repossession,
recovery and relocation expenses of the Vehicles, (c) the refurbishment and
re-seating of any Vehicle, (d) the costs relating to Quality’s LeaseWave
software, (e) any other direct costs relating to the Vehicles and (f) the
performance of obligations, covenants, liabilities, warranties or duties under
this Agreement.  Within 30 days of the date of this Agreement, 19th Capital
shall reimburse Quality in the amount of $218,425 for costs relating to the
LeaseWave software that were incurred by Quality on behalf of 19th Capital
before the date of this Agreement. Notwithstanding the foregoing, Quality shall
obtain the prior approval of 19th Capital prior to
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incurring any such costs or expenses in excess of the amount set forth in the
Business Plan per Vehicle per occurrence.
ARTICLE V
SERVICE FEES, ETC.
Section 5.1          Service Fees.  As compensation for Quality’s services under
this Agreement (including, without limitation, services related to the
servicing, remarketing, and re-leasing of Vehicles), 19th Capital shall pay to
Quality, (a) for the first twelve (12) months following the date of this
Agreement, not later than the 15th day of each such month (or, if the 15th day
is not a business day, the next business day), a monthly service fee equal to
$150 for each Fleet Vehicle and for each Independent Operator or PC Managed
Fleet Vehicle per Vehicle per month, with such amount being due for any Vehicle
that is owned, leased, or used in the business of 19th Capital in any such
month, without proration for any partial month; and (b) after the first twelve
(12) months following the date of this Agreement, such amount and at such time,
as determined by the board of managers of the 19th Capital (it being understood
that the board of managers of the 19th Capital shall, at least semi-annually,
review and make appropriate adjustment of the service fee, taking into
consideration the time and efforts spent by Quality with respect to each
Vehicle).
ARTICLE VI
TERM AND TERMINATION;
Section 6.1          Term.  The term of this Agreement shall commence on the
date hereof and continue until terminated in accordance with this Agreement.
Section 6.2          Termination.  This Agreement may be terminated only upon 90
days’ written notice after the approval by the Managers (as defined in the
limited liability company agreement of 19th Capital) of 19th Capital who were
appointed by Element Transportation LLC (“Element”).
(a)          upon mutual agreement of the parties hereto;
(b)          by either party if the other party enters into or is placed in
bankruptcy or receivership, becomes insolvent, or makes as assignment for the
benefit of its creditors; or
(c)          by either party on ninety (90) days prior written notice.
Section 6.3          Effects of Termination.
(a)          In the event of any termination of this Agreement in accordance
with the terms hereof, the parties hereto shall (except as may otherwise be
expressly provided herein) be relieved of any obligations hereunder accruing on
or after such termination; provided, however, that (i) the indemnity obligations
described in Section 8.1 hereof accruing before, on or after such termination
and (ii) all obligations with respect to compensation and expenses due to or
from the parties for periods up to the date of termination, shall survive any
such termination; and any breaching party shall continue to remain liable for
any damages resulting from such party’s breach.
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(b)          Upon the termination of this Agreement, Quality shall:
(i)          promptly make available to 19th Capital any and all properties and
assets of 19th Capital within the possession of Quality, including all Business
Records and Information, but excluding the Vehicles of the Lessees/Borrowers,
and it will apprise 19th Capital of the last known location of any inactive
Vehicles;
(ii)         remit to 19th Capital the balance (if any) of any funds of 19th
Capital held by Quality; and
(iii)        at 19th Capital’s expense, do all other acts and execute and
deliver all documents reasonably requested by 19th Capital in connection with
the termination of this Agreement, and otherwise use commercially reasonable
efforts to cooperate with 19th Capital and any successor servicer to facilitate
the orderly transition and continuation of the Lease Transactions and the
servicing thereof.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1          Representations and Warranties of Quality.  Quality hereby
makes the following representations, warranties and covenants to 19th Capital:
(a)          Quality is an Indiana limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Indiana and
is duly licensed and qualified to engage in its regular course of business in
each jurisdiction in which the character of its properties or the nature of its
activities requires such qualifications.
(b)          Quality has full power and authority to enter into this Agreement
and to take any action and execute any documents required by the terms hereof
and thereof.  The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
limited liability company proceedings of Quality. Assuming the due authorization
and execution of this Agreement by 19th Capital, this Agreement constitutes the
legal, valid and binding obligations of Quality, enforceable against Quality in
accordance with the terms hereof.
(c)          No consent, approval, authorization, order, registration or
qualification of, or with, any person, or of, or with, any court or regulatory
authority or other governmental body (collectively, “Governmental Authorities”)
having jurisdiction over Quality, the absence of which would adversely affect
the legal and valid execution, delivery and performance by Quality of this
Agreement or the documents and instruments contemplated hereby or thereby, or
the taking by Quality of any actions contemplated herein or therein, is
required.  Notwithstanding the foregoing, Quality shall be solely responsible
for the procurement, to the extent necessary, of all approvals and consents with
respect to Quality in connection with the transactions contemplated herein from
Governmental Authorities and shall bear all responsibility and/or liability
resulting from any failure to procure any said approvals and/or consent.
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(d)          Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, nor the
fulfillment of or compliance with the terms and conditions of this Agreement by
Quality, conflicts with or results in a breach of or a default under any of the
terms, conditions or provisions of any legal restriction (including, without
limitation, any judgment, order, injunction, decree or ruling of any court or
governmental authority, or any federal, state, local or other law, statute, rule
or regulation) or any material covenant or agreement or instrument to which
Quality is now a party, or by which Quality or any of Quality’s property is
bound, nor does such execution, delivery, consummation or compliance violate or
result in the violation of the certificate of formation, limited liability
company agreement or any other organizational document or agreement of Quality.
(e)          No action, arbitration, investigation, litigation, or suit (whether
civil, criminal, administrative, investigative, or informal) is pending or, to
the knowledge of Quality, threatened against Quality challenging the lawfulness
of the transactions contemplated herein and/or seeking to prevent or delay the
transactions contemplated herein.
(f)          No person acting on behalf of Quality is or will be entitled to any
brokers’ or finders’ fee or any other commission or similar fee, directly or
indirectly, for the transactions hereunder.
Section 7.2          Representations and Warranties of 19th Capital.  19th
Capital hereby represents and warrants to Quality as follows:
(a)          19th Capital is a Delaware limited liability company in good
standing in the State of Delaware and is duly licensed and qualified to engage
in the regular course of business in each jurisdiction in which the character of
its properties or the nature of its activities requires such qualification.
(b)          19th Capital has full power and authority to enter into this
Agreement and to take any action and execute any documents required by the terms
hereof and thereof.  The execution, delivery and performance of this Agreement
and the transactions contemplated hereby have been duly authorized by all
necessary limited liability company proceedings of 19th Capital. Assuming the
due authorization and execution of this Agreement by Quality, this Agreement
constitutes the legal, valid and binding obligations of 19th Capital,
enforceable against 19th Capital in accordance with the terms hereof and
thereof.
(c)          No consent, approval, authorization, order, registration or
qualification of, or with, any person, or of, or with, any Governmental
Authorities having jurisdiction over 19th Capital, the absence of which would
adversely affect the legal and valid execution, delivery and performance by 19th
Capital of this Agreement or the documents and instruments contemplated hereby
or thereby, or the taking by 19th Capital of any actions contemplated herein or
therein, is required.  Notwithstanding the foregoing, 19th Capital shall be
solely responsible for the procurement, to the extent necessary, of all
approvals and consents with respect to 19th Capital in connection with the
transactions contemplated herein from Governmental Authorities and shall bear
all responsibility and/or liability resulting from any failure to procure any
said approvals and/or consent.
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(d)          Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, nor the
fulfillment of or compliance with the terms and conditions of this Agreement by
19th Capital, conflicts with or results in a breach of or a default under any of
the terms, conditions or provisions of any legal restriction (including, without
limitation, any judgment, order, injunction, decree or ruling of any court or
governmental authority, or any federal, state, local or other law, statute, rule
or regulation) or any material covenant or agreement or instrument to which 19th
Capital is now a party, or by which 19th Capital or any of 19th Capital’s
property is bound, nor does such execution, delivery, consummation or compliance
violate or result in the violation of the certificate of formation, limited
liability company agreement or any other organizational document or agreement of
19th Capital.
(e)          No action, arbitration, investigation, litigation, or suit (whether
civil, criminal, administrative, investigative, or informal) is pending or, to
the knowledge of 19th Capital, threatened against 19th Capital challenging the
lawfulness of the transactions contemplated herein and/or seeking to prevent or
delay the transactions contemplated herein.
(f)          No person acting on behalf of 19th Capital is or will be entitled
to any brokers’ or finders’ fee or any other commission or similar fee, directly
or indirectly, for the transactions hereunder.
ARTICLE VIII
INDEMNIFICATION OBLIGATIONS.
Section 8.1          General Indemnification.  Each party hereto (the
“Indemnifying Party”) hereby agrees to indemnify, defend and hold harmless the
other party (the “Indemnified Party”), its successors and assigns, from and
against any and all suits, claims, liabilities, counterclaims, actions, damages,
penalties, losses, costs or expenses (including, without limitation, reasonable
attorneys’ fees, expenses and court costs) of any kind which the Indemnified
Party shall suffer as a result of or arising out of (a) any material breach by
the Indemnifying Party of any warranty, representation, covenant or agreement
contained in this Agreement, any other document executed by the parties in
connection herewith, or contained in any Lease Document, (b) any material
misrepresentation in, or omission from, any statement, certificate, exhibit,
schedule or other agreement, instrument or document prepared and delivered or to
be delivered by the Indemnifying Party pursuant to this Agreement, (c) any gross
negligence or intentional misconduct of the Indemnifying Party or of any agent
or employee of the Indemnifying Party in respect of the performance of its
obligations under this Agreement.  In no event will the Indemnifying Party’s
duty to indemnify apply to the extent that any claims are attributable to the
Indemnified Party’s own gross negligence or intentional misconduct or breach of
any Lease Document by any Lessee/Borrower.
Section 8.2          Survival.  The obligations under this Article VIII shall
survive the execution of this Agreement and the consummation of the transactions
contemplated hereunder.
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ARTICLE IX
MISCELLANEOUS
Section 9.1          Further Assurances.  Each party shall, and hereby agrees
to, execute and deliver such further documents and instruments and will take
such other actions as the other party may reasonably request in order to
effectuate the purposes and terms of this Agreement.
Section 9.2          Independent Contractor.  Nothing herein shall create any
association, partnership, joint venture or the relation of principal and agent
between the parties hereto, it being understood that each party is acting as an
independent contractor, and neither party shall have the authority to bind the
other or the other's representatives in any way, except as expressly set forth
herein.
Section 9.3          Successor and Assigns.  19th Capital shall have the
absolute right, without requiring Quality’s consent, to assign all or any of its
rights or delegate all or any of its duties hereunder.  Without limiting the
foregoing, Quality agrees and acknowledges that (i) 19th Capital has established
19th Capital Titling Limited (the “19th Trust”) for the purpose of holding title
to certain Vehicles and entering into Lease Transactions with respect to such
Vehicles, (ii) the 19th Trust shall be a direct beneficiary of 19th Capital’s
rights and interests under this Agreement with respect to any such Vehicles and
Lease Documents held by the 19th Trust, and (iii) 19th Capital may assign any
and all of its rights and obligations under this Agreement to the 19th Trust (or
any other trust or entity established by 19th Capital to hold any Leases
Documents and/or titles to Vehicles subject thereto), and/or to one or more
parties providing financing for the Vehicles and/or Lease Transactions. Without
limiting the foregoing, Quality further agrees and acknowledges that (i) Element
Transportation Asset Trust, a Delaware statutory trust and an affiliate of
Element (the “Element Trust”) holds the title to certain Vehicles as of the date
of this Agreement, (ii) the Element Trust shall be a direct beneficiary of
Element’s rights and interests under this Agreement with respect to any such
Vehicles and Lease Documents held by the Element Trust, and (iii) Element may
assign any and all of its rights and obligations under this Agreement to (A) the
Element Trust (or any other trust or entity wholly owned by Element and
established by Element to hold any Leases Documents and/or titles to Vehicles
subject thereto), provided that Element shall remain responsible for all duties
so delegated and no such assignment or delegation by Element shall relieve
Element of any of its obligations or liabilities hereunder and/or (B) one or
more entities providing financing for such Vehicles and/or Lease Transactions,
with the prior written consent of 19th Capital, which consent shall not be
unreasonably withheld or delayed, provided that Element shall remain responsible
for all duties so delegated and no such assignment or delegation by Element
shall relieve Element of any of its obligations or liabilities hereunder.
Quality may not assign all or any of its rights or delegate all or any of its
duties hereunder and thereunder without the prior written consent of
19th Capital (except that Quality may assign any or all of its rights or
responsibilities it has in this agreement to a subsidiary or controlled
Affiliate of Quality without 19th Capital’s prior written consent), which
consent shall not be unreasonably withheld or delayed, provided that Quality
shall remain responsible for all duties so delegated and no such assignment or
delegation by Quality shall relieve Quality of any of its obligations or
liabilities hereunder.
Section 9.4          Payments In Immediately Available Funds; Right to Setoff. 
Each payment to be made hereunder shall be made on the required payment date in
lawful money of
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the United States and in immediately available funds. In addition to any other
rights hereunder or otherwise, (a) to the extent Quality fails to make timely
payment of any amounts owed to 19th Capital pursuant to this Agreement (“Quality
Late Payments”), 19th Capital shall be entitled to set off the amount of Quality
Late Payments against any amounts 19th Capital would otherwise be required to
pay to Quality pursuant to this Agreement and (b) to the extent 19th Capital
fails to make timely payment of any amounts owed to Quality pursuant to this
Agreement (“19th Capital Late Payments”), Quality shall be entitled to set off
the amount of 19th Capital Late Payments against any amounts otherwise required
to be paid to 19th Capital pursuant to this Agreement. In the case of any such
setoff, Quality’s or 19th Capital’s obligation, as applicable, to make such
Quality Late Payments or 19th Capital Late Payments (or any portion thereof), as
applicable, shall be deemed satisfied and discharged to the extent of such
setoff.
Section 9.5          Rights Cumulative.  All rights, remedies and powers granted
to 19th Capital hereunder, under any Lease Document and under any other
agreement executed by the parties in connection herewith are irrevocable and
cumulative, and not alternative or exclusive, and shall be in addition to all
other rights, remedies and powers given hereunder and thereunder, or in or by
any other instrument, or available in law or equity.
Section 9.6          Waivers.  No failure or delay on the part of 19th Capital
or Quality in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other or further exercise thereof or
the exercise of any other power, right or remedy.
Section 9.7          Notices.  Any notice to be given hereunder shall be given
in writing and shall be deemed given: (a) when received if given in person, (b)
on the date of transmission (upon confirmation of receipt) if sent by electronic
mail or facsimile, (c) three days after being deposited in the U.S. mail,
certified or registered mail, postage prepaid, and (d) if sent by an nationally
recognized overnight delivery service, the second day following the date given
to such overnight delivery service (specified for overnight delivery).  All
notices shall be addressed as follows (or at such other address for a party as
shall be specified by like notice):
If to Quality:                                         Quality Companies LLC
9702 East 30th Street
Indianapolis, IN 46229
Attn: Danny Williams, COO
Email: dwilliams@celadontrucking.com

If to 19th Capital:                                   19th Capital Group, LLC
9702 East 30th Street
Indianapolis, IN 46229
Attn: Harry Dugan, President
Email: hdugan@19thcapital.com

with copies to:
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Element Transportation LLC
c/o Element Fleet Management Corp.
161 Bay Street, 36th Floor
Toronto, Ontario M5J 2S1
Canada
Attention: General Counsel
E-mail: pdanielson@elementcorp.com

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Patrick J. Naughton
E-mail: pnaughton@stblaw.com

Scudder Law Firm, P.C., L.L.O.
411 S. 13th Street, Suite 200
Lincoln, NE 68508
Attention: Mark A. Scudder
E-mail: mscudder@scudderlaw.com

Section 9.8          Merger and Integration; Amendments, Etc.  This Agreement
and the other agreements executed by the parties in connection herewith set
forth the entire understanding of the parties relating to the subject matter
hereof and thereof, and all other and/or prior understandings, written or oral,
are hereby superseded, unless referenced and/or incorporated herein, provided
that notwithstanding the foregoing, the agreements listed on Schedule 9.8 shall
remain in full force and effect.  This Agreement may not be modified, amended,
waived, or terminated, except in accordance with its express terms and in
writing executed by 19th Capital and Quality, or by supplement hereto as agreed
to by the parties.
Section 9.9          Headings and Cross-References.  The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement.  References to any
Section are to such Section of this Agreement.
Section 9.10        Governing Law.  This Agreement shall be governed by the
internal substantive laws of the State of Delaware, without regard to principles
of conflicts of law or choice of law.
Section 9.11        Counterparts.  This Agreement may be signed in one or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original and all of which shall be taken together as one and the
same agreement. For purposes of this Agreement, a document (or signature page
thereto) signed and transmitted by facsimile machine or electronic mail is to be
treated as an original document.  The signature of any party on such document,
for purposes hereof, is to be considered as an original signature, and the
document transmitted is to be considered to have the same binding effect as an
original signature on an original document.  At the request of any party, any
facsimile or electronically transmitted document shall be re‑executed in
original form by the parties who executed the facsimile or electronically
transmitted document.
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Section 9.12          Severability.  If any provision hereof, or the application
of such provision to any person or circumstance or in any jurisdiction, shall be
held to be invalid or unenforceable to any extent, (i) the remainder of this
Agreement shall not be affected thereby, and each other provision hereof shall
be valid and enforceable to the fullest extent permitted by law, (ii) as to such
person or circumstance or in such jurisdiction such provision shall be reformed
to be valid and enforceable to the fullest extent permitted by law and (iii) the
application of such provision to other persons or circumstances or in other
jurisdictions shall not be affected thereby.
Section 9.13          Survival of Duties, Warranties and Representations.  Each
party hereto covenants that its respective duties, warranties and
representations set forth in this Agreement and in any document delivered or to
be delivered in connection herewith or therewith, shall survive the execution of
this Agreement.
Section 9.14          Jurisdiction, Forum Selection Venue; Jury Trial Waivers. 
19TH CAPITAL AND QUALITY (a) AGREE TO SUBMIT FOR THEMSELVES, IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT AND ANY SCHEDULE OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT HEREOF OR THEREOF, TO THE EXCLUSIVE
JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR IF SUCH
JURISDICTION IS DECLINED BY THE COURT OF CHANCERY OF THE STATE OF DELAWARE, THE
FEDERAL COURTS OF THE STATE OF DELAWARE, AND APPELLATE COURTS FROM ANY THEREOF,
(b) CONSENT THAT ANY ACTION OR PROCEEDING SHALL BE BROUGHT IN SUCH COURTS, AND
WAIVE ANY OBJECTION THAT EACH MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT, (c) AGREE THAT SERVICE OF PROCESS OF ANY
SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE APPROPRIATE PARTY
AT ITS ADDRESS AS SET FORTH HEREIN, AND SERVICE MADE SHALL BE DEEMED TO BE
COMPLETED UPON RECEIPT, AND (d) AGREE THAT NOTHING HEREIN OR IN ANY EXHIBIT OR
SCHEDULE SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.  19TH CAPITAL AND QUALITY EACH HEREBY UNCONDITIONALLY WAIVES
ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY SCHEDULE AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, ANY OF THE RELATED DOCUMENTS, ANY
DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF OR
THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN 19TH CAPITAL
AND QUALITY.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.

 
QUALITY:
 
QUALITY COMPANIES, LLC
   
By:
 
/s/ Leslie Tarble
   
Name:  Leslie Tarble
   
Title:  CFO
           
19th CAPITAL:
     
19TH CAPITAL GROUP, LLC
           
By:
 
/s/ Harry Dugan
   
Name:  Harry Dugan
   
Title:  President

 
[Signature Page to the Service Agreement]

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Schedule 9.8

Existing Agreements

1. Fleet Program Agreement, dated September 28, 2015, by and among 19th Capital
Group, LLC, Quality Companies, LLC, formerly dba Quality Equipment Sales, and
Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

2. Service Agreement, dated September 28, 2015, by and among 19th Capital Group,
LLC, Quality Companies, LLC, formerly dba Quality Equipment Sales, and Quality
Equipment Leasing, LLC, dba Quality Equipment Sales, as amended by that First
Amendment to Service Agreement, dated March 30, 2016, by and among 19th Capital
Group, LLC, Quality Companies, LLC, formerly dba Quality Equipment Sales, and
Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

3. Reserve Account Agreement, dated September 28, 2015, by and among 19th
Capital Group, LLC, Quality Companies, LLC, formerly dba Quality Equipment
Sales, and Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

4. Supplement to Reserve Account Agreement, dated September 28, 2015, by and
among 19th Capital Group, LLC, Quality Companies, LLC, formerly dba Quality
Equipment Sales, and Quality Equipment Leasing, LLC, dba Quality Equipment
Sales.

5. Program Agreement, dated September 28, 2015, by and among 19th Capital Group,
LLC, Quality Companies, LLC, formerly dba Quality Equipment Sales, and Quality
Equipment Leasing, LLC, dba Quality Equipment Sales.

6. Portfolio Purchase and Sale Agreement, dated September 28, 2015, by and among
19th Capital Group, LLC, Quality Companies, LLC, formerly dba Quality Equipment
Sales, and Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

7. Portfolio Purchase and Sale Agreement, dated October 27, 2015, by and among
19th Capital Group, LLC, Quality Companies, LLC, formerly dba Quality Equipment
Sales, and Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

 
 
8. Portfolio Purchase and Sale Agreement, dated June 8, 2016, by and among 19th
Capital Group, LLC, Quality Companies, LLC, and Quality Equipment Leasing, LLC,
dba Quality Equipment Sales.

 

9. Portfolio Purchase and Sale Agreement, dated October 20, 2015, by and among
19th Capital Group, LLC, Quality Companies, LLC, formerly dba Quality Equipment
Sales, and Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

 

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10. Portfolio Purchase and Sale Agreement, dated December 30, 2015, by and among
19th Capital Group, LLC, Quality Companies, LLC, and Quality Equipment Leasing,
LLC, dba Quality Equipment Sales.

11. Portfolio Purchase and Sale Agreement, dated October 29, 2015, by and among
19th Capital Group, LLC, Quality Companies, LLC, formerly dba Quality Equipment
Sales, and Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

12. Portfolio Purchase and Sale Agreement, dated December 23, 2015, by and among
19th Capital Group, LLC, Quality Companies, LLC, and Quality Equipment Leasing,
LLC, dba Quality Equipment Sales.

13. Servicing Agreement, dated November 16, 2015, by and between 19th Capital
Titling Limited and 19th Capital Group, LLC.

14. 2016-A SUBI Sale Agreement, dated June 8, 2016, by and between 19th Capital
Group, LLC and 19th Capital SPE I, LLC.

15. 2016-A SUBI Servicing Agreement, dated June 8, 2016, by and among 19th
Capital Titling Limited, 19th Capital SPE I, LLC, Quality Companies, LLC, and
Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

16. Portfolio Purchase and Sale Agreement, dated September 30, 2016, by and
among 19th Capital Group, LLC, Quality Companies, LLC, and Quality Equipment
Leasing, LLC, dba Quality Equipment Sales.

17. 2016-B SUBI Sale Agreement, dated September 30, 2016, by and between 19th
Capital Group, LLC and 19th Capital SPE II, LLC.

18. 2016-B SUBI Servicing Agreement, dated September 30, 2016, by and among 19th
Capital Titling Limited, 19th Capital SPE II, LLC, Quality Companies, LLC, and
Quality Equipment Leasing, LLC, dba Quality Equipment Sales.

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