Exhibit 10.46

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk (“[***]”) to denote where omissions have been
made. The confidential material has been filed separately with the Securities
and Exchange Commission.

 

 

 

RAILCAR MANAGEMENT AGREEMENT

between

Longtrain Leasing I, LLC,

and

AMERICAN RAILCAR LEASING LLC

Dated as of December 20, 2012

 

 

 

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TABLE OF CONTENTS

 

SECTION 1. DEFINED TERMS; RULES OF INTERPRETATION

     1   

Section 1.1 Defined Terms

     1   

Section 1.2 Rules of Interpretation

     3   

SECTION 2. ENGAGEMENT OF MANAGER

     4   

Section 2.1 Appointment; Independent Contractor

     4   

Section 2.2 Standards of Performance

     4   

Section 2.3 Conflicts of Interest

     5   

Section 2.4 Subcontractors; Agents

     5   

Section 2.5 Limitation on Authority

     5   

Section 2.6 Similar Services

     5   

SECTION 3. MANAGEMENT TERM

     6   

Section 3.1 Duration of Management Term

     6   

Section 3.2 Resignation by Manager

     6   

Section 3.3 Termination with Respect to an Owner Equipment

     6   

SECTION 4. OWNERSHIP, MARKING OF THE OWNER EQUIPMENT, LEASE LOCATION AND LEGEND

     6   

Section 4.1 Retention of Title

     6   

Section 4.2 Marking of Owner Equipment

     6   

Section 4.3 Lease Location and Legend

     7   

Section 4.4 Liens

     7   

Section 4.5 Filings

     7   

SECTION 5. ADDITIONAL DUTIES OF MANAGER

     8   

Section 5.1 Marketing

     8   

Section 5.2 Lease Agreement Obligations

     8   

Section 5.3 Billing and Other Information

     8   

Section 5.4 Defaults by Lessees; Lease Agreement Amendments and Waiver

     9   

Section 5.5 Maintenance

     9   

Section 5.6 Insurance

     10   

Section 5.7 Taxes

     12   

Section 5.8 Compliance with Law

     12   

Section 5.9 Licenses

     12   

Section 5.10 Transportation

     12   

Section 5.11 Records and Information

     13   

Section 5.12 Owner Equipment Hire Relief

     13   

Section 5.13 Duties in Connection with Credit Agreement

     13   

Section 5.14 Other Services

     13   

SECTION 6. REPRESENTATIONS AND WARRANTIES

     14   

SECTION 7. MODIFICATIONS

     15   

SECTION 8. REPORTS AND INSPECTION

     15   

Section 8.1 Operating Expenses and Other Expenditures

     15   

Section 8.2 Inspection of the Owner Equipment and Records

     15   

Section 8.3 Additional Information

     16   

Section 8.4 Financial Information

     16   

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SECTION 9. COMPENSATION AND REIMBURSEMENT OF MANAGER

     16   

Section 9.1 Compensation of Manager

     16   

Section 9.2 Management Fee

     16   

Section 9.3 Reimbursable Services

     17   

SECTION 10. LOSS, DAMAGE OR SALE OF OWNER EQUIPMENT; ADDING OR TERMINATING OWNER
EQUIPMENT

     17   

Section 10.1 Loss or Damage

     18   

Section 10.2 Sale

     19   

Section 10.3 Replacing, Adding and Terminating Owner Equipment

     19   

SECTION 11. TRANSACTIONS WITH AFFILIATES

     19   

SECTION 12. RETURN OF OWNER EQUIPMENT UPON EXPIRATION OF MANAGEMENT TERM

     19   

SECTION 13. INDEMNIFICATION BY MANAGER

     20   

Section 13.1 Claims Excluded

     20   

Section 13.2 Cooperation

     21   

Section 13.3 Survival

     21   

SECTION 14. MANAGER TERMINATION EVENTS; REMEDIES

     21   

Section 14.1 Manager Termination Events

     21   

Section 14.2 Remedies Upon Manager Termination Event

     22   

Section 14.3 Remedies Cumulative

     23   

SECTION 15. REPLACEMENT OF MANAGER

     23   

SECTION 16. MISCELLANEOUS

     24   

Section 16.1 Merger or Sale

     24   

Section 16.2 Modification and Waiver

     24   

Section 16.3 Communications

     25   

Section 16.4 GOVERNING LAW; JURISDICTION; ETC.

     25   

Section 16.5 Severability

     26   

Section 16.6 Successors and Assigns

     26   

Section 16.7 Assignment to the Administrative Agent

     27   

Section 16.8 Third Party Beneficiaries

     27   

Section 16.9 Counterparts; Integration; Effectiveness

     27   

Section 16.10 No Bankruptcy Petition

     27   

Section 16.11 WAIVER OF JURY TRIAL

     28   

Exhibit A - Form of Notice of Addition/Removal of Owner Equipment

  

 

2

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RAILCAR MANAGEMENT AGREEMENT

This Railcar Management Agreement, dated as of December 20, 2012 (this
“Agreement”) is between Longtrain Leasing I, LLC, a Delaware limited liability
company (“Owner”), and American Railcar Leasing LLC, a Delaware limited
liability company (together with any successor manager or permitted assignee,
“Manager”).

RECITALS

WHEREAS, Owner owns the Owner Equipment;

WHEREAS, Manager is engaged in the business, among others, of managing railcars;

WHEREAS, Owner has entered into that certain Credit Agreement (the “Credit
Agreement”), dated as of December 20, 2012, among Owner, Fifth Third Bank (the
“Administrative Agent” and “Co-Syndication Agent”), Key Equipment Finance Inc.
(the “Co-Syndication Agent”) and the various lenders party thereto (the
“Lenders”), pursuant to which the Lenders have provided a term loan to Owner in
order to permit Owner to acquire certain Equipment and their related Lease
Agreements;

WHEREAS, as security for the loan made by the Lenders to Owner pursuant to the
Credit Agreement, Owner has pledged the Owner’s Collateral to the Administrative
Agent for the benefit of itself and the Lenders pursuant to that certain
Security Agreement (the “Security Agreement”), dated as of December 20, 2012,
between Owner and the Administrative Agent, as Secured Party; and

WHEREAS, Owner desires to retain Manager to manage the Owner’s Portfolio on
Owner’s behalf, and Manager desires to accept such engagement.

NOW, THEREFORE, the parties hereto, desiring legally to be bound, agree as
follows:

Section 1. Defined Terms; Rules of Interpretation.

Section 1.1 Defined Terms.

The following terms shall have the following meanings for the purposes of this
Agreement, and terms used herein but not defined shall have the respective
meaning assigned to such terms in the Credit Agreement:

“Administrative Agent” shall have the meaning assigned to such term in the
Preamble.

“Credit Agreement” shall have the meaning assigned to such term in the Recitals.

“Excluded Expenses” shall have the meaning assigned to such term in Section 9.3.

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“Final Termination Date” shall mean the earlier of (i) the date on which all of
the Obligations (other than contingent obligations not due and owing) are paid
in full in cash and (ii) August 31, 2018.

“Gross Revenues” for any period shall mean with respect to the Owner Equipment,
all revenues received for such period in the form of rents, equipment hire
payments of any kind or any similar payments in respect of such Owner Equipment,
from any source in connection with the ownership, use, lease or operation of
such Owner Equipment; provided, however, that Gross Revenues shall not include
any payment (whether from insurance, indemnity or otherwise) resulting from
damage to or destruction of any railcar or any proceeds from the sale of the
railcars, or rebates, reclamations, incentive load fees, or any revenues
required to be remitted to third parties or governmental agencies, including,
without limitation, sales and use taxes, and tariffs.

“Imposition” shall have the meaning assigned to such term in Section 5.7.

“Lien Claim” shall have the meaning assigned to such term in Section 4.4.

“Management Term” shall have the meaning assigned to such term in Section 3.1.

“Net Lease” shall mean a lease, where, as between the lessor and the lessee, the
lessee is responsible for all maintenance, repair, lining, insurance, taxes and
other costs and expenses associated with the operation and use of the related
Equipment.

“Net Sales Proceeds” shall mean the gross sales proceeds actually received in
immediately available funds by Owner from a sale of Owner Equipment, less any
costs of storage (paid to third parties or properly chargeable to Owner),
refurbishment or repair, broker’s commissions, advertising, legal fees and costs
and any other out-of-pocket expense incurred by Owner in connection with the
sale of any such Owner Equipment, provided, however, that Owner shall not deduct
from the gross sales proceeds any unpaid amounts due and payable to Manager
applicable to such railcar Owner Equipment.

“Other Equipment” shall have the meaning assigned to such term in Section 2.3.

“Owner Equipment” shall mean all Equipment owned by the Borrower, which shall
include, without limitation, Equipment listed on Schedule A to the Security
Agreement and Schedule A-1 to any Security Agreement Supplement.

“Owner’s Portfolio” shall mean all of the Owner Equipment and all of the Lease
Agreements related to such Owner Equipment.

“Required Modification” shall have the meaning assigned to such term in
Section 7.1.

“Subordinated Management Fees” shall have the meaning assigned to such term in
Section 9.2.

“Successor Manager” shall have the meaning assigned to such term in Section 15.

 

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“Tangible Net Worth” shall mean the tangible net members’ equity of Manager
(which shall represent total members’ equity of Manager less, without
duplication, any intangibles or goodwill determined in accordance with GAAP).

Section 1.2 Rules of Interpretation.

For purposes of this Agreement (including any Exhibit hereto), unless otherwise
specified herein:

 

  (a) accounting terms used and not specifically defined therein shall be
construed in accordance with GAAP;

 

  (b) the term “including” means “including without limitation,” and other forms
of the verb “to include” have correlative meanings;

 

  (c) references to any Person include such Person’s permitted successors or
assigns (and references to any Governmental Authority include any Person
succeeding to such Governmental Authority’s functions);

 

  (d) in the computation of a period of time from a specified date to a later
specified date, the word “from” means “from and including” and the words “to”
and “until” each means “to but excluding”;

 

  (e) the words “hereof”, “herein” and “hereunder” and words of similar import
refer to this Agreement as a whole and not to any particular provision of this
Agreement;

 

  (f) the term “or” means “and/or”, as applicable;

 

  (g) the meanings of defined terms are equally applicable to the singular and
plural forms of such defined terms;

 

  (h) references to “Section” or “Exhibit” herein are references to Sections and
Exhibits in this Agreement;

 

  (i) the defined term herein of “Owner” is intended to have the same meaning as
the defined term “Borrower” in the Credit Agreement, and the defined term herein
of “Manager” is intended to have the same meaning as the defined term “Servicer”
in the Credit Agreement;

 

  (j) to the extent that there is any ambiguity or conflict between any
provision hereunder and the terms of the Credit Agreement, the terms of this
Agreement shall control Manager’s duties and responsibilities to Owner;

 

  (k) the various captions (including any table of contents) are provided solely
for convenience of reference and shall not affect the meaning or interpretation
of this Agreement;

 

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  (l) references to any statute or regulation refer to that statute or
regulation as amended from time to time, and include any successor statute or
regulation of similar import; and

 

  (m) all references to any contract, document or agreement shall mean such
contract, document or agreement as amended, supplemented, restated and otherwise
modified and in effect from time to time.

Section 2. Engagement of Manager.

Section 2.1 Appointment; Independent Contractor.

(a) Owner hereby engages Manager to manage, operate, market, store, lease,
re-lease, sublease, service, repair, overhaul, replace, and maintain the Owner
Equipment on behalf of Owner and to perform the services set forth herein with
respect to the Owner’s Portfolio in accordance with the Servicing Standard, this
Agreement, the Lease Agreements and the Loan Documents, and grants to Manager
the authority to do and arrange for any of the foregoing, including entering
into agreements and arrangements in furtherance thereof on behalf of Owner, all
on the terms and conditions set forth herein, and Manager hereby accepts such
engagement Owner hereby constitutes and appoints Manager, with full power of
substitution, its true and lawful agent and attorney-in-fact, for it and in its
name, place and stead, to make, execute, sign, acknowledge, swear to, deliver,
record and file any and all registration documents, Lease Agreements, work
orders, repair or maintenance agreements, insurance applications or requests,
and any and all other documents or instruments, and to do all other acts and
things, which may be considered necessary or desirable to Manager to carry out
fully the provisions of this Agreement, consistent with Owner’s interests. Owner
hereby ratifies and confirms all that said agent and attorney-in-fact shall
lawfully do or cause to be done by virtue hereof so long as such actions are
performed in accordance with this Agreement, are within the powers granted to
Manager hereunder and any expressly required prior consent or approval of Owner
set forth herein shall have been obtained.

(b) Manager will act as an independent contractor on behalf of Owner and not as
an agent or employee of Owner or any other Person. The duties and obligations of
Manager are limited to those expressly set forth in this Agreement, and Manager
will not have any fiduciary or other duties or obligations, implied or
otherwise, to Owner or any other Person. Nothing contained herein shall obligate
(a) Owner to pay any taxes for or on behalf of Manager or otherwise be
responsible for the debts and obligations of Manager or (b) Manager to be
responsible for the debts and obligations of Owner or to make guaranty the
payment of amounts due as rent under any Lease or any variation thereof, be
otherwise responsible, as a guarantor or otherwise, for any of the foregoing or
any other obligation or liability of any Person to any other Person, or
indemnify any Person for any of the foregoing.

Section 2.2 Standards of Performance.

Manager shall perform all of its duties and obligations under this Agreement in
accordance with the Servicing Standard. The duties and obligations of Manager
are limited to those expressly set forth in this Agreement, and Manager will not
have any fiduciary or other duties or obligations, implied or otherwise, to
Owner or any other Person. Manager shall not be obligated to take any action or
perform any activity under this Agreement that would exceed the Servicing
Standard, nor shall Manager be liable to Owner or any other Person for any
failure to take such excess action or perform such activity.

 

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Section 2.3 Conflicts of Interest.

Manager shall perform its duties and obligations under this Agreement on a fair
and equitable basis. Without prejudice to the generality of the foregoing or to
the duties and obligations of Manager referenced in Section 2.2, to the extent
that any particular railcar owned, managed or leased by Manager other than an
Owner Equipment (any such Other Equipment, an “Other Equipment”) is
substantially similar in terms of objectively identifiable characteristics that
are relevant for purposes of the particular services to be performed, Manager
will not discriminate between an Owner Equipment and any such Other Equipment on
any basis that could reasonably be considered discriminatory or adverse to Owner
or the Owner Equipment, except that Manager is permitted to discriminate between
an Owner Equipment, on one hand, and Other Equipment, on the other hand, to the
extent as directed by Owner so that Manager takes any action which, if not
taken, would lead to or cause the Owner to default under any Loan Document
Agreement.

Section 2.4 Subcontractors; Agents.

Subject to the provisions of Section 11, Manager may execute any of its duties
under this Agreement by or through agents, contractors, employees or
attorneys-in-fact that may be Manager’s Affiliates and unrelated parties, and
Manager may enter into such agreements and arrangements with its agents,
contractors, employees or attorneys-in-fact as Manager deems reasonably
necessary or desirable to perform its duties under this Agreement; provided that
(a) no such delegation shall release, limit, or reduce in any way, any of
Manager’s duties and obligations under this Agreement, (b) any such agent,
contractor, employees or attorney-in-fact shall be a reputable and experienced
provider of such services as it may be delegated, and (c) Manager will be
responsible for the compensation of such agent, contractor, employees or
attorney-in-fact, except to the extent that Manager would be entitled to
reimbursement, as a Reimbursable Expense, for performing such duties.

Section 2.5 Limitation on Authority.

Manager shall not have any authority to do any act or thing with respect to the
Owner’s Portfolio, unless authorized under this Agreement.

Section 2.6 Similar Services.

It is expressly understood and agreed that nothing in this Agreement shall be
construed to prevent, prohibit or restrict Manager or any Affiliate of Manager
from providing the same or similar services as those provided under this
Agreement to any other Person or from manufacturing, selling, owning, leasing,
managing or otherwise dealing in other railcars; provided that no such activity
shall in any way diminish the obligations of Manager hereunder.

 

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Section 3. Management Term.

Section 3.1 Duration of Management Term.

The term of Manager’s duties hereunder (the “Management Term”) shall commence as
of the date hereof and, subject to the provisions of Sections 3.3 and 14, shall
continue until terminated by Owner as provided herein. Except as set forth in
Section 14, the rights and obligations of Manager hereunder may not be
terminated by, or on behalf of, Owner for any reason. Notwithstanding anything
to the contrary herein or in any other Loan Document, this Agreement and all of
the Owner’s and Manager’s rights, duties, liabilities or obligations hereunder
(except for those that by their own terms survive termination of this Agreement
and payment in full of the Obligations) shall, automatically and without further
action from any party, terminate on the Final Termination Date.

Section 3.2 Resignation by Manager.

Manager may not resign from its obligations and duties hereunder, except
(a) with the prior written consent of Owner; or (b) upon a determination that
Manager’s performance of such duties is no longer permissible under applicable
law. Any such determination permitting the resignation of Manager pursuant to
clause (b) above shall be evidenced by an opinion of independent counsel, in
form and substance reasonably satisfactory to Owner, to such effect delivered to
Owner. No such resignation will become effective until a Successor Manager (as
defined in and appointed in accordance with the provisions in Section 15) has
assumed servicing obligations and duties under this Agreement in accordance with
the terms hereof.

Section 3.3 Termination with Respect to an Owner Equipment.

With respect to any Owner Equipment that suffers a Event of Loss or which is
sold by Owner, all duties and obligations of Manager hereunder shall terminate
with respect to such Owner Equipment upon the date Manager has satisfied its
duties and obligations under Section 10.1(b) or 10.2, as applicable, with
respect to such Owner Equipment.

Section 4. Ownership, Marking of the Owner Equipment, Lease Location and Legend.

Section 4.1 Retention of Title.

Owner shall at all times retain full legal and equitable title to the Owner
Equipment, notwithstanding the management thereof by Manager hereunder. Manager
shall not make reference to or otherwise deal with or treat the Owner Equipment
in any manner except in conformity with this Section 4.1.

Section 4.2 Marking of Owner Equipment.

Manager shall take all actions necessary to enable Borrower to comply at all
times with Section 4.7 of the Security Agreement.

 

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Section 4.3 Lease Location and Legend.

Manager shall take all actions necessary to enable Borrower to comply at all
times with Section 5.2 of the Security Agreement.

Section 4.4 Liens.

Manager will promptly pay or discharge any and all sums claimed by any party
which, if unpaid, might become a lien, charge, security interest or other
encumbrance upon or with respect to any Owner Equipment, including any accession
thereto, or any part thereof or the interest of Owner therein, other than
Permitted Liens (any of the foregoing a “Lien Claim”), and will promptly
discharge any such lien, charge, security interest or other encumbrance, other
than a Permitted Lien, that arises; provided, however, that Manager shall be
under no obligation to pay or discharge any Lien Claim so long as it is
contesting the validity thereof in good faith in a reasonable manner and by
appropriate legal proceedings and the nonpayment thereof does not, in Manager’s
reasonable opinion, adversely affect the title, property or rights of Owner or
any assignee thereof; and provided, further, that Manager shall not be required
to pay or discharge any Lien Claim (a) except to the extent that it results from
Manager’s negligence, recklessness or willful misconduct or (b) unless prior to
such payment or discharge Manager receives from Owner the amount thereof. If any
Lien Claim shall have resulted from Manager’s negligence, recklessness or
willful misconduct and been paid by Owner, then Manager shall reimburse Owner,
upon presentation of an invoice therefor; provided that Owner or Manager shall
have been legally liable with respect thereto or Owner shall have approved the
payment thereof. All amounts expended by Manager pursuant to and in accordance
with this Section 4.4 shall constitute a Reimbursable Service.

Section 4.5 Filings.

Manager will prepare, execute, acknowledge, deliver, file, register and record
(and will refile, re-register or re-record whenever required) any and all
instruments for the purpose of protecting Owner’s title in the Owner Equipment
and complying with the terms of the Security Agreement, in connection therewith,
will promptly deliver to Owner proof of such filings. Such filings shall
include, but are limited to, the preparation and filing of (i) the Security
Agreement and any Security Agreement Supplement with the STB and with the RGC,
(ii) all financing and continuation statements to be filed with the Secretary of
State of the State of Delaware, and (ii) such other documents and all similar
notices required by applicable law to be filed in such other jurisdictions and
with such other Federal, state, provincial or local government or agency thereof
where the Secured Party deems it necessary or reasonably appropriate under the
circumstances to perfect, protect, or preserve its lien on the Collateral, in
order to fully preserve and protect the rights of the Secured Party under the
Loan Documents. All amounts expended by Manager pursuant to and in accordance
with this Section 4.5 shall constitute a Reimbursable Service.

 

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Section 5. Additional Duties of Manager.

Manager shall, in accordance with the Servicing Standard and in addition to the
duties and responsibilities described elsewhere in this Agreement, provide or
arrange for the provision of the services specified in this Section 5 to, and on
behalf of, Owner during the Management Term. The parties hereto acknowledge and
agree that certain Owner Equipment may be subject to Lease Agreements that
require the applicable Lessees to undertake certain of the obligations set forth
in Sections 5.5, 5.6 and 5.7, and in such cases, Manager shall be responsible
for verifying that such Lessees are complying with their respective obligations
under such Lease Agreements.

Section 5.1 Marketing.

As instructed by the Owner, the Manager shall clearly identify any Lease
Agreements entered into that are not Eligible Leases on the Manager Report that
is required to be delivered after such ineligible Lease Agreement is entered
into. In addition, Manager shall, consistent with the Servicing Standard,
negotiate the terms and conditions of such Lease Agreements; provided that such
terms and conditions must be consistent with those of Lease Agreements for the
Other Equipment and, in any event, must comply with then generally accepted
industry standards. In furtherance thereof, Manager shall cause its employees
and agents involved in the day-to-day marketing and re-leasing of railcars under
Manager’s management to perform their respective responsibilities without any
distinction between Owner Equipment and Other Equipment, except to the extent
required by this Agreement or the Loan Documents.

Section 5.2 Lease Agreement Obligations.

Manager shall, consistent with the Servicing Standard, perform or cause to be
performed the obligations of Owner under the Lease Agreements; provided,
however, that nothing contained in this Agreement shall obligate Manager to make
or guaranty the payment of amounts due as rent under any Lease Agreement or any
variation thereof.

Section 5.3 Billing and Other Information.

During the Management Term and for so long as Owner is a party to the Lease
Administration Agreement, Manager shall furnish to Administrators all
information required to be delivered by Manager thereunder, including all such
information as may be necessary to enable Administrators to (a) bill, on behalf
of Owner and Manager, for all rentals and other sums due to Owner and Manager
with respect to the Owner Equipment, including insurance benefits and railroad,
Lessee or other indemnity payments in the event of damage to, or loss or
destruction of, all or any of the Owner Equipment, (b) audit and direct
disbursement by the Lockbox Bank under the Lease Administration Agreement of
mileage allowance reports and payments with respect to the Owner Equipment, and
(c) perform when due Administrators other obligations under the Lease
Administration Agreement.

 

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Section 5.4 Defaults by Lessees; Lease Agreement Amendments and Waiver.

(a) In the event of any breach or default by an Lessee under a Lease Agreement,
Manager shall, consistent with the Servicing Standard, take such actions with
respect to such defaulted Lease Agreement, in the name of, and as specified in
writing by Owner, and in such a manner so as to enable Borrower to at all times
comply with the terms of the Security Agreement, including (i) the termination
of such Lease Agreement as to any or all Owner Equipment subject thereto,
(ii) the recovery of possession of any or all Owner Equipment subject thereto,
and (iii) the enforcement of any other rights or remedies of Owner under such
Lease Agreement, including the right to payment of any rent or other amounts
owed by the Lessee under such Lease Agreement. In furtherance of the foregoing,
Manager shall, consistent with the Servicing Standard, (x) institute and
prosecute such legal proceedings in the name of Owner as is permitted by
applicable law in order to accomplish the foregoing, (y) settle, compromise or
terminate such proceedings, or (z) reinstate such Lease Agreement; provided that
Manager shall not be required to take any such action if, in the exercise of its
reasonable commercial judgment and subject to the Servicing Standard, Manager
would not take such action if such Owner Equipment were Other Equipment; further
provided, that, without the prior written consent of Owner, Manager shall not
take any such action under this Section 5.4(a) if, in the exercise of its
reasonable commercial judgment, such action will cause Manager to claim
reimbursement in excess of $5,000. All amounts expended by Manager in connection
with the performance of its obligations pursuant to the provisions of this
Section 5.4, after reduction of such amounts for enforcement cost actually
received by Manager pursuant to the terms of the related Lease Agreements, shall
be a Reimbursable Service. Owner reserves the right to take, upon written notice
to Manager, in its sole discretion, any or all of the actions described in this
Section 5.4 directly in its own name and on its own behalf. In such event
Manager, at Owner’s expense, shall cooperate with Owner and provide Owner with
such assistance as Owner may reasonably request.

(b) In performing its obligations hereunder, Manager may, acting in the name of
Owner and without the necessity of obtaining the prior consent of Owner or any
other Person, grant consents or enter into and grant modifications, waivers and
amendments to the terms of any Lease Agreement except for consents,
modifications, waivers or amendments that are inconsistent with the Servicing
Standard, this Agreement or the requirements of the Loan Documents or, based on
the facts and circumstances in existence at such time, Manager reasonably
believes could have a Material Adverse Effect. Promptly upon the execution of
any such consent, modification, waiver or amendments, Manager shall forward a
copy of such documents to Owner.

Section 5.5 Maintenance.

(a) Subject to Sections 7 and 10, Manager shall, consistent with the Servicing
Standard, cause each Owner Equipment to be maintained (i) in good repair,
working order and condition, normal wear and tear (other than Owner Equipment
being repaired, renewed, replaced, bettered or improved in accordance with this
clause (i)), casualty and condemnation excepted, in compliance with AAR
mechanical regulations and industrial commercial acceptance standards, and shall
from time to time make or be making all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto so
that at all times such Owner Equipment are reasonably preserved and maintained,
or in the process of being reasonably preserved and maintained, in compliance
with AAR mechanical regulations and industrial commercial acceptance standards;
(ii) in a manner consistent with the maintenance practices used by Manager in
respect of Other Equipment; (iii) in accordance in all material respects with
such Owner Equipment’s manufacturer’s warranties and all applicable Equipment
Insurance Policies; and (vi) in compliance in all material respects with the
applicable Lease Agreement, and all Legal Requirements. All amounts to be
expended for maintenance of the Owner Equipment pursuant to this Section 5.5,
are to be paid directly by Owner; provided that only amounts that Manager
actually pays for any maintenance pursuant to this Section 5.5 or for
maintenance payments pursuant to the terms of any related Lease Agreement shall
constitute a Reimbursable Service.

 

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(b) Manager shall also periodically inspect all such Owner Equipment as it deems
reasonably necessary in order to determine whether the Owner Equipment are being
properly used and maintained and shall notify Owner promptly upon obtaining
actual knowledge of (i) and Event of Loss with respect to any Owner Equipment
(other than an Event of Loss impacting ten (10) or fewer Units at any time),
(ii) the occurrence of any other event that would cause any Owner Equipment to
be taken out of service for more than forty-five (45) consecutive days, or
(iii) the imposition of any new law or any rules or regulations that could be
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect.

Section 5.6 Insurance.

(a) Manager shall obtain and maintain in full force and effect with respect to
the Owner Equipment, Equipment Insurance Policies that comply with the specific
requirements of Section 5.6(b) below and shall furnish to the Owner upon request
full information as to the Equipment Insurance Policies so carried. Such
Equipment Insurance Policies shall be in addition to any Equipment Insurance
Policies provided by a Lessee pursuant to the terms of any Lease Agreement to
which such Owner Equipment is then subject. Owner reserves the right to request
Manager to provide or obtain insurance in addition to insurance provided
pursuant to the preceding sentence, which Manager shall use reasonable efforts
to obtain or provide. All insurance obtained by Manager with respect to the
Owner Equipment may (and shall to the extent reasonably practicable unless Owner
objects) be maintained under Equipment Insurance Policies that Manager obtains
for itself and the Other Equipment so long as Owner, Administrative Agent and
any other Persons designated by Owner or the Administrative Agent are either
(x) an “insured” thereunder or (y) “additional insured” and “loss payee”
thereunder, as their interests may appear, with respect to the Owner Equipment.
If at any time the Equipment Insurance Policies maintained by Manager on the
Owner Equipment shall lapse or have limits lower than as described therein for
whatever reason, Manager, promptly upon receipt of notice of the lapse of or
decrease in such insurance coverage, shall give notice to Owner of the same.
Manager shall also notify Owner promptly with respect to any default in the
payment of any premium or of any other act or omission of Manager or of any
other person of which Manager has knowledge that might invalidate, render
unenforceable, result in a lapse of or reduce any insurance coverage on the
Owner Equipment maintained by Manager pursuant to this Agreement. Manager shall
collect any amounts due (including any Equipment Insurance Proceeds) from the
insurers under such Equipment Insurance Policies and deposit any such amounts in
accordance with the terms of the Lease Administration Agreement and shall
provide Owner with such reasonable assistance as Owner may request in any
dealings that Owner may have with such insurers, including the pursuit of any
claims under such policies.

 

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(b) Each Equipment Insurance Policy maintained by Manager pursuant to the
provisions of this Section 5.6 shall be (i) maintained with insurers of
recognized standing with a rating of at least A- by A.M. Best Company or other
insurers reasonably approved by Administrative Agent, (ii) in amounts and
against risks and with deductibles and terms and conditions compliant with the
Servicing Standard and not less than the insurance, if any, maintained by
Manager with respect to Other Equipment. Without limiting the foregoing, Manager
will in any event: (A) keep each Unit of Equipment insured against physical
damage (which may be accomplished pursuant to a contingent physical damage
policy) in an amount not less than the Adjusted Appraised Value thereof, subject
to an aggregate limit of not less than [***] per occurrence; provided that such
coverage may provide for deductible amounts of not more than [***] per
occurrence, (B) maintain public liability insurance naming the Administrative
Agent as an additional insured against bodily injury, death or property damage
arising out of the use or operation of the Owner Equipment with general and
excess liability limits of not less than [***] per occurrence or in the
aggregate, provided that such coverage may provide for deductible amounts not
exceeding [***] and (C) maintain environmental liability insurance, either
through a separate policy or by extension to Manager’s general liability and
excess liability coverage, naming the Administrative Agent as an additional
insured against any loss resulting from the presence, discharge, spillage,
release or escape of Hazardous Material or damage to the environment arising out
of the use or operation of the Owner Equipment with general and excess liability
limits of not less than [***] per occurrence or in the aggregate, provided that
such coverage may provide for deductible amounts not exceeding [***]. In
addition, each Equipment Insurance Policy maintained by Manager pursuant to the
provisions of this Section 5.6 shall (i) expressly provide that no cancellation
or termination thereof or material change therein shall be effective unless at
least thirty (30) days’ prior written notice shall have been given to Owner and
the Administrative Agent, (ii) expressly provide that if such insurance shall be
cancelled for any reason whatsoever, or if any substantial changes are made in
the coverage that affect the interest of Owner, the Administrative Agent or any
other Person listed as an additional insured or loss payee, or if such insurance
shall be allowed to lapse for nonpayment of premium, such cancellation, change
or lapse shall not be effective as to Owner, the Administrative Agent and any
such other Person for thirty (30) days after receipt by Owner and the
Administrative Agent of written notice from such insurers of such cancellation,
change or lapse, (iii) permit Owner, the Administrative Agent or any such other
Person to make payments to affect the continuation of such insurance coverage
upon notice of cancellation due to nonpayment of premium, and (iv) expressly
provide that if such insurance shall not be renewed for any reason whatsoever,
such insurers shall provide written notice of such non-renewal to Owner and the
Administrative Agent at least thirty (30) days prior to the expiration date of
the policy.

(c) All amounts expended by Manager to (i) obtain the insurance (or enforce the
terms hereof) or (ii) satisfy any deductible with respect to any policy of
insurance covering the Owner Equipment, in either case pursuant to the
provisions of this Section 5.6, shall constitute a Reimbursable Service.

(d) In the event that any insurance coverage required by this Section 5.6 or the
limits, deductible amounts, or requirements thereof are not reasonably available
and commercially feasible in the available insurance market, Manager shall
promptly (i) notify Owner thereof and (ii) provide Owner with written reports
prepared by an independent insurance advisor certifying that such coverage,
limits, deductible amounts, or requirements are not reasonably available and
commercially feasible in the available insurance market for railcars similar to
the Owner Equipment and, where the required amount of coverage is not so
available, certifying as to the maximum amount that is so available.

 

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Section 5.7 Taxes.

(a) Manager shall prepare or cause to be prepared the necessary returns or other
filings for all local, state, federal and foreign personal property, sales or
use taxes, license fees, assessments, charges, fines, interest and penalties
(all such taxes, license fees, assessments, charges, fines, interest and
penalties being hereinafter called “Impositions”) imposed upon or against Owner
or the Owner Equipment of whatever kind or nature and, where directed by Owner,
protest the application of such Impositions or the rate or amount of assessment
thereunder, but excluding taxes payable in respect of the income of the Owner.
All amounts expended by Manager to pursuant to the provisions of this
Section 5.7, shall constitute a Reimbursable Service.

(b) Manager shall cause all Owner Equipment to be kept free and clear of all
Impositions that might in any way affect the title of Owner or result in a lien
(other than Permitted Liens) upon any Owner Equipment; provided, however, that
Manager shall not be required to pay any Imposition of any kind so long as it is
contesting such Imposition at the direction of Owner and by appropriate legal
proceedings in accordance with clause (a) of this Section 5.7 if the nonpayment
thereof does not, in Manager’s reasonable opinion, adversely affect the title,
property or rights of Owner or its assignees.

Section 5.8 Compliance with Law.

Manager shall, consistent with the Servicing Standard, cause the Owner Equipment
to comply, and each Lease Agreement entered into or renewed after the date
hereof shall require the Lessee thereunder to comply, in all respects with all
Legal Requirements. In the event that such Legal Requirements any Required
Modification of an Owner Equipment, Manager shall make such Required
Modification in accordance with provisions of Section 7.1. All amounts expended
by Manager pursuant to and in accordance with this Section 5.8 shall constitute
a Reimbursable Service.

Section 5.9 Licenses.

Manager shall apply for and use reasonable efforts to acquire, on behalf of and
at Owner’s expense, all licenses, certificates and permits required by Owner in
order for it to conduct its business relating to the Owner Equipment. All
amounts expended by Manager pursuant to and in accordance with this Section 5.9
shall constitute Reimbursable Servicing.

Section 5.10 Transportation.

When applicable, Manager shall, consistent with the Servicing Standard, cause
the Owner Equipment to be transported to required destination points under the
related Lease Agreements and, upon the termination or expiration of such Lease
Agreements, to be gathered and stored at reasonable cost to the extent required.
All amounts expended by Manager pursuant to and in accordance with this
Section 5.10, including for demurrage, switching, storage, and all other
services similar to any of the foregoing in respect of the Owner Equipment or
the movement thereof, including those services rendered in connection with the
return provisions in any Lease Agreement shall constitute Reimbursable Services.

 

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Section 5.11 Records and Information.

Manager shall perform all the administration and record keeping functions which
are reasonably necessary in the course of the operation and use of the Owner
Equipment, including without limitation: (a) maintenance of separate, complete
and accurate records relating to the Owner Equipment, including as to repair,
maintenance and all other matters covered by this Agreement, in the same form
and to the same extent as Manager customarily maintains records in respect of
the Other Equipment and consistent with the Servicing Standard; (b) preparation
and filing of appropriate AAR documents; (c) preparation and filing of such
reports as may be required from time to time by the STB, RGC and other
Governmental Authorities; and (d) to the extent not otherwise prepared by
Administrator pursuant to the terms of the Lease Administration Agreement,
preparation of mileage accounting and mileage equalization records. Manager
shall, upon request of Owner, promptly deliver to Owner or its designee such
records pertaining to the Owner Equipment.

Section 5.12 Owner Equipment Hire Relief.

Manager shall have the authority to enter into arrangements with railroads with
respect to the Owner Equipment to grant car hire claim relief and to make
equalization payments and all other adjustments with railroads on such terms and
conditions as Manager, acting in accordance with the Servicing Standard,
reasonably deems appropriate. All costs incurred in connection therewith shall
constitute Reimbursable Services.

Section 5.13 Duties in Connection with Credit Agreement, Collateral Agency
Agreement and Lease Administration Agreement.

Manager shall take such actions as Manager shall deem reasonably necessary or
appropriate or as Owner shall request to keep Owner in compliance with its
obligations under the Loan Documents, and to exercise its rights thereunder,
including, without limitation, timely delivering to the Owner any information
regarding the Manager that the Owner is required to deliver to the
Administrative Agent, the Collateral Agent or the Collection Bank. In accordance
with the terms of the ARL Fee Letter, Manager shall remit, on behalf of Owner,
the fees and expenses payable to the Collateral Agent and the Collection Bank,
for services provided by the Collateral Agent and the Collection Bank in
connection with the Owner Portfolio. Fees and expenses paid to the Collateral
Agent and the Bank shall constitute Reimbursable Services.

Section 5.14 Other Services.

Manager shall be responsible for the provision of such other services incidental
to the services set forth in this Agreement as may from time to time be required
under the Lease Agreements or may be reasonably necessary in connection with the
ownership, leasing and operation of the Owner Equipment. In the event Manager is
required or deems it necessary to retain services provided by outside counsel or
other professionals to fulfill any of its obligations hereunder, the expense
thereof shall be borne by Owner as a Reimbursable Service, unless Owner has
objected to the retention of such counsel or other professionals. In the event
Owner objects thereto and does not designate alternate counsel or other
professionals reasonably acceptable to Manager, Manager shall not be required to
fulfill such obligations.

 

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Section 6. Representations and Warranties.

Each of Owner and Manager represents and warrants to the other as follows:

(a) (i) it is duly organized and validly existing under the laws of the
jurisdiction of its organization, (ii) is in good standing under the laws of the
jurisdiction of its organization, (iii) has the power and authority to own its
property and to transact the business in which it is engaged and proposes to
engage and (iv) are duly qualified and in good standing in each jurisdiction
where the ownership, leasing or operation of property or the conduct of its
business requires such qualification, except, in each case of clauses (i), (ii),
(iii) and (iv), where the same could not be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect.

(b) It has the power and authority to enter into this Agreement and to perform
all of its obligations hereunder. This Agreement has been duly authorized by
proper corporate and/or other organizational proceedings, executed, and
delivered by it and constitutes valid and binding obligations of it enforceable
against it in accordance with its terms, except as enforceability may be limited
by Debtor Relief Laws and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity or at
law).

(c) This Agreement does not, nor does the performance or observance by it of any
of the matters and things herein provided for, (i) contravene or constitute a
material default under any applicable material Legal Requirement binding upon it
or any provision of its Organization Documents, (ii) contravene or constitute a
material default under any material covenant, indenture or agreement of or
affecting it or any of its Property, in each case where such violation,
contravention or default, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or (iii) result in the creation or
imposition of any Lien on any Property it other than, in the case of the Owner,
the Liens granted in favor of the Administrative Agent pursuant to the
Collateral Documents and other than Permitted Liens.

(d) No authorization, consent, license or exemption from, or filing or
registration with, any Governmental Authority, nor any approval or consent of
any other Person, is or will be necessary to the valid execution, delivery or
performance by it of this Agreement, except for (i) such approvals,
authorizations, consents, licenses or exemptions from, or filings or
registrations which have been obtained prior to the date of this Agreement and
remain in full force and effect and (ii) filings, authorizations, consents,
licenses, exemptions or registrations which are necessary to perfect the
security interests created under the Collateral Documents.

 

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Section 7. Modifications.

(a) Required Modifications. Manager shall, in accordance with the Servicing
Standard, promptly as practicable replace, or cause the applicable Lessee to
replace, all appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment of Owner Equipment that may from time to time
become worn out, obsolete, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, Manager shall make or cause to be made such modifications and
improvements to Owner Equipment: (A) to the extent required of Borrower by the
terms of the applicable Lease Agreement or (B) as may be (x) set forth as
requiring present compliance in any mandatory directives or standards adopted by
any Governmental Authority, unless the validity of such standard is being
contested in good faith by appropriate proceedings or (y) required from time to
time to meet the Servicing Standard. All amounts expended by Manager pursuant to
and in accordance with this Section 7(a) shall constitute Reimbursable
Servicing.

(b) Optional Modifications. Manager may, with the prior written consent of
Owner, alter or improve any Owner Equipment in a manner which is not required
pursuant to Section 7(a) hereof, including any Owner Equipment not then under an
Lease Agreement (each occurrence, an “Optional Modification”), if Manager
concludes in good faith that the proposed Optional Modification is likely to
enhance the marketability of such Owner Equipment (or such Optional Modification
is request by an Lessee) and such Optional Modification; provided, that no
Optional Modification shall diminish the Appraised Value (as defined in the
Credit Agreement), utility, capacity, residual value or remaining economic
useful life of such Owner Equipment immediately prior to such Optional
Modification, in more than a de minimis amount.

Section 8. Reports and Inspection.

Section 8.1 Operating Expenses and Other Expenditures.

Within five (5) Business Days after the end of each calendar month during the
Management Term, Manager shall furnish Owner with a report itemizing, in
reasonable detail, all information necessary for Owner to prepare and deliver
the Servicer Report pursuant to Section 6.1(c) of the Credit Agreement (such
information to include the amounts incurred by Manager as Reimbursable Services
during such month, as well as any other expenditures incurred on behalf of Owner
during such month).

Section 8.2 Inspection of the Owner Equipment and Records.

Owner and during the occurrence of a Manager Termination Event, the
Administrative Agent, shall have the right, at Owner’s expense, for their
respective representatives to inspect the Owner Equipment (subject to the terms
of any applicable Lease Agreement), any records relating thereto, and the
operations of Manager utilized in providing the services required of it
hereunder at such times during normal business hours as shall be reasonable to
confirm to Owner and the Administrative Agent (when applicable) the existence of
the Owner Equipment and records relating thereto, proper maintenance of the
Owner Equipment in accordance with Section 5.5, and the proper performance of
services hereunder during the continuance of this Agreement and, in the case of
the records, for one year thereafter.

 

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Section 8.3 Additional Information.

Manager shall furnish such additional information as Owner may reasonably
request from time to time in order to enable Owner to determine whether the
covenants, terms and provisions of this Agreement have been complied with by
Manager, including, without limitation, information required by the Borrower to
comply with its obligations under Section 6.2 (Appraisals) of the Credit
Agreement.

Section 8.4 Financial Information.

Manager will deliver the financial statements required to be delivered by
Manager under Section 6.1(a) and (b) of the Credit Agreement.

Section 9. Compensation and Reimbursement of Manager.

Section 9.1 Compensation of Manager.

As compensation to Manager for the performance of its services hereunder, Owner
shall pay to Manager the Management Fee and a charge for Reimbursable Services.
The Management Fee and charges for Reimbursable Services shall be payable to
Manager by Owner as follows:

(a) on each Payment Date, an amount equal to the Management Fee for the calendar
month immediately preceding the month in which such Payment Date occurs; and

(b) on each Payment Date, the amount of Reimbursable Services submitted by
Manager to Owner on or prior to the last day of the calendar month immediately
preceding the month in which such Payment Date occurs.

Manager acknowledges and agrees that Management Fees and charges for
Reimbursable Services shall be paid solely in accordance with (and only to the
extent of available funds) Section 2.7 of the Credit Agreement.

Section 9.2 Management Fee.

The Manager’s fee (the “Management Fee”) for each calendar month (or any portion
thereof) during each of the following calendar years shall be the sum of (x) a
monthly fee for Owner Equipment leased under any Full Service Leases equal to:

 

  (a) 2012: [***] of monthly Gross Revenue associated with such Owner Equipment;

 

  (b) 2013: [***] of monthly Gross Revenue associated with such Owner Equipment;

 

  (c) 2014: [***] of monthly Gross Revenue associated with such Owner Equipment;

 

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  (d) 2015 and subsequently: [***] of monthly Gross Revenue associated with such
Owner Equipment; [***]; and

(y) a monthly fee for the Owner Equipment leased under any Net Leases equal to
[***] of monthly Gross Revenues associated with such Owner Equipment. In
calendar year 2015 and subsequently, Manager and Owner may, with ten (10) days
advance written notice to the Agent of such agreement, agree to payment of other
fees and expenses as such fees and expenses may arise; provided, however, in the
event that the amount of the Management Fee plus such additional fees exceeds
[***] of Gross Revenue for any given month, such excess amount shall constitute
subordinated management fees (“Subordinated Management Fees”) for such month.

Section 9.3 Reimbursable Services.

(a) Manager shall be separately compensated for all costs specified by Manager
and incurred by Manager for services rendered on behalf of Owner pursuant to and
in accordance with this Agreement (collectively, the “Reimbursable Services”),
including the following: (i) enforcement costs incurred pursuant to and in
accordance with Section 5.4, (ii) maintenance costs incurred in connection with
Section 5.5, (iii) insurance costs incurred in connection with Section 5.6, and
(iv) other specified costs incurred pursuant to and in accordance with
Sections 4.4, 4.5, 5.7, 5.8, 5.9, 5.10, 5.13, 10.1 and 10.2; provided that,
Reimbursable Services shall not include any of the following costs, fees and
expenses (collectively, the “Excluded Expenses”): (A) salary, bonuses, company
cars and benefits of Manager’s employees; (B) office, office equipment and
office rental expenses; (C) telecommunications expenses; (D) taxes on the
income, receipts, profits, gains, net worth or franchise of Manager and payroll,
employment and social security taxes for employees of Manager; (E) any and all
financing costs (including interests and fees) relating to any indebtedness of
Manager; and (F) all other overhead expenses of Manager. Manager shall notify
Owner of the amounts of all expenses incurred in respect of Reimbursable
Services in accordance with Section 8.1.

(b) For purposes of calculating the value of Reimbursable Services in connection
with the services provided under this Agreement by Manager, Owner will be
charged for (i) materials at Manager’s actual cost therefor and (i) labor at
hourly rates established by Manager from time to time. Such hourly rates shall
be based upon Manager’s direct costs of labor and shall include amounts for
Manager’s plant or facility overhead based on Manager’s job cost system for
allocating overhead; provided that, the hourly rates for labor that are in
effect at any time shall not exceed the then current standard rates published by
the AAR for such types of labor. The costs to Owner for services performed by a
third Person will be the charges therefor as invoiced by such third Person,
without mark-up by Manager. Such third Person charges will be reviewed and
audited by Manager on behalf of Owner.

Section 10. Loss, Damage or Sale of Owner Equipment; Adding or Terminating Owner
Equipment.

 

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Section 10.1 Loss or Damage.

(a) If any Owner Equipment is rendered unusable as a result of any physical
damage or contamination or otherwise suffers a Event of Loss, and Manager
obtains knowledge of such damage, contamination or Event of Loss (other than an
Event of Loss impacting ten (10) or fewer Units at any time), then Manager shall
(i) within (2) Business Days of obtaining such knowledge, provide the Owner
written notice of such Event of Loss setting forth the date of such Event of
Loss and a description of the related Unit (including its Adjusted Appraised
Value), (ii) within fifteen (15) days after the date such Owner Equipment first
becomes available for inspection by Manager, provide Owner with a written
detailed description of notice of such damage, contamination or Event of Loss,
and, if applicable, the recommendation of Manager regarding whether or not to
repair such Owner Equipment; (iii) investigate on behalf of Owner the facts and
circumstances giving rise to such damage, contamination or Event of Loss;
(iv) collect or arrange for appropriate payment of compensation, if any, from
the relevant railroad, Lessee, third party or other source, or combination
thereof, and take such other steps, including field inspection and
investigation, as deemed appropriate by Manager and (v) take all steps and
actions, including the hiring of attorneys and consultants, required with
respect to physical damages or contamination as may be required under the Loan
Documents or by direction of Owner. If, in compliance with the Servicing
Standard, Manager would repair such Owner Equipment if it were an Other
Equipment and if Owner does not object in writing to such recommendation within
ten (10) days after receipt of Manager’s recommendation, Manager shall cause
such Owner Equipment to be repaired at Owner’s expense. All amounts expended by
Manager for such repair of the Owner Equipment, after deduction of payments
actually received by Manager pursuant to the terms of any related Lease
Agreement or from insurance maintained or provided with respect to such Owner
Equipment, shall be a Reimbursable Service. If any Owner Equipment suffers
physical damage or contamination, which in Manager’s reasonable judgment, makes
repair uneconomic or renders such Owner Equipment unfit for commercial use,
Manager shall not, without the prior receipt of the necessary repair costs from
third parties (such as an Lessee or insurer), repair such Owner Equipment if the
cost of repair is expected to be more than 10.0% of such Owner Equipment’s
current Adjusted Appraised Value. If in accordance with the provisions of this
Section 10.1(a), it is determined that such Owner Equipment is not to be
repaired, it shall be deemed to have suffered a Event of Loss as of the date
such determination was made. Owner shall promptly (and within no more than two
(2) Business Days), notify the Administrative Agent of any determination not to
repair Owner Equipment.

(b) With respect to any Owner Equipment suffering a Event of Loss, and in
accordance with the performance of it services under Section 10.1(a), Manager is
granted full power and authority, subject to the terms and conditions of the
relevant Lease Agreement, to sell (or dispose of as scrap) on Owner’s behalf any
such Owner Equipment that has been settled for under the rules of the AAR or
settled with any insurer and, upon direction of Owner, Manager will effect such
sale or disposition and take such other actions on behalf of Owner as necessary
for Owner to comply with the relevant Lease Agreement, all in accordance with
the Servicing Standard. Following such sale or disposition of the Owner
Equipment and transfer of any amounts received in connection with such sale or
disposition in accordance with Section 10.1(c), Manager shall have no other
obligation to Owner in respect of such Owner Equipment. Owner agrees to execute
all necessary powers of attorney and other documents evidencing such power and
authority.

 

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(c) Promptly upon receipt, but in no case later than two (2) Business Days
following receipt thereof by Manager, of any insurance proceeds or any other
payments from railroads, Lessees or third parties received in connection with
any repair, sale or disposition of any Owner Equipment in connection with this
Section 10, Manager shall transfer to the Collection Account all such amounts
received in connection with this Section 10, in accordance with the terms of the
Lease Administration Agreement.

Section 10.2 Sale.

Manager, as attorney-in-fact for Owner, is granted full power and authority to
sell any Owner Equipment on Owner’s behalf under any of the following
circumstances:

(a) such Unit is not an Eligible Unit or the Lease Agreement related to such
Unit is not an Eligible Lease Agreement;

(b ) such sale is made pursuant to Section 10.1(b); or

(c) Owner consents to such sale.

Manager shall receive a [***] sales commission of Net Sales Proceeds resulting
from sales of Owner Equipment and such commission shall constitute a
Reimbursable Service.

Section 10.3 Replacing, Adding and Terminating Owner Equipment.

Owner may, at its option, (a) add Equipment as new Owner Equipment subject to
the terms of this Agreement or (b) remove Equipment as Owner Equipment subject
to the terms of this Agreement, in each case by delivering to Manager a notice
to such effect substantially in the form attached as Exhibit A hereto; provided
that Owner shall only remove Equipment as Owner Equipment subject to the terms
of this Agreement if such Equipment has been released from the Lien granted to
the Administrative Agent in accordance with the terms of the Security Agreement.
From and after the effective date of each such notice (as set forth therein),
the subject Equipment shall or shall no longer, as the case may be, be Owner
Equipment under the terms of this Agreement.

Section 11. Transactions with Affiliates.

Subject to compliance with the Servicing Standard, Manager may, directly or
indirectly, enter into any transaction on behalf of Owner with Manager or any
Affiliate of Manager; provided that the terms of such transaction are no less
favorable to Owner than the terms that could be obtained from an independent
third Person.

Section 12. Return of Owner Equipment Upon Expiration of Management Term.

Upon the expiration or earlier termination of the Management Term, Manager, at
its expense (which shall be treated as a Reimbursable Service), will deliver
possession of each Owner Equipment then in its possession or control, but not
subject to a Lease Agreement, to Owner upon such storage tracks within the
continental United States that Manager is legally entitled to use, and shall
store the Owner Equipment on such tracks for a period not exceeding ninety
(90) days and transport the same at any time within such 90-day period to any
connecting carrier for shipment, all as directed by Owner upon not less than
thirty (30) days prior notice to Manager.

 

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Section 13. Indemnification By Manager.

Manager shall defend, indemnify and hold Owner, the Administrative Agent and
Collateral Agent and their respective Affiliates (other than Manager) and the
directors, officers, employees and agents of each such Person (collectively, the
“Manager Indemnified Persons”) harmless from and against any and all losses,
costs, expenses, damages or claims (collectively, “Claims”) incurred by or
asserted against any such Manager Indemnified Person to the extent resulting or
arising from any of the following:

(a) any material breach of or any material inaccuracy in any representation or
warranty made by Manager in this Agreement or in any certificate delivered
pursuant hereto;

(b) any material breach of or material failure by Manager to perform any
covenant or obligation of Manager set out or contemplated in this Agreement;

(c) the presence, discharge, spillage, release or escape of Hazardous Material
or damage to the environment or noncompliance with any applicable law with
respect to Hazardous Material or the environment (i) at or arising from a
facility owned, operated or controlled by Manager or any Subsidiary of Manager
or (ii) arising from any act, failure to act or omission by Manager or any
Subsidiary of Manager; and

(c) the negligence, recklessness or willful misconduct of Manager.

Section 13.1 Claims Excluded.

No Manager Indemnified Person shall be defended, indemnified, or held harmless
from or against, nor exculpated from, any Claim under Section 13.1 to the extent
caused by or resulting or arising from such Person’s bad faith, willful
misconduct, recklessness, gross negligence, or breach or failure to comply with
or perform any obligation under this Agreement, and Manager shall not have any
such obligation under Section 13.1 with respect thereto.

In addition, the Manager Indemnified Persons understand that nothing set forth
in the Loan Documents is intended to cause the Manager to be treated as a
guarantor of the obligations of Owner or any Lessee and no Manager Indemnified
Person shall be entitled to indemnification from Manager based on Owner’s
failure to repay the Loan or an Lessee’s failure to make payments under any
Lease Agreement to the extent such failures are attributable to credit
performance of the applicable Lessee rather than a breach by the Manager of the
performance of its duties undertaken as Manager under the Loan Documents or as
the original lessor under the Lease Agreements and other riders or schedules
subject to the same master service or master lease agreement as the Lease
Agreements.

 

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Section 13.2 Cooperation.

Manager and each Manager Indemnified Person shall cooperate in furnishing
evidence and testimony and in any other manner that the other may reasonably
request, and shall in all other respects have an obligation of good faith
dealing, one to the other, so as not to unreasonably expose the other to an
undue risk of loss. Each Manager Indemnified Person shall be entitled to
reimbursement for out-of-pocket expenses reasonably incurred by it in connection
with such cooperation. Except for fees and expenses for which indemnification is
provided pursuant to Section 13.1, as the case may be, and as provided in the
preceding sentence, each such Person shall bear its own fees and expenses
incurred pursuant to this Section 13.2.

Section 13.3 Survival.

The indemnity obligations of Manager pursuant to this Section 13 (including
obligations to indemnify against third Person claims made after the expiration
or termination of the Management Term) shall survive for two years beyond the
expiration or termination of the Management Term.

Section 14. Manager Termination Events; Remedies.

Section 14.1 Manager Termination Events.

The occurrence of any of the following events shall constitute a “Manager
Termination Event” under this Agreement:

(a) the failure by Manager to: (i) pay when due any amount payable by it
hereunder, (ii) timely deliver to the Collection Account any amounts received by
Manager under the Loan Documents which constitute Collections with respect to
the Owner’s Collateral, or (iii) comply with or perform any obligation set forth
in Sections 4.2, 4.3, 5.6 or 5.13, and if capable of cure, such default shall
not have been remedied within five (5) days;

(b) the failure by Manager to deliver any report or financial information when
required under Section 8.1, 8.3 or 8.4, and if capable of cure, such failure has
not been remedied within two (2) Business Days;

(c) any representation or warranty made by Manager under this Agreement or in
any writing delivered by Manager pursuant to this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect when made;

(d) breach or failure to comply with or perform any covenant or provision set
forth in this Agreement (other than those referred to in clauses (a), (b) and
(c) above) to be complied with or performed by Manager hereunder, and if capable
of cure, such default shall not have been remedied within thirty (30) days after
the earlier of: (i) knowledge by Manager of such breach or failure to comply or
perform and (ii) receipt by Manager of notice thereof from Owner;

 

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(e) Manager shall (i) have entered involuntarily against it an order for relief
under the United States Bankruptcy Code, as amended, (ii) not pay, or admit in
writing its inability to pay, its debts generally as they become due, (iii) make
an assignment for the benefit of creditors, (iv) apply for, seek, consent to or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part of its Property,
(v) institute any proceeding seeking to have entered against it an order for
relief under the United States Bankruptcy Code to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any Debtor Relief Law or fail
to file an answer or other pleading denying the material allegations of any such
proceeding filed against it, (vi) take any action in furtherance of any matter
described in parts (i) through (v) above, or (vii) fail to contest in good faith
any appointment or proceeding described in Section 14.1(f);

(f) a custodian, receiver, trustee, examiner, liquidator or similar official
shall be appointed for Manager, or any substantial part of any of its Property,
or a proceeding described in Section 14.1(e)(v) shall be instituted against
Manager, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days;

(g) any final judgment or judgments for the payment of money in an aggregate
amount in excess of [***] or its equivalent in another currency is rendered
against Manager and the same shall remain undischarged or effectively stayed for
a period of sixty (60) days without being contested in good faith and by
appropriate proceedings;

(h) Manager or its Affiliates shall cease to be actively involved in the railcar
management or maintenance businesses (other than solely as Manager under this
Agreement); or

(i) the Tangible Net Worth of Manager and its consolidated subsidiaries at the
end of any fiscal quarter or year is less than [***].

Section 14.2 Remedies Upon Manager Termination Event.

(a) Upon the occurrence and during the continuation of any Manager Termination
Event, Owner may: (i) terminate the Management Term by notice to Manager and the
Administrator, which termination shall be effective as of the date of such
notice or such later date as such notice may specify, (ii) proceed by
appropriate court action to enforce performance of this Agreement by Manager, or
(iii) sue to recover actual direct damages (including lost rents but not
including consequential damages) that result from a breach hereof, and Manager
shall bear Owner’s costs and expenses, including reasonable attorney’s fees in
securing such enforcement or damages or the transfer of management.
Notwithstanding the provisions of clause (i) of this Section 14.2(a), Manager or
the Management Term may not be terminated, in whole or in part, in connection
with an exercise of remedies hereunder unless a Successor Manager has been
appointed in accordance with Section 15. Upon the occurrence and during the
continuation of any Manager Termination Event, Owner and Administrative Agent is
authorized and empowered to execute and deliver, on behalf of Manager, as
attorney-in-fact or otherwise, any and all documents and perform any and all
other acts or things necessary or appropriate to effect the termination of
Manager and the appointment of a Successor Manager.

 

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(b) Upon the occurrence and during the continuation of any Manager Termination
Event and the termination of the Management Term as provided in Section 14.2(a),
Owner or its assign (including, without limitation, the Administrative Agent)
may (i) demand and be entitled to delivery of each Owner Equipment then in the
possession or control of Manager, but not subject to an Lease Agreement,
pursuant to Section 12 (except that the costs and expenses of assembly,
delivery, storage and transportation of such Owner Equipment in such case shall
be at the expense of Manager); (ii) enter upon any premises where such Owner
Equipment not subject to an Lease Agreement may be located and take possession
of them free from any rights of Manager; and (iii) demand and be entitled to
receive copies of all of Manager’s records regarding Owner Equipment. Manager
(x) agrees to cooperate fully with Owner, the Administrative Agent and
Collateral Agent in connection with the transfer of Manager’s rights and duties
hereunder to a third Person and (y) expressly waives any and all claims against
Owner, the Administrative Agent and Collateral Agent for damages of whatever
nature arising out of or resulting from the termination of Manager’s management
rights as to the Owner Equipment as properly permitted hereunder.

Section 14.3 Remedies Cumulative.

Each and every right, power and remedy herein specifically given to Owner, the
Administrative Agent, Collateral Agent and Manager shall be in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing at law or in equity, and each and every right, power and remedy may be
exercised from time to time and simultaneously and as often and in such order as
may be deemed expedient by Owner, the Administrative Agent, Collateral Agent or
Manager, as the case may be. All such rights, powers and remedies shall be
cumulative, and the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of Owner, the Administrative
Agent, Collateral Agent or Manager, as the case may be, in the exercise of any
such right, power or remedy and no extension of time for any payment due
hereunder shall impair any such right, power or remedy or shall be construed to
be a waiver of any default or an acquiescence therein. Any extension of time for
payment hereunder or other indulgence duly granted by Owner, the Administrative
Agent, Collateral Agent or Manager, as the case may be, shall not otherwise
alter or affect the respective rights and obligations of Owner, the
Administrative Agent, Collateral Agent or Manager, as the case may be. The
acceptance of any payment by any Person after it shall have become due hereunder
shall not be deemed to alter or affect the respective rights or obligations of
Owner, the Administrative Agent, Collateral Agent or Manager, as the case may
be, with respect to any subsequent payments or defaults hereunder.

Section 15. Replacement of Manager.

(a) Manager may not resign from its obligations and duties hereunder, nor may
Manager be terminated in whole or in part, unless: (i) a successor Manager (the
“Successor Manager”) has been appointed by Owner, or by the Administrative Agent
if a Servicer Replacement Event or Manager Termination Event has occurred; and
(ii) such Successor Manager has accepted such appointment. Any Successor
Manager, however appointed, shall execute and deliver to Owner, the
Administrative Agent and the predecessor Manager an instrument accepting such
appointment, including customary confidentiality provisions in favor of the
predecessor Manager and Owner, and thereupon such Successor Manager, without
further act, shall become vested with all the rights, powers, duties,
responsibilities, obligations, and trusts of the predecessor Manager hereunder
with like effect as if originally named the manager herein; provided, that all
liabilities of Manager to Owner, contingent or otherwise, for damages incurred
by Owner resulting from any uncured Manager Termination Event shall remain the
liability of Manager until so cured, and the Successor Manager shall have no
liability therefor.

 

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(b) The predecessor Manager shall promptly (but in no event later than two
(2) Business Days) deliver to Administrator in accordance with the terms of the
Lease Administration Agreement any funds that are required to be delivered
pursuant to this Agreement and shall promptly (but in no event later than two
(2) Business Days) deliver to Collateral Agent or the Administrative Agent, as
applicable, all related documents and statements held by it hereunder, and
Manager shall account for all such funds. The predecessor Manager shall
cooperate fully with Owner and the Administrative Agent in connection with the
transfer of predecessor Manager’s rights and duties hereunder to the Successor
Manager, and shall execute and deliver all such instruments and do all such
other things as may reasonably be required to more fully and definitely vest and
confirm in the Successor Manager all rights, powers, duties, responsibilities,
obligations and liabilities of Manager under this Agreement.

Section 16. Miscellaneous.

Section 16.1 Merger or Sale.

Any Person into which Manager may be merged or with which it may be
consolidated, or any Person resulting from any merger or consolidation to which
Manager shall be a party, or any Person to which substantially all the business
of Manager may be transferred, shall, so long as no Manager Termination Event is
then continuing or would result from such transaction, be Manager under this
Agreement without any further act. Any successor Person resulting from such
transaction shall deliver to Owner and the Administrative Agent an agreement, in
form and substance reasonable satisfactory to Owner and the Administrative
Agent, that is a legal, valid, binding and enforceable assumption by such
successor Person, of the due and punctual performance and observance of each
covenant and condition of Manager under this Agreement.

Section 16.2 Modification and Waiver.

This Agreement may not be waived, changed, altered, modified or amended in any
respect without a writing to that effect, signed by both of the parties hereto.
Failure of a party to enforce one or more of the provisions of this Agreement or
to exercise any option or other rights hereunder or to require at any time
performance of any of the obligations hereof shall not in any manner be
construed (a) to be a waiver of such provisions by such party, (b) to affect the
validity of this Agreement or such party’s right thereafter to enforce each and
every provision of this Agreement, or (c) to preclude such party from taking any
other action at any time that it would be legally entitled to take.

 

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Section 16.3 Communications.

Except in the case of notices and other communications expressly permitted to be
given by telephone, all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile or electronic mail
as follows:

To Manager:

American Railcar Leasing LLC

100 Clark Street, Suite 201

St. Charles, Missouri 63301

Attention: Treasurer

Telephone no.: (636) 940-5000

Facsimile no.: (636) 940-6044

To Owner:

Longtrain Leasing I, LLC

c/o 100 Clark Street Suite 200

St. Charles, Missouri 63301

Attention: Michael Obertop

Telephone: (636) 940-6000

Fax: (636) 940-6044

To Administrative Agent:

Fifth Third Bank

Fifth Third Center

38 Fountain Square Plaza

Cincinnati, OH 45263

Attention: Loan Syndications/Judy Huls

Telephone no.: (513) 579-4224

Facsimile no.: (513) 534-0875

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by facsimile or electronic mail shall be deemed to have been given when sent
(except that, if not given during normal business hours for the recipient, shall
be deemed to have been given at the opening of business on the next business day
for the recipient).

Section 16.4 GOVERNING LAW; JURISDICTION; ETC.

(A) GOVERNING LAW. THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE, OR CAUSE
OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED ON, ARISING OUT OF,
OR RELATING TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW
PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

 

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(B) JURISDICTION. OWNER AND MANAGER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR
DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR
OTHERWISE, AGAINST THE OTHER PARTY IN ANY WAY RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS RELATING HERETO IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT A PARTY
MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
AGAINST THE OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(C) WAIVER OF VENUE. OWNER AND MANAGER IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN SECTION 16.4(B)
ABOVE. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(D) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 16.3. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

Section 16.5 Severability.

Any provision of this Agreement which is unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. All rights, remedies and powers provided in this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable mandatory provisions of law, and all the provisions of this Agreement
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Agreement invalid or unenforceable.

Section 16.6 Successors and Assigns.

The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby, except that Owner may not assign or otherwise transfer any of its rights
or obligations under this Agreement without the prior written consent of the
Administrative Agent or except as otherwise expressly contemplated by the terms
of the Loan Documents. Subject to Section 16.8, nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby any
legal or equitable right, remedy or claim under or by reason of this Agreement.

 

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Section 16.7 Assignment to the Administrative Agent.

It is understood that the rights of Owner hereunder may be collaterally assigned
to the Administrative Agent and enforced by the Administrative Agent following
an Event of Default. Manager expressly agrees to any such assignment and agrees
that all of its duties, obligations, representations and warranties shall be for
the benefit of, and, subject to the terms of the Loan Documents, may be enforced
by the Administrative Agent, and any successor to or assignee of the rights of
the Loan Documents.

Section 16.8 Third Party Beneficiaries.

The parties hereto hereby agree that the Administrative Agent is an express
third-party beneficiary of this Agreement.

Section 16.9 Counterparts; Integration; Effectiveness.

This Agreement may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement
constitutes the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. This Agreement shall become
effective when it shall have been executed by the parties hereto and when the
Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto. Delivery of
an executed counterpart of a signature page of this Agreement by facsimile or in
electronic (i.e. “pdf” or “tif”) format shall be effective as delivery of a
manually executed counterpart of this Agreement.

Section 16.10 No Bankruptcy Petition

Manager will not, prior to the date that is one year and one day after the
payment in full of all Obligations and other amounts owing pursuant to this
Agreement and the other Loan Documents, institute against Owner or join any
other Person in instituting against Owner, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under any Debtor Relief Law. This Section 16.10 shall survive the termination of
this Agreement.

 

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Section 16.11 Limitation on Liability.

Notwithstanding anything in this Agreement to the contrary, neither party shall
have any liability (including any such liability under any indemnity obligations
of either party) to the other party with respect to, and each party expressly
waives, releases and agrees not to sue any of them for, (i) any special,
indirect or consequential damages, regardless of their foreseeability,
including, without limitation, any lost rents, profits or revenues, and, to the
extent permitted under applicable law, punitive damages suffered by either party
or any other Person in connection with this Agreement or any breach or default
hereunder by either party, (ii) any act, conduct or omission, whether or not due
to a breach, default or negligence of either party, for which actual damages
exceed [***] in the aggregate for the Term, except for any act, conduct or
omission of either party due to gross negligence or willful illegal misconduct
of such party, in which case the liability of the indemnifying party shall not
exceed [***] in the aggregate for the Term.

Section 16.12 WAIVER OF JURY TRIAL

OWNER AND MANAGER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Railcar Management
Agreement as of the date first above written.

 

LONGTRAIN LEASING I, LLC By:  

/s/ Dale C. Davies

Name:   Dale C. Davies Title:   Senior Vice President and CFO AMERICAN RAILCAR
LEASING LLC By:  

/s/ Umesh Choksi

Name:   Umesh Choksi Title:   President and CEO