EX-10.14






SECURITY AGREEMENT




made by




THE ANDERSONS RAIL OPERATING I LLC




in favor of




SIEMENS FINANCIAL SERVICES, INC.,




as Agent




Dated as of




December 29, 2005




1




SECURITY AGREEMENT




SECURITY AGREEMENT dated as of December 29, 2005 (this “Security Agreement”), made by THE
ANDERSONS RAIL OPERATING I LLC (the “Borrower”) in favor of SIEMENS FINANCIAL SERVICES, INC., as
Agent (in such capacity, the “Agent”) and the several banks and other financial institutions or
entities (the “Lenders”) from time to time parties to the Term Loan Agreement, dated as of December
29, 2005 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”),
among the Borrower, the Lenders and the Agent.



RECITALS




A. Pursuant to the Loan Agreement, the Lenders have severally agreed to make extensions of
credit to the Borrower upon the terms and subject to the conditions set forth therein.



B. It is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Loan Agreement that the Borrower shall have executed
and delivered this Security Agreement to the Agent.



ARTICLE I

DEFINITIONS.




Section 1.1 Definitions. Terms defined in the preamble hereof shall have
their respective meanings when used herein. Capitalized terms used but not defined herein shall
have the meanings assigned to them in the Loan Agreement. The following terms shall have the
following meanings for the purposes of this Security Agreement:



“Additional Collateral” has the meaning specified in Section 6.2(b).



“Collateral” has the meaning specified in Section 2.1.



“Cash Collateral Account” has the meaning specified in Section 3.1.



“Collateral Accounts” means the Collection Account and the Cash Collateral Account.



“Collection Account” has the meaning specified in Section 3.1.



“Eligible Investments” shall mean any one or more of the following obligations or securities:




(i) direct obligations of, and obligations fully guaranteed as a timely payment by, the
United States, or any agency or instrumentality of the United States the obligations of
which are backed by the full faith and credit of the United States;




(ii) demand and time deposits in, certificates of deposit of, bankers’ acceptances
issued by, or federal funds sold by any commercial bank, depository institution or trust
company incorporated under the laws of the United States or any state thereof,
provided, that (i) such commercial bank, depository institution or trust company
shall have a combined capital and surplus of at least $500,000,000 and be subject to
supervision and examination by federal and/or state banking authorities and (ii) at the time
of such investment or contractual commitment providing for such investment such commercial
bank, depository institution or trust company has the highest short and long-term unsecured
debt rating issued by S&P (or, in the case of a company, such holding company has the
highest short and long-term credit rating issued by S&P);




(iii) repurchase obligations with respect to and collateralized by (a) any security
described in clause (i) above or (b) any other security issued or guaranteed by an agency or
instrumentality of the United States, in each case entered into with a depository
institution or trust company (acting as principal) of the type described in clause (ii)
above, provided that such repurchasing party has a rating of A-1 by S&P or P-1 by
Moody’s and provided further that the Agent has taken delivery of such security;




(iv) commercial paper (including both non-interest bearing discount obligations and
interest-bearing obligations), payable on demand or on a specified date not later than the
Business Day prior to the next subsequent Payment Date, having the highest short-term credit
rating from S&P at the time of such investment; and




(v) shares with a constant net asset value in a mutual fund investing solely in
short-term securities of the government of the United States and having the highest
short-term credit rating from S&P, which shares are freely transferable by the holder on a
daily basis.



“Equipment” or “Items of Equipment” means all of the those railcars as described in
Schedule A hereto, and any railcars acquired at any time and from time to time by the
Borrower, together with all accessories, equipment, parts, additions, improvements, accessions,
attachments, repairs and appurtenances appertaining or attached to such railcars, whether now owned
or hereafter acquired by Borrower, and all substitutions, replacements, accumulations or proceeds
of any and all of said railcars.



“Exchange Account” means an account established pursuant to a 1031 Exchange Agreement.



“Expired Lease” an Equipment Lease that has expired or otherwise has terminated.



“Fair Market Value” means, with respect to any Item of Equipment, the value of such Item of
Equipment (on an operating basis) which would be obtained in an arm’s-length transaction between an
informed and willing buyer-user (other than a lessee currently in possession or a used equipment
dealer) under no compulsion to buy, and an informed and willing seller under no compulsion to sell.
Fair Market Value shall be determined from time to time as required by the Loan Documents in
accordance with the most recent Appraisal delivered by the Borrower to the Agent, which Appraisal
shall be conducted at the sole cost and expense of the Borrower.



“Loan Agreement” has the meaning specified in the initial paragraph of this Agreement.



“Lockbox Account” has the meaning specified in Section 3.1.



“Obligations” has the meaning specified in Section 2.1.



“Replacement Lease” means a lease of one or more Items of Equipment entered into by the
Borrower that satisfies the following conditions: (i) such lease is entered into in an arms-length
transaction that imposes no additional material obligations on the Borrower than those imposed by
the Expired Lease or the Equipment Lease to which the original Item of Equipment being replaced was
subject (such lease being the “Original Lease”), as the case may be, (ii) in the case of an Expired
Lease, the discounted future lease payments contained in such lease are not less than the
discounted future lease payments of the Original Lease, (iii) in the case of a replacement of Items
of Equipment, such lease shall contain a fair market rental value (which shall include fair market
rental escalation clauses), (iv) such lease is with a lessee that the Agent reasonably determines
is comparable in creditworthiness to the lessee under the Expired Lease or the Original Lease, as
applicable, (v) such lease is an Eligible Lease, (vi) such lease shall not permit the Equipment
Lessee thereunder to make any prepayments of rent, (vii) such lease shall not expressly permit the
transport or storage of any Hazardous Commodities on or in the related Equipment and (viii) such
lease is expressly subject and subordinate to the Loan Documents and permits the Agent to take
possession of the applicable Items of Equipment upon the occurrence of an Event of Default.



“Replacement Unit” means a replacement unit that (a) is an Eligible Item of Equipment, (b) is
of similar make, model and age and having a Fair Market Value (based on a recent Appraisal
conducted not more than thirty (30) days prior to the date of such determination), utility,
condition and remaining useful life at least equal to the Item of Equipment it is intended to
replace (assuming such Item of Equipment was in the condition required to be maintained by the
terms of this Security Agreement and did not suffer a Casualty Loss), and (b) has been maintained
in compliance with all the AAR’s mechanical regulations and industry commercial standards for
revenue interchange loading.



“Security Agreement” means this Security Agreement, together with all Exhibits and Schedules
attached hereto, as the same may be amended, supplemented or modified, from time to time.



“Tax Payment Amount” shall mean the amount required to pay all taxes, including, without
limitation, any income, withholding, excise, sales, gross receipts, general corporation, tangible
or intangible personal property, privilege, or license taxes due and owing by the Borrower with
respect to the activities of the Borrower to any taxing authority in any jurisdiction.



“UCC” means the Uniform Commercial Code in effect in the State of Delaware, unless otherwise
specified, as amended from time to time.



Section 1.2 Other Interpretive Provisions. (a) Except as otherwise specified
herein, all references herein (i) to any Person shall be deemed to include such Person’s successors
and permitted assigns, (ii) to any applicable law defined or referred to herein shall be deemed
references to such applicable law or any successor applicable law as the same may have been or may
be amended or supplemented from time to time and (iii) any agreement or document shall be deemed
references to such agreement or document as amended, supplemented, restated or otherwise modified
and in effect from time to time.



(b) When used in this Security Agreement, (i) the words “this Security Agreement”, “herein,”
“hereof” and “hereunder” and words of similar import shall refer to this Security Agreement as a
whole (together with all Schedules and Exhibits) and not to any provision of this Security
Agreement unless otherwise specified, and (ii) the words “Article,” “Section,” “Schedule” and
“Exhibit” shall refer to Articles and Sections of, and Schedules and Exhibits to, this Security
Agreement unless otherwise specified.



(c) Whenever the context so requires, the neuter gender includes the masculine or feminine,
the masculine gender includes the feminine, and the singular number includes the plural, and vice
versa.



(d) Any item or list of items set forth following the word “including,” “include” or
“includes” is set forth only for the purpose of indicating that, regardless of whatever other items
are in the category in which such item or items are “included,” such item or items are in such
category, and shall not be construed as indicating that the items in the category in which such
item or items are “included” are limited to such items or to items similar to such items.



(e) The table of contents and the captions to Articles and Sections and subsections of, and
Schedules and Exhibits to, this Security Agreement are included for convenience of reference only
and shall not constitute a part of this Security Agreement for any other purpose or in any way
affect the meaning or construction of any provision of this Security Agreement.



(f) References to days shall refer to calendar days unless Business Days are expressly
specified.



ARTICLE II

SECURITY




Section 2.1 Grant of Security. The Borrower hereby assigns and transfers to
the Agent, and hereby grants to the Agent, for the ratable benefit of the Lenders, a security
interest in, all of the following property now owned or at any time hereafter acquired by the
Borrower or in which the Borrower now has or at any time in the future may acquire any right, title
or interest (collectively, the “Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of
the Obligations:



(a) all Equipment, together with all the records, rents, mileage credits earned, issues,
income, profits, avails and other proceeds (including insurance proceeds) therefrom;



(b) all Equipment Leases and other related Equipment Lease Documents, together with full power
and authority with respect to any such lease to demand, receive, enforce, collect or give receipt
for any of the foregoing rights or any property which is the subject of any of such leases, to
enforce or execute any checks, or other instruments or orders, to file any claims and to take any
action which (in the opinion of the Agent) may be necessary or advisable in connection with any of
the foregoing insofar, all records related to such leases and all Equipment Lease Proceeds;



(c) all Deposit Accounts (as defined in the UCC), including, without limitation, each of the
Collection Account, the Cash Collateral Account and the Lockbox Account, including all amounts from
time to time on deposit therein and all investments made with the proceeds thereof and all interest
earned thereon, but shall not in any case include an Exchange Account;



(d) all of the Borrower’s rights under the Transfer Documents, the Servicing Agreement and the
Management Agreement;



(e) all books and records pertaining to the Collateral; and



(f) to the extent not otherwise included, all “proceeds” (as defined in the Uniform Commercial
Code as in effect from time to time in the State of New Jersey) and products of any and all of the
foregoing.



Section 2.2 Borrower Remains Liable. It is expressly agreed that anything
herein contained to the contrary notwithstanding, the Borrower shall remain liable under the
Equipment Leases and all other Equipment Lease Documents to perform all of the obligations assumed
by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and none
of the Agent or the Lenders shall have any obligation or liability under the Equipment Leases by
reason of or arising out of the assignment hereunder, and none of the Agent or the Lenders shall be
required or obligated in any manner to perform or fulfill any obligations of the Borrower under or
pursuant to the Equipment Leases or to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or take any action to
collect or enforce the payment of any amounts which may have been assigned to it or to which it may
be entitled at any time or times.



ARTICLE III

COLLATERAL ACCOUNTS




Section 3.1 Collection Account; Cash Collateral Account.



(a) On or before the Closing Date, the Borrower shall establish:



(i) a lockbox account with Fifth Third Bank and maintained by Fifth Third Bank in accordance
with the Lockbox Agreement (the Lockbox Account”) in which Equipment Lease Proceeds shall be
deposited by the Equipment Lessees;



(ii) a deposit account with Fifth Third Bank and maintained by Fifth Third Bank in accordance
with the Collection Account Blocked Account Agreement (the “Collection Account”) in which the
Borrower or the Servicer (on behalf of the Borrower) shall deposit all amounts from time to time in
the Lockbox Account and all other Equipment Lease Proceeds received by the Borrower (or the
Servicer), in accordance with the terms of the Loan Agreement; and



(iii) a deposit account with Fifth Third Bank and maintained by Fifth Third Bank in accordance
with the Cash Collateral Blocked Account Agreement (the “Cash Collateral Account”) in which the
Borrower or the Servicer (on behalf of the Borrower) shall deposit and maintain the Reserve Amount
and deposit the aggregate Net Cash Proceeds of all Asset Sales and Recovery Events in accordance
with Section 2.7 of the Loan Agreement.



(b) The Lockbox Account, the Collection Account and the Cash Collateral Account shall at all
times be under the sole dominion and control of the Agent and the Borrower acknowledges and agrees
that except as expressly provided in the Loan Documents (i) the Borrower will have no right of
withdrawal from the Lockbox Account, the Collection Account or the Cash Collateral Account and (ii)
the funds on deposit in such accounts shall at all time be collateral security for all of the
Obligations.



(c) The Borrower shall from time to time execute and deliver one or more “blocked account
agreements” or such other agreements in form and substance satisfactory to the Agent in order to
ensure a continued a first priority perfected security interest in the Collection Account and the
Cash Collateral Account.



(d) So long as no Default or Event of Default shall have occurred and be continuing, the funds
on deposit in the Collateral Accounts may be invested and reinvested by the Agent in one or more
Eligible Investments in the Agent’s sole discretion, and interest earned on such Eligible
Investments shall be deposited in such accounts as additional collateral for the payment and
performance of the Obligations. The Agent shall not in any way be held liable by reason of any
insufficiency in the Collateral Accounts resulting from losses on investments made in accordance
with the provisions of this Section 3.1. The Agent shall not be liable for any investment made by
it in accordance with this Section 3.1 on the grounds that it could have made a more favorable
investment.



Section 3.2 Payments from Collateral Accounts.



(a) On each Payment Date on which no Event of Default shall have occurred and be continuing,
funds on deposit in the Collection Account shall be applied by the Agent in the following order of
priority (without duplication):



first, to the Manager, any Tax Payment Amount then due and payable by the Borrower;



second, to the Agent, any fees and expenses due and payable and any arrearages
thereof;



third, to the Manager (but only if the Manager is not The Andersons or an Affiliate of
The Andersons), the Manager Fee (as defined in the Management Agreement) payable on such Payment
Date, together with all accrued Operating Expenses (as defined in the Management Agreement) payable
on such Payment Date;



fourth, to the Servicer (but only if the Servicer is not The Andersons or an Affiliate
of The Andersons), the Servicer Fee (as defined in the Servicing Agreement) payable on such Payment
Date;



fifth, to each Lender, ratably, any accrued but unpaid interest on such Lender’s Loan
that is due and payable on such Payment Date;



sixth, to each Lender, ratably, all principal payments due and owing under the Loan
Agreement on such Payment Date;



seventh, to the Agent and each Lender, any indemnification payments and any other
amounts then due and payable by the Borrower pursuant to the Loan Agreement or any other Loan
Document;



eighth, to the Agent, such amount necessary to ensure that an amount equal to the
Reserve Account shall be on deposit in the Cash Collateral Account on such Payment Date;



ninth, to the Manager (if the Manager is an Affiliate of The Andersons), the Manager
Fee payable on such Payment Date, together with all accrued Operating Expenses payable on such
Payment Date;



tenth, to the Servicer (if the Servicer is an Affiliate of The Andersons), the
Servicer Fee payable on such Payment Date;



eleventh, to the Manager, any expenses, indemnities and reimbursement payments owing
thereto but not previously paid in accordance with the terms of the Management Agreement;



twelfth, to the Servicer, any expenses, indemnities and reimbursement payments owing
thereto but not previously paid in accordance with the Servicing Agreement; and



thirteenth, to the Borrower or its designee, an amount equal to the excess of the
remaining funds in the Collection Account on such Payment Date.



Notwithstanding the foregoing, the Agent shall only be required to make disbursements in accordance
with this Section 3.2(a) if the Agent shall have received a written notice (other than for
disbursements to the Agent or the Lenders) requesting such disbursements along with such
documentation as the Agent may reasonably request to substantiate any disbursement request.



(b) On each Reinvestment Prepayment Date, the Agent shall apply funds on deposit in the Cash
Collateral Account in an amount equal to the applicable Reinvestment Prepayment Amount as a
prepayment of the Loans in accordance with Section 2.7 of the Loan Agreement.



(c) On the date on which all Obligations have been paid in full, the Agent shall withdraw all
amounts then on deposit in the Collateral Accounts and deliver such amounts to the Borrower or its
designee.



(d) Upon the occurrence and during the continuance of any Event of Default, all
amounts in the Collateral Accounts shall be applied by the Agent as specified in Section 7.3.



Section 3.3 Cash Collateral Account; Release of Proceeds. 



(a) The Agent shall be entitled to retain all Net Cash Proceeds of Asset Sales and Recovery
Events together with all other deposits by the Borrower into the Cash Collateral Account in
accordance with the terms of the Loan Agreement, and to hold such amounts as additional Collateral
hereunder.



(b) If on any Payment Date the funds on deposit in the Collection Account are insufficient to
make the payments to the Agent and the Lenders as set forth in Section 3.2, the Agent may apply an
amount of the funds on deposit in the Cash Collateral Account as may be necessary to make such
payments in full to the Agent and the Lenders.



(c) Amounts on deposit in the Cash Collateral Account shall not be released to the Borrower
except that, so long as no Event of Default or Default has occurred and is continuing or would
occur as a result of taking such action, the Agent will release to the Borrower, upon no less than
2 Business Days prior written notice to the Agent, amounts on deposit in the Cash Collateral
Account consisting of the Net Cash Proceeds of Asset Sales and Recovery Events to pay the purchase
price for Replacement Units in accordance with Section 6.2; provided, however, that no such
monies shall be released to the Borrower (i) prior to the delivery of such Replacement Unit to the
Borrower and the perfection of the Lien hereof on such Replacement Unit and any related Replacement
Lease that ensures that the Agent has a first priority Lien on such Replacement Unit and
Replacement Lease and (ii) unless the Borrower has provided the Agent with copies of the invoices
for such Replacement Unit or such other documents as the Agent may reasonably request.



ARTICLE IV

COVENANTS AND WARRANTIES OF BORROWER




The Borrower covenants, warrants and agrees with the Agent that until the Obligations are paid
in full:



Section 4.1 Maintenance of Equipment.



(a) The Borrower shall, and shall require and use its best efforts to cause, each Person in
possession of any of the Equipment to, use the Equipment only in the manner for which they were
designed and intended and so as to subject it only to ordinary wear and tear. The Equipment shall
not be used in any manner which is in violation of applicable law or the insurance required to be
maintained by the Borrower under Section 4.2.



(b) The Borrower shall maintain, service and repair each Item of Equipment or shall cause each
Item of Equipment to be maintained, serviced and repaired (in either case, subject to scheduling in
the ordinary course of business), so that each Item of Equipment and the component parts thereof
(i) are in as good order and repair as when initially subjected to the Lien of this Security
Agreement (ordinary wear and tear excepted), (ii) are in compliance with all applicable laws
governing the use and maintenance thereof, (iii) are in compliance with the requirements of any
insurance policies required pursuant to Section 4.2, and (iv) are in material compliance with
manufacturer’s maintenance recommendations and eligible under manufacturer’s warranties. Without
limiting the foregoing, the Borrower shall maintain and keep the Equipment (or shall cause the
Equipment to be maintained and kept) suitable for the commercial use as originally designed and
intended in interchange service, in accordance with and prudent industry practice. The Borrower
shall also maintain or cause to be maintained all records, logs and other materials required by the
AAR, the United States Department of Transportation and any other governmental entity having
jurisdiction over the Equipment or the Borrower.



Section 4.2 Insurance.



(a) The Borrower shall maintain insurance or require each Equipment Lessee to maintain
insurance at all times with insurers or re-insurers of recognized reputation and responsibility as
follows:



(i) The Borrower will maintain “all risk” property insurance in respect of the Equipment in
such amounts consistent with prudent Class I railroad industry standards with no limits on the
maximum number of covered occurrences (such that there are no limitations on the number of
“occurrences” covered by such insurance during the term of any such insurance policy); and



(ii) The Borrower will maintain liability insurance with respect to third-party personal
injury, death and property damage (including contractual liability insurance), Federal Employers
Liability Act coverage and against risks as are customarily carried in the United States by owners
or lessors of rolling stock similar to the Equipment (and, in any event, covering such risks as are
covered by the Borrower’s liability insurance in effect on the Closing Date) in an amount not less
than $5,000,000 per occurrence with no limits on the maximum number of covered occurrences (such
that there are no limitations on the number of “occurrences” covered by such insurance during the
term of any such insurance policy).



(b) Notwithstanding the foregoing, the Borrower shall be permitted to self-insure in an amount
up to $250,000 with respect to its deductible for liability and property damage policies.



(c) The insurance policies carried by the Borrower shall (i) require 30 days’ prior notice to
the additional insureds of cancellation for any reason or material change in the type or limits of
coverage and provide that one or more of the additional insureds may renew such coverage; (ii) not
require contributions from other policies held by the additional insureds; (iii) waive any right of
subrogation of the insurers against the additional insureds; (iv) name the Agent as additional
insureds, in the case of liability insurance, and as loss payee, in the case of property insurance;
(v) continue to insure such additional insured regardless of any breach or violation of any
warranty, declaration or condition contained in such policy by the Borrower or any Person; and (vi)
waive any right to claim any premium or commissions against the additional insured.



(d) If the Borrower fails to maintain the insurance coverages specified in this Section 4.2,
the Agent may, at its option, but shall not be required to (unless directed to do so by the
Required Lenders), obtain such insurance, and in such event, the Borrower shall, upon demand from
time to time, reimburse the Agent for the cost of such insurance which each Issuer shall have
failed to maintain and which the Agent shall have obtained in accordance herewith, together with
interest thereon at the Default Rate, from the date of payment thereof to but excluding the date of
receipt of such reimbursement.



(e) The Borrower shall deliver to the Agent (i) on the Closing Date, evidence in form and
substance satisfactory to the Agent of the insurance policies specified in this Section 4.2, and
(ii) thereafter, thirty (30) days prior written notice before any cancellation, expiration,
cessation, reduction in amount or change in coverage thereof shall become effective.



Section 4.3 Preservation of Collateral.



(a) The Borrower will warrant and defend the title to the Collateral against all claims and
demands of all Persons other than Permitted Liens. The Borrower will not assign, sell, lease,
transfer or otherwise dispose of, nor will the Borrower suffer or permit any of the same to occur
with respect to, the Collateral, except as expressly provided in the Loan Documents. The Borrower
will not create, assume or suffer to exist any Lien on the Collateral other than Permitted Liens,
and the Borrower shall pay or discharge, at its own cost and expense, any and all claims, liens or
charges other than Permitted Liens.



(b) The Borrower shall advise the Agent promptly, in reasonable detail, of any Lien (other
than Permitted Liens), claim or demand made or asserted against any of the Collateral and of any
event affecting the Agent’s security interest in the Collateral.



Section 4.4 Further Assurances. (a) The Borrower shall maintain the security
interests created by this Security Agreement as first priority perfected security interests subject
only to Permitted Liens, to the extent such Permitted Liens are expressly permitted by the Loan
Documents to have priority, and shall defend such security interests against all claims and demands
of all persons whomsoever (other than those pursuant to Permitted Liens).



(b) The Borrower will, at its own expense, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, transfers and assurances reasonably requested by the Agent for
the perfection and maintenance of the perfection and priority of the security interests in the
Collateral (other than Permitted Liens), whether now owned or hereafter acquired, or for the
purpose of obtaining or preserving the full benefits of this Security Agreement and of the rights
and powers herein granted.



Section 4.5 Recordation and Filing. 



(a) The Borrower will (i) cause this Security Agreement (or a memorandum of this Security
Agreement in form and substance satisfactory to the Agent) and any supplements hereto at all times
to be executed, recorded and filed, at the sole expense of the Borrower, with the STB and with the
Registrar General, and all financing and continuation statements to be filed with the Secretary of
State of the State of Delaware, and cause such 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 Agent 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 Agent hereunder; and (ii) at its own expense,
furnish to the Agent promptly after the execution and delivery of any supplement to this Security
Agreement, opinions of each of in-house counsel to the Borrower or its affiliates, of Alvord &
Alvord, special STB counsel to the Borrower, and of McCarthy Tétrault LLP, special Canadian counsel
to the Borrower, which opinions shall be in form and substance reasonably satisfactory to the
Agent.



(b) The Borrower hereby authorizes the Agent to execute and file all such documents
(including, without limitation, the filing of this Security Agreement or a memorandum thereof and
any supplements thereto, and any Uniform Commercial Code Financing Statements or amendments
thereto) which the Agent may deem necessary to perfect, protect, or preserve the liens and security
interests created hereunder (including the priority thereof (other than Permitted Liens)) and the
Borrower grants to the Agent a power of attorney to sign on behalf of the Borrower, execute and
file any such documents.



Section 4.6 Power of Attorney. 



(a) The Borrower does hereby irrevocably constitute and appoint the Agent its true and lawful
attorney with full power of substitution for it and in its name, place and stead, to file UCC-1
financing statements and continuation statements, which appointment is irrevocable and coupled with
an interest.



(b) The Borrower does hereby irrevocably constitute and appoint the Agent its true and lawful
attorney with full power of substitution for it and in its name, place and stead, to ask, demand,
collect, receive receipt for and sue for any and all Equipment Lease Proceeds hereof with full
power to settle, adjust or compromise any claim thereunder as fully as the Borrower could itself
do, and to endorse the name of the Borrower on all instruments or commercial paper given in payment
or in part payment thereof, and in its discretion to file any claim or take any other action or
proceedings, either in its own name or in the name of the Borrower or otherwise, which the Agent
may deem necessary or, in its reasonable discretion, appropriate under the circumstances, to
perfect, protect and preserve the right, title and interest of the Agent in and to such Equipment
Lease Proceeds and the liens and security interests intended to be afforded hereby (including the
priority thereof (other than Permitted Liens)). The appointment of this power of attorney is
irrevocable and coupled with an interest.



(c) The parties acknowledge that the powers conferred on the Agent hereunder are solely to
protect its interest in the Collateral and that anything herein contained to the contrary
notwithstanding, the Agent shall have no duty, obligation or liability by reason of or arising out
of this Security Agreement to make any inquiry as to the nature or sufficiency of, to present or
file any claim with respect to, or to take any action to collect or enforce the payment of, any
amounts to which it may be entitled at any time by virtue of this Security Agreement.



Section 4.7 Location. The Borrower’s location (as such term is used in
Section 9-307 of the UCC) is Delaware and the place where all its interest in, to and under the
Security Agreement and its records concerning the Equipment are kept, are located at 480 W. Dussel
Drive, Suite S, Maumee, OH 43537, and it agrees to give the Agent at least 30 days’ prior written
notice of any change in the Borrower’s location or place where said records are kept and, if
applicable, of any change in its name or the Borrower’s type of, or jurisdiction of, organization.



Section 4.8 Reports. The Borrower shall cause each of the Manager and the
Servicer to timely furnish to the Agent all reports, certificates or other items required to be
delivered to the Agent and the Borrower in accordance with the Management Agreement and the
Servicing Agreement. The Borrower shall (or shall cause the Manager to) keep proper books and
records with respect to the Equipment and each Equipment Lease and the other Collateral. The Agent
shall have the right (but not any obligation) by its agents to inspect the Borrower’s records with
respect to the Items of Equipment (and the right to make extracts from and to receive from the
Borrower true copies of such records relating to the Collateral other than the Equipment Leases
except as otherwise provided herein) at such reasonable times as the Agent may request during the
continuance of this Security Agreement. 



Section 4.9 Marking of Equipment.  



(a) The Borrower shall cause the placement of reporting marks or such other marks, legends, or
placards on the Equipment as shall be appropriate or necessary to comply with any regulation
imposed by the STB, the AAR or any equivalent authority. Immediately following the Closing Date,
except with respect to the reporting marks which are the subject of the Car Mark Agreement, the
Borrower covenants to (or cause the Manager to) take all necessary action to change the UMLER
designation associated with the reporting marks relating to the Equipment so as to reflect the
Borrower’s ownership of said marks immediately following the Closing Date. The Borrower will cause
each Item of Equipment owned to be kept numbered with the road number serial number as shall be set
forth on Schedule A hereto (as amended from time to time). Except as otherwise contemplated
in the Car Mark Agreement, the Borrower shall not allow the name of any other Person to be placed
on any Item of Equipment as a designation that might be identified as a claim of any interest
therein; provided, however, that nothing herein contained shall prohibit the Borrower or
any Equipment Lessee from placing its name, trademarks, initials, customary colors and other
insignia on, or from naming, any Item of Equipment.



(b) The Borrower shall not change the identification number of any Item of Equipment unless
and until a statement of a new number or numbers to be substituted therefor shall have been
delivered to the Agent and filed, recorded and deposited by the Borrower in all appropriate public
offices, including the public offices where this Security Agreement (or a memorandum thereof) shall
have been filed, recorded and deposited.



ARTICLE V

SPECIAL PROVISIONS CONCERNING LEASES




Section 5.1 Borrower’s Rights Under Equipment Leases. Until the occurrence
and continuance of an Event of Default, but subject to the terms of this Security Agreement and the
other Loan Documents, the Borrower may exercise all of the Borrower’s rights, powers, privileges
and remedies under the Equipment Leases.



Section 5.2 Delivery of Equipment Lease Documents. 



(a) Except as set forth on Schedule B to the Loan Agreement, on or before the Closing
Date, the Borrower shall deliver to the Agent with respect to each Equipment Lease (i) the chattel
paper original of such Equipment Lease, other than the chattel paper original of any Equipment
Lease not otherwise in the Borrower’s possession which the Borrower shall (or shall cause the
Manager to) deliver to the Agent as soon as practicable and (ii) certified copies of all other
related Equipment Lease Documents.



(b) After the Closing Date, the Borrower shall (or shall cause the Manager to) deliver to the
Agent (i) the chattel paper original of each Replacement Lease, (ii) certified copies of all other
Equipment Lease Documents related to each Replacement Lease, (iii) the chattel paper original of
each amendment, supplement or other modification to any Equipment Lease or any Replacement Lease
and (iv) certified copies of each amendment, supplement or other modification to any other
Equipment Lease Document.



ARTICLE VI

COLLATERAL




Section 6.1 Possession of Collateral. So long as no Event of Default has
occurred and is continuing, the Borrower and each Equipment Lessee party to an Equipment Lease
shall be permitted to remain in full possession, enjoyment and control of the Equipment the rights
under the Equipment Leases, and to manage, operate and use the Equipment and each part thereof with
the rights and franchises pertaining to the Equipment; provided always that the possession,
enjoyment, control and use of the Equipment shall at all times be subject to the observance and
performance of this Security Agreement and the other Loan Documents.



Section 6.2 Replacement Units; Additions to Collateral.  



(a) In the event that Items of Equipment have been the subject of a Recovery Event or a
Disposition permitted under Section 5.1(m)(i) of the Loan Agreement and the Borrower in consequence
thereof has deposited the Reinvestment Deferred Amount in respect thereof in the Cash Collateral
Account pursuant to Section 2.7(b) of the Loan Agreement, the Borrower may, at any time prior to
the applicable Reinvestment Prepayment Date, purchase and substitute Replacement Units. So long as
(i) no Default or Event of Default has occurred and is continuing or would occur as a result of the
purchase of Replacement Units and (ii) the addition of such Replacement Units and related
Replacement Leases are in accordance with the terms of the Loan Documents, an amount equal to the
lesser of (x) the purchase price of the Replacement Units and (y) the Reinvestment Deferred Amount
related to such Asset Sale or Recovery Event, shall be withdrawn from the Cash Collateral Account
by the Agent and paid by the Agent (on behalf of the Borrower) to the seller of such Replacement
Units. In the event the Borrower elects to add a Replacement Unit pursuant to this Section 6.2(a),
such Replacement Unit and the Replacement Lease covering such Replacement Unit shall become subject
to the perfected Lien of this Security Agreement and the security interest of the Agent, all
pursuant to a supplement to this Security Agreement in the form of Exhibit A, to be
executed by the parties hereto and filed with the STB and the Registrar General. The Borrower
shall deliver to the Agent such supplement, together with opinions of counsel reasonably acceptable
to the Agent (and opinions of such counsel substantially in the form as delivered on the Closing
Date shall be deemed acceptable) and addressed to the Agent on behalf of the Lenders confirming the
Agent’s perfected security interest therein under United States, Canada and Delaware law and all
applicable UCC financing statements and certified copies of all other documents and instruments
relied upon by such counsel in providing their opinions.



(b) So long as no Event of Default or Default has occurred and is continuing or would occur as
a result of taking such action, the Borrower may, in accordance with the following provisions, add
Eligible Items of Equipment and Eligible Leases to the Collateral (“Additional Collateral”) subject
to the Lien of this Security Agreement (i) pursuant to Section 2.7(a) or 5.1(m)(iii) of the Loan
Agreement, (ii) in connection with any Asset Sale permitted by Section 5.1(m) of the Loan
Agreement, (iii) to cure any Default or Event of Default under the Loan Agreement capable of being
cured by adding Equipment and related Equipment Leases or (iv) to cure any breach of the Borrower’s
covenant contained in any Loan Document capable of being cured by adding such railcars and related
leases; provided that any such Eligible Leases are in accordance with the definition of
Replacement Lease. The Borrower shall effect such addition by subjecting any such railcars and
related Leases to the Lien of this Security Agreement, pursuant to a supplement to this Security
Agreement in the form of Exhibit A hereto, to be executed by the parties hereto and filed
with the STB and the Registrar General. The Borrower shall deliver to the Agent such supplement,
together with opinions of counsel reasonably acceptable to the Agent (and opinions of such counsel
substantially in the form as delivered on the Closing Date shall be deemed acceptable) and
addressed to the Agent on behalf of the Lenders confirming the Agent’s perfected security interest
therein under United States, Canada and Delaware law and all applicable UCC financing statements
and certified copies of all other documents and instruments relied upon by such counsel in
providing their opinions.



(c) Notwithstanding anything to the contrary herein or on the other Loan Documents, prior to
the addition of any Additional Collateral to the Collateral, the Borrower shall provide the Agent
with evidence in form and substance satisfactory to the Agent in its sole discretion that the
credit quality of the Equipment Lessees under all the Equipment Leases, taken as a whole, shall be
no less favorable than prior to the addition of such Additional Collateral.



(d) Schedule A hereto shall be supplemented from time to time to reflect each addition
or substitution of any Items of Equipment or any Equipment Leases.



ARTICLE VII

AGENT’S RIGHTS




Section 7.1 Agent’s Rights. The Borrower agrees that when any Event of
Default has occurred and is continuing, the Agent shall have the rights, options, duties and
remedies of a secured party under applicable law and the rules of STB and under the UCC (regardless
of whether such UCC or a law similar thereto has been enacted in a jurisdiction wherein the rights
or remedies are asserted) as applicable, and the Agent shall have the following rights and
remedies:



(a) The Agent shall have all the rights of a secured party under the rules of STB and under
the UCC to enforce the security interests contained herein.



(b) The Agent personally or by agents or attorneys, shall have the right (subject to (i)
compliance with any applicable mandatory legal requirements and (ii) the rights of the Equipment
Lessees in the Equipment and under the Equipment Leases) to take immediate possession of the
Collateral, or any portion thereof, and for that purpose may pursue the same wherever it may be
found, and may enter any of the premises of the Borrower, with or without notice, demand, process
of law or legal procedure, if this can be done without breach of the peace, and search for, take
possession of, remove, keep and store the Collateral, or use and operate or lease the Collateral
until sold, and the Borrower shall deliver, or cause to be delivered, possession of the Equipment
to the Agent or its agents where the same may be found or at such place or places as the Agent may
reasonably require.



(c) The Agent shall have the right to deliver the Notice of Assignment to each of the
Equipment Lessees.



(d) Any Collateral repossessed by the Agent under or pursuant to this Section 7.1 may be sold,
leased or otherwise disposed of under one or more contracts or as an entirety, and without the
necessity of gathering at the place of sale the property to be sold, and in general in such manner,
at such time or times, at such place or places and on such terms as the Agent may, in compliance
with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of
the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Agent or after any overhaul or repair which the Agent shall determine to
be commercially reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10 days’ prior written
notice to Borrower specifying the times at which such disposition is to be made and the intended
sale price or other consideration therefor. Any such disposition which shall be a public sale
permitted by such requirements shall be made upon not less than 10 days’ prior written notice to
Borrower specifying the time and place of such sale and, in the absence of applicable requirements
of law, shall be by public auction after publication of notice of such auction not less than 10
days prior thereto in two newspapers in general circulation in the City of New York. To the extent
permitted by any such requirement of law, the Agent may itself bid for and become the purchaser of
the Collateral or any item thereof, offered for sale in accordance with this Section without
accountability to Borrower (except to the extent of surplus money received as provided in Section
7.3). In the payment of the purchase price therefor, the Agent shall be entitled to have credit on
account of the purchase price thereof of amounts owing to the Agent on account of the indebtedness
hereby secured and the Agent may deliver the claims for interest on or principal of the Loan or
other indebtedness hereby secured in lieu of cash up to the amount which would, upon distribution
of the net proceeds of such sale, be payable thereon. If, under mandatory requirements of
applicable law, the Agent shall be required to make disposition of the Collateral within a period
of time which does not permit the giving of notice to Borrower as hereinabove specified, the Agent
need give Borrower only such notice of disposition as shall be reasonably practicable in view of
such mandatory requirements of applicable law.



(e) The Agent may proceed to protect and enforce this Security Agreement by suit or suits or
proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any
covenant or agreement herein contained or in execution or aid of any power herein granted, or for
foreclosure hereunder, or for the appointment of a receiver or receivers for the Collateral or any
part thereof, for the recovery of judgment for the indebtedness hereby secured or for the
enforcement of any other legal or equitable remedy available under applicable law.



Section 7.2 Effect of Sale. Any sale, whether under any power of sale hereby
given or by virtue of judicial proceedings, shall operate to divest all right, title, interest,
claim and demand whatsoever, either at law or in equity, of the Borrower in and to the property
sold and shall be a perpetual bar, both at law and in equity, against the Borrower, its successors
and assigns, and against any and all persons claiming the property sold, or any part thereof under,
by or through the Borrower, its successors or assigns.



Section 7.3 Application of Sale Proceeds. The proceeds of any sale of the
Collateral, or any part thereof, and the proceeds of any remedy hereunder shall be paid to and
applied as follows:



(a) first, to the payment of all costs and expenses including those of foreclosure or
suit, if any, and of such sale, and of all reasonable expenses, liability and advances, including
legal expenses and reasonable attorneys’ fees, incurred or made hereunder, under the Notes, or
under the Loan Agreement or the other Loan Documents, by the Agent and the Lenders;



(b) second, to the Manager (but only if the Manager is not The Andersons or an
Affiliate of The Andersons), for all amounts then owing or unpaid in respect of the Management
Agreement;



(c) third, to the Servicer (but only if the Servicer is not The Andersons or an
Affiliate of The Andersons), for all amounts then owing or unpaid in respect of the Servicing
Agreement;



(d) fourth, to the payment of the amounts then owing or unpaid in respect of the Loans
ratably to the Lenders and any other amounts owed to the Agent and the Lenders in accordance with
the provisions of the Loan Documents;



(e) fifth, to the Manager (if the Manager is The Andersons or an Affiliate of The
Andersons), for all amounts then owing or unpaid in respect of the Management Agreement;



(f) sixth, to the Servicer (if the Servicer is The Andersons or an Affiliate of The
Andersons), for all amounts then owing or unpaid in respect of the Servicing Agreement;



(g) seventh, to the payment of the surplus, if any, to the Borrower, its successors
and assigns, or to whosoever may be lawfully entitled to receive the same.



Section 7.4 Discontinuance of Remedies. In case the Agent shall have
proceeded to enforce any right under this Security Agreement by foreclosure, sale, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely, then, and in every such case, the Borrower and the Agent shall be
restored to their former respective positions and rights hereunder with respect to the property
subject to the security interest created under this Security Agreement.



Section 7.5 Cumulative Remedies. No delay or omission of the Agent to
exercise any right or power arising from any default on the part of the Borrower, shall exhaust or
impair any such right or power or prevent its exercise during the continuance of such default. No
waiver by the Agent of any such default, whether such waiver be full or partial, shall extend to or
be taken to affect any subsequent default, or to impair the rights resulting there from except as
may be otherwise provided herein. The Agent may exercise any one or more or all of the remedies
hereunder and no remedy is intended to be exclusive of any other remedy but each and every remedy
shall be cumulative and in addition to any and every other remedy given hereunder or otherwise
existing now or hereafter at law or in equity; nor shall the giving, taking or enforcement of any
other or additional security, collateral or guaranty for the payment of the indebtedness secured
under this Security Agreement operate to prejudice, waive or affect the security of this Security
Agreement or any rights, powers or remedies hereunder, nor shall the Agent be required to first
look to, enforce or exhaust such other or additional security, collateral or guaranties.



Section 7.6 Indemnity. The Borrower agrees to indemnify, protect and hold
harmless the Agent, and its assigns, directors, officers, employees, agents or representatives in
accordance with and pursuant to Section 8.8 of the Loan Agreement as if such Person were an
Indemnified Person named therein.



Section 7.7 Costs and Expenses. Any and all fees, costs and expenses, of
whatever kind or nature, including the reasonable attorneys’ fees and legal expenses incurred by
the Agent or the Lenders in connection with the filing or recording of this Security Agreement or
any memorandum thereof, financing statements and other documents (including all taxes in connection
with the filing and recording of such documents) in public offices, the payment or discharge of any
taxes relating to the Collateral or imposed upon the Borrower, insurance premiums, encumbrances or
otherwise protecting, maintaining or preserving the Collateral, or the enforcing, foreclosing,
retaking, holding, storing, processing, selling or otherwise realizing upon the Collateral and the
Agent’s security interest therein, whether through judicial proceedings or otherwise, or in
defending or prosecuting any actions or proceedings arising out of or related to the transaction to
which this Security Agreement relates, shall be borne and paid by the Borrower on demand by the
Agent, and until so paid shall be added to the principal amount of the Loan and shall bear interest
at the Default Rate prescribed in the Loan Agreement.



ARTICLE VIII

MISCELLANEOUS




Section 8.1 Successors and Assigns. All the covenants, promises and
agreements in this Security Agreement contained by or on behalf of the Borrower or by or on behalf
of the Agent shall bind and inure to the benefit of the successors and assigns of such parties
whether so expressed or not, except the Borrower shall not be permitted to assign its obligations
hereunder without the consent of all of the Lenders under the Loan Agreement.



Section 8.2 Entire Agreement. This Security Agreement, together with the Loan
Documents and other agreements referred to herein, constitute the entire understanding between the
parties with respect to the subject matter hereof. All prior agreements, understandings,
representations, warranties and negotiations, if any, are merged into this Security Agreement, and
this Security Agreement is the entire agreement relating to the subject matter hereof. This
Security Agreement cannot be changed or terminated orally.



Section 8.3 Partial Invalidity. The unenforceability or invalidity of any
provision or provisions of this Security Agreement shall not render any other provision or
provisions herein contained unenforceable or invalid.



Section 8.4 Notices. All notices and communications provided for herein shall
be given to such parties, at such addresses and in such manner as is provided in the Loan
Agreement.



Section 8.5 Termination. This Security Agreement and the security interest
granted hereby shall terminate when the Obligations have been indefeasibly fully and finally paid
or discharged, at which time the Agent shall, at the Borrower’s sole expense, execute and deliver
to the Borrower all Uniform Commercial Code termination statements and such similar documents or
proper instrument or instruments which the Borrower shall reasonably request to evidence such
termination and the release of Collateral.



Section 8.6 Governing Law. THIS SECURITY AGREEMENT, INCLUDING THE VALIDITY
HEREOF, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW JERSEY.



Section 8.7 Consent to Jurisdiction. ANY LEGAL SUIT, ACTION OR PROCEEDING
AGAINST THE BORROWER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT, OR ANY TRANSACTION
CONTEMPLATED HEREBY, MAY BE INSTITUTED IN ANY FEDERAL, STATE OR LOCAL COURT IN THE COUNTY OF
MIDDLESEX, STATE OF NEW JERSEY AND THE BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND, SOLELY FOR THE
PURPOSES OF ENFORCING THE LOAN DOCUMENTS, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.



Section 8.8 Counterparts. This Security Agreement may be executed,
acknowledged and delivered in any number of counterparts, each of which shall constitute an
original but all of which when taken together shall constitute but one agreement.



Section 8.9 Waiver of Jury Trial. THE BORROWER AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, THE AGENT AND EACH LENDER, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT.



Section 8.10 Waiver. The Borrower hereby waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal action or proceeding in
connection with this Agreement any special, exemplary, punitive or consequential damages.



[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]






2






IN WITNESS WHEREOF, the Borrower has executed this Security Agreement as of the day and year
first above written.




THE ANDERSONS RAIL OPERATING I LLC




By: /s/ Richard R. George

Name: Richard R. George

Title: Manager

3






Exhibit A

to the Security Agreement




SUPPLEMENT NO. ___

TO

SECURITY AGREEMENT




SUPPLEMENT No.      (this “Supplement”) dated as of      , 200     to the Security
Agreement, dated as of December 29, 2005 (as amended, supplemented or modified from time to time,
the “Security Agreement”), made by THE ANDERSONS RAIL OPERATING I LLC in favor of SIEMENS FINANCIAL
SERVICES, INC., as Agent (in such capacity, the “Agent”) and the several banks and other financial
institutions or entities (the “Lenders”) from time to time parties to the Term Loan Agreement,
dated as of December 29, 2005 (as amended, supplemented or otherwise modified from time to time,
the “Loan Agreement”), among the Borrower, the Lenders and the Agent.



WHEREAS, the Security Agreement was recorded on      , 2005 with the Surface
Transportation Board, Recordation No.      , and with the Registrar General of Canada,
Recordation No.      .



1. Definitions. Except as otherwise defined in this Supplement, terms defined in the
Security Agreement or by reference therein are used herein as defined therein.



2. Supplements. The Security Agreement shall be amended and supplemented as follows:



(a) Schedule A to the Security Agreement shall be amended and supplemented by Schedule
A-1 hereto to include the Equipment and the Equipment Leases (relating to the Equipment but to
and only to the extent relating to the Equipment) more fully described on Schedule A-1
hereto and Schedule A-1 hereto shall be deemed to be an addition to and part of Schedule A
to the Security Agreement. The Borrower hereby assigns, mortgages, pledges, hypothecates,
transfers and sets over to the Secured Party and grants the Secured Party a first priority lien on
and security interest in all of the Borrower’s right, title and interest in and to such Equipment
and Equipment Leases (relating to the Equipment but to and only to the extent relating to the
Equipment) and agrees that such Equipment and Equipment Leases shall constitute Collateral subject
to the grant of security by the Borrower set forth in Section 2.1 of the Security Agreement. Each
reference to Schedule A in the Security Agreement, and each reference to Schedule A to the Security
Agreement in any other Loan Documents, shall be deemed to be a reference to Schedule A as amended
and supplemented by Schedule A-1 hereto. In connection herewith, the Borrower represents
that it delivered to the Agent a supplemental schedule to Schedule A to the Loan Agreement,
identifying the names of the Equipment Lessees under the Equipment Leases which are referenced on
Schedule A-1 hereto.



[(b) Schedule A to the Security Agreement shall be amended further by deleting therefrom the
Equipment and the Equipment Leases (relating to the Equipment but to and only to the extent
relating to the Equipment) described on Schedule A-2 hereto and the Secured Party hereby
agrees that such Equipment and Equipment Leases shall no longer be included in the Collateral, and
hereby releases and terminates its lien on and security interest in, and all of its rights, title
and interest, in and to, such Equipment and Equipment Leases. Schedule A-2 hereto shall be
deemed to be a deletion from, and the Equipment and the Equipment Leases described thereon shall
cease to be a part of, Schedule A to the Security Agreement. Each reference to Schedule A in the
Security Agreement, and each reference to Schedule A to the Security Agreement in any other Loan
Documents, shall be deemed to be a reference to Schedule A as amended by Schedule A-2
hereto, and each reference to Equipment or Equipment Leases in any other Loan Documents shall no
longer include a reference to the equipment and the equipment leases described on Schedule
A-2 hereto.]1



(c) It is hereby agreed that each reference to “this Security Agreement” in the Security
Agreement, “hereunder”, “hereof” or words of like import referring to the Security Agreement, and
each reference to the Security Agreement in each of the other Loan Documents, shall be deemed to be
a reference to the Security Agreement as amended and supplemented by this Supplement.



[3. Release. The Secured Party hereby releases, and terminates its security interest
in, and all of its right, title and interest in and to all of the Equipment and Equipment Leases
listed on Schedule A-2 hereto.]2



4. Ratification. Except as expressly amended and supplemented hereby, the Security
Agreement is and shall remain in full force and effect and is hereby ratified, approved and
confirmed in all respects, and no amendment or supplement in respect of any term or condition of
the Security Agreement shall be deemed to be an amendment or supplement in respect of any other
term or condition contained in the Security Agreement or any other Loan Document.



5. Counterparts. This Supplement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument and any of the parties hereto
may execute this Supplement by signing any such counterpart.



6. Governing Law; Binding Effect. THIS SUPPLEMENT, INCLUDING THE VALIDITY THEREOF,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW JERSEY WITHOUT
REGARD TO ITS OTHER CONFLICT OF LAWS PRINCIPLES. This Supplement shall be binding on the
undersigned and its successors and permitted assigns and shall inure to the benefit of each of the
Agent, the Lenders and the Borrower and their respective successors and assigns.



[signature page follows]




1 If applicable.



2 If applicable.



4



IN WITNESS WHEREOF, the parties hereto have executed and delivered this Supplement in one or
more counterparts as of the date first set forth above.




THE ANDERSONS RAIL OPERATING I LLC




By:

Name: 

Title:





SIEMENS FINANCIAL SERVICES, INC.,






as Agent




By:

Name: 

Title:




[Signature Page to Supplement No. __]





5