Document:

Exhibit 4.54

 

MANAGEMENT AGREEMENT

 

 

between

 

TAL INTERNATIONAL CONTAINER CORPORATION

Manager

 

and

 

TAL ADVANTAGE V LLC

Owner

 

 

Dated as of
 February 27, 2013

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 1.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
Section 2.
    	
Appointment of the Manager
    	
1
    
	
 
    	
2.1
    	
Appointment of Manager
    	
1
    
	
 
    	
2.2
    	
Appointment of Subservicers
    	
2
    
	
 
    	
2.3
    	
Retention of Title
    	
2
    
	
 
    	
2.4
    	
Exclusive Representation of Owner
    	
2
    
	
 
    	
 
    	
 
    
	
Section 3.
    	
Manager’s Services with Respect to the Managed Containers
    	
2
    
	
 
    	
3.1
    	
Non-Discrimination
    	
2
    
	
 
    	
3.2
    	
Terms of Lease Agreements
    	
3
    
	
 
    	
3.3
    	
Leasing
    	
3
    
	
 
    	
3.4
    	
Maintenance and Repair
    	
4
    
	
 
    	
3.5
    	
Compliance With Law
    	
4
    
	
 
    	
3.6
    	
Markings
    	
4
    
	
 
    	
3.7
    	
Casualty Losses; Sale of Managed Containers; Lost or   Destroyed Containers
    	
4
    
	
 
    	
3.8
    	
Sales of Managed Containers
    	
5
    
	
 
    	
3.9
    	
Insurance
    	
5
    
	
 
    	
3.10
    	
Books and Records; Inspection of Books and Records;   Inspection of Managed Containers; Back-up Data Tape
    	
6
    
	
 
    	
3.11
    	
Back-up Management Agreement
    	
7
    
	
 
    	
3.12
    	
Liens
    	
8
    
	
 
    	
3.13
    	
Concentration Account and Payment Instructions
    	
8
    
	
 
    	
3.14
    	
Identification of Funds in the Concentration Account
    	
8
    
	
 
    	
3.15
    	
Transfer of Funds Received by the Manager
    	
8
    
	
 
    	
3.16
    	
Time and Attention to Duties
    	
9
    
	
 
    	
3.17
    	
OFAC
    	
9
    
	
 
    	
 
    	
 
    
	
Section 4.
    	
Reporting Obligations of the Manager
    	
9
    
	
 
    	
4.1
    	
Reports Due from the Manager
    	
9
    
	
 
    	
4.2
    	
Manager Advances
    	
11
    
	
 
    	
 
    	
 
    
	
Section 5.
    	
Deposits to Trust Account; Payment of Management Fee
    	
11
    
	
 
    	
5.1
    	
Deposits
    	
11
    
	
 
    	
5.2
    	
Compensation of Manager
    	
12
    
	
 
    	
 
    	
 
    
	
Section 6.
    	
Term
    	
13
    
	
 
    	
 
    	
 
    
	
Section 7.
    	
Intercreditor Agreement
    	
13
    
	
 
    	
 
    	
 
    
	
Section 8.
    	
Representations and Warranties; Covenants
    	
14
    
	
 
    	
8.1
    	
Manager Representations
    	
14
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.2
    	
Owner Representations
    	
16
    
	
 
    	
8.3
    	
Covenants of the Manager
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.
    	
Manager Default
    	
18
    
	
 
    	
9.1
    	
Manager Default
    	
18
    
	
 
    	
9.2
    	
Remedies
    	
20
    
	
 
    	
9.3
    	
Transfer of Managed Containers
    	
21
    
	
 
    	
9.4
    	
Power of Attorney
    	
21
    
	
 
    	
9.5
    	
Owner Power of Attorney
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.
    	
No Partnership
    	
23
    
	
 
    	
 
    	
 
    
	
Section 11.
    	
No Warranties
    	
23
    
	
 
    	
 
    	
 
    
	
Section 12.
    	
Non-Exclusivity
    	
24
    
	
 
    	
 
    	
 
    
	
Section 13.
    	
Assignment
    	
24
    
	
 
    	
 
    	
 
    
	
Section 14.
    	
Indemnification
    	
24
    
	
 
    	
14.1
    	
By the Owner
    	
24
    
	
 
    	
14.2
    	
By the Manager
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
Section 15.
    	
No Bankruptcy Petition Against the Owner
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section 16.
    	
Notices
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section 17.
    	
Governing Law; Consent to Jurisdiction
    	
26
    
	
 
    	
17.1
    	
Governing Law
    	
26
    
	
 
    	
17.2
    	
Consent to Jurisdiction
    	
27
    
	
 
    	
17.3
    	
Waiver of Jury Trial
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 18.
    	
Successors and Assigns
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 19.
    	
Severability
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 20.
    	
Entire Agreement; Amendments; Waiver
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 21.
    	
Counterparts
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 22.
    	
Intended Third Party Beneficiaries
    	
28
    

 

ii

 

Table of Contents

(continued)

 

EXHIBIT A — MANAGER REPORT

 

EXHIBIT B — AFFILIATES OF MANAGER AND APPROVED SUBSERVICERS

 

EXHIBIT C — CREDIT AND COLLECTION POLICY

 

EXHIBIT D — AGREED UPON PROCEDURES

 

EXHIBIT E — DEPRECIATION POLICY

 

EXHIBIT F — ADDITIONAL CRITERIA FOR BACK-UP DATA TAPE

 

iii

 

This MANAGEMENT AGREEMENT, dated as of February 27, 2013 (as amended, modified or supplemented from time to time in accordance with the terms hereof, this “Agreement”), between TAL ADVANTAGE V LLC, a limited liability company organized and existing under the laws of the State of Delaware (together with its successors and permitted assigns, the “Owner” or the “Issuer”) and TAL INTERNATIONAL CONTAINER CORPORATION, a Delaware corporation (together with its successors and permitted assigns, “Manager”).

 

W  I  T  N  E  S  S  E  T  H

 

WHEREAS, the Owner is the owner of the Managed Containers; and

 

WHEREAS, the Manager is in the business of leasing Containers to shipping lines and other container users, and is experienced in administration of a container leasing business; and

 

WHEREAS, the Owner wishes to contract with the Manager for the purposes of (i) managing the operation and leasing of the Managed Containers, and (ii) performing other administrative duties for the Owner; and

 

WHEREAS, the Manager has agreed to manage the Owner’s business including the Managed Containers and to operate and lease out the Managed Containers as part of the Manager’s Container Fleet and to perform other administrative duties for the Owner; and

 

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto hereby agree as follows:

 

Section 1.                                           Definitions.  Terms capitalized but not defined herein shall have the meanings ascribed thereto in Appendix A to that certain Indenture, dated as of February 27, 2013, between the Issuer and Wells Fargo Bank, National Association, as Indenture Trustee (as amended, restated or otherwise modified from time to time in accordance with the terms thereof, the “Indenture”), as such Appendix A may be amended, supplemented or otherwise modified from time to time in accordance with the provisions of the Indenture.

 

Section 2.                                           Appointment of the Manager.

 

2.1                               Appointment of Manager.  The Owner hereby exclusively (i) appoints the Manager as its agent to manage and administer its business, and to manage the Managed Containers and the Related Assets, including performance of all of the Owner’s duties and observance of all of the Owner’s obligations under the Indenture and the other Transaction Documents to which it is a party, and (ii) grants to the Manager the authority on behalf of the Owner to enter into, administer, enforce and terminate Lease Agreements relating to the Managed Containers, to sell, transfer or otherwise dispose of and enforce the Owner’s rights with respect to the Managed Containers, to collect monies and make disbursements on behalf of the Owner, and to manage its finances, all such activities described in clauses (i) and (ii) to be conducted on the terms and subject to the conditions set forth herein.  The Manager hereby agrees to so manage the Managed Containers and the Related Assets and administer the Owner’s business, including performance of all of the Owner’s duties and observance of all of the

 

 

Owner’s obligations under the Indenture and the other Transaction Documents to which the Owner is a party, upon the terms and conditions herein; provided, however, that nothing contained in this Agreement or any other Transaction Document shall be or shall be construed to be either (x) an express or implied guaranty by the Manager of the Notes or any other Outstanding Obligations incurred by the Owner or (y) an express or implied agreement to make payments on the Notes or other Outstanding Obligations.

 

2.2                               Appointment of Subservicers.  In performing its duties hereunder, the Manager may, subject to the restrictions set forth herein, contract with any of its Affiliates listed on Exhibit B hereto to provide the services required to be rendered by the Manager hereunder (each resulting agreement, a “Subservicing Agreement,” and each Affiliate that is a party to such Subservicing Agreement, a “Subservicer”); provided, however, that (i) the Manager shall be solely responsible for the receipt and processing of all Container Revenues, Sales Proceeds, Casualty Proceeds and other Collections, (ii) each Subservicing Agreement (but not other agreements to which the Manager may be a party) must expressly provide that such Subservicing Agreement may be terminated by the Requisite Global Majority if a Manager Default has occurred and is then continuing, and (iii) the Manager shall be solely responsible for the payment to each such Subservicer of any and all compensation, expenses and indemnities to each such Subservicer.  The Manager will not contract with any other Person to provide any of the services to be rendered by the Manager to the Owner hereunder without the prior written consent of the Requisite Global Majority.  Notwithstanding any provision of such services by its Subservicers, the Manager shall remain obligated and liable to the Owner, the Indenture Trustee and the Noteholders for the management and the administration of the Managed Containers in accordance with the provisions of this Agreement, without diminution of such obligation or liability by virtue of such agreements or arrangements with its Subservicers, to the same extent and under the same terms and conditions as if the Manager alone were servicing and administering the Managed Containers.

 

2.3                               Retention of Title.  The Owner shall at all times retain full legal and equitable title to the Managed Containers, notwithstanding the management thereof by Manager hereunder.  Manager shall not make reference to, or otherwise deal with or treat, the Managed Containers in any manner except in conformity with this Agreement.

 

2.4                               Exclusive Representation of Owner.  Except as otherwise provided in this Agreement, during the term of this Agreement, the Manager will be the exclusive agent of the Owner with respect to the Owner’s business and with respect to the management of the Managed Containers and the Owner agrees that it will not engage any other Person to perform, or pay any consideration to any other Person for performing, the same or similar services with respect to the owner’s business or with respect to the Managed Containers.

 

Section 3.                                           Manager’s Services with Respect to the Managed Containers.

 

3.1                               Non-Discrimination.  In performing its duties pursuant to this Agreement, the Manager shall exercise substantially the same degree of skill and care with which it services, leases and manages containers held for its own account and consistent with the reasonable commercial practices of a prudent container lessor engaged in the administration, leasing and servicing of shipping containers (such standard of care, the “Servicing Standard”).  Without

 

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limiting the foregoing, the Manager shall not knowingly discriminate in favor of or against the Managed Containers in connection with the management and operation of the Container Fleet.

 

3.2                               Terms of Lease Agreements.  Without prejudice to the rights and title of the Owner with respect to the Managed Containers, the Manager may arrange for the leasing of the Managed Containers pursuant to Lease Agreements that are in its own name as principal, and not as agent of the Owner; provided, however, that it is understood and agreed that the Manager is acting thereunder solely as agent of the Owner. The Manager shall have sole discretion to determine to whom to lease, sell or otherwise dispose of the Managed Containers, to determine the per diem rates and other charges to be paid and all other terms and conditions of the Lease Agreements and to renegotiate, amend and consent to waivers under such Lease Agreements.  The Manager shall invoice and collect from lessees all rental payments and other amounts due under and pursuant to the Lease Agreements relating to the Managed Containers.

 

3.3                               Leasing.  The Manager shall operate and lease the Managed Containers as part of its Container Fleet and shall perform all managerial and administrative functions and provide or arrange for the provision of all services and documentation of any nature which it considers necessary or desirable for such operation and leasing.  The Manager shall, in compliance with the Servicing Standard, take all actions the Manager deems appropriate to ensure compliance by the Lessees with the terms of any Lease Agreement, including the exercise of the rights of the lessor thereunder.

 

3.3.1                     With respect to the Managed Containers, the Manager shall use reasonable efforts to include in the terms of lease agreements with lessees a provision requiring lessees to comply with Applicable Law affecting the Managed Containers and their use, operation and storage while the Managed Containers are on-hire and the Manager shall use reasonable efforts to include in the terms of depot agreements with third-party storage and repair depots a provision requiring the depots to comply with Applicable Law affecting the Managed Containers while the Managed Containers are off-hire and stored in the depot.

 

3.3.2                     The Manager will monitor and record the status of the Managed Containers in the same manner as for containers held for its own account, i.e., for each Managed Container it will record the on-hire location, the date of on-hire and the lessee to whom the Managed Container is on-hire, the off-hire date of the Managed Container and the off-hire location, and the depot where the Managed Container is located while off-hire.

 

3.3.3                     The Manager shall follow the Credit and Collection Policy with respect to the leasing of the Managed Containers and, subject to the terms of such Credit and Collection Policy, the Manager may, in its sole discretion (a) determine and approve the creditworthiness of any lessee (though the Manager makes no representation or warranty to the Owner as to the solvency or financial stability of any lessee), (b) determine that any amount due from any lessee is not collectible, (c) institute and prosecute legal proceedings against a lessee as permitted by Applicable Law, (d) terminate or cancel any Lease Agreement, (e) recover possession of the Managed Containers from any lessee, (f) settle, compromise or release any proceeding or claim against a lessee in the name of the Manager or, if appropriate, in the name of the Owner, or (g) reinstate any Lease Agreement.

 

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3.3.4                     In performing its duties under this Agreement, the Manager shall use reasonable efforts to comply with the Concentration Limits when entering into new Lease Agreements and, in any event, shall not, without the prior written consent of the Requisite Global Majority, lease all, or substantially all, of the Managed Containers to an Affiliate of the Manager or to a single lessee.

 

3.3.5                     The Manager hereby acknowledges that the Manager and its Affiliates are holding the leases relating to the Managed Containers (but only to the extent that such leases relate to the Managed Containers), on behalf of, and for the benefit of, the Indenture Trustee.

 

3.4                               Maintenance and Repair.  The Manager shall keep, or, with respect to Managed Containers on lease, cause the related lessee, to keep, each Managed Container (i) in good repair and working order in a manner consistent with past practices, and (ii) in accordance with its maintenance and repair standards for the Container Fleet.  The Manager shall make, or cause to be made, all necessary inspections, repairs, replacements, additions and improvements to each Managed Container as are commercially reasonable for the conduct of its business in accordance with the ordinary course of the Manager’s business consistent with past practices; it being understood that it may, in some cases, be commercially reasonable not to repair a Managed Container.  The Manager shall institute and prosecute claims against the manufacturers and sellers of the Managed Containers as the Manager may consider advisable for breach of warranty, any defect in condition, design, operation or fitness or any other nonconformity with the terms of manufacture.  The Manager shall have no liability to the Owner for any such breach of any manufacturer’s or seller’s or any other Person’s warranty or for any such defect in condition, design, operation or fitness or any other nonconformity with the terms of manufacture.  The Manager shall at all times use the Managed Containers, and require the related lessee to use the Managed Containers, in accordance with good operating practices.  The Manager shall not knowingly use (or knowingly permit the lessees to use) the Containers for storage or transportation of contraband in violation of applicable United States law.

 

3.5                               Compliance With Law.  The Manager will comply, in all material respects, with all acts, rules, regulations, orders, decrees and directions of any governmental authority that are applicable to the Lease Agreements and the Managed Containers or any part thereof except for any noncompliance which would not reasonably be expected to result in a Material Adverse Change; provided, however, that the Manager may contest any act, rule, regulation, order, decree or direction in any reasonable manner which shall not materially and adversely affect the Noteholders; and provided, further, that such contests shall be in good faith by appropriate proceedings and as to which adequate reserves in accordance with GAAP have been established, but only so long as such proceedings shall not, individually or in the aggregate, subject any Noteholder or Indenture Trustee to any civil or criminal liability.

 

3.6                               Markings.  The Manager shall ensure that each Managed Container shall carry its Container Identification Number and other markings as may be required for its operation in marine and intermodal shipping.

 

3.7                               Casualty Losses; Sale of Managed Containers;  Lost or Destroyed Containers.  If any Managed Container shall suffer a Casualty Loss while it is subject to the terms of this Agreement, the Manager shall remit to the Trust Account, in accordance with the provisions of

 

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Section 5.1.1 hereof, the Casualty Proceeds (net of any expenses, taxes and reserves in respect thereof), if any, received as a consequence of such Casualty Loss.

 

3.8                               Sales of Managed Containers.  The Manager shall have the ability in its sole discretion to sell or otherwise dispose of any of the Managed Containers, subject to compliance with the applicable provisions of Sections 404 and 606 of the Indenture.  The Manager shall remit to the Trust Account, in accordance with the provisions of Section 5.1.1 hereof, the Sales Proceeds (net of any expenses, taxes or reserves in respect thereof) received as a consequence of any such sale; provided, however, that Sales Proceeds resulting from the sale of the Containers and Leases sold at the direction of a Liquidating Series pursuant to Section 804(b) of the Indenture shall be remitted to the applicable Series Account pursuant to Section 302(d) of the Indenture.

 

3.9                               Insurance.  (a) The Manager will, in a manner consistent with its normal procedures and the Servicing Standard, (i) effect and maintain with financially sound and reputable companies general liability insurance, insuring the Issuer and the Indenture Trustee (for the benefit of the Noteholders) against liability for personal injury and property damage liability, caused by, or relating to, the Managed Containers then off-lease, with such levels of coverage and deductibles that are consistent with the levels in effect as of the Closing Date, and (ii) have a standard form of lease agreement that requires each lessee to maintain (1) physical damage insurance in an amount not less than the stipulated loss value agreed to by the lessee of the Managed Containers on lease to it, and (2) comprehensive general liability insurance, including contractual liability, against claims for bodily injury or death and property damage.  The Indenture Trustee reserves the right (but shall not have the obligation) to obtain, at the direction of the Requisite Global Majority and at the Manager’s expense, insurance of the type described in clause (i) above if the Manager shall fail to obtain such coverage in the specified amounts.  However, the Indenture Trustee will notify the Manager prior to obtaining such insurance.

 

(b)                                 All insurance maintained by the Manager for loss or damage of the Managed Containers shall provide that losses, if any, shall be payable to the Issuer and the Indenture Trustee or its designee as an additional loss payee and the Manager shall utilize its reasonable efforts to have all checks relating to any such losses delivered promptly to the Indenture Trustee.  The Issuer and the Indenture Trustee shall be named as additional insureds with respect to all such liability insurance maintained by the Manager (or on behalf of the Manager by a direct or indirect parent company thereof).  The Manager shall pay the premiums with respect to all such insurance and deliver to Indenture Trustee evidence of such insurance coverage as contemplated by Section 4.1.4.  The Manager shall cause to be provided to each of the Indenture Trustee and the Requisite Global Majority, not less than fifteen (15) days prior to the scheduled expiration or lapse of such insurance coverage, evidence reasonably satisfactory to the Requisite Global Majority of renewal or replacement coverage.  The Manager shall use its commercially reasonable efforts to have each insurer agree, by endorsement upon the policy or policies issued by it or by independent instrument furnished to the Indenture Trustee, that (i) it will give each additional insured and the loss payee thirty (30) days prior written notice of the effective date of any material alteration, cancellation or non-renewal of such policy and (ii) in the event that the cancellation of such coverage would result in a breach of this Section 3.9 by the Manager, it will permit the Issuer and the Indenture Trustee at the direction and expense of the

 

5

 

Issuer to make payments to effect the continuation of coverage upon notice of cancellation due to nonpayment of premium.  Such insurance may be effected by a policy which covers the entire Container Fleet, which policy shall include an additional insured and loss payee endorsement with respect to the Managed Containers in favor of the Indenture Trustee, for the benefit of the Noteholders.

 

3.10                        Books and Records; Inspection of Books and Records; Inspection of Managed Containers; Back-up Data Tape.

 

3.10.1              The Manager shall maintain at its offices (which, as of the Closing Date, are located at 100 Manhattanville Road, Purchase, New York 10577-2135 USA), such books and records (including computer records) with respect to the Managed Containers as it maintains for the Container Fleet and the leasing thereof, including a computer database including the Managed Containers (containing sufficient information to generate the List of Containers and the reports required to be delivered pursuant to this Agreement), any Lease Agreements relating thereto, their lessees (if on-hire) or location (if off-hire) and their Net Book Value.

 

3.10.2              The Manager shall make available to the Owner, the Indenture Trustee and the Transition Agent, for inspection and copying, its books, records and reports relating to the Managed Containers and copies of all Lease Agreements or other documents relating thereto, all in the format which the Manager uses for its own operations.  The Person(s) desiring to conduct any such inspection of the books, records and reports shall provide the Manager with not less than (i) five (5) Business Days notice if a Manager Default is not then continuing or (ii) one (1) Business Day’s notice if a Manager Default shall have occurred and is then continuing, and shall specify in such notice the matters to be addressed in such inspection.  All such inspections shall be conducted during normal business hours and shall not unreasonably disrupt the Manager’s business, and, subject to the foregoing, the Owner, Indenture Trustee or the Transition Agent, as applicable, will be permitted to discuss, with any Authorized Officer, Managing Officer or the Manager’s independent accountants, the affairs, finances and accounts of the Manager as they relate to the Managed Containers and this Agreement.  So long as no Manager Default, Early Amortization Event or Event of Default is continuing, the Manager shall pay the reasonable and documented costs and expenses incurred by such Person(s) in conducting not more than one such inspection in any calendar year; provided, however, that the Manager and the Transition Agent shall coordinate such that, so long as no Manager Default, Early Amortization Event or Event of Default is continuing, the Manager shall not be responsible for paying for more than one inspection in total per calendar year pursuant to this Section 3.10.2 and Section 8.3.6 hereof.  In addition, the Manager shall pay the reasonable and documented costs and expenses incurred by such Person(s) in conducting any such examinations during the continuation of any of a Manager Default, Early Amortization Event or Event of Default.

 

The Manager shall, subject to the terms of the related Lease Agreements and depot agreements, make the Managed Containers available for inspection to the Indenture Trustee and the Transition Agent; provided, however, that, so long as no Manager Default, Early Amortization Event or Event of Default is continuing, not more than one such inspection shall occur in any twelve month period.  So long as no Manager Default, Early Amortization Event or Event of Default is continuing, the Manager shall pay the reasonable and documented costs and expenses of such Persons in conducting not more than one such inspection in any calendar year.

 

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The Owner acknowledges that the Manager uses certain software under license from unrelated third parties and that the Manager shall grant the Owner, the Indenture Trustee and the Transition Agent access to the computer systems and data contained therein, but not copies of the software itself.

 

3.10.3              The Manager shall, in accordance with its then existing disaster recovery plan, deliver monthly (by the tenth (10th) Business Day of each month) to the Transition Agent electronic copy (the “Back-up Data Tape”) of the following information, with respect to each of the Managed Containers as of the last day of the immediately preceding month: (i) the Container Identification Number, (ii) if then on-lease, the name of the lessee and the date of the related Lease Agreement, (iii) if then off-lease, the name and location of the depot in which stored, and (iv) such other data as is described on Exhibit F hereto.  In addition, the Manager shall make the most recent Back-up Data Tape available to the Owner, the Indenture Trustee and the Control Party for any Series for inspection upon reasonable notice; provided, however, that, so long as no Manager Default, Early Amortization Event or Event of Default is continuing, not more than one such inspection shall be made in any calendar year.  During the continuation of any of a Manager Default, Early Amortization Event or Event of Default, the Manager shall pay the reasonable and documented costs and expenses incurred by such Person(s) in conducting all inspections made in accordance with the provisions of this Section 3.10.3.  Upon the termination of this Agreement pursuant to Section 9.2, the Manager shall deliver or authorize the Transition Agent to deliver to each of the Control Party for any Series, any applicable Person then acting as a back-up manager to the Manager, and to the Indenture Trustee, a copy of the most recent Back-up Data Tape containing information with respect to the Managed Containers as of such date.

 

3.11                        Back-up Management Agreement.

 

3.11.1              The Manager shall provide the Transition Agent with prompt written notice of the occurrence (but in any event such notice shall be delivered no later than five (5) Business Days after the Manager shall have received notice, or become aware of, any such occurrence) of any Back-up Manager Event.

 

3.11.2              Upon the receipt of the Manager Termination Notice, the Transition Agent shall seek to identify one or more potential replacement manager(s) acceptable to the Requisite Global Majority.  Upon receiving written notice from the Manager that a Back-up Manager Event has occurred, the Transition Agent shall solicit at least three (3) bids from prospective managers to act as a back-up manager to the Manager.  The Requisite Global Majority, in consultation with the Transition Agent, shall select the back-up manager (the “Back-up Manager”) from among the competing bidders.

 

3.11.3              Back-Up Management Agreement.  The Transition Agent shall, at the direction of the Requisite Global Majority, negotiate the terms and conditions of a back-up management agreement to be executed by the Issuer, the Back-up Manager and other relevant parties; provided, however, the final terms and conditions of any such back-up management agreement must be approved by the Requisite Global Majority.

 

3.11.4              Each of the Issuer and the Manager shall cooperate with the Transition Agent in performing its duties under this Section 3.11 and shall negotiate in good faith to

 

7

 

implement a Back-up Manager Agreement into the Transaction Documents.  The Manager will work with the Backup Manager to map and test data systems such that the Back-up Manager will be able to begin billing using the data in the Back Up Data Tape, which it will receive if the Manager is Terminated; provided, however, such mapping shall be blind mapping with no customer or fleet data provided unless a Manager Default shall have occurred and then be continuing.

 

3.12                        Liens.  The Manager agrees not to create, incur, assume or grant, or suffer to exist, directly or indirectly, any lien, security interest, pledge or hypothecation of any kind on or concerning the Managed Containers, the related Lease (to the extent related to a Managed Container), title thereto or any interest therein or in this Agreement to any Person other than the Owner, except for Permitted Encumbrances.  The Manager will promptly take or cause to be taken such actions as may be necessary to discharge any such lien that arises by, through or under the actions of the Manager in violation of this Section 3.12.

 

3.13                        Concentration Account and Payment Instructions.  The Manager shall maintain the Concentration Account.  The Manager shall instruct all lessees to submit all payments on the Leases directly to the Concentration Account (or to a post office box, a lockbox or Collection Account (as defined in the Intercreditor Agreement) from which the applicable payment items will be removed and, within one week after receipt, deposited in the Concentration Account).  The Manager shall not grant any lien or encumbrance in the Concentration Account or any Collection Account (as defined in the Intercreditor Agreement) to any Person other than the Lien created pursuant to the Intercreditor Agreement.

 

3.14                        Identification of Funds in the Concentration Account.  Weekly (or more frequently at the Manager’s option) beginning with the first full calendar week following the Closing Date, the Manager shall identify all Container Revenues, Sales Proceeds or Casualty Proceeds received in the Concentration Account during the preceding week as relating to either a Managed Container (including any advance payments of rentals for future Collection Periods) or another container managed by the Manager.  Any such Container Revenues, Sales Proceeds or Casualty Proceeds that have been identified as relating to a Managed Container shall be transferred by the Manager to the Trust Account in accordance with the procedures outlined in Section 5.1 hereof; provided, however, that Sales Proceeds resulting from the sale of the Containers and Leases sold at the direction of a Liquidating Series pursuant to Section 804(b) of the Indenture shall be remitted to the applicable Series Account pursuant to Section 302(d) of the Indenture.  Prior to such transfer to the Trust Account or (if applicable) appropriate Series Account, all Container Revenues, Sales Proceeds and Casualty Proceeds relating to a Managed Container received, or held by, the Manager shall be deemed to be held by the Manager in trust for the benefit of Indenture Trustee.

 

3.15                        Transfer of Funds Received by the Manager.  If, notwithstanding the payment instructions given by the Manager to a lessee in the monthly invoice, lease payments or other amounts in respect of the Managed Containers are received directly by the Manager, the Manager agrees to hold any such lease payments or other amounts in trust and, within two (2) Business Days after receipt, transmit and deliver to the Concentration Account (or a related post office box or lockbox), in the form received, all cash, checks and other instruments or writings for the payment of money so received by the Manager.

 

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3.16                        Time and Attention to Duties.  The Manager shall devote such time and attention to the performance of its duties hereunder as is reasonably necessary, it being understood that the Manager shall not be required to devote all of its time or attention to the performance of such duties, it being further understood that the Manager manages, and may in the future manage, containers other than the Managed Containers, either for third parties or for its own account, and may, as well, conduct business unrelated to managing containers.  Nothing in this Agreement shall be construed to prohibit the Manager from performing its obligations to owners of other containers or from engaging in such (or any other) business activity.

 

3.17                        OFAC.  The Manager shall not (i) in a manner which would violate the laws of the United States, other than pursuant to a license issued by OFAC, lease, or consent to any sublease of, any of the Managed Containers to any Person that is a Sanctioned Person; or (ii) derive any of its assets or operating income from investments in or transactions with any such Sanctioned Person.  The Manager will, immediately upon obtaining knowledge thereof, notify the Indenture Trustee and the Noteholder of the leasing, or subleasing, of a Managed Container to, or other use of a Managed Container by, a Sanctioned Person.  The Manager will allow each of the Indenture Trustee, the Deal Agent and each Noteholder to conduct, at the expense of the Issuer, on not more than one occasion during any twelve (12) month period and in conjunction with the examination referred to in the first paragraph of Section 3.10.2, an audit of the screening and monitoring process employed by the Manager to ensure compliance during the most recently completed twelve (12) month period with the laws, rules and regulations promulgated or imposed by OFAC.  The Manager will, immediately upon obtaining knowledge thereof, notify the Deal Agent of the leasing, or subleasing, of a Container to, or other use of a Container by, a Sanctioned Person.

 

Section 4.                                           Reporting Obligations of the Manager.

 

4.1                               Reports Due from the Manager.

 

4.1.1                     Financial Statements.  The Manager will maintain the Owner’s financial books and records and prepare the Owner’s financial statements.  The Manager will deliver to the Indenture Trustee and each Rating Agency all of the financial statements required to be delivered to the Indenture Trustee pursuant to Section 625 of the Indenture.  All such financial statements shall be prepared in accordance with GAAP, subject to, in the case of unaudited financial statements, the absence of footnotes, and in the quarterly financial statements, the absence of year-end adjustments.

 

4.1.2                     Manager Reports.  On or prior to each Determination Date, the Manager shall deliver to the Owner, the Transition Agent, the Indenture Trustee and each Hedge Counterparty, a report as to deposits into and instructions for payments out of the Trust Account, Excess Funding Account, each Series Account and each Restricted Cash Account, substantially in the form of Exhibit A hereto (each such report, the “Manager Report”), which report shall be certified by the chief financial officer, controller, treasurer or other financial officer of the Manager with primary responsibility for matters arising under this Agreement or another authorized signatory acceptable to the Requisite Global Majority.  Each such Manager Report shall also include (a) evidence of the Manager’s compliance with any financial covenants set forth in Section 9 hereof and compliance with each of the financial covenants and other tests the

 

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failure of which would trigger a Series Specific Manager Default or Back-up Manager Event, which calculations shall be based on the most recently certified quarterly financial information, (b) accounts receivable agings, (c) top-25 lessee concentrations, (d) a listing of the number and type of Managed Containers then owned by the Issuer, (e) the Aggregate Net Book Value of the Managed Containers, (f) the aggregate original cost of the Managed Containers, (g) utilization rates for both the Managed Containers and the Container Fleet, (h) other information regarding the Container Fleet upon the reasonable request of the Requisite Global Majority or the Indenture Trustee, and (i) the calculations required to demonstrate compliance by the Issuer with any applicable Early Amortization Event or any applicable Series Specific Early Amortization Event.

 

4.1.3                     Asset Base Certificates.  On or prior to (i) each Determination Date, and (ii) each date on which an advance of funds to the Issuer is to be made in accordance with the terms of a Supplement, the Manager will deliver to the Owner and the Indenture Trustee, an Asset Base Certificate certified by the chief financial officer, controller, treasurer or other financial officer of the Manager with primary responsibility for matters arising under this Agreement or another authorized signatory acceptable to the Requisite Global Majority as of the end of the month most recently ended.

 

4.1.4                     Evidence of Insurance.  The Manager will provide confirmation of the renewal of the insurance required by Section 3.9 hereof annually before the expiration date of such insurance each year, and will forward copies of all certificates evidencing renewal, and all notices of termination or non-renewal of such insurance, to the Indenture Trustee and the Transition Agent promptly after receipt.

 

4.1.5                     Lessees in Container Fleet; Other Reports.  Within one hundred twenty (120) days after the end of each fiscal year of the Manager, the Manager shall send to the Indenture Trustee and the Transition Agent listing of all Lessees in the Container Fleet.  The Manager shall provide, in the format which the Manager uses for its own operations, any reports filed by the Manager with the Securities and Exchange Commission and any other reports and information which are reasonably requested by the Owner, the Indenture Trustee, the Transition Agent, each Hedge Counterparty or the Rating Agencies provided that such reports and information are reasonably available from the books and records of the Owner and can be generated by the Manager’s then existing data processing system.

 

4.1.6                     Independent Accountant’s Report.  The Manager shall, at its sole cost and expense, deliver to the Issuer and the Indenture Trustee a report from a firm of nationally recognized independent certified public accountants, who may also render other services to TAL International Group or any of its affiliates, on or before May 30th of each year (or 150 days after the end of the Manager’s fiscal year, if other than December 31st of each year), beginning on May 30, 2013, with respect to the twelve months ended on the preceding December 31 (or other applicable fiscal year-end date) (or such other period as shall have elapsed from the Closing Date to the date of such statement), a report (the “Accountants’ Report”) addressed to the Board of Directors of TAL International Group, to the effect that such firm of accountants has audited the books and records of TAL International Group, and issued its report thereon in connection with the audit report on the consolidated financial statements of TAL International Group and (1) such audit was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as such firm

 

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considered necessary in the circumstances; (2) the firm is independent of TAL International Group within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants; and (3) specifies the results of the application of such agreed upon procedures, as the Requisite Global Majority shall reasonably agree from time to time, relating to (i) maintenance of the separateness of the Issuer for bankruptcy remoteness purposes and (ii) three selected Manager Reports and Asset Base Certificates delivered during the preceding year, to achieve the objectives specified on Exhibit D hereto.

 

4.1.7                     Interest Rate Hedge Agreements.  When required by Section 628 of the Indenture and a Series Supplement, the Manager shall arrange for the Owner to enter into Interest Rate Hedge Agreements (which Interest Rate Hedge Agreements must be in form and substance reasonably satisfactory to the Requisite Global Majority) that comply with the provisions of that Section and a Series Supplement.

 

4.1.8                     Back-up Data Tape.  The Manager shall deliver the Back-up Data Tape in accordance with the provisions of Section 3.10.3 hereof.

 

4.2                               Manager Advances.  The Manager may, at its option, remit to the Trust Account by 1:00 p.m. New York time on each Determination Date, an amount of funds (a “Manager Advance”); provided, that (A) the Manager deems such Manager Advance to be recoverable from delinquent rental and other payments owing with respect to the Leases of the Managed Containers and (B) unless otherwise consented to in writing in each instance by the Indenture Trustee (acting at the direction of the Requisite Global Majority), the aggregate amount of all Manager Advances outstanding at any time shall not exceed fifty percent (50%) of the outstanding balance of all Lease receivables which are less than ninety (90) days delinquent.  An allocated portion of unreimbursed Manager Advances shall be paid to the Manager on each Payment Date from funds on deposit in each Series Account in accordance with the priority of payments for such Series.

 

Section 5.                                           Deposits to Trust Account; Payment of Management Fee.

 

5.1                               Deposits.

 

5.1.1                     Weekly Deposits to Trust Account.  On or before the last Business Day in New York of each calendar week beginning with the first full calendar week following the week of the Closing Date, the Manager shall cause to be transferred from the Concentration Account to the Trust Account an amount equal to the excess (if any) of (x) the sum of (A) the Manager’s good faith estimate of the Container Revenues for the Managed Containers received during the immediately preceding calendar week (including any customer advance payments) and (B) subject to Section 302(b) of the Indenture, the Manager’s good faith estimate of the Sales Proceeds and Casualty Proceeds received during the immediately preceding calendar week, over (y) the Manager’s good faith estimate of Direct Operating Expenses for the Managed Containers accrued during the immediately preceding calendar week (the excess of (x) over (y), the “Estimated Net Operating Income”).  Prior to such transfer or deposit, all Container Revenues, Sales Proceeds and Casualty Proceeds received, or held by, the Manager with respect to the Managed Containers shall be deemed to be held by the Manager in trust for the benefit of the Indenture Trustee.

 

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On or before each Determination Date, the Manager shall determine the excess (if any) of (x) the aggregate amount of Container Revenues, Sales Proceeds and Casualty Proceeds for the Managed Containers actually received during the immediately preceding Collection Period over (y) the aggregate amount of Direct Operating Expenses accrued during such Collection Period and to be paid in the current or a subsequent Collection Period (the excess of (x) over (y), the “Actual Net Operating Income”).  If the Actual Net Operating Income for such Collection Period exceeds the Estimated Net Operating Income for such Collection Period, then the Manager will cause to be transferred from the Concentration Account to the Trust Account on such Determination Date funds in an amount equal to such excess.  However, if the Estimated Net Operating Income for such Collection Period exceeds the Actual Net Operating Income for such Collection Period, then the Manager shall indicate so on that month’s Manager Report and the amount of such excess allocable to a Series (such excess, the “Excess Deposit”) will be distributed to the Manager on the immediately succeeding Payment Date from amounts on deposit in the Series Account for such Series.

 

5.2                               Compensation of Manager.

 

5.2.1                     Management Fee.  As compensation to the Manager for the performance of its services hereunder, the Owner shall pay to the Manager a Management Fee for each Series of Notes then Outstanding.  Such Management Fee shall be set forth in the Supplement for each such Series of Notes and shall be paid for the immediately preceding Collection Period in arrears on each Payment Date (or, in the case of the first payment of the Management Fee, for the payment thereof, commencing on the Closing Date).  The allocated Management Fee for each Series of Notes shall be payable to the Manager (to the extent not previously withheld in accordance with the terms hereof) from amounts on deposit in each Series Account to the extent monies are available for the payment thereof in accordance with the provisions of the related Supplement; provided, however, that, as long as no Manager Default shall have occurred and been continuing for thirty (30) days, the Manager shall be entitled to withhold in advance, at periodic intervals more frequent than each Payment Date, an estimate of the Management Fee payable for all Series of Notes owing to the Manager for such interval from the actual Container Revenues, Sales Proceeds or Casualty Proceeds received by it from lessees or sublessees.  For the sake of clarity, to the extent the Manager has withheld amounts from the actual Container Revenues, Sales Proceeds or Casualty Proceeds received by it from lessees or sublessees, then such amounts shall be deducted from the Management Fee owing to the Manager from the Owner hereunder.  On each Payment Date, the Manager and the Owner shall determine whether the amounts actually paid to or withheld by the Manager during the preceding calendar month pursuant to the terms of this Section 5.2.1 accord with the Management Fee owing under this Agreement and the Supplement for each Series of Notes then Outstanding for such month and shall arrange that any excess or deficiency promptly be corrected (i.e., in the case of an overpayment to the Manager, the Manager shall promptly repay such overpayment, and in the case of an underpayment to the Manager such underpayment shall be added to the Management Fee payable to the Manager on such Payment Date). Upon any resignation or termination of the Manager in accordance with the terms of this Agreement and the other Transaction Documents, such resigning or terminated Manager shall not be entitled to receive any Management Fee accruing on or after the effective date of such termination or resignation and such resigning or terminated Manager shall immediately remit to the Trust Account any portion of the Management Fee deducted in advance by such resigning or terminated Manager which did not

 

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accrue as of the date following such termination or resignation on which a replacement Manager has assumed the responsibilities of the resigning or terminated Manager.

 

5.2.2                     Business Day.  Notwithstanding anything to the contrary contained herein, if any date on which a payment becomes due hereunder is not a Business Day, then such payment may be made on the next succeeding Business Day with the same force and effect as if made on such scheduled date.

 

5.2.3                     No Set-Off, Counterclaim, etc.  The Manager’s obligation under this Agreement to transfer to or to deposit any amount to the Trust Account shall (subject to the withholding of the Management Fee as contemplated by Section 5.2.1 hereof) be absolute and unconditional and all payments thereof shall be made free and clear of and without any deduction for or on account of any set-off or counterclaim or any circumstance, recoupment, defense or other right which the Manager may have against the Owner or any other Person for any reason whatsoever (whether in connection with the transactions contemplated hereby or any other transactions), including without limitation, (i) any defect in title, condition, design or fitness for use, of, or any damage to or loss or destruction of, any Managed Container, (ii) any insolvency, bankruptcy, moratorium, reorganization or similar proceeding by or against the Manager or any other Person, or (iii) any other circumstance, happening or event whatsoever, whether or not unforeseen or similar to any of the foregoing.

 

5.2.4                     Manner of Payment.  All payments hereunder shall be made in United States Dollars by wire transfer of immediately available funds prior to 2:00 P.M. prevailing Eastern Time, on the date of payment.

 

Section 6.                                           Term.

 

6.1.1                     Term.  The Term of this Agreement shall commence on the date hereof and shall end on the date on which all Outstanding Obligations have been repaid, unless earlier terminated in accordance with the provisions hereof.

 

6.1.2                     Resignation by Manager.  The Manager may not resign from its obligations and duties as Manager hereunder, except (i) with the prior written consent of Owner and the Requisite Global Majority or (ii) upon a determination by the Manager that the performance by Manager of its duties under this Agreement is no longer permissible under Applicable Law, which determination shall be evidenced by an Opinion of Counsel, in form and substance reasonably satisfactory to Owner and the Requisite Global Majority, to such effect delivered to the Indenture Trustee and the Transition Agent.  No such resignation shall, to the extent consistent with Applicable Law, become effective until a replacement Manager has assumed the responsibilities of the resigning Manager in accordance with the terms of this Agreement, Section 405 of the Indenture and the other Transaction Documents.

 

Section 7.                                           Intercreditor Agreement.

 

(a)                                 TAL will use commercially reasonable efforts to join the Issuer and the Indenture Trustee as parties to the Intercreditor Agreement.

 

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(b)                                 To the extent that neither the Indenture nor this Agreement is considered to be an “Equipment Loan Agreement” within the meaning of the Intercreditor Agreement, the Manager hereby extends to the Owner and the Indenture Trustee the benefit of the same covenants and rights set forth in Section 5 of the Intercreditor Agreement.

 

Section 8.                                           Representations and Warranties; Covenants.

 

8.1                               Manager Representations.  The Manager represents and warrants to the Owner and the Indenture Trustee on the Closing Date and each Series Issuance Date that:

 

8.1.1                     The Manager is a corporation duly organized and validly existing under the laws of the State of Delaware and is duly qualified and is authorized to do business and is in good standing (or its equivalent) in all jurisdictions where it is required by Applicable Law to be so qualified (or its equivalent) and has all licenses, permits, charters and registrations necessary for the operation of its container management business, except for any such jurisdiction where the failure to be so qualified or for any licenses the failure to hold which, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

8.1.2                     The Manager has the requisite power and authority to enter into and perform its obligations under this Agreement, and all requisite corporate authorizations have been given for it to enter into this Agreement and to perform all the matters envisaged hereby, this Agreement has been duly executed and delivered and constitutes the valid, legally binding and enforceable obligation of the Manager, subject to bankruptcy, insolvency, moratorium, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

 

8.1.3                     The Manager has not breached its certificate of incorporation or by-laws or any other agreement to which it is a party or by which it is bound in the course of conduct of its business and corporate affairs and has not breached any applicable laws and regulations, except for such breaches which would not have a materially adverse effect on the Manager’s ability to perform its obligations under this Agreement.

 

8.1.4                     There are no Proceedings or investigations to which the Manager or any of its Affiliates is a party pending or, to the Manager’s knowledge, threatened, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality (A) asserting the invalidity of this Agreement or any other Transaction Document, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document or (C) seeking any determination or ruling that is reasonably likely to materially and adversely affect the performance by the Manager of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document to which it is a party.

 

8.1.5                     The execution, delivery and performance of the transactions contemplated by and the fulfillment of the terms of this Agreement and the other Transaction Documents will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the organizational documents of the Manager, or any material term of any indenture, agreement, mortgage, deed of trust, or other

 

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instrument to which Manager is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust, or other instrument, or violate any law or any order, rule, or regulation applicable to Manager of any court or of any federal or state regulatory body, administrative agency, or other Governmental Authority having jurisdiction over Manager or any of its properties, in each case, other than any conflict, breach, default, Lien, or violation that would not reasonably be expected to result in a Material Adverse Change.

 

8.1.6                     The Manager shall take all actions as may be necessary to perform the Issuer’s obligations under Section 604 of the Indenture.

 

8.1.7                     The Manager will fulfill all of its obligations as lessor under any Lease Agreement to which a Managed Container is subject except where any such nonfulfillment would not reasonably be expected to materially and adversely affect the rights of the Owner under such Lease.  The Manager shall use commercially reasonable efforts to perform all of the Owner’s duties and obligations under the Transaction Documents to which the Owner is a party; provided, however, that nothing contained herein shall be construed as an express or implied guaranty by the Manager of the Notes or any other Outstanding Obligation incurred by the Owner.

 

8.1.8                     Promptly, but in any case within seven (7) Business Days of an Authorized Officer becoming aware of a Manager Default, Early Amortization Event or an Event of Default, and which, in each case, has not been waived in writing by the Requisite Global Majority, the Manager shall deliver to the Owner, the Transition Agent and the Indenture Trustee a written notice describing the nature of such event and period of existence and, in the case of a Manager Default, the action the Manager is taking or proposed to take with respect thereto.

 

8.1.9                     Since the date of the most audited financial statements of TAL International Group delivered pursuant to Section 625 of the Indenture, there has been no Material Adverse Change in the financial condition of the Manager.

 

8.1.10              The Manager will operate the Managed Containers so as not knowingly  cause a violation of the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)).  Furthermore, none of the Manager or its Affiliates (i) is or will become a “blocked person” as described in the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or (ii) engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person.”

 

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8.1.11              The credit and collection policy used by the Manager as in effect on the Closing Date (which policy also addresses the criteria under which a lessee is allowed to self-insure for property and liability risks) is attached as Exhibit C hereto.  The credit and collection policy used by the Manager is subject to modification from time to time at the discretion of the Manager.  The “Credit and Collection Policy” shall mean the credit and collection policy used by the Manager as modified by the Manager from time to time.

 

8.1.12              The depreciation policy as in effect on the Closing Date used in the calculation of the Asset Base for the purposes of the Transaction Documents is attached as Exhibit E hereto.

 

8.2                               Owner Representations.  The Owner represents and warrants to the Manager:

 

8.2.1                     The Owner is a limited liability company duly organized and validly existing under the laws of Delaware;

 

8.2.2                     The Owner has the requisite power and authority to enter into and perform its obligations under this Agreement and all requisite limited liability company authorizations have been given for it to enter into this Agreement and to perform all the matters envisaged hereby, this Agreement has been duly executed and delivered by the Owner and constitutes the valid, legally binding and enforceable obligation of the Owner, subject to bankruptcy, insolvency, moratorium, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles; and

 

8.2.3                     The Owner has not breached its limited liability company agreement or any other agreement to which it is a party or by which it is bound in the course of conduct of its business and corporate affairs and has not breached any applicable laws and regulations of Delaware in such manner as would in any case have a materially adverse effect on its ability to perform its obligations under this Agreement.

 

8.2.4                     Since its formation, there has been no Material Adverse Change in the financial condition of the Owner.

 

8.3                               Covenants of the Manager.

 

8.3.1                     Location of Books and Records.  The Manager shall not change the location at which the Owner’s books and records are maintained unless (i) the Manager shall have given the Indenture Trustee and the Transition Agent at least thirty (30) days prior written notice thereof and (ii) the Manager shall cause to be filed any necessary registration of charges or documents of similar import necessary to continue the Indenture Trustee’s security interest in the Collateral.

 

8.3.2                     Liens.  Except for the Lien created pursuant to the Contribution and Sale Agreement and Permitted Encumbrances: (a) Manager agrees not to create, incur, or grant, directly or indirectly, any lien, security interest, pledge or hypothecation of any kind on or concerning (i) its rights under this Agreement or (ii) the Managed Containers or any interest therein; and (b) Manager shall promptly take, or cause to be taken, such action as may be necessary to discharge any such lien arising by, through or under the Manager.

 

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8.3.3       UNIDROIT Convention.  The Manager will comply with the terms and provisions of the UNIDROIT Convention on International Interests in Mobile Equipment or any other internationally recognized system for recording interests in or liens against shipping containers at the time that such convention is adopted for containers.

 

8.3.4       Identification of Gross Lease Revenues and Direct Operating Expense; Transfer of Gross Lease Revenues.  The Manager will establish and maintain such procedures as are necessary for determining and for identifying Container Revenues and Direct Operating Expenses to a specific Managed Container.  Notwithstanding the foregoing, Manager shall have the right to allocate various indirect overhead expenses among containers in the Container Fleet (including the Managed Containers) in any way it deems appropriate as long as such allocation is non-discriminatory, fair and equitable, after giving due recognition to the cost, age and other factors relevant to the Managed Containers as compared to other containers in the Container Fleet.

 

8.3.5       Compliance with Credit and Collection Policy.  The Manager will comply in all material respects with the Credit and Collection Policy in regard to the origination of, and amendments and modifications to, Leases of Managed Containers.  The Manager shall not amend the Credit and Collection Policy in any respect which would materially and adversely affect the Noteholders without the prior written consent of the Requisite Global Majority in each instance.  The Manager shall promptly provide the Owner, the Transition Agent and the Indenture Trustee with a copy of all amendments to the Credit and Collection Policy.

 

8.3.6       Inspections.  The Manager shall, upon reasonable prior notice, allow the Indenture Trustee, the Transition Agent and each Hedge Counterparty to inspect, under guidance of officers of the Manager, the Manager’s facilities during normal business hours; provided, however, that unless an Event of Default or a Manager Default shall have occurred and then be continuing, the Indenture Trustee, the Transition Agent and the Interest Rate Hedge Counterparties may request, in the aggregate, only one inspection during any twelve-month period.  So long as no Manager Default, Early Amortization Event or Event of Default is continuing, the Manager shall pay the reasonable and documented costs and expenses incurred by such Person(s) in conducting not more than one such inspection in any calendar year; provided, however, that the Manager and such designee selected by the Requisite Global Majority shall coordinate such that, so long as no Manager Default, Early Amortization Event or Event of Default is continuing, the Manager shall not be responsible for paying for more than one inspection in total per calendar year pursuant to this Section 8.3.6 and Section 3.10 hereof.  In addition, the Manager shall pay the reasonable and documented costs and expenses incurred by such Person(s) in conducting any such examinations during the continuation of any of a Manager Default, Early Amortization Event or Event of Default.

 

8.3.7       Container Management System.  Without the prior written consent of the Indenture Trustee, acting at the direction of the Requisite Global Majority, the Manager agrees that it will not grant to any Person, or permit any Person to obtain, a Lien (other than items listed in clauses (i), (ii), (iii), (iv) or (v) of the definition of Permitted Encumbrance (as determined as though the Container Management System were deemed “Collateral” for the purposes of the definition of Permitted Encumbrance)) over the Container Management System.

 

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8.3.8       Rating Agency Notices.  Subject to the application of applicable law, the Manager shall promptly deliver a copy of any written notice concerning the Owner’s credit rating received by it from any Rating Agency to the Indenture Trustee and the Transition Agent.

 

Section 9.              Manager Default.

 

9.1          Manager Default.  Each of the following is a Manager Default (and each of the events described in Sections 9.1.1 through 9.1.11 is a “Trust Manager Default”):

 

9.1.1       The Manager shall fail to make any deposits of Container Revenues, Sales Proceeds, Casualty Proceeds or any other amounts due and payable under this Agreement to the Trust Account within one (1) Business Day after the date such deposit is due; provided, that if such failure to make a deposit shall result from administrative failure beyond the control of the Manager, the Manager shall have two (2) additional Business Days to cure such failure before such failure shall constitute a Manager Default.

 

9.1.2       The Manager shall fail (A) to deliver any report required to be delivered to the Indenture Trustee pursuant to the terms of Sections 4.1.2 or 4.1.3 hereof such failure shall continue unremedied for three (3) Business Days or (B) in any material respect to perform the covenant of the Manager to deliver financial statements set forth in the second sentence of Section 4.1.1 and such failure shall continue unremedied for thirty (30) days after the earlier of the date (x) on which there has been given to the Manager, by the Indenture Trustee, the Transition Agent or any Noteholder, a written notice specifying such default or breach and requiring it to be remedied and (y) on which any Authorized Officer of the Manager shall have knowledge of such default or breach;  provided, however, that (x) if the reason for such failure is primarily attributable to changes in accounting principles or interpretations or the application of the same, (y) such changes are not related to the assets of the Issuer and (z) no Series Specific Manager Default then exists, then such failure shall not constitute a Manager Default under this Section 9.1.2(B) unless such failure materially and adversely affects the interests of any Noteholder;

 

9.1.3       The Manager shall fail to (A) deliver any report required to be delivered to the Indenture Trustee pursuant to the terms hereof or of any other Transaction Document (which is not otherwise addressed in Section 9.1.2) and such failure shall continue unremedied for thirty (30) days, or (B) perform or observe, or cause to be performed or observed, in any material respect any other covenant or agreement contained herein or in any other Transaction Document (including in its capacity as Seller) (which is not otherwise addressed in this Section 9.1), which failure materially and adversely affects the interests of the Noteholders, and such failure, if capable of remedy, shall continue unremedied for a period of thirty (30) days after earlier of the date (x) on which there has been given to the Manager, by the Indenture Trustee, the Transition Agent or any Noteholder, a written notice specifying such default or breach and requiring it to be remedied and (y) on which any Authorized Officer of the Manager shall have knowledge of such default or breach.

 

9.1.4       Any representation or warranty made by the Manager in this Agreement or any other Transaction Document (including in its capacity as Seller), or in any certificate, report or financial statement delivered by it pursuant hereto or thereto proves to have been untrue in any

 

18

 

material respect when made, such breach materially and adversely affects the interests of the Noteholders, and such breach, if capable of remedy, shall continue unremedied for a period of thirty (30) days after the earlier of the date (x) on which there has been given to the Manager, by the Indenture Trustee, the Transition Agent or any Noteholder, a written notice specifying such default or breach and requiring it to be remedied and (y) on which any Authorized Officer of the Manager shall have knowledge of such default or breach.

 

9.1.5       TAL ceases to be engaged in the container leasing or management business.

 

9.1.6       The Manager shall commence a voluntary case concerning itself under the Bankruptcy Code; or an involuntary case is commenced against the Manager or any of its Subsidiaries and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Manager; or the Manager commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Manager and such proceeding remains undismissed for a period of 60 days; or the Manager is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Manager suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Manager makes a general assignment for the benefit of creditors; or any action is taken by the Manager for the purpose of effecting any of the foregoing;

 

9.1.7       Except as permitted by Sections 2 and 13 hereof, Manager assigns or attempts to assign its interest under this Agreement.

 

9.1.8       Any of the Manager, TAL International Group, the Borrower (as such term is defined in the Credit Agreement) or any Restricted Subsidiary (as such term is defined in the Credit Agreement) fails to make any payment when due (beyond the applicable grace or cure period with respect thereto, if any) or defaults in the observance or performance (beyond the applicable grace or cure period with respect thereto, if any) of any payment obligation, or any other agreement or covenant with respect to the Indebtedness that, individually or in the aggregate for all such Persons, exceeds Twenty Million Dollars ($20,000,000) and, such condition is not remedied by a permanent and unconditional cure or waiver of such default within thirty (30) days.

 

9.1.9       One or more judgments or decrees shall be entered against TAL International Group, the Borrower (as such term is defined in the Credit Agreement) or any of its Restricted Subsidiaries (as such term is defined in the Credit Agreement) (other than a Special Purpose Vehicle (as such term is defined in the Credit Agreement)) involving a liability (to the extent not paid when due or covered by a reputable and solvent insurance company (with any portion of any judgment or decree not so covered to be included in any determination hereunder)) equal to or in excess of Twenty Million Dollars ($20,000,000) for all such judgments and decrees and all such judgments or decrees shall either be final and non-appealable or shall

 

19

 

not have been vacated, discharged or stayed or bonded pending appeal for any period of 30 consecutive days.

 

9.1.10     This Agreement shall at any time cease to be the legal, valid and binding obligation of the Manager, enforceable in accordance with its terms.

 

9.1.11     The Manager shall fail to deliver to the Transition Agent the Back-up Data File in accordance with Section 3.10.3 hereof, and such failure, if capable of remedy, shall continue unremedied for a period of three (3) days after earlier of the date (x) on which there has been given to the Manager, by the Indenture Trustee, the Transition Agent or any Noteholder, a written notice specifying such default or breach and requiring it to be remedied and (y) on which any Authorized Officer of the Manager shall have knowledge of such default or breach.

 

9.1.12     The occurrence of any other event or condition specified as an additional Manager Default in a Supplement for any Series of Notes then Outstanding (each, a “Series Specific Manager Default”), which Series Specific Manager Default continues beyond any grace and/or cure period set forth in the related Supplement or which has not been waived by the Control Party for such Series in accordance with (and within the timeframes specified in) the related Supplement.

 

The occurrence of a Trust Manager Default shall constitute an “Actionable Default” under the Intercreditor Agreement for so long as such Trust Manager Default is continuing.  A Series Specific Manager Default may be waived in a written instrument by the Control Party for the related Series in accordance with the terms of such Supplement.  All Manager Defaults other than a Series Specific Manager Default may be waived in a written instrument executed by the Requisite Global Majority in each such instance.  Any such waiver of a Trust Manager Default or Series Specific Manager Default, as the case may be, shall not be construed as a waiver of any subsequent Trust Manager Default or Series Specific Manager Default.  No delay by the Requisite Global Majority or applicable Control Party, as the case may be, shall constitute any such waiver or prejudice the Requisite Global Majority or Control Party, as the case may be, in exercising any right, power or privilege arising out of such Trust Manager Default or Series Specific Manager Default.

 

9.2          Remedies.  If a Trust Manager Default shall have occurred and be continuing, and any Notes are then Outstanding, the Indenture Trustee, acting at the direction of the Requisite Global Majority and in the Requisite Global Majority’s discretion, shall have the right (upon written notice (a “Manager Termination Notice”) to the Manager, the Issuer, the Transition Agent and the Rating Agencies), in addition to other rights or remedies that the Issuer or its assignee may have under any Applicable Law or in equity to: (i) terminate this Agreement, (ii) appoint a replacement Manager selected by the Requisite Global Majority to manage the Managed Containers, (iii) take control of the Managed Containers wherever located, subject to the rights of lessees under Lease Agreements to which any of the Managed Containers shall at the time be subject or to appoint a replacement Manager to manage the Managed Containers, (iv) appoint an independent auditor of national reputation and mutually acceptable to the Issuer and the Requisite Global Majority (the “Verification Auditor”) to verify that all prior Manager Reports and Asset Base Certificates prepared by the Manager are in accordance with this Agreement and/or (v) exercise any other remedies specifically set forth in this Agreement, the

 

20

 

Indenture and the other Related Documents that are exercisable while a Manager Default is continuing.  Notwithstanding such termination, until the Manager is notified of the appointment of a replacement manager and the replacement manager has assumed such responsibility, the Manager shall (i) continue to manage the Managed Containers and the Owner’s business, and deposit into the Trust Account or (if applicable) appropriate Series Account all Container Revenues, Sales Proceeds, Casualty Proceeds and other amounts, and submit all reports due hereunder and perform all other services required hereunder, all in accordance with this Agreement and (ii) not make any disbursement of funds from the Concentration Accounts (whether to the Owner or any other Person) until the Verification Auditor has verified the allocation of such amounts.

 

9.3          Transfer of Managed Containers.  Upon any termination of this Agreement pursuant to Section 9.2, the Manager shall cooperate with the Owner, the Indenture Trustee, the Transition Agent and the Requisite Global Majority in transferring management of the Managed Containers as provided in the Indenture, including, but not limited to making available all books and records (including computer systems and data contained therein) pertaining to the Manager’s activities hereunder, providing access to, and cooperating in the transfer of, information from the Manager’s computer system to the Owner’s or its designee’s system, promptly notifying lessees of the termination of management of the Managed Containers by the Manager and assumption of management by the Owner or its designee, depositing funds belonging to the Owner but not yet in the Trust Account to such account as designated by the Owner or its assignee, executing assignments of interests in Lease Agreements pertaining to the Managed Containers and taking any other action as may be reasonably requested by the Owner or its assignee to ensure the orderly assumption of management of the Managed Containers by the Owner or its designee.  During such transition period, the outgoing Manager shall continue to provide notices pursuant to Section 8.1.8 and Section 6.19 of the Indenture that relate to occurrences of which it is aware.

 

9.4          Power of Attorney.  The Manager hereby irrevocably constitutes and appoints the Indenture Trustee, with full power of substitution (such appointment being coupled with an interest), as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Manager and in the name of the Manager or in its own name, for the purpose of carrying out the terms of this Agreement, to take (subject to the limitations set forth below) any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, the Manager hereby gives the Indenture Trustee the power and right, on behalf of the Manager, without notice to or assent by the Manager (subject to the limitation set forth below), to do any or all of the following:

 

(i)            So long as a Manager Default has occurred and is continuing and a Manager Termination Notice has been delivered in accordance with the terms hereof, at any time, in the name of the Manager or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instrument, general intangible or contract or any other Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Indenture Trustee, the Transition Agent for the purpose of collecting any and all such moneys due under any account, instrument, general intangible or contract with respect to the Managed Containers and the other Collateral whenever payable;

 

21

 

(ii)           So long as a Manager Default has occurred and is continuing and a Manager Termination Notice has been delivered in accordance with the terms hereof, at any time, to enter and use the premises of the Manager and make use of the Manager’s computer database, software system and all other books and records relating to the Managed Containers and the other Collateral.  The Manager hereby grants, and agrees to grant from time to time, to the Indenture Trustee a non-exclusive royalty-free license (such license not to be exercised until, and only so long as, a Manager Default has occurred and is continuing and a Manager Termination Notice has been delivered in accordance with the terms hereof) of all its intellectual property rights arising in connection with the software system used by the Manager in connection with the Managed Containers, such license to be irrevocable until the later of (a) the last date on which any Note was Outstanding or (b) the date on which all amounts owed to the Indenture Trustee and the Noteholders pursuant to the terms of the Indenture and the related Enhancement Agreement shall have been paid in full, subject, in the case of intellectual property rights held under license by the Manager, to the prior consent of the relevant licensor, if required, which consent the Manager undertakes to use its reasonable efforts forthwith to obtain at its own expense on terms reasonably acceptable to the Indenture Trustee so long as a Manager Default has occurred and is continuing and a Manager Termination Notice has been delivered in accordance with the terms hereof; and

 

(iii)          So long as an Event of Default or Manager Default has not occurred, upon the failure of the Manager to comply with the provisions of Section 8.1.6 (and so long as an Event of Default or Manager Default has occurred, whether or not the Manager has complied with the provisions of Section 8.1.6), to execute and deliver those agreements, instruments, documents and papers (including, without limitation, deeds of trust) as the Manager may otherwise be required to file in accordance with the provisions of Section 8.1.6 hereof; provided, however, that the Indenture Trustee shall not be obligated to execute, deliver, authorize or file any such agreements, instruments, documents or papers except upon written instruction from the Manager or Owner.

 

The Manager hereby ratifies and confirms and agrees to ratify and confirm whatever any such attorney shall do or propose to do in the exercise or purported exercise of all or any of the powers, authorities and discretion referred to in this Section.

 

9.5          Owner Power of Attorney.  The Owner hereby irrevocably constitutes and appoints the Indenture Trustee, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Owner and in the name of the Owner or in its own name, for the purpose of carrying out the terms of this Agreement and the other Transaction Documents to which the Owner is a party, to take (subject to the limitations set forth below) any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, the Owner hereby gives the Indenture Trustee the power and right, on behalf of the Owner, without notice to or assent by the Owner (subject to the limitation set forth below), to do any or all of the following:

 

(i)            So long as a Manager Default has occurred and is continuing and a Manager Termination Notice has been delivered in accordance with the terms hereof, at any time, in the name of the Owner or its own name, or otherwise, to take possession of and indorse

 

22

 

and collect any checks, drafts, notes, acceptances or other instrument, general intangible or contract or any other Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Indenture Trustee for the purpose of collecting any and all such moneys due under any account, instrument, general intangible or contract with respect to the Managed Containers and the other Collateral whenever payable;

 

(ii)           So long as an Event of Default or Manager Default has occurred and is continuing, at any time, to enter and use the premises of the Owner and make use of the Owner’s computer database, software system and all other books and records relating to the Managed Containers and the other Collateral.  The Owner hereby grants, and agrees to grant from time to time, to the Indenture Trustee a non-exclusive royalty-free license (such license not to be exercised until, and only so long as, a Manager Default has occurred and is continuing and a Manager Termination Notice has been delivered in accordance with the terms hereof) of all its intellectual property rights arising in connection with the software system used by the Owner in connection with the Managed Containers, such license to be irrevocable until the last date on which any Note was Outstanding, subject, in the case of intellectual property rights held under license by the Owner, to the prior consent of the relevant licensor, if required, which consent the Owner undertakes to use its reasonable efforts forthwith to obtain at its own expense on terms reasonably acceptable to the Indenture Trustee and the Transition Agent; and

 

(iii)          So long as an Event of Default or Manager Default has not occurred, upon the failure of the Manager to comply with the provisions of Section 8.1.6 (and so long as an Event of Default or Manager Default has occurred, whether or not the Manager has complied with the provisions of Section 8.1.6), to execute and deliver those agreements, instruments, documents and papers (including, without limitation, deeds of trust) as the Owner (or the Manager, on behalf of the Owner) may otherwise be required to file in accordance with the provisions of Section 8.1.6 hereof or in accordance with Section 604 of the Indenture; provided, however, that the Indenture Trustee shall not be obligated to execute, deliver, authorize or file any such agreements, instruments, documents or papers except upon written instruction from the Manager or Owner.

 

Section 10.            No Partnership.

 

Except as otherwise provided herein, the Manager’s activities taken on behalf of the Owner hereunder will be taken solely as manager of the Managed Containers.  The parties hereto expressly recognize and acknowledge that this Agreement is not intended to create a partnership, joint venture or other entity between the Manager and the Owner.

 

Section 11.            No Warranties.

 

THE MANAGED CONTAINERS ARE BEING DELIVERED BY THE OWNER TO THE MANAGER “AS IS”.  THE OWNER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE MANAGED CONTAINERS, THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF OBLIGATIONS BASED ON

 

23

 

STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED.

 

Section 12.            Non-Exclusivity.

 

During the term of this Agreement, the Manager may provide container, management, sales, leasing or remarketing services directly or indirectly to any other Person or on behalf of any other Person.

 

Section 13.            Assignment.

 

This Agreement, and the rights and duties of the Manager hereunder, may not be assigned by the Manager to any other Person without the prior written consent of the Owner and the Indenture Trustee (acting at the direction of the Requisite Global Majority).  The Owner may charge, assign, pledge or hypothecate its rights (but not its obligations) under this Agreement as provided herein.  The Manager hereby acknowledges that the Owner shall pledge all of its rights, title and interest under this Agreement to the Indenture Trustee (for the benefit of the Noteholders), and the Manager hereby consents to such pledge.  The Manager will give any Rating Agency prior notice of any assignment effected pursuant to this Section 13.

 

Section 14.            Indemnification.

 

14.1        By the Owner.  The Owner, at its own expense, shall defend, indemnify and hold the Manager harmless from and against any and all claims, actions, damages, losses, liabilities, costs and expenses (including reasonable legal fees) (each, a “Claim”) incurred by or asserted against the Manager to the extent resulting or arising from the Manager’s performance of its obligations under this Agreement or from the Owner’s failure to comply with or perform its obligations under this Agreement, except for Claims which arise out of the Manager’s willful misconduct, or gross negligence, or failure to comply with or perform its obligations under this Agreement.  Manager subordinates its claims under this Section 14.1 to all claims which have priority in payment pursuant to the provisions of each Supplement for each Series of Notes then Outstanding.

 

14.2        By the Manager.

 

14.2.1     The Manager, in its capacity as the Manager, agrees to, and hereby does, indemnify and hold harmless the Owner, the Indenture Trustee (for the benefit of the Noteholders and their respective representatives and/or agents), any Hedge Counterparty, the Transition Agent and their respective officers, directors, employees and agents (each of the foregoing, an “Indemnified Party”) against any and all liabilities, losses, damages, penalties, costs and expenses which may be incurred or suffered by such Indemnified Party (except to the extent caused by the gross negligence or willful misconduct on the part of the Indemnified Party) as a result of claims, actions, suits or judgments asserted or imposed against an Indemnified Party and arising out of (i) an action or inaction by the Manager that is contrary to the Servicing Standard or otherwise in violation of the terms of this Agreement; or (ii) any breach of or any inaccuracy in any representation or warranty made by the Manager in this Agreement or in any certificate delivered by the Manager pursuant hereto; or (iii) any breach of or failure by the Manager to perform any covenant or obligation of the Manager set out or contemplated in this

 

24

 

Agreement; (iv) personal injury or property damage claim arising out of or in connection with the negligence of the Manager; or (v) any defense, setoff or counterclaim arising out of any negligence of the Manager or any acts or omissions of the Manager related to the performance hereunder of its duties with respect to the Managed Containers; provided however, that the foregoing indemnity shall in no way be deemed to impose on the Manager any obligation to reimburse an Indemnified Party for: (A) losses arising from the financial inability of the related obligor on a Lease Agreement to make the payments due thereunder or because the Leases otherwise are uncollectible, or (B) losses arising from the failure of the remarketing proceeds of the Managed Containers to achieve historical or projected levels for reasons other than the Manager’s failure to comply with the terms of this Agreement.  The provisions of this Section 14.2 shall run directly to and be enforceable by an injured party, subject to the limitations hereof.  The obligations of the Manager under this Section 14.2 shall survive the resignation or removal of the Manager and each Indemnified Party, the payment of the Notes and Outstanding Obligations and the termination of this Agreement or the Indenture; it being understood and agreed that the Manager shall have no liability for the actions or inactions of any replacement Manager.

 

14.2.2     The Manager shall pay any amounts owing by it pursuant to this Section 14 directly to the Indemnified Party, and such amounts shall not be deposited in the Trust Account.

 

14.2.3     Indemnification payments owing pursuant to the provisions of this Section 14 shall include, without limitation, reasonable and documented fees and expenses of counsel and expenses of litigation reasonably incurred.

 

Section 15.            No Bankruptcy Petition Against the Owner.

 

The Manager will not, prior to the date that is one year and one day after the payment in full of all Outstanding Obligations under the Indenture or obligations of the Issuer under any of the other Transaction Documents, institute against the Owner, or join any other Person in instituting against the Owner, an Insolvency Proceeding.  The provision of this Section 15 shall survive the termination of this Agreement.

 

Section 16.            Notices.

 

All notices, demands or requests given pursuant to this Agreement shall be in writing, sent by internationally recognized overnight courier service or by telecopy or hand delivery, to the following addresses:

 

	
To   the Manager:
    	
TAL   International Container Corporation
    
	
 
    	
100   Manhattanville Road
    
	
 
    	
Purchase,   New York 10577-2135
    
	
 
    	
Attn:   Jeffrey Casucci, Vice President, Treasury   and Credit
    
	
 
    	
Fax:   (914) 697-2526
    
	
 
    	
 
    
	
 
    	
with   a copy to:
    
	
 
    	
 
    
	
 
    	
TAL   International Container Corporation
    

 

25

 

	
 
    	
100   Manhattanville Road
    
	
 
    	
Purchase,   New York 10577-2135
    
	
 
    	
Attn:
    	
Marc   A. Pearlin, Vice President, General Counsel & Secretary
    
	
 
    	
Fax:
    	
(914)   697-2526
    
	
 
    	
 
    	
 
    
	
To   the Owner:
    	
TAL   Advantage V LLC
    
	
 
    	
100   Manhattanville Road
    
	
 
    	
Purchase,   New York 10577-2135
    
	
 
    	
Attn:
    	
Jeffrey   Casucci
    
	
 
    	
 
    
	
 
    	
with   a copy to:
    
	
 
    	
 
    
	
 
    	
TAL   International Container Corporation
    
	
 
    	
100   Manhattanville Road
    
	
 
    	
Purchase,   New York 10577-2135
    
	
 
    	
Attn:
    	
Jeffrey   Casucci, Vice President, Treasury and Credit
    
	
 
    	
Fax:
    	
(914)   697-2526
    
	
 
    	
 
    	
 
    
	
To   the Indenture Trustee:
    	
Wells   Fargo Bank, National Association
    
	
 
    	
MAC   N9311-161
    
	
 
    	
Sixth   Street and Marquette Avenue
    
	
 
    	
Minneapolis,   MN 55479
    
	
 
    	
Attention:   Corporate Trust Services - Asset-Backed Administration
    
	
 
    	
Tel:   (612) 667-8058
    
	
 
    	
Fax:   (612) 667-3464
    
	
 
    	
 
    
	
To   the
    	
 
    
	
Transition   Agent:
    	
Wells   Fargo Bank, National Association
    
	
 
    	
MAC   N9311-161
    
	
 
    	
Sixth   Street and Marquette Avenue
    
	
 
    	
Minneapolis,   Minnesota 55479
    
	
 
    	
Attn:   Corporate Trust Services - Asset-Backed
    
	
 
    	
Administration
    
	
 
    	
Fax:   (612) 667-3464
    
	
 
    	
 
    
	
To   any Hedge Counterparty:
    	
At   the address set forth in the related Hedge Agreement
    

 

Notice shall be effective and deemed received (a) two days after being delivered to the courier service, if sent by courier, (b) upon receipt of confirmation of transmission, if sent by telecopy or (c) when delivered, if delivered by hand.

 

Section 17.            Governing Law; Consent to Jurisdiction.

 

17.1        Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK

 

26

 

 

(INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT GIVING EFFECT TO ANY OTHER PRINCIPLES OF CONFLICTS OF LAW).

 

17.2        Consent to Jurisdiction.  Any legal suit, action or proceeding against Owner or Manager arising out of or relating to this Agreement, or any transaction contemplated hereby, may be instituted in any federal or state court in the County of New York, State of New York and each of Owner and Manager 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 this Agreement, Owner and Manager each hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding.

 

17.3        Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, AS AGAINST EACH OTHER PARTY HERETO, ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION OR PROCEEDING (WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE), INCLUDING ANY COUNTERCLAIM ARISING UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, INCLUDING IN RESPECT OF THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT HEREOF OR THEREOF.

 

Section 18.            Successors and Assigns.

 

The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto.

 

Section 19.            Severability.

 

If any term or provision of this Agreement or the performance thereof shall to any extent be or become invalid or unenforceable, such invalidity or unenforceability shall not affect or render invalid or unenforceable any other provisions of this Agreement, and this Agreement shall continue to be valid and enforceable to the fullest extent permitted by law.

 

Section 20.            Entire Agreement; Amendments; Waiver.

 

This Agreement represents the entire agreement between the parties with respect to the subject matter hereof and may not be amended or modified except by an instrument in writing signed by the parties hereto and approved by (x) the Requisite Global Majority (except for the items specified in clause (z) below), (y) if such amendment or modification would directly affect the Transition Agent, the Transition Agent, and (z) if such amendment or modification relates to a Series Specific Manager Default, the Control Party for such Series.  Promptly after execution of any amendment or modification, the Owner shall deliver a copy thereof to the Indenture Trustee and the Transition Agent. The Manager will send prior notice of any amendment or modification to the Rating Agencies setting forth in general terms the substance of such amendment or modification.  Waiver of any terms or conditions of this Agreement (including any extension of time required for performance) shall be effective only if in writing and shall not be construed as a waiver of any subsequent breach or waiver of the same terms or conditions or a waiver of any other term or condition of this Agreement.  No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof.

 

27

 

Section 21.            Counterparts.

 

This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or PDF file shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section 22.            Intended Third Party Beneficiaries.

 

Each of the Transition Agent and the Indenture Trustee (in its individual and representative capacity) are express third party beneficiaries of this Agreement; and, as such, shall have full power and authority to enforce the provisions of this Agreement against the parties hereto.  Except as set forth in the immediately preceding sentence, this Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer on any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

28

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above.

 

	
 
    	
TAL   INTERNATIONAL CONTAINER CORPORATION, as Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

MANAGEMENT AGREEMENT

 

 

	
 
    	
TAL   ADVANTAGE V LLC, as Owner,
    
	
 
    	
By:
    	
TAL   International Container Corporation,
    
	
 
    	
 
    	
its   manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

MANAGEMENT AGREEMENT

 

 

EXHIBIT A

 

MANAGER REPORT

 

[To be attached]

 

 

EXHIBIT B

 

AFFILIATES OF MANAGER AND APPROVED SUBSERVICERS

 

NONE

 

 

EXHIBIT C

 

CREDIT AND COLLECTION POLICY

 

[To be attached]

 

 

EXHIBIT D

 

AGREED UPON PROCEDURES

 

The accountant’s report will address:

 

·                  Specified information contained in the March 31st, June 30th and December 31st Manager Report prepared by the Manager with respect to the Issuer; and

·                  Specified information contained in the March 31st, June 30th and December 31st Asset Base Certificate prepared by the Manager with respect to the Issuer.

·                  Where applicable, the accountant’s reports related to the 3 month periods ending March 31, June 30 and December 31.

 

Manager Report

 

·                  Verify the mathematical accuracy of each report.

·                  Compare the Management Fee information as enumerated on the Manager Report to the amount contained in the Issuer’s general ledger.

·                  Compare the Container Revenue and Sales Proceeds (including Casualty Proceeds) information as enumerated on the Manager Report to the amounts contained in the Issuer’s general ledger.

 

Asset Base Certificate

 

·                  Verify the mathematical accuracy of each report.

·                  Agree each line item on the Asset Base Certificate to its source (note that the source of each line item will be agreed upon to by the parties at a later date).

·                  Randomly select a sample of 10 units from the Manager’s equipment tracking system report (“Terms”) and trace to the Issuer’s fixed asset accounting system, or other accounting records as applicable, by pool and recalculate depreciation in accordance with the determination of Net Book Value as that term is defined in Appendix A to the Indenture.

·                  Randomly select a sample of 15 units from the Manager prepared listing of all purchased assets for the quarter and agree the serial number to the Manager’s equipment tracking system report (“Terms”) and Net Book Value to the Issuer’s fixed asset accounting system, or other accounting records as applicable, by pool.

·                  Randomly select a sample of 15 units from the Manager prepared listing of all newly purchased assets for the quarter and agree the purchase price component of the Original Equipment Cost per the Issuer’s fixed asset accounting system, or other accounting records as applicable, to the applicable vendor’s or manufacturer’s invoice or purchase agreement and cash disbursement advice (e.g. wire transfer or cancelled check).

 

Assets Contributed and Sold by Issuer at Transaction Date

 

 

·                  In conjunction with the accountant’s quarterly report as of [INSERT DATE], the following procedures will be performed as of the Transaction Date:

·                  Agree the total number of units transferred from the Schedule of Assets Transferred to Issuer’s fixed asset accounting system or other accounting records.

 

 

EXHIBIT E

 

DEPRECIATION POLICY

 

[See Exhibit D to the Indenture]

 

 

EXHIBIT F

 

ADDITIONAL CRITERIA FOR BACK-UP DATA TAPE

 

NONEExhibit 4.55

 

 

CONTRIBUTION AND SALE AGREEMENT

 

 

between

 

TAL INTERNATIONAL CONTAINER CORPORATION,

 

and

 

TAL ADVANTAGE V LLC

 

 

Dated as of

 

February 27, 2013

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    
	
 
    	
 
    	
 
    
	
DEFINITIONS
    
	
 
    	
 
    	
 
    
	
SECTION 1.01
    	
Definitions
    	
1
    
	
SECTION 1.02
    	
General Interpretive Principles
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    	
 
    	
 
    
	
TRANSFER   OF CONTAINERS
    
	
 
    	
 
    	
 
    
	
SECTION 2.01
    	
Transfer of Transferred Assets on the Closing Date
    	
2
    
	
SECTION 2.02
    	
Transferred Containers and Related Assets after the Closing   Date
    	
2
    
	
SECTION 2.03
    	
Required Financing Statements; Marking of Records
    	
3
    
	
SECTION 2.04
    	
General Provisions Regarding All Transfers of Containers
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    	
 
    	
 
    
	
REPRESENTATIONS   AND WARRANTIES
    
	
 
    	
 
    	
 
    
	
SECTION 3.01
    	
Representations and Warranties of the Seller
    	
6
    
	
SECTION 3.02
    	
Representations and Warranties of the Issuer
    	
13
    
	
SECTION 3.03
    	
Breach of Representations and Warranties Regarding Certain   Transferred Assets
    	
16
    
	
SECTION 3.04
    	
Substitute Container
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    	
 
    	
 
    
	
COVENANTS   OF THE SELLER
    
	
 
    	
 
    	
 
    
	
SECTION 4.01
    	
Seller Covenants
    	
17
    
	
SECTION 4.02
    	
Pledge of Transferred Assets
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    	
 
    	
 
    
	
CONDITIONS   PRECEDENT
    
	
 
    	
 
    	
 
    
	
SECTION 5.01
    	
Conditions to Issuer Obligations
    	
20
    
	
SECTION 5.02
    	
Conditions to the Seller’s Obligations
    	
21
    
	
SECTION 5.03
    	
Waiver of Conditions
    	
21
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    
	
 
    	
 
    	
 
    
	
TERMINATION
    

 

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 6.01
    	
Termination
    	
22
    
	
SECTION 6.02
    	
Effect of Termination
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    	
 
    	
 
    
	
INDEMNIFICATION   PAYMENTS
    
	
 
    	
 
    	
 
    
	
SECTION 7.01
    	
Indemnification
    	
22
    
	
SECTION 7.02
    	
Procedure for Indemnification
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
 
    	
 
    	
 
    
	
MISCELLANEOUS   PROVISIONS
    
	
 
    	
 
    	
 
    
	
SECTION 8.01
    	
Amendment
    	
23
    
	
SECTION 8.02
    	
Governing Law
    	
23
    
	
SECTION 8.03
    	
Notices
    	
23
    
	
SECTION 8.04
    	
Severability of Provisions
    	
25
    
	
SECTION 8.05
    	
Assignment
    	
25
    
	
SECTION 8.06
    	
Further Assurances
    	
25
    
	
SECTION 8.07
    	
Waiver; Cumulative Remedies
    	
25
    
	
SECTION 8.08
    	
Counterparts
    	
25
    
	
SECTION 8.09
    	
Binding
    	
26
    
	
SECTION 8.10
    	
Merger and Integration
    	
26
    
	
SECTION 8.11
    	
Headings
    	
26
    
	
SECTION 8.12
    	
Schedules and Exhibits
    	
26
    
	
SECTION 8.13
    	
Intended Third Party Beneficiaries
    	
26
    
	
SECTION 8.14
    	
Consent to Jurisdiction
    	
26
    
	
SECTION 8.15
    	
WAIVER OF JURY TRIAL
    	
26
    
	
SECTION 8.16
    	
No Claim
    	
26
    
	
 
    	
 
    	
 
    
	
EXHIBIT A — List of Containers
    	
 
    
	
EXHIBIT B — Container Transfer Certificate
    	
 
    
	
SCHEDULE 3.01 — Other Names of Seller
    	
 
    

 

ii

 

CONTRIBUTION AND SALE AGREEMENT

 

THIS CONTRIBUTION AND SALE AGREEMENT, dated as of February 27, 2013 (as amended, modified or supplemented from time to time in accordance with the terms hereof, this “Agreement”), is entered into between TAL INTERNATIONAL CONTAINER CORPORATION (together with its permitted successors and assigns, the “Seller”), a Delaware corporation, and TAL ADVANTAGE V LLC (together with its permitted successors and assigns, the “Issuer”), a limited liability company organized under the laws of Delaware.

 

W I T N E S S E T H:

 

WHEREAS, the Seller wishes to transfer to the Issuer from time to time containers, leases and other related assets, and the Issuer desires to acquire such assets from the Seller, in each case on the terms and conditions set forth herein;

 

WHEREAS, the assets transferred by the Seller to the Issuer hereunder will subsequently be pledged by the Issuer to the Indenture Trustee as collateral for the Notes to be issued from time to time pursuant to the terms of the Indenture;

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01             Definitions.  Capitalized terms used in this Agreement but not defined herein shall have the meaning assigned to such terms in Appendix A to the Indenture dated as of February 27, 2013, between the Issuer and Wells Fargo Bank, National Association, as Indenture Trustee, as such Appendix A may be amended, supplemented or otherwise modified from time to time in accordance with the terms of the Indenture.

 

SECTION 1.02             General Interpretive Principles.  For purposes of this Agreement except as otherwise expressly provided or unless the context otherwise requires:

 

(a)           the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;

 

(b)           accounting terms not otherwise defined herein have the meanings assigned to them in accordance with Generally Accepted Accounting Principles;

 

(c)           references herein to “Articles”, “Sections”, “Subsections”, “paragraphs”, and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, paragraphs and other subdivisions of this Agreement;

 

 

(d)           a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions;

 

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

 

(f)            the term “include” or “including” shall mean without limitation by reason of enumeration.

 

ARTICLE II

 

TRANSFER OF CONTAINERS

 

SECTION 2.01             Transfer of Transferred Assets on the Closing Date.

 

On the Closing Date, the Seller shall sell, transfer and convey to the Issuer, and the Issuer shall acquire from the Seller, all of the Seller’s rights, title and interest in, and under (i) the Containers identified on Exhibit A hereto and (ii) the Related Assets with respect thereto (the items described in clauses (i) and (ii) collectively, the “Initial Transferred Assets”).  For purposes of this sale, transfer and conveyance, the Related Assets will include all Casualty Proceeds, Sales Proceeds, and Container Revenues accrued as of February 1, 2013.  The purchase price for the Initial Transferred Assets shall be an amount equal to the sum of (x) the sum of the Net Book Values (determined as of the last day of the month preceding the Closing Date) of such Containers, and (y) the sum of the then Fair Market Values of such Related Assets (the sum of (x) and (y), the “Initial Purchase Price”).  The Initial Purchase Price shall be paid by the Issuer on the Closing Date by (i) making a cash payment to the Seller in an amount equal to Two Hundred Sixty-Two Million Nine Hundred Sixty-One Thousand Four Hundred Thirty-One Dollars and Fifty Cents ($262,961,431.50), and (ii) the issuance by Issuer to the Seller of all of the authorized membership interests of the Issuer.  The excess of (a) the aggregate Fair Market Value of the Initial Transferred Assets, over (b) the amount of cash described in the preceding sentence, shall be treated as a contribution to capital of the Issuer.

 

SECTION 2.02             Transferred Containers and Related Assets after the Closing Date.

 

(a)           Subsequent to the Closing Date, the Seller may, from time to time, sell, transfer and convey, to the Issuer, and the Issuer may in its sole discretion, acquire from the Seller, all of such Seller’s rights, title and interest in, to and under such additional Containers and the Related Assets  with respect thereto (collectively, the “Additional Transferred Assets”) as shall be identified from time to time on a Container Transfer Certificate substantially in the form of Exhibit B hereto to be delivered on such Transfer Date.  The Seller and the Issuer hereby agree that the purchase price of such Additional Transferred Assets (such purchase price, the “Additional Purchase Price”) sold by the Seller on any such subsequent Transfer Date shall be an amount equal to the sum of (x) the sum of the Net Book Values (determined as of the last day of the month preceding such Transfer Date) of such additional Containers and (y) the sum of the

 

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Fair Market Values of such Related Assets.  The Additional Purchase Price will be paid on the related Transfer Date in full.

 

At the option of the Seller, some or all of the Additional Transferred Assets may be transferred by the Seller to the Issuer as a capital contribution.

 

In connection with any transfer of Additional Transferred Assets to the Issuer, the Seller shall, on or prior to the respective Transfer Date, (i) execute and deliver each of the documents set forth in Section 2.02(b) hereof, and (ii) complete the actions required by Section 2.03 hereof.

 

(b)           In connection with any transfer of Transferred Assets by the Seller to the Issuer in accordance with the provisions of Section 2.01 or Section 2.02 of this Agreement, the Seller shall execute and deliver to the Issuer  (and the Issuer shall deliver to the Requisite Global Majority and the Indenture Trustee) on or before the related Transfer Date, each of the following documents:

 

(i)            A completed Container Transfer Certificate which certificate shall operate as an assignment, without recourse, representation or warranty (except for the representations and warranties specifically set forth in this Agreement) of all such Seller’s right, title, and interest in and to the Transferred Assets identified in such Container Transfer Certificate;

 

(ii)           Completed UCC financing statements and documents of similar import, if applicable, described in Section 2.03(a) hereof, together with evidence of filing of such financing statements, changes or similar documents, in the appropriate filing offices and jurisdictions as may be required to perfect the Issuer’s ownership of the Related Assets; and

 

(iii)          A supplement to the List of Containers (or, in the case of the initial Transfer Date, the List of Containers itself).  Upon delivery of such supplement, the List of Containers shall be deemed to have been amended to incorporate the information contained in such supplement.

 

SECTION 2.03             Required Financing Statements; Marking of Records.

 

(a)           In connection with the transfer by it on any Transfer Date, the Seller agrees to record and file, at its own expense, the following UCC financing statements (and/or amendments to previously filed UCC financing statements) with respect to the Related Assets, such filings to be made (unless otherwise requested by the Requisite Global Majority) in each case only to the extent necessary pursuant to applicable law to perfect the ownership interest of the Issuer:

 

(i)            UCC financing statements filed against the Seller and  covering the Transferred Assets.  Such financing statements (or documents of similar import) shall be filed in the appropriate filing offices in the jurisdiction in which the Seller is located (as defined in the UCC) or as otherwise required under Applicable Law;

 

3

 

(ii)           UCC financing statements or documents of similar import, evidencing the release of the security interest of any other Person with respect to any of the Transferred Assets; and

 

(iii)          With respect to each Finance Lease included in the Transferred Assets, a UCC financing statement (or document of similar import), naming each lessee of Containers subject to such Finance Lease, as debtor, the Seller, as secured party, and the Containers under such related Finance Lease as collateral, such financing statement against the lessee shall be filed in the appropriate filing offices in the jurisdiction in which the lessee is located (as determined under the UCC); provided, however, that the Seller shall not be required to change the name of the secured party as of record in any such filing office.

 

All UCC financing statements required pursuant to this Section 2.03 shall meet the requirements of Applicable Law.  Nothing contained in this Section 2.03 shall limit the Seller’s obligation to file continuation or termination statements in accordance with Section 4.01(g) of this Agreement and Applicable Law.

 

The Seller shall forward, promptly upon receipt, file-stamped copies of all UCC financing documents described in paragraphs (i) and (ii) above to the Indenture Trustee and the Requisite Global Majority.

 

(b)           In connection with each transfer of Transferred Assets, the Seller shall, at its own expense on or prior to each Transfer Date, cause its master accounting and data processing records to be marked to indicate that all right, title and interest in each Transferred Asset has been irrevocably and absolutely transferred to the Issuer.

 

SECTION 2.04             General Provisions Regarding All Transfers of Containers.

 

(a)           Except as specifically provided in Sections 3.03 and 7.01 of this Agreement, all transfers of Transferred Assets by the Seller to the Issuer pursuant to this Agreement shall be without recourse to the Seller; it being understood that the Seller shall be liable to the Issuer for all representations, warranties, covenants and indemnities made by the Seller pursuant to the terms of this Agreement, all of which representations, warranties, covenants and indemnifications shall survive the transfer of such Transferred Assts hereunder.  Notwithstanding any term or provision of this Agreement, nothing in this Agreement shall create (or shall be deemed to create) recourse to the Seller for (i) the failure of the lessees under the Leases included in the Transferred Assets to make any payments under such Leases or the Leases otherwise being uncollectible and/or (ii) the failure of the Issuer to realize an amount equal to the sum of (x) the Net Book Value of a Transferred Container and (y) the Fair Market Value of the Related Assets with respect to such Transferred Containers.

 

(b)           The Seller and the Issuer intend all transfers of Transferred Assets to be “true sales” or “true contributions” by the Seller to the Issuer that are absolute and irrevocable and that provide the Issuer with the full benefits of ownership of the Transferred Assets, and neither the Seller nor the Issuer intend the transactions contemplated hereunder to be, or for any purpose to be characterized as, loans from the Issuer to the Seller.  It is, further, not the intention

 

4

 

of the Issuer or the Seller that the conveyance of the Transferred Assets by the Seller be deemed a grant of a security interest in the Transferred Assets by the Seller to the Issuer to secure a debt or other obligation of the Seller.  However, in the event that, notwithstanding the intent of the parties, any Transferred Assets are considered to be property of the Seller’s estate, then (i) this Agreement also shall be deemed to be and hereby is a security agreement within the meaning of Applicable Law, and (ii) the conveyance by the Seller provided for in this Agreement shall be deemed to be a grant by the Seller to the Issuer of, and the Seller hereby grants to the Issuer, a security interest in and to all of the Seller’s right, title and interest in, to and under the Transferred Assets, whether now or hereafter existing or created, to secure (A) the rights of the Issuer hereunder, (B) a loan by the Issuer to the Seller in an amount equal to the sum of (1) the sum of the Net Book Values of all Transferred Containers and (2) the sum of the Fair Market Values of all Related Assets, in each case to the extent of all of the Transferred Containers transferred or purported to be transferred by the Seller hereunder, (C) without limiting the foregoing, the payment and performance of the Seller’s obligations (whether monetary or otherwise) hereunder, and (D) payment to the Issuer of all lease rentals, and other payments in respect of the Leases and proceeds of the Transferred Assets transferred or purported to be transferred hereunder.  The Seller and the Issuer shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Transferred Assets, such security interest would be deemed to be a perfected security interest of first priority in favor of the Issuer under Applicable Law and will be maintained as such throughout the term of this Agreement.  The Seller hereby irrevocably authorizes the Issuer (and the Issuer hereby authorizes the Indenture Trustee (as pledgee of the Issuer’s rights hereunder)), at any time, and from time to time, to file in any filing office in any jurisdiction any initial financing statements or documents of similar import and amendments thereto that (x) indicate Transferred Assets as collateral regardless of whether any particular asset included in the Transferred Assets falls within the scope of Article 9 of the UCC, and (y) provide any other information required for the sufficiency or filing office acceptance of any financing statement or document of similar import or amendment.  The Seller agrees to furnish any such information to the Issuer promptly upon the Issuer’s request, and the Issuer agrees to furnish any such information to the Indenture Trustee (as pledgee of the Issuer’s rights hereunder) promptly upon the Indenture Trustee’s request.  The Seller also ratifies its authorization for the Issuer and the Issuer also ratifies its authorization for the Indenture Trustee having filed in any jurisdiction any financing statements or documents of similar import or amendments thereto if filed prior to the date hereof.

 

(c)           Consistent with the Issuer’s ownership of the Transferred Assets, as between the parties to this Agreement, the Issuer shall have the sole right to service, administer and collect the Transferred Assets and to assign and/or delegate such right to others;

 

(d)           Except as specifically provided for in Section 3.03 and Section 3.04 hereof, the Issuer shall have no obligation to account to the Seller for the Transferred Assets.  The Issuer shall have no obligation to account for, or to return rental payments on or with respect to any Transferred Asset, or any interest or other finance charge collected pursuant thereto, to the Seller, irrespective of whether such collections and charges are in excess of the Initial Purchase Price or Additional Purchase Price, as appropriate, of such Transferred Asset.  The Issuer shall have the sole right to retain any gains or profits created by buying, selling or holding the

 

5

 

Transferred Assets and shall have the sole risk of and responsibility for losses or damages created by such buying, selling or holding;

 

(e)           The Issuer shall have the unrestricted right to further assign, transfer, deliver, hypothecate, subdivide or otherwise deal with the Transferred Assets, and all of the Issuer’s right, title and interest in, to and under this Agreement, on whatever terms the Issuer shall determine, pursuant to this Agreement or otherwise.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.01             Representations and Warranties of the Seller.  The Seller hereby makes the following representations and warranties.  The Issuer has relied upon such representations and warranties in accepting the conveyance of the Transferred Assets.  Such representations and warranties are made only as of a Transfer Date with respect to the Transferred Assets transferred to the Issuer on such date and, with respect to the representation and warranty set forth in clause (v) below, as of the date which is two Business Days following the later of the acquisition of the applicable Transferred Asset by the Issuer or the inclusion of the applicable Transferred Asset in the Asset Base, but shall survive each transfer and conveyance of the respective Transferred Assets to the Issuer.

 

(a)           Organization and Good Standing.  The Seller is a corporation duly organized, validly existing and in compliance under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, had at all relevant times, and now has, power, authority, and legal right to acquire and own the Transferred Assets and to perform its obligations hereunder and under any Transaction Document to which it is a party;

 

(b)           Due Qualification.  The Seller is qualified as a foreign corporation in each jurisdiction where failure to be so qualified would have a material adverse effect upon its business and has obtained all necessary licenses and approvals as required under Applicable Law, in each case, where the failure to be so qualified, licensed or approved, would reasonably be expected to materially and adversely affect the ability of the Seller to perform its obligations under and comply with the terms of this Agreement and any other Transaction Document to which it is a party;

 

(c)           Power and Authority; Due Execution and Delivery.  The Seller has the corporate power and authority to execute and deliver this Agreement and any other Transaction Document to which it is a party and to carry out the terms thereof; the Seller has duly authorized the transfer and conveyance to the Issuer of the Transferred Assets by all necessary corporate action; the execution, delivery, and performance by the Seller of this Agreement and any other Transaction Document to which it is a party has been duly authorized by the Seller by all necessary corporate action and this Agreement and any other Transaction Document to which it is a party have been duly executed and delivered by the Seller;

 

6

 

(d)           Legal Name.  The legal name of the Seller is as set forth on the signature page of the Seller for this Agreement, and, except as set forth in Schedule 3.01 hereof, in the five years preceding the date of this Agreement:  (a) the Seller has not changed its name, the Seller has not used, and does not currently use, any trade names, fictitious names, assumed names or “doing business as” names, and (b) the Seller has not been known by any name other than “TAL International Container Corporation”;

 

(e)           Valid Assignment; Binding Obligations.  This Agreement constitutes a valid transfer and conveyance to the Issuer of all right, title, and interest of the Seller in, to and under the Transferred Assets and the Transferred Assets will be held by the Issuer free and clear of any Lien of any Person claiming through or under the Seller, except for Permitted Encumbrances; and this Agreement and each other Transaction Document to which the Seller is a party, when duly executed and delivered by the other parties thereto, will constitute a legal, valid, and binding obligation of the Seller enforceable against the Seller in accordance with its terms subject as to enforceability to applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or other laws affecting creditors’ rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law);

 

(f)            No Violation.  The consummation of the transactions contemplated by and the fulfillment of the terms of this Agreement and the Transaction Documents to which it is a party will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the charter documents or by-laws of the Seller, or any material term of any indenture, agreement, mortgage, deed of trust, or other instrument to which the Seller is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust, or other instrument, other than this Agreement and the Indenture, or violate any material provision of any law, order, rule, or regulation applicable to the Seller of any court or of any federal or state regulatory body, administrative agency, or other Governmental Authority having jurisdiction over the Seller or any of its properties, in each case, other than any conflict, breach, default, Lien, or violation that would not reasonably be expected to result in a Material Adverse Change;

 

(g)           No Proceedings or Injunctions.  There are (i) no actions, suits, proceedings or investigations pending, or, to the knowledge of the Seller, threatened, before any court, regulatory body, administrative agency, or other tribunal or Governmental Authority (A) asserting the invalidity of this Agreement or any other Transaction Document to which it is a party, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party, or (C) seeking any determination or ruling that might materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document to which it is a party, and (ii) no injunctions, writs, restraining orders or other orders are in effect against the Seller that would materially and adversely affect its ability to perform under this Agreement or any other Transaction Document to which it is a party;

 

(h)           Compliance with Law.  The Seller:

 

7

 

(i)                         is not in violation of any laws, ordinances, governmental rules or regulations or any court order to which it is subject or by which it is bound, in each case the violation of which would reasonably be expected to materially and adversely affect the ability of the Seller to perform its obligations under this Agreement or any other Transaction Document to which it is a party; and

 

(ii)                      has obtained all licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its business including, without limitation, with respect to transactions contemplated by this Agreement and the other Transaction Documents to which it is a party, in each case, other than any such license, permit, franchise or other authorization the failure to so obtain will not reasonably be expected to result in a Material Adverse Change;

 

(i)            Insolvency.  The Seller is not insolvent under the Insolvency Law and will not be rendered insolvent by the transactions contemplated by this Agreement; the Seller is paying its debts as they become due and, after giving effect to the transactions contemplated hereby, will have adequate capital to conduct its business;

 

(j)            Security Interest Representations. The Seller makes the following representations:

 

(i)                             This Agreement creates a valid and continuing security interest (as defined in the UCC) in the Transferred Assets in favor of the Issuer (to the extent that the sale of the Transferred Assets creates a security interest under the UCC), which security interest is prior to all other Liens (other than Permitted Encumbrances), and is enforceable as such as against creditors of and purchasers from the Seller.

 

(ii)                          The Containers included in the Transferred Assets constitute “goods” within the meaning of the applicable UCC.  The related Leases constitute “tangible chattel paper” within the meaning of the UCC.  The lease receivables constitute “accounts” or “proceeds” of the Leases within the meaning of the UCC.

 

(iii)                       Immediately prior to the transfer to the Issuer of the Transferred Assets, the Seller owned and had good and marketable title to the Transferred Assets, free and clear of any Lien (whether senior, junior or pari passu), claim or encumbrance of any Person, except (x)  Permitted Encumbrances and (y) a manufacturer’s or vendor’s lien for the unpaid purchase price of such Transferred Assets so long as such unpaid purchase price is paid within two Business Days following the later of the acquisition of such Transferred Assets by the Issuer or the inclusion of such Transferred Assets in the Asset Base.

 

8

 

(iv)                      The Seller has caused the filing of all appropriate financing statements or documents of similar import in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Transferred Assets arising under this Agreement (to the extent that the sale of the Transferred Assets creates a security interest under the UCC) and such security interest constitutes a perfected security interest in favor of the Issuer.  All financing statements filed against the Seller in favor of the Issuer (and the Indenture Trustee as its assignee) in connection herewith describing the Transferred Assets contain a statement substantially to the following effect: “A purchase or acquisition of a security interest in any collateral described in this financing statement will violate the rights of the Secured Party.”

 

(v)                         Other than the security interest granted to the Issuer pursuant to this Agreement, the Seller has not pledged or granted a security interest in the Transferred Assets, except as contemplated by this Agreement.  The Seller has not authorized the filing of, and is not aware of, any financing statements against the Seller that include a description of collateral covering the Transferred Assets other than any financing statement or document of similar import (i) relating to the security interest granted to the Issuer (and the Indenture Trustee as its assignee) in this Agreement, (ii) that has been terminated or (iii) relating to a security interest that is released at the time of the transfer of such Transferred Assets to the Issuer.  The Seller has no actual knowledge of any judgment or tax lien filings against the Seller.

 

(vi)                      None of the Leases that constitute or evidence the Transferred Assets has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person.

 

(vii)                   The Seller has received all necessary consents and approvals required by the terms of the Transferred Assets to the transfer to the Issuer of its interest and rights in such Transferred Assets hereunder.

 

(viii)                No creditor of the Seller (other than (x) with respect to the Managed Containers, the related lessee) has in its possession any goods that constitute or evidence the Transferred Assets, other than for purposes of repair, refurbishment, painting, positioning, storage and other similar matters with respect to Managed Containers.

 

The representations and warranties set forth in this Section 3.01(j) shall survive until this Agreement is terminated in accordance with its terms.  Any breaches of the representations and warranties set forth in this Section 3.01(j) may be waived by the Issuer and the Indenture Trustee (acting at the direction of the Requisite Global Majority) only with prior written notice to the Rating Agency.

 

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(k)           Place of Business.  As of the Closing Date, the principal place of business and chief executive office of the Seller and the place where the accounting books and records of the Seller are maintained is located at its address set forth in Section 8.03 and has been located at such address at all times since the later of (i) the date of formation of the Seller, and (ii) the date that is five years prior to the Closing Date;

 

(l)            Accounting and Tax Treatment.  The Seller will treat the transfer of the Transferred Assets to the Issuer pursuant to this Agreement as a capital contribution (in part) and sale (in part) of such Transferred Assets (which allocation between capital contribution and sale will be determined in accordance with Sections 2.01 and Section 2.02 hereof) for financial reporting and accounting purposes.  The Seller will treat the transfer of the Transferred Assets as a transfer to an entity disregarded as separate from its owner for U.S. federal, state and local income tax purposes (“Tax Purposes”); provided, that in the event Issuer may become treated as a “partnership” for Tax Purposes, then from and after such time Seller will treat the transfer of the Transferred Assets as a transfer to a “partnership” for such purposes;

 

(m)          Bulk Transfer Provisions.  No transfer, assignment or conveyance of the Transferred Assets by the Seller to the Issuer contemplated by this Agreement will be subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction;

 

(n)           All Representations and Warranties True.  All representations, warranties, certifications and statements made by the Seller in any certificate or other document delivered in connection with the closing of the transactions contemplated by the Transaction Documents including all representations, warranties, certifications and statements made to Vedder Price P.C. in support of its opinions issued and delivered in connection with the issuance of the Notes and each of the factual assumptions contained in such opinions, to the extent compliance with such assumptions is in the control of the Seller, are true and correct in all material respects as of the date made and do not omit or fail to state a material fact necessary to make the statements contained therein not misleading as of such date.

 

(o)           Approvals.  All approvals, authorizations, consents, orders or other actions of any Person required to be obtained by the Seller in order to execute and deliver this Agreement and any other Transaction Documents to which it is a party have been or will be taken or obtained on or prior to the Closing Date;

 

(p)           Financial Statements.  The consolidated balance sheet of TAL International Group as of the date of the most recent financial statement of TAL International Group and the consolidated statements of income, retained earnings and cash flows for the twelve months ended on such date, are accompanied by reports thereon containing opinions without qualification, except as therein noted, by the independent accountants, have been prepared in accordance with Generally Accepted Accounting Principles consistently applied, and present fairly the financial position of TAL International Group and its consolidated Subsidiaries (including the Seller) as of such dates and the results of their operations for such periods;

 

Since the date of the most audited financial statements of TAL International Group delivered in accordance with the terms of the Transaction Documents there has been no change in the business or financial condition of TAL International Group and its consolidated

 

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Subsidiaries (including the Seller) except as disclosed in TAL International Group’s financial reports, or changes in the ordinary course of business, which individually or in the aggregate may have been materially adverse.  Neither TAL International Group nor any of its consolidated Subsidiaries (including the Seller) has any material liabilities or obligations other than those disclosed in the financial statements (including the notes thereto) referred to in the preceding paragraph or for which adequate reserves are reflected in such financial statements or which were incurred in the ordinary course of business since the date of such financial statements;

 

(q)           Governmental Consent.  No consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority is or will be necessary or required on the part of the Seller in connection with the execution, delivery, legality, binding effect or enforceability of this Agreement or any other Transaction Document to which it is a party or the transfer and conveyance of the Transferred Assets hereunder except for (A) the filing of any financing statements and (B) such the failure of which to make or obtain, individually or in the aggregate, would not reasonably be expected to result in a material adverse effect on the Seller;

 

(r)            Investment Company.  The Seller is not an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended;

 

(s)            Substantive Consolidation.  The Seller is operated such that the Issuer would not be “substantively consolidated” in the bankruptcy estate of the Seller and its separate existence disregarded in the event of the bankruptcy of the Seller under any applicable Insolvency Law;

 

(t)            Financial Statements.  The financial statements and books and records of the Seller will reflect the separate existence of the Issuer, the annual consolidated financial statements of the Seller after the date hereof will contain disclosures to the effect that the Seller has or will have one or more direct and indirect Subsidiaries that were or may be established as bankruptcy remote entities to facilitate asset securitization transactions;

 

(u)           Valid Business Purpose.  The transfers and conveyances of Transferred Assets by the Seller to the Issuer pursuant to the terms of this Agreement are being consummated by the Seller in good faith, with no contemplation of insolvency and with no intent to hinder, delay or defraud any of its present or future creditors of the Seller;

 

(v)           Title to Containers.  Immediately prior to the transfer of any Transferred Asset to the Issuer pursuant to the terms of this Agreement, the Seller had good and marketable title to such Transferred Asset, free and clear of all Liens, except (i) Permitted Encumbrances and (ii) a manufacturer’s or vendor’s lien for the unpaid purchase price of such Transferred Asset so long as such unpaid purchase price is paid within two Business Days following the later of the acquisition of such Transferred Asset by the Issuer or the inclusion of such Transferred Asset in the Asset Base. The Seller has not authorized the filing of, and is not aware of, any financing statements against the Seller that include a description of collateral covering the Transferred Assets other than any financing statement or document of similar import (i) in favor of the Issuer

 

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pursuant to this Agreement or (ii) that has been terminated.  The Seller is not aware of any judgment or tax lien filings against the Seller;

 

(w)          Rights to Lease Agreements are Assignable.  The assignment of the rights with respect to each Lease Agreement (to the extent related to a Transferred Container) and all scheduled lease payments to become due thereunder (which relate to a Transferred Container) pursuant to this Agreement does not violate the terms of the applicable Lease Agreement and such assignment by the Seller is permitted without the consent of any Person other than consents which will have been obtained on or before the related Transfer Date;

 

(x)           All Necessary Action Taken.  Immediately after each of the transfers and conveyances to the Issuer as contemplated in this Agreement, all necessary action will have been taken by the Seller to validly transfer and convey to the Issuer all right, title and interest of the Seller in and to the Transferred Containers and the Related Assets;

 

(y)           Eligible Container.  As of the related Transfer Date for a Container, such  Container is an Eligible Container.

 

(z)           Ordinary Course of Business.  All Lease Agreements related to Transferred Containers were originated in the ordinary course of business of the Seller’s business and in accordance with the Credit and Collection Policy as in effect on such origination date;

 

(aa)         Binding Obligation.  Each Lease included in the Related Assets being transferred to the Issuer on the applicable Transfer Date represents the genuine, legal, valid and binding payment obligation in writing of the related lessee, enforceable in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally;

 

(bb)         No Defenses.  No right of rescission, setoff, counterclaim or defense exists or has been asserted in writing or threatened in writing with respect to any Lease included in the Related Assets being transferred to the Issuer on the applicable Transfer Date.  The exercise of any right under any such Lease will not render such Lease unenforceable in whole or in part or subject to any such right of rescission, setoff, counterclaim or defense;

 

(cc)         Servicing.  The servicing of each Lease included in the Related Assets and the collection practices relating thereto have been lawful and in accordance with the standards set forth in the Credit and Collection Policy;

 

(dd)         Seller Acquisition Cost.  One of the following: (A) with respect to any Container originally acquired by the Seller subsequent to August 1, 2005, the vendor’s or manufacturer’s invoice price of such Container was representative of the market price of containers of similar specifications with such vendor or manufacturer on the date on which the Seller placed the order for such Container with the vendor or manufacturer thereof; or (B) with respect to any Container not covered by clause (A), the purchase price allocated to such Container by the Seller on the Closing Date was reflective of the market value (as determined in the Issuer’s good faith estimation) of such class of Container;

 

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(ee)         Creation of Security Interest.  In the event that, contrary to the intention of the parties hereto, the transfer of the Transferred Assets pursuant to the terms of this Agreement is held not to constitute a “true sale” or a “true contribution”, this Agreement creates a valid and continuing security interest (as defined in the UCC) in the Transferred Assets in favor of the Issuer, which security interest is prior to all other Liens other than Permitted Encumbrances, and is enforceable as such against creditors of and purchasers from the Seller;

 

(ff)          UCC Classification.  As of the Transfer Date for a Transferred Container:  (x) such Transferred Container constitutes “goods” within the meaning of the applicable UCC; (y) the related Lease constitutes “tangible chattel paper” within the meaning of the UCC; and (z) the lease receivables under such Lease constitute “accounts” or “proceeds” of such Lease within the meaning of the UCC;

 

(gg)         Perfection of Security Interest.  The Seller has caused the filing of all appropriate financing statements or documents of similar import in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the Issuer’s ownership interest in the Transferred Assets.  All financing statements filed or to be filed against the Seller in favor of the Issuer in connection herewith contain a statement to the following effect:  “A purchase of or any other security interest in any collateral described in this financing statement will violate the rights of the Issuer and the Indenture Trustee (as the pledgee of the Issuer)”;

 

(hh)         Possession of Leases.  Aside from any original counterparts of such Lease included in such Transferred Assets in the possession of the lessee, the only other original counterpart(s) of such Lease is in the possession of the Manager or an Affiliate of the Manager.  Such Lease (to the extent that such Lease relates to the Transferred Containers) does not have any marks or notations indicating that such Lease (to the extent that such Lease relates to the Transferred Containers) has been pledged, assigned or otherwise conveyed to any Person; and

 

(ii)           OFAC.  None of the Containers are leased, nor has Seller consented to a sublease, to a Sanctioned Person or an entity organized in a Sanctioned Country in a manner which would violate the laws of the United States (other than pursuant to a license issued by OFAC).  None of the Seller, any Subsidiary of the Seller or, to the knowledge of the Seller, any Affiliate of the Seller (i) is a Sanctioned Person, (ii) has, to the knowledge of the Seller, any of its assets in Sanctioned Countries, and (iii) derives any of its operating income from investments in, or transactions with, Sanctioned Persons or Sanctioned Countries. The Purchase Price will not be used by the Seller, any Subsidiary of the Seller or, to the knowledge of the Seller, any Affiliate of the Seller, and has not been used to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.

 

SECTION 3.02             Representations and Warranties of the Issuer.  The Issuer hereby makes the following representations and warranties.  The Seller has relied upon such representations and warranties in transferring the Transferred Assets to the Issuer.  Such representations and warranties speak only as of the Transfer Date with respect to the Transferred Assets transferred to the Issuer on such date, but shall survive each transfer and conveyance of the respective Transferred Assets to the Issuer.

 

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(a)           Organization and Good Standing.  The Issuer is a limited liability company duly organized and validly existing in compliance under the laws of the State of Delaware, with full corporate power and authority to own and operate its properties and to conduct its business as presently conducted and to enter into and perform its obligations under this Agreement and each other Transaction Document to which it is a party and the transactions contemplated hereby and thereby;

 

(b)           Due Qualification.  The Issuer is duly qualified to do business as a foreign company in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, except to the extent that the failure to be so qualified, licensed or approved would not, in the aggregate, materially and adversely affect the ability of the Issuer to perform its obligations under and comply with the terms of this Agreement or any other Transaction Documents to which it is a party;

 

(c)           Power and Authority.  The Issuer has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery, and performance of this Agreement by the Issuer have been duly authorized by the Issuer by all necessary company action;

 

(d)           Binding Obligations.  This Agreement and each other Transaction Document to which the Issuer is a party, when duly executed and delivered by the other parties hereto or thereto, will constitute a legal, valid, and binding obligation of the Issuer enforceable in accordance with its terms subject as to enforceability to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law);

 

(e)           No Violation.  The consummation of the transactions contemplated by and the fulfillment of the terms of this Agreement and the Transaction Documents to which it is a party will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the charter documents or by-laws of the Issuer, or any material term of any indenture, agreement, mortgage, deed of trust, or other instrument to which the Issuer is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust, or other instrument, other than pursuant to the Indenture, or violate any law or any order, rule, or regulation applicable to the Issuer of any court or of any federal or state regulatory body, administrative agency, or other Governmental Authority having jurisdiction over the Issuer or any of its properties;

 

(f)            No Proceedings or Injunctions.  There are (i) no proceedings or investigations to which the Issuer is a party pending or, to the knowledge of Issuer, threatened before any court, regulatory body, administrative agency or other tribunal or Governmental Authority (A) asserting the invalidity of this Agreement or any of the other Transaction Documents to which the Issuer is a party, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the other Transaction Documents to which the Issuer is a party, or (C) seeking any determination or ruling that would materially and

 

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adversely affect the performance by the Issuer of its obligations under, or the validity or enforceability of, this Agreement or the other Transaction Documents to which the Issuer is a party and (ii) no injunctions, writs, restraining orders or other orders are in effect against the Issuer that would adversely affect its ability to perform under this Agreement or the other Transaction Documents to which it is a party;

 

(g)           Approvals.  All approvals, authorizations, consents, orders or other actions of any Person required to be obtained by the Issuer in connection with the execution and delivery of this Agreement or any other Transaction Document to which it is a party have been or will be taken or obtained on or prior to the Closing Date;

 

(h)           Solvency.  The Issuer is not insolvent under the Insolvency Law and will not be rendered insolvent by the transactions contemplated by this Agreement; the Issuer is paying its debts as they become due and, after giving effect to the transactions contemplated hereby, will have adequate capital to conduct its business;

 

(i)            Principal Place of Business; Trade Names.  The Issuer is a limited liability company organized under the laws of the State of Delaware.  The Issuer’s only “place of business” (as such term is referred to in Section 9-307 of the UCC) and its “chief executive office” (as such term is referred to in Section 9-307 of the UCC) is located at and has been located at such address at all times since the date of formation of the Issuer, and the accounting books and records of the Issuer are maintained at its address determined in accordance with Section 8.03.  The Issuer has not been known by any name other than “TAL Advantage V LLC”;

 

(j)            Accounting and Tax Treatment.  The Issuer will treat the transfer of the Transferred Assets to the Issuer by the Seller pursuant to this Agreement as a capital contribution (in part) and sale (in part) of such Transferred Assets by the Seller (which allocation between capital contribution and sale will be determined in accordance with Sections 2.01 and Section 2.02 hereof) for financial reporting and accounting purposes.  The Issuer will treat the transfer of the Transferred Assets to the Issuer as a transfer to an entity disregarded as separate from its owner for U.S. federal, state and local income tax purposes (“Tax Purposes”); provided, that in the event Issuer may become treated as a “partnership” for Tax Purposes, then from and after such time Issuer will treat the transfer of the Transferred Assets as a transfer to a “partnership” for such purposes;

 

(k)           Investment Company.  The Issuer is not an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended;

 

(l)            Separateness.  The Issuer: (1) conducts its business in its own name, it being understood that the Issuer’s assets will be managed by the Manager in accordance with the terms of the Management Agreement, (2) maintains its books and records separate from those of any other Person, (3) does not commingle its funds with any other Person (except for any commingling of Collections which may occur prior to the identification and segregation of such amounts in accordance with the terms of the Management Agreement), (4) maintains separate financial statements, showing its assets and liabilities separate and apart from those of any other

 

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Person, (5) holds itself out as a separate entity, and (6) observes all other organizational formalities;

 

(m)          All Representations and Warranties True.  All representations, warranties, certifications and statements made by Issuer in any certificate or document delivered in connection with the closing of the transactions contemplated by the Transaction Documents including all representations, warranties, certifications and statements made by the Issuer to Vedder Price P.C. in support of its opinions issued and delivered in connection with the issuance of the Notes and each of the factual assumptions contained in such opinions, to the extent compliance with such assumptions is in the control of the Issuer, are true and correct in all material respects as of the date made and do not omit to state a material fact necessary to make the statements contained therein not misleading as of such date;

 

(n)           Financial Statements.  The financial statements and books and records of the Issuer will reflect the separate existence of the Issuer and the Seller;

 

(o)           No Subsidiaries.  The Issuer has no Subsidiaries;

 

(p)           Ordinary Course.  The transactions contemplated by this Agreement are being consummated by the Issuer in good faith and in furtherance of the Issuer’s ordinary business purposes, with no contemplation of insolvency and with no intent to hinder, delay or defraud any of its present or future creditors; and

 

(q)           OFAC.  None of the Containers are leased, nor has the Issuer consented to a sublease, to a Sanctioned Person or an entity organized in a Sanctioned Country in a manner which would violate the laws of the United States (other than pursuant to a license issued by OFAC).  The Issuer (i) is not a Sanctioned Person, (ii) does not, to the knowledge of the Issuer, have any of its assets in Sanctioned Countries, and (iii) derives any  of its operating income from investments in, or transactions with, Sanctioned Persons or Sanctioned Countries. The Purchase Price will not be used and has not been used by the Issuer to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.

 

SECTION 3.03             Breach of Representations and Warranties Regarding Certain Transferred Assets.

 

(a)           Upon discovery by the Seller or the Issuer (or any of their respective successors or permitted assigns) of a breach of any of the Container Representations and Warranties made by the Seller on the related Transfer Date, the party (including any such successor or permitted assign) discovering such breach shall give prompt written notice to the other party (and the Issuer shall give prompt notice thereof to each of the Indenture Trustee and the Transition Agent).  If the Issuer (or its successors or permitted assigns) reasonably determines that such breach materially and adversely affects the interests of the Issuer or its successors and permitted assigns, then, unless the breach shall have been cured, or waived by the Issuer, within thirty (30) days after the receipt by the Seller of written notice of such breach from the Issuer (or its successors and permitted assigns), the Seller shall, on or prior to such thirtieth (30th) day, repurchase the applicable Container (and all Related Assets with respect thereto) by

 

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paying the Warranty Purchase Amount to the Issuer for deposit into the Trust Account and, upon deposit of such payment in the Trust Account, such repurchase shall occur automatically without further action by any Person.

 

(b)           The Issuer agrees that the obligation of the Seller to make the indemnification payments pursuant to this Section 3.03 shall constitute the sole remedy available against the Seller by the Issuer and its successors and permitted assigns for breach of a Container Representation or Warranty; provided, however, that nothing contained herein shall derogate from the Seller’s indemnification obligations set forth in Section 7.01 hereof for matters other than a breach of a Container Representation and Warranty.

 

SECTION 3.04             Substitute Container.

 

(a)           The Seller will have the right (exercisable solely at its option) at any time to transfer to the Issuer one or more Containers and Related Assets (such Containers and Related Assets, collectively, a “Substitute Container”) in substitution for one or more Transferred Containers and Related Assets (such Transferred Containers and Related Assets, collectively, a “Predecessor Container”) if:

 

(i)            the Predecessor Container is required to be repurchased pursuant to Section 3.03 hereof;

 

(ii)           after giving effect to such substitution, no Asset Base Deficiency shall exist; and

 

(iii)          the ownership of such containers by the Issuer will not result in a Trust Early Amortization Event.

 

If more than one Substitute Container is being transferred on any date, the criteria set forth in clause (ii) above shall be determined on an aggregate basis.

 

(b)           Any substitution pursuant to this Section 3.04 shall become effective upon compliance with the provisions of Section 2.02(b) hereof.  Upon the effectiveness of such substitution, the Predecessor Container shall automatically be reconveyed by the Issuer to the Seller without further action by any Person.

 

ARTICLE IV

 

COVENANTS OF THE SELLER

 

SECTION 4.01             Seller Covenants.  Seller hereby covenants and agrees with the Issuer (and its successors and assigns) as follows:

 

(a)           Merger or Consolidation of, or Assumption of the Obligations of, the Seller.  Notwithstanding anything in this Agreement to the contrary, any Person (i) into which the Seller may be merged or consolidated, (ii) resulting from any merger, conversion, or consolidation to which the Seller shall be party, or (iii) succeeding to the business of the Seller substantially as a whole, will be the successor to the Seller under this Agreement, without the

 

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execution or filing of any document or any further act on the part of any of the parties to this Agreement; provided, however, that the Seller shall not enter into any merger or consolidation unless (x) immediately after giving effect to such transaction, no Event of Default or Early Amortization Event shall result therefrom, (y) the Seller shall have delivered to the Issuer, an Officer’s Certificate and an Opinion of Counsel (which the Issuer shall forward to the Indenture Trustee and the Requisite Global Majority) each stating that such consolidation, merger, or succession complies with this Section 4.01 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with and (z) the Seller shall have delivered to the Issuer an Opinion of Counsel (which the Issuer shall forward to the Indenture Trustee and the Requisite Global Majority), either (1) stating that, in the opinion of such counsel, all financing statements or other documents of similar import, and amendments thereto have been executed (if applicable) and filed that are necessary fully to perfect the interest of the Issuer in the Transferred Assets, or (2) stating that, in the opinion of such counsel, no such action shall be necessary to perfect such interest.

 

(b)           Limitation on Liability of the Seller and Others.  The Seller and any director, officer, employee or agent of the Seller may rely in good faith on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement; provided, however, that any such limitation does not affect the obligation of the Seller to accept reconveyance of certain Containers and the Related Assets and to pay the consideration therefor pursuant to Section 3.03.  The Seller in its capacity as such shall not be under any obligation to appear in, prosecute, or defend any legal action that is not incidental to its obligations as the transferor of the Transferred Assets under this Agreement and that in its opinion may involve it in any expense or liability.

 

(c)           Preservation of Name, etc.  The Seller will not change its name, identity, location of chief executive office, jurisdiction of incorporation or corporate structure in any manner that would make ineffective any financing statement, continuation statement, or documents of similar import, filed by the Seller in accordance with Section 2.03 above unless (i) the Seller shall have given the Issuer at least thirty (30) days’ prior written notice thereof (which the Issuer promptly shall forward to the Indenture Trustee and the Requisite Global Majority), (ii) the Seller shall have filed any necessary financing statements or amendments thereof or documents of similar import necessary to continue the effectiveness of any financing statement or document of similar import referred to in Section 2.03 above and (iii) the Seller shall have delivered to the Issuer one or more Opinions of Counsel (which the Issuer promptly shall forward to the Indenture Trustee and the Requisite Global Majority), stating that, after giving effect to such change in name, identity, location of chief executive office, jurisdiction of incorporation or corporate structure: (A) the Seller and the Issuer will not, pursuant to applicable Insolvency Law, be substantively consolidated in the event of any Insolvency Proceeding by, or against, the Seller, (B) under applicable Insolvency Law, the transfers of Transferred Assets made in accordance with the terms of this Agreement will be treated as a “true sale” in the event of any Insolvency Proceeding by, or against, the Seller and (C) either (1) in the opinion of such counsel, all financing statements or other documents of similar import, and amendments thereto have been executed (if applicable) and filed that are necessary fully to perfect the interest of the Issuer in the Transferred Assets, or (2) stating that, in the opinion of such counsel, no such action shall be necessary to perfect such interest; provided that the opinions described in clause (A) and clause (B) shall not be required unless,  as a result of the Seller’s change of chief executive office

 

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or jurisdiction of incorporation, the Seller’s chief executive office or the Seller’s jurisdiction of location is outside of the United States.  The Seller shall observe all formalities necessary to maintain its corporate existence, subject to its rights under Section 4.01(a), and shall maintain all licenses, permits, charters and registration, the suspension of which or the failure to hold which, would reasonably be expected to result in a Material Adverse Change.

 

(d)           Books and Records.  The Seller will, at its own cost and expense, mark its books and records (which may include computerized records) to the effect that each Transferred Container and Related Assets have been transferred to the Issuer.

 

(e)           Compliance with Law.  The Seller will comply, in all material respects, with all acts, rules, regulations, orders, decrees and directions of any Governmental Authority except for any such noncompliance which would not reasonably be expected to result in a Material Adverse Change; provided, however, that the Seller may contest any act, rule, regulation, order, decree or direction in any reasonable manner which shall not materially and adversely affect the rights of the Issuer, the Noteholders or the Indenture Trustee in the Transferred Assets.

 

(f)            Conveyance of Transferred Assets; Security Interests.  Except for the transfers and conveyances hereunder, the Seller will not pledge, assign or transfer to any other Person, or grant, create, incur or assume, or permit or suffer to exist, any Lien other than Permitted Encumbrances on, any Transferred Asset, or any interest therein and the Seller shall defend the right, title, and interest of the Issuer and its successors and assigns in, to, and under the Transferred Assets, against all claims of third parties claiming through or under the Seller.

 

(g)           Notification of Breach.  The Seller will advise the Issuer promptly, in reasonable detail, upon discovery of the occurrence of any breach in any material respect by the Seller of any of its representations, warranties and covenants contained herein or in any other Transaction Documents (and the Issuer promptly shall forward such notice to the Requisite Global Majority and the Indenture Trustee).

 

(h)           Further Assurances.  The Seller will make, execute or endorse, acknowledge and file or deliver to the Issuer from time to time such UCC financing statements or documents of similar import (including any termination or continuation statements), schedules, confirmatory assignments, conveyances, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments and take such further steps relating to the Transferred Assets and other rights covered by this Agreement, as the Issuer or its successors and assigns may reasonably request.  Any such requested UCC financing statement or document of similar import must be required pursuant to Applicable Law to fully preserve, maintain, and protect the interest of the Issuer under this Agreement in the Transferred Assets.  The Seller shall comply with the terms and provisions of the UNIDROIT Convention or any other internationally recognized system for recording interests in or license against shipping containers at the time that such convention is adopted by the container leasing industry.

 

(i)            Notice of Liens.  The Seller shall notify the Issuer promptly after becoming aware of any Lien other than Permitted Encumbrances on the Transferred Assets (and

 

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the Issuer promptly shall forward such notice to the Requisite Global Majority and the Indenture Trustee).

 

(j)            Transfer Taxes.  The Seller shall pay any transfer taxes, if any, required to be paid in connection with the conveyance of the Transferred Assets by the Seller to the Issuer and acknowledges that the Issuer shall have no responsibility with respect thereto.

 

(k)           No Bankruptcy Petition Against the Issuer.  The Seller will not, prior to the date that is one year and one day after the payment in full of all amounts owing pursuant to the Indenture, this Agreement and the Transaction Documents, institute against the Issuer, or join any other Person in instituting against the Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of any applicable jurisdiction.  This subsection 4.01(k) shall survive the termination of this Agreement.

 

(l)            ERISA.  The Seller agrees to indemnify, defend and hold the Issuer harmless from and against any and all loss, liability, damage, judgment, claim, deficiency, or expense (including interest, penalties, reasonable and documented attorneys’ fees and amounts paid in settlement) to which the Issuer may become subject insofar as such loss, liability, damage, judgment, claim, deficiency or expense arises out of any Plan of the Seller.

 

(m)          Issuer’s Ownership.  The Seller shall take no action inconsistent with the Issuer’s ownership of the Managed Containers (except for such actions as are specifically authorized in the Management Agreement).

 

(n)           Access to Information; Notices.  In the event that the Seller is no longer the Manager, the Seller shall continue to make available to the Issuer and the Indenture Trustee its books and records concerning the Transferred Assets, subject to the terms and limitations set forth in Section 3.10.2 of the Management Agreement.

 

SECTION 4.02             Pledge of Transferred Assets.  The Seller understands that the Issuer has pledged the Transferred Assets and its rights under this Agreement to the Indenture Trustee under the Indenture, and consents to such pledge.  The Seller agrees that the Indenture Trustee may exercise the rights of the Issuer hereunder.

 

ARTICLE V

 

CONDITIONS PRECEDENT

 

SECTION 5.01             Conditions to Issuer Obligations.  The obligations of the Issuer to acquire Transferred Assets on any Transfer Date occurring on or after the Closing Date shall be subject to the satisfaction of the following conditions (in addition to the procedures required by Section 2.02(b)):

 

(a)           All representations and warranties of the Seller contained in this Agreement shall be true and correct in all material respects on such Transfer Date (including without limitation the Container Representations and Warranties);

 

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(b)           All written information concerning the Transferred Assets provided by the Seller to the Issuer shall be true and correct in all material respects;

 

(c)           The Seller shall have materially performed all other obligations required to be performed by the Seller pursuant to the provisions of this Agreement and the other Transaction Documents to which it is a party other than any such obligation the failure to so perform shall have not materially and adversely affected the interests of the Issuer;

 

(d)           All corporate and legal proceedings and all instruments in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Issuer, and the Issuer shall have received from the Seller copies of all documents (including without limitation records of corporate proceedings) relevant to the transactions herein contemplated as the Issuer may reasonably have requested;

 

(e)           No Trust Event of Default, Trust Early Amortization Event or Manager Default shall have occurred and then be continuing (other than any such Event of Default, Early Amortization Event or Manager Default that will be cured upon the consummation of such acquisition) or result from the acquisition of such Transferred Assets; and

 

(f)            The Issuer has adequate means of financing available in order to complete the acquisition of such Transferred Assets.

 

Notwithstanding the foregoing conditions precedent, upon the making of a transfer of Transferred Assets hereunder, all of Issuer’s rights under this Agreement (and by operation of law) shall vest in Issuer, whether or not the conditions precedent to such transfer were in fact satisfied.

 

SECTION 5.02             Conditions to the Seller’s Obligations.  The obligations of the Seller to convey and contribute the Transferred Assets on any Transfer Date occurring on or after the Closing Date shall be subject to the satisfaction of the following conditions (in addition to the procedures required by Section 2.02 hereof):

 

(a)           All representations and warranties of the Issuer contained in this Agreement shall be true and correct with the same effect as though such representations and warranties had been made on such date; and

 

(b)           All corporate and legal proceedings and all instruments in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Seller, and the Seller shall have received from the Issuer copies of all documents (including without limitation records of corporate proceedings) relevant to the transactions herein contemplated as the Seller may reasonably have requested.

 

SECTION 5.03             Waiver of Conditions.  None of the conditions precedent set forth in Section 5.01 or Section 5.02 may be waived without the prior written consent of the Issuer and Indenture Trustee (acting at the direction of the Requisite Global Majority) in each such instance.

 

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ARTICLE VI

 

TERMINATION

 

SECTION 6.01             Termination.  The respective obligations and responsibilities of the Seller and the Issuer created by this Agreement shall not terminate prior to payment in full of all Outstanding Obligations.

 

SECTION 6.02             Effect of Termination.  No termination or rejection or failure to assume the executory obligations of this Agreement in the bankruptcy of the Seller or the Issuer shall be deemed to impair or affect the obligations pertaining to any executed conveyance or executed obligations, including without limitation breaches of representations and warranties by the Seller or the Issuer occurring prior to the date of such termination.  Without limiting the foregoing, prior to termination, neither the failure of the parties to execute and to deliver a Container Transfer Certificate pursuant to Section 2.02, nor the failure of the Issuer to pay in cash or kind the compensation therefor shall render such transfer or obligation executory, nor shall the continued duties of the parties pursuant to Article IV or Section 8.06 of this Agreement render an executed conveyance executory.

 

ARTICLE VII

 

INDEMNIFICATION PAYMENTS

 

SECTION 7.01             Indemnification.  Subject to Section 3.03 hereof, the Seller agrees to indemnify and hold harmless the Issuer, its successors and assigns (which includes the third-party beneficiaries specified in Section 8.13) and their respective officers, directors, employees, counsel and agents (each, an “Indemnified Party”) against any and all liabilities, losses, damages, penalties, costs and expenses (including reasonable and documented out-of-pocket costs of defense and legal fees (of one counsel) but excluding (A) any special, consequential or punitive damages and (B) any damages on the basis of lost profits) which may be incurred or suffered by such Indemnified Party (except to the extent caused by the gross negligence, bad faith or willful misconduct of the Indemnified Party) as a result of (i) a breach by the Seller of any of its covenants and agreements set forth in this Agreement; (ii) any representation or warranty of the Seller proven to have been false or misleading in any material respect when made or deemed made in this Agreement; (iii) any information certified in any certificate or document delivered by the Seller pursuant hereto not being true in any material respect as of the date of such certificate or document (or, if earlier, the date set forth in such certificate or document); (iv) any personal injury or property damage claim or action arising out of or in connection with any of the Transferred Assets in connection with any act or omission prior to the related Transfer Date; (v) any defense, setoff or counterclaim arising out of any acts or omissions of the Seller with respect to any Transferred Assets transferred on or before the related Transfer Date; or (vi) any attempt by any Person to void, rescind or set aside any transfer of the Seller’s right, title and interest in the Transferred Assets to the Issuer as provided herein under statutory provisions or common law or equitable action, including any provision of the Bankruptcy Code or other insolvency law.  The obligations of the Seller under this Section 7.01 shall survive the termination of this Agreement.  It is expressly agreed and understood that this Section does not (and shall not be deemed to) create recourse to the Seller for the

 

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creditworthiness of any lessee or, for avoidance of doubt, for losses due to a lessee’s failure to make payments under a Lease or for the uncollectibility of the Leases.

 

SECTION 7.02             Procedure for Indemnification.  Promptly after receipt by an Indemnified Party of notice of the assertion of a claim or the commencement of a proceeding by a third-party with respect to any matter referred to in Section 7.01 which could be the subject of an indemnification claim against the Seller hereunder, such Indemnified Party shall give written notice thereof to the Seller and thereafter shall keep the Seller reasonably informed with respect thereto; provided, however, that failure of an Indemnified Party to give the Seller written notice as provided herein shall not relieve the Seller of its obligations hereunder except to the extent that the Seller (x) incurs any incremental costs directly related to the delay in failing to provide such notice within a reasonable period of time or (y) is otherwise materially and adversely prejudiced by such failure.  If any such proceeding (including any litigation, arbitration or similar proceeding) shall be brought against any Indemnified Party, the Seller shall be entitled to assume the defense thereof at the Seller’s expense with counsel chosen by the Seller and reasonably satisfactory to such Indemnified Party; provided, however, that any Indemnified Party may at its own expense retain separate counsel to participate in such defense.  The Seller shall not be liable under this Article VII for any amount paid in settlement of such claims or proceedings without the consent of the Seller unless such consent is unreasonably withheld.

 

ARTICLE VIII

 

MISCELLANEOUS PROVISIONS

 

SECTION 8.01             Amendment.  This Agreement may be amended from time to time by the Seller and the Issuer only with the prior written consent of the Indenture Trustee (acting at the direction of the Requisite Global Majority) and, if such amendment or modification would cause any of the events set forth in Section 1002(a)(i) through (vii) of the Indenture to occur, with the consent of the Persons set forth in Section 1002(a) of the Indenture).  The Issuer shall forward copies of any amendment to this Agreement to the Requisite Global Majority and, if any Series of Notes Outstanding is then rated, each applicable Rating Agency.

 

SECTION 8.02             Governing Law.  THIS AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 8.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

SECTION 8.03             Notices.  All demands, notices, and communications under this Agreement shall be in writing personally delivered, or sent by facsimile (with subsequent telephone confirmation of receipt thereof) or sent by internationally recognized overnight courier service, at the following address:

 

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Seller:
    	
 
    	
TAL   International Container Corporation
   100 Manhattanville Road
   Purchase, New York 10577-2135
   Attn:    Jeffrey Casucci, Vice   President, Treasury and Credit
   Fax:  914-697-2526
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to:

 

TAL   International Container Corporation

100   Manhattanville Road

Purchase,   New York 10577-2135

Attn:    Marc A. Pearlin, Vice President, General   Counsel & Secretary

Fax:     (914) 697-2526
    
	
 
    	
 
    	
 
    
	
Issuer:
    	
 
    	
TAL   Advantage V LLC
   100 Manhattanville Road
   Purchase, New York 10577-2135
   Attn: Jeffrey Casucci
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
With   a copy to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
TAL   International Container Corporation
   100 Manhattanville Road
   Purchase, New York 10577-2135
   Attn:    Jeffrey Casucci, Vice   President, Treasury and Credit
   Fax:     914-697-2526
    
	
 
    	
 
    	
 
    
	
Indenture   Trustee:
    	
 
    	
Wells   Fargo Bank, National Association
   MAC N9311-161

Sixth   Street and Marquette Avenue

Minneapolis,   Minnesota  55479

Attn:  Corporate Trust Services - Asset-Backed Administration

Fax:  (612) 667-3464
    
	
 
    	
 
    	
 
    
	
Requisite   Global Majority:
    	
 
    	
Merrill   Lynch, Pierce, Fenner & Smith Incorporated

One   Bryant Park, 11th Floor

New   York, NY 10036

Attention:   Branden Avishar

Facsimile   Number: (704) 719-5461
    
	
 
    	
 
    	
 
    
	
Hedge   Counterparty:
    	
 
    	
shall   be set forth in any related Hedge Agreement
    

 

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or at such other address as shall be designated by such party in a written notice to the other parties. Notice shall be effective and deemed received (a) two days after being delivered to the courier service, if sent by courier, (b) upon receipt of confirmation of transmission, if sent by telecopy, or (c) when delivered, if delivered by hand. Any rights to notices conveyed to a Rating Agency pursuant to the terms of the Indenture with respect to any Series shall terminate immediately if such Rating Agency no longer has a rating outstanding with respect to such Series.

 

Wherever notice or a report is required to be given or delivered to or from any party pursuant to this Agreement, a copy of such notice or report shall also be given or delivered by the Issuer to the Requisite Global Majority and the Indenture Trustee.

 

SECTION 8.04             Severability of Provisions.  If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.

 

SECTION 8.05             Assignment.  Notwithstanding anything to the contrary contained in this Agreement, this Agreement may not be assigned by the Seller except as provided in Section 4.01(a), without the prior written consent of the Issuer and the Indenture Trustee at the direction of the Requisite Global Majority and, except as provided in Section 4.02, this Agreement may not be assigned by the Issuer without the prior written consent of the Requisite Global Majority.  Whether or not expressly stated, all representations, warranties, covenants and agreements of the Seller and the Issuer in this Agreement, or in any document delivered by any of them in connection with this Agreement, shall be for the benefit of, and (in the case of rights of the Issuer) shall be exercisable by, the Indenture Trustee or by any other representative of the Requisite Global Majority.

 

SECTION 8.06             Further Assurances.  Each of the Seller and the Issuer agrees to do such further acts and things and to execute and deliver such additional assignments, agreements, powers and instruments as are reasonably required to carry into effect the purposes of this Agreement.

 

SECTION 8.07             Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of the Issuer or the Seller, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise hereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any rights, remedies, powers and privilege provided by law.

 

SECTION 8.08             Counterparts.  This Agreement may be executed in two or more counterparts (and by different parties on separate counterparts), each of which shall be an original, but all of which shall constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by facsimile or by electronic means shall be equally effective as of the delivery of an originally executed counterpart.

 

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SECTION 8.09             Binding.  This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

 

SECTION 8.10             Merger and Integration.  Except as specifically stated otherwise herein, this Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement.

 

SECTION 8.11             Headings.  The headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.

 

SECTION 8.12             Schedules and Exhibits.  The schedules and exhibits attached hereto and referred to herein shall constitute a part of this Agreement and are incorporated into this Agreement for all purposes.

 

SECTION 8.13             Intended Third Party Beneficiaries.  Each of the Requisite Global Majority, the Indenture Trustee and the Requisite Global Majority are express third party beneficiaries of this Agreement and, as such, shall have full power and authority to enforce the provisions of this Agreement against the parties hereto.  Except as set forth in the immediately preceding sentence, this Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

SECTION 8.14             Consent to Jurisdiction.  Any legal suit, action or proceeding against the Seller or the Issuer arising out of or relating to this Agreement, or any transaction contemplated hereby or thereby, may be instituted in any federal or state court in the County of New York, State of New York and each of the Seller and the Issuer 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 this Agreement, the Seller and the Issuer each hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding.

 

SECTION 8.15             WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, AS AGAINST THE OTHER PARTY HERETO, ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION OR PROCEEDING (WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE), INCLUDING ANY COUNTERCLAIM, ARISING UNDER OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, INCLUDING IN RESPECT OF THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT HEREOF OR THEREOF.

 

SECTION 8.16             No Claim.  Indemnity payments payable by the Issuer to the Seller, the Indenture Trustee and Manager hereunder shall be non-recourse to the Issuer and shall not constitute a claim (as defined in Section 101(5) of the Bankruptcy Code) against the Issuer or the Collateral in the event such amounts are not paid in accordance with the Indenture and the respective Supplements thereto.  Each of the Seller, Indenture Trustee and Manager hereby subordinates its claims hereunder to all claims which have priority in payment under the Indenture and the respective Supplements thereto, and further agrees that any such claims shall

 

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only be payable at the times and in the amounts for which funds are available for such purpose pursuant to the Indenture and the respective Supplements thereto.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Seller and the Issuer have caused this Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
TAL   INTERNATIONAL CONTAINER 
    
	
 
    	
CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
TAL   ADVANTAGE V LLC,
    
	
 
    	
 
    	
By:   
    	
TAL   International Container 
    
	
 
    	
 
    	
Corporation,   its Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

EXHIBIT A

 

LIST OF CONTAINERS

 

See Attached.

 

A-1-1

 

EXHIBIT B

 

CONTAINER TRANSFER CERTIFICATE

 

TAL INTERNATIONAL CONTAINER CORPORATION (the “Seller”) and TAL ADVANTAGE V LLC (the “Issuer”), pursuant to the Contribution and Sale Agreement, dated as of February 27, 2013 (as amended, supplemented, or otherwise modified in accordance with its terms, the “Agreement”), hereby confirm their understandings with respect to the transfer and conveyance by the Seller to the Issuer of the Containers listed by Container Identification Number on Schedule 1 attached hereto (the “Transferred Containers”) and Related Assets.

 

Conveyance of Containers.  The Seller hereby transfers and conveys to the Issuer all of the Seller’s rights, title and interest in, to, and under the Transferred Containers and Related Assets with respect thereto.  Such transfer and conveyance is made without recourse to the Seller except to the extent provided in the Agreement.

 

Seller Certifications.  The Seller hereby certifies that:

 

(1)           As of the date hereof (the “Transfer Date”) for the Transferred Containers being transferred on such date, the Seller was not insolvent under the Insolvency Law and will not be rendered insolvent by the transactions contemplated hereby; the Seller is paying its debts as they become due and, after giving effect to the transactions contemplated hereby, will have adequate capital to conduct its business.

 

(2)           As of such Transfer Date, each Transferred Container being transferred on such date complies with the Container Representations and Warranties made by the Seller pursuant to the Agreement as of such date.

 

The Seller’s Confirmations.  The Seller hereby confirms that:

 

(1)           The sum of the Net Book Values of the Transferred Containers  (as of the applicable date determined in accordance with Article II of the Agreement) is $          .

 

(2)           The Seller intends that transfers of the Transferred Assets made under this Container Transfer Certificate shall be removed from the Seller’s estate, as more particularly set forth in the Agreement.

 

All terms and conditions of the Agreement with respect to the Issuer, the Seller and the Transferred Assets are hereby ratified, confirmed and incorporated herein.

 

B-1-1

 

Capitalized terms defined in (or by reference in) the Agreement and not defined herein shall have their respective meanings as defined in (or by reference in) the Agreement.

 

	
 
    	
TAL   INTERNATIONAL CONTAINER 
    
	
 
    	
CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

CONTAINER TRANSFER CERTIFICATE

 

 

	
 
    	
TAL   ADVANTAGE V LLC, 
    
	
 
    	
 
    	
By:   
    	
TAL   International Container
    
	
 
    	
 
    	
Corporation,   its Manager
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

CONTAINER TRANSFER CERTIFICATE

 

 

SCHEDULE 3.01

 

OTHER NAMES OF THE SELLER

 

1.              Prior legal name: Transamerica Leasing Inc.

 

2.              Trade Names: Trader, Greyslot

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