EXHIBIT 10.10
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NARCAT LLC,
CARCAT ULC and
NARCAT MEXICO, S. DE R.L. DE C.V.,
as the Companies
THE ANDERSONS, INC.,
as the Manager
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as the Indenture Trustee and as the Backup Manager
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MANAGEMENT AGREEMENT
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Dated as of February 12, 2004
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I DEFINITIONS........................................................................... 2
Section 1.01. Defined Terms......................................................................... 2
Section 1.02. Terms Defined in the Indenture, Sale Agreements or Servicing Agreement................ 10
ARTICLE II MANAGEMENT OF RAILCARS................................................................ 10
Section 2.01. The Manager to Act as Manager; Standard of Care;
Covenants Concerning Railcars and Leases.......................................... 10
Section 2.02. Authority of Manager; Delegation of Management........................................ 12
Section 2.03. Duties of Manager..................................................................... 13
Section 2.04. Required Modifications and Optional Modifications..................................... 19
Section 2.05. Manager Fee and Supplemental Manager Fee.............................................. 20
Section 2.06. Authorized Deductions from Earnings................................................... 20
Section 2.07. Responsibility for Loss of, Distribution of, or Damage to Railcars.................... 22
Section 2.08. Denial or Refusal of Insurance........................................................ 23
Section 2.09. Conflicts of Interest................................................................. 23
Section 2.10. Separate Corporate Existence Covenants................................................ 23
ARTICLE III ACCOUNTINGS, STATEMENTS AND REPORTS................................................... 24
Section 3.01. Monthly Manager Report................................................................ 24
Section 3.02. Financial Statements; Certification as to Compliance; Notice of Default............... 24
Section 3.03. Annual Accountants' Reports........................................................... 25
Section 3.04. Delivery of Accountings, Statements and Reports....................................... 26
Section 3.05. Annual Security Interest Opinion...................................................... 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................ 27
Section 4.01. Initial Manager Representations and Warranties........................................ 27
Section 4.02. Company Representations and Warranties................................................ 30
Section 4.03. Initial Manager Representations and Warranties with Respect to the Collateral......... 31
Section 4.04. Purchase or Substitution Required upon Breach of Certain
Representations and Warranties.................................................... 37
ARTICLE V INITIAL MANAGER COVENANTS............................................................. 38
Section 5.01. Corporate Existence; Status as Manager; Merger........................................ 38
Section 5.02. The Manager Not to Resign; No Assignment.............................................. 39
Section 5.03. Car Mark Agreement, GNRR Agreement and Railcar Storage Agreement...................... 40
Section 5.04. Manager Indemnification............................................................... 40
Section 5.05. Expense Reimbursement................................................................. 41
Section 5.06. Agreements with respect to the Car Mark Agreement and the Railcar Storage Agreement... 41
ARTICLE VI MANAGER TERMINATION................................................................... 41
Section 6.01. Manager Events of Termination......................................................... 41
Section 6.02. Backup Manager to Act; Appointment of Successor....................................... 44
Section 6.03. Notification to Holders............................................................... 45
Section 6.04. Waiver of Breaches and Defaults....................................................... 45
Section 6.05. Effects of Termination of Manager..................................................... 45
Section 6.06. Rights Cumulative..................................................................... 47
ARTICLE VII THE BACKUP MANAGER.................................................................... 47
Section 7.01. Representations of Backup Manager..................................................... 47
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, Backup Manager....... 48
Section 7.03. Backup Manager Resignation............................................................ 48
Section 7.04. Duties and Responsibilities........................................................... 48
Section 7.05. Backup Manager Compensation........................................................... 49
ARTICLE VIII MISCELLANEOUS PROVISIONS.............................................................. 49
Section 8.01. Termination of Agreement.............................................................. 49
Section 8.02. Amendments............................................................................ 49
Section 8.03. Governing Law......................................................................... 50
Section 8.04. Notices............................................................................... 50
Section 8.05. Severability of Provisions............................................................ 50
Section 8.06. Inspection and Examination Rights..................................................... 51
Section 8.07. Binding Effect........................................................................ 51
Section 8.08. Article Headings...................................................................... 51
Section 8.09. Legal Holidays........................................................................ 52
Section 8.10. Assignment for Security for the Notes................................................. 52
Section 8.11. Third-Party Beneficiaries............................................................. 52
Section 8.12. No Bankruptcy Petition................................................................ 52
SCHEDULE I Manager Employee Benefits
SCHEDULE II Permitted Adjustments
SCHEDULE III Lease Delivery Exceptions
EXHIBIT A Form of Monthly Manager Report
EXHIBIT B Forms of Leases
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MANAGEMENT AGREEMENT, dated as of February 12, 2004 (this "Agreement"),
by and among NARCAT LLC ("NARCAT"), a Delaware limited liability company, CARCAT
ULC ("CARCAT"), a Nova Scotia unlimited liability company, and NARCAT MEXICO, S.
DE R.L. DE C.V. ("NARCAT Mexico"), a Mexican limited liability company with
variable capital, (each, a "Company" and collectively, the "Companies"), THE
ANDERSONS, INC. ("The Andersons"), an Ohio corporation, as the manager (the
"Manager"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Wells Fargo"), a
national banking association, as the indenture trustee (the "Indenture Trustee")
and as the backup manager (the "Backup Manager").
PRELIMINARY STATEMENT
The Companies are entering into an Indenture, dated as of February 12,
2004 (as amended or supplemented from time to time, the "Indenture"), among the
Companies and the Indenture Trustee, pursuant to which the Companies will issue,
jointly and severally, $29,000,000 aggregate principal amount of their 2.79%
Class A-1 Railcar Notes due 2019, $21,000,000 aggregate principal amount of
their 4.57% Class A-2 Railcar Notes due 2019, $31,400,000 of their 5.13% Class
A-3 Railcar Notes due 2019 and $5,000,000 aggregate principal amount of their
14.00% Class B Railcar Notes due 2019 (collectively, the "Notes"). The
obligations of the Companies under the Notes and the Indenture will be secured
by the Railcars, Leases and the other Railcar Assets (as such capitalized terms
are defined herein).
NARCAT is entering into a Sale Agreement, dated as of February 12, 2004
(the "NARCAT Sale Agreement"), with Cap Acquire, LLC (the "NARCAT Seller")
providing for, among other things, the sale by the NARCAT Seller to NARCAT of
certain Railcars, Leases and the other Railcar Assets which NARCAT is and will
be pledging to the Indenture Trustee, and in which NARCAT is granting to the
Indenture Trustee a security interest.
CARCAT is entering into a Sale Agreement, dated as of February 12, 2004
(the "CARCAT Sale Agreement"), with Cap Acquire Canada ULC (the "CARCAT Seller")
providing for, among other things, the sale by the CARCAT Seller of certain
Railcars, Leases and other Railcar Assets which CARCAT is and will be pledging
to the Indenture Trustee, and in which CARCAT is granting to the Indenture
Trustee a security interest.
NARCAT Mexico is entering into a Sale Agreement, dated as of February
12, 2004 (the "NARCAT Mexico Sale Agreement" and, together with the NARCAT Sale
Agreement and the CARCAT Sale Agreement, the "Sale Agreements"), with Cap
Acquire Mexico, S. de R.L. de C.V. (the "NARCAT Mexico Seller" and, together
with the NARCAT Seller and the CARCAT Seller, the "Sellers") providing for,
among other things, the sale by the NARCAT Mexico Seller of certain Railcars,
Leases and other Railcar Assets which NARCAT Mexico is and will be pledging to
the Indenture Trustee, and in which NARCAT Mexico is granting to the Indenture
Trustee a security interest.
It is a condition precedent to the issuance of the Notes under the
Indenture that, on or prior to the Closing Date (as defined in the Indenture),
the Companies enter into this Agreement
with the Manager and the Backup Manager to provide for the management of the
Railcars. In order to further secure each Company's obligations under the
Indenture and the Notes, each Company is granting to the Indenture Trustee a
security interest in, among other things, such Company's rights derived under
this Agreement, and the Manager agrees that all covenants and agreements made by
the Manager herein with respect to the Railcars, Leases and the other Railcar
Assets shall also be for the benefit and security of the Class A Note Insurer
(as defined herein), the Indenture Trustee and all Holders of the Notes. For its
services hereunder, the Manager will receive the Manager Fee and the
Supplemental Manager Fee as set forth in Section 2.05.
On the date hereof, the Companies, Wells Fargo, as the Indenture
Trustee and as the backup servicer, and The Andersons (the "Servicer") are
entering into a servicing agreement (the "Servicing Agreement") for the purpose
of engaging the Servicer to receive and apply, as required under the Indenture,
all collections received with respect to the Railcars and Leases and to perform
Lessee monitoring, collection and enforcement activities, to perform record
keeping and to prepare servicer reports, among other things, all as described in
the Servicing Agreement.
The Manager is engaged in the business of owning, leasing, managing and
servicing railcars for itself and for others, and each Company desires to retain
the Manager, on the terms and conditions set forth in this Agreement, to perform
operating, maintenance, insurance and remarketing services on behalf of each
Company in respect of the Railcars and Leases of each such Company.
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. Subject to Section 1.02, except as
otherwise specified or as the context may otherwise require, the following terms
have the respective meanings set forth below for all purposes of this Agreement,
and the definitions of such terms are equally applicable both to the singular
and plural forms of such terms and to the masculine, feminine and neuter genders
of such terms:
"AAR" shall have the meaning set forth in the Indenture.
"Action" shall mean any action, claim, suit, litigation, arbitration or
governmental investigation.
"Advance Rate" shall mean 90% of the Stated Value of any Railcar.
"Affiliate" shall have the meaning set forth in the Indenture.
"Agreement" shall mean this Management Agreement as amended, restated
or supplemented from time to time as permitted hereby.
"Anderson Family" shall mean any of (i) any child or descendant of
Harold Anderson, the founder of The Andersons, Inc., (ii) any spouse or former
spouse of any individual described in the preceding clause (i), and (iii) any
trust, the beneficiaries of which are any one or more of the individuals
described in the preceding clauses (i) or (ii). For purposes of this definition,
an adopted child shall be considered a lineal descendant.
"APA Seller Documents" shall mean the Asset Purchase Agreement, the Car
Mark Agreement, the GNRR Agreement, the Railcar Storage Agreement and all other
agreements, instruments and/or documents executed by any Railcar Entity in favor
of a Seller or a Company.
"Asset Purchase Agreement" shall have the meaning set forth in the
Indenture.
"Authorized Officer" shall have the meaning set forth in the Indenture.
"Backup Manager" shall have the meaning set forth in the preamble to
this Agreement.
"Backup Manager Fee" shall mean the fees of the Backup Manager set
forth in that certain fee letter, dated February 12, 2004, and acknowledged on
February 12, 2004 by the Companies.
"Board of Directors" shall mean the Board of Directors of the Manager
or any duly authorized committee of such Board.
"Business Day" shall have the meaning set forth in the Indenture.
"Canadian Registry" shall mean the Office of the Registrar General of
Canada, which maintains the database pursuant to Section 105 of the Canada
Transportation Act.
"Car Mark Agreement" shall have the meaning set forth in the Indenture.
"CARCAT" shall have the meaning set forth in the preamble to this
Agreement.
"CARCAT Collection Account" shall have the meaning set forth in the
Indenture.
"CARCAT OER Subaccount" shall have the meaning set forth in the
Indenture.
"CARCAT Sale Agreement" shall have the meaning set forth in the
Preliminary Statement of this Agreement.
"CARCAT Seller" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"Change of Control" shall mean (a) any Person or group (within the
meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the
date hereof) shall own directly or indirectly, beneficially or of record, shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the
Manager; provided, however, that any Person which shall be a member of the
Anderson Family shall be excluded from determinations made under this clause
(a); or (b) a majority of the seats (other than vacant seats) on the Board of
Directors of the Manager shall at any time be occupied by persons who were
neither (i) nominated by the Board of Directors of the Manager, nor (ii)
appointed by directors so nominated.
"Class A Note Insurer" shall mean MBIA Insurance Corporation, a stock
insurance company incorporated under the laws of the State of New York, or its
successors in interest.
"Class A Note Insurer Default" shall have the meaning set forth in the
Indenture.
"Closing Date" shall have the meaning set forth in the Indenture.
"Collateral" shall have the meaning set forth in the Indenture.
"Collection Accounts" shall have the meaning set forth in the
Indenture.
"Collection Period" shall have the meaning set forth in the Indenture.
"Collections" shall have the meaning set forth in the Indenture.
"Company" or "Companies" shall have the meaning set forth in the
preamble to this Agreement.
"Concentration Limits" shall have the meaning set forth in the
Indenture.
"Continued Errors" shall have the meaning set forth in Section 6.05(d).
"Controlling Party" shall have the meaning set forth in the Indenture.
"Determination Date" shall have the meaning set forth in the Indenture.
"DOT" shall mean the United States Department of Transportation.
"Eligible Railcar" shall have the meaning set forth in the Indenture.
"Environmental Law" shall have the meaning set forth in the Indenture.
"Errors" shall have the meaning set forth in Section 6.05(d).
"Event of Default" shall have the meaning set forth in the Indenture.
"Event of Loss" shall have the meaning set forth in the Indenture.
"FRA" shall mean the Federal Railroad Administration.
"Full Service Lease" shall have the meaning set forth in the Indenture.
"GAAP" shall have the meaning set forth in the Indenture.
"GNRR Agreement" shall have the meaning set forth in the Indenture.
"Governmental Authority" shall have the meaning set forth in the
Indenture.
"Hazardous Commodities" shall have the meaning set forth in the
Indenture.
"Holder" or "Holders" shall have the meaning set forth in the
Indenture.
"Indemnified Parties" shall have the meaning set forth in Section 5.04.
"Indenture" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"Indenture Trustee" shall have the meaning set forth in the preamble to
this Agreement.
"Initial Manager" shall mean The Andersons and any of its Affiliates.
"Insurance Policy" shall have the meaning set forth in the Indenture.
"Insurance Proceeds" shall have the meaning set forth in the Indenture.
"Insurers" shall have the meaning set forth in the Indenture.
"Interchange Rules" shall have the meaning set forth in the Sale
Agreements.
"Knowledge of the Manager" shall mean the actual knowledge, after due
inquiry, of the officers of the Manager or any Affiliate of the Manager
responsible for matters relating to the Manager's performance of its obligations
hereunder.
"Law" shall have the meaning set forth in the Indenture.
"Lease" shall have the meaning set forth in the Indenture.
"Lease File" and "Lease Files" shall have the meanings set forth in the
Servicing Agreement.
"Lease and Railcar Schedule" shall have the meaning set forth in the
Indenture.
"Lessee" shall have the meaning set forth in the Indenture.
"Lessor" shall mean the lessor under each related Lease, or a successor
or assignee of such lessor.
"Liens" shall have the meaning set forth in the Indenture.
"Lockbox Account" shall have the meaning set forth in the Servicing
Agreement.
"Lockbox Agreements" shall have the meaning set forth in the Servicing
Agreement.
"Lockbox Bank" shall have the meaning set forth in the Servicing
Agreement.
"Maintenance Expense Reimbursement Request" shall have the meaning set
forth in Section 2.06(b).
"Majority Holders" shall have the meaning set forth in the Indenture.
"Manager" shall have the meaning set forth in the preamble to this
Agreement, or any Successor Manager appointed pursuant to Section 6.01.
"Manager Events of Termination" shall mean each of the occurrences or
circumstances enumerated in Section 6.01.
"Manager Fee" shall mean a monthly fee equal to $25.00 per Railcar per
month (whether or not such Railcar is then subject to a Lease); provided,
however, that the Manager Fee, at the direction of the Controlling Party, may be
increased to up to $37.50 per Railcar (whether or not such Railcar is then
subject to a Lease) per month in the event that any Person other than the
Initial Manager shall be the Manager.
"Manager Standard" shall have the meaning set forth in Section 2.01(b).
"Manager Termination Notice" shall have the meaning set forth in
Section 6.01(b).
"Material Adverse Effect" shall have the meaning set forth in the
Indenture.
"Modified Lease" shall mean any Lease in which the Lessee is
responsible for repairs to specific items such as gates, hatch covers, doors, or
other items specified in the Lease, and the Lessor is responsible for all other
maintenance.
"Monthly Manager Report" shall have the meaning set forth in Section
3.01.
"NARCAT" shall have the meaning set forth in the preamble to this
Agreement.
"NARCAT Collection Account" shall have the meaning set forth in the
Indenture.
"NARCAT Mexico" shall have the meaning set forth in the preamble to
this Agreement.
"NARCAT Mexico Sale Agreement" shall have the meaning set forth in the
Preliminary Statement of this Agreement.
"NARCAT Mexico Seller" shall have the meaning set forth in the
Preliminary Statement of this Agreement.
"NARCAT OER Subaccount" shall have the meaning set forth in the
Indenture.
"NARCAT Sale Agreement" shall have the meaning set forth in the
Preliminary Statement of this Agreement.
"NARCAT Seller" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"Note Principal Balance" shall have the meaning set forth in the
Indenture.
"Note Register" shall have the meaning set forth in the Indenture.
"Notes" shall have the meaning set forth in the Preliminary Statement
of this Agreement.
"Officer's Certificate" shall mean a certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President, a Vice President,
the Treasurer or the Secretary of the Manager.
"Operating Expense Reserve Account" shall have the meaning set forth in
the Indenture.
"Operating Expense Reserve Subaccounts" shall mean, collectively, the
CARCAT OER Subaccount and the NARCAT OER Subaccount.
"Operating Expenses" shall have the meaning set forth in Section
2.06(a).
"Opinion of Counsel" shall mean a written opinion of counsel who,
unless otherwise specified, may be in-house counsel employed full time by the
Person (or an affiliate of such Person) required to deliver the opinion.
"Optional Modification" shall have the meaning set forth in Section
2.04(b).
"Outstanding" shall have the meaning set forth in the Indenture.
"Payment Date" shall have the meaning set forth in the Indenture.
"Permitted Adjustments" shall mean any of the adjustments described on
Schedule II hereto.
"Permitted Liens" shall have the meaning set forth in the Indenture.
"Person" shall have the meaning set forth in the Indenture.
"PPSA" shall mean the Personal Property Security Act (Nova Scotia).
"Predecessor Manager Work Product" shall have the meaning set forth in
Section 6.05(d).
"Prefunded Existing Lease" shall have the meaning set forth in the
Indenture.
"Prefunded Lease and Railcar Schedule" shall have the meaning set forth
in the NARCAT Sale Agreement.
"Prefunded Railcar" shall have the meaning set forth in the Indenture.
"Prefunded Railcar Acquisition Date" shall have the meaning set forth
in the Indenture.
"Prime Rate" shall have the meaning set forth in the Indenture.
"Purchase" shall mean a purchase by the Manager of a Railcar and any
related Lease and other related Railcar Assets pursuant to Section 4.04.
"Purchase Price" shall have the meaning set forth in Section 4.04(c).
"Railcar" or "Railcars" shall have the meaning set forth in the
Indenture.
"Railcar Assets" shall have the meaning set forth in the Indenture.
"Railcar Entities" shall have the meaning set forth in the Indenture.
"Railcar Storage Agreement" shall mean that certain Railcar Storage
Agreement, dated as of February 12, 2004, by and between Progress Rail Services
Corporation, Cap Acquire, LLC, Cap Acquire Canada ULC and Cap Acquire Mexico, S.
de R.L. de C.V. as the same may be amended, restated, supplemented or otherwise
modified from time in accordance with its terms.
"Railroad Mileage Credits" shall have the meaning set forth in the
Indenture.
"Rapid Amortization Event" shall have the meaning set forth in the
Indenture.
"Rating Agencies" shall have the meaning set forth in the Indenture.
"Rating Agency Condition" shall have the meaning set forth in the
Indenture.
"Relevant Company" shall have the meaning set forth in the Servicing
Agreement.
"Relevant Sale Agreement" shall mean (i) with respect to CARCAT, the
CARCAT Sale Agreement, (ii) with respect to NARCAT Mexico, the NARCAT Mexico
Sale Agreement and (iii) with respect to NARCAT, the NARCAT Sale Agreement.
"Reported Companies" shall mean The Andersons, if the Manager is The
Andersons, or for any Successor Manager appointed pursuant to this Agreement,
such Successor Manager and its parent and its Affiliates on a consolidated
basis.
"Reported Companies' Financial Statements" shall mean the Reported
Companies' audited, consolidated financial statements (including consolidated
balance sheets, statements of earnings, retained earnings and cash flows)
including all notes to the audited financial statements and auditors opinion
regarding the audited financial statements, all prepared in accordance with
generally accepted accounting principles.
"Required Modification" shall have the meaning set forth in Section
2.04(a).
"Sale Agreements" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"Scrapped Railcar" shall have the meaning set forth in the Indenture.
"Secured Parties" shall have the meaning set forth in the Indenture.
"Sellers" shall have the meaning set forth in the Preliminary Statement
of this Agreement.
"Separate Person" shall have the meaning set forth in Section 2.10.
"Servicer" shall have the meaning set forth in the preamble to the
Servicing Agreement, or any Successor Servicer appointed pursuant to Section
6.01 of the Servicing Agreement.
"Servicing Agreement" shall have the meaning set forth in the
Preliminary Statement of this Agreement.
"Servicer Event of Termination" shall have the meaning set forth in the
Servicing Agreement.
"Solvent" shall have the meaning set forth in the Indenture.
"Stated Value" shall have the meaning set forth in the Indenture.
"STB" shall have the meaning set forth in the Indenture.
"Subsequent Lease" shall have the meaning set forth in the Indenture.
"Substitute Railcar" shall mean any Railcar substituted pursuant to
Section 4.04 which (i) is an Eligible Railcar, (ii) has a Stated Value not less
than the Stated Value of the Railcar for which it is substituted and (iii) is of
a similar type, and has a similar term of service, to the Railcar for which it
is substituted.
"Successor Manager" shall have the meaning set forth in Section
6.01(b).
"Supplemental Manager Fee" shall mean a monthly fee equal to $37.50 per
Railcar minus the then-applicable Manager Fee per Railcar per month (whether or
not such Railcar is then subject to a lease).
"Tangible Net Worth" shall mean with respect to any Person as of any
particular date, (a) consolidated net worth, (b) minus the consolidated book
value of intangible assets, (c) plus the consolidated book amount of long term
deferred income. Additionally, "Tangible Net Worth" shall not include any assets
or liabilities related to The Andersons' investments in special purpose entities
established to facilitate the acquisition of certain rail assets from Progress
Rail Services, Railcar Ltd., or any of their Affiliates.
"The Andersons" shall have the meaning set forth in the preamble to
this Agreement.
"TOP CAT" shall have the meaning set forth in the Servicing Agreement.
"Transaction Documents" shall have the meaning set forth in the
Indenture.
"Trustee Fee" shall have the meaning set forth in the Indenture.
"UCC" shall mean Article 9 of the Uniform Commercial Code as in effect
in an applicable jurisdiction within the United States.
"UMLER" shall have the meaning set forth in the Indenture.
Section 1.02. Terms Defined in the Indenture, Sale Agreements or
Servicing Agreement. For the purposes of this Agreement, capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned to
such terms in the Indenture or, if not defined therein, in the Sale Agreements
or the Servicing Agreement, as applicable.
ARTICLE II
MANAGEMENT OF RAILCARS
Section 2.01. The Manager to Act as Manager; Standard of Care;
Covenants Concerning Railcars and Leases. (a) Each Company hereby retains The
Andersons as Manager hereunder, as an independent contractor for the purpose of
undertaking and performing the services described in this Agreement, and The
Andersons hereby agrees to act as Manager on the terms and conditions set forth
herein.
(b) All of the functions, services, duties and obligations of the
Manager under this Agreement shall be performed by the Manager at a level of
care and diligence consistent with customary commercial practices as would be
used by a prudent Person in the railcar leasing and management industry and the
level of care and diligence utilized by the Manager in its business
and in the management of the Manager's own fleet of railcars, if any, in order
for each Company to be able to perform its obligations under the Leases and the
other applicable Transaction Documents (the "Manager Standard"). The Manager
agrees that management of the Railcars shall be carried out in accordance with
the Manager Standard.
(c) The Manager shall not be required to threaten or commence any
legal or other proceedings before any court or Governmental Authority or
nongovernmental organization in connection with its performance or actions
hereunder if, in the Manager's reasonable judgment consistent with the Manager
Standard, the potential expense or risk associated with such exercise or action
is such that the Manager would not undertake such exercise or action with
respect to other railcars owned, leased or managed by the Manager.
(d) The Manager shall not create or permit to exist any Lien on
any Railcar, Lease or other Railcar Asset other than a Permitted Lien.
(e) The Manager shall, in connection with the performance of the
services provided for herein, comply in all material respects with all Laws
applicable to the Manager, any Company, the Railcars, the Leases and the other
Railcar Assets.
(f) The duties and obligations of the Manager will be limited to
those expressly set forth in this Agreement, and the Manager will not have any
fiduciary or other implied duties or obligations, except as provided herein.
(g) The Manager shall not take any action, without the consent of
the Indenture Trustee (acting at the direction of the Controlling Party), which
would release any Person from any of its covenants or obligations under any of
the Leases or under any other instrument included in the Collateral, which
action or release would materially and adversely affect the interests of the
Class A Note Insurer, the Holders or the Indenture Trustee in any such Lease or
which would result in the amendment, hypothecation, subordination, termination,
set off or discharge of, or impair the validity or effectiveness of, any of the
Leases or any such instrument, except as expressly provided herein and therein.
(h) The parties hereto acknowledge that each Company shall retain
title to, and ownership and exclusive control of, its Collateral (subject to the
Lien of the Indenture). Except as expressly permitted hereunder, the Manager
will not acquire any title to, security interest in, or other rights of any kind
in or to the Railcars, the Leases or any other Railcar Assets. The Manager
agrees not to file any Lien, exercise any right of setoff against, or attach or
assert any claim in, any of the Railcars, the Leases or any other Railcar
Assets, unless authorized pursuant to a judicial or administrative proceeding or
a court order or on behalf of any Company or the Indenture Trustee in accordance
with this Agreement or the Indenture.
(i) The Manager shall maintain, at its own expense, an insurance
policy, with coverage appropriate and customary in the industry with responsible
companies on all officers or employees of the Manager, or other persons
authorized by the Manager to act in any capacity with regard to the Railcar
Assets to handle funds, money, documents and papers relating to the Railcar
Assets. Any such insurance policy shall protect and insure the Manager against
losses,
including forgery, theft, embezzlement, and fraudulent acts of such persons and
shall be maintained in a form and amount that would meet the requirements of a
prudent institutional Manager. The requirement to maintain such insurance policy
shall not diminish or relieve the Manager from its duties and obligations as set
forth in this Agreement. Any such insurance policy shall not be cancelled or
modified in a materially adverse manner without ten days' prior written notice
to the Indenture Trustee and the Class A Note Insurer. The Manager shall
promptly, but in any event within five Business Days after receipt, notify the
Indenture Trustee and the Class A Note Insurer upon receipt from the surety of
any termination or cancellation notice or any other notice of a material change
to the terms of such insurance policy.
(j) The Manager shall use its best efforts to ensure that new
non-renewal Leases will conform to one of the form leases attached as Exhibit B,
except for such modifications or deviations which will not have a material
adverse effect on the Holders or the Class A Note Insurer, unless otherwise
approved by the Controlling Party.
(k) The Successor Manager may perform any duties hereunder either
directly or through agents or attorneys, and the Successor Manager shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent or attorney appointed by it with due care
hereunder.
(l) The Manager shall not directly perform services in Canada nor
hire non-Canadian residents to perform services in Canada. The Manager, as an
agent for CARCAT, shall engage Canadian residents to perform services in Canada
for CARCAT.
(m) The Backup Manager may, both before and after the time, if
any, that it is acting as Successor Manager, share information regarding the
Railcars, Leases and other Railcar Assets with its agents and attorneys;
provided, however, that unless a Manager Event of Termination has occurred and
is continuing or the Class A Note Insurer directs otherwise, the Backup Manager
shall ensure that such shared information has been redacted to remove all
information that, if disclosed, would create a competitive disadvantage for The
Andersons (including but not limited to the names of Lessees).
(n) Notwithstanding the proviso appearing in the definition of the
term "Concentration Limits", the Manager shall in its leasing efforts use
reasonable efforts, in compliance with the Manager Standard, to maintain
compliance by the portfolio of Railcars and associated Leases with the
Concentration Limits (such as, all other factors being equal, giving precedence
to a Subsequent Lease that would maintain compliance with the Concentration
Limits over a Subsequent Lease that would not maintain compliance with the
Concentration Limits).
Section 2.02. Authority of Manager; Delegation of Management. (a) Until
the termination of this Agreement in accordance with Section 8.01, the Manager,
on behalf of each Company, shall have full authority and power to manage the
Railcars and the Leases in all respects, including, but not limited to, the
following authority and powers, in accordance with the Manager Standard:
(i) To contract for the maintenance, storage and release
of the Railcars and to authorize any repairs or maintenance service
which, in the exercise of the Manager's business judgment, are
necessary or appropriate.
(ii) To enter into Subsequent Leases in the name of the
Relevant Company.
(iii) To settle any claim pertaining to the Railcars or the
deployment or use thereof.
(iv) To do any and all other things necessary or
appropriate to fulfill the duties set forth in Section 2.03 below.
(b) Notwithstanding the foregoing, the authority granted to the
Manager under this Section 2.02 shall not cover any matters (i) which the
Relevant Company, as owner of the Railcars in question, shall not be entitled to
perform under the Indenture or any other agreement to which any such Company
shall be bound, or (ii) as to which the Servicer shall have been granted
authority under the Servicing Agreement.
(c) The Manager may enter into management agreements with one or
more submanagers, with prior written notice to the Class A Note Insurer, each
Company, the Backup Manager and the Indenture Trustee, to perform all or a
portion of the management functions on behalf of the Manager; provided, however,
that the Manager will remain obligated and be liable to the Class A Note
Insurer, the Indenture Trustee, the Backup Manager and each Company for managing
the Railcars in accordance with the provisions of this Agreement, without
diminution of such obligation and liability by virtue of the appointment of such
submanager, to the same extent and under the same terms and conditions as if the
Manager alone were managing the Railcars. The fees and expenses of the
submanager (if any) will be as agreed between the Manager and its submanager and
shall be the liability of the Manager exclusively, and none of the Class A Note
Insurer, the Indenture Trustee, the Backup Manager, any Company or any Holder
will have any responsibility therefor; provided, however, to the extent agreed
to between the Manager and submanager, expenses of the submanager may be
reimbursed by the Manager and treated for all purposes hereof as expenses
incurred by the Manager (which, subject to the terms of the Indenture and the
limitations contained in Section 2.06(b), be reimbursable from the Operating
Expense Reserve Subaccounts or, to the extent that funds in the relevant
Operating Expense Reserve Subaccount are insufficient, the Collection Accounts,
if and to the extent provided herein and in the Indenture). All actions of a
submanager taken pursuant to such a submanager agreement will be taken as an
agent of the Manager with the same force and effect as though performed by the
Manager. For the avoidance of doubt, any maintenance shop which routinely
services or repairs railroad rolling stock, including any of the Railcars, or
does running repairs shall not, solely based upon such custom (and not a written
agreement), be deemed a submanager.
Section 2.03. Duties of Manager. In consideration of the compensation
to be paid to the Manager pursuant to Section 2.05, and, if applicable, Section
6.02(a), and subject to the provisions of Section 2.02 above, the Manager shall
provide and perform the services on behalf
of each Company set forth below until this Agreement is terminated in accordance
with Section 8.01:
(a) To contract for the maintenance, storage and release
of the Railcars and to authorize any repairs or maintenance service
which, in the exercise of the Manager's business judgment, are
necessary or appropriate.
(b) For any Railcar not subject to a Lease, to take
possession of such Railcar, as agent for the Relevant Company, for the
purpose of managing and operating such Railcar as herein provided,
subject to the Lien of the Indenture.
(c) To exercise the authority granted in Section 2.02
above and to use its best efforts in accordance with the Manager
Standard to keep the Railcars under lease for the term of this
Agreement, subject to the following conditions:
(i) the Manager shall only enter into a
Subsequent Lease if each of the representations and warranties
set forth in Section 4.03 with respect to such Subsequent
Lease are true and correct as of the date of the origination
of such Subsequent Lease and the Concentration Limits are
satisfied;
(ii) the Manager (A) shall have delivered to the
Backup Manager, the Indenture Trustee and the Class A Note
Insurer an updated Lease and Railcar Schedule reflecting the
addition of such Subsequent Lease and (B) shall maintain a
complete and current copy of such Lease and Railcar Schedule
in its records for inspection in accordance with the terms
hereof; and
(iii) the Manager shall have delivered any items
to be included in the Lease File in respect of such Subsequent
Lease to the Servicer to be held on behalf of the Indenture
Trustee (except that any originals of the Lease not in the
possession of the Lessee under such Lease shall be delivered
to the Indenture Trustee).
(d) To enter into or accept assignment of, on behalf of
each Company, lease agreements providing for the lease of the Railcars
to railroads, shippers or other financially responsible parties for
that purpose on terms and conditions which are customary in its own
practice in the industry (including, without limitation, exercising its
right to cause a railroad to put the Railcars on such railroad's line
bearing such railroad's reporting marks, if such arrangement appears,
in the Manager's business judgment, to be either the most effective
method of remarketing the Railcars or the most effective short-term use
of the Railcars pending long-term remarketing), taking such steps as
may be required to ensure that all obligations and duties arising under
such agreements are performed or complied with in an orderly and timely
fashion and causing all original copies of the Leases constituting
chattel paper not in the possession of the Lessee under such Lease to
be delivered to the Indenture Trustee.
(e) Cause to be taken all steps which may be necessary to
have the Railcars registered and accepted by all hauling carriers under
the AAR as required by the terms of any Lease or otherwise.
(f) Maintain, or to enforce the Lessees' obligations to
maintain, the Railcars in good condition equal to or greater than the
highest of (i) any standard required or set forth for the Railcars or
railcars of a similar class by the AAR, STB, or DOT or any equivalent
authority in Canada or Mexico, (ii) any standard set by a Lessee,
whether by terms of a Lease or by other understanding or agreement
between such Lessee and the Manager, on behalf of each Company, (iii)
any standard set by any Insurance Policy under which the Railcars shall
from time to time be insured, (iv) in good working order and in
accordance with the Interchange Rules, (v) any standard recommended by
the manufacturer, and (vi) the standards used by the Manager in respect
of railcars owned, leased or managed by the Manager and its Affiliates
similar in type to the Railcars.
(g) Place and maintain, or enforce the Lessees'
obligations to maintain, such insurance with respect to the Railcars as
shall be necessary to comply with the provisions of Section 11.14 of
the Indenture. During the month of February in each year, beginning
February, 2005, the Manager shall deliver to each Company, the Class A
Note Insurer, the Backup Manager and the Indenture Trustee an Officer's
Certificate confirming the renewal of all Insurance Policies.
(h) Within 10 days after the Closing Date with respect to
the initial Collateral and as necessary from time to time thereafter
with respect to any Railcars, Leases (except for Leases which have
terms of less than one year, including, but not limited to,
month-to-month Leases) and the other Railcar Assets located in the
United States or Canada which shall become part of the Collateral, the
Manager shall make, at the expense of either NARCAT or CARCAT, as
applicable, such filings, deposits, registers or recordations, in the
manner required by and in accordance with applicable law, necessary to
perfect and protect the Lien of the Indenture, including filings with
the STB pursuant to 49 U.S.C. 11301(a) (and in conformity with 49
C.F.R. 1177) and with the Canadian Registry and the filing of UCC and
PPSA financing statements in all applicable filing offices. From time
to time thereafter, the Manager shall take or cause to be taken such
actions and execute such documents as are necessary to perfect and, at
the expense of each Company, preserve and protect each Company's, the
Indenture Trustee's, and the Holders' interests, as such interests may
appear, in the Collateral against all other Persons, including the
filing of financing statements, amendments thereto and continuation
statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
Notwithstanding the foregoing, neither the Manager, any Company or any
other person is required to take any actions described in this
paragraph with respect to any Railcars, Leases or other Railcar Assets
to the extent that such action involves the making of any filings,
deposits, registrations or recordations in Mexico.
(i) Maintain books and records reflecting transactions
arising from the operation of the Railcars, including records relating
to maintenance, repair and service
contracts and all authorized expenses relating thereto. Such books and
records shall be available to each Company, the Backup Manager, the
Class A Note Insurer and the Indenture Trustee upon any Company's, the
Backup Manager's, the Class A Note Insurer's or the Indenture Trustee's
reasonable prior request for examination during the normal business
hours of the Manager.
(j) Monitor movement of the Railcars, including (i)
keeping records pertaining to the movement of the Railcars, Railcar
Mileage Credits and other compensation earned and received with respect
to such Railcars as well as charges from railroads as a result of
mileage adjustments; (ii) subject to all rules and tariffs of the
railroad, crediting such Railcar Mileage Credits and other compensation
as provided for in the related Lease; and (iii) such other matters as
may be reasonably related thereto.
(k) Place reporting marks or such other marks, legends,
or placards on the Railcars as shall be appropriate or necessary to
comply with any regulation imposed by the STB, the AAR or any
equivalent authority, or as shall be required under the Indenture.
Immediately following the Closing Date, except with respect to the
reporting marks which are the subject of the Car Mark Agreement, the
Manager covenants to take all or cause its Affiliates to take all
necessary action to change the UMLER designation associated with the
reporting marks relating to the Railcars so as to reflect such
Company's ownership of said marks immediately following the Closing
Date. The Manager will cause each Railcar owned by any Company to be
kept numbered with the road number serial number as shall be set forth
on the Lease and Railcar Schedule. Except as otherwise contemplated in
the Car Mark Agreement, the Manager shall not allow the name of any
other Person, other than the related Company, to be placed on any
Railcar as a designation that might be identified as a claim of any
interest therein; provided, however, that nothing herein contained
shall prohibit the Manager or any Company or its permitted lessees from
placing its name, trademarks, initials, customary colors and other
insignia on any Railcar or from naming any Railcar. The Manager shall
not change the identification number of any Railcar unless and until a
statement of a new number or numbers to be substituted therefor shall
have been delivered to the Indenture Trustee and the Class A Note
Insurer and filed, recorded and deposited by the Manager in all
appropriate public offices, including the public offices where the
Indenture shall have been filed, recorded and deposited.
(l) Furnish factual information reasonably requested by
any Company in connection with any federal, state, or local tax
returns.
(m) Prepare or cause to be prepared the necessary returns
or other filings for all personal property taxes and other taxes,
charges, assessments, or levies imposed upon or against the Railcars or
any Company of whatever kind or nature and, where it deems appropriate
(or as otherwise directed by any Company), protest the application of
such taxes or the rate or amount of assessment thereunder. The Manager
shall pay, or enforce the Lessees' obligations to pay, such taxes on
behalf of each Company. In the Manager's discretion (or as otherwise
directed by any Company), the Manager shall contest or defend against
any taxes imposed upon or against the Railcars and seek revision or
appeal
from any such taxes deemed improper, all such actions to be in the name
of the Relevant Company or the Manager on behalf of the Relevant
Company. Notwithstanding the foregoing, the consent of the Controlling
Party shall be required prior to any protest, contest, defense or
appeal in respect of any taxes, rate or amount hereinabove referred to
in the event that the aggregate liability at issue at any one time
shall exceed $100,000.
(n) If any Railcar suffers an Event of Loss, the Manager
shall, promptly after learning of such Event of Loss, (i) investigate
the facts and circumstances giving rise to such Event of Loss and
provide such notices and Officer's Certificates with respect thereto on
behalf of the Relevant Company as may be required under the applicable
Lease, (ii) collect or arrange for appropriate payment of compensation
from the relevant railroad, Lessee, third party or other source, or
combination thereof, and take such other steps, including field
inspection and investigation, as deemed appropriate by the Manager, and
(iii) take all steps and actions, including the hiring of attorneys and
consultants, required with respect to such Event of Loss under the
applicable Lease. Following such investigation and consideration of
such other facts and circumstances as the Manager feels are necessary
or appropriate, the Manager shall terminate such Lease (as to such
Railcar) and arrange for deposit of the related Lessee's payments,
railroad payments or insurance proceeds into the Collection Account.
With respect to any Railcar suffering an Event of Loss, the Manager is
hereby granted full power and authority, subject to the terms and
conditions of the Leases, to sell (or dispose as scrap) on the Relevant
Company's behalf any such Railcar which has been settled for under the
rules of the AAR or settled with Lessees or any Insurer and, upon
direction of such Company, the Manager will effect such sale or
disposition in accordance with the Manager Standard, for no additional
fee or other compensation. The Manager shall transfer to the relevant
Lockbox Bank, for deposit into the related Lockbox Account, any amounts
the Manager receives in respect of such Event of Loss from such
sources. Each Company hereby agrees to execute all necessary powers of
attorney and other documents evidencing such power and authority in
favor of the Manager. Anything herein to the contrary notwithstanding,
in the event of damage to a Railcar to which Rule 107 of the
Interchange Rules applies, the Manager shall not, without the prior
written consent of the Controlling Party, (i) accept any settlement
offer if the offered Settlement Value (set forth in the related
"Settlement Value Statement" (as such term is used in Rule 107)) is
less than the Advance Rate times the Stated Value of such Railcar nor
(ii) reject any such settlement offer if the offered Settlement Value
equals or exceeds the Advance Rate times the Stated Value of such
Railcar.
(o) Upon the expiration of any Lease (or upon the
acquisition by any Company of any Railcar not then subject to a Lease),
the Manager shall, (i) until the related Railcars have been leased or
re-leased in accordance with this Agreement and the Indenture,
transport and store, or arrange for the transportation and storage of,
such Railcars on tracks designated by the Manager (whether such tracks
are owned by the Manager or otherwise), (ii) negotiate appropriate
renewals thereof or remarket the related Railcars on terms and
conditions which are in compliance with the terms and provisions of the
Indenture, as to which each of the representations and warranties
contained in Section 4.03 shall be correct and which otherwise are
customary at such time and with
adequate regard as to credit quality in accordance with the Manager
Standard; (iii) inspect, clean (to the extent not done by the
applicable Lessee) and refurbish any Railcar which is to be remarketed
in a manner consistent with the Manager Standard; and (iv) take such
steps as may be required to see that all obligations and duties arising
under the Indenture with respect to the remarketed Railcars are
performed or complied with to the extent required thereunder.
(p) Terminate any Lease (if permitted by, and in
accordance with the terms of, such Lease) with respect to any Railcar
which the Manager believes is obsolete or surplus to the Relevant
Company's requirements under the terms of such Lease and provide such
notices with respect thereto as may be required under such Lease to
effect such a termination; if such election is made, take the necessary
action on behalf of such Company to arrange for the sale of such
Railcar and the termination of the Lease of such Railcar.
(q) Cause compliance with the Lessor's obligations, if
any, under the return provisions of any Lease with respect to any
Railcar which is being returned to the Relevant Company thereunder.
(r) Enforce, on behalf of the Relevant Company, the
warranties with respect to all repairs, maintenance and modifications
made with respect to the Railcars at facilities not owned by the
Manager or an Affiliate of the Manager.
(s) In the event that any Railcar shall become
economically obsolete or damaged beyond repair, sell such Railcar in
compliance with the requirements of the Indenture.
(t) In the event that the Relevant Company (with the
consent of the Controlling Party) shall so direct, sell such Railcar to
such purchaser as the Relevant Company shall designate to the Manager.
(u) Enforce the Lessee's obligations to ensure compliance
of the Railcars and Leases with applicable governing regulations and
rules, including regulations and rules promulgated by AAR, DOT, STB and
the FRA, including, but not limited to, maintaining the STB
registration of the Leases and, in the event that any Lessee is a
United States Governmental Authority, cause the Relevant Company to
comply with the Assignment of Claims Act.
(v) Perform on behalf of each Relevant Company all
maintenance obligations thereof (as Lessor) set forth in any Leases.
(w) Notify the Controlling Party and each Company of any
breaches of warranties, misrepresentations or defaults of the Railcar
Entities under the Asset Purchase Agreement or any related APA Seller
Document.
(x) Enforce all covenants and obligations of the Railcar
Entities contained in the Asset Purchase Agreement and the other APA
Seller Documents on behalf of the Companies and deposit any amounts
recovered into the Collection Account, and take such actions as may be
reasonably requested from time to time by any Company or the
Controlling Party on behalf of such Company) in connection with such
enforcement, and deliver to such Company (with a copy to the Indenture
Trustee and the Class A Note Insurer) all consents, approvals,
directions, notices, waivers and take other actions under the Asset
Purchase Agreement and the other APA Seller Documents.
(y) Without limiting the foregoing, to perform all
obligations of each Company under the Indenture with respect to the
Railcars, the Leases and the other Railcar Assets.
(z) Perform for each Company such other services
incidental to the foregoing as may from time to time be reasonably
necessary in connection with the leasing, operation and day-to-day
management of the Railcars.
(aa) On the 15th day of each February, May, August and
November (or if such day is not a Business Day, then the next Business
Day), commencing May 17, 2004, the Manager shall deliver to the Backup
Manager, the Indenture Trustee and the Class A Note Insurer (i) an
Officer's Certificate identifying any changes in car marks related to a
Railcar made during the three-month period ending on the last day of
the immediately preceding calendar month and (ii) in the event that any
such changes shall have been so made, an Opinion of Counsel (which
shall be an outside counsel) in form and substance reasonably
satisfactory to the Indenture Trustee and the Class A Note Insurer to
the effect that all such changes have been so filed, recorded and
deposited with the STB pursuant to 49 U.S.C. 11301(a) (and in
conformity with 49 C.F.R. 1177) and with the Canadian Registry as to
protect the Indenture Trustee's security interest (on behalf of the
Secured Parties) in the Railcars located in the United States or
Canada, and that no other filing, recordation, deposit or giving of
notice to any Governmental Authority is necessary to protect such
interests; provided, however, that in the event that, during any
three-month period ending on the last day of any January or July, there
shall have been made changes to car marks relating to fewer than 5% of
Eligible Railcars as of such date, no such Opinion of Counsel shall be
required to be so delivered on such date and any changes made to car
marks during such three-month period shall be covered by the Opinion of
Counsel required to be delivered hereunder on the next succeeding May
15 or November 15, as the case may be.
Section 2.04. Required Modifications and Optional Modifications. (a)
Required Modifications. In the event the AAR, DOT or any other Governmental
Authority having jurisdiction over the Railcars or any other applicable Law
requires as a condition of continued use or operation of any such Railcar that
such Railcar be altered or modified (a "Required Modification"), the Manager
agrees to make or have made such Required Modification in accordance with the
applicable Lease, on behalf of the Relevant Company, in a timely manner;
provided, however, that the Manager may, on behalf of any Company, in good faith
and by appropriate proceedings diligently conducted, contest the validity or
application of any such Law,
regulation, requirement or rule in any reasonable manner which does not
materially interfere with the use, possession, operation or return of any
Railcar or materially adversely affect the rights or interests of the Relevant
Company or the Indenture Trustee in the Railcar or subject the Relevant Company,
the Class A Note Insurer or the Indenture Trustee or any Holder to criminal or
material financial sanctions or relieve the Lessee of the obligation to return
the Railcar in compliance with the provisions of such Lease or other related
Transaction Documents (or the obligations of the Manager hereunder in respect of
such return). Promptly after the Manager becomes aware of the requirement to
make a Required Modification, the Manager shall notify the Relevant Company, the
Backup Manager, the Class A Note Insurer and the Indenture Trustee thereof,
which notice shall also set forth the time period for the making of such
Required Modification and the Manager's reasonable estimate of the cost thereof.
If the Manager, on a non-discriminatory basis, believes that any Required
Modification to a Railcar would be economically impractical, it shall so advise
the Relevant Company and, if directed by such Company, in lieu of making the
Required Modifications as provided above, the Manager shall provide written
notice to such Company that such Required Modification is economically
impractical, and shall treat such Railcar as if an Event of Loss had occurred as
of the date of such written notice with respect to such Railcar. In such event,
the provisions of the related Lease and this Agreement with respect to an Event
of Loss shall apply with respect to such Railcar. In reaching any decision as to
whether a Required Modification is economically impractical, the Manager shall
assess the cost and timing of the Required Modification, the anticipated
revenues and other sources of funds which would be available to fund such costs,
the requirements of the applicable Lease and such other factors as the Manager
considers necessary or appropriate and shall provide a report to the Relevant
Company, with copies to the Backup Manager, Class A Note Insurer and the
Indenture Trustee regarding such assessment.
(b) Optional Modifications. The Manager is authorized at any time
to modify, alter or improve any Railcar in a manner which is not a Required
Modification, including any Railcar not then under a Lease (an "Optional
Modification"), if the Manager concludes in good faith that the proposed
Optional Modification is likely to enhance the marketability of the Railcar by
more than the cost of such modification (or such Optional Modification is
requested by a Lessee) and that such Optional Modification meets the standards
set forth in the applicable Lease, if any.
Section 2.05. Manager Fee and Supplemental Manager Fee. As compensation
to the Manager for the performance of services hereunder, the Manager will
receive the Manager Fee and the Supplemental Manager Fee, which shall be paid to
the Manager on each Payment Date in accordance with, and subject to the priority
of payment provisions of, Section 12.02(d) or Section 6.08, as applicable, of
the Indenture. In the event that a Successor Manager is appointed as Manager
hereunder, the Successor Manager will be entitled to receive the Manager Fee and
the Supplemental Manager Fee.
Section 2.06. Manager Expenses. (a) In addition to the Manager Fee and
the Supplemental Manager Fee, the Manager shall be entitled to reimbursement of
the following out-of-pocket expenses (collectively, "Operating Expenses")
incurred by the Manager, in the manner and to the extent provided for in Section
2.06(b), in connection with the satisfaction of its responsibilities under this
Agreement (it being expressly understood and agreed that the Manager
shall not be entitled to separate reimbursement for any salaries or benefits of
employees of the Manager, overtime wages or any other "overhead" costs or
expenses of the Manager):
(i) repositioning charges;
(ii) repair and maintenance charges;
(iii) fees and expenses incurred in connection with the
occurrence of any Event of Loss or with enforcing Lease rights or
repossessing any Railcars;
(iv) insurance premiums and charges with respect to the
Insurance Policies;
(v) fees and expenses incurred in connection with
calculation and payment of ad valorem taxes, and in connection with any
protest, contest, defense or appeal referenced in, and permitted under,
Section 2.03(m);
(vi) taxes for which the Lessor is responsible under any
Lease;
(vii) fees and expenses incurred in connection with
inspections of Railcars;
(viii) fees and expenses of outside counsel in connection
with the management of the Railcars;
(ix) fees of third-party advisors, consultants and brokers
relating to the re-letting of any Railcar;
(x) storage and car mark charges;
(xi) charges incurred in connection with tracing and
registering Railcars;
(xii) reimbursements for prefunded or advance payments;
(xiii) painting and re-stenciling the car mark and number
for Railcars;
(xiv) making any Required Modifications or Optional
Modifications to any Railcar;
(xv) making any regulatory filings with respect to the
Leases or the Railcars;
(xvi) ensuring the maintenance of the security interest of
the Relevant Company and of the Indenture Trustee in the Leases and the
Railcars;
(xvii) payment for uninsured losses and for bodily injury or
property damage caused by any Railcars which are not covered by
Insurance Policies or which exceed the amount of deductible(s) under
any Insurance Policy; and
(xviii) all other out-of-pocket expenses properly chargeable
to the management, operation, leasing or disposition of the Railcars in
the manner provided herein.
(b) The Manager is entitled to be reimbursed upon request out of
the Operating Expense Reserve Account and, if necessary, out of the Collection
Accounts, in accordance with the terms of the Indenture for any Operating
Expenses incurred by the Manager in connection with its obligations hereunder as
set forth in Section 2.06(a) above; provided, however, that any expenses to be
reimbursed for services provided by an Affiliate of the Manager shall be limited
to amounts that are the arm's-length, fair-market-value costs for the services
provided by such Affiliate. On any Business Day, but not more frequently than
once per week, the Manager may deliver to the Indenture Trustee (with a copy to
the Class A Note Insurer) a report (the "Maintenance Expense Reimbursement
Request"), which shall set forth the Operating Expenses then due and owing to
the Manager, and the Indenture Trustee shall withdraw funds from the appropriate
Operating Expense Reserve Subaccount on the following Business Day and pay such
amounts to the Manager in accordance with, and subject to the limitations
contained in, Section 12.02(d) or Section 6.08, as applicable, of the Indenture;
provided, however, that such withdrawal shall be made out of the NARCAT OER
Subaccount and the NARCAT Collection Account only to the extent that the
Operating Expenses in question shall have been incurred in connection with
Railcars owned by NARCAT or NARCAT Mexico, and such withdrawal shall be made out
of the CARCAT OER Subaccount and the CARCAT Collection Account only to the
extent that the Operating Expenses in question shall have been incurred in
connection with Railcars owned by CARCAT. If Operating Expenses incurred by the
Manager in any given calendar month, as set forth in the Maintenance Expense
Reimbursement Requests delivered to the Indenture Trustee during such month,
exceed the funds available for such payment in the Operating Expense Reserve
Subaccounts, the Manager shall be entitled to collect such shortfall in
accordance with the priorities set forth in Section 12.02(d) or Section 6.08, as
applicable, of the Indenture on the next Payment Date; provided, however, that
the Backup Manager, in its role as Manager, shall have no obligation to incur
any out-of-pocket expenses over and above (i) the sum of $50,000 during any
Collection Period plus (ii) the amounts on deposit in the Operating Expense
Reserve Subaccounts at any given time and available for the payment of such
expenses, unless adequate indemnity for such amounts satisfactory to the Backup
Manager has been provided to it.
Section 2.07. Responsibility for Loss of, Distribution of, or Damage to
Railcars. The responsibilities of each Company and the Manager for loss of,
destruction of, or damage to any Railcar are apportioned as follows:
(a) The Manager shall not be liable for damage to or
destruction of any Railcar under any circumstances unless such damage
or destruction is the direct result of the Manager's negligence or
willful misconduct.
(b) The Manager shall obtain insurance to the extent
required by Section 2.01(i) and Section 2.03(g).
(c) If any Railcar is damaged, but is not destroyed or
damaged beyond repair, the Manager shall use its best efforts, in
accordance with the Manager Standard, to obtain reimbursement of repair
expenses for the Relevant Company in accordance with AAR
rules. If any Railcar is damaged beyond repair or destroyed, the
Manager shall use its best efforts, in accordance with the Manager
Standard, to obtain the value of such Railcar in accordance with
appropriate AAR rules and, if applicable, in accordance with provisions
in the Leases relating to Events of Loss.
Section 2.08. Denial or Refusal of Insurance. (a) If an Insurer under
an Insurance Policy shall deny coverage (in any such case prior to termination
thereof as a result of the payment by such Insurer of an aggregate amount equal
to its maximum liability under such Insurance Policy), or shall refuse to honor
a claim under any such Insurance Policy with respect to any Railcar, and if such
denial or refusal resulted solely from the Manager's failure to comply with the
requirements of such Insurance Policy or the requirements of such Insurer, or if
the Manager shall have failed to maintain the coverage required by the terms of
the Transaction Documents (including, but not limited to, Section 11.14 of the
Indenture), then the Manager, on behalf of the Relevant Company, shall cause the
amount of any resulting unpaid claim to be deposited into the related Collection
Accounts as a recovery on such Railcar with respect to which such denial or
refusal arose; provided, however, that if the Backup Manager is acting as
Manager, it will not be required to deposit such funds in the Collection
Accounts. The Manager shall not be entitled to seek reimbursement under Section
2.06 for amounts deposited into any Collection Account pursuant to this Section
2.08(a).
(b) The Manager shall promptly, but in any event within five days,
notify the Relevant Company, the Class A Note Insurer, the Backup Manager and
the Indenture Trustee of the occurrence of any event described in Section
2.08(a) or the cancellation or termination of any Insurance Policy.
Section 2.09. Conflicts of Interest. It is expressly understood and
agreed that nothing herein shall be construed to prevent or prohibit the Manager
from providing the same or similar services to any Person or organization not a
party to this Agreement. In particular, the Manager shall be entitled to own and
operate for its own account railroad cars and equipment identical to the
Railcars managed hereunder and/or to manage such railroad cars or equipment
under a similar management agreement with another owner; provided, however, that
if other railroad cars similar to or competitive with the Railcars owned or
managed by the Manager are available for leasing at the same time that any
Railcar is so available, the Manager or its agent or submanager shall give no
preference or priority to either the leasing of such other railroad cars or the
Railcars, subject to the needs of prospective deployers and all applicable
regulations of the AAR, STB and DOT.
Section 2.10. Separate Corporate Existence Covenants. The Manager
recognizes that the Indenture Trustee, the Holders and the Class A Note Insurer
have entered into the Transaction Documents on the understanding that each of
the Companies, the Seller and TOP CAT (each a "Separate Person") is an entity
intended to have its own separate existence independent from that of the
Manager. In connection therewith, the Manager will (i) maintain separate bank
accounts and books of account from each Separate Person, (ii) not hold itself
out to third parties as liable or responsible for the debts of each Separate
Person (except for performance of such obligations which are assumed by it as
Manager hereunder) and not holding any Separate Person out to third parties as
being liable or responsible for the debts of the Manager, (iii) not conduct
business in the name of any Separate Person except when acting in the name of
such Separate Person in its capacity as Manager and it identifies itself as
such, (iv) not hold itself out as the owner of the Railcar Assets and take
reasonable steps to ensure that Lessees and other parties dealing with the
Railcar Assets are aware of the Separate Person's interests therein and (v) take
such other actions on its part as may be required for each Separate Person to be
in compliance with Section 10.01(p) of the Indenture on the Closing Date. In the
event that the Manager's consolidated financial statements are required under
GAAP to include any Separate Person, the Manager will include footnotes therein
that disclose the separate corporate existence of each such Separate Person and
its assets from the Manager and the Manager's Assets.
ARTICLE III
ACCOUNTINGS, STATEMENTS AND REPORTS
Section 3.01. Monthly Manager Report. With respect to each Payment Date
and the related Collection Period, the Manager will provide to the Backup
Manager, the Class A Note Insurer and the Indenture Trustee, on the
Determination Date immediately prior to such Payment Date, a Monthly Manager
Report (a "Monthly Manager Report") substantially in the form of Exhibit A
hereto with each of the items specified on such form completed as the case may
be, including the amount of Operating Expenses incurred by the Manager in
respect of the Railcars owned by each Company in such immediately preceding
calendar month (as set forth in the Maintenance Expense Reimbursement Requests
delivered to the Indenture Trustee during such month) which exceed the funds
available in the relevant Operating Expense Reserve Subaccount and which are to
be paid pursuant to the priorities set forth in Section 12.02(d) or Section
6.08, as applicable, of the Indenture, together with such supplemental
information reasonably requested by the Controlling Party.
Section 3.02. Financial Statements; Certification as to Compliance;
Notice of Default. The Manager will deliver to the Indenture Trustee, the Backup
Manager, each Rating Agency and the Class A Note Insurer, except as provided in
subsection (h):
(a) within 90 days after the end of each fiscal year of
the Reported Companies, a copy of the Reported Companies' Financial
Statements for such fiscal year certified in a manner acceptable to the
Controlling Party by the senior financial officer of the Manager or
such other person as may be acceptable to the Controlling Party, it
being understood that delivery to the Indenture Trustee, the Backup
Manager, each Rating Agency and the Class A Note Insurer of the
Manager's report on Form 10-K filed with the Securities and Exchange
Commission shall satisfy the requirements of this Section 3.02(a);
(b) with each set of Reported Companies' Financial
Statements delivered pursuant to subsection (a) above and (d) below, a
certificate of an officer of the Manager demonstrating compliance with
all financial covenants or tests calculated by reference to such
financial statements and containing an additional certification to the
effect that a review of the activities of the Manager during the period
covered by the Reported
Companies' Financial Statements, and of its performance under this
Agreement has been made under the supervision of the officer executing
such Officer's Certificate with a view to determining whether during
such period the Manager had performed and observed all of its
obligations under this Agreement, and either (i) stating that based on
such review no default by the Manager under this Agreement has occurred
and is continuing, or (ii) if such a default has occurred and is
continuing, specifying such default, the nature and status thereof and
what steps, if any, the Manager is planning to do or has done to cure
such default;
(c) promptly upon becoming aware of the existence of any
condition or event which constitutes a Manager Event of Termination, a
written notice describing its nature and period of existence and what
action the Manager is taking or proposes to take with respect thereto;
(d) quarterly, unaudited versions of the Reported
Companies' consolidated balance sheet, year-to-date income statement,
retained earnings and cash flows within 45 days after the end of each
quarter (other than the quarter at the end of each fiscal year), it
being understood that delivery to the Indenture Trustee, the Backup
Manager, each Rating Agency and the Class A Note Insurer of the
Manager's report on Form 10-Q filed with the Securities and Exchange
Commission shall satisfy the requirements of this Section 3.02(d);
(e) copies of any reports filed by the Manager with the
SEC or the Rating Agencies concerning the Manager;
(f) in the case of the Initial Manager, copies of any
certificates required to be furnished by the Initial Manager under any
credit agreement to which the Initial Manager is a party and which
addresses compliance by the Initial Manager with the requirements of
such credit agreement and the absence or existence of defaults
thereunder;
(g) such other information regarding the Railcars, the
Leases, the Manager or the transactions contemplated hereby, as the
Class A Note Insurer may reasonably request; and
(h) with respect to the financial reports described in
subsections (a) and (d), and the notice described in subsection (c),
above, the Manager will also deliver such reports to the Holders
(except that the Manager shall not be obligated to deliver the notice
described in subsection (c) above to each Holder if the Controlling
Party has waived such Manager Event of Termination in accordance with
Section 6.04).
Section 3.03. Annual Accountants' Reports. (a) On or before 120 days
after the end of each fiscal year of the Manager, the Manager shall deliver to
each Company, the Indenture Trustee, the Backup Manager, the Class A Note
Insurer, each Rating Agency and the Holders a report of a firm of independent
public accountants of recognized national standing selected by the Manager to
the effect that such firm has examined certain documents and records relating to
the management of the Railcars, the Leases and the other Railcar Assets under
this Agreement and
that, on the basis of such examination conducted substantially in compliance
with generally accepted audit standards, nothing came to their attention which
caused them to believe that the Manager has accounted for matters regarding the
Railcars, the Leases and the other Railcar Assets, including deposits in, and
requested withdrawals from, the Operating Expense Reserve Subaccounts or the
Collection Accounts, otherwise than in accordance with this Agreement, except
for such immaterial exceptions or errors on records that, in the opinion of such
firm, it is not required to report.
(b) In the event such independent public accountants require the
Indenture Trustee to agree to the procedures to be performed by such firm in any
of the reports required to be prepared pursuant to this Section 3.03, the
Manager shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Manager, and the
Indenture Trustee has not made any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
Section 3.04. Delivery of Accountings, Statements and Reports. To the
extent that the Manager and the Servicer are the same Person, it may, in its
sole discretion and to the extent practicable, fulfill its obligations under
this Article III and Article III of the Servicing Agreement with the delivery of
one monthly report, one set of financial statements, a single Officer's
Certificate (executed in its capacities as both Manager and Servicer) or a
single accountants' report, as the case may be.
Section 3.05. Annual Security Interest Opinion. Within 120 days after
the beginning of each calendar year, beginning with the calendar year 2005, the
Manager shall furnish to the Indenture Trustee and the Class A Note Insurer an
Opinion of Counsel (which shall be outside counsel) either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording or re-filing of (a) all UCC financing statements
and continuation statements, filings with the STB, filings with the Canadian
Registry and any other requisite filings, deposits, registers or recordations as
are necessary to maintain the ownership interests, security interests and liens,
as applicable, created in favor of (x) each of the NARCAT Seller and the CARCAT
Seller under the Asset Purchase Agreement, (y) each of NARCAT and CARCAT under
its respective Sale Agreement and (z) the Indenture Trustee under the Indenture
and reciting the details of such action or stating that, in the opinion of such
counsel, no such action is necessary to maintain such security interests and
liens. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and re-filing of the Indenture, and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that, in the opinion of such counsel, are or will within the next
twelve months be required to maintain the liens and security interests described
above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Initial Manager Representations and Warranties. The
Initial Manager hereby represents and warrants to each Company, the Indenture
Trustee and the Backup Manager as follows:
(a) Corporate Existence and Power. The Manager has been
duly organized and is validly existing and in good standing as a
corporation under the laws of the state of Ohio, with all requisite
power and authority to own its properties and to transact the business
in which it is now engaged, and the Manager is duly qualified to do
business and is in good standing in each state where the nature of its
business requires it to be so qualified except where failure to so
qualify would not have a Material Adverse Effect. The Manager has all
requisite power and authority and has taken all action necessary to
enter into this Agreement and the other Transaction Documents to which
it is a party, to consummate the transactions contemplated hereby and
thereby, and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by the Manager of this Agreement
are within the Manager's powers, have been duly authorized by all
necessary action and do not contravene any applicable Law, the
Manager's organizational documents or any contractual or other
obligation binding on or affecting the Manager or any of its assets.
The Manager has delivered to each Company, the Indenture Trustee and
the Class A Note Insurer a true and correct copy of its articles of
incorporation, its code of regulations and other organizational
documents.
(b) No Conflict. The performance of the Manager's
obligations under this Agreement and each other Transaction Document to
which it is a party will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any Lien (other than as contemplated
by this Agreement and the other Transaction Documents, and other than
Permitted Liens) upon any of the property or assets of the Manager
pursuant to the terms of any indenture, mortgage, deed of trust, or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject, nor will
such action result in any violation of the provisions of any charter
document of the Manager or any statute or any order, rule or regulation
of any court or Governmental Authority having jurisdiction over it or
any of its properties; and no consent, approval, authorization, order,
registration or qualification of or with any court, or any such
Governmental Authority is required for the consummation of the other
transactions contemplated by this Agreement or any other Transaction
Document to which it is a party except such consents, approvals and
authorizations which have been obtained or such registrations or
qualifications which have been made.
(c) Due Authorization, Execution and Delivery. Each
Transaction Document to which the Manager is a party has been duly
authorized, executed and delivered by the Manager and each such
Transaction Document is a valid and legally binding agreement of the
Manager, enforceable against the Manager in accordance with its terms,
subject as to
enforceability to applicable bankruptcy, insolvency, reorganization and
other similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity
regardless of whether enforcement is sought in a court of law or
equity.
(d) Solvency. Both before and after giving effect to the
transactions contemplated by this Agreement, the Manager is Solvent.
(e) True and Complete Copies. The Manager has delivered
to each Company a true, complete and correct copy of the APA Seller
Documents.
(f) Accuracy of Information. All information heretofore
furnished (including, but not limited to, the Reported Companies'
Financial Statements) by the Manager to each Company, the Indenture
Trustee, the Class A Note Insurer and the Backup Manager for purposes
of or in connection with this Agreement, the other Transaction
Documents, or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by it hereunder will be, true,
complete and correct in every material respect, on the date such
information is stated or certified, and no such item contains or will
contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, the Manager
has no knowledge of any facts which would cause it to disbelieve any of
the representations or warranties made by the Railcar Entities under
the APA Seller Documents.
(g) Tax Status. It has (i) timely filed all federal,
state and local tax returns or permitted extensions thereof in the
United States and all other tax returns or permitted extensions thereof
in foreign jurisdictions required to be filed and (ii) paid or made
adequate provision in accordance with GAAP for the payment of all
taxes, assessments and other governmental charges.
(h) Employee Benefits. With respect to employees that
primarily work in connection with the Railcars, Leases and other
Railcar Assets:
(i) Except as set forth on Schedule I, with
respect to current or former employees of the Manager, the
Manager does not maintain, participate in or contribute to any
(A) deferred compensation or retirement plans or arrangements,
(B) tax-qualified or nonqualified defined contribution or
defined benefit plans or arrangements which are employee
pension benefit plans (as defined in Section 3(2) of ERISA),
(C) employee welfare benefit plans (as defined in Section 3(1)
of ERISA), (D) phantom stock appreciation right, stock option,
stock purchase or other stock based plans, or (E) any fringe
benefit plans or programs. The Manager does not maintain or
contribute to any employee welfare benefit plan that provides
health, accident or life insurance benefits to former
employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code or Part 6 of
Subtitle B of Title I of ERISA or other applicable Law.
(ii) The employee pension benefit plans and
employee welfare benefit plans (and related trusts and
insurance contracts) of the Manager, which plans are described
on Schedule I, have been administered in compliance with the
requirements of applicable Laws, except where failure thereof
would not result in a Material Adverse Effect on the
Collateral. Each employee pension benefit plan which is
intended to be a "qualified plan" has received an opinion
letter from the Internal Revenue Service as to the
qualification under the Code of such plan.
(iii) With respect to each of the plans listed on
Schedule I, the Manager has made available to each Company and
the Class A Note Insurer true and complete copies of (A) the
plan documents, summary plan descriptions and summaries of
material modifications and other material employee
communications about such plan, (B) the opinion letter
received from the Internal Revenue Service, (C) the Form 5500
Annual Report (including all schedules and other attachments)
for the most recent plan year, (D) all related trust
agreements, insurance contracts or other funding agreements
which implement such plans and (E) all contracts relating to
each such plan, including, without limitation, service
provider agreements, insurance contracts, investment
management agreements and record keeping agreements.
(iv) All contributions and other payments
required to have been made by the Manager with respect to any
plan described on Schedule I have been or will be made when
due.
To the Knowledge of the Manager, no plan described on Schedule I is
subject to any ongoing audit, investigation or other administrative
proceeding of any Governmental Authority nor has any Action been
commenced against any such plan (other than for benefits in the
ordinary course), in which the adverse result thereof would result in a
Material Adverse Effect on the Railcars, Leases or other Railcar
Assets, or on any Company after the Closing Date.
(i) Employment Matters. The Manager is not party to,
bound by, or negotiating in respect of any collective bargaining
agreement or any other agreement with any labor union, association or
other employee group in connection with its railcar leasing business,
nor, to the Knowledge of the Manager, is any employee that primarily
works in connection with its railcar leasing business represented by
any labor union or similar association. No labor union or employee
organization has been certified or recognized as the collective
bargaining representative of any employee of the Manager that primarily
works in connection with its railcar leasing business. To the Knowledge
of the Manager, there are no formal union organizing campaigns or
representation proceedings in process or formally threatened with
respect to any employee of the Manager that primarily work in
connection with its railcar leasing business, nor are there any
existing or, to the Knowledge of the Manager, threatened at large labor
strikes, work stoppages, organized slowdowns, unfair labor practice
charges, or labor arbitration proceedings affecting employees of the
Manager that primarily work in connection with its railcar leasing
business.
(j) Environmental Matters. Except to the extent such
matters would not have a Material Adverse Effect:
(i) to the Knowledge of the Manager, the Manager
is in compliance with all applicable Environmental Laws
related to the Collateral. Except for matters that have been
fully resolved, the Manager has not received any written
communication from any person or Governmental Authority that
alleges that its operations in connection with the Railcars,
Leases or other Railcar Assets are not in compliance with
applicable Environmental Laws;
(ii) to the Knowledge of the Manager, the Manager
has obtained all environmental, health and safety permits and
governmental authorizations (collectively, the "Environmental
Permits") necessary for the conduct of its railcar leasing
business, and all such permits are in good standing or, where
applicable, a renewal application has been timely filed and is
pending agency approval, and to the Knowledge of the Manager,
the Manager is in compliance with all terms and conditions of
the Environmental Permits; and
(iii) there is no Environmental Claim pending or,
to the Knowledge of the Manager, threatened against or
concerning the Railcars, Leases or other Railcar Assets.
To the Knowledge of the Manager, no release of any Hazardous
Commodities has occurred on or from any of the Railcars, Leases or
other Railcar Assets, which requires investigation, assessment,
monitoring, remediation or cleanup under Environmental Laws.
(k) No Default. To the Knowledge of the Manager, there
has been no default under the Asset Purchase Agreement or any other
Transaction Document.
(l) Credit and Collection Policies. The Manager has
previously delivered to the Class A Note Insurer a true and correct
copy of its credit and collection policies, and no material amendments
shall be made to such policies without the consent of the Class A Note
Insurer.
Section 4.02. Company Representations and Warranties. Each Company
hereby represents and warrants to the Manager, the Indenture Trustee and the
Backup Manager as follows:
(a) Such Company has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
organization, with all requisite power and authority to own its
properties and to transact the business in which it is now engaged, and
such Company is duly qualified to do business and is in good standing
in each jurisdiction where the nature of its business requires it to be
so qualified except where failure to so qualify would not have a
Material Adverse Effect. Such Company has all requisite power and
authority and has taken all action necessary to enter into this
Agreement and the other Transaction Documents to which it is a party,
to consummate the transactions contemplated hereby and thereby, and to
perform its obligations hereunder and thereunder. The execution,
delivery and performance by such Company of this Agreement and the
other Transaction Documents are within such Company's powers, have been
duly authorized by all necessary action and do not contravene any
applicable Law, such Company's organizational documents or any
contractual or other obligation binding on or affecting the Company or
any of its assets.
(b) The performance of such Company's obligations under
this Agreement and each other Transaction Document to which it is a
party will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any Lien (other than as contemplated by this
Agreement and the other Transaction Documents, and other than Permitted
Liens) upon any of the property or assets of such Company pursuant to
the terms of any indenture, mortgage, deed of trust, or other agreement
(including the Leases) or instrument to which it is a party or by which
it is bound or to which any of its property or assets is subject, nor
will such action result in any violation of the provisions of any
charter document of such Company or any statute or any order, rule or
regulation of any court or Governmental Authority having jurisdiction
over it or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any
court, or any such Governmental Authority is required for the
consummation of the other transactions contemplated by this Agreement
or any other Transaction Document to which it is a party except such
consents, approvals and authorizations which have been obtained or such
registrations or qualifications which have been made.
(c) Each Transaction Document to which such Company is a
party has been duly authorized, executed and delivered by such Company
and each such Transaction Document is a valid and legally binding
agreement of such Company, enforceable against such Company in
accordance with its terms, subject as to enforceability to applicable
bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of whether
enforcement is sought in a court of law or equity.
(d) Such Company has delivered to the Manager a true,
complete and correct copy of the Indenture.
Section 4.03. Initial Manager Representations and Warranties with
Respect to the Collateral. In consideration of the Manager Fee and the
Supplemental Manager Fee, and as a result of its conducting due diligence with
respect to the Railcars, the Leases and the other Railcar Assets, the Initial
Manager hereby represents and warrants, as of the Closing Date or Prefunded
Railcar Acquisition Date, as applicable, with respect to any Railcar, Lease or
other Railcar Asset transferred under the Sale Agreements, and as of the
origination date with respect to any Subsequent Lease originated in accordance
with Section 2.03(c), to each Company, the Indenture Trustee and the Backup
Manager as follows:
(a) Each Company has good and marketable title to all of
the Leases and Railcars transferred thereto under the Relevant Sale
Agreement and any Subsequent Lease originated in accordance with
Section 2.03(c), free and clear of all Liens, other than Permitted
Liens; provided, however, that, for a period not to exceed 30 days
after the Closing Date, up to 39 Railcars representing an aggregate
Stated Value not to exceed $125,000 may be subject to Leases for which
the Companies have not obtained requisite consents of the Lessee to the
assignment thereof.
(b) Each Lease sold or, in the case of each Prefunded
Existing Lease, to be sold under a Sale Agreement is for the Railcar or
Railcars identified therein, as set forth on the Lease and Railcar
Schedule or the Prefunded Lease and Railcar Schedule, as applicable, to
such Sale Agreement. The Lease and Railcar Schedule or the Prefunded
Lease and Railcar Schedule, as applicable, to each Sale Agreement
contains a true, correct and complete list of all Leases sold on the
Closing Date or to be sold on the Prefunded Railcar Acquisition Date,
if applicable, under such Sale Agreement, and an updated Lease and
Railcar Schedule delivered thereafter in accordance with Section
2.03(c) will contain a true, correct and complete list of all
Subsequent Leases originated in accordance with Section 2.03(c),
including, in each case, the name of the lessee, deal number (if
applicable), type of lease (full service, modified, triple net, etc.),
lease rate, number of lease payments remaining (if applicable), final
payment due date under lease, number of Railcars under lease and
commencement date of lease.
(c) The Lease and Railcar Schedule sets forth a true,
correct and complete list of all Railcars transferred and the Prefunded
Lease and Railcar Schedule sets forth a true, correct and complete list
of all Prefunded Railcars to be transferred under the Sale Agreements,
including, as to each Railcar, the month and year built (and, if
applicable, rebuilt), car type (by AAR equipment code), car mark and
number assigned to such Railcar in UMLER, if applicable, volume
capacity as expressed in cubic feet if a railcar, or in horsepower if a
locomotive (in each case, if known and if applicable), total (gross)
weight on rail, the AAR determination of extended life (if applicable),
whether such Railcar is subject to a Lease (and, if so, the lease or
deal number, as applicable), whether such Railcar is primarily leased
to a Lessee for which an address in Canada or in Mexico is referenced
on the Lease and, if applicable, storage location (including
description, city and state).
(d) The Manager has not received any notice of the
occurrence of any Event of Loss, or any event which, with the passage
of time would constitute an Event of Loss, with respect to any Railcar.
(e) Each Lease (i) is evidenced by a writing, (ii)
constitutes the legal, valid and binding obligation of the Lessee
thereunder, (iii) has not been satisfied other than in the ordinary
course, subordinated, rescinded, or, except for Permitted Adjustments,
adjusted, (iv) remains in full force and effect and (v) is enforceable
against such Lessee in accordance with its terms (except to the extent
that enforcement may be affected by applicable bankruptcy,
reorganization, insolvency and other Laws affecting creditors'
rights and remedies generally and by general principles of equity,
regardless of whether enforcement is sought at law or in equity).
(f) Except as set forth on the Lease and Railcar
Schedule, (i) no Lessee under any Lease is currently in bankruptcy
under the bankruptcy laws of the United States, Canada or Mexico, (ii)
unless consented to by the Relevant Company, no provision of any Lease
has been waived, amended, or modified in any material respect, except
by instruments or documents copies of which have been delivered to the
Relevant Company, the Indenture Trustee and the Class A Note Insurer
and reflected on the Lease and Railcar Schedule and, in any event, no
Lease has been waived, amended or modified since its origination to
cure a payment default or delinquency, (iii) no delinquency or default
by the Lessee under any Lease has occurred and is continuing and (iv)
the Lessee is in compliance with the terms of such Lease in all
material respects.
(g) No Action is pending or, to the Knowledge of the
Manager, has been threatened asserting the invalidity of any Lease, or
seeking any determination or ruling that might adversely and materially
affect the validity or enforceability of any Lease or the value of any
Railcar.
(h) Each Lease is "chattel paper" (as defined in Section
9-102(a)(11) of the UCC). Except for the Leases set forth on Schedule
III, all original, executed copies of Leases are in the possession of
the Indenture Trustee.
(i) No Lease has been originated in or is subject to the
laws of any jurisdiction whose laws would make the assignment and
transfer thereof pursuant to the terms hereof (or any subsequent
assignment by the Relevant Company) unlawful.
(j) Each Railcar is marked with the railroad equipment
number (also known as the running number) as noted on the Lease and
Railcar Schedule.
(k) To the Knowledge of the Manager, the Lessees have
complied with all applicable Laws in respect of each Lease in all
material respects and each Lease complies with all applicable Laws of
the jurisdiction in which it was originated in all material respects.
(l) The Lessee under each Lease is (i) a United States or
Canadian governmental agency, (ii) a United States common carrier by
railroad engaged in the transportation of individuals or property or
owner of trackage facilities leased by such common carrier, (iii) a
United States or Canadian corporation (provincial or federal), limited
partnership, limited liability company or other entity, (iv) a Mexican
entity listed on the Lease and Railcar Schedule, or (v) a "railroad
company" as defined in the Canadian Transportation Act.
(m) Any guarantees on behalf of an applicable Lessee
required at the time of origination of a Lease remain in full force and
effect.
(n) The lease origination practices used by the Manager
and, to the Knowledge of the Manager, by any Railcar Entity, with
respect to each Lease have been legal in all material respects.
(o) Each Lessee under a Lease has accepted the related
Railcar or Railcars and after reasonable opportunity to inspect and
test, has not notified the Manager of any defects therein.
(p) For those Railcars described on the Lease and Railcar
Schedule as having an extended life determined by AAR as a result of
having been refurbished, modified or substantially rebuilt, there is in
the Lease Files, and there has been filed, the proper documentation
with AAR to qualify such Railcars for extended life along with updating
UMLER records.
(q) No correspondence has been received by the Manager
(nor, to the Knowledge of the Manager, by any Railcar Entity) from the
AAR or FRA regarding any outstanding general or specific recalls for
the Railcars or any required modifications, nor, to the Knowledge of
the Manager, do there exist any such outstanding general or specific
recalls for any Railcar or any required modifications.
(r) Except for Scrapped Railcars, each Railcar is in good
working order and is suitable for the use for which it is presently
engaged. None of the Leases or Railcars are subject to any restrictions
with respect to the transferability thereof.
(s) Except for (i) one Lease for not more than 100
Railcars having a Stated Value of not more than $1,502,750.00 expiring
on March 31, 2004 which is denominated in Canadian dollars, and (ii)
two Leases, involving not more than five Railcars, for which Rent
payments are calculated by multiplying mileage by an amount which is
specified in United States dollars, each Lease is denominated in and
provides for payment solely in United States dollars.
(t) All Railcars are located in the United States, Canada
or Mexico.
(u) No more than 450 of Eligible Railcars are leased to
Lessees for which a Mexican address is referenced on the Lease.
(v) No Lease expressly allows the transport or storage of
any Hazardous Commodities on the related Railcars.
(w) None of the Railcars are tank cars.
(x) Rental payments under each Lease are billed and
payable monthly.
(y) Except for locomotives and certain other Railcars
which the Manager intends to designate as Scrapped Railcars no later
than January 31, 2005, the total number
of which locomotives and Railcars will not exceed 630, each Railcar is
in compliance with all applicable Laws (including applicable
Interchange Rules of the AAR).
(z) Except for one Lease involving not more than 24
Railcars which are leased to the Initial Manager, no Lessee is an
Affiliate of any Seller, the Servicer or the Manager.
(aa) No Lease is a finance lease.
(bb) Except as set forth on the Lease and Railcar
Schedule, there are no split schedules for any Lease.
(cc) No Lease expressly releases the lessee from liability
for all of its obligations under such Lease (including with respect to
the related Railcars) in connection with any sublease and, to the
Knowledge of the Manager, no Lessee has subleased any of the Railcars
unless such Lessee remains so liable and all other terms set forth in
Section 2.01(j) of the Servicing Agreement have been satisfied.
(dd) To the extent such matters are governed by the laws
of the United States or any state thereof, or Canada or any province
thereof, the Indenture Trustee has a first priority, perfected security
interest in the Railcars, the Leases and other Railcar Assets.
(ee) Except for those Leases set forth on Schedule III,
the Lease File for each Lease is complete in all respects and has been
delivered to the Servicer on behalf of the Relevant Company (except for
any original, executed copies of Leases which are in the possession of
the Indenture Trustee).
(ff) Each Lease other than a Modified Lease or Full
Service Lease contains provisions requiring the Lessee to pay all
sales, use, excise, rental, property or similar taxes imposed on or
with respect to the related Railcar and to assume all risk of loss,
damage, or destruction of the related Railcar, and each such Lease
requires the Lessee to maintain the Railcars which are subject thereto
in good and workable order.
(gg) Except for one Lease permitting not more than two
Railcars to be returned and storage fees to be paid in lieu of Rent
therefor, no Lease provides for the replacement, addition or exchange
of any Railcar subject to such Lease which would result in any
reduction, or change the timing of, payments due, or modification of,
the Lessee's obligations under such Lease.
(hh) No Lease is a "consumer lease", as defined in Article
2A of the UCC.
(ii) Except for certain Leases with Northeast Regional
Commuter Railroad Corporation (d/b/a Metra) involving not more than 39
Railcars which have an aggregate Stated Value not exceeding $124,500,
the obligation of the Lessee under each Lease to make lease payments
and other amounts is absolute and unconditional and not dependent
on the future appropriation of funds, and no Lessee is entitled to
invoke sovereign immunity with respect to the related Lease and its
obligations thereunder.
(jj) The Relevant Company has the right under each Lease
owned thereby to exercise appropriate remedies with respect to the
Railcars without obtaining the consent of any third parties.
(kk) No selection criteria were used in connection with
the acquisition by the Companies of the Railcars, Leases or other
Railcar Assets that identified the Railcars, Leases or other Railcar
Assets as being less desirable or valuable than other comparable
railcars, leases or other assets owned by any Seller, any Company, the
Servicer or the Manager.
(ll) Each Lease either (i) provides for the return of the
related Railcars upon default, or (ii) does not prohibit the Lessor
from demanding return of the related Railcars and repossessing said
Railcars after default under, or termination of, such Lease.
(mm) For each Lease other than a Modified Lease or Full
Service Lease where the Lessee is not a railroad, each Lease requires
that in the event of a casualty loss that the Lessee must take one of
the following actions: (a) restore or repair the affected Railcar to
good repair, condition and working order, (b) replace the Railcar with
a like Railcar of the same or later model in good repair, condition and
working order, or (c) pay the Lessor thereunder the "stated value" (as
defined in such Lease) of such Railcar. For each Lease where the Lessee
is a railroad, (i) if damage to a Railcar occurs while on the Lessee's
railroad line, the relevant Lease requires the Lessee to pay the Lessor
the "stated value" (as defined in such Lease), and (ii) if damage to a
Railcar occurs while on the lines of another railroad, Interchange
Rules apply.
(nn) No Lessee under a Lease has made a cash deposit to
secure its obligation to make future lease payments.
(oo) The Railcars conform, to the Knowledge of the
Manager, to (i) any applicable standards or requirements of any
Governmental Authority and (ii) any applicable standards required by
each national and international standards organization which regulates
railcars in any relevant jurisdiction.
(pp) On the Closing Date or Prefunded Railcar Acquisition
Date, as applicable, after giving effect to transfer of the Leases
transferred under the Sale Agreements, the Companies were in compliance
with the Concentration Limits, and each Subsequent Lease originated in
accordance with Section 2.03(c) will be originated in compliance with
the Concentration Limits.
(qq) On the Closing Date or Prefunded Railcar Acquisition
Date, as applicable, no set-offs exist under any Lease.
Section 4.04. Purchase or Substitution Required upon Breach of Certain
Representations and Warranties. (a) The representations, warranties and
agreements of the Initial Manager set forth in Section 4.03 with respect to each
Railcar, Lease and other Railcar Assets shall survive so long as such Railcar,
Lease and other Railcar Assets remains subject to the Lien of the Indenture.
Upon discovery by the Initial Manager or any Company that any of such
representations or warranties was incorrect as of the time made, the party
making such discovery shall give prompt notice to the others, to the Class A
Note Insurer and to the Indenture Trustee. In the event that the failure of any
such representation or warranty (other than the representation and warranty set
forth in Section 4.03(pp)) to be correct at the time as of which it was made
materially and adversely affects the interests of the Holders of the Notes in
any Railcar or Lease which is the subject of such representation or warranty,
the Initial Manager shall eliminate or cure such circumstance or condition
within 45 days of having actual knowledge of, or receiving notice of, such
breach, or the Initial Manager shall take such steps as are necessary to (a) if
a Lease is the subject of such representation or warranty, Purchase all of the
Railcars covered by such Lease (and the related Lease and other Railcar Assets
relating solely to such Railcars) at the Purchase Price in accordance with this
Section 4.04, (b) if a Railcar is the subject of such representation or
warranty, purchase such Railcar at the Purchase Price in accordance with this
Section 4.04 or (c) if a Railcar is the subject of such representation or
warranty, provide a Substitute Railcar meeting all of the requirements of
Section 4.03, complying with the Concentration Limits and having a Stated Value
which, when aggregated with the Stated Values of all other substitute Railcars
then being substituted, shall be no less than the aggregate Stated Value of all
Railcars then being replaced, so that the representations and warranties with
respect to such Railcar or Lease, as applicable, are correct. In the event of
any breach of the representation or warranty set forth in Section 4.03(pp), the
obligation of the Manager to Purchase or provide Substitute Railcars shall apply
to the extent required to cure such breach. For the avoidance of doubt, this
Section 4.04 shall not apply to any Successor Manager.
(b) Any Purchase of a Railcar (and any related Lease and other
Railcar Assets) or other payment required of the Initial Manager pursuant to
this Section 4.04 shall be made by the Initial Manager by deposit of the
Purchase Price required by Section 4.04(c) into the Collection Accounts, and any
substitution of a Railcar made in lieu of any such purchase shall be made, in
either case, on or prior to the Determination Date next following the calendar
month in which the Initial Manager's obligation to Purchase such Railcar (and
any related Lease and other Railcar Assets) arose. For purposes of this Section
4.04, the Manager agrees that any Railcar which is not eligible after the
expiration of the 30-day period referenced in Section 4.03(a) shall be deemed a
breach of the representation set forth therein and the repurchase shall occur on
the first Payment Date following the expiration of such 30-day period.
(c) Any Railcar (and any related Lease and other Railcar Assets)
to be Purchased by the Initial Manager under this Section 4.04, shall be
Purchased by the Initial Manager at a purchase price (the "Purchase Price")
equal to (i) with respect to Purchases on the first Payment Date, the Stated
Value of such Railcars on the Accounting Date immediately preceding the first
Payment Date and (ii) with respect to any other Purchase, the Stated Value of
such Railcar on the Accounting Date preceding the date on which the obligation
to Purchase first arose, plus accrued interest (calculated at the Prime Rate)
thereon from the Accounting Date preceding the date on
which the obligation to Purchase first arose to the next succeeding Accounting
Date. All Purchases shall be accomplished at the times required in Section
4.04(b).
(d) Upon the substitution of any Substitute Railcar, the Initial
Manager hereby agrees that such Substitute Railcar will be subject to all of the
terms and conditions of this Agreement and the other Transaction Documents just
as if such Substitute Railcar has been one of the original Railcars acquired on
the related Closing Date.
(e) If the Initial Manager fails to Purchase or substitute any
Railcar (and any related Lease and other Railcar Assets) by the time required in
Section 4.04(c), the Indenture Trustee, provided it has received notice in
accordance with Section 4.04(a), shall be obligated promptly to notify the
Servicer, each Company and the Class A Note Insurer of such failure. The
Servicer shall thereafter pursue any remedies available against the Railcar
Entities under the Asset Purchase Agreement for any breach thereunder and
deposit any amounts received from the Railcar Entities into the Collection
Accounts in accordance with Section 4.03 of the Servicing Agreement.
(f) The Companies agree to cause any amounts received from any
Railcar Entity and deposited into the Collection Accounts as a result of a
breach of a representation or warranty under the Asset Purchase Agreement to be
paid to the Initial Manager to the extent that such breach by the Railcar Entity
resulted in a breach by the Initial Manager under this Agreement and the Initial
Manager shall have (i) expended any funds to fully eliminate or cure all
circumstances and conditions causing such breach, (ii) deposited to the relevant
Collection Account the Purchase Price for such Railcar (and any related Lease or
other Railcar Asset) or (iii) provided a substitute Railcar. In the event that
the Indenture Trustee should receive any amounts described in the previous
sentence, the Indenture Trustee shall upon request by the Manager calculating in
reasonable detail the portion of such amounts to which it is entitled, remit
such portions to the Initial Manager. The Companies hereby authorize the Manager
to enforce all provisions of the Asset Purchase Agreement against the Railcar
Entities on behalf of the Companies, including without limitation the indemnity
provisions contained therein and the Manager agrees to enforce said provisions
on behalf of the Companies. All funds collected in connection with this Section
4.04(f) by the Manager shall be, to the extent not used to reimburse the Initial
Manager for any related Purchase of a Railcar (and related Lease and other
Railcar Assets), deposited into the Collection Accounts and distributed in
accordance with the Indenture.
ARTICLE V
INITIAL MANAGER COVENANTS
Section 5.01. Corporate Existence; Status as Manager; Merger. (a) The
Initial Manager shall keep in full effect its existence and good standing as a
corporation in its state of incorporation and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to enable the Initial Manager
to perform its duties under this Agreement, except where the failure to so
qualify would not have a Material Adverse Effect on the Initial Manager or its
ability to perform its
duties hereunder; provided, however, that the Initial Manager may reincorporate
in another state, if to do so would be in the best interest of the Initial
Manager and would not have a Material Adverse Effect upon any Company, the Class
A Note Insurer, the Backup Manager, the Indenture Trustee or the Holders, and
the Initial Manager has complied with the requirements set forth in Section
5.01(b).
(b) The Initial Manager shall not consolidate with or merge into
any other Person or convey, transfer or lease substantially all of its assets as
an entirety to any Person, unless (i) the entity formed by such consolidation or
into which the Initial Manager has merged or the Person which acquires by
conveyance, transfer or lease substantially all the assets of the Initial
Manager as an entirety, executes and delivers to each Company, the Class A Note
Insurer, the Backup Manager and the Indenture Trustee an agreement, in form and
substance reasonably satisfactory to each Company, the Backup Manager and the
Indenture Trustee (acting at the direction of the Controlling Party), which
contains an assumption by such successor entity of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Initial Manager under this Agreement, (ii) such Person at the
time of the execution of such agreement has at least the same Tangible Net Worth
as the Initial Manager at the time of such consolidation, merger or transfer,
but in any event a Tangible Net Worth of at least $75,000,000 (iii) after giving
effect to such merger or consolidation, no Manager Event of Termination shall
have occurred and be continuing, (iv) such Person shall meet the criteria
required of and applicable to a Successor Manager set forth in Section 6.01(b)
and (v) the Manager shall have received the prior written consent of the
Controlling Party.
Section 5.02. The Manager Not to Resign; No Assignment. (a) The Manager
shall not resign from the duties and obligations hereby imposed on it except (i)
upon a determination by its Board of Directors that by reason of a change in
applicable legal requirements the continued performance by the Manager of its
duties under this Agreement would cause it to be in violation of such legal
requirements, said determination to be evidenced by a resolution of its Board of
Directors to such effect accompanied by an Opinion of Counsel reasonably
satisfactory to the Indenture Trustee, the Backup Manager and the Controlling
Party to such effect, (ii) upon appointment of a Successor Manager by the
Companies, with the approval of the Indenture Trustee (acting at the direction
of the Controlling Party), and (iii) the entering into of amendments to this
Agreement to effect such succession in form reasonably acceptable to each
Company, the Backup Manager and the Indenture Trustee (acting at the direction
of the Controlling Party).
(b) The Manager may not assign this Agreement or delegate any of
its rights, powers, duties or obligations hereunder; provided, however, that the
Manager may submanage its duties and obligations hereunder in accordance with
Section 2.02(c) and assign this Agreement in connection with a consolidation,
merger, conveyance, transfer or lease made in compliance with Section 5.01(b).
(c) Except as provided in Sections 5.02(a) and 6.01, the duties
and obligations of the Manager under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01, and shall
survive the exercise by any Company, the Class A Note Insurer, the Backup
Manager or the Indenture Trustee of any right or remedy under this
Agreement, or the enforcement by any Company, the Class A Note Insurer, the
Backup Manager, the Indenture Trustee or any Holder of any provision of the
Indenture, the Notes or this Agreement.
Section 5.03. Car Mark Agreement, GNRR Agreement and Railcar Storage
Agreement. The Manager shall abide by the terms of the Car Mark Agreement, GNRR
Agreement and the Railcar Storage Agreement and shall provide the benefits
thereof to each Company.
Section 5.04. Manager Indemnification. The Manager shall indemnify and
hold harmless each Company, the Class A Note Insurer, the Backup Manager, the
Indenture Trustee and the Holders and their respective Affiliates and the
directors, officers, employees and agents of each thereof (the "Indemnified
Parties"), from and against:
(a) any breach of or any inaccuracy in any representation
or warranty (other than any representation or warranty contained in
Section 4.03 which has been fully remedied in accordance with Section
4.04) made by the Manager in this Agreement or in any certificate
delivered pursuant thereto;
(b) any breach of or failure by the Manager to perform
any covenant or obligation of the Manager set out or contemplated in
this Agreement;
(c) the negligence, recklessness or willful misconduct of
the Manager;
(d) any dispute or claim of any third party related to or
in connection with the existence of more than one originally executed
counterpart of a Lease which constitutes "chattel paper" under Article
9 of the UCC;
(e) any dispute, counterclaim, defense, loss, liability,
expense, damage or injury suffered or sustained by reason of any acts,
omissions or alleged acts or omissions arising out of any act or
failure to act on the part of the Manager with respect to its
obligations under this Agreement, including but not limited to any
judgment, award, settlement, reasonable attorneys' fees and other
reasonable costs or expenses incurred in connection with the defense of
any actual or threatened action, proceeding or claim;
(f) any failure by the Manager to comply with any
applicable Law with respect to any Railcar Asset;
(g) the commingling by the Manager of Collections at any
time with any other funds;
(h) any inability to obtain any judgment in or utilize
the court or other adjudication system of, any jurisdiction in which a
Lessee may be located as a result of the failure of the Manager to
qualify to do business or file any notice of business activity report
or any similar report; or
(i) any liability arising out of or incurred in
connection with the failure of 3079936 Nova Scotia Company to comply
with any and all "bulk sales" laws.
provided, however, that the Manager shall not indemnify the Indemnified Parties
if such acts, omissions or alleged acts or omissions constitute fraud,
negligence, or willful misconduct by such Indemnified Party; and provided,
further, that the Manager shall not indemnify the Indemnified Parties for any
liability, cost or expense of the Collateral with respect to any federal, state
or local income or franchise taxes (or any interest or penalties with respect
thereto) required to be paid by the Holders in connection herewith to any taxing
authority; and provided, further, that in the event that a Successor Manager
(including the Backup Manager) shall succeed to the duties of the Manager, the
provisions of this Section 5.04 shall not apply to such Successor Manager unless
expressly agreed to thereby. The provisions of this Section 5.04 shall survive
any expiration or termination of this Agreement. Any indemnification owed to the
Indemnified Parties under this Section 5.04 shall be due and payable within 30
days of the applicable Indemnified Party's demand therefor.
Section 5.05. Expense Reimbursement. The Manager shall not request
reimbursement for any expenses incurred on its behalf by an Affiliate of the
Manager unless such expenses are no more than the arm's-length,
fair-market-value costs of the services provided by such Affiliate.
Section 5.06. Agreements with respect to the Car Mark Agreement and the
Railcar Storage Agreement. The Manager hereby agrees (i) to comply with the
representations, warranties, covenants and agreements of the "Buyer" under the
Car Mark Agreement and the Railcar Storage Agreement and (ii) not to consent or
agree to any amendment, restatement, supplement or other modification to the Car
Mark Agreement or the Railcar Storage Agreement without the prior written
consent of the Controlling Party. Unless otherwise agreed to in writing by the
Controlling Party, the Manager also hereby agrees to cause each Railcar subject
to the Car Mark Agreement to be re-marked (in accordance with the provisions of
the Car Mark Agreement and the Transaction Documents) prior to the expiration of
the "Initial Term" of the Car Mark Agreement.
ARTICLE VI
MANAGER TERMINATION
Section 6.01. Manager Events of Termination. (a) If any of the
following acts or occurrences (each, a "Manager Event of Termination") shall
occur and be continuing:
(i) any failure by the Manager to submit a Monthly
Manager Report pursuant to Section 3.01 that continues unremedied for a
period of two Business Days after the earliest of the date upon which
(A) the Indenture Trustee, the Class A Note Insurer or any Holder
provides written notification to the Manager of such failure, or (B)
the date on which an Authorized Officer obtains actual knowledge of
such failure; or
(ii) any representation or warranty made by the Manager in
this Agreement (other than any representation or warranty contained in
Section 4.03 which has been fully remedied in accordance with Section
4.04), any other Transaction Document to which it is a party or in any
certificate delivered by the Manager hereunder proves to have been
untrue or incorrect in any material respect when made and such untruth
or incorrectness shall continue to be material and unremedied;
provided, however, solely if such untruth or incorrectness is capable
of being remedied, no such untruth or incorrectness shall constitute
cause for termination hereunder for a period of 30 days after the
earlier of (A) the date on which an Authorized Officer obtains actual
knowledge of such failure or (B) the Manager's receipt of notice from
any Company or the Indenture Trustee so long as the Manager is
diligently proceeding to remedy such untruth or incorrectness and shall
in fact remedy such untruth or incorrectness within such period;
provided, however, such untrue or incorrect representation or warranty
shall be deemed to be remediable or remedied only after all adverse
consequences thereof, if any, can be and have been remedied as
applicable; or
(iii) any failure on the part of the Manager duly to
observe or to perform in any material respect any covenant or agreement
of the Manager set forth in this Agreement or any other Transaction
Document to which it is a party (including if the Manager is also
acting as the Servicer, of its duties as the Servicer), which failure,
if such failure is curable, continues unremedied for a period of 30
days after the earlier to occur of (A) the date on which written notice
of such failure or breach, requiring the situation giving rise to such
failure or breach to be remedied, shall have been given to the Manager
by the Indenture Trustee, the Backup Manager, the Class A Note Insurer,
each Company or any Holder or (B) the date on which an Authorized
Officer of the Manager obtains actual knowledge of such failure; or
(iv) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Manager
in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or
(B) a decree or order adjudging the Manager bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Manager
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Manager or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any of the foregoing unstayed and in effect for a period
of 45 consecutive days; or
(v) the commencement by the Manager of a voluntary case
or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by
it to the entry of a decree or order for relief in respect of the
Manager in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
federal or state
law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the
Manager or of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Manager in furtherance of
any such action; or
(vi) any assignment by the Manager to a delegate of its
duties or rights hereunder, except as specifically permitted hereunder,
or any attempt to make such an assignment; or
(vii) a final nonappealable judgment of a court of
competent jurisdiction for more than $1,000,000 shall be entered
against the Manager and shall not be stayed, vacated, bonded, paid or
discharged within 45 days; or
(viii) the Manager shall fail to pay, when and as the same
shall become due and payable (after giving effect to any applicable
grace period), any principal or interest, regardless of amount, due in
respect of any indebtedness of the Manager in a principal amount in
excess of $5,000,000 or any event shall occur with respect to any such
indebtedness, the effect of which is to cause, or allow the holder
thereof to cause, such indebtedness to become due before its stated
maturity; or
(ix) the Manager shall cease to be engaged in the railcar
management or maintenance business (unless the Backup Manager is acting
as Manager); or
(x) the existence of a Rapid Amortization Event of the
nature described in clause (b) of the definition of "Rapid Amortization
Event" contained in the Indenture; or
(xi) the failure of the Manager (unless the Backup Manager
is acting as Manager) to maintain a ratio of long term debt minus the
non-recourse portion of long term debt to Tangible Net Worth of not
more that 1.25 to 1; or
(xii) so long as the Initial Manager is the Manager, the
occurrence of a Change of Control; or
(xiii) so long as the Manager or any Affiliate thereof is
acting as Servicer, the occurrence of a Servicer Event of Termination
pursuant to Section 6.01 of the Servicing Agreement;
then, and in each and every case, so long as a Manager Event of Termination
shall not have been remedied within any applicable period set forth above, the
Indenture Trustee shall, at the direction of the Controlling Party, or may, with
the consent of the Controlling Party, by notice (the "Manager Termination
Notice") then given in writing to the Manager, terminate all, but not less than
all, of the rights (other than any rights to receive, subject to the priority of
payments set forth in Section 12.02 or Section 6.08 of the Indenture, as
applicable, all amounts owed to the Manager, including but not limited to the
Manager Fee and any Operating Expenses in
accordance with Section 2.06, accrued up to the effective date specified by the
Manager Termination Notice) and obligations of the Manager under this Agreement,
which termination shall be effective as of the date of such Manager Termination
Notice or such later date as such Manager Termination Notice may specify.
(b) The Manager may not be terminated in whole or in part, unless
(i) a successor Manager (the "Successor Manager") has been appointed by the
Indenture Trustee (acting at the direction of the Controlling Party) and (ii)
such Successor Manager has accepted such appointment. Any Successor Manager
shall be a located in the United States and be acceptable to the Controlling
Party. Any Successor Manager, however appointed, shall execute and deliver to
the Class A Note Insurer, the Backup Manager (if not the Successor Manager), the
Indenture Trustee, each Company and to the predecessor Manager an instrument
accepting such appointment, including customary confidentiality provisions in
favor of the predecessor Manager and each Company, and thereupon such Successor
Manager, without further act, shall become vested with all the rights, powers,
duties and trusts of the predecessor Manager hereunder with like effect as if
originally named the Manager herein.
(c) On and after the time the Manager receives a Manager
Termination Notice pursuant to this Section 6.01, all authority and power of the
Manager under this Agreement shall pass to the Successor Manager appointed
pursuant to Section 6.02, and, without limitation, such Successor Manager is
hereby authorized and empowered to execute and deliver, as Manager and on behalf
of each Company, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such Manager Termination Notice.
(d) The terminated Manager shall cooperate with the Indenture
Trustee and the Successor Manager in effecting the termination of the
responsibilities and rights of the terminated Manager hereunder and the
transition of the management to the Successor Manager, including, without
limitation, (i) by transferring, at its own expense, its electronic records
relating to the Railcars to the Successor Manager in such electronic form as the
Successor Manager may reasonably request, (ii) by transferring the current Lease
and Railcar Schedule and all other records, correspondence and documents
relating to the Leases, Railcars and other Railcar Assets that it may possess to
the Successor Manager in the manner and at such times as the Successor Manager
shall reasonably request and (iii) by responding to all reasonable requests of
the Successor Manager.
Section 6.02. Backup Manager to Act; Appointment of Successor. (a)
Subject to Section 6.01, on and after the time the Manager receives a Manager
Termination Notice pursuant to Section 6.01 hereof, the Backup Manager shall,
unless prevented by law (in which case such other Successor Manager as shall be
appointed by the Indenture Trustee acting at the direction of the Controlling
Party), without further action be the Successor Manager, and, to the extent
provided in Section 6.01, shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Manager by the terms and
provisions hereof; provided, however, that any Successor Manager shall not (i)
be liable for any acts or omissions of the outgoing Manager or for any breach by
the outgoing Manager of any of its representations and warranties contained
herein or in any related document or agreement, (ii) be responsible to perform
any duties under
Section 2.03(u) in respect of the United States Assignment of Claims Act,
Section 2.03(w) or Section 2.03(x). Subject to the consent of the Controlling
Party, the Successor Manager may subcontract with another firm to act as
submanager so long as the Successor Manager remains fully responsible and
accountable for performance of all obligations of the Manager.
(b) The Manager, the Backup Manager, the Indenture Trustee and
such Successor Manager shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession. The Successor Manager
and the Indenture Trustee shall be reimbursed for their respective expenses, if
any, incurred in connection with the assumption of responsibilities of the
Successor Manager as provided for in Section 12.02(d) or Section 6.08 of the
Indenture.
(c) If the Manager is also acting as Servicer under the Servicing
Agreement, upon any resignation of the Servicer, the Manager will also be
required to resign as Manager. The Manager and Servicer shall at all times be
the same Person.
Section 6.03. Notification to Holders. Upon any termination of, or
appointment of a successor to, the Manager pursuant to this Article VI, the
Indenture Trustee shall give prompt written notice thereof to the Holders at
their respective addresses appearing in the Note Register.
Section 6.04. Waiver of Breaches and Defaults. The Indenture Trustee
shall, at the direction of the Controlling Party, (a) waive any breach by the
Manager of any of its representations and warranties set forth in Section 4.03,
and (b) waive any events permitting removal of the Manager under Section 6.01.
Upon any waiver of a past breach or default, such breach or default shall cease
to exist, and any purchase or substitution obligation arising from such breach
shall no longer exist and any Manager Event of Termination arising from such
default shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other breach or
default or impair any right consequent thereto except to the extent expressly so
waived.
Section 6.05. Effects of Termination of Manager. (a) After the delivery
of a Manager Termination Notice and appointment of a Successor Manager, the
former Manager shall have no further obligations with respect to the management
of the Railcars or the performance of maintenance, insurance, remarketing or any
other services with regard to the Railcars, and the Successor Manager shall have
all of such obligations except as otherwise set forth herein. The former
Manager's indemnification obligations pursuant to Section 5.04 will survive the
termination of the Manager hereunder but will not extend to any acts or
omissions of a Successor Manager.
(b) A Manager Event of Termination shall not affect the rights and
duties of the parties hereunder (including, but not limited to, the obligations
and indemnities of the Manager pursuant to Section 5.04) other than those
relating to the management, insuring and remarketing of the Railcars.
(c) The predecessor Manager shall defend, indemnify and hold the
Successor Manager and any officers, directors, employees or agents of the
Successor Manager harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Manager may sustain in connection with the claims asserted at any time by third
parties against the Successor Manager which result from (i) any willful or
negligent act taken or omission by the predecessor Manager or (ii) a breach by
the predecessor Manager of an express obligation of the Manager hereunder. The
indemnification provided by this Section 6.05(c) shall survive the termination
of this Agreement.
(d) The Successor Manager will not be responsible for delays
attributable to the predecessor Manager's failure to deliver information,
defects in the information supplied by the terminated Manager or other
circumstances beyond the control of the Successor Manager.
The Successor Manager shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Manager acting reasonably and in
accordance with information prepared or supplied by a Person other than the
Successor Manager or the failure of any such Person to prepare or provide such
information. The Successor Manager shall have no responsibility, shall not be in
default and shall incur no liability (i) for any act or failure to act by any
third party, including the terminated Manager, or for any inaccuracy or omission
in a notice or communication received by the Successor Manager from any third
party or (ii) which is due to or results from the invalidity or unenforceability
of any Lease under applicable law or the breach or the inaccuracy of any
representation or warranty made by the terminated Manager. The Successor Manager
shall not be liable for any acts or omissions of the Manager occurring prior to
such Manager transfer or for any breach by the Manager of any of its
representations and warranties contained herein or in any related document or
agreement.
Notwithstanding anything contained in this Agreement to the contrary,
the Successor Manager is authorized to accept and rely on all of the accounting,
records (including computer records) and work of the terminated Manager relating
to the Leases, the Railcars and the other Railcar Assets (collectively, the
"Predecessor Manager Work Product") without any audit or other examination
thereof, and the Successor Manager shall have no duty, responsibility,
obligation or liability for the acts and omissions of the prior Manager. If any
error, inaccuracy, omission or incorrect or non-standard practice or procedure
(collectively, "Errors") exist in any Predecessor Manager Work Product and such
Errors make it materially more difficult to service or should cause or
materially contribute to the Successor Manager making or continuing any Errors
(collectively, "Continued Errors"), the Successor Manager shall have no duty,
responsibility, obligation or liability for such Continued Errors; provided,
however, that the Successor Manager agrees to use its best efforts, consistent
with the Manager Standard, to prevent further Continued Errors. In the event
that the Successor Manager becomes aware of Errors or Continued Errors, the
Successor Manager shall, with the prior consent of the Controlling Party, use
its best efforts, consistent with the Manager Standard, to reconstruct and
reconcile such data as is commercially reasonable to correct such Errors and
Continued Errors and to prevent future Continued Errors. The Successor Manager
shall be entitled to recover its costs thereby expended in accordance with
Section 12.02(d) or Section 6.08, as applicable, of the Indenture.
Section 6.06. Rights Cumulative. All rights and remedies from time to
time enforced upon or reserved to each Company, the Class A Note Insurer, the
Backup Manager, the Indenture Trustee or the Holders or to any or all of the
foregoing are cumulative, and none is intended to be exclusive of another. No
delay or omission in insisting upon the strict observance or performance of any
provision of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every right and remedy of each Company, the Indenture
Trustee or the Holders may be exercised from time to time and as often as deemed
expedient.
ARTICLE VII
THE BACKUP MANAGER
Section 7.01. Representations of Backup Manager. The Backup Manager
makes the following representations and warranties:
(a) Corporate Existence and Power. The Backup Manager has
been duly organized and is validly existing and in good standing as a
national banking association under the laws of the United States of
America, with all requisite power and authority to own its properties
and to transact the business in which it is now engaged, and the Backup
Manager is duly qualified to do business and is in good standing in
each state where the nature of its business requires it to be so
qualified except where failure to so qualify would not have a Material
Adverse Effect on the Backup Manager or its ability to perform its
obligations under this Agreement. The Backup Manager has all requisite
power and authority and has taken all action necessary to enter into
this Agreement and the other Transaction Documents to which it is a
party, to consummate the transactions contemplated hereby and thereby,
and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by the Backup Manager of this Agreement are
within the Backup Manager's powers, have been duly authorized by all
necessary action and do not contravene any applicable Law, the Backup
Manager's organizational documents or any contractual or other
obligation binding on or affecting the Backup Manager or any of its
assts.
(b) No Conflict. The performance of the Backup Manager's
obligations under this Agreement and each other Transaction Document to
which it is a party will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any Lien (other than as contemplated
by this Agreement and the other Transaction Documents, and other than
Permitted Liens) upon any of the property or assets of the Backup
Manager pursuant to the terms of any indenture, mortgage, deed of
trust, or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject,
nor will such action result in any violation of the provisions of any
charter document of the Backup Manager or any statute or any order,
rule or regulation of any court or Governmental Authority having
jurisdiction over it or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or
with any
court, or any such Governmental Authority is required for the
consummation of the other transactions contemplated by this Agreement
or any other Transaction Document to which it is a party except such
consents, approvals and authorizations which have been obtained or such
registrations or qualifications which have been made.
(c) Due Authorization, Execution and Delivery. Each
Transaction Document to which the Backup Manager is a party has been
duly authorized, executed and delivered by the Backup Manager and each
such Transaction Document is a valid and legally binding agreement of
the Backup Manager, enforceable against the Backup Manager in
accordance with its terms, subject as to enforceability to applicable
bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of whether
enforcement is sought in a court of law or equity.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, Backup Manager. Any Person (a) into which the Backup Manager may
be merged or consolidated, (b) which may result from any merger or consolidation
to which the Backup Manager shall be a party, or (c) which may succeed to the
properties and assets of the Backup Manager substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Backup Manager hereunder, shall be the successor
to the Backup Manager under this Agreement without any further act on the part
of any of the parties to this Agreement.
Section 7.03. Backup Manager Resignation. The Backup Manager shall not
resign from its obligations and duties under this Agreement except upon
determination that the performance of its duties shall no longer be permissible
under applicable law (any such determination permitting the resignation of the
Backup Manager shall be evidenced by an Opinion of Counsel to such effect
delivered to the Indenture Trustee and the Class A Note Insurer). Upon the
Backup Manager's resignation pursuant to this Section 7.03, the Backup Manager
shall comply with the provisions of this Agreement until the acceptance of a
successor Backup Manager.
The Backup Manager shall consult fully with the Manager as may be
necessary from time to time to perform or carry out the Backup Manager's
obligations hereunder, including the obligation to succeed at any time to the
duties and obligations of the Manager under Section 6.02.
Section 7.04. Duties and Responsibilities. (a) The Backup Manager shall
perform such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Backup Manager.
(b) The Backup Manager may conclusively rely as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Backup Manager and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions, which by any provision hereof are specifically required to be
furnished to the Backup Manager, the Backup Manager shall be under a duty to
examine the same and to determine whether or not they conform to the
requirements of this Agreement.
Section 7.05. Backup Manager Compensation. As compensation to the
Backup Manager for the performance of services hereunder, the Backup Manager
shall be entitled to receive the Backup Manager Fee, which shall be paid to the
Backup Manager on each Payment Date in accordance with, and subject to the
priority of payment provisions of, Section 12.02(d) or Section 6.08, as
applicable, of the Indenture.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Termination of Agreement. (a) Except where otherwise
expressly noted herein, the respective duties and obligations of the Manager,
each Company, the Backup Manager and the Indenture Trustee created by this
Agreement shall terminate upon the discharge of the Indenture in accordance with
its terms.
(b) This Agreement shall not be automatically terminated as a
result of an Event of Default under the Indenture or any action taken by the
Indenture Trustee thereafter with respect thereto, and any liquidation or
preservation of any property held as contemplated in the Indenture by the
Indenture Trustee thereafter shall be subject to the rights of the Manager to
manage the Railcars as provided hereunder. In the event of any sale of
Collateral to a third party following an Event of Default, however, this
Agreement shall not be deemed assigned to such third party.
Section 8.02. Amendments. (a) This Agreement may be amended by the
parties hereto, without the consent of any Holders but with the consent of the
Class A Note Insurer (so long as no Class A Note Insurer Default shall have
occurred and is continuing), to (i) cure any ambiguity, to correct or supplement
any provisions in this Agreement which are inconsistent with the provisions
herein, or to add any other provisions with respect to matters or questions
arising under this Agreement that shall not be inconsistent with the provisions
of this Agreement or (ii) amend any of the representations or warranties with
respect to the Collateral set forth in Section 4.03; provided, however, that
Section 4.03 may be amended prospectively at any time by the Controlling Party
without the consent of any other party; provided further, however, that if the
Class A Note Insurer is not the Controlling Party, the Rating Agency Condition
shall have been met.
(b) This Agreement may also be amended from time to time by the
parties hereto with the prior written consent of the Controlling Party for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders.
(c) Prior to the execution of any amendment or consent under this
Section 8.02, the Manager shall furnish written notification of the substance of
such amendment or consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment, the
Manager shall furnish a written copy of the text of such amendment (and any
consent required with respect thereto) to the other parties hereto, the Class A
Note Insurer and to each Holder.
(e) Approval of the particular form of any proposed amendment or
consent shall not be necessary for the consent of any Holders, if required,
under Section 8.02(b), but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by the Holders shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.
(f) The Indenture Trustee may request an Opinion of Counsel, an
Officer's Certificate and such other opinions, certificates and documents as it
deems advisable in connection with any proposed amendment of this Agreement. The
Indenture Trustee may, but shall not be obligated to, execute and deliver any
such amendment which affects that Indenture Trustee's rights, powers, immunities
or indemnifications hereunder.
Section 8.03. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING SECTIONS
5-1401 AND 1402 OF THE GENERAL OBLIGATIONS LAWS, BUT OTHERWISE WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 8.04. Notices. All demands, notices and communications
hereunder shall be in writing and shall be delivered or mailed by registered or
certified United States mail, postage prepaid, or by telephonic facsimile
transmission and overnight delivery service, postage prepaid, and addressed, in
each case as follows: (a) if to NARCAT, at 480 W. Dussel Drive, Suite R, Maumee,
Ohio 43537; (b) if to CARCAT, at 480 W. Dussel Drive, Suite R, Maumee, Ohio
43537; (c) if to NARCAT Mexico, at 480 W. Dussel Drive, Suite R, Maumee, Ohio
43537; (d) if to the Manager, at The Andersons Inc., 480 W. Dussel Drive,
Maumee, Ohio 43537, Attention: Betsy Hall, Esq. (facsimile: (419) 491-6695); (e)
if to the Indenture Trustee or the Backup Manager, at Wells Fargo Bank, National
Association, MAC N9311-161, Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479, Attention: Corporate Trust Services -- Asset-Backed
Administration (facsimile: (612) 667-3539); (f) if to any Holder, at its address
for notices specified in the Register for the Notes maintained pursuant to the
Indenture and (g) if to the Class A Note Insurer, at the address specified in
the Indenture. Any of the Persons in subclauses (a) through (e) and (g) above
may change the address for notices hereunder by giving notice of such change to
other Persons. Any change of address shown in the Note Register shall, after the
date of such change, be effective to change the address for such Holder
hereunder. The Indenture Trustee shall provide all parties hereto with notice of
any change of address shown in the Note Register. All notices and demands shall
be deemed to have been given either at the time of the delivery thereof to any
officer of the Person entitled to receive such notices and demands at the
address of such Person for notices hereunder.
Section 8.05. Severability of Provisions. If one or more of the
provisions of this Agreement shall be for any reason whatever held invalid, such
provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of such remaining provisions, the rights
of any parties hereto, or the rights of the Class A Note Insurer, the Backup
Manager, the Indenture Trustee or any Holders. To the extent permitted by law,
the parties hereto hereby waive any provision of law which renders any provision
of this Agreement prohibited or unenforceable in any respect.
Section 8.06. Inspection and Examination Rights. (a) The Manager agrees
that, on reasonable prior notice, it will permit any representative of the Class
A Note Insurer, the Backup Manager, the Indenture Trustee, the Controlling Party
or any Company, during the Manager's normal business hours, to examine all the
books of account, records, reports and other papers of the Manager relating to
the Railcar Assets, to make copies and extracts therefrom, to cause such books
to be examined by independent certified public accountants selected by the Class
A Note Insurer, the Backup Manager, the Indenture Trustee, the Controlling Party
or any Company, as the case may be, and to discuss its affairs, finances and
accounts relating to the Railcar Assets with its officers, employees and
independent public accountants (and by this provision the Manager hereby
authorizes said accountants to discuss with such representatives such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any expense incident to the exercise by the Class A Note
Insurer, the Backup Manager, the Indenture Trustee or any Company of any right
under this Section 8.06 shall be borne by the Initial Manager, except that only
the first examination in any year by the Class A Note Insurer, the Backup
Manager, the Indenture Trustee or the Controlling Party will be at the Initial
Manager's expense (unless there has occurred and is continuing a Manager Event
of Termination, a Servicer Event of Termination (if the Manager is also the
Servicer) or a Rapid Amortization Event (or any event which, with the giving of
notice or passage of time, would constitute any such event), in each of which
cases each such examination shall be at the expense of the Manager)), or, if a
Successor Manager other than an Affiliate of the Initial Manager is then acting
as Manager, such expense shall be borne by the party exercising such right of
inspection; provided, however, that in no event shall the Class A Note Insurer,
the Backup Manager, the Indenture Trustee, the Controlling Party or any Company
be entitled to any expenses hereunder for which it has been previously
reimbursed pursuant to Section 8.06 of the Servicing Agreement.
(b) Upon reasonable prior notice, the Manager shall give, or cause
to be given, to the Railcar Entities, Affiliates of the Railcar Entities and
their respective representatives, during normal business hours, access to the
Leases and the Railcars and all books and records relating to the Leases and the
Railcars, and the Manager shall permit such persons to examine and copy such
books and records and investigate such Leases and Railcars to the extent
requested by the Railcar Entities and at the Railcar Entities' expense in
connection with any reasonable business purpose; provided, however, that such
access does not unreasonably disrupt the normal operations of the Manager.
Section 8.07. Binding Effect. All provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto.
Section 8.08. Article Headings. The article headings herein are for
convenience of reference only, and shall not limit or otherwise affect the
meaning hereof.
Section 8.09. Legal Holidays. In the case where the date on which any
action required to be taken, document required to be delivered or payment
required to be made is not a Business Day, such action, delivery or payment need
not be made on such date, but may be made on the next succeeding Business Day.
Section 8.10. Assignment for Security for the Notes. The Manager
understands that each Company will assign to, and grant to the Indenture Trustee
under the Indenture a security interest in, all of its right, title and interest
to this Agreement. The Manager consents to such assignment and grant and further
agrees that all representations, warranties, covenants, and agreements of the
Manager made herein shall also be for the benefit of and inure to the Class A
Note Insurer, the Indenture Trustee and the Holders.
Section 8.11. Third-Party Beneficiaries. The Class A Note Insurer and
its successors and assigns shall be third-party beneficiaries to the provisions
of this Agreement, and shall be entitled to rely upon and directly enforce such
provisions of this Agreement. Nothing in this Agreement, express or implied,
shall give to any Person, other than the Class A Note Insurer, the parties
hereto and their successors hereunder and permitted assigns, any benefit or any
legal or equitable right, remedy or claim under this Agreement.
Section 8.12. No Bankruptcy Petition. The Manager hereby covenants and
agrees for the benefit of each of the parties hereto, the Indenture Trustee and
each of the other Secured Parties, that, prior to the date which is one year and
one day after the payment in full of all obligations of each of the Companies,
it will not institute against any Company, or join any other Person in
instituting against any Company, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under the laws of the
United States, any state of the United States or any foreign jurisdiction. Each
Company hereby covenants and agrees for the benefit of each of the parties
hereto, the Indenture Trustee and each of the other Secured Parties, that, prior
to the date which is one year and one day after the payment in full of all
obligations of the Manager and each other Company, it will not institute against
the Manager or any other Company, or join any other Person in instituting
against the Manager or any other Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings under
the laws of the United States, any state of the United States or any foreign
jurisdiction. This Section 8.12 shall survive the termination of this Agreement.
IN WITNESS WHEREOF, each Company, the Manager, the Indenture Trustee
and the Backup Manager have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized as of the date and year first
above written.
NARCAT LLC
By /s/Rasesh H. Shah
------------------------------
Name: Rasesh H. Shah
Title: Manager
CARCAT ULC
By Rasesh H. Shah
-------------------------------
Name: Rasesh H. Shah
Title: President/Secretary
NARCAT MEXICO, S. DE R.L. DE C.V.
By /s/Rasesh H. Shah
-------------------------------
Name: Rasesh H. Shah
Title: Legal Representative
THE ANDERSONS, INC.
By /s/Gary Smith
-------------------------------------
Name: Gary Smith
Title: Vice President, Finance and Treasurer
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Indenture Trustee and as Backup Manager
By /s/Joe Nardi
Name: Joe Nardi
Title: Vice President