Asset Purchase Agreement

Asset Purchase Agreement

 

by and among

 

CIT Group Inc.

and

 

MILPI Holdings, LLC,
Rail Investors I LLC,
Rail Investors II LLC,
Transportation Equipment-PLM, LLC,
PLM Investment Management, Inc.,
PLM Transportation Equipment Corporation
PLM Equipment Growth Fund V,
PLM Equipment Growth Fund VI,
PLM Equipment Growth & Income Fund VII,
Professional Lease Management Income Fund I, LLC,
PLM Equipment Growth Fund Canada Limited,
PLM Investment Fund LLC,
PLM Rail Partners, LLC,
PLM Rail V, LLC, and
Acquisub, LLC

 

 

 

Dated as of August 4, 2005

 

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		1
ARTICLE II PURCHASED ASSETS; PURCHASE PRICE; CLOSING		13
2.1	Purchased Assets; Assumed Liabilities	13
2.2	Purchase Price	14
2.3	Purchase Price Adjustment	14
2.4	Removal of Owned Cars; Insurance Payments	15
2.5	The Closing	16
2.6	Taxes	16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS		17
3.1	Organization and Good Standing	17
3.2	Corporate Authority	17
3.3	No Conflicts	17
3.4	Consents	18
3.5	No Violations of Law	18
3.6	Taxes	18
3.7	Litigation and Liabilities	20
3.8	Conduct of Business	20
3.9	Brokers’ or Finders’ Fees, etc.	20
3.1	Purchased Assets	20
3.11	Document Files	23
3.12	Data Tape	23
3.13	Conduct of Business	24
3.14	Employee Benefit Plans	24
3.15	Information	24
3.16	Calgary Lease	24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER		25
4.1	Organization and Good Standing	25
4.2	Corporate Authority	25
4.3	No Conflicts	25
4.4	Consents	25
4.5	Brokers’ or Finders’ Fees, etc.	26
ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO CLOSING; COVENANTS		26
5.1	Access	26
5.2	Hart-Scott-Rodino Filings	26
5.3	No Changes	26
5.4	Conduct of Business	27
5.5	Negative Covenants	27
5.6	Pending or Threatened Litigation	28
5.7	Tax Matters	28
5.8	Insurance; Risk of Loss	28
5.9	Further Assurances	29
5.1	Payment of Broker’s or Finder’s Fees	29
5.11	Transition Services Agreement	30
5.12	Reasonable Best Efforts	30
5.13	Employees	30
5.14	Replacement Credit Support Arrangements	31
5.15	Document Files	31
5.16	Post-Closing Access	31
5.17	Remittance Notices	31
5.18	Mileage Equalization	32
5.19	Maintenance Expenses	32
5.2	IP-20 Rail Cars	33
5.21	Payments by Sellers	33
5.22	Customer Information	33
5.23	Calgary Lease	33
5.24	Earned Mileage	34
ARTICLE VI CONDITIONS TO CLOSING; ABANDONMENT OF THE TRANSACTION		34
6.1	Conditions to Purchaser’s Obligations to Close	34
6.2	Conditions to Sellers’ Obligations to Close	36
ARTICLE VII TERMINATION		37
7.1	Termination	37
7.2	Procedure and Effect of Termination	37
7.3	Termination Fee	38
ARTICLE VIII NO COMPETITION; PUBLIC ANNOUNCEMENTS; NO SOLICITATION		38
8.1	No Competition	38
8.2	Public Announcements	38
8.3	No Solicitation	39
ARTICLE IX INDEMNIFICATION AND RELATED MATTERS		39
9.1	Indemnification by Sellers	39
9.2	Additional Indemnification by Sellers	40
9.3	Indemnification by Purchaser	40
9.4	Additional Indemnification by Purchaser	40
9.5	Sole and Exclusive Remedy; Limitations	41
9.6	Indemnification Procedure	42
9.7	Survival of Representations and Warranties	43
9.8	Tax Treatment	43
ARTICLE X MISCELLANEOUS		43
10.1	Amendments	43
10.2	Integrated Contract	43
10.3	Governing Law	44
10.4	Notices	44
10.5	No Assignment	45
10.6	Headings	45
10.7	Counterparts	45
10.8	Severability	45
10.9	Binding Effect	46
10.1	Waiver of Jury Trial	46
10.11	No Third Party Beneficiary	46
10.12	Expenses	46
10.13	Currency	46

 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement, dated as of August 4, 2005 (the " Agreement "), is entered into by and among CIT Group Inc., a Delaware corporation (" Purchaser "), and MILPI Holdings, LLC, a Delaware limited liability company (" MILPI "), Rail Investors I LLC, a Delaware limited liability company (" Rail I "), Rail Investors II LLC, a Delaware limited liability company (" Rail II "), Transportation Equipment-PLM, LLC, a Delaware limited liability company (" TE-PLM "), PLM Investment Management, Inc., a California corporation (" PLM Investment Management "), PLM Transportation Equipment Corporation, a California corporation (" PLM Transportation "), PLM Equipment Growth Fund V, a California limited partnership (" Fund V "), PLM Equipment Growth Fund VI, a California limited partnership (" Fund VI "), PLM Equipment Growth & Income Fund VII, a California limited partnership (" Fund VII "), Professional Lease Management Income Fund I, LLC, a Delaware limited liability company (" Fund I "), PLM Equipment Growth Fund Canada Limited, a company incorporated in Alberta, Canada (" EGF Canada "), PLM Investment Fund LLC, a Delaware limited liability company (" Investment Fund "), PLM Rail Partners, LLC, a Delaware limited liability company (" Rail Partners "), PLM Rail V, LLC, a Delaware limited liability company (" Rail V ") and Acquisub, LLC, a Delaware limited liability company (" Acquisub " and, collectively with MILPI, Rail I, Rail II, TE-PLM, PLM Investment Management, PLM Transportation, Fund V, Fund VI, Fund VII, Fund I, EGF Canada, Investment Fund, Rail Partners and Rail V, the " Sellers ").

WHEREAS, Sellers own a portfolio of railcar assets and provide related services under the trade name PLM Rail (the " Business "); and

WHEREAS, Purchaser desires to purchase and acquire, and Sellers desire to sell and convey to Purchaser, certain assets relating to the Business, and Purchaser is willing to assume, and Sellers desire to assign and delegate to Purchaser, certain liabilities associated therewith, all in the manner and subject to the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and intending to be legally bound, Purchaser and Sellers do hereby agree as follows:

1. 
   DEFINITIONS

Capitalized terms used in this Agreement shall have the following meanings:

" AAR " shall mean the Association of American Railroads.

" Acquisition Proposal " shall have the meaning given to such term in Section 8.3(b) .

" Acquisition Transaction " shall have the meaning given to such term in Section 8.3(a) .

" Acquisub " shall have the meaning given to such term in the preamble to this Agreement.

" Advance Payment " shall mean, in respect of any LILO Sublease Contract, Owned Car Lease Contract or other Assigned Contract, the portion of any rent, unapplied cash or other amount paid to or for the account of any Seller prior to the Closing Date that is allocable to any period commencing on or after the Closing Date (any such allocation to be done ratably between the period prior to the Closing Date and the period commencing on or after the Closing Date based on the number of days covered by such rent, unapplied cash or other amount).

" Affiliate " shall mean, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such Person. For purposes of this definition, " control " (including, with correlative meaning, the terms " controlled by " and " under common control with ") means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person through ownership of voting securities, by contract or otherwise.

" Agreement " shall mean this Asset Purchase Agreement, including the exhibits and schedules attached hereto and made a part hereof, as the same may be supplemented or amended from time to time in accordance with the provisions hereof.

" ARI Agreement " shall mean that certain Fleet Services Agreement, dated April 26, 2005, but effective September 1, 2003, by and between American Railcar Industries, Inc. and PLM Transportation, as amended, modified or supplemented by that certain Rider No. 1-1, dated April 26, 2005, but effective September 1, 2003, and that certain Rider No. 2-1, dated April 26, 2005, but effective September 1, 2003.

" Assigned Contracts " shall mean, collectively, the LILO Contracts, the LILO Sublease Contracts, the Management Contracts, the Owned Car Lease Contracts, the Rail Car Purchase Orders, the ARI Agreement and the economic interests of the master lessor and the master lessee under each Master Lease.

" Assumed Liabilities " shall mean all liabilities and obligations of Sellers and their Affiliates with respect to, arising out of or relating to: (i) the ownership, possession or use of the Purchased Assets to the extent arising on or after the Closing Date; (ii) the ownership, possession or use of the Owned Cars, the LILO Cars and the Managed Cars to the extent arising on or after the Closing Date; (iii) the ownership, possession or use of the LILO Contracts to the extent arising on or after the Closing Date, including without limitation any lease or rent payments required to be made under the LILO Contracts to the extent not due and payable prior to the Closing Date regardless of the date of any invoice with respect to such payments; (iv) the ownership, possession or use of the LILO Sublease Contracts to the extent arising on or after the Closing Date; (v) the ownership, possession or use of the Owned Car Lease Contracts to the extent arising on or after the Closing Date; (vi) the ownership, possession or use of the Rail Car Purchase Orders, and any Rail Cars covered thereby, to the extent arising on or after the Closing Date; (vii) the ownership, possession or use of the ARI Agreement to the extent arising on or after the Closing Date; (viii) the ownership, possession or use of the Management Contracts to the extent arising on or after the Closing Date; (ix) accounts payable related to the LILO Contracts, the Owned Car Lease Contracts and the Management Contracts to the extent arising on or after the Closing Date; (x) any obligations as a lessor or sublessor to any Obligor under any LILO Sublease Contracts or Owned Car Lease Contracts to the extent arising on or after the Closing Date; (xi) the ownership, possession or use of the Rail Marks and Computer Software used in connection with the Purchased Assets or the Business, and any copyrights relating to the foregoing, to the extent arising on or after the Closing Date; (xii) Maintenance Expenses with respect to any maintenance, improvement, alteration or running repair completed after the Closing Date regardless of the start date of any such maintenance or running repair ; provided that, in the case of any such maintenance, improvement, alteration or running repair for any Owned Car that was authorized by Sellers prior to the Closing Date and as to which Maintenance Expenses are reasonably expected to exceed $2,000.00 in the aggregate, such Maintenance Expenses are identified on Schedule 5.19 hereto or any update to such schedule delivered to Purchaser at or prior to the Closing pursuant to Section 5.19 ; (xiii) Freight Charges to the extent the waybill with respect to such Freight Charges is dated on or after the Closing Date; (xiv) Mileage Equalization for periods subsequent to December 31, 2004; (xv) the Calgary Lease to the extent arising on or after the date of assignment thereof to Purchaser or any of its Affiliates in accordance with Section 5.23 hereof; and (xvi) the ownership, possession or use of the Master Leases to the extent arising on or after the Closing Date. Assumed Liabilities shall not include any other liabilities or obligations of Sellers or their Affiliates, including, without limitation, Excluded Liabilities.

" Assumed Value " shall mean, with respect to any Owned Car that is not purchased by Purchaser at the Closing in accordance with Section 2.4(a) hereof, the cash replacement value thereof determined in accordance with AAR Rule 107.

" Authorization " shall mean any consent, license, permit, grant, authorization or approval of any Governmental Entity that is used in or necessary to the ownership, use, lease or operation of any of the Purchased Assets, or the sale, assignment or transfer of the Purchased Assets as provided in this Agreement.

" Bankruptcy Exception " shall mean, in respect of any agreement, contract or commitment, any limitation thereon imposed by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar law affecting creditors’ rights and remedies generally and, with respect to the enforceability of any agreement, contract or commitment, by general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

" Books and Records " means the books and records of Sellers to the extent specifically relating to any or all of the Purchased Assets and the Assumed Liabilities.

" Business " shall have the meaning given to such term in the first recital to this Agreement.

" Business Day " shall mean a day other than a Saturday, Sunday or other day on which commercial banks in New York City, New York are authorized or required by law to close.

" Calgary Lease " shall have the meaning given to such term in Section 5.23 hereof.

" Casualty Occurrence " shall have the meaning given to such term in Section 2.4(c) hereof.

" Casualty Proceeds " shall have the meaning given to such term in Section 2.4(a) hereof.

" Closing " shall mean the consummation of the transactions contemplated hereby pursuant to the terms of this Agreement.

" Closing Date " shall mean the date on which the Closing shall occur.

" Closing Date Data Tape " shall mean the Data Tape as of the close of business on the Business Day immediately preceding the Closing Date.

" Code " shall mean the Internal Revenue Code of 1986, as amended, and any successor law.

" Computer Software " shall mean all computer software (including object code and source code and documentation related thereto) and related Know-How owned by or licensed to any of the Sellers and used in connection with the Business.

" Competitive Business " shall have the meaning given to such term in Section 8.1 hereof.

" Conveyance Taxes " shall mean Sales Taxes and all use, value added, transfer, stamp, stock transfer, real property transfer or gains and similar Taxes.

" Cypress Management Contract " shall mean any Management Contract to which Cypress Canada Management, Inc., Cypress Canada Management IV, Inc., Cypress Tankcar Leasing II, LLC, Cypress Tankcar III, LLC, or Cypress Tankcar Leasing IV, LLC is a party, in each case as indicated on Schedule 1.7 hereto.

" Cypress Monthly Payment " shall mean the aggregate amount of all management fees, expense reimbursements and other amounts that are payable to Sellers or their Affiliates under any Cypress Management Contract for the month in which the Closing shall occur.

" Damages " shall mean any and all losses, claims, damages, liabilities, obligations, judgments, Taxes, equitable relief granted, settlements, awards (including back pay awards), demands, offsets, defenses, counterclaims, actions or proceedings, reasonable out-of-pocket costs, reasonable expenses and reasonable legal or attorneys’ fees (including any such reasonable costs, reasonable expenses and reasonable legal or attorneys’ fees incurred in enforcing any right of indemnification against any Indemnitor or with respect to any appeal), interest and penalties, if any.

" Data Tape " shall mean, as of any date, an electronic data storage disk prepared by Sellers from their management information systems setting forth, as of such date, information of the type set forth or described on Schedule 3.12 hereto with respect to the Purchased Assets.

" Document Files " shall have the meaning given to such term in Section 3.11 hereof.

" Domain Name " shall mean the domain name " plm.com ".

" EGF Canada " shall have the meaning given to such term in the preamble to this Agreement.

" Employee Benefit Plan " shall have the meaning given to such term in Section 3.14 hereof.

" Encumbrance " shall mean any title defect, conflicting or adverse claim of ownership, mortgage, hypothecation, security interest, lien, Uniform Commercial Code financing statement or similar filing (whether or not otherwise constituting a security interest or any other encumbrance), pledge, claim, right of first refusal, option, charge, covenant, reservation, lease, order, decree, judgment, stipulation, settlement, attachment, restriction, objection or any other encumbrance of any nature whatsoever, whether or not perfected.

" Environmental Costs and Liabilities " shall mean, with respect to any Person, all liabilities, obligations, responsibilities, Remedial Action, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including, but not limited to, all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person, whether based in contract, tort, implied or express warranty, strict liability, or criminal or civil statute, including any thereof arising under any Environmental Law, Environmental Permit, or order or agreement with any Governmental Entity or other Person, which relate to any environmental, health or safety condition or a Release or threatened Release.

" Environmental Law " means any applicable federal, state, provincial, local, or foreign law (including common law), statute, code, ordinance, rule, regulation or other legal requirement relating to the environment, natural resources, or public or employee health and safety.

" Environmental Permit " shall mean, with respect to Sellers, all Authorizations required by Environmental Law to use the Purchased Assets.

" ERISA " shall have the meaning given to such term in Section 3.14 hereof.

" Excluded Assets " shall mean all assets of the Sellers and their subsidiaries and Affiliates except for the Purchased Assets. Excluded Assets shall include, without limitation: (i) all cash and cash equivalents held by Sellers or their Affiliates or otherwise for the account of Sellers or their Affiliates (other than security deposits held by Sellers or any of their Affiliates pursuant to any LILO Sublease Contract, Management Contract, Owned Car Lease Contract or Rail Car Purchase Order or the ARI Agreement); (ii) all accounts receivable of Sellers or their Affiliates (other than accounts receivable in respect of amounts payable under the Assigned Contracts to the extent allocable to periods commencing on and after the Closing Date); (iii) all Intellectual Property (other than (A) the Rail Marks, (B) Computer Software and Know-How used in connection with the Purchased Assets or the Business, and (C) any copyrights relating to the foregoing); (iv) all MILPI Guarantee Obligations; (v) any and all amounts collectible or receivable from any Obligor under any Owned Car Lease Contract or LILO Sublease Contract with respect to Mileage Equalization Charges that are Excluded Liabilities; and (vi) the assets listed on Schedule 2.1(b) hereto.

" Excluded Liabilities " shall mean any liability or obligation (whether known or unknown, contingent or absolute, or arising before, on or after the Closing Date) of Sellers and their Affiliates other than the Assumed Liabilities. Excluded Liabilities shall include, without limitation: (i) any Environmental Costs and Liabilities to the extent arising from, related to or otherwise attributable to (A) the operation by Sellers or any of their Affiliates, or any other Person, of any Purchased Assets or any real property owned, operated or leased by Sellers or any of their Affiliates prior to the Closing Date, including, without limitation, noncompliance with or liability under Environmental Law and Remedial Action obligations, (B) any Excluded Asset or (C) the operations of Sellers or any of their Affiliates after the Closing Date; (ii) any liability or obligation of Sellers or any Affiliate thereof under this Agreement; (iii) any liability or obligation of Sellers or any Affiliate thereof under any agreements, contracts, commitments or guaranties in respect of any indebtedness for borrowed money; (iv) any liability or obligation with respect to any current or former employee of Sellers or related to any Employee Benefit Plans of Sellers; (v) (A) any liability or obligation of Sellers or any Affiliate thereof to the extent relating to Taxes imposed on or measured by reference to gross or net income or receipts, and franchise, net worth, capital or other doing business Taxes, (B) any liability or obligation of Sellers or any Affiliate thereof to the extent relating to any Taxes imposed on or with respect to Sellers or any such Affiliate other than with respect to the Purchased Assets or the Assumed Liabilities, (C) any liability or obligation for Taxes with respect to the Business, the Purchased Assets or the Assumed Liabilities for all taxable periods, or portions thereof, ending on or prior to the Closing Date and (D) any liability or obligation of Sellers for Taxes allocable to Sellers pursuant to Section 2.6 hereof; (vi) any contractual liabilities or obligations of Sellers other than contractual liabilities or obligations arising under the terms of the Assigned Contracts; (vii) any liabilities or obligations arising by reason of a breach, default or other act or omission by Sellers prior to the Closing Date; (viii) any tort or other similar liabilities with respect to, arising out of or relating to any act or omission prior to the Closing Date; (ix) any liability of Sellers to the extent arising from, related to or otherwise attributable to any Excluded Asset; (x) Maintenance Expenses with respect to any maintenance, improvement, alteration or running repair completed on or prior to the Closing Date or otherwise not constituting Assumed Liabilities in accordance with clause (xii) of the definition thereof; (xi) Freight Charges to the extent the waybill with respect to such Freight Charges is dated prior to the Closing Date; (xii) Mileage Equalization Charges to the extent assessed for any period prior to January 1, 2005; and (xiii) any liability or obligation of Sellers under any Managed Car Lease Contracts.

" Freight Charges " shall mean fees and expenses of any type or character payable in connection with the transportation or delivery of Rail Cars.

" Fund I " shall have the meaning given to such term in the preamble to this Agreement.

" Fund V " shall have the meaning given to such term in the preamble to this Agreement.

" Fund VI " shall have the meaning given to such term in the preamble to this Agreement.

" Fund VII " shall have the meaning given to such term in the preamble to this Agreement.

" GAAP " shall mean generally accepted accounting principles as in effect from time to time in the United States consistently applied.

" Governmental Entity " shall mean a federal, state, provincial, local, county or municipal government, governmental, quasi-governmental, regulatory or administrative agency, department, commission, board, bureau, court or other authority or instrumentality, domestic or foreign.

" Hazardous Material " shall mean any material, substance or waste that is classified, regulated or otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant or a pollutant or by other words of similar meaning or regulatory effect, including any petroleum or petroleum-derived substance or waste, asbestos and polychlorinated biphenyls.

" HSR Act " shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

" Indemnification Event " shall mean any event, action, proceeding or claim for which a Person is entitled to indemnification under this Agreement.

" Indemnitor " shall mean the indemnifying person in the case of any obligation to indemnify pursuant to the terms of this Agreement.

" Intellectual Property " shall mean, collectively, all United States and foreign registered, unregistered and pending (i) PLM Marks, (ii) Computer Software, (iii) copyrights (including, without limitation, those in Computer Software and Know-How, and all registrations and applications therefor), (iv) Know-How and (v) the Domain Name, in each case which are used by Sellers or their Affiliates in connection with or related to the Business.

" Investment Fund " shall have the meaning given to such term in the preamble to this Agreement.

" IP-20 Rail Cars " shall have the meaning given to such term in Section 5.20 hereof.

" IP-20 Sale Agreement " shall have the meaning given to such term in Section 5.20 hereof.

" IRS " shall mean the United States Internal Revenue Service.

" Know-How " shall mean the trade secrets, know-how, data and other confidential and proprietary technical, business and other information primarily used by Sellers in connection with or relating to the Business.

" LILO Cars " shall mean the Rail Cars leased or rented by any Seller pursuant to a LILO Contract that are described and listed on Schedule 1.1 hereto.

" LILO Contract " shall mean any lease agreement or rental agreement and any master lease or master rental agreement with respect to LILO Cars (together will all schedules, supplements, and addenda relative to any of the foregoing) that evidences the payment obligations of any Seller to the owner or lessor of the LILO Cars, in each case as specifically set forth on Schedule 1.2 hereto.

" LILO Sublease Contract " shall mean any lease agreement or rental agreement and any master lease or master rental agreement with respect to LILO Cars (together will all schedules, supplements, and addenda relative to any of the foregoing) that evidences the payment obligations of an Obligor to any Seller as the lessor or sublessor of the LILO Cars, in each case as specifically set forth on Schedule 1.3 hereto.

" Maintenance Expenses " shall mean fees and expenses of any type or character payable for maintenance, improvements, alterations and running repairs with respect to any Owned Car.

" Maintenance Reserves " shall mean, in respect of any LILO Contract, any security deposit or other payment made by Sellers or any of their Affiliates as collateral or security, or any cash deposits or cash reserves paid by Sellers or any of their Affiliates for repair and maintenance of the LILO Cars, in each case to the extent existing immediately prior to the Closing Date in respect of such LILO Contract and listed on Schedule 1.4 hereto.

" Managed Car Lease Contract " shall mean any lease agreement or rental agreement and any master lease or master rental agreement with respect to Managed Cars (together with all schedules, supplements, and addenda relative to any of the foregoing) that evidences the payment obligation of a lessee to any party to a Management Contract as the owner or lessor of the Managed Cars and that was entered into by any Seller as agent or otherwise on behalf of such owner or lessor, in each case as described on Schedule 1.5 hereto.

" Managed Cars " shall mean the Rail Cars leased, rented or managed by any Seller or any of their respective Affiliates, or for which any Seller or any of their respective Affiliates acts as agent, pursuant to a Management Contract that are described and listed on Schedule 1.6 hereto.

" Management Contract " shall mean any management contract or other agreement pursuant to which any Seller provides leasing and asset management services to the owners and users of Rail Cars in return for a management or similar fee, in each case as specifically set forth on Schedule 1.7 hereto.

" Master Lease " shall have the meaning given to such term in Section 3.10(h) hereof.

" Material Adverse Effect " shall mean any state of facts, events, changes or effects that is materially adverse to or materially impairs (i) the ownership, collection, enforcement, value or administration of the Purchased Assets taken as a whole, other than (A) changes in economic or business conditions generally applicable to the United States and global economies, (B) changes in laws and regulations impacting the rail industry generally, or (C) changes or effects resulting from the execution or announcement of this Agreement; or (ii) the ability of any party hereto to perform its obligations under this Agreement.

" Mileage Equalization Charges " shall mean fees and charges of any type and character that are assessed by a railroad for the transportation or movement of any empty Rail Car along any privately owned railway.

" MILPI " shall have the meaning given to such term in the preamble to this Agreement.

" MILPI Guarantee Obligations " shall mean all guarantee obligations of MILPI and its Affiliates as guarantor(s) under or pursuant to a Management Contract.

" Multiemployer Plan " shall have the meaning given to such term in Section 3.14 hereof.

" New Cars " shall have the meaning given to such term in Section 2.1(a) hereof.

" Obligor " shall mean any Person that is an obligor or lessee under any LILO Sublease Contract or Owned Car Lease Contract.

" Owned Cars " shall mean the Rail Cars owned by Sellers that are described and listed on Schedule 1.8 hereto and any New Cars delivered to Sellers on or prior to the Closing Date pursuant to any Rail Car Purchase Order.

" Owned Car Lease Contract " shall mean any lease agreement or rental agreement and any master lease or master rental agreement with respect to Owned Cars (together will all schedules, supplements, and addenda relative to any of the foregoing) that evidences the payment obligations of an Obligor to any of Sellers or their Affiliates as the owner or lessor of the Owned Cars, in each case as specifically set forth on Schedule 1.9 hereto.

" Partial Casualty Occurrence " shall have the meaning given to such term in Section 2.4(c) hereof.

" Permitted Encumbrance " shall mean (i) any Encumbrance for Taxes not yet due and payable or that are being contested in good faith and for which adequate reserves have been provided in the Books and Records in accordance with GAAP, (ii) any Encumbrance resulting from the interest of an Obligor as lessee under any Owned Car Lease Contract, or (iii) any Encumbrance that is specifically permitted in accordance with the terms of any Assigned Contract other than Encumbrances securing (A) indebtedness for borrowed money or other credit accommodations or (B) the performance of any obligation other than an obligation arising under such Assigned Contract.

" Person " shall mean any individual, partnership, corporation, trust, limited liability company, joint venture, unincorporated organization, government or department or agency thereof and any other entity.

" PLM Investment Management " shall have the meaning given to such term in the preamble to this Agreement.

" PLM Marks " shall mean the name "PLM" and any other trade names, trademarks, service marks, trade dress, logos, symbols, slogans and other source identifiers set forth on Schedule 1.10 hereto, together with the goodwill symbolized thereby.

" PLM Railcar " shall have the meaning given to such term in Section 5.23 hereof.

" PLM Transportation " shall have the meaning given to such term in the preamble to this Agreement.

" Potential Acquirer " shall have the meaning given to such term in Section 8.3(b) .

" Proceedings " shall mean any civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending (including, but not limited to, any counterclaim).

" Property " shall mean all property and assets of whatever nature, including, but not limited, to personal property, whether tangible or intangible, and whether leased or owned, and claims, rights and chooses in action.

" Purchase Price " shall mean the amount to be paid by Purchaser to Sellers in accordance with Section 2.2(a) hereof.

" Purchased Assets " shall mean, subject to any changes or adjustments expressly permitted by this Agreement:

1. 1. 1. 1. all Owned Cars;
         2. all LILO Contracts;
         3. all LILO Sublease Contracts;
         4. all Owned Car Lease Contracts;
         5. all Rail Car Purchase Orders and any Rail Cars covered thereby;
         6. all Management Contracts and the interests of Sellers (if any) as agent for the owner of any Managed Cars under any Managed Car Lease Contracts;
         7. the ARI Agreement;
         8. all Rail Marks and, to the extent transferable, all Computer Software and Know-How used in connection with the Business, and any copyrights related to the foregoing;
         9. the Document Files;
         10. copies of all Books and Records;
         11. all Advance Payments;
         12. to the extent transferable, all rights under manufacturers’ and vendors’ warranties and similar rights to the extent relating to any Purchased Asset and all similar rights against third parties to the extent relating to any Purchased Asset;
         13. all of Sellers’ rights under or in respect of the Assigned Contracts;
         14. all Casualty Proceeds payable with respect to any Purchased Asset;
         15. all payments and rights to payment under or in respect of any Purchased Asset, and all security therefor, guaranties thereof, and proceeds therefrom, to the extent allocable to periods commencing on and after the Closing Date;
         16. to the extent in existence as of the Closing Date, all of Sellers’ rights under or in respect of the IP-20 Sale Agreement;
         17. the economic interests of the master lessor and the master lessee under each Master Lease; and
         18. all goodwill associated with the Business.

" Purchaser " shall have the meaning given to such term in the preamble to this Agreement.

" Purchaser Indemnified Parties " shall have the meaning given to such term in Section 9.1 hereof.

" Purchaser Related Documents " shall have the meaning given to such term in Section 9.3 hereof.

" Rail I " shall have the meaning given to such term in the preamble to this Agreement.

" Rail II " shall have the meaning given to such term in the preamble to this Agreement.

" Rail V " shall have the meaning given to such term in the preamble to this Agreement.

" Rail Car Purchase Orders " shall mean the purchase orders, vendor invoices, letter agreements, or installment or conditional sales agreements, letters, memoranda or other writings, together with all schedules, supplements and addenda relative to any of the foregoing (including any assignment, assumption, renewal or novation, or delivery and acceptance certificates), relating to the purchase of new Rail Cars by any Seller, in each case as specifically set forth on Schedule 1.11 hereto.

" Rail Cars " shall mean any railroad cars, including without limitation general service tank cars, pressure tank cars and specialized freight cars, and all ancillary components and equipment for such railroad cars.

" Rail Marks " shall mean the name "PLM Rail" together with the goodwill symbolized thereby and all of the Rail Car reporting marks listed on Schedule 1.12 hereto.

" Rail Partners " shall have the meaning given to such term in the preamble to this Agreement.

" Release " means, with respect to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of Hazardous Material through or in the air, soil, surface water, ground water or property.

" Remedial Action " means all actions required to (a) clean up, remove, treat or in any other way address any Hazardous Material in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release so that a Hazardous Material does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care.

" Replacement Credit Support Arrangements " shall have the meaning given to such term in Section 5.14(a) hereof.

" Restricted Period " shall have the meaning given to such term in Section 8.1 hereof.

" Sales Taxes " shall mean all Taxes imposed on the sale of property and calculated as a percentage of the purchase price for the transferred property.

" Scheduled Employee " shall mean each of the employees of Sellers listed on Schedule 1.13 hereto.

" Sellers " shall have the meaning given to such term in the preamble to this Agreement.

" Sellers Claims " shall have the meaning given to such term in Section 5.8 hereof.

" Sellers Disclosure Schedules " shall have the meaning given to such term in Article III hereof.

" Sellers Indemnified Parties " shall have the meaning given to such term in Section 9.3 hereof.

" Sellers Insurance Policies " shall have the meaning given to such term in Section 5.8 hereof.

" Sellers Related Documents " shall have the meaning given to such term in Section 9.1 hereof.

" Sellers’ Knowledge " or any similar expression shall mean the actual knowledge of the following employees of Sellers or their Affiliates: James A. Coyne; Todd Emro; and Mike Clayton.

" State and Local Governmental Entity " shall mean a state, province, territory or possession of the United States, or fully constituted political subdivision or agency of any of the foregoing, or the District of Columbia.

" Superior Proposal " shall have the meaning given to such term in Section 8.3(b) .

" Tax " (and, in the plural, " Taxes ") shall mean any domestic or foreign federal, state, provincial or local taxes, charges, fees, levies, imposts, duties and governmental fees or other like assessments or charges of any kind whatsoever, together with any interest or penalty, addition to Tax or additional amount imposed with respect thereto or any Tax Return, whether payable by reason of contract, assumption, transferee liability, operation of law or otherwise (including, but not limited to, any income, net income, gross income, receipts, windfall profit, severance, property, inventory and merchandise, business privilege, production, sales, use, license, excise, registration, franchise, employment, payroll, withholding, alternative or add-on minimum, intangibles, ad valorem , transfer, gains, stamp, estimated, transaction, title, capital, paid-up capital, profits, occupation, premium, value-added, recording, real property, personal property, federal highway use, commercial rent or environmental tax).

" Tax Return " shall mean any return, report, election, form or other statement required to be filed with respect to any Tax (including any attachments thereto, and any amendment thereof) including, but not limited to, any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, unitary or consolidated returns for any group of entities that includes the Sellers or their Affiliates.

" TE-PLM " shall have the meaning given to such term in the preamble to this Agreement.

" Threshold Amount " shall have the meaning given to such term in Section 9.5(b) hereof.

" Transition Services Agreement " shall have the meaning given to such term in Section 5.11 hereof.

2. 
   PURCHASED ASSETS; PURCHASE PRICE; CLOSING

2. 1. Purchased Assets ; Assumed Liabilities

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2. 1. 1. Purchased Assets . Upon the terms and subject to the conditions of this Agreement, at the Closing, Purchaser shall purchase and acquire from Sellers, and Sellers shall sell, assign, transfer, convey and deliver to Purchaser, the Purchased Assets and all of Sellers’ right, title and interest therein, in each case free and clear of all Encumbrances other than Permitted Encumbrances. For the avoidance of doubt, any Rail Cars delivered to Sellers on or prior to the Closing Date pursuant to a Rail Car Purchase Order (collectively, " New Cars ") shall be considered " Owned Cars " and shall be deemed " Purchased Assets " at the Closing for all purposes of this Agreement.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, (A) SELLERS HAVE NEITHER HERETOFORE MADE, NOR DO THEY MAKE BY ANY OTHER AGREEMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH, ANY ADDITIONAL REPRESENTATIONS OR WARRANTIES, AND (B) THE PURCHASED ASSETS ARE BEING SOLD ON AN "AS IS", "WHERE IS" BASIS, AND NO SELLER MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, EXPRESS OR IMPLIED, WITH RESPECT TO THE PURCHASED ASSETS INCLUDING ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, OPERABILITY, DESIGN OR CONDITION OF, OR AS TO THE QUALITY OR CAPACITY OF, THE MATERIAL OR WORKMANSHIP OF ANY PARTICULAR PURCHASED ASSET.

2. 1. 2. Excluded Assets . Sellers shall not sell, assign, transfer, convey or deliver to Purchaser, nor shall Purchaser purchase or acquire Sellers’ right, title or interest in and to, any Excluded Assets.
      3. Assumed; Excluded Liabilities . Upon the terms and subject to the conditions of this Agreement, effective as of the Closing Date, Purchaser shall assume and be obligated to pay when due, perform, or discharge only the Assumed Liabilities. Purchaser shall not assume or otherwise become liable for any Excluded Liabilities.

2. 2. Purchase Price

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2. 2. 1. Subject to Section 2.3 hereof, the aggregate cash purchase price to be paid by Purchaser for the Purchased Assets (the " Purchase Price ") shall be equal to the sum of (i) $119,800,000.00 plus (ii) the aggregate of the purchase prices (as set forth in section B to Schedule 1.11 hereto) paid by Sellers under the Rail Car Purchase Orders for any New Cars delivered to Sellers on or prior to the Closing Date plus (iii) the portion of the Cypress Monthly Payment that is allocable to any period prior to the Closing Date (such allocation to be done ratably between the period prior to the Closing Date and the period commencing on or after the Closing Date based on the number of days covered by such Cypress Monthly Payment), minus (iv) the aggregate amount of the Advance Payments as of the Closing Date, minus (v) if, and only in the event that, the closing of the transactions contemplated by any sale agreement entered into with respect to the IP-20 Rail Cars pursuant to Section 5.20 hereof shall occur prior to the Closing Date, the aggregate amount of any fees, commissions or other amounts paid or payable to Sellers under such sale agreement, or otherwise in connection with such sale, of the IP-20 Rail Cars, minus (vi) the aggregate amount, if any, paid or payable to Sellers with respect to any sales of obsolete or damaged Owned Cars for scrap value made in accordance with clause (i) of Section 5.5(g) hereof. Subject to Section 2.2(b) hereof, Purchaser shall pay the Purchase Price to the Sellers at the Closing by wire transfer in immediately available funds to an account or a ccounts designated by Sellers.
      2. Notwithstanding the last sentence of Section 2.2(a) hereof, if Sellers have not provided evidence reasonably satisfactory to Purchaser of the payment in full of all purchase price and other amounts required to be paid by Sellers under any Rail Car Purchase Orders for New Cars that are included as Purchased Assets at the Closing, Purchaser is hereby authorized and instructed to pay, on behalf of Sellers, a portion of the Purchase Price to the applicable seller of the New Cars as is necessary to fully pay the outstanding balance of purchase price and other amounts required to be paid by Sellers under any such Rail Car Purchase Orders. A paid invoice and either executed wire transfer instructions or a copy of a check payable to the applicable seller of the New Cars shall be deemed "evidence reasonably satisfactory to Purchaser" for purposes of this Section 2.2(b) .

2. 3. Purchase Price Adjustment

. The Purchase Price shall be reduced, dollar for dollar, by the Assumed Value of any Owned Car that is not purchased by Purchaser at the Closing in accordance with Section 2.4(a) hereof. Notwithstanding anything to the contrary contained in this Agreement but subject to such reduction having been made on the Closing Date, the reduction to Purchase Price described in this Section 2.3 shall be the sole and exclusive remedy of Purchaser with respect to the events described in Section 2.4(a) hereof and Purchaser shall not have any other right or remedy against any Seller for any breach of this Agreement as a result of such Seller’s failure to convey any Owned Car to Purchaser at the Closing as a result of any such event.

2. 4. Removal of Owned Cars; Insurance Payments

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2. 4. 1. If, prior to the Closing Date, any Owned Car suffers a Casualty Occurrence of which any Seller has knowledge, such Seller shall promptly, but in no event later than one Business Day after such Seller has knowledge of the Casualty Occurrence, notify Purchaser in writing of the Casualty Occurrence. Unless otherwise requested in writing by Purchaser, any Owned Car that suffers a Casualty Occurrence shall be deemed eliminated from Schedule 1.8 hereto and Purchaser shall have no obligation to purchase such Owned Car at the Closing. The Seller holding title to any such Owned Car shall retain all rights to receive any casualty proceeds or other payments under the terms of any applicable Sellers Insurance Policies or from any third party or under any third party insurance policy in respect of the Casualty Occurrence (collectively, the " Casualty Proceeds "). Notwithstanding the foregoing, Purchaser shall purchase all Owned Cars that may suffer a Partial Casualty Occurrence prior to the Closing Date; provided that Sellers shall promptly pay to Purchaser upon receipt (whether before, on or after the Closing Date, and without deduction or offset) any Casualty Proceeds (including, without limitation, any Casualty Proceeds received from any Obligor or any other third party) in respect of such Partial Casualty Occurrence to the extent not used by Sellers to make repairs to any such Owned Car prior to the date hereof.
      2. If, on or after the Closing Date, either party discovers that an Owned Car had suffered a Casualty Occurrence prior to the Closing Date and the Owned Car was purchased by the Purchaser at the Closing, neither this Agreement nor the Purchase Price shall be adjusted. Instead, Purchaser shall be entitled to receive all Casualty Proceeds paid or receivable in respect of the Casualty Occurrence and shall have the sole and exclusive right to exercise any rights or remedies with respect to such Casualty Proceeds; provided , however that if the aggregate amount of Casualty Proceeds is less than the Assumed Value of such Owned Car, and the Obligor under the applicable Owned Car Lease Contract (if any) is not otherwise responsible or liable to Purchaser for the Casualty Occurrence, Sellers shall pay to Purchaser on demand the amount of the difference. The right to receive Casualty Proceeds, and any additional amounts from Sellers in accordance with the immediately foregoing proviso, shall be the sole and exclusive remedy of Purchaser with respect to the events described in this Section 2.4(b) and Purchaser shall not have any other right or remedy against any Seller for any breach of this Agreement as a result thereof.
      3. For purposes of this Agreement, a " Casualty Occurrence " with respect to any Owned Car shall be deemed to have occurred if (i) the Owned Car is stolen or destroyed, damaged beyond economic repair or otherwise rendered permanently unfit for use (including, without limitation, use in unrestricted interchange) from any cause whatsoever, or taken or requisitioned by condemnation or otherwise, or (ii) the Owned Car suffers a "total loss" or "total casualty" under the terms of any applicable Sellers Insurance Policy or third party insurance policy. For purposes of this Agreement, the term " Partial Casualty Occurrence " shall mean, with respect to any Owned Car, any damage or loss to the Owned Car that does not give rise to a Casualty Occurrence.

2. 5. The Closing

. Unless this Agreement has been terminated and the transactions herein abandoned pursuant to Article VII, the Closing shall (subject to Sections 6.1 and 6.2 of this Agreement) be held at the offices of Shefsky & Froelich Ltd., 111 East Wacker Drive, Suite 2800, Chicago, Illinois 60601, or such other location as the parties may mutually agree, at 10:00 a.m. Chicago, Illinois time on the later to occur of (i) August 5, 2005, or (ii) as soon as reasonably practical following the day on which all of the conditions to Closing set forth in Sections 6.1 and 6.2 of this Agreement have been satisfied or waived (other than the conditions that by their nature cannot be satisfied until the Closing, but subject to all such conditions having been satisfied or waived at the time of the Closing), or such other time and date as the parties hereto may mutually agree.

2. 6. Taxes

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2. 6. 1. The Sellers shall be liable for and shall hold the Purchaser harmless against all Conveyance Taxes (other than Sales Taxes) that may become due and payable in connection with the transactions contemplated by this Agreement, and Sellers shall file all required change of ownership and similar statements. Purchaser shall be liable for and shall hold the Sellers harmless against all Sales Taxes that may become due and payable in connection with the transactions contemplated by this Agreement. Sellers, after the review and consent by Purchaser (such consent not to be unreasonably withheld or delayed), shall file such applications and documents as shall permit any such Conveyance Taxes (including any Sales Taxes) to be assessed and paid on or prior to the Closing in accordance with any available pre-sale filing procedure. Purchaser shall execute and deliver all instruments and certificates necessary to enable Sellers to comply with the foregoing. Purchaser shall complete and execute any applicable resale or other exemption certificates with respect to the Purchased Assets, and shall provide Sellers with executed copies thereof. The parties hereto shall cooperate to minimize or eliminate any and all Conveyance Taxes that may result from the transactions contemplated by this Agreement. Purchaser, after notice to and consent by Sellers (such consent not to be unreasonably withheld or delayed), shall withhold and deduct any amounts required under applicable law to be withheld and deducted by Purchaser from the Purchase Price in respect of Taxes and shall remit such amounts to the appropriate Governmental Entity on a timely basis. Anything contained herein to the contrary notwithstanding, Purchaser shall in no event be responsible for any interest, penalties or additions to Tax in connection with any Sales Taxes imposed by a Canadian taxing authority (including, without limitation, goods and services Tax, or GST) that may become due and payable in connection with the transactions contemplated by this Agreement, whether such interest, penalties or additions to Tax arise by reason of failure to pay such Sales Taxes or file any reports or other documents in connection therewith on a timely basis or otherwise.
      2. Sellers shall be responsible for and shall pay when due all personal property Taxes, ad valorem and other similar Taxes with respect to the Purchased Assets to the extent attributable or allocable to periods on or before December 31, 2004, regardless of the reporting and payment dates of such Taxes. Upon reasonable request by Purchaser from time to time, Sellers shall provide evidence of such payments reasonably acceptable to Purchaser. Purchaser shall be responsible for all personal property Taxes, ad valorem and other similar Taxes with respect to the Purchased Assets to the extent attributable or allocable to periods after December 31, 2004, and Purchaser shall pay when due all such Taxes with respect to the Purchased Assets for calendar year 2005. In the event a refund of any portion of such personal property Taxes, ad valorem or other similar Taxes previously paid with respect to the Purchased Assets is received by Purchaser, on the one hand, or Sellers, on the other hand, and such party was not the party responsible for such Taxes under this Section 2.6(b) , then Purchaser or Sellers, as the case may be, shall promptly pay to the other party the amount of any such refund.

3. 
   REPRESENTATIONS AND WARRANTIES OF SELLER S

Except as disclosed in the disclosure schedules delivered by Sellers to Purchaser in connection with the execution of this Agreement (the " Sellers Disclosure Schedules "), Sellers hereby make as of the date hereof, and shall be deemed to make again at the Closing, the following representations and warranties to Purchaser:

3. 1. Organization and Good Standing

. Each Seller (i) is duly organized, validly existing and in good standing (or its equivalent) under the laws of its state of incorporation or organization and (ii) has the corporate or other applicable power to own, lease and operate the Purchased Assets owned, leased or operated by it and to carry on its business in the manner currently conducted. Each Seller is duly qualified or authorized to conduct business in the manner currently conducted and is in good standing (or its equivalent) as a foreign corporation (or other organization) in all jurisdictions in which the character or location of the Purchased Assets requires such qualification or authorization, except where the failure to be so qualified or authorized would not have a Material Adverse Effect.

3. 2. Corporate Authority

. Each Seller has the requisite corporate or other applicable power and authority to execute and deliver, and to perform its obligations under, this Agreement and the other documents, instruments and agreements to be executed and delivered by such Seller pursuant hereto and thereto. Each of this Agreement and the other documents, instruments and agreements to be executed and delivered by Sellers pursuant hereto or thereto has been (or, with respect to the documents, instruments and agreements to be executed and delivered after the date hereof, will be at the Closing) duly authorized by all necessary corporate, stockholder, manager, member, partner or other required action on the part of Sellers and has been (or, with respect to the documents, instruments and agreements to be executed and delivered after the date hereof, will be at the Closing) duly executed and delivered by Sellers and (assuming this Agreement constitutes a valid and binding obligation of Purchaser and each of the other documents, instruments and agreements to be executed and delivered by parties pursuant hereto other than Sellers constitutes a valid and binding obligation of such other parties) is (or, with respect to the documents, instruments and agreements to be executed and delivered after the date hereof, will be at the Closing) the valid and binding obligation of Sellers, enforceable against Sellers in accordance with its terms, except as may be limited by the Bankruptcy Exception.

3. 3. No Conflicts

. Neither the execution and delivery by Sellers of this Agreement or any other document, instrument or agreement to be executed and delivered by Sellers in connection herewith or therewith nor compliance by Sellers with the terms and provisions hereof or thereof nor the consummation by Sellers of the transactions contemplated hereby or thereby will conflict with or result in a breach of any of the terms, conditions or provisions of (i) the organizational documents of any Seller, (ii) any judgment, order, injunction, decree, rule, regulation or ruling of any court or of any other Governmental Entity (including, without limitation, any rule or regulation of the AAR or the Federal Railroad Administration) or any law, statute or regulation to which any Seller or any of its Properties is subject and which is related to the Purchased Assets, the Maintenance Reserves or the Assumed Liabilities or (iii) any agreement, contract or commitment to which any Seller is a party or to which any Seller or any of its Properties is subject and which is related to the Purchased Assets, the Maintenance Reserves or the Assumed Liabilities, except in the case of clauses (ii) and (iii) above, for such conflicts or breaches that would not be likely to have a Material Adverse Effect; nor will such execution, delivery and compliance result in any acceleration in the time for performance of any obligation of Sellers under, relating to or affecting any of the Purchased Assets, the Maintenance Reserves or Assumed Liabilities or in the creation of any Encumbrance on any of the Purchased Assets or the Maintenance Reserves, except in each case as would not be likely to have a Material Adverse Effect.

3. 4. Consents

. No notices, reports or other filings are required to be made by Sellers with, nor are any consents, licenses, permits, Authorizations or approvals required to be obtained by Sellers from, (i) any Governmental Entity or (ii) except where the failure to make such notices, reports or other filings or obtain such consents, licenses, permits, Authorizations or approvals would not have a Material Adverse Effect, any other Person in connection with the execution and delivery by Sellers of this Agreement or any of the documents, instruments or agreements to be executed and delivered by Sellers pursuant hereto or thereto or the consummation by Sellers of the transactions contemplated hereby or thereby. Without limiting the generality of the foregoing, Sellers are not required under the terms of any Owned Car Lease Contract to obtain consent from any Obligor to assign any of the Owned Car Lease Contracts to Purchaser at Closing.

3. 5. No Violations of Law

. Except as would not be likely to have a Material Adverse Effect, (i) Sellers have at all times owned each of the Purchased Assets and acted with respect to the Purchased Assets and the Assumed Liabilities in compliance with, and the origination and servicing of the Assigned Contracts have at all times been in compliance with, all applicable laws enacted, and all rules and regulations promulgated or issued, by any Governmental Entity, including, without limitation, Environmental Laws, (ii) Sellers have had at all times all Authorizations required to own, operate, lease and/or service the Purchased Assets and, in the case of the Assigned Contracts, to perform their respective obligations thereunder, and have owned and operated the Purchased Assets and performed such obligations at all times in compliance with all such Authorizations, and (iii) Sellers have not received any notice of violation of any law or regulation from any Governmental Entity relating to any of the Purchased Assets or the ownership or operation thereof or the performance of any such obligations.

3. 6. Taxes

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3. 6. 1. Sellers (i) have timely filed with the appropriate Governmental Entities all material Tax Returns required to be filed with respect to any Purchased Asset or the Maintenance Reserves, and all such Tax Returns are true, complete and correct in all material respects, and (ii) have paid all material Taxes due and payable with respect to any Purchased Asset or the Maintenance Reserves and have paid all material Taxes claimed or asserted in writing by any Governmental Entity to be due from them with respect to any Purchased Asset or the Maintenance Reserves or have provided for all such Taxes on the Books and Records in accordance with GAAP. No adjustment relating to such Tax Returns has been proposed formally or informally by any Governmental Entity, and to Sellers’ Knowledge, no basis exists for any such adjustment. With respect to any taxable period for which any material Tax Returns have not yet been filed with respect to any Purchased Asset, or for which material Taxes with respect to any Purchased Asset are not yet due or owing or are being contested in good faith, Sellers have made due and sufficient current accruals for such Taxes on the Books and Records in accordance with GAAP.
      2. There are no liens for Taxes upon the Purchased Assets or the Maintenance Reserves except for liens arising as a matter of law for Taxes not yet due and payable and liens for Taxes that are being contested in good faith, in each case, for which adequate reserves have been provided in the Books and Records in accordance with GAAP. There are no proposed reassessments of any Purchased Assets or other proposals that could increase the amount of any Tax in respect of the Purchased Assets. There are no pending or, to Sellers’ Knowledge, threatened claims, actions, suits, or other proceedings by or before any Governmental Entity for the assessment or collection of Taxes in respect of the Purchased Assets. There are no Tax investigations or audits in progress relating to the Purchased Assets, and the Sellers have not received any written notice indicating that a Governmental Entity intends to conduct such an audit or investigation. Sellers have not received any written inquiries or requests for information outstanding that could affect the Taxes relating to the Purchased Assets. There are no outstanding waivers or agreements extending the applicable statute of limitations for any period with respect to any Taxes relating to the Purchased Assets.
      3. The LILO Contracts, LILO Sublease Contracts and Owned Car Lease Contracts have been classified on the federal and state Tax Returns of the Sellers as leases while such LILO Contracts, LILO Sublease Contracts and Owned Car Lease Contracts were owned by the Sellers and such classification has not been challenged by any Governmental Entity in any correspondence with any Seller.
      4. There are no outstanding liabilities for Taxes payable, collectible or remittable by the Sellers in respect of the Purchased Assets or the Business, whether assessed or not, which may result in an Encumbrance (other than a Permitted Encumbrance) on, or other claim against, or seizure or sale of all or any part of, the Purchased Assets or would otherwise materially adversely affect the Purchased Assets or would result in Purchaser becoming liable or responsible therefor.
      5. No claim in writing has been made by any Governmental Entity within seven (7) years prior to the date of this Agreement in a jurisdiction where any Seller does not file Tax Returns that such filings may be required or that such Seller is or may be subject to taxation by that jurisdiction in respect of the Purchased Assets.
      6. Each of the Sellers has properly and timely withheld, collected and deposited all amounts for Taxes that were required to be withheld, collected or deposited in respect of the Purchased Assets.

3. 7. Litigation and Liabilities

. There are no Proceedings pending or, to Sellers’ Knowledge, threatened, against Sellers relating to or affecting any of the Purchased Assets, the Maintenance Reserves or Assumed Liabilities except for Proceedings which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Since January 1, 2003, Sellers have not been the subject of any Proceeding nor, to Sellers’ Knowledge, have there been any investigations by or before any Governmental Entity, in either case relating to any of the Purchased Assets, the Maintenance Reserves or Assumed Liabilities.

3. 8. Conduct of Business

. Since December 31, 2004 (or, with respect to New Cars delivered to Sellers after December 31, 2004, since the date of acquisition), Sellers have owned the Purchased Assets and acted with respect to the Assumed Liabilities only in the ordinary course consistent with past practices.

3. 9. Brokers’ or Finders’ Fees, etc.

No Person acting on behalf of Sellers or any of their Affiliates or under the authority of any of them is or will be entitled to any brokers’ or finders’ fee or any other commission or similar fee, directly or indirectly, from Purchaser or any of its Affiliates in connection with any of the transactions contemplated hereby.

3. 10. Purchased Assets

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3. 10. 1. Owned Cars . Sellers have good and valid title to each Owned Car, free and clear of all Encumbrances other than Permitted Encumbrances. Each Owned Car complies in all material respects with all laws, statutes, ordinances, rules and regulations applicable to the Owned Car. Each Owned Car that is subject to an Owned Car Lease Contract is suitable for interchange on the lines of Class I railroads. To Sellers’ Knowledge, no Owned Car has suffered a Casualty Occurrence or a Partial Casualty Occurrence. Schedule 1.8 sets forth the location of each Owned Car, other than Owned Cars that are subject to an Owned Car Lease Contract as of the date hereof.
       2. LILO Contracts; LILO Sublease Contracts. Each LILO Contract and LILO Sublease Contract (i) is in full force and effect, free and clear of Encumbrances other than Permitted Encumbrances and is not subject to any defense, offset, claim, right of rescission or counterclaim by any party thereto, and (ii) is valid, binding and enforceable in accordance with its terms, except as may be limited by the Bankruptcy Exception. No Seller is in material breach or material default under any LILO Contract or LILO Sublease Contract, no other party is in material breach or material default thereunder and no other event has occurred that, with written notice or lapse of time, would constitute a material breach or a material default by Sellers or, to Sellers’ Knowledge, any other party thereunder. Sellers have made available to Purchaser true, correct and complete copies of each LILO Contract and LILO Sublease Contract, and all amendments or modifications thereto. No LILO Contract or LILO Sublease Contract is subject to any debt subordination agreement, participation agreement, intercreditor agreement, owner trust agreement, purchase agreement, collateral sharing agreement, residual sharing agreement, remarketing agreement or vendor recourse agreement. Each LILO Contract and LILO Sublease Contract is a "true lease" or an "operating lease" and not a financing lease, conditional sale or security agreement. The Books and Records pertaining to each LILO Contract