Management Agreement

THE ANDERSONS RAIL OPERATING I LLC,

and

THE ANDERSONS, INC.,

as the Manager

______________________________

Management Agreement

______________________________

Dated as of December 29, 2005

1

Management Agreement , dated as of December 29, 2005 (this “Agreement” ), by and between THE ANDERSONS RAIL OPERATING I LLC, a Delaware limited liability company (“ Company ”), and THE ANDERSONS, INC. ( “The Andersons” ), an Ohio corporation, as the manager (the “Manager” ), for the benefit of the Agent and the Lenders (as defined herein).

Preliminary Statement

The Company is entering into a Term Loan Agreement, dated as of December 29, 2005 (as amended or supplemented from time to time, the “Loan Agreement” ), among the Company, the financial institutions or entities from time to time parties thereto (the “ Lenders ”) and Siemens Financial Services, Inc, as agent for the Lenders (the “ Agent ”). The obligations of the Company under the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement) will be secured by the Collateral described in the Security Agreement, dated as of December 29, 2005 (the “ Security Agreement ”) made by the Company in favor of the Agent and the Lenders.

It is a condition precedent to the Loan Agreement that, on or prior to the Closing Date (as defined in the Loan Agreement), the Company enter into this Agreement with the Manager and to provide for the management of the Railcars (as defined herein). In order to further secure Company’s obligations under the Loan Agreement and the other Loan Documents (as defined herein, Company is granting to the Agent and the Lenders a security interest in, among other things, the 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 and Leases (as defined herein) shall also be for the benefit and security of the Agent and the Lenders. For its services hereunder, the Manager will receive the Manager Fee as set forth in Section 2.05.

On the date hereof, the Company 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 Loan Documents, all collections received with respect to the Railcars and Leases and to perform Equipment Lessee (as defined herein) 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 the 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 the Company in respect of the Railcars and the Leases.

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 Loan Agreement.

“Action” shall mean any action, claim, suit, litigation, arbitration or governmental investigation.

“Advance Rate” shall mean 85% of the Fair Market Value of any Railcar.

“Affiliate” shall have the meaning set forth in the Loan Agreement.

“Agent” shall have the meaning set forth in the preamble to this Agreement

“Agreement” shall mean this Management Agreement, as amended, restated or supplemented from time to time as permitted hereby.

“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 Loan Agreement.

“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 mean the Car Mark Agreement, dated December 29, 2005, between The Andersons and the Company.

“Casualty Loss” shall have the meaning set forth in the Loan Agreement.

“Change of Control” shall mean (a) any Person or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 50% or more of the outstanding shares of voting stock of The Andersons or (ii) the stock of The Andersons shall cease to be publicly traded.

“Closing Date” shall have the meaning set forth in the Loan Agreement.

“Collateral” shall have the meaning set forth in the Security Agreement.

“Collection Account” shall have the meaning set forth in the Security Agreement.

“Company” shall have the meaning set forth in the preamble to this Agreement.

“Concentration Limits” shall have the meaning set forth in the Loan Agreement.

“Continued Errors” shall have the meaning set forth in Section 6.05(d).

“DOT” shall mean the United States Department of Transportation or any successor thereof.

“Eligible Railcar” shall have the meaning set forth in the Loan Agreement.

“Environmental Law” shall have the meaning set forth in the Loan Agreement.

“Equipment Lease Proceeds” shall have the meaning set forth in the Loan Agreement.

“Equipment Lessee” shall have the meaning set forth in the Loan Agreement.

“ERISA” shall have the meaning set forth in the Loan Agreement.

“Errors” shall have the meaning set forth in Section 6.05(d).

“Event of Default” shall have the meaning set forth in the Loan Agreement.

“Fair Market Value” shall have the meaning set forth in the Security Agreement.

“FRA” shall mean the Federal Railroad Administration or any successor thereto.

“GAAP” shall have the meaning set forth in the Loan Agreement.

“Governmental Authority” shall have the meaning set forth in the Loan Agreement.

“Hazardous Commodities” shall have the meaning set forth in the Loan Agreement.

“Indemnified Parties” shall have the meaning set forth in Section 5.04.

“Initial Manager” shall mean The Andersons.

“Interchange Rules” shall mean the Interchange Rules or supplements thereto of the Mechanical Division of the AAR as the same may be in effect from time to time.

“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 mean any law, statute, ordinance, rule, regulation, judgment, injunction, order, decree or code adopted, enacted or promulgated by any Governmental Authority or the requirements of the AAR, any self-regulatory agency or any entity of a nature similar to that of any of the foregoing.

“Lease” shall mean an “Equipment Lease” as defined in the Loan Agreement.

“Lease File” and “Lease Files” shall have the meanings set forth in the Servicing Agreement.

“Lease and Railcar Schedule” shall be in substantially the same form as Schedule A to the Security Agreement, as such schedule is amended, supplemented or otherwise modified from time to time in accordance with this Agreement and/or the Security Agreement.

“Lenders” shall have the meaning set forth in the Preliminary Statement of this Agreement.

“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 Loan Agreement.

“Loans” shall have the meaning set forth in the Loan Agreement.

“Loan Documents” shall have the meaning set forth in the Loan Agreement.

“Lockbox Account” shall have the meaning set forth in the Servicing Agreement.

“Lockbox Agreement” shall have the meaning set forth in the Loan Agreement.

“Loan Agreement” shall have the meaning set forth in the Preliminary Statement of this Agreement.

“Maintenance Expense Reimbursement Request” shall have the meaning set forth in Section 2.06(b).

“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 $37.50 per railcar per month (whether or not such Railcar is then subject to a Lease.

“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 Loan Agreement.

“Monthly Operating Expense Report” shall have the meaning set forth in Section 3.01.

“Note” shall have the meaning set forth in the Loan 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 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).

“Payment Date” shall have the meaning set forth in the Loan Agreement.

“Permitted Liens” shall have the meaning set forth in the Loan Agreement.

“Person” shall have the meaning set forth in the Loan Agreement.

“Predecessor Manager Work Product” shall have the meaning set forth in Section 6.05(d).

“Prime Rate” shall have the meaning set forth in the Loan Agreement.

“Purchase” shall mean a purchase by the Manager of a Railcar and any related Lease pursuant to Section 4.04.

“Purchase Price” shall have the meaning set forth in Section 4.04(c).

“Quarterly Manager Report” shall have the meaning set forth in Section 3.01.

“Railcar” or “Railcars” shall mean “Equipment” or “Items of Equipment” as defined in the Security Agreement.

“Replacement Lease” shall have the meaning set forth in the Security Agreement.

“Replacement Unit” shall have the meaning set forth in the Security Agreement.

“Reported Company” 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 Company’s Financial Statements” shall mean the Reported Company’ 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 Lenders” shall have the meaning set forth in the Loan Agreement.

“Required Modification” shall have the meaning set forth in Section 2.04(a).

“ Responsible Officer” shall have the meaning set forth in the Loan Agreement.

“Sale Agreement” shall mean the Sale Agreement, dated as of December 29, 2005, between The Andersons, as seller, and the Company, as buyer.

“Seller” shall mean The Andersons.

“Security Agreement” shall have the meaning set forth in the preamble to this Agreement.

“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 Loan Agreement.

“STB” shall have the meaning set forth in the Loan Agreement.

“Successor Manager” shall have the meaning set forth in Section 6.01(b).

“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.

“The Andersons” shall mean The Andersons, Inc., an Ohio corporation.

“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 Loan Agreement.

Section 1.02. Terms Defined in the Loan Agreement 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 Loan Agreement or, if not defined therein, in 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) The 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 the 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 or Lease 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, the Company, the Railcars and the Leases.

(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 Agent 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 Agent 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 the Company shall retain title to, and ownership and exclusive control of Collateral (subject to those liens which arise pursuant to the Loan Agreement). 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 or the Leases. 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 or the Leases, unless authorized pursuant to a judicial or administrative proceeding or a court order or on behalf of the Company or the Agent in accordance with this Agreement or the Loan Agreement.

(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 Railcars and the Leases to handle funds, money, documents and papers relating to the Railcars and the Leases. 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 Agent. The Manager shall promptly, but in any event within five Business Days after receipt, notify the Agent 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 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.

(k) Notwithstanding anything to the contrary in the Loan Documents, 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 Replacement Lease that would maintain compliance with the Concentration Limits over a Replacement 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 6.01, the Manager, on behalf of the 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 Replacement Leases in the name of the 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 Company, as owner of the Railcars in question, shall not be entitled to perform under the Loan Documents or any other agreement to which the 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 Company and the Agent, 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 Agent and the 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 neither the Agent nor the Company 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 Loan Agreement and the limitations contained in Section 2.06(b), be reimbursable to the extent provided herein and in the Loan Agreement). 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 the Company set forth below until this Agreement is terminated in accordance with Section 6.01:

(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 Company, for the purpose of managing and operating such Railcar as herein provided, subject to the Lien of the Security Agreement.

(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 Replacement Lease if each of the representations and warranties set forth in Section 4.03 hereof with respect to such Replacement Lease are true and correct as of the date of the origination of such Replacement Lease and the Concentration Limits are satisfied;

(ii) the Manager (A) shall have delivered to the Agent an updated Lease and Railcar Schedule reflecting the addition of such Replacement 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 Replacement Lease to the Servicer to be held on behalf of the Agent (except that any originals of the Lease not in the possession of the Equipment Lessee under such Lease shall be delivered to the Agent).

(d) To enter into or accept assignment of, on behalf of the 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 Equipment Lessee under such Lease to be delivered to the Agent.

(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 Equipment 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, (ii) any standard set by a Equipment Lessee, whether by terms of a Lease or by other understanding or agreement between such Equipment Lessee and the Manager, on behalf of the 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 Equipment Lessees’ obligations to maintain, such insurance with respect to the Railcars as shall be necessary to comply with the provisions of Section 4.2 of the Security Agreement. During the month of December in each year, beginning December, 2006, the Manager shall deliver to the Company, and the Agent 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 and the Leases (except for Leases which have terms of less than one year, including, but not limited to, month-to-month Leases) which shall become part of the Collateral, the Manager shall make, at the expense of the Company, 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 Security Agreement, 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 the Company, to preserve and protect the Company’s, the Agent’s and the Lenders’, 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.

(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 the Company, and the Agent upon the Company’s or the Agent’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) Using reporting marks pursuant to the Car Mark Agreement, 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 Loan Documents. The Manager will cause each Railcar owned by the Company to be kept numbered with the road number serial number as shall be set forth on the Lease and Railcar Schedule. Other than as permitted by the Car Mark Agreement, the Manager shall not allow the name of any other Person, other than the 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 the Company or its permitted Equipment Lessees from placing its name, trademarks, initials, customary colors and other insignia on any Railcar or from naming any Railcar. Except with respect to those Railcars for which new identification numbers have been set forth on the Lease and Railcar Schedule as of the Closing Date, 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 Agent and filed, recorded and deposited by the Manager in all appropriate public offices, including the public offices where the Security Agreement (or a memorandum thereof) shall have been filed, recorded and deposited.

(l) Furnish factual information reasonably requested by the 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 the Company of whatever kind or nature and, where it deems appropriate (or as otherwise directed by the Company), protest the application of such taxes or the rate or amount of assessment thereunder. The Manager shall pay, or enforce the Equipment Lessees’ obligations to pay, such taxes on behalf of the Company. In the Manager’s discretion (or as otherwise directed by the 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 Company or the Manager on behalf of the Company. Notwithstanding the foregoing, the consent of the Agent 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 a Casualty Loss, the Manager shall, promptly after learning of such Casualty Loss, (i) investigate the facts and circumstances giving rise to such Casualty Loss and provide such notices and Officer’s Certificates with respect thereto on behalf of the Company as may be required under the applicable Lease, (ii) collect or arrange for appropriate payment of compensation from the relevant railroad, Equipment 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 Casualty 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 Equipment Lessee’s payments, railroad payments or insurance proceeds into the Collection Account. With respect to any Railcar suffering an Casualty 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 Company’s behalf any such Railcar which has been settled for under the rules of the AAR or settled with Equipment Lessees or any insurer and, upon direction of the 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 Lockbox Account, for deposit into the Collection Account, any amounts the Manager receives in respect of such Casualty Loss from such sources. The 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 Agent, (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 Fair Market Value of such Railcar nor (ii) reject any such settlement offer if the offered Settlement Value equals or exceeds the Advance Rate times the Fair Market Value of such Railcar.

(o) Upon the expiration of any Lease (or upon the acquisition by the 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 Loan Agreement, 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 Loan Documents, 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 Equipment 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 Loan Agreement 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 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 the 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 Company thereunder.

(r) Enforce, on behalf of the 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 Loan Agreement.

(t) In the event that the Company shall so direct in accordance with the terms of the Loan Agreement, sell such Railcar to such purchaser as the Company shall designate to the Manager.

(u) Enforce the Equipment Lessee’s obligations to ensure compliance of the Railcars and the 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 Equipment Lessee is a United States Governmental Authority, cause the Company to comply with the Assignment of Claims Act.

(v) Notify the Agent and the Company of any breaches of warranties, misrepresentations or defaults under the Sale Agreement.

(w) Enforce all covenants and obligations of the seller contained in the Sale Agreement on behalf of the Company and deposit any amounts recovered into the Collection Account, and take such actions as may be reasonably requested from time to time by the Company or the Agent on behalf of such Company) in connection with such enforcement, and deliver to such Company (with a copy to the Agent) all consents, approvals, directions, notices, waivers and take other actions under the Sale Agreement.

(x) Perform on behalf of the Company all maintenance obligations thereof (as Lessor) set forth in any Leases. .

(y) Without limiting the foregoing, to perform all obligations of the Company under the Loan Agreement with respect to the Railcars and the Leases; provided , however, that the Manager shall have no liability with respect to (i) principal or interest on any Loan or Note or (ii) any diminution in the value of the Railcars and Leases other than as a result of a breach by the Manager of its obligations hereunder.

(z) Perform for the 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.

(y) As soon as available and in any event within 90 days after the end of each of the first three quarters of each fiscal year of the Company, commencing June 30, 2006, and within 120 days after the end of each fiscal year of the Company, the Manager shall deliver to the Agent (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 Agent 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 Agent’s and the Lenders’ security interest (on behalf of the Secured Parties) in the Railcars located in the United States and Canada, and that no other filing, recordation, deposit or giving of notice to any Governmental Authority is necessary to protect such interests.

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 Company, in a timely manner; provided , however, that the Manager may, on behalf of the 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 Company, the Agent or the Lenders in the Railcar or subject the Company, or the Agent or the Lenders to criminal or material financial sanctions or relieve the Equipment 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 Company and the Agent 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, reasonably believes in good faith that any Required Modification to a Railcar would be economically impractical, it shall so advise the Company and, if directed by the Company, in lieu of making the Required Modifications as provided above, the Manager shall provide written notice to the Company that such Required Modification is economically impractical, and shall treat such Railcar as if an Casualty 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 a Casualty 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 Company, with copies to the Agent 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 Equipment 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, which shall be paid to the Manager on each Payment Date in accordance with, and subject to the priority of payment provisions of, Section 3.1 or Section 7.3, as applicable, of the Security Agreement. In the event that a Successor Manager is appointed as Manager hereunder, the Successor Manager will be entitled to receive the 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 Casualty 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;

(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 Agent and the Lenders 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) On each Payment Date immediately succeeding the delivery of a Monthly Operating Expense Report to the Agent in accordance with Section 3.01, the Manager shall be entitled to be reimbursed, upon request, for any Operating Expenses that it has incurred in the previous calendar quarter and such amounts shall be paid to the Manager in accordance with, and subject to the priority of payment provisions of, Section 3.2 or Section 7.3, as applicable, of the Security Agreement.

Section 2.07. Responsibility for Loss of, Distribution of, or Damage to Railcars . The responsibilities of the 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 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 rela