EXHIBIT 10.16.4
---------------------------------
EQUIPMENT LEASE AGREEMENT
(TRLI 2001-1C)
Dated as of December 28, 2001
between
TRLI 2001-1C RAILCAR STATUTORY TRUST,
By: State Street Bank and Trust Company of Connecticut, National Association,
not in its individual capacity except as
expressly provided herein but solely as Owner Trustee,
Lessor
and
TRINITY RAIL LEASING I L.P.,
Lessee
Tank Cars and Covered Xxxxxx Cars
---------------------------------
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS LEASE, THE
EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE HEREUNDER HAVE BEEN
ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST IN
FAVOR OF, LASALLE BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND SECURITY AGREEMENT (TRLI
2001-1C), DATED AS OF DECEMBER 28, 2001 BETWEEN SAID INDENTURE TRUSTEE, AS
SECURED PARTY, AND LESSOR, AS DEBTOR. INFORMATION CONCERNING SUCH SECURITY
INTEREST MAY BE OBTAINED FROM THE INDENTURE TRUSTEE AT ITS ADDRESS SET FORTH IN
SECTION 20 OF THIS LEASE. SEE SECTION 25.2 FOR INFORMATION CONCERNING THE RIGHTS
OF THE ORIGINAL HOLDER AND HOLDERS OF, THE VARIOUS COUNTERPARTS HEREOF
---------------------------------
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions 1
SECTION 2. Acceptance and Leasing of Equipment 1
SECTION 3. Term and Rent 1
Section 3.1 Lease Term 1
Section 3.2 Basic Rent 2
Section 3.3 Supplemental Rent 3
Section 3.4 Adjustment of Rent 3
Section 3.5 Manner of Payments 3
SECTION 4. Ownership and Marking of Equipment 4
Section 4.1 Retention of Title 4
Section 4.2 Duty to Number and Xxxx Equipment 4
Section 4.3 Prohibition Against Certain Designations 5
SECTION 5. Disclaimer of Warranties 6
Section 5.1 Disclaimer of Warranties 6
Section 5.2 Rights Under Existing Equipment Subleases 7
SECTION 6. Return of Equipment; Storage 7
Section 6.1 Return; Holdover Rent 7
Section 6.2 Condition of Equipment 10
SECTION 7. Liens 11
SECTION 8. Maintenance; Possession; Compliance with Laws 11
Section 8.1 Maintenance and Operation 11
Section 8.2 Possession and Use 13
Section 8.3 Sublease 13
SECTION 9. Modifications 16
Section 9.1 Required Modifications 16
Section 9.2 Optional Modifications 17
Section 9.3 Removal of Property; Replacements 17
Page
----
SECTION 10. Voluntary Termination 18
Section 10.1 Right of Termination 18
Section 10.2 Sale of Equipment 19
Section 10.3 Retention of Equipment by Lessor 21
Section 10.4 Termination of Lease 22
Section 10.5 Funding of Accounts on Termination 22
SECTION 11. Loss, Destruction Requisition, Etc 23
Section 11.1 Event of Loss 23
Section 11.2 Replacement or Payment upon Event of Loss 23
Section 11.3 Rent Termination 25
Section 11.4 Disposition of Equipment; Replacement of Xxxx 00
Xxxxxxx 00.0 Eminent Domain 28
SECTION 12. Insurance 28
Section 12.1 Insurance 28
Section 12.2 Physical Damage Insurance 30
Section 12.3 Public Liability Insurance 31
Section 12.4 Certificate of Insurance 32
Section 12.5 Additional Insurance 33
Section 12.6 Post-Lease Term Insurance 34
SECTION 13. Reports; Inspection 34
Section 13.1 Duty of Lessee to Furnish 34
Section 13.2 Lessor's Inspection Rights 35
SECTION 14. Lease Events of Default 35
SECTION 15. Remedies 39
Section 15.1 Remedies 39
Section 15.2 Cumulative Remedies 42
Section 15.3 No Waiver 43
Section 15.4 Notice of Lease Default 43
Section 15.5 Lessee's Duty to Return Equipment Upon Default 43
Section 15.6 Specific Performance; Lessor Appointed
Lessee's Agent 44
SECTION 16. Filings; Further Assurances 45
ii
Page
----
Section 16.1 Filings 45
Section 16.2 Further Assurances 45
Section 16.3 Other Filings 46
Section 16.4 Expenses 46
SECTION 17. Lessor's Right to Perform 46
SECTION 18. Assignment 47
Section 18.1 Assignment by Lessor 47
Section 18.2 Assignment by Lessee 47
Section 18.3 Sublessee's or Others Performance and Rights 47
SECTION 19. Net Lease, Etc 48
SECTION 20. Notices 49
SECTION 21. Concerning the Indenture Trustee 51
Section 21.1 Limitation of the Indenture Trustee's
Liabilities 51
Section 21.2 Right, Title and Interest of the Indenture
Trustee Under Lease 51
SECTION 22. Purchase Options; Renewal Options 51
Section 22.1 Early Purchase Option 51
Section 22.2 Election to Retain or Return Equipment at
End of Basic or Renewal Term 54
Section 22.3 Purchase Option 54
Section 22.4 Renewal Option 55
Section 22.5 Rent Appraisal; Outside Renewal Date 56
Section 22.6 Stipulated Loss Amount and Termination Amount
During Renewal Term 57
Section 22.7 Deemed Renewals 57
Section 22.8 Funding of Accounts on Purchase 58
SECTION 23. Limitation of Lessor's Liability 58
SECTION 24. Investment of Security Funds 58
SECTION 25. Miscellaneous 59
iii
Page
----
Section 25.1 Governing Law; Severability 59
Section 25.2 Execution in Counterparts 59
Section 25.3 Headings and Table of Contents; Section
References 59
Section 25.4 Successors and Assigns 59
Section 25.5 True Lease 59
Section 25.6 Amendments and Waivers 60
Section 25.7 Survival 60
Section 25.8 Business Days 60
Section 25.9 Directly or Indirectly; Performance by Managers 61
Section 25.10 Incorporation by Reference 61
iv
APPENDICES AND EXHIBITS
Exhibit A - Form of Lease Supplement
Exhibit B-1 - Form of Net Sublease
Exhibit B-2 - Form of Full Service Sublease
Appendix A - Definitions
v
EQUIPMENT LEASE AGREEMENT
(TRLI 2001-1C)
This Equipment Lease Agreement (TRLI 2001-1C), dated as of
December 28, 2001 (this "Lease"), is by and between TRLI 2001-1C Railcar
Statutory Trust, a Connecticut statutory trust, by State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity
except as expressly provided herein, but solely as trustee under the Trust
Agreement, as Lessor, and Trinity Rail Leasing I L.P., a Texas limited
partnership, as Lessee.
In consideration of the mutual agreements herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto agree as follows:
SECTION 1. Definitions.
Unless otherwise defined herein or required by the context, all
capitalized terms used herein shall have the respective meanings assigned to
such terms in Appendix A hereto for all purposes of this Lease.
SECTION 2. Acceptance and Leasing of Equipment.
Subject to Section 4 of the Participation Agreement, Lessor hereby
agrees to accept delivery of each Unit from Lessee and to lease such Unit to
Lessee hereunder, and Lessee hereby agrees, immediately following such
acceptance by Lessor, to lease from Lessor hereunder such Unit, such acceptance
by Lessor and lease by Lessee to be evidenced by the execution and delivery by
Lessee and Lessor of a Lease Supplement covering such Unit, all in accordance
with Section 2.3(b) of the Participation Agreement. Lessee hereby agrees that
its execution and delivery of a Lease Supplement covering any Unit shall,
without further act, irrevocably constitute acceptance by Lessee of such Unit
for all purposes of this Lease.
SECTION 3. Term and Rent.
Section 3.1. Lease Term. The basic term of this Lease (the "Basic
Term") shall commence on the Basic Term Commencement Date and, subject to
earlier termination pursuant to Section 10, 11, 15 or 22.1, shall expire at
11:59 p.m. (Chicago, Illinois time) on the Basic Term Expiration Date. Subject
and pursuant to Section 22.4, Lessee may elect one or more Renewal Terms and, as
provided in
Lease Agreement (TRLI 2001-1C)
Section 22.7 hereof, in certain circumstances a Renewal Term shall be deemed to
have occurred with respect to some or all of the Units.
Section 3.2 Basic Rent. Lessee hereby agrees to pay Lessor Basic
Rent for each Unit throughout the Basic Term applicable thereto in consecutive
monthly installments payable on each Rent Payment Date. Each such monthly
payment of Basic Rent shall be in an amount equal to the product of the
Equipment Cost for such Unit multiplied by the Basic Rent percentage set forth
opposite such Rent Payment Date on Schedule 3-A to the Participation Agreement
(as such Schedule 3-A shall be adjusted pursuant to Section 2.6 of the
Participation Agreement). Schedule 3-B to the Participation Agreement sets forth
the Basic Rent allocated for Federal income tax purposes to each lease period
and calendar year throughout the Basic Term and in addition, sets forth that for
certain months, amounts of Basic Rent shall be allocated to the following and/or
preceding calendar year. Schedule 3-B to the Participation Agreement also sets
forth the application of Basic Rent payments to the calendar year to which such
payments relate. It is the intention of Lessor and Lessee that the allocations
of Basic Rent set forth on Schedule 3-B to the Participation Agreement
constitute specific allocations of fixed rent within the meaning of Treas. Reg.
Section 1.467-1(c)(2)(ii). Stipulated Loss Amounts and Termination Amounts have
been calculated on the basis that (i) any Basic Rents actually due on the date
of such calculation shall not be paid and (ii) any Basic Rents scheduled to have
been paid prior to the date of such calculation are assumed to have been paid
and have been appropriately reflected in such calculations. Lessor and Lessee
agree to include in income and deduct the Basic Rents allocated to each lease
period and calendar year according to Schedule 3-B of the Participation
Agreement. In addition, Lessor and Lessee intend that under no circumstances are
any Basic Rents to be considered related to (i) any period after the calendar
year succeeding the calendar year in which such Basic Rents are payable or any
period before the calendar year preceding the calendar year in which such Basic
Rents are payable or (ii) the period beginning on the Closing Date and ending on
(but not including) March 28, 2002 (the "Basic Rent Holiday").
Notwithstanding anything to the contrary contained herein or in
the Participation Agreement, each installment of Basic Rent (both before and
after any adjustment pursuant to Section 2.6 of the Participation Agreement)
shall be, under any circumstances and in any event, in an amount at least
sufficient for Lessor to pay in full as of the due date of such installment, any
payment of principal of and interest
2
Lease Agreement (TRLI 2001-1C)
on the Equipment Notes required to be paid by Lessor pursuant to the Indenture
on such due date in accordance with the Scheduled Amortization.
Section 3.3 Supplemental Rent. Lessee also agrees to pay to
Lessor, or to whosoever shall be entitled thereto, any and all Supplemental
Rent, promptly as the same shall become due and owing, or where no due date is
specified, promptly after demand by the Person entitled thereto, and in the
event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise as in the case of nonpayment of Basic Rent. Lessee will also
pay, as Supplemental Rent, (i) on demand, to the extent permitted by applicable
law, an amount equal to Late Payment Interest on any part of any installment of
Basic Rent not paid when due for any period for which the same shall be overdue
and on any payment of Supplemental Rent not paid when due or promptly after
demanded for the period from such due date or demand date, as applicable, until
the same shall be paid and (ii) as and when due in accordance with the Trust
Indenture or the Participation Agreement, any Make-Whole Amount payable with
respect to any Equipment Note, including, without limitation, amounts of
Make-Whole Amount due in the case of the termination of this Lease with respect
to any Unit pursuant to Section 10, in the case of the purchase of any Unit (but
not in the case of a purchase of the Beneficial Interest or if the Equipment
Notes are assumed in accordance with the Operative Agreements) pursuant to
Section 22.1 or Section 6.9 of the Participation Agreement, and in the case of
any refinancing of the Equipment Notes pursuant to Section 10.2 of the
Participation Agreement. All Supplemental Rent to be paid pursuant to this
Section 3.3 shall be payable in the type of funds and in the manner set forth in
Section 3.5.
Section 3.4 Adjustment of Rent. Lessee and Lessor agree that the
Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values
and Termination Amount percentages and the Early Purchase Price shall be
adjusted to the extent provided in Section 2.6 of the Participation Agreement.
Section 3.5 Manner of Payments. All Rent (other than Supplemental
Rent payable to Persons other than Lessor, which shall be payable to such other
Persons in accordance with written instructions furnished to Lessee by such
Persons, as otherwise provided in any of the Operative Agreements or as required
by law) shall be paid by Lessee to Lessor at its office at 000 Xxxxxx Xxxxxx,
Xxxxxxx Square, Hartford, CT, 06103, Attention: Corporate Trust Administration,
provided, that so
3
Lease Agreement (TRLI 2001-1C)
long as the Indenture shall not have been discharged pursuant to the terms
thereof, Lessor hereby directs, and Lessee hereby agrees, that all Rent
(excluding Excepted Property) payable to Lessor shall be paid into the Payment
Account directly to the Indenture Trustee at the times and in funds of the type
specified in this Section 3.5 at the office of the Indenture Trustee at 000 X.
XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, ABA No. 000000000, Account No.
0000000, Ref: 608775318 TRLI, Attn: Xxxxxxxx Xxxxxxxx, Corporate Trust Services
Division, Trust TRLI 2001-1C, or at such other location in the United States of
America as the Indenture Trustee may otherwise direct. All Rent shall be paid by
Lessee to the recipient not later than 11:00 a.m. Chicago, Illinois time on the
date of such payment in funds consisting of lawful currency of the United States
of America, which shall be immediately available. Notwithstanding anything
contained in this Lease to the contrary, any amounts received pursuant to
distribution from any of the Accounts (as such term is defined in the Collateral
Agency Agreement) shall for all purposes hereof be deemed payment in
satisfaction of the related obligation hereunder to which such distribution
relates and any failure by Lessor, the Indenture Trustee or any Indemnified
Party to receive from the Collateral Agent the full amount of any such
distribution measured by reference to Basic Rent, Supplemental Rent or any
component thereof shall be deemed a failure by Lessee to pay such Basic Rent or
Supplemental Rent hereunder, as the case may be.
SECTION 4. Ownership and Marking of Equipment.
Section 4.1 Retention of Title. Lessor shall and hereby does
retain full legal title to and beneficial ownership of each Unit notwithstanding
the delivery to and possession and use of such Unit by Lessee hereunder or any
Sublessee under any sublease permitted hereby.
Section 4.2 Duty to Number and Xxxx Equipment. With respect to
the Units to be delivered on the Closing Date, Lessee represents that Manager
has caused, and as soon as practicable after the date on which a Lease
Supplement is executed and delivered in respect of a Replacement Unit pursuant
to Section 11.4(b), Lessee will cause, each Unit to be numbered with its
reporting xxxx shown on the Lease Supplement dated the date on which such Unit
was delivered and covering such Unit, and will from and after such date keep and
maintain, plainly, distinctly, permanently and conspicuously marked by a plate
or stencil printed in contrasting colors upon each side of each Unit, in letters
not less than one inch in height, a legend substantially as follows:
4
Lease Agreement (TRLI 2001-1C)
"OWNERSHIP SUBJECT TO A SECURITY AGREEMENT
FILED WITH THE SURFACE TRANSPORTATION BOARD"
with appropriate changes thereof and additions thereto as from time to time may
be required by law in order to protect Lessor's right, title and interest in and
to such Unit, its rights under this Lease and the rights of the Indenture
Trustee. Except as provided hereinabove, Lessee will not place any such Units in
operation or exercise any control or dominion over the same until the required
legend shall have been so marked on both sides thereof, and will replace
promptly any such word or words in such legend which may be removed, defaced,
obliterated or destroyed. In the event of a change in the reporting xxxx of any
Unit, within 60 days after a Responsible Officer of the Manager has received
notice of any such changed xxxx, a statement of the new reporting xxxx to be
substituted therefor shall be delivered by Lessee to Lessor and, so long as the
Indenture shall not have been discharged pursuant to its terms, to the Indenture
Trustee. As soon as practicable after the delivery of such statement a
supplement to this Lease and, if not so discharged, the Indenture, with respect
to such new reporting marks, shall be filed or recorded in all public offices
where this Lease and the Indenture shall have been filed or recorded and in such
other places, if any, where Lessor and, so long as the Indenture shall not have
been discharged pursuant to its terms, the Indenture Trustee may reasonably
request in order to protect, preserve and maintain its right, title and interest
in the Units. The costs and expenses of all such supplements, filings and
recordings shall be borne by Lessee.
Section 4.3 Prohibition Against Certain Designations. Except as
above provided, Lessee will not allow the name of any Person to be placed on any
Unit as a designation that might reasonably be interpreted as a claim of
ownership; provided, however, that, subject to the delivery of the statement of
new reporting marks specified in Section 4.2, Lessee may cause any Unit to be
lettered with the names or initials or other insignia customarily used by Lessee
or any Sublessee or any of their respective Affiliates on railroad equipment
used by it of the same or a similar type for convenience of identification of
the right of Lessee to use such Unit hereunder or any Sublessee to use such Unit
pursuant to a Permitted Sublease.
5
Lease Agreement (TRLI 2001-1C)
SECTION 5. Disclaimer of Warranties.
Section 5.1 Disclaimer of Warranties. Without waiving any claim
Lessee may have against any seller, supplier or manufacturer, LESSEE
ACKNOWLEDGES AND AGREES THAT (i) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT
EACH UNIT IS SUITABLE FOR ITS PURPOSES AND LESSEE HAS ACCEPTED EACH UNIT, (iii)
NEITHER LESSOR NOR OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY
OF SUCH KIND OR HAS INSPECTED THE UNITS PRIOR TO DELIVERY TO AND ACCEPTANCE BY
LESSEE, (iv) EACH UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND (v) LESSOR
LEASES AND LESSEE TAKES EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN
WHATEVER CONDITION IT MAY BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS
LESSOR OR IN ITS INDIVIDUAL CAPACITY, NOR OWNER PARTICIPANT MAKES NOR SHALL BE
DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS,
WARRANTIES OR REPRESENTATIONS EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY THEREOF OR AS TO THE TITLE OF ANY UNIT, THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM
FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR
OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND EACH OF LESSOR
AND OWNER PARTICIPANT EXPRESSLY DISCLAIMS SELECTION OF THE UNITS, except that
Lessor, in its individual capacity, represents and warrants that on the Closing
Date, Lessor shall have received whatever title to each Unit as was conveyed to
Lessor by Lessee and each Unit will be free of Lessor's Liens attributable to
Lessor and provided that the foregoing disclaimer in clause (v) shall not extend
to Owner Participant's representation and warranty contained in Section 3.5(e)
of the Participation Agreement. Lessor hereby appoints and constitutes Lessee
its agent and attorney-in-fact during the Lease Term to assert and enforce,
6
Lease Agreement (TRLI 2001-1C)
from time to time, in the name and for the account of Lessor and Lessee, as
their interests may appear, but in all cases at the sole cost and expense of
Lessee, whatever claims and rights Lessor may have as owner of each Unit against
the manufacturers or any prior owner thereof; provided, however, that if at any
time a Lease Event of Default shall have occurred and be continuing, at Lessor's
option, such power of attorney shall terminate, and Lessor may assert and
enforce, at Lessee's sole cost and expense, such claims and rights. Lessee's
delivery of a Lease Supplement shall be conclusive evidence as between Lessee
and Lessor that all Units described therein are in all the foregoing respects
satisfactory to Lessee, and Lessee will not assert any claim of any nature
whatsoever against Lessor based on any of the foregoing matters.
Section 5.2 Rights Under Existing Equipment Subleases. Unless a
Lease Event of Default shall have occurred and be continuing under Section 14
and Lessor shall have given written notice to Lessee, Lessor agrees to make
available to Lessee such rights as Lessor may have, and Lessee shall be entitled
to exercise all rights of Lessor under, each Sublease.
SECTION 6. Return of Equipment; Storage.
Section 6.1 Return; Holdover Rent. (a) Not less than 180 days
prior to the end of the Basic Term or the end of any Renewal Term, if Lessee has
elected to return the Units under Section 22.2, Lessee will provide Lessor with
a list of not less than ten (10) alternative storage locations ("Storage
Locations") used for the storage of rolling stock within the Contiguous United
States sufficient to store the Units and the available storage capacities of
such locations. Unless Lessee shall have purchased the Units pursuant to Section
22 of this Lease or pursuant to Section 6.9 of the Participation Agreement, not
less than 90 days prior to the end of the Lease Term, Lessor will give Lessee
irrevocable notice of its decision either to take possession of or store the
Units. If Lessor shall have decided to take possession of the Units, the terms
of Section 6.1(b) will apply. If Lessor shall have decided to store the Units,
the terms of Section 6.1(c) will apply.
(b) Unless Lessee shall have purchased the Units pursuant to
Section 22 of this Lease or pursuant to Section 6.9 of the Participation
Agreement, if Lessor shall have decided to take possession of the Units, Lessee
will, at its sole risk and expense, deliver possession of the Units at any
storage location, f.o.b. such location, (i) as may be agreed upon by Lessor and
Lessee in writing or (ii) in the absence of such agreement as Lessor may
reasonably select by written notice to
7
Lease Agreement (TRLI 2001-1C)
Lessee on or before the 90th day before the end of the Lease Term; provided,
that (x) with respect to all Units being so delivered, there shall be no more
than ten (10) locations (each of which shall be located within the Contiguous
United States and shall have adequate storage capacities) and (y) Lessor's
notice shall specify the total number and type of Units to be delivered to each
location.
(c) (i) Unless Lessee shall have purchased the Units pursuant
to Section 22 of this Lease or pursuant to Section 6.9 of the Participation
Agreement, if Lessor shall have elected to store the Units upon the expiration
of the Lease Term with respect thereto, Lessee shall store the Units free of
charge and at the risk and expense of Lessee for a period (the "Storage Period")
beginning, for any particular Storage Location, on the expiration of the Lease
Term for such Units (the "Storage Period Commencement Date") and ending not more
than 60 days thereafter. On or before the 90th day before the end of the Lease
Term, Lessor shall provide Lessee with written notice designating its choices
from among the Storage Locations provided by Lessee pursuant to Section 6.1(a).
Any storage provided by Lessee during the Storage Period shall be at the sole
risk and expense of Lessee, and Lessee shall maintain the insurance required by
Section 12.1 with respect to all stored Units. During the Storage Period, Lessee
will permit Lessor or any Persons designated by it, including the authorized
representative or representatives of any prospective purchaser or user of such
Units, to restencil the marks on such Units and to inspect the same during
Lessee's normal business hours upon at least three Business Days' prior written
or telephonic notice; provided, however, that such inspection and restenciling
shall not interfere with the normal conduct of Lessee's business; and provided,
further, that (x) such inspection and restenciling shall be at such Person's own
risk and expense, (y) Lessee shall be indemnified by Lessor against any loss or
damage incurred by it in connection with any such inspection or restenciling by
such Person and (z) Lessee (except in the case of Lessee's gross negligence or
wilful misconduct) shall not be liable for any injury to, or the death of, any
person exercising, either on behalf of Lessor or any prospective purchaser or
user, the rights of inspection and restenciling granted pursuant hereto. Lessee
shall not be required to store any Unit after the Storage Period. If Lessee does
store any Unit after the expiration of the Storage Period, such storage shall be
at the sole risk and expense of Lessor.
(ii) Upon the request and direction of Lessor (and at
Lessor's sole risk and expense), on not more than one occasion with respect to
each stored Unit and upon not less than 15 days' prior written notice from
Lessor to Lessee, Lessee
8
Lease Agreement (TRLI 2001-1C)
will, on or before the expiration of the Storage Period, transport such Unit to
any railroad interchange point or points within the Contiguous United States on
any railroad lines or to any connecting carrier for shipment (with appropriate
instructions to cause such Unit to be transported to such locations in the
Contiguous United States as Lessor shall direct), whereupon Lessee shall have no
further liability or obligation with respect to such Unit.
(iii) Upon receipt of Lessor's written notice designating
its choices from among the alternative Storage Locations provided by Lessee
under Section 6.1(a), Lessee shall have the option to store such Units at such
Storage Locations as it shall choose in which case the Storage Period shall be
at the sole risk and expense of Lessee for a period of 60 days, during which
period Lessee shall be obligated to insure such Units as provided in Section 12.
Upon receipt of such notice, Lessee will promptly give notice to Lessor of the
locations at which Lessee will store such Units. If Lessee shall exercise such
option, Lessee shall on or before the expiration of the Storage Period transport
the Units to any railroad interchange point or points within the Contiguous
United States on any railroad lines or to any connecting carrier for shipment
(with appropriate instructions to cause such Units to be transported to such
locations (provided that such Units shall be transported to no more than ten
(10) locations, each having adequate storage capacity) designated by Lessor upon
not less than 15 days' prior written notice). The movement of any Unit from such
Unit's location as designated by Lessee pursuant to this Section 6.1(c)(iii) to
an interchange point thereafter designated by Lessor in accordance with the
foregoing sentence will be at the risk and expense of Lessor; provided, however,
that any incremental costs associated with movement from the storage facility
designated by Lessee pursuant to this clause (iii) over the costs that would be
incurred in movement from the storage facility designated by Lessor pursuant to
Section 6.1 (a) shall be for the account of Lessee. During any Storage Period,
Lessee shall store the Units in such manner as the Manager normally stores
similar units of railroad equipment owned or managed by it.
(d) Upon the latest of (i) expiration of the Lease Term with
respect to a Unit, (ii) tender of such Unit at the location determined in
accordance with Section 6.1(b) or, as applicable, the tender of such Unit for
storage in accordance with Section 6.1(c) and (iii) compliance by such Unit with
Section 6.2, this Lease and the obligation to pay Basic Rent for such Unit
accruing subsequent to the expiration of the Lease Term with respect to such
Unit shall terminate.
9
Lease Agreement (TRLI 2001-1C)
(e) In the event any Unit is not (i) returned to Lessor in
accordance with the provisions of Section 6.1(b) on the last day of the Lease
Term with respect thereto, or, if requested by Lessor pursuant to Section
6.1(c), delivered and stored on such last day of the Lease Term, and, in either
case, in the condition specified in Section 6.2 or (ii) deemed automatically
renewed in accordance with the provisions of Section 22.7, the Lease with
respect to such Unit shall continue in effect and Lessee shall pay to Lessor for
each such day from the scheduled expiration of the Lease Term with respect to
such Unit until the date on which such Unit is returned to Lessor in accordance
with the provisions of Section 6.1(b) and in the condition specified in Section
6.2, an amount equal to the daily equivalent of the average Basic Rent for the
Basic Term or the Renewal Term, as applicable, to such Unit. Notwithstanding the
foregoing, nothing in this Section 6.1(e) shall be construed as permitting or
authorizing Lessee to fail to meet, or be construed as Lessor consenting to or
waiving any failure by Lessee to perform, Lessee's obligation to return the
Units in accordance with the requirements of this Lease. Nothing herein shall be
in abrogation of Lessor's right to terminate this Lease under Section 15 as a
result of such failure or to have such Unit returned to it for possession or
storage.
Section 6.2 Condition of Equipment. Each Unit when returned to
Lessor pursuant to Section 6.1 shall be (i) capable of performing the functions
for which it was designed, with all loading and unloading components operating
in good working order with allowance for normal wear and tear, (ii) suitable for
continued commercial use in the commodity last carried immediately prior to such
return, (iii) suitable for use in interchange in accordance with then applicable
Federal regulations, the Field Manual of the AAR, the Interchange Rules and FRA
rules and regulations, (iv) in all material respects in the condition required
by Section 8.1, (v) in conformance with any requirement pertaining to warranties
of the manufacturer of the Units during the warranty period, (vi) empty, (vii)
unless industry custom or practice indicates to the contrary, steam cleaned or
otherwise cleaned in a comparable commercially acceptable manner and (viii) free
and clear of all Liens except Lessor's Liens. All logs, records, books and other
materials, or appropriate copies of any thereof, relating to the maintenance of
such Unit shall, upon Lessor's request, be delivered to Lessor or its designee
upon the return of such Unit. Lessor shall have the right to inspect any Unit
that is returned pursuant to Section 6.1 to ensure that such Unit is in
compliance with the conditions set forth in this Section 6.2, at Lessor's sole
cost, expense and risk (including, without limitation, the risk of personal
injury or death), by its authorized representatives, during Lessee's normal
business hours and upon reasonable prior notice to Lessee; provided, however,
that
10
Lease Agreement (TRLI 2001-1C)
Lessee shall not be liable for any injury to, or the death of, any Person
exercising, on behalf of Lessor, the rights of inspection granted under this
Section 6.2 unless caused by Lessee's gross negligence or wilful misconduct; and
further provided, that if such Unit is not in compliance with the conditions set
forth in this Section 6.2, then Lessee will (i) promptly take such steps as are
necessary to bring such Unit in compliance with the conditions set forth in this
Section 6.2 and (ii) pay the reasonable cost and expense of the original
inspection of such Unit and any reinspection of such Unit conducted by Lessor
required because of such non-compliance with Section 6.2. No inspection pursuant
to this Section 6.2 shall interfere with the normal conduct of Lessee's business
or the normal conduct of any Sublessee's business, and Lessee shall not be
required to undertake or incur any additional liabilities in connection
therewith. A Unit shall not be deemed to have been returned to Lessor for
purposes of this Lease unless and until it is in compliance with the conditions
set forth in this Section 6.2.
SECTION 7. Liens.
Lessee will not directly or indirectly create, incur, assume,
permit or suffer to exist any Lien on or with respect to any Unit or Lessee's
leasehold interest therein under this Lease, except Permitted Liens, Lessor's
Liens and Liens described in Section 6.4(a) and 6.4(b) of the Participation
Agreement. Lessee shall promptly, at its own expense, take such action or cause
such action to be taken as may be necessary to duly discharge (or bond to the
reasonable satisfaction of Lessor and Indenture Trustee) any such Lien not
excepted above if the same shall arise at any time.
SECTION 8. Maintenance; Possession; Compliance with Laws.
Section 8.1 Maintenance and Operation. (a) Lessee, at its own
cost and expense, shall maintain, repair and keep each Unit, or cause the
Manager under the Management Agreement to maintain, repair and keep each Unit,
(i) according to prudent industry practice and in all material respects, in good
working order, and in good physical condition for railcars of a similar age and
usage, normal wear and tear excepted, (ii) in a manner in all material respects
consistent with maintenance practices used by the Manager or, with respect to
any Equipment subject to an Existing Equipment Sublease that is a Net Sublease,
11
Lease Agreement (TRLI 2001-1C)
the applicable Sublessee, as applicable, in respect of railcars owned or managed
by the Manager or, with respect to any Equipment subject to an Existing
Equipment Sublease that is a Net Sublease, the applicable Sublessee, as
applicable, similar in type to such Unit, (iii) in accordance in all material
respects with all manufacturer's warranties in effect and in accordance with all
applicable provisions, if any, of insurance policies required to be maintained
pursuant to Section 12 and (iv) in compliance in all material respects with any
applicable laws and regulations from time to time in effect, including, without
limitation, the Field Manual of the AAR, FRA rules and regulations and
Interchange Rules as they apply to the maintenance and operation of the Units in
interchange regardless of upon whom such applicable laws and regulations are
nominally imposed; provided, however, that, so long as the Manager or, with
respect to any Equipment subject to an Existing Equipment Sublease, the
applicable Sublessee, as applicable, is similarly contesting such law or
regulation with respect to all other similar equipment owned or operated by
Manager or, with respect to any Equipment subject to an Existing Equipment
Sublease, the applicable Sublessee, as applicable, Lessee may, in good faith and
by appropriate proceedings diligently conducted, contest the validity or
application of any such standard, rule or regulation in any reasonable manner
which does not materially interfere with the use, possession, operation or
return of any of the Units or materially adversely affect the rights or
interests of Lessor and the Indenture Trustee in the Units or hereunder or
otherwise expose Lessor, the Indenture Trustee or any Participant to criminal
sanctions or release Lessee from the obligation to return the Units in
compliance with the provisions of Section 6.2; provided further, that Lessee
shall promptly notify Lessor and Indenture Trustee in reasonable detail of any
such contest. In no event shall Lessee discriminate in any material respect as
to the use or maintenance of any Unit (including the periodicity of maintenance
or recordkeeping in respect of such Unit) as compared to equipment of a similar
nature which the Manager owns or manages. Lessee will maintain in all material
respects all records, logs and other materials required by relevant industry
standards or any governmental authority having jurisdiction over the Units
required to be maintained in respect of any Unit, all as if Lessee were the
owner of such Units, regardless of whether any such requirements, by their
terms, are nominally imposed on Lessee, Lessor or Owner Participant.
(b) Without the written waiver or consent of Lessor (which
waiver or consent will not be unreasonably withheld), Lessee shall not change,
or permit any Sublessee to change, a DOT/AAR classification (as provided for in
49 C.F.R. Part 179 or any successor thereto), or permit any Sublessee to operate
any Unit under a different DOT/AAR classification, from that classification in
effect for such Unit on the Closing Date, except for any change in tank test
pressure rating provided such
12
Lease Agreement (TRLI 2001-1C)
change does not increase the pressure rating of the Unit above the tank test
pressure to which the Unit was manufactured; provided however, that in the event
Lessor shall not have provided Lessee with a written waiver or consent to such a
reclassification or operation of any Unit within 10 Business Days after receipt
of Lessee's written request therefor (or Lessor expressly rejects such a request
by Lessee), Lessee may elect to replace such Unit in accordance with and subject
to the provisions of Sections 11.2(i), 11.3 and 11.4.
Section 8.2 Possession and Use. Lessee shall be entitled to the
possession of the Units and to the use of the Units by it or any Affiliate in
the United States and, subject to the remaining provisions of this Section 8.2
and Section 8.3, Canada and Mexico, only in the manner for which it was designed
and intended and so as to subject it only to ordinary wear and tear. In no event
shall Lessee use, store or permit the use or storage of any Unit in any
jurisdiction not included in the insurance coverage required by Section 12. The
Units shall be used primarily on domestic routes in the United States, and in no
event shall more than forty percent (40%) of the Units and the Other Units (as
determined by mileage records and measured annually on a calendar year basis) be
used outside the Contiguous United States at the same time. Nothing in this
Section 8.2 shall be deemed to constitute permission by Lessor to any Person
that acquires possession of any Unit to take any action inconsistent with the
terms and provisions of this Lease or any of the other Operative Agreements.
Section 8.3 Sublease. Lessee shall be entitled, without the
prior approval of Lessor, to enter into a sublease, car contract or other
contract granting permission for the use of a Unit to:
(i) a railroad company or companies (that is not a Credit
Bankrupt, Trinity or any Affiliate of Trinity) organized under the laws of the
United States of America or any state thereof or the District of Columbia,
Canada or any province thereof, or Mexico or any state thereof, upon lines of
railroad owned or operated by such railroad company or companies or over which
such railroad company or companies have trackage rights or rights for operation
of their trains, and upon connecting and other carriers in the usual interchange
of traffic;
(ii) responsible companies (i.e., a company with which the
Manager would do business in the ordinary course of its business with respect to
railcars
13
Lease Agreement (TRLI 2001-1C)
which it owns or manages) (other than railroad companies, Trinity, Affiliates of
Trinity or Credit Bankrupts) for use in their business; or
(iii) wholly-owned Subsidiaries of Trinity organized under the
laws of (x) Canada or any political subdivision thereof (each a "Canadian
Affiliate") or (y) Mexico or any political subdivision thereof (each a "Mexican
Affiliate") (subleases to any of such sublessees referred to in clauses (i),
(ii) or (iii) of this Section 8.3 being herein referred to as "Permitted
Subleases");
provided, however, that Lessee shall not (A) sublease to a sublessee organized
under the laws of Mexico or any state thereof (a "Mexican Sublessee") if, after
giving effect to such sublease, the percentage of Units, Other Units and Pledged
Units in the aggregate (as measured by number of Units, Other Units and Pledged
Units and not mileage records) subleased to Mexican Sublessees exceeds the
lesser of (I) 7% (or, with Rating Agency Confirmation, 20%) of the Units, Other
Units and the Pledged Units in the aggregate, or (II) the percentage of railcars
leased or subleased to Mexican Sublessees in the Total Managed Fleet, and (B)
sublease more than 50 Units and Other Units to any single Mexican Sublessee
(other than (x) with Rating Agency Confirmation, to a Mexican Affiliate or (y) a
Mexican Sublessee (I) with a credit rating of at least BBB and Baa2 as
determined by S&P and Xxxxx'x, respectively (or, in the event that either S&P or
Xxxxx'x shall not or cease to provide a credit rating for such entity, a credit
rating of at least BBB or Baa2 by S&P or Xxxxx'x, as the case may be) or (II)
with a full, unconditional irrevocable guaranty from such Mexican Sublessee's
parent with a credit rating at least BBB and Baa2 as determined by S&P and
Xxxxx'x, respectively, or (III) with a letter of credit from a provider with a
credit rating at least A+ or A1 as determined by S&P and Xxxxx'x, respectively),
provided, further, that Lessee shall not at any time sublease more than 20% (or,
with Rating Agency Confirmation, 30%) of the Units and the Other Units (as
measured by number of Units and Other Units and not mileage records) in the
aggregate to Canadian Affiliates, provided, further, that any Unit subleased to
a Canadian Affiliate or a Mexican Affiliate shall be sub-subleased to Persons of
the type described in clause (i) or (ii) above pursuant to a sub-sublease
containing terms and conditions similar in all material respects to the
applicable sublease between Lessee and the applicable Canadian Affiliate or
Mexican Affiliate and, provided, further, that no sub-sublease may provide
greater rights to the sub-sublessee than those provided to the sublessee in the
related sublease.
14
Lease Agreement (TRLI 2001-1C)
Each Sublease (and to the extent permitted, sub-sublease) other
than Existing Equipment Subleases shall include appropriate provisions so that
such sublease (i) shall require the payment of rent (x) in dollars (y) at Fair
Market Rental Value and (z) not disproportionately in the earlier term of the
sublease compared to in the later term of the sublease; (ii) shall not permit
any sub-subleasing (or in the case of any sub-sublease, any subleasing), other
than (A) sub-subleases by Canadian Affiliates or Mexican Affiliates to Persons
of the type described in clauses (i) or (ii) of the immediately preceding
paragraph containing terms and conditions similar in all material respects to
the applicable sublease between Lessee and the applicable Canadian Affiliate or
Mexican Affiliate, (B) "single trip" subleases or (C) sub-subleases by Permitted
Sublessees so long as such sub-sublease is (X) of a term of not more than one
year, (Y) subject and subordinate to the Sublease and (Z) to a sub-sublessee and
on terms such that it would be a Permitted Sublease if it were entered into
directly by the Partnership and shall not permit any sub-sub-sub leasing, (iii)
provide that the rights of the Sublessee to offset or otherwise set-off against
amounts due to Lessee from any such Sublessee under the applicable Sublease be
limited to matters arising under the Sublease (except that the Sublessee may
offset or otherwise set off amounts due to the Marks Company Trustee under the
Sublease), (iv) without regard to the payment of Basic Rent or the Lease Term,
shall not include any term or provision which is inconsistent with the terms and
conditions of this Lease or which could reasonably be expected to result in
material adverse consequences to Lessor, any Participant or the Indenture
Trustee (it being agreed that a sublease substantially in the form attached as
Exhibit B-1 or Exhibit B-2 satisfies the provisions of this sentence) and (v)
does not have a term which extends three years beyond the later of (i) the Basic
Term Expiration Date or (ii) if applicable, the end of any Renewal Term then in
effect.
Lessee will use commercially reasonable efforts to have each
Sublease other than Existing Equipment Subleases (i) provide that such Sublease
and all rights of the Sublessee (and of any other person claiming or who may
hereafter claim under or through the Sublessee) under such Sublease, including
any purchase options of the Sublessee thereunder, be made subject and
subordinate to the terms of this Lease and (ii) be substantially in the form
attached as Exhibit B-1 or Exhibit B-2.
Notwithstanding the foregoing, in no event shall Lessee or any of
its Affiliates be required to take any action to perfect any security interest
which any Person may have in any Sublease, other than the filing of a UCC-1
Financing Statement against the Partnership in the jurisdiction in which the
Partnership's chief
15
Lease Agreement (TRLI 2001-1C)
executive office is located and in the Partnership's jurisdiction of formation
covering all Subleases generally.
No sublease entered into by Lessee hereunder shall relieve Lessee
of any liability or obligation hereunder, which shall be and remain those of a
principal and not a surety. Nothing in this Section 8.3 shall be deemed to
constitute permission to any Person in possession of any Unit pursuant to any
such sublease to take any action inconsistent with the terms and provisions of
this Lease or any of the other Operative Agreements. As used in this Section
8.3, "sublease" as a noun means a sublease, car contract or other contract
granting permission for the use of a Unit and "sublease" as a verb means to
enter into any of the foregoing.
SECTION 9. Modifications.
Section 9.1 Required Modifications. In the event a Required
Modification to a Unit is required, Lessee agrees to make such Required
Modification at its own expense; provided, however, that Lessee may, 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 Unit or materially adversely affect the rights or
interests of Lessor or the Indenture Trustee in the Units or hereunder or
otherwise expose Lessor, the Indenture Trustee or any Participant to criminal
sanctions or relieve Lessee of the obligation to return the Units in compliance
with the provisions of Section 6.2; provided, further, that, with respect to a
Unit subject to a Full Service Sublease, the Manager, and with respect to a Unit
subject to a Net Sublease, the Sublessee, as applicable, is similarly contesting
such law, regulation, requirement or rule with respect to all other similar
equipment owned or operated by the Manager or the Sublessee, as applicable.
Title to any Required Modification shall immediately vest in Lessor.
Notwithstanding anything herein to the contrary, if Lessee, on a
non-discriminatory basis, determines in its reasonable judgment (as evidenced by
an Officer's Certificate of Lessee to such effect, confirmed by an Officer's
Certificate of the Manager) that any Required Modification to a Unit would be
economically impractical and the Manager certifies that it has made a similar
determination with respect to similar railcars in similar circumstances which
are part of the Manager's Fleet, in lieu of making the Required Modification as
provided above, Lessee may provide written notice of such determination to
Lessor in such Officer's Certificate and treat such Unit as if an Event of Loss
had occurred as of the date of such written notice with respect to such
16
Lease Agreement (TRLI 2001-1C)
Unit and in such event the provisions of Sections 11.2(ii), 11.3 and 11.4 shall
apply with respect to such Unit except that the amount payable under Section
11.2(ii)(a) as a result of such determination shall be an amount equal to the
greater of the Fair Market Sales Value or Stipulated Loss Amount of such Unit;
provided that there shall also be included in such Officer's Certificate a
statement of how Lessee intends to meet the financial obligations imposed under
said Sections 11.2, 11.3 and 11.4 with respect to such Units.
Section 9.2 Optional Modifications. Lessee at any time may or may
permit a Sublessee to, in its discretion and at its own or such Sublessee's cost
and expense, modify, alter or improve any Unit in a manner which is not required
by Section 9.1 (a "Modification"); provided that no Modification shall diminish
the fair market value, utility, capacity, residual value or remaining economic
useful life of such Unit below the fair market value, utility, capacity,
residual value or remaining economic useful life thereof immediately prior to
such Modification, in more than a de minimis respect, assuming such Unit was
then at least in the condition required to be maintained by the terms of this
Lease. Title to any Non-Severable Modification shall be immediately vested in
Lessor. Title to any Severable Modification (other than Required Modifications)
shall remain with Lessee or the Sublessee as applicable. If Lessee shall at its
cost cause such Severable Modifications (other than Required Modifications) to
be made to any Unit, Lessor shall have the right, upon 90 days prior written
notice in the case of the return of such Unit pursuant to Section 6.1, to
purchase any such Severable Modifications (other than Severable Modifications
consisting of proprietary or communications equipment) title to which is held by
Lessee at their then Fair Market Sales Value (taking into account their actual
condition). If Lessor does not so elect to purchase such Severable
Modifications, Lessee may remove such Severable Modifications at Lessee's cost
and expense, and if requested (which request shall be made by not less than 90
days prior written notice in the case of a return other than pursuant to Section
15.6) by Lessor will so remove such Severable Modifications at Lessee's cost and
expense, and Lessee shall, at its expense, repair any damage resulting from the
removal of any such Severable Modifications in a manner consistent with Section
8.1. If Lessee has not removed any Severable Modification prior to the return of
the related Unit as provided herein, title to such Severable Modification shall
pass to Lessor as of the date of such return.
Section 9.3 Removal of Property; Replacements. Lessee may, in the
ordinary course of maintenance or repair of any Unit, remove any item of
property
17
Lease Agreement (TRLI 2001-1C)
constituting a part of such Unit, and unless the removal of such item is
required by Section 9.1 hereof, Lessee shall replace such item as promptly as
practicable by an item of property that is free and clear of all Liens (other
than Permitted Liens) and in as good operating condition as, and with a fair
market value, utility, capacity, residual value and remaining economic useful
life at least equal to, the item of property being replaced, assuming that such
replaced item was in the condition required to be maintained by the terms of
this Lease. Any item of property removed from such Unit in the ordinary course
of maintenance and repair as provided in the preceding sentence shall remain the
property of Lessor until replaced in accordance with the terms of such sentence,
but shall then, without further act, become the property of Lessee. Any
replacement property which is incorporated into a Unit in the ordinary course of
maintenance and repair shall, without further act, become the property of Lessor
and be deemed part of such Unit for all purposes hereof.
SECTION 10. Voluntary Termination.
Section 10.1 Right of Termination. Lessee shall have the right,
at its option at any time or from time to time during the Basic Term on or after
the seventh anniversary of the Basic Term Commencement Date (as defined under
the Lease Agreement TRLI 2001-1A) to terminate the Lease with respect to any or
all of the Units (provided that, if such termination is for less than all Units
in a Functional Group across the Partnership Fleet, Lessee shall exercise such
termination hereunder and under the comparable provisions contained in the Other
Leases (i) with respect to at least 50 railcars in the aggregate of the type
included in such Functional Group, (ii) no fewer than 25 railcars of the type
included in such Functional Group shall in the aggregate remain subject to this
Lease and the Other Leases, (iii) such termination shall be made hereunder and
under the Other Leases pro rata in accordance with the number of units in such
Functional Group subject to each such lease and (iv) the determination as to
which Units are subject to termination shall otherwise be made by Lessee on a
random basis without discrimination based on maintenance status, operating
condition of the Units in question or otherwise) (the "Terminated Units") if (x)
Lessee determines in good faith (as evidenced by a certified copy of a
resolution adopted by the General Partner's Board of Managers and a certificate
executed by the Chief Financial Officer of the General Partner and the Chief
Financial Officer of the Manager) that such Units have become obsolete or
surplus to Lessee's requirements, (y) Lessor has received an Officer's
Certificate from each of Lessee and the Manager to the effect that there has
been no discrimination in the selection of the Terminated Units when measured
against the other Units and the Manager's Fleet, and that,
18
Lease Agreement (TRLI 2001-1C)
following the termination of this Lease with respect to the Terminated Units,
the Units remaining subject to this Lease will constitute a pool of Units which
is of a sufficient quantity and quality to sustain over the remaining Basic Term
the Coverage Ratios applicable at the time of such termination and (z) Lessee
delivers at least 120 days' prior notice to Lessor and the Indenture Trustee (i)
specifying a proposed date of termination for such Units (the "Termination
Date"), which date shall be a Rent Payment Date, any such termination to be
effective on the Termination Date upon Lessee's compliance with this Section 10,
and (ii) if some but less than all of the Units in a Functional Group are
designated as Terminated Units, describing in such Officer's Certificate the
nondiscriminatory manner in which Lessee proposes to determine which Units in
that Functional Group are to be Terminated Units. Notwithstanding anything
herein contained to the contrary, there shall be no determination that a Unit is
surplus or obsolete for purposes of this Lease if, on the Termination Date, such
Unit is subject to a Sublease. Except as expressly provided otherwise herein,
there will be no conditions to Lessee's right to terminate this Lease with
respect to the Terminated Units pursuant to this Section 10.1. So long as (a)
Lessor shall not have given Lessee a notice of election to retain the Terminated
Units in accordance with Section 10.3 or (b) notice of prepayment of the
Equipment Notes shall not have been given pursuant to Section 2.10 of the
Indenture, Lessee may withdraw the termination notice referred to above at any
time prior to the 60th day prior to the scheduled Termination Date, whereupon
this Lease shall continue in full force and effect; provided that Lessee may not
exercise its right to withdraw a termination notice more than once annually or
more than four times during the Basic Term (irrespective of which Units are
covered thereby). Lessee agrees that whether or not it withdraws a termination
notice it will reimburse Lessor, each Participant and the Indenture Trustee on
an After Tax Basis for all reasonable out-of-pocket costs and expenses
(including reasonable legal fees and expenses) incurred by any thereof in
connection with such termination or proposed termination.
Section 10.2 Sale of Equipment. During the period from the date
of such notice given pursuant to Section 10.1 to the Termination Date, Lessee,
as non-exclusive agent for Lessor and, except as provided in Section 10.3, at
Lessee's sole cost and expense, shall use reasonable best efforts to obtain bids
from Persons other than Lessee or Affiliates thereof for the cash purchase of
the Terminated Units, and Lessee shall promptly, and in any event at least five
Business Days prior to the proposed date of sale, certify to Lessor in writing
the amount and terms of each such bid, the proposed date of such sale and the
name and address of the party submitting such bid. Unless Lessor shall have
elected to retain the Terminated Units in
19
Lease Agreement (TRLI 2001-1C)
accordance with Section 10.3, on the Termination Date: (i) Lessee shall deliver
the Terminated Units (excluding any optional Severable Modifications removed by
Lessee pursuant to Section 9.2) to the bidder (which shall not be Lessee or an
Affiliate of Lessee (for the avoidance of doubt the bidder may be a Customer, or
a customer of the Manager, and neither the Manager nor any Affiliate shall be
prohibited from managing the Units for such bidder after the purchase by such
bidder)), which shall have submitted the highest cash bid prior to such date (or
to such other bidder as Lessee and Lessor shall agree) and (ii) subject to the
prior or concurrent receipt (x) by Lessor of all amounts owing to Lessor
pursuant to the next sentence and (y) by the Persons entitled thereto of all
unpaid Supplemental Rent due on or before the Termination Date, Lessor shall,
without recourse or warranty (except as to the absence of any Lessor's Lien)
simultaneously therewith transfer all of its right, title and interest in and to
the Terminated Units to such bidder. The net proceeds of sale realized at such
sale shall be paid to and retained by Lessor and, in addition, on the
Termination Date, Lessee shall pay to Lessor (A) all Basic Rent with respect to
such Terminated Units due and payable prior to the Termination Date (exclusive
of any Basic Rent due on such date), (B) the excess, if any, of (1) the
Termination Amount for the Terminated Units computed as of the Termination Date
over (2) the net cash sales proceeds (after the deduction of all reasonable
costs and expenses (including any applicable sales, transfer or similar taxes)
of Lessor and Owner Participant in connection with such sale) of the Terminated
Units, (C) an amount equal to the Make-Whole Amount and any unpaid Late Payment
Premium in respect of the principal amount of the Equipment Notes to be prepaid
in accordance with Section 2.10(a) of the Indenture and (D) all other Rent
(exclusive of any Basic Rent due on such date) then due and payable hereunder
(which shall include, without limitation, the Accumulated Equity Deficiency
Amount (without duplication of amounts calculated above) and Late Payment
Interest related thereto), so that, after receipt and application of all such
payments, but without withdrawal from any Reserve Account, Owner Participant
shall be entitled under the terms of the Collateral Agency Agreement to receive,
and does receive, taking into account all payments of Basic Rent, in respect of
all such Units, the sum of the Accumulated Equity Deficiency Amount and Late
Payment Interest related thereto and any other amounts then due to Owner
Participant. If no sale shall have occurred, whether as a result of Lessee's
failure to pay all of the amounts hereinabove required or otherwise, this Lease
shall continue in full force and effect with respect to such Units and Lessee
agrees to reimburse Lessor, each Participant and the Indenture Trustee for all
reasonable costs and expenses (including reasonable legal fees and expenses)
incurred by any thereof in connection therewith; provided that if such sale
shall not
20
Lease Agreement (TRLI 2001-1C)
have occurred solely because of Lessee's failure to pay the amounts hereinabove
required, Lessee shall have no further right to terminate this Lease with
respect to such Units. Lessee, in acting as agent for Lessor, shall have no
liability to Lessor for failure to obtain the best price, shall act in its sole
discretion and shall be under no duty to solicit bids publicly or in any
particular market. Lessee's sole interest in acting as agent shall be to use its
reasonable best efforts to sell the Units at the highest price then obtainable
consistent with the terms of this Lease. Owner Participant shall have the right,
but not the obligation, to obtain bids either directly or through agents other
than Lessee.
Section 10.3 Retention of Equipment by Lessor. Notwithstanding
the provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect by
written notice to Lessee, not later than 60 days after receipt of Lessee's
notice of termination, not to sell the Terminated Units on the Termination Date,
whereupon Lessee shall (i) deliver the Terminated Units to Lessor in the same
manner and condition as if delivery were made to Lessor pursuant to Section
6.1(b) and Section 6.2, and shall extend storage rights to the same extent as
provided in Section 6.1(c), treating the Termination Date as the termination
date of the Lease Term with respect to the Terminated Units and (ii) pay to
Lessor, or to the Persons entitled thereto, all Basic Rent and all Supplemental
Rent due and owing on the Termination Date and unpaid (exclusive of any Basic
Rent due on such date in respect of the Terminated Units, but inclusive of any
Supplemental Rent measured by the Make-Whole Amount and any unpaid Late Payment
Interest in respect of the Terminated Units), so that, after receipt and
application of all such payments, but without withdrawal from any Reserve
Account, Owner Participant shall be entitled under the terms of the Collateral
Agency Agreement to receive, and does receive, taking into account all payments
of Basic Rent, in respect of all such Units, the sum of the Accumulated Equity
Deficiency Amount and Late Payment Interest related thereto and any other
amounts then due to Owner Participant. On any Termination Date where Lessee is
required to make payments pursuant to the preceding sentence, Lessee shall pay
as additional Basic Rent (or Lessor shall pay as a refund of Basic Rent) an
amount equal to the Basic Rent Adjustment (or the absolute value of the negative
Basic Rent Adjustment) set forth on Schedule 4-B to the Participation Agreement
for the relevant Rent Payment Date. If Lessor elects not to sell the Terminated
Units as provided in this Section 10.3, then Lessor shall pay, or cause to be
paid, to the Indenture Trustee an amount equal to the product obtained by
multiplying the unpaid principal amount of the Equipment Notes outstanding on
such date (after deducting therefrom the principal installment, if any, to be
paid on such date) by a fraction, the
21
Lease Agreement (TRLI 2001-1C)
numerator of which shall be the Equipment Cost of the Terminated Units and the
denominator of which shall be the aggregate Equipment Costs of all Units then
subject to this Lease. Upon payment by Lessor of the foregoing, Lessee shall pay
to Lessor an amount of rent equal to the Make-Whole Amount and any unpaid Late
Payment Interest in respect of the principal amount of the Equipment Notes to be
prepaid together with all Basic Rent (including Basic Rent due on the
Termination Date) and Supplemental Rent due and owing; provided that unless all
such amounts shall have been paid to the Indenture Trustee on the Termination
Date, this Lease shall continue in full force and effect. If after giving the
notice referred to above Lessor shall fail to pay the amounts required pursuant
to the third sentence of this Section 10.3 and as a result thereof this Lease
shall not be terminated with respect to the Terminated Units on a proposed
Termination Date, Lessor shall (x) thereafter no longer be entitled to exercise
its election to retain such Terminated Units and (y) reimburse Lessee for any
reasonable out-of-pocket expenses (including reasonable legal fees and expenses)
incurred by it in attempting to sell the Terminated Units pursuant to Section
10.2 immediately prior to Lessor's exercise of such preemptive election, and
Lessee may at its option at any time thereafter prior to the immediately
following Rent Payment Date submit a new termination notice pursuant to Section
10.1 with respect to such Terminated Units specifying a proposed Termination
Date occurring on a Determination Date occurring not earlier than 25 days from
the date of such notice.
Section 10.4 Termination of Lease. In the event of either (x) any
such sale and receipt by Lessor and the Indenture Trustee of all of the amounts
provided in Section 10.2 in respect of the Terminated Units or (y) retention of
the Terminated Units and full performance by Lessor and Lessee of their
respective payment obligations in compliance with Section 10.3, and upon
compliance by Lessee with the other provisions of this Section 10, the
obligation of Lessee to pay Basic Rent hereunder for such Terminated Units shall
cease and the Lease Term for the Terminated Units shall end.
Section 10.5 Funding of Accounts on Termination. Lessee will not
exercise a termination option under this Section 10 with respect to all of the
Units unless either (a) the full amount required to fund the Post Lease Term
Reserve Account is (upon consummation of such purchase and distribution of all
amounts required to be distributed by the Collateral Agent under the Collateral
Agency Agreement) and will be then available to the Collateral Agent to fund
such Post
22
Lease Agreement (TRLI 2001-1C)
Lease Term Reserve Account or (b) an indemnity pursuant to Section 3.13 of the
Collateral Agency Agreement has been provided.
SECTION 11. Loss, Destruction Requisition, Etc.
Section 11.1 Event of Loss. In the event that any Unit (i) shall
suffer damage or contamination which, in Lessee's reasonable judgment (as
evidenced by an Officer's Certificate of Lessee to such effect, confirmed by an
Officer's Certificate of the Manager), makes repair uneconomic or renders such
Unit unfit for commercial use, (ii) shall suffer destruction which constitutes a
total loss, or shall suffer theft or disappearance (after reasonable efforts by
Lessee to locate the same) for a period exceeding 6 months (or, if earlier, the
end of the Basic Term or Renewal Term then in effect), (iii) shall be
permanently returned to the manufacturer pursuant to any patent indemnity
provisions, (iv) shall have title thereto taken or appropriated by any
governmental authority, agency or instrumentality under the power of eminent
domain or otherwise or (v) shall be taken or requisitioned for use by any
governmental authority or any agency or instrumentality thereof under the power
of eminent domain or otherwise, and such taking or requisition is for a period
that exceeds the remaining Basic Term or any Renewal Term then in effect (unless
such taking or requisition is by any governmental authority, agency or
instrumentality of Mexico or any state thereof in which case such period shall
be the lesser of the period as aforesaid or 365 days) (any such occurrence being
hereinafter called an "Event of Loss"), Lessee, in accordance with the terms of
Section 11.2, shall promptly and fully inform Lessor and the Indenture Trustee
of such Event of Loss.
Section 11.2 Replacement or Payment upon Event of Loss. Upon the
occurrence of an Event of Loss or the deemed occurrence of an Event of Loss
pursuant to Section 9.1 or an election to replace pursuant to Section 8.1(b),
Lessee shall as soon as reasonably practical and in any event within 60 days
after a Responsible Officer of the Manager shall have actual knowledge of the
occurrence of such Event of Loss or election to replace give Lessor and the
Indenture Trustee notice thereof (which initial notice shall identify the Unit
involved). Thereafter, within the 60-day period following such initial notice,
Lessee shall give Lessor and the Indenture Trustee a second notice as to which
of the following options Lessee shall elect to perform (it being agreed that,
except in the case of an election to replace pursuant to Section 8.1(b) (in
which case Lessee will comply with the provisions of Section 8.1(b)), if Lessee
shall fail to give such second notice, Lessee shall be deemed to have elected to
perform the option set forth in Section 11.2(ii)):
23
Lease Agreement (TRLI 2001-1C)
(i) Upon Lessee's election to perform under this clause (i)
pursuant to the above-mentioned second notice (or in the circumstances of an
election described in Section 8.1(b) with respect to any Unit), as promptly as
practicable following such election, and in any event on or before the 60th day
following such second notice (or Section 8.1(b) election), Lessee shall comply
with Section 11.4(b) and shall convey or cause to be conveyed to Lessor a
replacement unit ("Replacement Unit") to be leased to Lessee hereunder, such
Replacement Unit to be of the same car type of the same or newer model year (or
otherwise approved by Lessor, which approval shall not be unreasonably
withheld), and free and clear of all Liens (other than Permitted Liens of the
type described in clause (ii) with respect to Permitted Subleases, and in
clauses (iv) and (vii) of the definition thereof) and to have a fair market
value, utility, residual value, remaining economic useful life and condition at
least equal to the Unit so replaced (assuming such Unit was in the condition
required to be maintained by the terms of this Lease) and to be (as of the date
of conveyance) then subject to a currently effective Permitted Sublease having a
remaining term of not less than one year; provided, that, if only railcars of
newer age or greater value are available for such replacement, Lessee may on one
occasion re-substitute a railcar with a value closer to or equal to that of the
Unit which originally suffered the Event of Loss or was replaced (which
re-substitution shall occur within twenty-four months of the original
replacement (but in no event within the three year period immediately preceding
the Basic Term Expiration Date) and shall comply with this Section 11 as if an
Event of Loss had occurred); provided also that, if Lessee shall elect the
option under this clause (i) but shall fail to perform its obligation to effect
such replacement under this clause (i) within the 60-day period hereinabove
provided for, then (except in the case of a failure to perform an election to
replace pursuant to Section 8.1(b)) at the end of such 60-day period Lessee
shall immediately give Lessor and the Indenture Trustee notice of such failure
and specify that Lessee shall pay to Lessor on the next succeeding Rent Payment
Date that is at least 25 days after the end of such 60-day period, or in the
case of Supplemental Rent, to the Person entitled thereto, the amounts specified
in clause (ii) below as of such next succeeding Rent Payment Date, and Lessee
shall pay such amounts on such Rent Payment Date; provided further that Lessee
shall have no right to elect replacement or re-substitution under this clause
(i) if, at the time of the notice of the Event of Loss under Section 11.2 above
or at the time such replacement or re-substitution is to occur, either (A), a
Lease Default pursuant to Section 14(a), 14(b), 14(g) or 14(h) or a Lease Event
of Default shall have occurred and be continuing or (B) sufficient cash amounts
shall not have been made available to the
24
Lease Agreement (TRLI 2001-1C)
Collateral Agent such that all amounts then required to be applied under Section
3.4 of the Collateral Agency Agreement in order to satisfy the amounts referred
to in clauses (1) through (11) thereof, inclusive shall have been distributed as
specified thereby; or
(ii) on the Rent Payment Date which is not less than 25 days
nor more than 60 days following the date of notice of Lessee's election to
perform under this clause (ii), Lessee shall pay or cause to be paid to Lessor
(or in the case of Supplemental Rent, to the Persons entitled thereto) in funds
of the type specified in Section 3.5, (a) an amount equal to the Stipulated Loss
Amount of each such Unit suffering an Event of Loss or deemed Event of Loss
determined as of such Rent Payment Date, (b) all Basic Rent payable on such date
in respect of such Unit (exclusive of any Basic Rent due on such date in respect
of the Unit or Units suffering the Event of Loss), (c) any unpaid Late Payment
Premium in respect of the principal amount of the Equipment Notes to be prepaid
in accordance with Section 2.10(b) of the Indenture and (d) all other Rent
(exclusive of any Basic Rent due on such date in respect of the Unit or Units
suffering the Event of Loss) then due and payable hereunder (including, without
limitation, the Accumulated Equity Deficiency Amount (without duplication of
amounts calculated above) and Late Payment Interest related thereto) so that,
after receipt and application of all such payments, but without withdrawal from
any Reserve Account, Owner Participant shall be entitled under the terms of the
Collateral Agency Agreement to receive, and does receive, taking into account
all payments of Basic Rent in respect of such Unit, the sum of the Accumulated
Equity Deficiency Amount and Late Payment Interest related thereto and any other
amounts then due to Owner Participant, it being understood that until such
Stipulated Loss Amount and such other sums are paid, there shall be no abatement
or reduction of Basic Rent on account of such Event of Loss.
Section 11.3 Rent Termination. Upon the replacement of any Unit
or Units in compliance with Sections 11.2(i) and 11.4(b) (but only as to
replaced Units and not any Replacement Unit) or upon the payment of all sums
required to be paid pursuant to Section 11.2 in respect of any Unit or Units,
the Lease Term with respect to such Unit or Units and the obligation to pay
Basic Rent for such Unit or Units accruing subsequent to the date of payment of
Stipulated Loss Amount or date of conveyance of such Replacement Unit or Units
pursuant to Section 11.2 shall terminate; provided that Lessee shall be
obligated to pay all Rent in respect of such Unit or Units which is payable
under Section 11.2 with respect to such payment of
25
Lease Agreement (TRLI 2001-1C)
Stipulated Loss Amount or such replacement of such Unit or Units and in respect
of all other Units then continuing to remain subject to this Lease.
Section 11.4 Disposition of Equipment; Replacement of Unit. (a)
Upon the payment of all sums required to be paid pursuant to Section 11.2 in
respect of any Unit or Units, Lessor will convey to Lessee or its designee all
right, title and interest of Lessor in and to such Unit or Units, "as is",
"where is", without recourse or warranty, except for a warranty as to the
absence of Lessor's Liens, and shall execute and deliver to Lessee or its
designee, at Lessee's cost and expense, such bills of sale and other documents
and instruments as Lessee or its designee may reasonably request to evidence
such conveyance. As to each separate Unit so disposed of, so long as no Lease
Event of Default shall have occurred and be continuing, Lessee or its designee
shall (subject to any insurer's right of subrogation, if any) be entitled to any
amounts arising from such disposition, plus any awards, insurance or other
proceeds and damages received by Lessee, Lessor or the Indenture Trustee by
reason of such Event of Loss up to the Stipulated Loss Amount attributable
thereto and any remainder shall be divided between Lessee and Lessor, as their
respective interests may appear.
(b) At the time of or prior to any replacement of any Unit or
Replacement Unit, Lessee, at its own expense, will (A) furnish Lessor with a
Xxxx of Sale with respect to the Replacement Unit substantially in the form
delivered pursuant to Section 4.1(g) of the Participation Agreement, (B) cause a
Lease Supplement substantially in the form of Exhibit A hereto, subjecting such
Replacement Unit to this Lease, and duly executed by Lessee, to be delivered to
Lessor for execution by the appropriate parties, it being understood that upon
such execution (x) Lessee will cause such Lease Supplement to be filed for
recordation in the same manner as provided for the original Lease Supplement in
Section 16.1 and (y) to the extent that the Indenture has not been satisfied and
discharged, Lessor shall deliver possession of the "original" counterpart of
such Lease Supplement to the Indenture Trustee, (C) so long as the Indenture
shall not have been satisfied and discharged, cause an Indenture Supplement
substantially in the form of Exhibit A to the Indenture for such Replacement
Unit, to be delivered to Lessor and to the Indenture Trustee for execution and,
upon such execution, to be filed for recordation in the same manner and within
the same time periods as provided for the original Indenture Supplement in
Section 16.1, (D) furnish Lessor with an opinion of Lessee's counsel (which may
be the General Counsel or Assistant General Counsel of Trinity), (x) to the
effect that the Xxxx of Sale referred to in clause (A) above constitutes an
26
Lease Agreement (TRLI 2001-1C)
effective instrument for the conveyance of title to the Replacement Unit to
Lessor, and that legal and beneficial title to the Replacement Unit has been
delivered to Lessor and (y) describing all filings and recordings required
pursuant to Section 16 with respect to the Replacement Units, (E) furnish to
Owner Participant (and its applicable Affiliates) an agreement of Lessee to
indemnify Owner Participant (and its applicable Affiliates) against any adverse
tax consequences suffered as a result of such replacement that are not otherwise
indemnified under the Tax Indemnity Agreement, (F) furnish Lessor with an
engineer's certificate (which may be from an employee of the Manager) certifying
as to the utility, condition, model year and remaining useful life required
under clause (i) of Section 11.2, (G) furnish to Lessor and the Indenture
Trustee an Officer's Certificate certifying that the Replacement Unit has a fair
market value, utility, residual value, model year and remaining economic useful
life and condition at least equal to the Unit being replaced and is free and
clear of all Liens (other than Permitted Liens of the type described in clause
(ii) with respect to Permitted Subleases, and in clauses (iv) and (vii) of the
definition thereof), (H) furnish Lessor with an opinion from independent tax
counsel reasonably acceptable to Owner Participant to the effect that Owner
Participant should not suffer any adverse consequence as a result of such
replacement, (I) furnish Lessor with an opinion of independent transportation
counsel or in-house counsel for Manager as to the absence of Liens of record
with the STB and as to the completion of all necessary STB filings and deposits
with the Registrar General of Canada described in Section 16.1 hereof with
respect to such Replacement Unit and (J) furnish such other documents and
evidence as any Participant, Lessor or the Indenture Trustee, or their
respective counsel, may reasonably request in order to establish the
consummation of the transactions contemplated by this Section 11.4. For all
purposes hereof, (i) Lessee shall be deemed to have complied with the
requirements of this Section 11.4(b) as of the date of its delivery to Lessor,
the Participants and the Indenture Trustee of the documents and instruments
referred to in the foregoing clauses (A) through (J), signed by Lessee or its
counsel, as applicable, in due form for any required filing or recording, and
such filing or recording shall have been made if such documents and instruments
have been executed and delivered by Lessor or Indenture Trustee or both of them
in a timely manner, (ii) title to the Replacement Unit shall be deemed to have
been transferred to Lessor as of such date and (iii) upon such passage of title
thereto to Lessor the Replacement Unit shall be deemed part of the property
leased hereunder and the Replacement Unit shall be deemed a "Unit" as defined
herein. Upon such passage of title, Lessor will transfer to Lessee, "as is" and
"where is" and without recourse or warranty (except as to Lessor's Liens), all
Lessor's right, title and interest in and to the replaced Unit, and upon such
transfer, Lessor will request in
27
Lease Agreement (TRLI 2001-1C)
writing that the Indenture Trustee execute and deliver to Lessee an appropriate
instrument releasing such replaced Unit from the lien of the Indenture. Lessee
shall pay all reasonable out-of-pocket costs and expenses (including reasonable
legal fees and expenses) incurred by Lessor, any Participant or the Indenture
Trustee in connection with any replacement pursuant to this Section 11.4. Lessee
further agrees that, upon receipt of fully signed counterparts of the Lease
Supplement and Indenture Supplement referred to in clauses (B) and, if
applicable, (C) of the first sentence of this Section 11.4(b), it will, at its
sole cost and expense, cause such documents to be filed or recorded in the
manner contemplated by Section 16.1.
Section 11.5 Eminent Domain. In the event that during the Lease
Term the use of any Unit is requisitioned or taken by any governmental authority
under the power of eminent domain or otherwise for a period which does not
constitute an Event of Loss, all of Lessee's obligations under the Operative
Agreements, including without limitation, Lessee's obligation to pay all
installments of Basic Rent, shall continue for the duration of such
requisitioning or taking. Any amount referred to in Section 11.4(a) or in
Section 12 which is payable to Lessor shall be deposited in the related
Non-Shared Payments Account established under the Collateral Agency Agreement.
SECTION 12. Insurance.
Section 12.1 Insurance. Lessee will at all times after delivery
and acceptance of each Unit, at its own expense, keep or cause the Insurance
Manager under the Insurance Agreement to keep such Unit insured with insurers of
recognized responsibility with a rating of at least A- by A.M. Best Company (or
a comparable rating by a nationally or internationally recognized rating group
of comparable stature) or by other insurers approved in writing by Lessor, which
approval shall not be unreasonably withheld, in amounts and against risks and
with deductibles and terms and conditions not less than the insurance, if any,
maintained by the Manager with respect to similar equipment which it owns or
leases, but in no event shall such coverage be for amounts or against risks less
than the prudent industry standard for companies engaged in leasing of railcars.
Without limiting the foregoing, Lessee will in any event:
(a) keep each Unit insured against physical damage (which may
be accomplished pursuant to a contingent physical damage policy) in an amount
not less than the Stipulated Loss Amount attributable thereto as shown on
Schedule 4 to
28
Lease Agreement (TRLI 2001-1C)
the Participation Agreement, subject to an aggregate limit for all Units of not
less than $1,500,000 per occurrence, provided that such coverage may provide for
deductible amounts of not more than $50,000 per occurrence; and
(b) maintain public liability insurance naming Owner
Participant, Lessor, the Trust Company, the Indenture Trustee, the Collateral
Agent and Loan Participant as additional insureds (but only with respect to
liability arising out of or related to the Operative Agreements and the Units)
against bodily injury, death or property damage arising out of the use or
operation of the Units with general and excess liability limits of not less than
$100,000,000 per occurrence or in the aggregate, provided that such coverage may
provide for deductible amounts not exceeding the lesser of (w) $10,000,000 or
(x) the difference (not less than zero (0)) between (i) the level of the then
current deductible maintained by Manager for the Manager's Fleet (or if Manager,
its successors and assigns is no longer engaged in the railcar leasing business,
the average level of the then current deductible amounts maintained by the three
largest companies engaged in such business in the United States) and (ii) such
amount of additional coverage as may be obtained by Lessee in reduction of the
then current deductible maintained by Manager for an additional incremental
annual premium payable by Lessee in the aggregate in respect of the entire
Partnership Fleet of up to $100,000 as adjusted by the Inflation Factor;
provided, further, that such policies which are carried on a "claims made" basis
shall provide for a retroactive date not more recent than either (y) the Closing
Date, or (z) a date seven years prior to the effective date of the policy.
(c) It is understood and agreed that the insurance required
under this Section 12.1 may be part of a company-wide insurance program of the
Insurance Manager or its Affiliates, including risk-retention and
self-insurance. Any policy of insurance maintained in accordance with this
Section 12.1 and any policy purchased in substitution or replacement for any of
such policies shall provide that if any such insurance lapses or is cancelled or
terminated for any reason whatever (other than upon normal policy expiration),
Lessor, the Indenture Trustee, the Collateral Agent, Loan Participant and Owner
Participant shall receive 30 days' prior written notice of such lapse,
cancellation or termination.
(d) If Lessee or the Insurance Manager shall maintain any
liability coverages for the benefit of Lessee in excess of the coverages
required hereunder (whether or not such excess coverage complies with the
requirements under this Section 12), Lessee will cause all such coverages to
name Owner Participant, Lessor,
29
Lease Agreement (TRLI 2001-1C)
the Trust Company, the Indenture Trustee and Loan Participant as additional
insureds (but only with respect to liability arising out of or related to the
Operative Agreements or the Units), provided, however, that, the requirements of
this Section 12 shall not otherwise apply to such coverages.
Section 12.2 Physical Damage Insurance. (a) The insurance
maintained pursuant to Section 12.1(a) shall provide that (i) so long as the
Equipment Notes remain outstanding, the proceeds up to the Stipulated Loss
Amount for any loss or damage to any Unit shall be paid to the Indenture Trustee
under a standard loss payable clause, and thereafter to Lessor and (ii) so long
as no Lease Event of Default shall have occurred and be continuing, Lessee will
be entitled, at its own expense, to make all proofs of loss and/or take all
other steps necessary to collect the proceeds of such insurance.
(b) In lieu of maintaining the physical damage insurance
required by Section 12.1(a), Lessee may self-insure with respect to the Units
for such amounts and against such risks as shall be consented to by Lessor and
the Indenture Trustee, which consent shall be based upon reasonable practices
then in effect in the railcar leasing and insurance industries and upon the
financial condition of Lessee taking into account Lessee's capital structure and
that Lessee is a special purpose corporation.
(c) The entire proceeds of any property insurance or third
party payments for damages to any Unit received by Lessor or the Indenture
Trustee shall be held by such party until, with respect to such Unit, the
repairs referred to in clause (i) below are made as specified therein or payment
of the Stipulated Loss Amount is made, and such entire proceeds will be paid, so
long as no Lease Event of Default shall have occurred and be continuing, either:
(i) to Lessee promptly following receipt by the Indenture
Trustee or Lessor, as the case may be, of a written application signed
by Lessee for payment to Lessee for repairing or restoring the Units
which have been damaged so long as (1) Lessee shall have complied with
the applicable provisions of this Lease, and (2) Lessee shall have
certified that any damage to such Units shall have been fully repaired
or restored; or
(ii) if this Lease is terminated with respect to such
Unit because of an Event of Loss and Lessee has paid the Stipulated Loss
Amount
30
Lease Agreement (TRLI 2001-1C)
and all other amounts due as a result thereof, such proceeds shall be
promptly paid over to, or retained by, Lessee.
Section 12.3 Public Liability Insurance. (a) The public liability
insurance referred to in paragraph 12.1(b) shall (i) provide that in as much as
such policies cover more than one insured, all terms, conditions, insuring
agreements and endorsements, with the exception of limits of liability,
deductibles or retentions and liability for premiums, commissions, assessments
or calls (which shall be solely a liability of Lessee), shall operate in the
same manner as if there were a separate policy or policies covering each
insured, (ii) waive any rights of subrogation of the insurers against Owner
Participant, Lessor, the Trust Company, the Indenture Trustee, and Loan
Participant (iii) provide that neither Owner Participant, Lessor, the Trust
Company, the Indenture Trustee nor Loan Participant shall have any
responsibility for any insurance premiums, whether for coverage before or after
cancellation or termination of any such policies as to Lessee and (iv) be
primary without contribution from any similar insurance maintained by Owner
Participant, Lessor, the Trust Company, the Indenture Trustee or Loan
Participant.
(b) Lessee shall use its reasonable efforts to obtain public
liability insurance policies which stipulate that coverage thereunder will not
be invalidated (as to Owner Participant, Loan Participant, Lessor, as Lessor of
the Units and in its individual capacity, and the Indenture Trustee) by any act
or neglect of Lessee, or any breach or violation by Lessee of any warranties,
declarations or conditions contained in such policies, but shall be under no
obligation to obtain such policies containing such stipulations if they are not
available to Lessee at commercially reasonable rates in the markets in which
Lessee has then placed its insurance program.
(c) In the event any public liability insurance policy or
coverage thereunder which are required to be maintained under Section 12.1(b)
shall not be available to Lessee in the commercial insurance market on
commercially reasonable terms, Lessor shall not unreasonably withhold its
agreement to waive such requirement. Lessee shall make written request for any
such waiver in writing, accompanied by written reports prepared, at Lessee's
option, either by (i) one independent insurance advisor chosen by Lessee and
Lessor or (ii) three independent insurance advisors, one chosen by Lessor, one
chosen by Lessee and one chosen by the other two advisors (one of which may be
the regular insurance broker or brokers of Lessee). The fees and expenses of all
such advisors shall be paid by Lessee. The written reports required hereunder
shall (x) state that such insurance (or the required
31
Lease Agreement (TRLI 2001-1C)
coverage thereunder) is not reasonably available to Lessee at commercially
reasonable premiums in the commercial insurance markets within which Lessee or
the Manager normally purchases its insurance from insurers, acceptable to
Lessee, with a Best's rating of A- or better for railcars of similar type and
capacity and (y) explain in detail the basis for such conclusions. Upon the
granting of any such waiver, Lessee shall within 15 days thereafter certify to
Lessor in writing the cost (on the basis of the Manager's Fleet) of liability
insurance premiums for the coverage required by Section 12.1 (b) for the
immediately preceding fiscal year; and in the event that any such certificate is
not received by Lessor within such 15-day period, any such waiver shall be
deemed revoked. At any time after the granting of such waiver, but not more
often than once a year, Lessor may make a written request for a supplemental
report (in form reasonably acceptable to Lessor) from such insurance advisor(s)
updating the prior report and reaffirming the conclusions set forth therein.
Lessee shall provide any such required supplemental report within 60 days after
receipt of the written request therefor. Any such waiver shall be effective for
only as long as such insurance is not reasonably available to Lessee in the
commercial markets in which Lessee normally purchases its insurance at
commercially reasonable rates, it being understood that the failure of Lessee to
furnish timely any such supplemental report shall be conclusive evidence that
such condition no longer exists. If such supplemental report shows that such
coverage is available, Lessee shall within 90 days of such report obtain such
insurance coverage. During any period with respect to which such waiver has been
granted and remains in effect under this Section 12.3(c), Lessee shall obtain
public liability insurance as set forth in Section 12.1(b) from such carriers,
in such amounts and with coverage limits and deductibles as may be reasonable in
its judgment under the circumstances, but in any event (i) no less than prudent
industry standards and (ii) in an amount that may be purchased for a premium
equal to 200% of Lessee's cost (on a fleet-wide basis) of public liability
insurance premiums for the coverage on a fleet-wide basis required by Section
12.1(b) for the final year immediately preceding the fiscal year in which such
waiver first was granted.
Section 12.4 Certificate of Insurance. (a) Lessee shall, prior
to the Closing Date and when the renewal certificate referred to below is sent
(but in any event not less than annually), furnish (or, in the case of (iii)
below, use reasonable efforts to furnish) Lessor, the Indenture Trustee, Owner
Participant and the Loan Participant with a certificate signed by the insurer or
an independent insurance broker (i) showing the insurance then maintained by
Lessee pursuant to Section 12.1, (ii) stating that, except as noted in such
certificate, such insurance complies with the
32
Lease Agreement (TRLI 2001-1C)
requirements contained in Exhibit B-1 (as to public liability insurance) and/or
B-2 (as to physical/damage insurance) to the Participation Agreement, (iii)
stating that, except as noted in such certificate, such insurance complies with
the requirements contained in this Section 12 and (iv) to the extent that any
provision that Lessee is required to use reasonable efforts to obtain is not
contained in such insurance, such certificate shall so state and shall confirm
that, in such broker's opinion, such provision is not reasonably obtainable.
Lessor shall be entitled at its expense to review copies of all applicable
insurance policies. With respect to any renewal policy or policies, certificates
or binders evidencing such renewal shall be furnished as soon as practicable,
but in no event later than 30 days after the earlier of the date such renewal is
effected or the expiration date of the original policy or policies.
Simultaneously, with the furnishing of such certificate, Lessee will provide
appropriate evidence, reasonably satisfactory to Lessor and the Indenture
Trustee, that all premiums due on such insurance have been paid.
(b) Lessee agrees to use reasonable efforts to cause each of
its insurers to agree that, with respect to any policy of insurance maintained
pursuant to Section 12.1, such insurer will provide not less than 30 days' prior
written notice to Lessor, the Indenture Trustee, Loan Participant and Owner
Participant of any non-renewal or material adverse change with respect to such
policy. For purposes of this Section 12.4(b), "material adverse change" shall
mean a material adverse change in policy limits, exclusions or deductibles or
any material adverse change in policy coverage inconsistent with the
requirements of Section 12.1(b). If any of Lessee's insurers delivers such
notice of non-renewal, Owner Participant may attempt to obtain and provide
satisfactory insurance and Lessee shall reimburse Owner Participant for
reasonable and prudent expenses incurred (i) during the period 10 days prior to
expiration of existing insurance policies, for all Owner Participant's expenses
excluding broker fees and commissions and insurance premiums, and (ii) on and
after the expiration of existing insurance policies, for all Owner Participant's
expenses including broker fees and commissions and insurance premiums.
Section 12.5 Additional Insurance. In the event that Lessee shall
fail to maintain insurance as herein provided in Section 12.1 or, if applicable,
Section 12.3, Lessor may at its option, upon prior written notice to Lessee,
provide such insurance and, in such event, Lessee shall, upon demand from time
to time reimburse Lessor for the cost thereof together with interest from the
date of payment thereof at the Late Rate, on the amount of the cost to Lessor of
such insurance which Lessee shall have failed to maintain. If after Lessor has
provided such insurance, Lessee then obtains
33
Lease Agreement (TRLI 2001-1C)
the coverage provided for in Section 12.1 which was replaced by the insurance
provided by Lessor, and Lessee provides Lessor with evidence of such coverage
reasonably satisfactory to Lessor, Lessor shall cancel the insurance it has
provided pursuant to the first sentence of this Section 12.5. In such event,
Lessee shall reimburse Lessor for all costs to Lessor of cancellation, including
without limitation any short rate penalty, together with interest from the date
of Lessor's payment thereof at the Late Rate. In addition, at any time Lessor
(either directly or in the name of Owner Participant) may at its own expense
carry insurance with respect to its interest in the Units, provided that such
insurance does not interfere with Lessee's ability to insure the Units as
required by this Section 12 or adversely affect Lessee's insurance or the cost
thereof, it being understood that all salvage rights to each Unit shall remain
with Lessee's insurers at all times. Any insurance payments received from
policies maintained by Lessor pursuant to the previous sentence shall be
retained by Lessor without reducing or otherwise affecting Lessee's obligations
hereunder, other than with respect to Unit(s) with respect to which such
payments have been made.
Section 12.6 Post-Lease Term Insurance. Lessee agrees that upon
the expiration or earlier termination of the Lease Term, Lessee will, with
respect to the public liability insurance otherwise required to be carried under
this Section 12, either: (A) purchase a seven year extended reporting period for
Owner Participant, Lessor and Owner Trustee, or (B) obtain the written agreement
of the Manager in form and substance satisfactory to Owner Participant to carry
or cause to be carried for such seven year period public liability insurance
which satisfies the requirements of this Section 12 and which names Owner
Participant, Lessor, the Collateral Agent and Owner Trustee as additional
insureds.
SECTION 13. Reports; Inspection.
Section 13.1 Duty of Lessee to Furnish. On or before April 30,
2002, and on or before each April 30 thereafter, Lessee will furnish (or cause
the Manager under the Management Agreement to furnish) to Lessor, Owner
Participant, Loan Participant, the Indenture Trustee and the Rating Agency an
accurate statement, as of the preceding December 31, (a) showing the amount,
description and reporting marks of the Units then leased hereunder, the amount,
description and reporting marks of all Units that may have suffered an Event of
Loss during the 12 months ending on such December 31 (or since the Closing Date,
in the case of the first such statement), and such other information regarding
the condition or repair of the Units as Lessor may
34
Lease Agreement (TRLI 2001-1C)
reasonably request, (b) stating that, in the case of all Units repainted during
the period covered by such statement, the markings required by Section 4.2
hereof shall have been preserved or replaced, (c) showing the percentage of use
in the United States and in each of Canada and Mexico based on the total mileage
traveled by all railcars in the Total Managed Fleet (or by the Units, if and to
the extent generally made available to the Manager in the ordinary course with
respect to railcars in general interchange service similar to the Units) for the
prior calendar year as reported to the Manager by railroads (provided, that
Lessee shall cooperate with Owner Participant and Lessor and shall provide such
additional information on such matters as Owner Participant or Lessor may
reasonably request to enable Owner Participant and Lessor to pursue or fulfill
their respective tax audit and tax litigation rights and obligations) and (d)
stating that Lessee is not aware of any condition of any Unit which would cause
such Unit not to comply in any material respect with the rules and regulations
of the FRA and the interchange rules of the Field Manual of the AAR as they
apply to the maintenance and operation of the Units in interchange and any other
requirements hereunder.
Section 13.2 Lessor's Inspection Rights. Lessor, Owner
Participant and the Indenture Trustee each shall have the right, but not the
obligation, at their respective sole cost and expense, unless a Lease Event of
Default shall have occurred and be continuing, by their respective authorized
representatives, to inspect the Units, all subleases thereof and Lessee's
records with respect thereto. All inspections shall be conducted during Lessee's
normal business hours, on the Manager's premises or in areas that are not the
premises of a Sublessee to which Lessee has reasonable access, and upon
reasonable prior notice to Lessee. Lessee shall not be liable for any injury to,
or the death of, any Person exercising, either on behalf of Lessor, Owner
Participant, the Indenture Trustee or any prospective user, the rights of
inspection granted under this Section 13.2 unless caused by Lessee's gross
negligence or wilful misconduct. Except following the occurrence and continuance
of a Lease Event of Default, no inspection pursuant to this Section 13.2 shall
interfere with the use, operation or maintenance of the Units or the ordinary
course of Lessee's or any Sublessee's business, and except as provided herein,
Lessee shall not be required to undertake or incur any additional liabilities in
connection therewith.
SECTION 14. Lease Events of Default.
The following events shall constitute Lease Events of Default
hereunder (whether any such event shall be voluntary or involuntary or come
about
35
Lease Agreement (TRLI 2001-1C)
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body) and each such Lease Event of Default shall
be deemed to exist and continue so long as, but only as long as, it shall not
have been remedied:
(a) Lessee shall fail to (i) make or (ii) be deemed by virtue
of the last sentence of Section 3.5 hereof to have made any payment of Basic
Rent, Early Purchase Price, any other purchase price to be paid by Lessee for
any Units pursuant to this Lease or the Participation Agreement, Stipulated Loss
Amount or Termination Amount within 10 Business Days after the same shall have
become due; provided, however, that so long as any Equipment Notes remain
outstanding, failure to make (or be deemed to have made) any portion of Basic
Rent on any Rent Payment Date shall not be a Lease Event of Default so long as
the amounts applied under Section 3.4, clause (4), of the Collateral Agency
Agreement are sufficient to make the distributions required under such clause
(4) with respect to the obligations owed under this Lease; or
(b) Lessee shall fail to (i) make or (ii) be deemed by virtue
of payments made by the Collateral Agent to have made any payment of
Supplemental Rent; including indemnity or tax indemnity payments, but not
including Stipulated Loss Amount, Termination Amount, Early Purchase Price, or
any other purchase price to be paid by Lessee for any Units pursuant to this
Lease or the Participation Agreement after the same shall have become due and
such failure shall continue unremedied for 10 Business Days after receipt by
Lessee of written notice of such failure from Lessor, Owner Participant or the
Indenture Trustee; provided, however, that so long as any Equipment Notes remain
outstanding, failure to make (or be deemed to have made) payment of any of the
amounts referred to in or to be applied pursuant to clauses (5) through (14) of
Section 3.4 of the Collateral Agency Agreement shall not be a Lease Event of
Default; or
(c) Lessee shall fail to maintain in effect the insurance
required by Section 12 or Section 6.4 of the Collateral Agency Agreement and
such failure shall not have been waived as provided for therein; or
(d) Lessee shall use or permit the use of the Units or the
Pledged Units or any portion thereof in a way which is not permitted by this
Lease (with respect to the Units) or the Collateral Agency Agreement (with
respect to the Pledged Units), provided that such unauthorized use shall not
constitute a Lease Event of
36
Lease Agreement (TRLI2001-1C)
Default for a period of 45 days after the occurrence thereof so long as (i)
such unauthorized use is not the result of any willful action of Lessee and
(ii) such unauthorized use is capable of being cured and Lessee diligently
pursues such cure throughout such 45-day period; or Lessee shall make or
permit any unauthorized assignment or transfer of this Lease in violation of
Section 18.2; or
(e) Lessee shall fail to observe or perform in any material respect
any of the covenants or agreements to be observed or performed by Lessee in
Section 6.2 or 6.3 of the Collateral Agency Agreement; or
(f) Any representation or warranty made by Lessee in any Lessee
Agreement or any representation or warranty made by TILC or TRMI in any
Operative Agreement to which any such Person is a party is untrue or incorrect
in any material respect as of the date of making thereof and such untruth or
incorrectness shall continue to be material and unremedied; provided that, if
such untruth or incorrectness is capable of being remedied, no such untruth or
incorrectness shall constitute a Lease Event of Default hereunder for a period
of 30 days after receipt of notice from Lessor, Owner Participant or the
Indenture Trustee so long as Lessee, TILC or TRMI, as the case may be, is
diligently proceeding to remedy such untruth or incorrectness and shall in
fact remedy such untruth or incorrectness within such period; provided that
such untrue or incorrect representation or warranty shall be deemed to be
remediable or remedied only after all adverse consequences thereof, if any,
can be and have been remedied as applicable; or
(g) Lessee or the General Partner shall (i) commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect, or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or (ii) consent to any such relief or to
the appointment of or taking possession by any such official in any voluntary
case or other proceeding commenced against it, or (iii) admit in writing its
inability to pay its debts generally as they come due, or (iv) make a general
assignment for the benefit of creditors, or (v) take any corporate action to
authorize any of the foregoing; or
(h) An involuntary case or other proceeding shall be commenced
against Lessee or the General Partner seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar
37
Lease Agreement (TRLI2001-1C)
law now or hereafter in effect, or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days; or
(i) Lessee shall fail to observe or perform any other of the
covenants or agreements to be observed or performed by Lessee under any Lessee
Agreement or any certificate and such failure shall continue unremedied for 30
days after notice from Lessor, Owner Participant or the Indenture Trustee to
Lessee, specifying the failure and demanding the same to be remedied; provided
that, if such failure is capable of being remedied, and the remedy requires an
action other than, or in addition to, the payment of money, no such failure
(other than one relating to the payment of such money) shall constitute a
Lease Event of Default hereunder for a period of 90 days after receipt of such
notice so long as Lessee is diligently proceeding to remedy such failure and
shall in fact remedy such failure within such period; or
(j) A Manager Default shall have occurred and be continuing under
the Management Agreement, and Lessee shall have failed to exercise its rights
under the Management Agreement in respect of such Manager Default for a period
of 30 days after receipt by Lessee of written notice from Lessor, Owner
Participant or the Indenture Trustee demanding that such action be taken; or
(k) An Insurance Manager Default shall have occurred and be
continuing under the Insurance Agreement, and Lessee shall have failed to
exercise its rights under the Insurance Agreement in respect of such Insurance
Manager Default for a period of 30 days after receipt by Lessee of written
notice from Lessor, Owner Participant or the Indenture Trustee demanding that
such action be taken;
(l) The Administrator shall have defaulted in any material respect
in the performance of any of its obligations under the Administrative Services
Agreement, and Lessee shall have failed to exercise its rights under the
Administrative Services Agreement in respect of such default for a period of
30 days after receipt by Lessee of written notice from Lessor, Owner
Participant or the Indenture Trustee , demanding that such action be taken; or
(m) A "Lease Event of Default" (as defined in the applicable Other
Lease) shall have occurred and be continuing with respect to any Other Lease.
38
Lease Agreement (TRLI2001-1C)
Notwithstanding anything to the contrary contained in this Lease, any
failure of Lessee to perform or observe any covenant or agreement herein shall
not constitute a Lease Event of Default if such failure is caused solely by
reason of an event which constitutes an "Event of Loss" so long as Lessee is
continuing to comply with the applicable terms of Section 11.
SECTION 15. Remedies.
Section 15.1 Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare this Lease to be in default by a written
notice to Lessee (except that this Lease shall, without any action on the part
of Lessor, be automatically deemed to have been declared in default upon the
occurrence of a Lease Event of Default described in Section 14(g) or (h)); and
at any time thereafter, unless Lessee shall have remedied all outstanding
Lease Events of Default prior to the commencement of the exercise by Lessor of
any of its remedies hereunder, Lessor may do one or more of the following as
lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirements of, applicable law then
in effect:
(a) proceed by appropriate court action or actions, either at law
or in equity, to enforce performance by Lessee of the applicable covenants of
this Lease or to recover damages for the breach thereof;
(b) by notice in writing to Lessee, Lessor may demand that Lessee,
and Lessee shall, upon written demand of Lessor and at Lessee's expense (but
subject to the rights of any Sublessee which has been granted the right of
quiet enjoyment of the Unit by Lessee pursuant to a Sublease, so long as no
event of default by the Sublessee shall have occurred and be continuing under
the relevant Sublease), (i) forthwith return all or any part of the Units so
demanded to Lessor or its order in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Section 15.5; or Lessor
with or without notice or judicial process may by its agents enter upon the
premises of Lessee or other premises where any of the Units may be located and
take possession of and remove all or any of the Units , and Lessor may use and
employ in connection with such removal any services, aids, equipment, trackage
and other facilities of Lessee as is reasonably required to remove such Units
and thenceforth hold, possess and enjoy the same free from any right of
39
Lease Agreement (TRLI2001-1C)
Lessee, or its successor or assigns, to use such Units for any purpose
whatever and (ii) with respect to any Unit which is then subject to a
Sublease, assign all of Lessee's right, title and interest in such Sublease to
Lessor;
(c) sell any Unit and/or assign any Sublease at public or private
sale in such manner as Lessor may determine, free and clear of any rights of
Lessee (but subject to the rights of any Sublessee which has been granted the
right of quiet enjoyment of the Unit by Lessee pursuant to a Sublease, so long
as no event of default by the Sublessee shall have occurred and be continuing
under the relevant Sublease) and without any duty to account to Lessee or any
Sublessee with respect to such sale or for the proceeds thereof (except to the
extent required by paragraph (f) below if Lessor elects to exercise its rights
under said paragraph), in which event Lessee's obligation to pay Basic Rent
with respect to such Unit hereunder due for any periods subsequent to the date
of such sale shall terminate (except to the extent that Basic Rent is to be
included in computations under paragraph (e) or (f) below if Lessor elects to
exercise its rights under either of said paragraphs);
(d) hold, keep idle or lease to others any Unit not then subject to
a Sublease as Lessor in its sole discretion may determine, free and clear of
any rights of Lessee and without any duty to account to Lessee or any
Sublessee with respect to such action or inaction or for any proceeds with
respect thereto, except that Lessee's obligation to pay Basic Rent with
respect to such Unit due for any periods subsequent to the date upon which
Lessee shall have been deprived of possession and use of such Unit pursuant to
this Section 15 shall be reduced by the net proceeds, if any, received by
Lessor from leasing such Unit to any Person other than Lessee;
(e) whether or not Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights under paragraph (a), (b), (c) or (d)
above with respect to any Unit, Lessor, by written notice to Lessee specifying
a payment date (which date shall be a Determination Date for the purposes of
computing Stipulated Loss Amount) which shall be not less than 10 days after
the date of such notice, may demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor, on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent for such Unit due after the payment date specified in such notice),
all Rent, other than Stipulated Loss Amount and Termination Amount or amounts
calculated by reference thereto, due and payable, or accrued, in respect of
such Unit as of the payment date specified in such notice (exclusive of any
Basic Rent due on such date) plus whichever of the following amounts Lessor,
in its
40
Lease Agreement (TRLI2001-1C)
sole discretion, shall specify in such notice: (i) an amount with respect to
each such Unit which represents the excess of the present value, as of such
payment date, of all rentals for such Unit which would otherwise have accrued
hereunder from such payment date for the remainder of the Basic Term or any
Renewal Term then in effect over the then present value of the then Fair
Market Rental Value of such Unit (taking into account its actual condition)
for such period discounted from the end of such Term to such payment date,
such present value to be computed in each case using a per annum discount rate
equal to the Debt Rate, compounded monthly from the respective dates upon
which rentals would have been payable hereunder had this Lease not been
terminated; or (ii) an amount equal to the excess, if any, of the Stipulated
Loss Amount for such Unit computed as of the payment date specified in such
notice over the Fair Market Sales Value of such Unit (taking into account its
actual condition) as of the payment date specified in such notice; or (iii) if
Lessor shall not have sold such Unit pursuant to the exercise of its rights
under paragraph (c) above with respect to such Unit, an amount equal to the
higher of Stipulated Loss Amount for such Unit computed as of the payment date
specified in such notice or the Fair Market Sales Value of such Unit (assuming
it is in the condition required by this Lease) as of the payment date
specified in such notice; and upon payment by Lessee pursuant to said clause
(iii) of such Stipulated Loss Amount or Fair Market Sales Value, as the case
may be, any Late Payment Premium and of all other amounts (other than Basic
Rent due on such date) payable by Lessee under this Lease and under the other
Operative Agreements in respect of such Unit, Lessor shall transfer "as is"
and "where is" and without recourse or warranty all right, title and interest
of Lessor in and to such Unit to Lessee or as it may direct, and Lessor shall
execute and deliver such documents evidencing such transfer as Lessee shall
reasonably request;
(f) if Lessor shall have sold any Unit pursuant to paragraph (c)
above, Lessor, in lieu of exercising its rights under paragraph (e) above with
respect to such Unit may, if it shall so elect, demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent for such Unit due
subsequent to the Rent Payment Date next preceding such sale), any accrued and
unpaid Rent for such Unit as of the date of such sale (Basic Rent for this
purpose accruing at a per diem rate equal to the monthly amount due on the
next following Rent Payment Date divided by 30) (exclusive of any Basic Rent
due on such date), plus the amount, if any, by which the Stipulated Loss
Amount of such Unit computed as of the Rent Payment Date next preceding the
date of such sale or, if such sale occurs on a Rent Payment Date, then
computed as of such Rent Payment Date, plus the amount of any Late Payment
41
Lease Agreement (TRLI2001-1C)
Premium, exceeds the net proceeds of such sale (taking into account for this
purpose all costs and expenses, including legal fees and expenses, incurred by
Lessor in connection with such sale or otherwise exercising remedies
hereunder) plus interest on such excess from the date of such sale to the date
of payment at the Late Rate; and
(g) Lessor may terminate the leasing of any or all Units under this
Lease and/or any Sublease (except with respect to a Sublease which grants the
Sublessee thereunder the right of quiet enjoyment with respect to the Unit, so
long as no event of default by the Sublessee shall have occurred and be
continuing under the relevant Sublease) or may exercise any other right or
remedy that may be available to it under applicable law.
In addition, Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Rent due hereunder before or during the exercise
of any of the foregoing remedies (including, without limitation, Late Payment
Interest, but exclusive of any Basic Rent due on such date), and for legal
fees and other costs and expenses incurred by reason of the occurrence of any
Lease Event of Default or the exercise of Lessor's remedies with respect
thereto, including without limitation the repayment in full of any costs and
expenses necessary to be expended in repairing any Unit in order to cause it
to be in compliance with all maintenance and regulatory standards imposed by
this Lease.
In the event Lessor terminates this Lease pursuant to any provision of
this Section 15.1, and the Stipulated Loss Amount is not payable, the amounts
otherwise payable by Lessee hereunder shall be increased by any positive
amount (as a payment for accrued but unpaid Basic Rent) of the Basic Rent
Adjustment set forth on Schedule 4-A of the Participation Agreement opposite
the relevant Rent Payment Date or decreased by the absolute value of any
negative amount (as a rebate of prepaid Basic Rent) of the Basic Rent
Adjustment set forth on Schedule 4-A of the Participation Agreement opposite
the relevant Rent Payment Date; provided, however, that to the extent that
such payment or refund does not precisely reflect the difference between Basic
Rent allocated and Basic Rent paid as of the date Basic Rent ceases to accrue,
the amounts due hereunder shall be further adjusted to ensure that the
aggregate amount of Basic Rent paid equals the aggregate amount of Basic Rent
allocated as of the date Basic Rent ceases to accrue.
Section 15.2 Cumulative Remedies. The remedies in this Lease
provided in favor of Lessor shall not be deemed exclusive, but shall be
cumulative
42
Lease Agreement (TRLI2001-1C)
and shall be in addition to all other remedies in its favor existing at law or
in equity. Lessee hereby waives any mandatory requirements of law, now or
hereafter in effect, which might limit or modify any of the remedies herein
provided, to the extent that such waiver is permitted by law. Except to the
extent provided in the operative agreements, Lessee hereby waives any and all
existing or future claims of any right to assert any offset or counterclaim
against the rent payments due hereunder, and agrees to make the rent payments
regardless of any offset or counterclaim or claim which may be asserted by
lessee on its behalf in connection with the lease of the Units. Lessee further
agrees that Lessee's obligations to pay all rent (including, without
limitation, all basic rent and supplemental rent) and its obligations to
maintain the Units pursuant to Section 8 hereof and to maintain the insurance
pursuant to Section 12 hereof shall constitute monetary obligations of lessee
for all purposes of section 365 of the bankruptcy code. To the extent
permitted by applicable law, Lessee hereby waives any rights now or hereafter
conferred by statute or otherwise that may require lessor to sell, lease or
otherwise use the units in mitigation of Lessor's damages as set forth in
Section 15.1 or that may otherwise limit or modify any of Lessor' rights and
remedies provided in this Section 15.
Section 15.3 No waiver. No delay or omission to exercise any right,
power or remedy accruing to Lessor upon any breach or default by Lessee under
this Lease shall impair any such right, power or remedy of Lessor, nor shall
any such delay or omission be construed as a waiver of any breach or default,
or of any similar breach or default hereafter occurring; nor shall any waiver
of a single breach or default be deemed a waiver of any subsequent breach or
default.
Section 15.4 Notice of Lease Default. Lessee agrees to furnish to
Lessor, owner participant and the indenture trustee, promptly upon any officer
acquiring actual knowledge of any condition which constituted or constitutes a
Lease Default under this Lease, written notice specifying such condition and
the nature and status thereof.
Section 15.5 Lessee's Duty to Return Equipment Upon Default. If
Lessor or any assignee of Lessor shall terminate this Lease pursuant to this
Section 15 and shall have provided to Lessee the written demand specified in
Section 15.1(b), Lessee shall forthwith deliver possession of the units not
then subject to a Sublease to Lessor (except where Lessor has received all
amounts payable by Lessee pursuant to any notice provided by Lessor under
Section 15.1(e)(iii)). For the purpose of delivering possession of any unit
not then subject to a Sublease to Lessor
43
Lease Agreement (TRLI2001-1C)
as above required, Lessee shall at its own cost, expense and risk (except as
hereinafter stated):
(a) forthwith place such Units upon such storage tracks of Lessee
or any of its Affiliates or, at the expense of Lessee, on any other storage
tracks, as Lessor may designate or, in the absence of such designation, as
Lessee may select;
(b) permit Lessor to store such Units on such tracks without charge
for insurance, rent or storage until such Units have been sold, leased or
otherwise disposed of by Lessor and during such period of storage Lessee shall
continue to maintain all insurance required by Section 12.1 hereof; and
(c) transport the Units to any place on any lines of railroad or to
any connection carrier for shipment, all as Lessor may direct in writing. All
such Units not then subject to a Sublease returned shall be in the condition
required by Section 6.2 hereof.
All amounts earned in respect of the Units after the date of
termination of this Lease pursuant to this Section 15, but not exceeding
amounts actually received therefor, shall be paid to Lessor or, so long as the
Indenture shall not have been discharged pursuant to its terms, the Indenture
Trustee, and, if received by Lessee, shall be promptly turned over to Lessor
or the Indenture Trustee as aforesaid. In the event any Unit not then subject
to a Sublease is not assembled, delivered and stored as hereinabove provided
within 15 days after the termination of the leasing of such Unit pursuant to
Section 15, Lessee shall, in addition, pay to Lessor or the Indenture Trustee
as aforesaid as liquidated damages and not as a penalty, for each day
thereafter an amount equal to the amount, if any, by which the daily
equivalent of the average Basic Rent for the term in effect immediately prior
to the expiration of the Lease for such Unit exceeds the amount, if any,
received by Lessor or the Indenture Trustee as aforesaid (either directly or
from Lessee) for such day for such Unit pursuant to the preceding sentence.
Section 15.6 Specific Performance; Lessor Appointed Lessee's Agent.
The assembling, delivery, storage and transporting of the Units not then
subject to a Sublease as provided in Section 15.5 are of the essence of this
Lease, and upon application to any court of equity having jurisdiction in the
premises, Lessor shall be entitled to a decree against Lessee requiring
specific performance of the covenants of Lessee so to assemble, deliver, store
and transport the Units not then subject to a
44
Lease Agreement (TRLI2001-1C)
Sublease. Without in any way limiting the obligation of Lessee under the
provisions of Section 15.5, Lessee hereby irrevocably appoints Lessor as the
agent and attorney of Lessee, with full power and authority, at any time while
Lessee is obligated to deliver possession of any Units not then subject to a
Sublease to Lessor pursuant to this Section 15, to demand and take possession
of such Unit in the name and on behalf of Lessee from whosoever shall be at
the time in possession of such Unit.
SECTION 16. Filings; Further Assurances.
Section 16.1 Filings. This Lease or a counterpart or copy hereof or
evidence hereof may be filed or recorded in any public office in the United
States as may be necessary or appropriate to protect the interest of Lessor,
Owner Participant or the Indenture Trustee herein or in the Units. On or prior
to the Closing Date Lessee will (i) cause each of (A) a memorandum of this
Lease and the Lease Supplements dated the Closing Date, (B) a memorandum of
the Indenture and the Indenture Supplements dated the Closing Date, (C) a
memorandum of the Collateral Agency Agreement, (D) the XXXX Xxxx of Sale, (E)
the Xxxx of Sale, (F) the TILC Assignment and (G) the Assignment (x) to be
duly filed and recorded with the STB in accordance with 49 U.S.C. Section
11301 and (y) to be deposited with the Registrar General of Canada pursuant to
Section 105 of the Canada Transportation Act (and all necessary actions shall
have been taken for publication of such deposit in the Canada Gazette in
accordance with said Section 105), (ii) cause precautionary UCC-1 financing
statements to be filed in appropriate jurisdictions as reasonably requested by
Lessor naming Lessor as "lessor" and Lessee as "lessee" of the Equipment and
(iii) will furnish Lessor, the Indenture Trustee and Owner Participant proof
thereof. Notwithstanding the foregoing, in no event shall Lessee or any of its
Affiliates be required to take any action to perfect any security interest
which any Person may have in any Sublease, other than the filing of a UCC-1
Financing Statement against the Partnership in the jurisdiction in which the
Partnership's chief executive office is located and in the Partnership's
jurisdiction of formation covering all Subleases generally.
Section 16.2 Further Assurances. Lessee will duly execute and
deliver to Lessor such further documents and assurances and take such further
action as Lessor may from time to time reasonably request or as may be
required by applicable law or regulation in order to effectively carry out the
intent and purpose of this Lease and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor, the
Participants and the Indenture Trustee hereunder, including,
45
Lease Agreement (TRLI 2001-1C)
without limitation, the execution and delivery of supplements or amendments
hereto, in recordable form, subjecting to this Lease any Replacement Unit and
the recording or filing of counterparts hereof or thereof or Uniform
Commercial Code financing statements in accordance with the laws of such
jurisdiction as Lessor may from time to time deem advisable; provided, that in
no event shall Lessee or any of its Affiliates be required to take any action
to perfect any security interest which any Person may have in any Sublease,
other than the filing of a UCC-1 Financing Statement against the Partnership
in the jurisdiction in which the Partnership's chief executive office is
located and in the Partnership's jurisdiction of formation covering all
Subleases generally.
Section 16.3 Other Filings. If, at any time after the Closing Date
and during the Lease Term, Mexico, or one or more states in Mexico,
establishes a state or other system for filing and perfecting the ownership
and/or security interests of entities such as Lessor and/or the Indenture
Trustee, at the time that Lessee or the Manager takes such action with respect
to other equipment similar to the Units (whether owned or leased by Lessee)
and also upon the request of Lessor, any Participant, or the Indenture
Trustee, Lessee shall cause any and all of the Operative Agreements to be
recorded with or under such system and shall cause all other filings and
recordings and all such other action required under such system to be effected
and taken, in order to perfect and protect the respective right, title and
interests of Lessor, Owner Participant, Loan Participant and the Indenture
Trustee; provided, that in no event shall Lessee or any of its Affiliates be
required to take any action to perfect any security interest which any Person
may have in any Sublease.
Section 16.4 Expenses. Lessee will pay all costs, charges and
expenses (including reasonable attorneys fees) incident to any such filing,
refiling, recording and rerecording or depositing and re-depositing of any
such instruments or incident to the taking of such action.
SECTION 17. Lessor's Right to Perform.
If Lessee fails to make any payment required to be made by it hereunder
or fails to perform or comply with any of its other agreements contained
herein, Lessor may itself make such payment or perform or comply with such
agreement, after giving not less than five Business Days' prior notice thereof
to Lessee (except in the event that an Indenture Default resulting from a
Lease Default or a Lease Event of Default shall have occurred and be
continuing, in which event Lessor may effect
46
Lease Agreement (TRLI 2001-1C)
such payment, performance or compliance to the extent necessary to cure such
Indenture Default with notice given concurrently with such payment,
performance or compliance), but shall not be obligated hereunder to do so, and
the amount of such payment and of the reasonable expenses of Lessor incurred
in connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Late Rate
from such date of payment, to the extent permitted by applicable law, shall be
deemed to be Supplemental Rent, payable by Lessee to Lessor on demand.
SECTION 18. Assignment.
Section 18.1 Assignment by Lessor. Lessee and Lessor hereby confirm
that concurrently with the execution and delivery of this Lease, Lessor has
executed and delivered to the Indenture Trustee the Indenture, which assigns
as collateral security and grants a security interest in favor of the
Indenture Trustee in, to and under this Lease and certain of the Rent payable
hereunder (excluding Excepted Property), all as more explicitly set forth in
the Indenture. Lessor agrees that it shall not otherwise assign or convey its
right, title and interest in and to this Lease or any Unit, except as
expressly permitted by and subject to the provisions of the Participation
Agreement, the Trust Agreement and the Indenture.
Section 18.2 Assignment by Lessee. Except in the case of any
requisition for use by any governmental authority or any agency or
instrumentality thereof referred to in Section 11.1, Lessee will not, except
as expressly permitted in the Operative Agreements, without the prior written
consent of Lessor and the Indenture Trustee, assign any of its rights
hereunder.
Section 18.3 Sublessee's or Others Performance and Rights. Any
obligation imposed on Lessee in this Lease shall require only that Lessee
perform or cause to be performed such obligation, even if stated herein as a
direct obligation, and the performance of any such obligation by the Manager
under the Management Agreement, the Insurance Manager under the Insurance
Agreement or any Sublessee under a Sublease then in effect and permitted by
the terms of this Lease shall constitute performance by Lessee and discharge
such obligation by Lessee. Except as otherwise expressly provided herein, any
right granted to Lessee in this Lease shall grant Lessee the right to (a)
exercise such right or permit such right to be exercised by the Manager or the
Insurance Manager or (b) in Lessee's capacity as sublessor pursuant to any
Permitted Sublease permit any Sublessee to exercise substantially
47
Lease Agreement (TRLI 2001-1C)
equivalent rights under any such sublease as are granted to Lessee under this
Lease; provided, however, that Lessee's right to terminate this Lease pursuant
to Section 10 and Lessee's purchase and renewal options set forth in Section
22 may be exercised only by Lessee; provided, further, that nothing in this
Section 18.3 shall or shall be deemed to (i) create any privity of contract
between any such Sublessee, on the one hand, and any of Lessor, Owner
Participant or any subsequent transferee or Affiliate of any such Person, on
the other hand, (ii) create any duty or other liability of any nature
whatsoever on the part of any of Lessor, Owner Participant or any subsequent
transferee or Affiliate of any such Person, to any such Sublessee or any
Affiliate thereof or (iii) modify or waive any term or provision of Section
8.3 hereof, which Section 8.3 shall control if any conflict arises between any
of the provisions thereof and this Section 18.3. The inclusion of specific
references to obligations or rights of any such Sublessee in certain
provisions of this Lease shall not in any way prevent or diminish the
application of the provisions of the two sentences immediately preceding with
respect to obligations or rights in respect of which specific reference to any
such Sublessee has not been made in this Lease.
SECTION 19. Net Lease, Etc.
This Lease is a net lease and Lessee's obligation to pay all Rent
payable hereunder shall be absolute, unconditional and irrevocable and shall
not be affected by any circumstance of any character including, without
limitation, (i) any set-off, abatement, counterclaim, suspension, recoupment,
reduction, rescission, defense or other right that Lessee may have against
Lessor, Owner Participant, the Indenture Trustee or any holder of an Equipment
Note or Pass Through Certificate, any vendor or manufacturer of any Unit, or
any other Person for any reason whatsoever, (ii) any defect in or failure of
title, merchantability, condition, design, compliance with specifications,
operation or fitness for use of all or any part of any Unit, (iii) any damage
to, or removal, abandonment, requisition, taking, condemnation, loss, theft or
destruction of all or any part of any Unit or any interference, interruption,
restriction, curtailment or cessation in the use or possession of any Unit by
Lessee or any other Person for any reason whatsoever or of whatever duration,
(iv) any insolvency, bankruptcy, reorganization or similar proceeding by or
against Lessee, Lessor, Owner Participant, the Indenture Trustee, Loan
Participant, any holder of an Equipment Note or Pass Through Certificate or
any other Person, (v) the invalidity, illegality or unenforceability of this
Lease, any other Operative Agreement, or any other instrument referred to
herein or therein or any other infirmity herein or therein or any lack of
right, power or authority of Lessee, Lessor, Owner Participant, the
48
Lease Agreement (TRLI 2001-1C)
Indenture Trustee, any holder of an Equipment Note or Pass Through Certificate
or any other Person to enter into this Lease or any other Operative Agreement
or to perform the obligations hereunder or thereunder or consummate the
transactions contemplated hereby or thereby or any doctrine of force majeure,
impossibility, frustration or failure of consideration, (vi) the breach or
failure of any warranty or representation made in this Lease or any other
Operative Agreement by Lessee, Lessor, Owner Participant, Loan Participant,
the Indenture Trustee, any holder of an Equipment Note or Pass Through
Certificate or any other Person, (vii) the requisitioning, seizure or other
taking of title to or use of such Unit by any government or governmental
authority or otherwise, whether or not by reason of any act or omission of
Lessor, Lessee or the Indenture Trustee, or any other deprivation or
limitation of use of such Unit in any respect or for any length of time,
whether or not resulting from accident and whether or not without fault on the
part of Lessee or (viii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing. To the extent permitted by
applicable law, Lessee hereby waives any and all rights which it may now have
or which at any time hereafter may be conferred upon it, by statute or
otherwise, to terminate, cancel, quit or surrender this Lease with respect to
any Unit, except in accordance with the express terms hereof. If for any
reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise, except as specifically provided herein, Lessee
nonetheless agrees, to the maximum extent permitted by law, to pay to Lessor
or to the Indenture Trustee, as the case may be, an amount equal to each
installment of Basic Rent and all Supplemental Rent due and owing, at the time
such payment would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part. Each payment of
Rent made by Lessee hereunder shall be final and Lessee shall not seek or have
any right to recover all or any part of such payment from Lessor or any Person
for any reason whatsoever. Nothing contained herein shall be construed to
waive any claim which Lessee might have under any of the Operative Agreements
or otherwise or to limit the right of Lessee to make any claim it might have
against Lessor or any other Person or to pursue such claim in such manner as
Lessee shall deem appropriate.
SECTION 20. Notices.
Unless otherwise expressly specified or permitted by the terms hereof,
all communications and notices provided for herein shall be in writing or by
facsimile capable of creating a written record, and any such notice shall
become effective (i) upon personal delivery thereof, including, without
limitation, by
49
Lease Agreement (TRLI 2001-1C)
reputable overnight courier or (ii) in the case of notice by facsimile, upon
confirmation of receipt thereof, provided such transmission is promptly
further confirmed in writing by the method set forth in clause (i) addressed
to the following Person at its respective address set forth below or at such
other address as such Person may from time to time designate by written notice
to the other Persons listed below:
If to Lessor:. TRLI 2001-1C Railcar Statutory Trust
. c/o State Street Bank and Trust Company of
. Connecticut, National Association
. 000 Xxxxxx Xxxxxx
. Xxxxxxx Square
. Xxxxxxxx, XX 00000
. Attention: Corporate Trust Administration
. Fax No.: (000) 000-0000
. Confirmation No.: (000) 000-0000
. With copies to Owner Participant.
If to Owner Participant: Trimaran Leasing, L.P.
. c/o Xxxxxx Xxxxxx Capital Corporation
. 000 Xxxx Xxxxx Xxxx, Xxxxx 000
. Xxxxxxxx, XX 00000
Attention: Vice
President, Structured Finance
. Fax No.: (000) 000-0000
. Confirmation No.: (000) 000-0000
If to the Indenture Trustee: LaSalle Bank National Association
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
. Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to Lessee: . Trinity Rail Leasing I L.P.
. 0000 Xxxxxxxx Xxxxxxx
. Xxxxxx, XX 00000
. Attention: Vice President Leasing Operations
50
Lease Agreement (TRLI 2001-1C)
. Re: TRLI 2001-1C
. Fax No.: (000) 000-0000
. Confirmation
No.: (000) 000-0000
SECTION 21. Concerning the Indenture Trustee.
Section 21.1 Limitation of the Indenture Trustee's Liabilities.
Notwithstanding any provision to the contrary contained herein or in any of
the Operative Agreements, the Indenture Trustee's obligation to take or
refrain from taking any actions, or to use its discretion (including, but not
limited to, the giving or withholding of consent or approval and the exercise
of any rights or remedies under such Operative Agreements), and any liability
therefor, shall, in addition to any other limitations provided herein or in
the other Operative Agreements, be limited by the provisions of the Indenture,
including, but not limited to, Article VI thereof.
Section 21.2 Right, Title and Interest of the Indenture Trustee
Under Lease. It is understood and agreed that the right, title and interest of
the Indenture Trustee in, to and under this Lease and the Rent due and to
become due hereunder shall by the express terms granting and conveying the
same be subject to the interest of Lessee in and to the Units as created
pursuant to and governed by the terms of this Lease.
SECTION 22. Purchase Options; Renewal Options.
Section 22.1 Early Purchase Option. In addition to the option
granted Lessee pursuant to Section 6.9 of the Participation Agreement and
provided that Lessee shall have duly given the notice required by the next
succeeding sentence and the corresponding notices under the Other Leases and
shall concurrently purchase all (but not less than all) of the Other Units
then subject to the Other Leases, Lessee shall have the right and, upon the
giving of such notices, the obligation to purchase all (but not less than all)
of the Units leased hereunder (as specified in such notice) on the Early
Purchase Date for such Units at a price equal to the Early Purchase Price of
such Units plus the other amounts specified below. Lessee shall give Lessor
written notice not less than 90 days and not more than 180 days prior to the
Early Purchase Date of its election to exercise the purchase option provided
for in this Section 22.1, which notice shall be irrevocable. Payment of the
Early Purchase Price, together with (w) all unpaid Basic Rent therefor due and
payable, or accrued, prior to the Early Purchase Date, (x) any Make-Whole
Amount and Late Payment
51
Lease Agreement (TRLI 2001-1C)
Interest with respect to the Equipment Notes then being prepaid, (y) the
Accumulated Equity Deficiency Amount (without duplication of amounts
calculated above) and any Late Payment Interest related thereto and (z) any
other Supplemental Rent due and owing by Lessee under the Operative Agreements
(so that, after receipt and application of all such payments, but without
withdrawal from any Reserve Account, Owner Participant shall be entitled under
the terms of the Collateral Agency Agreement to receive, and does receive,
taking into account all payments of Basic Rent in respect of the Units, the
sum of the Accumulated Equity Deficiency Amount and Late Payment Interest
related thereto and any other amounts then due to Owner Participant) shall be
made on the Early Purchase Date at the place of payment specified in Section
3.5 hereof in immediately available funds against delivery of a xxxx of sale
transferring and assigning to Lessee all right, title and interest of Lessor
in and to such Units on an "as-is" "where-is" basis and containing a warranty
as to the absence of Lessor's Liens. Lessor shall not be required to make any
other representation or warranty as to the condition of such Units or any
other matters, and may specifically disclaim any such representations or
warranties. The costs of preparing the xxxx of sale and all other
documentation relating to any purchase by Lessee pursuant to this Section 22.1
and the costs of all necessary filings relating to such purchase will be borne
by Lessee. In the event of any such purchase and receipt by Lessor of all of
the amounts provided in this Section 22.1, the obligation of Lessee to pay
Basic Rent hereunder shall cease and the Lease Term shall end.
If Lessee elects to exercise the purchase option provided for in this
Section 22.1, Lessee shall, as the purchase price therefor, in the sole
discretion of Lessee, either (i) pay the Early Purchase Price, together with
all other amounts due and owing by Lessee under the Operative Agreements, as
specified in the paragraph above or (ii) pay the difference between the amount
specified in clause (i) and the outstanding principal amount of the Equipment
Notes as of the Early Purchase Date and assume on a full recourse basis all of
the Owner Trustee's obligations under the Indenture in respect of the
indebtedness evidenced by such Equipment Notes related to such Units as
provided in Section 3.6 of the Indenture; provided, that, following such
assumption, the purchased Units shall remain subject to the Lien of a separate
indenture similar to the Indenture pursuant to Section 3.6 of the Indenture.
Lessee will make the payments required by foregoing clause (i) or assume the
indebtedness evidenced by the Equipment Notes as provided in foregoing clause
(ii) on the Early Purchase Date in immediately available funds against
delivery of a xxxx of sale transferring and assigning to Lessee all right,
title and interest of Lessor in and to the Units on an "as-is" "where-is"
basis and containing a warranty as to the absence of
52
Lease Agreement (TRLI 2001-1C)
Lessor's Liens; provided, however, that Lessee shall have the option of
specifying in such notice under this Section 22.1 its election to defer
payment of a portion of the Early Purchase Price for such Units in four (4)
installments in the amounts and on the dates set forth on Schedule 6 to the
Participation Agreement so long as the portion of the Early Purchase Price
payable by Lessee on the Early Purchase Date in the event of any such election
by Lessee, under any circumstances and in any event, together with other
amounts of Supplemental Rent payable by Lessee on such date, will be at least
sufficient to pay in full, as of the date of payment thereof, the aggregate
unpaid principal and accrued interest of the Equipment Notes together with any
Make Whole Amount, Late Payment Interest and all other amounts owed to the
holders of the Equipment Notes under the Operative Agreements; and provided
further, that such deferred portion (i) may be prepaid by Lessee at any time
in whole and (ii) will be secured in favor of Lessor by a letter of credit by
a bank or financial institution acceptable to Owner Participant in its sole
discretion or if acceptable to Owner Participant in its sole discretion a
guaranty of Trinity in form and substance reasonably satisfactory to Lessor.
If Lessee shall fail to fulfill its obligations under this second paragraph of
Section 22.1, all of Lessee's obligations under this Lease and the Operative
Agreements, including, without limitation, Lessee's obligation to pay
installments of Rent, shall continue and Lessee shall be obligated to pay all
costs and expenses, including legal fees and expenses, incurred by Lessor,
Owner Participant and Indenture Trustee as a result of the notice given by
Lessee pursuant to this Section.
Listed on Schedule 6 to the Participation Agreement as the Basic Rent
Adjustment for the Early Purchase Date is the amount of Basic Rent that, as of
the Early Purchase Date, has been paid for periods after the Early Purchase
Date (based upon the assumption that all prior amounts of Basic Rent due have
been paid) or the amount of Basic Rent that, as of the Early Purchase Date, is
the amount of Basic Rent that has accrued but has not been paid for periods
prior to the Early Purchase Date. If Lessee exercises its Early Purchase
Option and the Basic Rent Adjustment is negative and Lessee pays all other
amounts due in relation to such exercise, then Lessee shall pay an amount
equal to the Early Purchase Price less the absolute value of the amount of
such Basic Rent Adjustment listed on Schedule 6 to the Participation Agreement
(as a rebate of such Basic Rent and not as a reduction in Early Purchase
Price). If Lessee exercises the Early Purchase Option and the Basic Rent
Adjustment is positive, Lessee shall pay an amount equal to the Early Purchase
Price plus the Basic Rent Adjustment (as a payment of accrued, but unpaid
Basic Rent and not an increase in the Early Purchase Price). If Lessee
53
Lease Agreement (TRLI 2001-1C)
elects to pay the Early Purchase Price in installments, then the amount of
Basic Rent Adjustment listed on Schedule 6 to the Participation Agreement
shall increase or decrease, as the case may be, the amount of Early Purchase
Price payable by Lessee on the Early Purchase Date.
Notwithstanding the foregoing provisions of this Section 22.1 to the
contrary, Lessee may purchase or cause an Affiliate of Lessee to purchase the
Beneficial Interest in lieu of Lessee purchasing the Units pursuant to this
Section 22.1 for a purchase price equal to the Beneficial Interest Purchase
Price and may keep this Lease (and the Equipment Notes) in place; provided,
that Lessee shall remain liable under this Lease to pay Basic Rent and all
other payments hereunder in full, provided, further, that such purchase shall
be made in all respects in accordance with Section 6.9 of the Participation
Agreement.
Section 22.2 Election to Retain or Return Equipment at End of Basic
or Renewal Term. Not less than 180 days and not more than 360 days prior to
the end of the Basic Term or any Renewal Term, Lessee shall give Lessor a
preliminary notice of its decision to return or retain the Units and the Other
Units subject to the Other Leases (it being understood that at the end of the
Basic Term or any Renewal Term Lessee must return all (and not less than all)
such Units and Other Units if it returns any, or retain all (and not less than
all) such Units and Other Units if it retains any) at the end of the Basic
Term or such Renewal Term and not less than 120 days prior to the end of the
Basic Term or the end of any Renewal Term, Lessee shall give Lessor
irrevocable written notice of its decision to return or retain the Units at
the end of the Basic Term or such Renewal Term and such corresponding notices
pursuant to the Other Leases. If Lessee elects to retain Units, Lessee shall
comply with Section 22.3 and/or 22.4 hereof, as it may elect in accordance
with the provisions thereof including the notice requirements stated therein.
If Lessee fails to give the 120 days' notice required by this Section 22.2 and
such corresponding notices pursuant to the Other Leases, or a subsequent
notice required by Section 22.3 or 22.4 and such corresponding notices
pursuant to the Other Leases, Lessee shall be deemed to have irrevocably
elected to return all of the Units at the end of the Basic Term or the
applicable Renewal Term, as the case may be, in accordance with Section 6.
Section 22.3 Purchase Option. Provided that Lessee shall have duly
given the notice required by Section 22.2 and by the next succeeding sentence
of this Section 22.3 and, in the case of a purchase, Lessee shall have given
the
54
Lease Agreement (TRLI 2001-1C)
corresponding notices under the Other Leases and shall upon the purchase of
the Units hereunder concurrently purchase the Other Units under the Other
Leases, Lessee shall have the right and, upon the giving of such notice under
this Section 22.3, the obligation to purchase all of the Units at a price
equal to the Fair Market Sales Value of such Units, at the expiration of the
Basic Term, or, if a Renewal Term is then in effect, at the end of such
Renewal Term, plus all other amounts due and owing by Lessee under the
Operative Agreements, including, without limitation, Late Payment Interest and
any unpaid Rent (so that, after receipt and application of all such payments,
but without withdrawal from any Reserve Account, Owner Participant shall be
entitled under the terms of the Collateral Agency Agreement to receive, and
does receive, taking into account all Basic Rent payments in respect of the
Units, the sum of the Accumulated Equity Deficiency Amount and Late Payment
Interest related thereto and any other amounts then due to Owner Participant).
Lessee shall give Lessor written notice not less than 90 days and not more
than 360 days prior to the end of the Basic Term or any Renewal Term, as the
case may be, of its election to exercise the purchase option provided for in
this Section 22.3, which notice shall be irrevocable. Payment of the purchase
price, together with all other amounts due and owing by Lessee under the
Operative Agreements shall be made at the place of payment specified in
Section 3.5 hereof in immediately available funds against delivery of a xxxx
of sale transferring and assigning to Lessee all right, title and interest of
Lessor in and to such Units on an "as-is" "where-is" basis and containing a
warranty as to the absence of Lessor's Liens. Lessor shall not be required to
make any other representation or warranty as to the condition of such Units or
any other matters, and may specifically disclaim any such representations or
warranties.
Section 22.4 Renewal Option. Provided no Event of Default shall have
occurred and be continuing and Lessee shall have duly given the notice
required by Section 22.2, and the corresponding notices under the Other Leases
and shall upon the renewal of the Units hereunder concurrently renew the Other
Units under the Other Leases and Lessee has not exercised its option to
purchase the Units pursuant to Section 22.3, Lessee shall have the right and,
upon the giving of a notice under this Section 22.4 as below provided, the
obligation to lease pursuant to this Lease all (but not less than all) of the
Units at the expiration of the Basic Term or any applicable Renewal Term.
Lessee may exercise this renewal option by giving Lessor written notice not
less than 90 days and not more than 360 days prior to the end of the Basic
Term (or, in the circumstances described below the then Renewal Term) that
Lessee elects to renew this Lease with respect to all, but not less than all,
of the
55
Lease Agreement (TRLI 2001-1C)
Units then leased hereunder at a rental payment calculated by reference to the
then fair market rental value (a "Fair Market Renewal") or a fixed rental (a
"Fixed Rate Renewal"). At Lessee's option, such renewal may, in the case of a
Fair Market Renewal, be for a renewal term of one or more years or, in the
case of a Fixed Rate Renewal, be for an initial renewal term of three years
(but not to extend beyond the Outside Renewal Date) and in connection with any
renewal term following the initial renewal term, a term of one year or more
expiring not later than the Outside Renewal Date, in each case as Lessee shall
specify in such notice, which notice shall be irrevocable. The Basic Rent for
each Unit during any Renewal Term (the "Renewal Rent") shall (a) in the case
of any Fixed Rate Renewal, be 1/12th of 100% of the average annual Basic Rent
allocated over the period from the end of the Basic Rent Holiday through the
Basic Term Expiration Date, payable monthly in arrears and (b) in the case of
any Fair Market Renewal, be 100% of the Fair Market Rental Value determined as
of the commencement of the applicable Renewal Term; provided, however, that in
the case of the first two years of the Fair Market Renewal period(s) that
immediately follow the Basic Term Expiration Date (whether under Section 22.4
or Section 6.1), be 105% of the Fair Market Rental Value determined as of the
commencement of the applicable Renewal Term; provided further, however, that
the preceding proviso shall not apply in the event that the Lessee provides
the Lessor, at the Lessee's sole cost and expense, with an opinion of
independent tax counsel selected by Lessor (which counsel shall be selected by
Lessor from among four nationally recognized law firms proposed by Lessee,
each of which must be experienced in leveraged leasing transactions similar to
the transactions contemplated herein) to the effect that applicable Treasury
Regulations (or other administrative pronouncements upon which taxpayers may
rely for Federal income tax purposes) will permit rent for such Renewal Term
at a rate equal to 100% of the fair market rent determined as of the time of
such Renewal Term without resulting in any adverse Federal income tax
consequences to the Owner Participant Parent (within the meaning of the Tax
Indemnity Agreement) under Code Section 467 or any successor provision
thereto. Each Renewal Term shall commence immediately upon the expiration of
the Basic Term or the preceding Renewal Term, as the case may be. Lessee shall
not be entitled to enter any Fixed Rate Renewal following the expiry of any
Fair Market Renewal.
Section 22.5 Rent Appraisal; Outside Renewal Date. Promptly
following Lessee's irrevocable written notice pursuant to Section 22.2 of its
election to retain the Units at the end of the Basic Term or any Renewal Term
(and, in any event, if it is anticipated that there will be any Extended Units
at the end of the Basic
56
Lease Agreement (TRLI 2001-1C)
Term or such Renewal Term), Lessor and Lessee shall determine (a) if Lessee
shall have exercised a Fixed Rate Renewal, (i) the remaining useful life and
Fair Market Sales Value (based on the actual condition of a reasonable
sampling of such Units and determined pursuant to the appraisal procedure set
forth in the definition of Fair Market Sales Value) of the Units, and (ii) the
latest date such that (1) the period from the Closing Date to such date would
not exceed 80% of the useful life of any Unit (as determined in subclause (i)
above) from and after the Closing Date, and (2) the Fair Market Sales Value of
each Unit (determined without regard to inflation or deflation from the
Closing Date) on such date would not be less than 20% of the Equipment Cost of
such Unit (such date determined under this subclause (ii) shall thereafter be
the latest date to which this Lease may be renewed pursuant to a Fixed Rate
Renewal under Section 22.4 (the "Outside Renewal Date")), (b) if Lessee shall
have exercised the purchase option under Section 22.3(i) or any renewal option
under Section 22.4, the Fair Market Sales Value of the applicable Units as of
the end of the then existing Basic Term or Renewal Term, as applicable, in
each case assuming such Units are at least in the condition required by this
Lease, and (c) if Lessee shall have exercised a Fair Market Renewal (or if it
is anticipated that there will be any Extended Units at the end the Basic Term
or such Renewal Term), the Fair Market Rental Value of the applicable Units as
of the end of the then existing Basic Term or Renewal Term, as applicable, in
each case assuming such Units are at least in the condition required by this
Lease.
Section 22.6 Stipulated Loss Amount and Termination Amount During
Renewal Term. All of the provisions of this Lease, other than Section 10,
shall be applicable during any Renewal Term for such Units, except as
specified in the next sentence. During any Renewal Term, the Stipulated Loss
Amount and Termination Amount of any Unit shall be determined on the basis of
the Fair Market Sales Value of such Unit as of the first day of such Renewal
Term, reduced in equal monthly increments to the Fair Market Sales Value of
such Unit as of the last day of such Renewal Term; provided that in no event
during any Fixed Rate Renewal shall the Stipulated Loss Amount and Termination
Amount of any Unit be less than 20% of the Equipment Cost of such Unit.
Section 22.7 Deemed Renewals. If Lessee does not exercise its
purchase option under Section 22.3 or its renewal option under Section 22.4 at
the end of the Basic Term or any Renewal Term, then the Lease for any Unit
subject to a Sublease at the end of the Basic Term or such Renewal Term shall
be deemed automatically renewed for a Renewal Term expiring at the expiration
of such
57
Lease Agreement (TRLI 2001-1C)
Sublease's term (but in no event later than three years following the expiry
of the Basic Term or such Renewal Term, as applicable) (such Unit, an
"Extended Unit"). The terms and conditions of any such deemed renewal of a
Unit under this Section 22.7 including rent shall otherwise be those generally
provided in Section 22.4 in respect of a Fair Market Renewal for the period
thereof (which shall be considered a Renewal Term).
Section 22.8 Funding of Accounts on Purchase. Lessee will not
exercise the purchase option under this Section 22 unless either (a) the full
amount required to fund the Post Lease Term Reserve Account is (upon
consummation of such purchase and distribution of all amounts required to be
distributed by the Collateral Agent under the Collateral Agency Agreement) and
will be then available to the Collateral Agent to fund such account or (b) an
indemnity pursuant to Section 3.13 of the Collateral Agency Agreement has been
provided.
SECTION 23. Limitation of Lessor's Liability.
It is expressly agreed and understood that all representations,
warranties and undertakings of Lessor hereunder (except as expressly provided
herein) shall be binding upon Lessor only in its capacity as Owner Trustee
under the Trust Agreement and in no case shall the Trust Company be personally
liable for or on account of any statements, representations, warranties,
covenants or obligations stated to be those of Lessor hereunder, except that
the Trust Company shall be personally liable for its gross negligence or
wilful misconduct and for its breach of its covenants, representations and
warranties contained herein to the extent covenanted or made in its individual
capacity.
SECTION 24. Investment of Security Funds.
Any moneys received by Lessor or the Indenture Trustee pursuant to
Section 12.2 which are required to be paid to Lessee after completion of
repairs to be made pursuant to Section 12.2 or pursuant to Section 11.4(a) or
11.5, as the case may be, shall be paid directly to the appropriate Non-Shared
Payments Account established under the Collateral Agency Agreement.
58
Lease Agreement (TRLI 2001-1C)
SECTION 25. Miscellaneous.
Section 25.1 Governing Law; Severability. THIS LEASE SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible,
each provision of this Lease shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Lease
shall be prohibited by or invalid under the laws of any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Lease in any other jurisdiction.
Section 25.2 Execution in Counterparts. This Lease may be executed
in any number of counterparts, each executed counterpart constituting an
original and in each case such counterparts shall constitute but one and the
same instrument; provided, however, that to the extent that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code) no security interest in this Lease may be created through the transfer
or possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page
hereof, which counterpart shall constitute the only "original" hereof for
purposes of the Uniform Commercial Code.
Section 25.3 Headings and Table of Contents; Section References. The
headings of the sections of this Lease and the Table of Contents are inserted
for purposes of convenience only and shall not be construed to affect the
meaning or construction of any of the provisions hereof. All references herein
to numbered sections, unless otherwise indicated, are to sections of this
Lease.
Section 25.4 Successors and Assigns. This Lease shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the
parties hereto and their respective permitted successors and permitted
assigns.
Section 25.5 True Lease. It is the intent of the parties to this
Lease that it will be a true lease and not a "conditional sale", that Lessor
shall at all times be considered to be the owner of each Unit which is the
subject of this Lease for the purposes of all federal, state, city and local
income taxes, that this Lease conveys to Lessee no right, title or interest in
any Unit except as lessee and that the Lease will be a finance lease under the
provisions of Article 2A of the New York Uniform
59
Lease Agreement (TRLI 2001-1C)
Commercial Code. Nothing contained in this Section 25.5 shall be construed to
limit Lessee's use or operation of any Unit or constitute a representation,
warranty or covenant by Lessee as to tax consequences.
The parties hereto hereby agree that Lessee's obligation to make
payments of the type described in the definition of "Excepted Property" is a
separate and independent obligation from its obligation to make other Rent
payments, and that Lessee's obligation to make payments of the type described
in the definition of "Excepted Property" may be independently enforced and may
be assigned, pledged or otherwise transferred separately from Lessee's
obligations to make other Rent payments. The obligation to make such payments
has been included herein for the convenience of the parties.
Section 25.6 Amendments and Waivers. No term, covenant, agreement or
condition of this Lease may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
each party hereto and except as may be permitted by the terms of the
Indenture.
Section 25.7 Survival. All warranties, representations, indemnities
and covenants made by either party hereto, herein or in any certificate or
other instrument delivered by such party or on the behalf of any such party
under this Lease, shall be considered to have been relied upon by the other
party hereto and shall survive the consummation of the transactions
contemplated hereby on the Closing Date regardless of any investigation made
by either such party or on behalf of either such party, and to the extent
having accrued and not been paid or relating to or otherwise arising in
connection with the transactions contemplated by the Operative Agreements
during the Lease Term, shall survive the expiration or other termination of
this Lease or any other Operative Agreement.
Section 25.8 Business Days. If any payment is to be made hereunder
or any action is to be taken hereunder on any date that is not a Business Day,
such payment or action otherwise required to be made or taken on such date
shall be made or taken on the immediately succeeding Business Day with the
same force and effect as if made or taken on such scheduled date and as to any
payment (provided any such payment is made on such succeeding Business Day) no
interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business
Day.
60
Lease Agreement (TRLI 2001-1C)
Section 25.9 Directly or Indirectly; Performance by Managers. Where
any provision in this Lease refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
In this regard, it is understood and agreed that Lessee has entered into the
Management Agreement with the Manager and the Insurance Agreement with the
Insurance Manager, under which agreements certain rights and obligations of
Lessee hereunder will be exercised and performed by such Persons on behalf of
Lessee. Lessee agrees to instruct the Manager and the Insurance Manager to
take such actions as shall be necessary or appropriate under such agreements
so that Lessee shall be in compliance in all material respects with its
obligations hereunder and under the other Operative Agreements.
Section 25.10 Incorporation by Reference. The payment obligations set
forth in Sections 7.1 and 7.2 of the Participation Agreement are hereby
incorporated by reference.
* * *
61
Lease Agreement (TRLI 2001-1C)
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to
be duly executed and delivered on the day and year first above written.
Lessor:
TRLI 2001-1C RAILCAR STATUTORY TRUST,
By: State Street Bank and Trust Company of
Connecticut, National Association, not in its
individual capacity except as otherwise
expressly provided but solely as Owner Trustee
By: _________________________________
Name:_______________________________
Title:________________________________
Lessee:
TRINITY RAIL LEASING I L.P.
By TILX GP I, LLC,
its General Partner
By:________________________________
Name: Xxxx Xxxxxxxxx
Title: Vice President
Lease Agreement (TRLI 2001-1C)
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on the ___ day of December, 2001.
LASALLE BANK NATIONAL ASSOCIATION,
Indenture Trustee
By: _________________________________
Name:
Title:
Lease Agreement (TRLI 2001-1C)
EXHIBIT A
LEASE SUPPLEMENT NO. _____
(TRLI 2001-1C)
This Lease Supplement No. ___, dated as of ____________, between TRLI
2001-1C Railcar Statutory Trust by State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement ("Lessor"), and Trinity Rail
Leasing I L.P., a Texas limited partnership ("Lessee");
Witnesseth:
Lessor and Lessee have heretofore entered into that certain Equipment
Lease Agreement (TRLI 2001-1C) dated as of December 28, 2001 (the "Lease").
The terms used herein are used with the meanings assigned to such terms in the
Lease.
The Lease provides for the execution and delivery of one or more Lease
Supplements substantially in the form hereof for, among other things, the
purpose of particularly describing all or a portion of the Units to be leased
to Lessee under the Lease.
Now, therefore, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 2 of the Lease, Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby
accepts and leases from Lessor, under the Lease as herein supplemented, the
Units described in Schedule 1 hereto.
2. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
3. To the extent that this Lease Supplement constitutes chattel
paper (as such term is defined in the Uniform Commercial Code) no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by
Lease Agreement (TRLI 2001-1C)
the Indenture Trustee on the signature page hereof, which counterpart shall
constitute the only "original" hereof for purposes of the Uniform Commercial
Code.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
5. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together constituting one and the same instrument.
* * *
A-2
Lease Agreement (TRLI 2001-1C)
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
to be duly executed as of the day and year first above written and to be
delivered as of the date first above written.
Lessor:
TRLI 2001-1C RAILCAR STATUTORY TRUST,
By: State Street Bank and Trust Company of
Connecticut, National Association, not in its
individual capacity but solely as Owner Trustee
By:_________________________________
Name:_______________________________
Lessee:______________________________
TRINITY RAIL LEASING I L.P.
By TILX GP I, LLC, its
General Partner
By:______________________________
Name:____________________________
Title:___________________________
(1) Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ___ day of ____, 20___.
LASALLE BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By:_________________________________
Name:_______________________________
Title:______________________________
--------
(1) This language contained in the original counterpart only.
