1
EXHIBIT 4(b)(2)
EQUIPMENT LEASE AGREEMENT
(UTC TRUST NO. 1998-A)
(L-15)
Dated March 30, 1998
Between
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee,
Lessor
and
UNION TANK CAR COMPANY,
Lessee
TANK CARS AND COVERED HOPPERS
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, XXXXXX TRUST AND SAVINGS BANK, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND
SECURITY AGREEMENT (UTC TRUST NO. 1998-A) (L-15), DATED MARCH 30, 1998 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.
2
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................................................................ 2
Section 3.4 Adjustment of Rent............................................................... 3
Section 3.5 Advances......................................................................... 3
Section 3.6 Manner of Payments............................................................... 4
Section 4. Ownership and Marking of Equipment......................................................... 4
Section 4.1 Retention of Title............................................................... 4
Section 4.2 Duty to Number Equipment......................................................... 4
Section 4.3 Prohibition Against Certain Designations......................................... 5
Section 5. Disclaimer of Warranties................................................................... 5
Section 6. Return of Equipment; Storage............................................................... 6
Section 6.1 Return; Holdover Rent............................................................ 6
Section 6.2 Condition of Equipment........................................................... 10
Section 6.3 Residual Date Sale of Units...................................................... 10
Section 7. Liens...................................................................................... 12
Section 8. Maintenance; Possession; Compliance with Laws.............................................. 13
Section 8.1 Maintenance and Operation........................................................ 13
Section 8.2 Possession....................................................................... 14
Section 8.3 Sublease; Replacement of Units................................................... 14
Section 8.4 Replacement for Valid Business Reasons........................................... 15
Section 9. Modifications.............................................................................. 16
Section 9.1 Required Modifications........................................................... 16
Section 9.2 Optional Modifications........................................................... 17
Section 9.3 Removal of Property; Replacements................................................ 17
Section 10. Voluntary Termination with Respect to Obsolete or Surplus Units............................ 18
Section 10.1 Right of Termination............................................................ 18
Section 10.2 Sale of Equipment............................................................... 18
Section 10.3 Retention of Equipment by Lessor................................................ 19
Section 10.4 Termination of Lease............................................................ 20
i
3
TABLE OF CONTENTS (cont'd)
Page
----
Section 11. Loss, Destruction or Requisition........................................................... 21
Section 11.1 Event of Loss................................................................... 21
Section 11.2 Replacement or Payment upon Event of Loss....................................... 21
Section 11.3 Rent Termination................................................................ 24
Section 11.4 Disposition of Equipment; Replacement of Unit................................... 24
Section 11.5 Eminent Domain...................................................... 26
Section 12. Insurance.................................................................................. 26
Section 12.1 Physical Damage and Public Liability Insurance.................................. 26
Section 12.2 Physical Damage Insurance....................................................... 27
Section 12.3 Public Liability Insurance...................................................... 28
Section 12.4 Certificate of Insurance........................................................ 29
Section 12.5 Additional Insurance............................................................ 30
Section 12.6 Pollution Coverage.............................................................. 30
Section 13. Reports; Inspection........................................................................ 30
Section 13.1 Duty of Lessee to Furnish....................................................... 30
Section 13.2 Lessor's Inspection Rights...................................................... 31
Section 14. Lease Events of Default.................................................................... 31
Section 15. Remedies................................................................................... 33
Section 15.1 Remedies........................................................................ 33
Section 15.2 Cumulative Remedies............................................................. 36
Section 15.3 No Waiver....................................................................... 36
Section 15.4 Notice of Lease Default......................................................... 36
Section 15.5 Lessee's Duty to Furnish Information with Respect to Subleases.................. 36
Section 15.6 Lessee's Duty to Return Equipment Upon Default.................................. 37
Section 15.7 Specific Performance; Lessor Appointed Lessee's Agent........................... 37
Section 16. Filings; Further Assurances................................................................ 38
Section 16.1 Filings......................................................................... 38
Section 16.2 Further Assurances.............................................................. 38
Section 16.3 Other Filings................................................................... 39
Section 16.4 Expenses........................................................................ 39
Section 17. Lessor's Right to Perform.................................................................. 39
ii
4
TABLE OF CONTENTS (cont'd)
Page
----
Section 18. Assignment................................................................................. 39
Section 18.1 Assignment by Lessor............................................................ 39
Section 18.2 Assignment by Lessee............................................................ 40
Section 18.3 Sublessee's Performance and Rights.............................................. 40
Section 19. Net Lease, Etc............................................................................. 41
Section 20. Notices.................................................................................... 42
Section 21. Concerning the Indenture Trustee........................................................... 43
Section 21.1 Limitation of the Indenture Trustee's Liabilities............................... 43
Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease.................. 43
Section 22. Purchase Options; Renewal Options.......................................................... 44
Section 22.1 Early Purchase Option........................................................... 44
Section 22.2 Election to Retain or Return Equipment at End of Basic or
Renewal Term.................................................................... 45
Section 22.3 Purchase Options................................................................ 45
Section 22.4 Renewal Options................................................................. 46
Section 22.5 Appraisal....................................................................... 47
Section 22.6 Stipulated Loss Value and Termination Value During Renewal
Term............................................................................ 47
Section 23. Limitation of Bank's Liability............................................................. 48
Section 24. Investment of Security Funds............................................................... 48
Section 25. Miscellaneous.............................................................................. 49
Section 25.1 Governing Law; Severability..................................................... 49
Section 25.2 Execution in Counterparts....................................................... 49
Section 25.3 Headings and Table of Contents; Section References.............................. 49
Section 25.4 Successors and Assigns.......................................................... 49
Section 25.5 True Lease...................................................................... 49
Section 25.6 Amendments and Waivers.......................................................... 50
Section 25.7 Survival........................................................................ 50
Section 25.8 Business Days................................................................... 50
iii
5
TABLE OF CONTENTS (cont'd)
Page
----
Section 25.9 Directly or Indirectly.......................................................... 50
Section 25.10 Incorporation by Reference...................................................... 50
Section 25.11 Lessee's Right of Quiet Enjoyment............................................... 50
Section 25.12 Entire Agreement................................................................ 50
Attachments to Equipment Lease Agreement:
Exhibit A -- Form of Lease Supplement A-1
Appendix A -- Definitions
iv
6
EQUIPMENT LEASE AGREEMENT
(UTC TRUST NO. 1998-A)
(L-15)
THIS EQUIPMENT LEASE AGREEMENT (UTC Trust No. 1998-A) (L-15),
dated March 30, 1998 (the "Lease"), between Wilmington Trust Company, a Delaware
banking corporation (the "Bank"), not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement (in such capacity, "Lessor"), and UNION
TANK CAR COMPANY, a Delaware corporation ("Lessee").
W I T N E S S E T H:
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, all capitalized terms
used herein without definition shall have the respective meanings set forth in
Appendix A hereto for all purposes of this Lease.
SECTION 2. ACCEPTANCE AND LEASING OF EQUIPMENT.
Lessor hereby agrees (subject to satisfaction or waiver of the
conditions set forth in Sections 4.1 and 4.3 of the Participation Agreement) to
accept delivery of each Unit from Lessee and to lease such Unit to Lessee
hereunder, and Lessee hereby agrees (subject to satisfaction or waiver of the
conditions set forth in Section 4.4 of the Participation Agreement), immediately
following such acceptance by Lessor, to lease from Lessor hereunder such Unit.
Such acceptance by Lessor and lease by Lessee is 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 interim term of this Lease for
each Unit covered by a Lease Supplement executed and delivered on the Initial
Closing Date shall commence on the Initial Closing Date and shall terminate on
the day before the Basic Term Commencement Date. The interim term of this Lease
for each Unit covered by a Lease Supplement executed and delivered on the
Subsequent Closing Date shall commence on the Subsequent Closing Date and
terminate on the day before the Basic Term Commencement Date. The basic term of
this
7
Lease (the "Basic Term") shall commence on the Basic Term Commencement Date and,
subject to earlier termination pursuant to Sections 10, 11, 15 and 22 shall
expire at 11:59 P.M. (Chicago time) on the Basic Term Expiration Date. Subject
and pursuant to Section 22.4, Lessee may elect one or more Renewal Terms.
Section 3.2 Basic Rent. Lessee hereby agrees to pay Lessor as
Basic Rent for each Unit throughout the Basic Term applicable thereto Basic Rent
in installments payable on each Rent Payment Date. Each such 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 for such Unit set forth opposite
such Rent Payment Date on (i) Schedules 3-A or 3-B, as applicable, to the
Participation Agreement with respect to each Unit covered by a Lease Supplement
executed and delivered on the Initial Closing Date or (ii) Schedule 3-C, with
respect to each Unit covered by a Lease Supplement executed and delivered on the
Subsequent Closing Date (as such Schedules shall be adjusted pursuant to Section
2.6 of the Participation Agreement). Basic Rent shall be payable in advance on
certain Rent Payment Dates and in arrears on certain Rent Payment Dates, as
specified in Schedules 3-A, 3-B and 3-C to the Participation Agreement, as so
adjusted, such Schedules as so adjusted from time to time being incorporated
herein by reference.
Anything contained herein or in the Participation Agreement to
the contrary notwithstanding, 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 on the Equipment Notes required to be paid
by Lessor pursuant to the Indenture on such due date.
Section 3.3 Supplemental Rent. Lessee also agrees to pay to
Lessor, or to whomsoever 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, (a) on demand, to the extent permitted by applicable
law, an amount equal to interest at the Late Rate 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 demanded,
as the case may be, for the period from such due date or demand until the same
shall be paid, (b) in the case of the termination of this Lease with respect to
any Unit pursuant to Section 10, on the applicable Termination Date, an amount
equal to the Make-Whole Amount, if any, with respect to the principal amount of
each Equipment Note to be prepaid as a result of such termination, (c) in the
case of the purchase of any Unit pursuant to Section 22.1 hereof or Section 6.9
of the Participation Agreement, on such date of purchase, an amount equal to the
Make-Whole Amount, if any, with respect to the principal amount of each
Equipment Note
2
8
to be prepaid as a result of such purchase, (d) an amount equal to any other
amount payable by Lessor on the Equipment Notes in excess of the principal and
interest payments due thereunder, as and when such amount shall be due and
payable, in accordance with the terms of the Equipment Notes and the Indenture,
and (e) in the case of any refinancing of the Equipment Notes pursuant to
Section 10.2 of the Participation Agreement, on the Refunding Date, an amount
equal to the Make-Whole Amount, if any, with respect to the aggregate principal
amount of the Equipment Notes being prepaid. 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 3.6.
Section 3.4 Adjustment of Rent. Lessee and Lessor agree that
the Basic Rent, Stipulated Loss Value and Termination Value percentages and the
Early Purchase Price, Basic Term Purchase Price and Outside Date Purchase Price
shall be adjusted to the extent provided in Section 2.6 of the Participation
Agreement, subject in all cases to the limitation set forth in the second
paragraph of Section 3.2.
Section 3.5 Advances. Lessor agrees to give notice to Lessee
and the Indenture Trustee at least five Business Days prior to the Interim
Interest Payment Date, if the funds for the payment of interest on the Equipment
Notes contemplated to be made by Owner Trustee on such date pursuant to Section
2.2(c) of the Participation Agreement will not be paid by Owner Trustee to the
Indenture Trustee in an amount equal to the amount contemplated to be paid
pursuant to Section 2.2(c) of the Participation Agreement. If and to the extent
that the Indenture Trustee on the Interim Interest Payment Date, shall not have
received funds from Owner Trustee sufficient for the payment in full of the
interest then due and owing on the Equipment Notes, Lessee shall pay as
Supplemental Rent, in one installment due on the Interim Interest Payment Date
an amount, if any, equal to such deficiency (such payment being referred to
herein as an "Advance"). In the event Lessee makes any Advance pursuant to this
Section 3.5 and is not promptly reimbursed therefor by Owner Participant after
demand for such reimbursement in the manner set forth in Section 20 and provided
no Lease Default shall have occurred and be continuing, Lessee shall be entitled
to offset and deduct (without duplication) against that portion of each
succeeding payment of Basic Rent, Stipulated Loss Value or Termination Value
which becomes payable to or to the order of Owner Trustee under the Indenture
and distributable to Owner Participant under the Trust Agreement, an amount
equal to such Advance plus interest on such amount at the Late Rate until Lessee
has been fully reimbursed for such Advance plus such interest and in each such
case, such offset shall be deemed to constitute a reduction in the amount of
such Advance so payable. No such offset or aggregate combined effect of separate
offsets shall reduce the amount of any indemnity or other claim payable by
Lessee to any holder of an Equipment Note, the Indenture Trustee or Owner
Trustee in its individual capacity, nor reduce any installment of Basic Rent, or
any payment of Stipulated Loss Value or Termination Value, to an amount that is
insufficient to pay in full the payments then required to be made on account of
the principal and interest on the Equipment Notes then outstanding.
3
9
Section 3.6 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 Xxxxxx
Square North, 0000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention:
Corporate Trust Administration. All Rent shall be paid by Lessee in funds
consisting of lawful currency of the United States of America, which shall be
immediately available to the recipient not later than 12:00 noon (New York City
time) on the date of such payment, provided, that so long as the Indenture shall
not have been discharged pursuant to the terms thereof, Lessor hereby directs,
and Lessee agrees, that all Rent (excluding Excepted Property) payable to Lessor
shall be paid directly to the Indenture Trustee at the times and in funds of the
type specified in this Section 3.6 at the office of the Indenture Trustee at
Xxxxxx Trust and Savings Bank, ABA No. 000000000, Trust Department Account No.
000-000-0, for credit to trust number 1046705, Attention: Bond Service Unit-UTC
Trust No. 1998-A (L-15), or at such other location in the United States of
America as the Indenture Trustee may otherwise direct with written confirmation
of such payment delivered to Lessor at the address first stated in this Section
3.6.
SECTION 4. OWNERSHIP AND MARKING OF EQUIPMENT.
Section 4.1 Retention of Title. Lessor shall and hereby does
retain full legal title to the Equipment (for the benefit of the Owner
Participant under the Trust Agreement) notwithstanding the delivery to and
possession and use of the Equipment by Lessee hereunder or any sublessee under
any sublease permitted hereby.
Section 4.2 Duty to Number Equipment. With respect to the
Units to be delivered on the Initial Closing Date, Lessee has caused, and as
soon as practicable after the date on which a Lease Supplement is executed and
delivered in respect of the Units to be delivered on the Subsequent Closing Date
or Replacement Units pursuant to Section 11.2, 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. Lessee will not change
the reporting xxxx of any Unit except in accordance with a statement of new
reporting marks to be substituted therefor, which statement 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 prior to or contemporaneously
with such change. A supplement to this Lease and, if not so discharged, the
Indenture, with respect to such new reporting marks, shall, prior to or
contemporaneously with the substitution of such reporting marks, 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.
4
10
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 new reporting
marks statement specified in the second sentence of Section 4.2, Lessee may
cause the Equipment to be lettered with the names or initials or other insignia
customarily used by Lessee or any permitted sublessees 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 the
Equipment hereunder or any permitted sublessee to use the Equipment pursuant to
a sublease permitted hereby.
SECTION 5. 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, THE BANK 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, THE BANK 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 THE
EQUIPMENT, 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 represents and warrants
that on the Initial Closing Date or the Subsequent Closing Date, as the case may
be, Lessor shall have received whatever title to the Equipment as was conveyed
to Lessor by Lessee on such date 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 3.6(e) of the Participation Agreement or the Bank's representation
5
11
and warranty in Section 3.1(i) of the Participation Agreement. Lessor hereby
appoints and constitutes Lessee its agent and attorney-in-fact during the Lease
Term to assert and enforce, 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 the Equipment 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. Lessor, the Bank and Owner Participant shall have no
responsibility or liability to Lessee or any other Person with respect to any of
the following: (i) any liability, loss or damage caused or alleged to be caused
directly or indirectly by any Unit, or by any of the commodities, items or
materials from time to time contained therein, whether or not permitted by the
terms hereof, or by any inadequacy thereof or deficiency or defect therein or by
any other circumstances in connection therewith; (ii) the use, operation or
performance of any Unit or any risks relating thereto; (iii) any interruption of
service, loss of business or anticipated profits or consequential damages; or
(iv) the delivery, operation, servicing, maintenance, repair, improvement or
replacement of any Unit. 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 6. RETURN OF EQUIPMENT; STORAGE.
Section 6.1 Return; Holdover Rent.
(a) Not less than 150 days prior to the end of the Basic Term,
the end of any Fixed Rate Renewal Term, or the end of any Fair Market Renewal
Term, in each case with respect to any Units which Lessee has elected to return
under Section 22.2, Lessee will provide Lessor with a list specifying 21 storage
locations used for the storage of rolling stock within the continental United
States (excluding Alaska), which locations, to the extent practicable, shall be
geographically diverse. Not less than 90 days prior to the end of the Lease Term
with respect to any Unit Lessee has elected to return pursuant to Section 22.2,
Lessor will give Lessee irrevocable notice of its decision either to take
possession of or store such Unit. If Lessor shall have decided to take
possession of such Unit, the terms of Section 6.1(b) will apply. If Lessor shall
have decided to store such Unit, the terms of Section 6.1(c) hereof will apply.
Not less than 10 days prior to the date on which any Unit is to be returned to
the location specified pursuant to Section 6.1(b) or delivered and stored for
Lessor pursuant to Section 6.1(c), Lessee shall give Lessor irrevocable written
notice specifying the number, identification numbers and type of Units (i.e.
tank cars or xxxxxx cars) which are to be returned or delivered and stored, the
location of such return or delivery and storage and the date on which the
Inspection Period is scheduled to commence with respect to each such Unit. Upon
the arrival of the Units at the return or delivery location(s) described in the
foregoing notice, Lessee will give Lessor prompt
6
12
written confirmation of the number, identification numbers and type of Units
(i.e. tank cars or xxxxxx cars) returned or delivered and the date on which the
Inspection Period commences with respect to the Inspectable Group(s)
(hereinafter defined) of which such Units are a part. In the event that,
subsequent to the date an Inspection Period commences for any Inspectable Group
but not less than five Business Days prior to the end of such Inspection Period,
additional Units are delivered to such location, unless Lessor is at that time
still conducting its inspection at such location pursuant to Section 6.1(h) and
the Person conducting the inspection on Lessor's behalf can reasonably inspect
such additional Units prior to the end of such Inspection Period, a new
Inspection Period will commence upon receipt of notice that an Inspectable Group
made up of such subsequently delivered Units has been assembled; provided,
however, that if less than 25 additional Units are to be subsequently returned
or delivered to such location, such new Inspection Period will commence upon
receipt of notice that all of such subsequently delivered Units have been
assembled; and provided, further, that if not less than five Business Days prior
to the end of an Inspection Period additional Units are delivered to a location
at which an Inspectable Group is then being inspected but the Person conducting
the inspection on Lessor's behalf cannot reasonably inspect such additional
Units prior to the end of such Inspection Period, the Inspection Period in
respect of such additional Units shall be extended to the end of the fifth
Business Day following the date on which such Inspection Period would otherwise
have expired.
(b) If Lessor shall have decided to take possession of any
Unit, Lessee will, at its own cost and expense, deliver possession of such Unit
at any track 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 Lessee delivered on or before the 90th
day before the end of the Lease Term; provided, that (x) there shall be no more
than 21 such locations designated by Lessor (each of which shall be located
within the continental United States, exclusive of Alaska), which locations, to
the extent practicable, shall be geographically diverse, (y) there shall be no
less than 25 Units (any group of 25 Units, an "Inspectable Group") returned to
each location; provided that upon Lessor's request for valid business reasons,
an Inspectable Group shall consist of less than 25 Units, and (z) Lessor's
notice shall specify the total number and type of Units (i.e. tank cars or
xxxxxx cars) to be delivered to each location. Maintenance logs and records with
respect to each Unit shall be delivered to Lessor or its designee upon the
return of such Unit.
(c) (i) If Lessor shall have elected to store any Unit upon
the expiration of the Lease Term with respect thereto, Lessee shall
store such Unit, free of charge for a period (the "Storage Period")
beginning on the expiration of the Lease Term and ending not more than
60 days after the later of (A) the date of commencement of the
Inspection Period for the Inspectable Group of which such Unit is a
part and (B) the date on which such Unit is in compliance with the
conditions set forth in Section 6.2. Any storage provided by Lessee
during the Storage Period shall be at the sole risk (other than in the
case of Lessor's gross negligence or wilful misconduct) and expense of
Lessee, and Lessee shall maintain during the Storage Period the
insurance required by Section 12.1
7
13
with respect to all stored Units. During the Storage Period, Lessee
will permit Lessor or any person designated by it, including the
authorized representative or representatives of any prospective
purchaser or user of such Unit, to restencil the marks on such Unit and
to inspect the same during the storage location's normal business hours
upon at least three Business Days' prior telephonic notice; provided,
however, that such inspection and restenciling shall not unreasonably
interfere with the normal conduct of the storage location's business
and shall be subject to the storage location's standard security and
safety rules and regulations; and provided, further, that (x) such
inspection and restenciling shall be at such Person's own risk, (y)
Lessee shall be protected against any loss or damage incurred by it in
connection with any such inspection or restenciling by such Person
through indemnification, insurance or other means reasonably
satisfactory to Lessee 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 (other than in the case of Lessee's gross negligence
or wilful misconduct, it being understood and agreed that the selection
by Lessee of a particular storage location shall not under any
circumstances constitute gross negligence or wilful misconduct provided
that such storage location is the same location or a storage location
which is comparable in all material respects to the location at which
such Unit was stored during the Storage Period) 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 will, on or before the expiration of the
Storage Period, transport such Units to any railroad interchange point
or points designated by Lessor within the continental United States
(except Alaska), with a minimum of at least an Inspectable Group
delivered to each interchange point on any railroad lines or to any
connecting carrier for shipment, whereupon Lessee shall have no further
liability or obligation with respect to such Units.
(d) Provided no Lease Default referred to in Section 14(g) or
(h) or Lease Event of Default shall have occurred and be continuing, all amounts
earned in respect of a Unit subsequent to the expiration of the Lease Term with
respect to such Unit and prior to the return of the Unit hereunder shall belong
to Lessee and, if received by Lessor, shall be promptly turned over to Lessee.
(e) Subject to the other provisions of this Section 6.1 with
respect to additional holdover rent, Lessee shall pay to Lessor the daily
equivalent of the rental rate in effect at the expiration or termination of the
most recent Lease Term with respect to such Unit ("Holdover Rent") for each Unit
for each day commencing on the date immediately following the expiration
8
14
or termination of the Lease Term with respect to such Unit to and including the
day immediately preceding the commencement of the Inspection Period for the
Inspectable Group of which such Unit is a part. During such holdover period,
Lessee shall use its reasonable best efforts to secure the return of the
Equipment as required under this Section 6. Nothing herein shall be in
abrogation of Lessor's right to have such Unit returned to it for possession or
storage.
(f) In the event any Unit is not returned to Lessor in the
condition specified in Section 6.2, Lessee shall pay to Lessor Holdover Rent
multiplied by the number of days equal to the sum of (i) one-half of the number
of days elapsed beginning on the commencement of the Inspection Period for the
Inspectable Group of which such Unit is a part and ending on the date on which
Lessee receives notice from Lessor, which is given no later than the date
specified in the second sentence of Section 6.1(h), that such Unit is not in the
condition specified in Section 6.2 (provided, however, that in no event shall
the number determined pursuant to this clause (i) exceed 30), plus (ii) the
number of days beginning on the day immediately following receipt by Lessee of
notice from Lessor, which notice is given no later than the date specified in
the second sentence of Section 6.1(h), that such Unit is not in the condition
required by Section 6.2 to and including the day such Unit is restored to the
condition specified by Section 6.2 and redelivered to the location at which the
Unit was inspected by Lessor or such other location as may be agreed upon by
Lessor and Lessee in writing. Notwithstanding the foregoing, if the repairs
required to restore any Unit to the condition set forth in Section 6.2 cost less
than $2,500 and can be promptly performed at any track location, then (A) Lessor
shall be responsible for making such repairs, the cost of which shall be
reimbursed by Lessee, and (B) the Unit shall be deemed to comply with the
conditions set forth in Section 6.2 and no additional Holdover Rent shall be
payable under this Section 6.1(f) with respect thereto solely as a result of the
condition of such Unit.
(g) Holdover Rent shall be paid monthly in arrears, by payment
from Lessee to Lessor on or before the fifth day following the end of each
calendar month, in the manner specified in Section 3.6 hereof, such payment to
be accompanied by a statement setting forth in reasonable detail the calculation
of such payment on a per Unit basis.
(h) During the 30-day period commencing on the date on which a
minimum of at least an Inspectable Group is delivered, pursuant to Section 6.1
(b) or (c), to Lessor or to a storage location, as the case may be (the
"Inspection Period"), Lessor shall be entitled to inspect any Unit so delivered
to ensure that such Unit is in the condition required under Section 6.2. Lessor
shall promptly (but in no event later than 10 Business Days following receipt by
a Responsible Officer of the Owner Participant and the Owner Trustee of a final
report relating to the foregoing inspection) notify Lessee in writing if any
Units are not in compliance with the conditions specified in Section 6.2,
specifying in reasonable detail the manner in which such Units fail to comply
with such conditions. Subject to Section 6.1(f), no Holdover Rent shall be
payable by Lessee during the Inspection Period. The inspection of all
redelivered Units shall be performed at Lessor's sole cost, expense and risk
(including, without limitation, the risk of
9
15
personal injury or death), by its authorized representatives. 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 6.1 unless caused
by Lessee's gross negligence or wilful misconduct. If such Unit is not in
compliance with the conditions set forth in Section 6.2, then, subject to the
last sentence of Section 6.1(f), Lessee shall promptly take such steps as are
necessary to bring such Unit into such compliance and shall, subject to the last
sentence of Section 6.1(f) pay, in addition to Holdover Rent otherwise owing
under this Section 6.1, the reasonable cost and expense of any reinspection of
such Unit conducted by Lessor required because of such non-compliance with
Section 6.2. No reinspection pursuant to this Section 6.1(h) shall unreasonably
interfere with the normal conduct of business by Lessee, any sublessee or the
location to which such Unit is returned. Lessee shall provide (or cause any
sublessee or owner of the return location to provide) reasonable cooperation to
Lessor and its representatives in connection with such inspection, but 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 Section 6.2.
Section 6.2 Condition of Equipment. Each Unit, when returned
to Lessor pursuant to Section 6.1, shall be (a) 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, (b)
suitable for use in interchange in accordance with the Field Manual of the AAR
and FRA rules and regulations, (c) suitable for continued commercial use in the
commodity last carried immediately prior to such return, (d) in the condition
required by Section 8.1, (e) in conformance with any requirement pertaining to
warranties of the manufacturers of the Units during the warranty period, (f) fit
for loading and acceptable for interchange service generally in the
transportation industry after giving effect to a transfer or change in ownership
(in accordance with applicable interchange rules), (g) empty, (h) steam cleaned
or otherwise cleaned in a comparable commercially acceptable manner, and (i)
free and clear of all Liens except Lessor's Liens and Permitted Liens of the
type described in clause (iii) of the definition of Permitted Liens to the
extent arising as a result of a fleet wide action which includes such Unit;
provided, however, that Lessee's obligation to comply with the conditions set
forth in this Section 6.2 with respect to any Unit shall terminate 90 days after
the end of the Inspection Period for such Unit.
Section 6.3 Residual Date Sale of Units.
(a) Not later than April 30, 2014, Lessor will notify Lessee
of Lessor's decision, to be made in its sole discretion, to (i) retain the Units
then held by the Trust and the Beneficial Interest or (ii) sell, subject to
Lessee's rights under Section 22 of this Agreement, some or all of the Units
then held by the Trust and/or the Beneficial Interest. In the event the Lessor
elects to sell or cause to be sold any Units then held by the Trust or the
Beneficial Interest, such Units or Beneficial Interest will be offered for sale
after receipt by Lessee of
10
16
notice from Lessor that Lessor elects to sell the Units or the Beneficial
Interest and will be sold on or after the Residual Date (regardless of whether
the Lease shall have terminated earlier or shall still be in effect) and before
90 days following the Residual Date to the Person making the highest bid
pursuant to an offer with terms reasonably satisfactory to Lessor and satisfying
any applicable terms and conditions of the Operative Agreements. If the Net
Proceeds from such sale are less than 7.75% of the Equipment Cost of the Units
or the Beneficial Interest sold, Lessee hereby irrevocably and unconditionally
agrees to pay Lessor an amount equal to the Unrealized Residual Value as
hereafter provided. Any costs and expenses incurred by Lessor hereunder shall be
for its own account and shall not be subtracted in the calculation of Net
Proceeds from the sale of any Units. Lessor may, in its sole discretion, reject
any purchase offer, provided that if Lessor rejects any bona fide offer to
purchase for cash on an as-is-where-is basis, Lessee's obligation to pay the
Unrealized Residual Value shall be limited to the amount which would have been
payable had such offer been accepted. If no bids that are acceptable to Lessor
are received prior to 90 days after the Residual Date, Lessee shall remit the
Unrealized Residual Value (limited, to the extent applicable, as set forth in
the foregoing sentence) to Lessor within 5 Business Days after such date, unless
Lessor shall have waived in writing its right to receive the Unrealized Residual
Value hereunder. Lessee will remit the Unrealized Residual Value with respect to
any sale pursuant to this paragraph within 5 Business Days after such sale,
unless Lessor shall have waived in writing its right to receive the Unrealized
Residual Value hereunder. Neither Lessor nor any Person acting on behalf of
Lessee may bid on or purchase any Unit or the Beneficial Interest under this
Section 6.3; provided, however, that Lessee shall be entitled to act an
nonexclusive remarketing agent for the disposition of the Units following the
Residual Date and otherwise to assist Lessor in the remarketing of the Units
after such date. Lessee shall not be entitled to share in, or receive any
additional amounts under this Section 6.3 based on or measured by, the Net
Proceeds from the sale of any Unit.
(b) The obligations of Lessee under this Section 6.3 shall
remain in full force and effect without regard to, and shall not be impaired or
affected by, any act or, except for the obligations of Lessor set forth in the
second sentence of Section 6.3(a), any omission to act of any kind by Lessor or
any other Person, or any other circumstances whatsoever which might constitute a
legal or equitable discharge of a guarantor, including but not limited to (i)
any waiver, consent, extension, indulgence, surrender or assignment or other
like action in respect of this Agreement or any other Operative Agreement, or
any agreements relating thereto, (ii) any exercise or non-exercise by Lessor or
any other Person of any right, remedy, power or privilege under or in respect of
this Agreement or any other Operative Agreement, or any agreements relating
thereto, or any waiver of any such right, remedy, power or privilege, (iii) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation, administrative proceeding or the like of Lessee or any other
Person, (iv) the invalidity, illegality or unenforceability of this Agreement or
any other Operative Agreement, or any other document for any reason, (v) any
set-off, counterclaim, recoupment, defense or other right Lessee may have
against Owner Participant, Lessor or any other Person, or (vi) any amendments,
modifications or supplements of or to this Agreement or any other Operative
Agreement, or any
11
17
related document; it being the intention of Lessee that its obligations under
this Section 6.3 shall be absolute and unconditional in any and all
circumstances and that such obligations shall be discharged only by the payment
in full of all sums, and the full and complete performance and discharge of all
covenants, agreements and obligations, as agreed to by Lessee in accordance with
the terms hereof. The obligations of Lessee hereunder shall be reinstated and
revived with respect to any amount which at any time is paid to or for the
account of Lessor by Lessee and is thereafter required to be, and is, restored
and returned by Lessor to Lessee or Lessee's trustee or receiver or similar
official, upon the bankruptcy, insolvency or reorganization of Lessee or for any
other reason, all as though such amount had not been paid by Lessee.
(c) The obligations of Lessee under this Section 6.3 will be
in effect until the earliest to occur of the following: (i) Lessee shall have
paid or caused to be paid to Lessor the Unrealized Residual Value pursuant to
Section 6.3(a) hereof, (ii) Lessor shall not have demanded payment of the
Unrealized Residual Value pursuant to Section 6.3(a) hereof on or before 120
days following the Residual Date, or (iii) the termination of the Lease with
respect to all the Equipment prior to the scheduled termination of the Lease.
Lessee and Lessor agree that, notwithstanding anything to the contrary contained
herein or in any document executed in connection herewith, if there shall have
occurred an Event of Default under the Lease and the Lease shall have been
terminated as a result thereof, Lessee shall not under any circumstances be
deemed to have guaranteed or be responsible for any amounts due hereunder or any
residual exposure of Lessor or any other losses suffered or incurred by Lessor,
in each case, as a result of any such Event of Default.
(d) Lessor and Lessee agree that this Section 6.3 and the
transactions contemplated hereby do not create in Lessee a present or contingent
proprietary interest in Lessor's business, the Owner Trust or the Units. Lessor
and Lessee agree that Lessee is not a beneficiary of the Owner Trust. Lessor and
Lessee agree that neither this Section 6.3 nor any other provision of the
Operative Agreements is intended to provide Lessee any present ownership
interest in the Owner Trust or the Units. Lessor and Lessee specifically agree
that neither this Section 6.3 nor any of the transactions contemplated hereby
are intended to nor shall they create a partnership between Lessor and Lessee.
Lessee represents that it has not and agrees that it will not hold itself out as
a partner of Lessor or otherwise authorized to act so as to bind Lessor.
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 Units 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, and Lessee shall promptly, at its own expense, take such action or
cause such action to be taken as may be necessary to duly discharge (by bonding
or otherwise) any such Lien not excepted above if the same shall arise at any
time.
12
18
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 (i) according to
prudent industry practice, 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 consistent in all material respects with maintenance practices used by
Lessee in respect of equipment owned or leased by Lessee similar in type to such
Unit, (iii) in accordance in all material respects with all manufacturers'
warranties 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,
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 Equipment in interchange regardless of upon whom such applicable laws and
regulations are nominally imposed; provided, however, that 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 Equipment or hereunder or
otherwise expose Lessor, the Bank, the Indenture Trustee or any Participant to
criminal liability, or material civil liability with respect to which Lessee is
not required to indemnify Lessor, the Bank, the Indenture Trustee or any
Participant pursuant to an Operative Agreement, or release Lessee from the
obligation to return the Equipment in compliance with the provisions of Section
6.2. Lessee shall provide Lessor and the Indenture Trustee with notice of any
contest of the type described in the preceding sentence in detail sufficient to
enable Lessor and the Indenture Trustee to ascertain whether such contest may
have an effect of the type described in the preceding sentence. In no event
shall Lessee discriminate as to the use or maintenance of any Unit (including
the periodicity of maintenance or record keeping in respect of such Unit) as
compared to equipment of a similar nature which Lessee owns or leases. Lessee
will maintain 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) Lessee shall not nor shall it expressly permit any
sublessee to change a DOT classification (as provided for in 49 C.F.R. Part 179
or any successor thereto), or expressly permit any sublessee to operate any Unit
under a different DOT classification, from that classification in effect for
such Unit on the Initial Closing Date or the Subsequent Closing Date, as
applicable, except for any change in tank test pressure rating, provided such
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 of Lessee's
written request therefor (or Lessor expressly rejects such a request
13
19
by Lessee), Lessee may replace such Unit in accordance with and subject to the
provisions of Section 11.2(i), 11.3 and 11.4.
Section 8.2 Possession. Lessee shall be entitled to the
possession and use of the Equipment by it or any Affiliate, in the United
States, 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 make use of any Equipment in any jurisdiction not included in the
insurance coverage required by Section 12. The Equipment shall be used primarily
on domestic routes in the United States, and in no event shall more than 20% of
the Units be used (as determined by mileage records) outside the continental
United States (exclusive of Alaska) during any taxable year in which the
transaction generates losses for federal or state income tax purposes. 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.
The rights of any Person that acquires possession of any Unit pursuant to this
Section 8.2 shall be subject and subordinate to the rights of Lessor hereunder.
Section 8.3 Sublease; Replacement of Units. Provided Lessor
shall not have declared the Lease to be in default (or the Lease shall not be
deemed to have been declared in default) pursuant to Section 15.1 hereof, Lessee
shall be entitled, without the prior approval of Lessor, to enter into a
sublease for any Unit or Units (pursuant to a car service contract or otherwise)
to, or to grant permission for the use thereof under car contracts by, (a) a
railroad company or companies incorporated under the laws of the United States
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 or (b) responsible companies other than railroad companies for use in
their business (leases to such sublessees being herein referred to as "Permitted
Subleases"); provided, however, that if Lessee subleases any Unit to a sublessee
which operates primarily in Mexico (or any state thereof), Lessee shall first
have made all registrations, filings and deposits which are necessary or
advisable under then-current prudent industry practice (including any actions
reasonably requested by Lessor or the Indenture Trustee) to protect the right,
title and interest of Lessor under this Lease and the Indenture Trustee under
the Indenture in and to the Units to be so subleased. In entering into any
sublease for any Unit or Units, Lessee shall not discriminate with respect to
the commodity to be shipped in such Unit or Units by the sublessee against
similar Units owned, leased or operated by Lessee. All subleases shall include
appropriate provisions so that such subleases, (i) shall in all events be
subject and subordinate to this Lease and the rights and interests of Lessor and
its respective successors and assigns hereunder and shall confirm such
subordination by a provision substantially in the form currently contained in
Lessee's standard car service contract delivered to Lessor and the Indenture
Trustee prior to the Initial Closing Date, or otherwise as reasonably
satisfactory to Lessor and the Indenture Trustee, (ii) shall not be for a
14
20
term which extends beyond the Basic Term or any agreed upon Renewal Term, and
(iii) shall not include any term or provision which could reasonably be expected
to result in material adverse consequences to Lessor, the Bank, Owner
Participant or the Indenture Trustee. Notwithstanding the foregoing, in the
event Lessee (A) desires to sublease one or more Units for a term which extends
beyond the Basic Term or any Renewal Term, or (B) enters into a sublease with
respect to one or more Units, which sublease contains terms and conditions that
are not consistent with the requirements hereof (provided that in no event shall
the existence of such inconsistent term or condition relieve Lessee of any of
its obligations hereunder or constitute a waiver by Lessor of compliance by
Lessee with such obligations), Lessee may do so without violating this Lease and
will have the option to replace such Unit on or prior to the expiration of the
Basic Term or any Renewal Term with another Unit in accordance with and subject
to the provisions hereof and of Section 11.2(i), 11.3 and 11.4(b) (and in any
event shall effect such replacement prior to the time that such inconsistent
term or condition results in a breach of any provision of this Lease) by
delivering to Lessor, not less than 15 days prior to such replacement, a written
notice stating that Lessee has exercised its option hereunder and advising
Lessor of the date on which the Unit to be replaced will be so replaced and
appropriately identifying the Unit to be replaced and the Replacement Unit;
provided that if replacement is to be made pursuant to the foregoing clause (B),
such notice shall be accompanied by an Officer's Certificate (executed by
Lessee's President or any Vice President) stating that such replacement is
required for valid business reasons arising in the ordinary course of Lessee's
business as an operating lessor and briefly setting forth the reasons therefor;
and provided further, that except for the replacement of a Unit resulting from
the proposed sale of such Unit by Lessee to a sublessee of such Unit, Lessee may
not, during the last five years of the Basic Term, any Fixed Rate Renewal Term
or any Fair Market Renewal Term, replace a number of Units that exceeds 25% of
the Units subject to this Lease (determined as of the close of business on the
Subsequent Closing Date). In the event Lessee exercises its option pursuant to
the foregoing clause (A) or (B), on the date specified for replacement in the
notice delivered by Lessee in connection therewith, Lessee shall transfer title
to the replacement Unit to Lessor, Lessor shall transfer title to the replaced
Unit to Lessee, and Lessee and Lessor shall deliver to each other such documents
and other instruments as are required by Section 11.4(b). Except in connection
with an assignment pursuant to a transaction permitted by Section 6.8 of the
Participation Agreement, 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 nor shall
anything contained herein relieve Lessee of its obligations under clause (i) of
Section 6.2.
Section 8.4 Replacement for Valid Business Reasons. Provided
Lessor shall not have declared the Lease to be in default (or the Lease shall
not be deemed to have been declared in default) pursuant to Section 15.1 hereof,
Lessee shall be entitled, without the prior approval of Lessor, when for valid
business reasons (independent of events solely in Lessee's control)
15
21
arising in the ordinary course of business, to replace any Unit with another
Unit in accordance with the provisions hereof and of Section 11.2(i), 11.3 and
11.4(b) by delivering to Lessor, not less than 15 days prior to such
replacement, a written notice stating that Lessee has exercised its option
hereunder and advising Lessor of the date on which the Unit to be replaced and
appropriately identifying the Unit to be replaced and the Replacement Unit will
be so replaced; provided that, except for the replacement of a Unit resulting
from the proposed sale of such Unit by Lessee, Lessee may not, during the last
five years of the Basic Term, any Fixed Rate Renewal Term or any Fair Market
Renewal Term, replace a number of Units that exceeds 25% of the Units subject to
this Lease (determined as of the close of business on the Subsequent Closing
Date). Such notice shall be accompanied by an Officer's Certificate (executed by
Lessee's President or any Vice President) stating that such replacement is
required for valid business reasons arising in the ordinary course of Lessee's
business and briefly setting forth the reasons therefor. On the date specified
for replacement in the notice delivered by Lessee in connection therewith,
Lessee shall transfer title to the replacement Unit to Lessor, Lessor shall
transfer title to the replaced Unit to Lessee, and Lessee and Lessor shall
deliver to each other such documents and other instruments as are required by
Section 11.4(b).
SECTION 9. MODIFICATIONS.
Section 9.1 Required Modifications. In the event the AAR, the
United States Department of Transportation, or any other United States, state or
local governmental agency or any other applicable law or requirements of
insurance policies maintained pursuant to Section 12 requires that any Unit be
altered, replaced or modified (a "Required Modification"), 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 and the Indenture Trustee in the Equipment or
hereunder or otherwise expose Lessor, the Bank, the Indenture Trustee or any
Participant to criminal liability, or material civil liability with respect to
which Lessee is not required to indemnify Lessor, the Bank, the Indenture
Trustee or any Participant pursuant to an Operative Agreement, or relieve Lessee
of the obligation to return the Equipment in compliance with the provisions of
Section 6.2. Title to any Required Modification shall immediately vest in
Lessor. Notwithstanding anything herein to the contrary, if Lessee determines in
good faith that any Required Modification to a Unit would be economically
impractical, in lieu of making the Required Modification as provided above,
Lessee may provide written notice of such determination to Lessor and either (i)
treat such Unit as if an Event of Loss had occurred as of the date of such
written notice with respect to such Unit; provided that upon such occurrence
Lessee shall have only the right to replace such Unit under the provisions of
Section 11.2(i), 11.3 and 11.4, or (ii) if such determination is made on or
after the seventh anniversary of the Basic Term Commencement Date, either treat
such Unit as provided in clause (i) above or treat such Unit as a Terminated
Unit on the terms and conditions set forth in Section 10.1; provided
16
22
that Lessee shall not discriminate against such Unit in making such
determination of economic impracticality as compared with other equipment of the
same type as such Unit which is owned or leased by Lessee.
Section 9.2 Optional Modifications. Lessee at any time may in
its discretion and at its own 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, estimated
residual value or remaining useful life of such Unit below the value, utility,
estimated residual value or remaining useful life thereof immediately prior to
such Modification, other than in a de minimis manner, assuming such Unit was
then at least in the condition required to be maintained by the terms of this
Lease, or cause such Unit to become Limited Use Property. Title to any
Non-Severable Modification shall be immediately vested in Lessor. Title to any
Severable Modification shall remain with Lessee unless it is a Required
Modification, in which case title shall vest in Lessor pursuant to Section 9.1.
If Lessee, at its cost and expense, shall cause any Severable Modifications
(which are not Required Modifications) to be made to any Unit, Lessee shall give
written notice to Lessor briefly describing such Severable Modifications not
less than 120 days prior to the return other than pursuant to Section 15.6 of
such Unit to Lessor hereunder and Lessor shall have the right, upon 90 days
prior written notice in the case of a return other than pursuant to Section
15.6, prior to the return of such Unit to Lessor hereunder, to purchase such
Severable Modifications (other than Severable Modifications consisting of
proprietary or communications equipment) 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.
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 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 with 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 value,
utility, estimated residual value and remaining 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 as provided in the preceding sentence shall
remain the property of Lessor free and clear of all rights of Lessee until
replaced in accordance with the terms of such sentence, but shall then, without
further act, become the property of Lessee. Any such replacement property shall,
without further act, become the property of Lessor and be deemed part of such
Unit for all purposes hereof.
17
23
SECTION 10. VOLUNTARY TERMINATION WITH RESPECT TO OBSOLETE OR SURPLUS
UNITS.
Section 10.1 Right of Termination. So long as no Lease Default
or Lease Event of Default shall have occurred and be continuing, 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, to
terminate the Lease Term with respect to any or all of the Units (provided that,
if such termination is for less than all Units in an Equipment Group, the
determination as to which Units are subject to termination shall be made by
Lessee on a random or other reasonable basis (including, without limitation, on
the basis of Car Type) without discrimination based on maintenance status or
operating condition of the Units in question) (the "Terminated Units") if Lessee
determines in good faith (as evidenced by a certified copy of a resolution
adopted by Lessee's Board of Directors and a certificate executed by the Chief
Financial Officer of Lessee) either (a) that such Units have become obsolete or
surplus to Lessee's requirements, or (b) in the circumstances described in
clause (ii) of the last sentence of Section 9.1, that a Required Modification to
such Units would be economically impractical. Lessee shall be entitled to
exercise its termination rights under this Section 10.1 by delivering at least
120 days' prior notice to Lessor, the Indenture Trustee and the Pass Through
Trustee (i) specifying a proposed date of termination for such Units (the
"Termination Date"), which date shall, except as provided in the last sentence
of Section 10.3, be a Rent Payment Date, any such termination to be effective on
the Termination Date, and (ii) if some but less than all of the Units in an
Equipment Group are designated as Terminated Units, describing the
nondiscriminatory manner (including, without limitation, on the basis of Car
Type) in which Lessee proposes to determine which Units in that Equipment Group
are to be Terminated Units. Except as expressly provided 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 up to sixty (60)
days prior to the scheduled Termination Date, whereupon this Lease shall
continue in full force and effect; provided that Lessee (1) may not exercise its
right to withdraw such a termination notice more than once annually, and (2) may
not withdraw any termination notice with respect to any Terminated Units after
receipt by Lessee of a bid equal to or greater than the Termination Value with
respect to such Terminated Units. Lessee agrees that if it withdraws a
termination notice it will reimburse Lessor, Owner Participant and the Indenture
Trustee for all reasonable out-of-pocket costs and expenses (including
reasonable legal fees and expenses) incurred by any thereof in connection
therewith.
Section 10.2 Sale of Equipment. During the period from the
date of each notice given pursuant to Section 10.1 to the Termination Date,
Lessee, as agent for Lessor and, except as provided in Section 10.3, at Lessee's
sole cost and expense, shall use its reasonable best efforts to obtain bids from
Persons other than Lessee or Affiliates thereof for the cash purchase
18
24
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 accordance with Section 10.3, on
the Termination Date: (a) Lessee shall, 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, 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 any Affiliate thereof),
if any, which shall have submitted the highest cash bid prior to such date (or
to such other bidder as Lessee and Lessor shall agree), in the condition
specified in Section 6.2 and (b) 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
Lessor and, in addition, on the Termination Date, Lessee shall pay to Lessor,
(i) all unpaid Rent with respect to such Terminated Units due and payable on or
prior to the Termination Date (exclusive of any in advance Basic Rent due on
such date), (ii) the excess, if any, of (A) the Termination Value for the
Terminated Units computed as of the Termination Date, over (B) the net cash
sales proceeds (after the deduction of all reasonable costs and expenses
(including reasonable legal fees and expenses) of Lessor, the Bank and Owner
Participant in connection with such sale) of the Terminated Units, and (iii) an
amount equal to the Make-Whole Amount, if any, in respect of the principal
amount of the Equipment Notes to be prepaid in accordance with Section 2.10(a)
of the Indenture. 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, the Bank, Owner 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 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.
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, no 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 (a) deliver the Terminated Units to Lessor in the same
manner and condition as if delivery were made to Lessor pursuant to Section 6,
treating the Termination Date as the termination date of the Lease Term with
respect to the Terminated Units, and (b) pay to Lessor, or to the Persons
entitled thereto, all Basic Rent and all
19
25
Supplemental Rent due and owing on the Termination Date and unpaid (exclusive of
any in advance Basic Rent due on such date but inclusive of any Supplemental
Rent measured by the Make-Whole Amount). 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 in funds of the type and in an amount
equal to the outstanding principal amount of the Equipment Notes issued in
respect of such Terminated Units and all accrued and unpaid interest to the date
of prepayment of such Equipment Notes on such Termination Date and an amount
equal to the Make-Whole Amount, if any, in respect of the principal amount of
the Equipment Notes to be prepaid without in any manner relieving Lessee of its
obligation to pay any such amount pursuant to the preceding sentence; provided
that unless Lessor shall have paid all such amounts to the Indenture Trustee on
the Termination Date, this Lease shall continue in full force and effect with
respect to such Terminated Units. If Lessee shall have complied with its
obligations under this Section 10.3 and Lessor shall fail to pay the amounts
required pursuant to this Section 10.3 and as a result thereof this Lease shall
not be terminated with respect to the Terminated Units on the 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
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 that is not less than 25 days after the date of such notice;
provided that for purposes of determining the amount to be paid by Lessee
pursuant to Section 10.2, the Termination Date shall be deemed to be the
Termination Date on which Lessor failed to make the payments provided in this
Section 10.3.
Section 10.4 Termination of Lease. In the event of either (a)
any sale of Terminated Units and receipt by Lessor and the Indenture Trustee of
all of the amounts provided in Section 10.2 or (b) retention of the Equipment
and payment in full by Lessor of all amounts required to be paid pursuant to
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 such Terminated Units shall
end. Upon the payment of all amounts required to be paid in respect of any
Terminated Unit or Units as contemplated by clause (a) of the preceding
sentence, Lessor will convey to the purchaser thereof all right, title and
interest of Lessor in and to such Terminated Unit or Units, "as is", "where is",
without recourse or warranty, except for a warranty against Lessor's Liens, and
shall execute and deliver to the purchaser thereof such bills of sale and other
documents and instruments as the purchaser thereof may reasonably request to
evidence such conveyance.
20
26
SECTION 11. LOSS, DESTRUCTION OR REQUISITION.
Section 11.1 Event of Loss. In the event that any Unit shall
(a) suffer damage or contamination which, in Lessee's reasonable judgment (as
evidenced by an Officer's Certificate to such effect), makes repair uneconomic
or renders such Unit unfit for commercial use, (b) suffer destruction, or shall
suffer theft or disappearance for a period exceeding 12 months, (c) in the case
of any Unit not manufactured by the Manufacturer, such Unit shall be permanently
returned to the manufacturer pursuant to any patent indemnity provisions, (d)
have title thereto taken or appropriated by any governmental authority, agency
or instrumentality under the power of eminent domain or otherwise, (e) suffer an
actual or constructive total loss, (f) in the normal course of interstate rail
transportation, have been prohibited from being used for a continuous period in
excess of six months as a result of any rule, regulation, order promulgated, or
any other action taken, by the United States government or any agency or
instrumentality thereof, (g) be subject to a sublease with any Person which
operates primarily outside the United States and shall not be returned to Lessee
within 60 days of a demand by Lessee for return of such Unit following the
termination or other expiration of the term of such sublease, or (h) be taken or
requisitioned for use by any governmental authority of the United States, Canada
or Mexico 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 Mexico or any governmental authority, agency or
instrumentality 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; provided, however, that if any Unit shall suffer a theft or disappearance
as described in clause (b) above for a period exceeding 6 months, Lessee shall
use its reasonable best efforts to inform Lessor and the Indenture Trustee of
such theft or disappearance as an Event of Loss once it has knowledge thereof,
regardless of whether the 12-month period referred to in said clause (b) has
run.
Section 11.2 Replacement or Payment upon Event of Loss. Lessee
shall report, by written notice to Lessor given (a) on the date that is 60 days
prior to each Rent Payment Date, or (b) promptly, but in no event later than 30
days, after the date on which a Responsible Officer of Lessee shall have
obtained actual knowledge that since the end of the last period for which a
report was delivered to Lessor under this Section 11.2 ten or more Units have
suffered an Event of Loss (a "Multiple Loss"), any and all occurrences of an
Event of Loss and shall in such written notice notify Lessor of its election to
perform one of the following options with respect to each such Unit:
(i) on the Rent Payment Date immediately following delivery of
the foregoing notice (or, in the case of a Multiple Loss, on the first
Business Day succeeding the 60th day following the date on which Lessee
is required to report such Multiple Loss pursuant to this Section
11.2), Lessee shall comply with Section 11.4 and shall convey or cause
21
27
to be conveyed to Lessor a Replacement Unit to be leased to Lessee
hereunder, such Replacement Unit to be of the same Equipment Group, the
same or later year of manufacture of the Unit replaced and free and
clear of all Liens (other than Permitted Liens of the type described in
clause (ii) with respect to sublessees, and in clauses (iii), (iv),
(vi) and (vii) of the definition thereof) and to have a Fair Market
Sales Value, utility, remaining useful life, estimated residual value
and condition at least equal to the Unit so replaced (assuming such
Unit was at least in the condition required to be maintained by the
terms of this Lease), and Lessee shall identify in a written notice to
Lessor the Units to be replaced and the Replacement Units; provided
that if at the time of such replacement, only railcars (x) of a later
year of manufacture or (y) with a greater Fair Market Sales Value than
the replaced Units are available as Replacement Units, Lessee shall
convey such Replacement Units to Lessor as set forth above but Lessee
may, at a later date, replace such Replacement Units with other Units
of the same Equipment Group that are closer in age or Fair Market Sales
Value to the original replaced Units and which have a utility,
remaining useful life, estimated residual value and condition at least
equal to such Replacement Units; provided further that (a) a
Replacement Unit may only be replaced with another Unit on one
occasion, (b) any substitution of a Unit for a Replacement Unit must
occur within 18 months of the date on which such Replacement Unit was
conveyed to Lessor and (c) except in the event a purchase option has
been exercised by Lessee pursuant to Section 22 with respect to such
Replacement Unit, no Replacement Unit may be replaced with another Unit
within three years of the Basic Term Expiration Date or during the last
three years of any Renewal Term; provided further that if Lessee shall
either fail to elect an option under clause (i) or (ii) of this Section
11.2 by the applicable date, or timely elects the option under this
clause (i) but shall fail to perform its obligation to effect such
replacement under this paragraph (i) on a timely basis, then (except in
the case of a failure to perform an election to replace pursuant to
Section 8.1(b), Section 8.3 or Section 9.1) Lessee shall immediately
give Lessor, the Indenture Trustee and the Pass Through Trustee notice
of such failure and Lessee shall pay to Lessor on such Rent Payment
Date (or, in the case of a Multiple Loss, on the first Business Day
succeeding the 60th day following the date on which Lessee is required
to report such loss pursuant to this Section 11.2) or in the case of
Supplemental Rent, to the Person entitled thereto, the amounts
specified in clause (ii) below; provided further that Lessee shall have
no right to elect replacement under this clause (i) if at the time
Lessee delivers the notice described in the first sentence of this
Section 11.2, a Lease Event of Default or a Lease Default described in
Section 14(a), Section 14(g) or Section 14(h) shall have occurred and
be continuing; and provided further that the Lessee may substitute
fewer or more Replacement Units than the number of Units which have
suffered an Event of Loss so long as (A) such Replacement Unit(s) have
in the aggregate a Fair Market Sales Value, utility, remaining economic
useful life, estimated residual value and condition at least equal to
the aggregate Fair Market Sales Value, utility, remaining economic
useful life, estimated residual value and condition of the Unit(s) so
replaced (assuming such Unit(s) were in at least the condition required
to
22
28
be maintained by the terms of this Lease), (B) each such Replacement
Unit has a utility and condition not materially worse than that of each
of the Units so replaced, (C) each such Replacement Unit has an
estimated residual value as of the end of the Lease Term (determined at
the date of such replacement) of at least 20% (without giving effect to
inflation or deflation) of the Fair Market Sales Value of such
Replacement Unit as of the date of such replacement and an estimated
economic useful life at the end of the Lease Term (determined at the
date of such replacement) of at least 20% of the economic useful life
of such Replacement Unit as of the date on such replacement, and (D)
such Replacement Unit(s) otherwise meet the requirements of this
paragraph (i); and provided further, that if Lessee substitutes fewer
or more Replacement Units than the number of Units which have suffered
an Event of Loss, then the Basic Rent, Stipulated Loss Value,
Termination Value, Early Purchase Price, Basic Term Purchase Price and
Outside Date Purchase Price of each Replacement Unit so substituted
shall be equal to the following amount: the Basic Rent, Stipulated Loss
Value, Termination Value, Early Purchase Price, Basic Term Purchase
Price and Outside Date Purchase Price, as applicable, with respect to
the Units which have suffered an Event of Loss, taken as a whole,
multiplied by a fraction, the numerator of which is the Fair Market
Sales Value as of the date of replacement of the particular Replacement
Unit and the denominator of which is the Fair Market Sales Value as of
the date of replacement of all the Replacements Units taken as a whole;
or
(ii) on the Rent Payment Date immediately following the
delivery of the notice described in the first sentence of this Section
11.2, Lessee shall pay or cause to be paid to Lessor (or in the case of
Supplemental Rent, to the Person entitled thereto) in funds of the type
specified in Section 3.6, an amount equal to (A) the Stipulated Loss
Value 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 in
advance Basic Rent due on such date), and (C) all other Rent then due
and payable hereunder with respect to such Unit, it being understood
that until such Stipulated Loss Value and other sums are paid, there
shall be no abatement or reduction of Basic Rent; provided, however,
that in the event of a Multiple Loss, in lieu of the amounts otherwise
required to be paid in respect of each such Unit as provided above,
Lessee shall pay or cause to be paid on the first Business Day
succeeding the 60th day following the date on which Lessee is required
to report such loss pursuant to this Section 11.2 (the "Multiple Loss
Payment Date"), (A) an amount equal to the Stipulated Loss Value of
each such Unit determined as of (i) the second day of the month in
which the Multiple Loss Payment Date occurs or (ii) the second day of
the immediately preceding month if the Multiple Loss Payment Date is
the first day of a month (the second day of any such month a "Multiple
Loss Determination Date"), (B) an amount of accrued and unpaid Basic
Rent, if any, in respect of each such Unit equal to the product of (x)
the daily equivalent of the amount of Basic Rent scheduled to be paid
with respect to each such Unit on the Rent Payment Date next succeeding
such Multiple Loss
23
29
Determination Date and (y) the number of days from and including such
Multiple Loss Determination Date to but excluding the Multiple Loss
Payment Date (but in no event less than the amount of accrued and
unpaid interest, if any, in respect of the principal amount of
Equipment Notes to be prepaid as a result of such Multiple Loss) and
(C) all other Rent then due and payable hereunder, it being understood
that until such Stipulated Loss Value and other sums are paid, there
shall be no abatement or reduction of Basic Rent; provided, further,
that if Lessee elects the option under this clause (ii), it shall
notify the Lessor, the Indenture Trustee and the Pass Through Trustee
thereof at least 20 days prior to the date such payment is to be made,
which election shall be irrevocable on the 15th day prior to the date
payment is required hereunder.
Section 11.3 Rent Termination. Upon the replacement of any
Unit or Units in compliance with Section 11.2(i) (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
Value or date of conveyance of such Replacement Unit or Units 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
Stipulated Loss Value or such replacement of such Unit or Units and in respect
of all other Units then continuing to remain subject to this Lease; provided
further that it is understood and agreed that, in the event of a replacement in
compliance with Section 11.2(i), the Rent paid with respect thereto on the Rent
Payment Date next following the conveyance of the Replacement Unit or Units
shall be deemed paid in respect of, and allocated between, both the Replacement
Unit or Units and the original Unit or Units it or they replaced.
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 against Lessor's
Liens, and shall execute and deliver to Lessee or its designee 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 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 after having paid the Stipulated Loss Value attributable thereto.
(b) At the time of or prior to any replacement of any Unit,
Lessee, at its own expense, will (i) 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, (ii) cause a Lease Supplement
substantially in the form of Exhibit A hereto, subjecting such
24
30
Replacement Unit to this Lease, and duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation as
required in Section 16.1, (iii) 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 as required in Section 16.1, (iv) furnish Lessor with
an opinion of Lessee's counsel (which may be Lessee's General Counsel or
Assistant General Counsel), to the effect that (A) the Xxxx of Sale referred to
in clause (i) above constitutes an effective instrument for the conveyance of
title to the Replacement Unit to Lessor, (B) legal and beneficial title to the
Replacement Unit has been delivered to Lessor, free and clear of all Liens
(other than Permitted Liens of the type described in clause (ii) with respect to
sublessees, and in clauses (iii), (iv), (v) and (vi) of the definition thereof),
and (C) all filings and recordings and other action necessary or appropriate to
protect the respective interests of Lessor and the Indenture Trustee in the
Replacement Units (to the extent required by the provisions of this Lease) have
been accomplished, (v) furnish Lessor with an engineer's certificate (which may
be from an employee of Lessee) in form and substance reasonably satisfactory to
the Owner Participant certifying as to the value, utility, remaining useful life
and condition required under clause (i) of Section 11.2 and stating that the
Replacement Unit has an estimated residual value which is not less than the
estimated residual value of the Unit being replaced, (vi) furnish to Lessor and
the Indenture Trustee an Officer's Certificate certifying that the Replacement
Unit is free and clear of all Liens (other than Permitted Liens of the type
described in clause (ii) with respect to sublessees, and in clauses (iii), (iv),
(v) and (vi) of the definition thereof), (vii) furnish to Owner Participant an
agreement to indemnify Owner Participant against any adverse tax consequences
suffered as a result of such replacement, and (viii) furnish such other
documents and evidence as Owner Participant, Lessor, the Bank 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. In addition, in connection with any substitution pursuant to this Section
11.4, and in addition to the Lessee's obligation to indemnify the Owner
Participant as set forth in the Tax Indemnity Agreement, Lessee shall elect, in
its sole discretion, (i) to furnish a tax opinion from Xxxx, Xxxxxx & Xxxxxxxxx
or other independent tax counsel reasonably acceptable to Owner Participant to
the effect that Owner Participant has a reasonable basis, within the meaning of
Section 6662(d)(2)(B)(ii) of the Code, for the opinion that Owner Participant
will not be required to recognize gain or loss for Federal income tax purposes
with respect to such replacement or (ii) promptly following receipt of written
notice from Owner Participant that Owner Participant has filed its Federal
income tax returns wherein such gain or loss is required to recognized, to make
an indemnity payment to Owner Participant in the incremental amount of such
adverse tax consequence (on a net after-tax basis) attributable to the
conveyance of such Replacement Unit. For all purposes hereof, upon 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" of
Equipment as defined herein. Upon such passage of title, Lessor will transfer to
Lessee, without recourse or warranty (except as to Lessor's Liens), all of
Lessor's right, title and interest in and to the replaced Unit (and shall
execute and deliver to
25
31
Lessee or its designee such bills of sale and other documents and instruments as
Lessee may reasonably request to evidence such conveyance), and upon such
transfer, Lessor will request in 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,
the Bank, Owner Participant and the Indenture Trustee in connection with any
replacement pursuant to this Section 11.4.
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 and Supplemental Rent, shall continue for the
duration of such requisitioning or taking. All sums payable for any such period
by such governmental authority as compensation for the requisitioning or taking
of possession shall be divided between Lessor and Lessee as their respective
interests may appear. Any amount referred to in this Section 11.5, 11.4(a) or 12
which is payable to Lessee shall not be paid to Lessee, or if it has been
previously paid directly to Lessee, shall not be retained by Lessee, if at the
time of such payment a Lease Default under Section 14(g) or Section 14(h) or a
Lease Event of Default shall have occurred and be continuing, but shall be paid
to and held by Lessor pursuant to Section 24, or if the Indenture shall not then
have been discharged pursuant to its terms, to the Indenture Trustee, as
security for the obligations of Lessee under this Lease, and at such time as
there shall not be continuing any such Lease Default or Lease Event of Default,
such amount shall be paid to Lessee.
SECTION 12. INSURANCE.
Section 12.1 Physical Damage and Public Liability Insurance.
Lessee will at all times after delivery and acceptance of each Unit and until
such Unit is returned to Lessor, at its own expense, keep such Unit or cause
such Unit to be kept insured by a reputable insurance company or companies, in
amounts and against risks and with deductibles and terms and conditions not less
than the insurance, if any, maintained by Lessee 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 full service leasing of tank and xxxxxx railcars. Without limiting
the foregoing, Lessee will in any event:
(a) (i) for so long as a Lease Event of Default shall have
occurred and be continuing, or (ii) if required by the Letter Agreement dated as
of the Closing between Lessee and the Owner Participant (in the circumstances
set forth therein), keep each Unit insured against physical damage in an amount
not less than the Stipulated Loss Value attributable thereto as shown on
Schedule 4 to the Participation Agreement, subject to a limit of not less than
$10 million per occurrence (except for a $10 million annual aggregate for flood
and earth
26
32
movement); provided that such coverage may provide for deductible amounts or
self-insured retention of not more than $1,000,000 per occurrence; and
(b) maintain public liability insurance naming Owner
Participant, Lessor, as lessor of the Equipment and the Bank in its individual
capacity, and the Indenture Trustee as additional insureds (but only with
respect to liability arising out of or related to the Operative Agreements and
the Equipment) against bodily injury, death or property damage arising out of
the use or operation of the Equipment with general and excess liability limits
of not less than $100,000,000 per occurrence and annually in the aggregate;
provided that such coverage may provide for deductible amounts or self-insured
retention not exceeding $25,000,000.
It is understood and agreed that the insurance required
hereunder may be part of a group-wide insurance program, 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 is
cancelled or terminated, for any reason whatever (other than upon normal policy
expiration or non-payment of premiums), Lessor, the Indenture Trustee and Owner
Participant shall receive 30 days' prior written notice of such cancellation or
termination and shall further provide that if any such insurance is cancelled or
terminated for non-payment of premiums, the Indenture Trustee and Owner
Participant shall receive 10 days' prior written notice of such cancellation or
termination.
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 Value
for any loss or damage to any Unit shall be paid to the Indenture Trustee under
a standard mortgage 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 take all
other steps necessary to collect the proceeds of such insurance.
(b) The entire proceeds of any property insurance or third
party payments for damage 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 Value 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 the Lease, and (2) Lessee shall have
certified that any damage to such Units shall have been fully repaired
or restored; or
27
33
(ii) if this Lease is terminated with respect to such Unit
because of an Event of Loss and Lessee has paid the Stipulated Loss
Value due as a result thereof, such proceeds shall 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
inasmuch as such policies cover more than one insured, all terms, conditions,
insuring agreements and endorsements, with the exception of limits of liability
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) provide that, as a
result of Lessee's waiver of subrogation contained in Section 12.3(d), the
insurers shall have no rights of subrogation against Owner Participant, Lessor,
as lessor of the Equipment or to the Bank in its individual capacity, and the
Indenture Trustee, (iii) provide that neither Owner Participant, Lessor, as
lessor of the Equipment, the Bank in its individual capacity, or the Indenture
Trustee 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 Bank or the Indenture Trustee.
(b) Lessee shall use its reasonable best efforts to obtain
public liability insurance policies stipulating that coverage thereunder will
not be invalidated (as to Owner Participant, Lessor, as lessor of the Equipment,
the Bank in its individual capacity, and the Indenture Trustee) due to any
action or inaction of Lessee or any other Person (other than Owner Participant,
Lessor or the Indenture Trustee, but only in respect of their respective
coverages), 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 to the extent the maintenance thereof is not
so available upon application therefore as set forth herein. 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), in
either case, such independent insurance advisors being of recognized national
standing. 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 coverage thereunder) is not reasonably available to Lessee at
commercially reasonable premiums in the commercial insurance markets within
which Lessee normally purchases its insurance from insurers, acceptable to
Lessee, with a Best's rating of A- or better for railcars of similar type
28
34
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 a fleet-wide basis) 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 is prudent under the
circumstances, but in any event in an amount that may be purchased for a premium
equal to 110% of Lessee's cost (on a fleet-wide basis) of public liability
insurance premiums for the coverage required by Section 12.1(b) for the fiscal
year immediately preceding the fiscal year in which such waiver first was
granted.
(d) Lessee hereby waives (on behalf of itself and its
insurers) all of Lessee's and Lessee's insurers' rights of subrogation against
the Owner Participant, Lessor, as lessor of the Equipment, and the Bank in its
individual capacity, and the Indenture Trustee with respect to all matters
relating to or arising out of the Units, the Operative Documents or the
transactions contemplated thereby.
Section 12.4 Certificate of Insurance. Lessee shall, prior to
the Initial Closing Date and the Subsequent Closing Date and when the renewal
certificate referred to below is sent (but in any event not less than annually),
furnish Lessor, the Indenture Trustee and the Owner Participant with a
certificate signed by the insurer or an independent insurance broker showing the
insurance then maintained by Lessee pursuant to Section 12.1 and, with respect
to any renewal policy or policies, furnish certificates or binders evidencing
such renewal 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.
29
35
Section 12.5 Additional Insurance. In the event that Lessee
shall fail to maintain insurance as 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 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 Equipment 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 Pollution Coverage. The public liability
insurance policies that are maintained pursuant to Section 12.1 on the date
hereof include coverage for pollution incidents (other than as may occur on
property owned, leased, controlled or occupied by Lessee) of a sudden and
accidental nature, including, without limiting the generality of the foregoing,
collision and overturn of railcars arising out of the use or operation of the
Units; provided however, that such insurance shall cover third-party bodily
injury and property damage claims and shall not cover property owned, leased or
occupied by Lessee. The coverage under such insurance shall be maintained as
long as it remains available on commercially reasonable terms under such public
liability insurance policy as determined in a manner consistent with Section
12.3(c).
SECTION 13. REPORTS; INSPECTION.
Section 13.1 Duty of Lessee to Furnish. On or before May 31,
1998, and on or before each May 31 thereafter during the Basic Term and each
Renewal Term, Lessee will furnish to Lessor, Owner Participant and the Indenture
Trustee 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 ended on such December 31 (or since the
Initial Closing Date, in the case of the first such statement), and such other
information regarding the condition or repair of the Equipment as Lessor may
reasonably request, (b) stating that, in the
30
36
case of all Equipment repainted during the period covered by such statement, the
reporting xxxx required by Section 4.2 hereof shall have been preserved or
replaced, and (c) showing the percentage of use in both Canada and Mexico based
on the total mileage travelled by all railcars in Lessee's fleet for the prior
calendar year as reported to Lessee by railroads, and 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 as they apply to the maintenance and operation of the
Equipment in interchange.
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, expense and risk (including, without
limitation, the risk of bodily injury or death), by their respective authorized
representatives, to inspect the Equipment and Lessee's maintenance records with
respect to the Equipment (consisting of maintenance logs and records, and
sublessee identity and location). All inspections shall be conducted during
Lessee's normal business hours 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, any 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. No
inspection pursuant to this Section 13.2 shall interfere with the use, operation
or maintenance of the Equipment or the normal conduct of Lessee's business, and
Lessee shall not be required to undertake or incur any additional liabilities in
connection therewith. Upon request by Lessor, which request shall not be made
more than once in any calendar year (unless an Event of Default shall have
occurred and be continuing in which case at any reasonable time), Lessee, upon
three Business Days' prior notice from Lessor, will provide Lessor with
reasonable access at Lessee's office where such information is located to
information regarding the Person in possession of any or all Units as specified
in such request; provided that, prior to providing Lessor with access to such
information, Lessee and Lessor shall have executed a confidentiality agreement
in form and substance reasonably satisfactory to Lessee with respect to such
information.
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 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 make any payment of Basic Rent,
Supplemental Rent in respect of Make-Whole Amounts, Early Purchase Price, Basic
Term Purchase Price or any other purchase price to be paid by Lessee for any
Units pursuant to this Lease or the
31
37
Participation Agreement, Stipulated Loss Value or Termination Value within 10
Business Days after the same shall have become due; or
(b) Lessee shall fail to make any payment of Supplemental
Rent, including indemnity or tax indemnity payments, but not including
Stipulated Loss Value, Early Purchase Price, Basic Term Purchase Price or any
other purchase price to be paid by Lessee for any Units pursuant to this Lease
or the Participation Agreement, Termination Value, Supplemental Rent in respect
of Make-Whole Amount, after the same shall have become due and such failure
shall continue unremedied for 10 Business Days after receipt by Lessee of demand
therefor from Lessor, the Owner Participant or the Indenture Trustee; or
(c) Lessee shall fail to maintain in effect the insurance
required by Section 12 and such failure shall not have been waived as provided
for therein; or
(d) Lessee shall make or permit any possession of the
Equipment or any portion thereof not permitted by this Lease; provided that such
unauthorized possession shall not constitute a Lease Event of Default for a
period of 45 days after the occurrence thereof, 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 any of the
covenants or agreements to be observed or performed by Lessee in Section 6.8 of
the Participation Agreement, and such failure shall continue unremedied for 30
days; or
(f) any representation or warranty made by Lessee in any
Lessee Agreement (other than the Tax Indemnity Agreement) 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 for a period of 30
days after receipt by Lessee of written notice thereof from Lessor or the
Indenture Trustee; 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 60 days after receipt of such notice so
long as Lessee 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 remedied only after all adverse consequences thereof, if any, have
been remedied; or
(g) Lessee 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
32
38
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 seeking liquidation, reorganization or other relief with respect
to it 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, 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 (other than the Tax Indemnity Agreement) 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) Lessee shall have given notice of its intention to retain
any Units at the end of the Basic Term or any Renewal Term and, prior to the
last day of the Basic Term or such Renewal Term, as the case may be, Lessee
shall not have notified Lessor of its election to purchase or continue leasing
such Unit;
provided that, 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 referred to in the definition of "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
33
39
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,
forthwith return all or any part of the Equipment to Lessor or its order in the
manner and condition required by, and otherwise in accordance with all of the
provisions of Section 15.6; 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 Equipment 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 Lessee, or its successor or assigns, to use such
Units for any purpose whatever, and in connection with the foregoing, Lessee
hereby agrees that it will, if requested by Lessor, give prompt notice of such
demand for return of the Equipment to the AAR and all railroads having
possession of any such Unit;
(c) sell any Unit at public or private sale by such
advertisement or publication, if any, as Lessor may determine, free and clear of
any rights of Lessee and without any duty to account to Lessee 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 as Lessor in
its sole discretion may determine, free and clear of any rights of Lessee and
without any duty to account to Lessee with respect to such action or inaction or
for any proceeds with respect thereto;
(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 Value), which shall be not earlier than 30
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 due and payable, or accrued, for such Unit as of the payment date
specified in such notice (exclusive of any in advance Basic Rent due on such
34
40
date) plus whichever of the following amounts Lessor, in its sole discretion,
shall specify in such notice: (i) an amount with respect to each such Unit which
represents the excess of the present value, at the time of such payment date, of
all Basic Rent 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 computed by
discounting from the end of such Term to such payment date rentals which Lessor
reasonably estimates to be obtainable for the use of such Unit during such
period, such present value to be computed in each case on a basis of a per annum
discount at the Debt Rate, compounded semiannually 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 Value 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 Value 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 this clause (iii) of such
Stipulated Loss Value or Fair Market Sales Value, as the case may be, and of all
other amounts payable by Lessee under this Lease and under the other Operative
Agreements in respect of such Unit, Lessor shall transfer without recourse or
warranty all right, title and interest of Lessor in and to such Unit to Lessee
or as it may direct, Lessor shall execute and deliver such documents evidencing
such transfer as Lessee shall reasonably request, the obligation of Lessee to
pay Basic Rent hereunder for such Units shall cease and the Lease Term for such
Units shall end;
(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 semiannual amount due on the
next following Rent Payment Date divided by 180) and, if that date is a Rent
Payment Date, the Basic Rent due on that date (exclusive of any in advance Basic
Rent due on such date), plus the amount, if any, by which the Stipulated Loss
Value 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, exceeds the net proceeds of such sale, plus interest on
such amounts 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 or may exercise any other right or remedy that may be available to it
under applicable law.
35
41
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 (exclusive of any in advance 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.
Section 15.2 Cumulative Remedies. The remedies in this Lease
provided in favor of Lessor shall not be deemed exclusive, but shall be
cumulative 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. 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 Equipment.
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 Equipment in mitigation of Lessor's damages as set
forth in Section 15.1 or that may otherwise limit or modify any of Lessor's
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 Furnish Information with Respect
to Subleases. Upon the occurrence of a Lease Event of Default, Lessor may
request that Lessee deliver to Lessor, and upon such request Lessee agrees that
it will promptly provide to Lessor, a detailed list of all Units that are then
being subleased by Lessee, the identity of the sublessees with respect to such
Units, the identity of an employee or other agent of each such sublessee with
whom Lessee regularly communicates regarding such Units and the most recent
known location of such Units.
36
42
Section 15.6 Lessee's Duty to Return Equipment Upon Default.
If Lessor or any assignee of Lessor shall terminate the leasing of any or all
Units pursuant to this Section 15 and shall have provided to Lessee the written
demand specified in Section 15.1(b) with respect to such Units, Lessee shall
forthwith deliver possession of such Units 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 to Lessor as above required, Lessee shall at its own cost, expense and risk
(except as hereinafter stated):
(a) Forthwith place such Equipment upon such storage tracks of
Lessee or any of its Affiliates or, at the expense of Lessee, on any other
storage tracks within the continental United States (excluding Alaska), as
Lessor may designate or, in the absence of such designation, as Lessee may
select;
(b) permit Lessor to store such Equipment on such tracks
without charge for insurance, rent or storage until such Equipment has 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 Equipment to any place on any lines of
railroad or to any connection carrier for shipment within the continental United
States (excluding Alaska), all as Lessor may direct in writing.
All Equipment returned shall be in the condition required by Section 6.2 hereof.
All amounts earned in respect of the Equipment 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 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 higher of (i) an amount equal to 110% of the daily
equivalent of the Basic Rent in effect immediately prior to the expiration of
the Lease for such Unit and (ii) 125% of the Fair Market Rental Value for such
Unit for each such day 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 15.7 Specific Performance; Lessor Appointed Lessee's
Agent. The assembling, delivery, storage and transporting of the Equipment as
provided in Section 15.6 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
37
43
of the covenants of Lessee so to assemble, deliver, store and transport the
Equipment. Without in any way limiting the obligation of Lessee under the
provisions of Section 15.6, 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 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 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 (a) the Initial
Closing Date and the Subsequent Closing Date, as the case may be, Lessee will
(a) cause this Lease, the Lease Supplements dated the Initial Closing Date or
the Subsequent Closing Date, as the case may be, the Indenture and the Indenture
Supplements dated the Initial Closing Date or the Subsequent Closing Date, as
the case may be, to be (i) duly filed and recorded with the STB in accordance
with 49 U.S.C. Section 11301, and (ii) deposited in the office of the Registrar
General of Canada pursuant to Section 105 of the Canadian 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), and (b) cause notice
of the security interests created in this Lease, the Lease Supplements dated the
Initial Closing Date or the Subsequent Closing Date, as the case may be, the
Indenture and the Indenture Supplements dated the Initial Closing Date or the
Subsequent Closing Date, as the case may be, to be filed in the appropriate
offices in the Canadian provinces of Ontario, Manitoba, Saskatchewan, Alberta,
British Columbia, Quebec, Nova Scotia and New Brunswick, and (c) furnish Lessor,
the Indenture Trustee and Owner Participant proof thereof.
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 Bank, Owner
Participant and the Indenture Trustee hereunder, including, 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 in accordance with the laws of such
jurisdiction as Lessor may from time to time deem advisable; provided, however
that Lessee shall not be required to make any recording or filing in any
province in Canada (or any political subdivision thereof) or in Mexico (or any
political subdivision thereof) in respect of a Replacement Unit if (a) Lessee in
good faith (as evidenced by an Officer's Certificate to such effect) deems such
action unduly burdensome and (b) after giving effect to the failure to take such
action, Lessee has taken all action required by law so as to perfect and protect
the right, title and interests of Owner Trustee and Owner Participant in the
Trust Estate
38
44
and of the Indenture Trustee in the Indenture Estate in respect of Units having
a Stipulated Loss Value of not less than 90% of the aggregate Stipulated Loss
Value of the Equipment.
Section 16.3 Other Filings. If, at any time during the Lease
Term, Mexico, or one or more states in Mexico, or the Canadian territory of the
Northwest Territories, establishes a state or provincial system for filing and
perfecting the security and/or ownership interests of entities such as Lessor
and/or the Indenture Trustee, Lessee shall cause any of the Operative Agreements
required to be recorded under such system to be so recorded 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, the Bank, Owner Participant and the
Indenture Trustee. Notwithstanding anything contained herein to the contrary,
Lessee's obligations in this Section 16.3 shall be subject in all respects to
the provisions of Section 16.2.
Section 16.4 Expenses. Except as provided in Section 2.5(a) of
the Participation Agreement, 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 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
39
45
Indenture. Lessor agrees that it shall not otherwise assign or convey its right,
title and interest in and to this Lease, the Equipment 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 as otherwise
provided in Section 8.3 or in the case of any requisition for use by any
governmental authority or any agency or instrumentality thereof referred to in
Section 11.5, Lessee will not, without the prior written consent of Lessor and
the Indenture Trustee, assign any of its rights hereunder, except as provided
herein and in the Participation Agreement; provided that Lessee may assign its
rights and/or obligations hereunder to any corporation in accordance with the
provisions of Section 6.8 of the Participation Agreement or to any corporation
which is an Affiliate of Lessee, provided that in the case of an assignment to
an Affiliate, (a) Lessor shall have received an instrument or instruments
reasonably satisfactory to it, the Bank, Owner Participant and the Indenture
Trustee under which such Affiliate assumes the obligations of Lessee hereunder,
and (b) Lessee irrevocably and unconditionally guarantees, pursuant to an
agreement in form and substance reasonably satisfactory to Lessor, the Bank,
Owner Participant and the Indenture Trustee, such assignee's performance of all
of such obligations as primary obligor and not as a surety.
Section 18.3 Sublessee's 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 in accordance with
the terms and provisions of this Lease by any permitted assignee, sublessee or
transferee under an assignment, sublease or transfer agreement 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 any such
assignee or transferee, or (b) in Lessee's capacity as sublessor pursuant to any
sublease permitted pursuant to Section 8.3 hereof, permit any sublessee to
exercise substantially 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 Sections 10 and 11, Lessee's right of replacement set
forth in Sections 8.3 and 8.4 and Lessee's purchase and renewal options set
forth in Section 22 of the Lease and Section 6.9 of the Participation Agreement
may be exercised only by Lessee itself or by any assignee or transferee of, or
successor to, Lessee in a transaction permitted by Section 6.8 of the
Participation Agreement; 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, the Bank, 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, the Bank, 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
40
46
obligations or rights of any such assignee, sublessee or transferee 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 assignee, sublessee or transferee 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, subject to Section 3.5, be absolute, unconditional
and irrevocable and shall not be affected by any circumstance of any character
including, without limitation, (a) any set-off, abatement, counterclaim,
suspension, recoupment, reduction, rescission, defense or other right that
Lessee may have (other than pursuant to Section 3.5 hereof) against Lessor, the
Bank, 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, (b) 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, (c) 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, (d) any
insolvency, bankruptcy, reorganization or similar proceeding by or against
Lessee, Lessor, the Bank, Owner Participant, the Indenture Trustee, any holder
of an Equipment Note or Pass Through Certificate or any other Person, (e) 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, the Bank, Owner Participant, the 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, (f) the breach or failure of any warranty or representation
made in this Lease or any other Operative Agreement by Lessee, Lessor, the Bank,
Owner Participant, the Indenture Trustee, any holder of an Equipment Note or
Pass Through Certificate or any other Person, (g) 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 (h) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, any present or future law to the contrary notwithstanding
to the extent permitted by applicable law. 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
41
47
whole or in part by operation of law or otherwise, except as specifically
provided herein, Lessee nonetheless agrees, subject to Section 3.5, 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,
except in the manners precluded by this Section 19.
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 (a) upon personal delivery thereof, including, without
limitation, by overnight mail or courier service, (b) in the case of notice by
United States mail, certified or registered, postage prepaid, return receipt
requested, upon receipt thereof, or (c) in the case of notice by such facsimile,
upon confirmation of receipt thereof, provided such transmission is promptly
further confirmed in writing by either of the methods set forth in clause (a) or
(b), in each case 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: Wilmington Trust Company
Xxxxxx Square North
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
With copies to Owner Participant.
42
48
If to Owner Participant: FNBC Leasing Corporation
One First Xxxxxxxx Xxxxx
Xxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Contract Administration
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
Reference: UTC Trust No. 1998-A
If to the Indenture Trustee: Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Administration
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to Lessee: Union Tank Car Company
000 Xxxx Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel and Secretary
(UTC Trust No. 1998-A) (L-15)
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 herein or in any of the Operative
Agreements to the contrary, 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 Equipment.
43
49
SECTION 22. PURCHASE OPTIONS; RENEWAL OPTIONS.
Section 22.1 Early Purchase Option. (a) Provided that no Lease
Event of Default shall have occurred and be continuing either at the time of the
notice described below or on the Early Purchase Date (unless Lessor shall have
waived such Lease Event of Default solely for the purpose of this Section 22.1)
and Lessee shall have duly given the notice required by the next succeeding
sentence, Lessee shall have the right and, upon the giving of such notice, the
obligation to purchase any or all of the Units then leased hereunder (as
specified in such notice) on the Early Purchase Date; provided that if Lessee
elects to purchase some but less than all of the Units in any Equipment Group
the determination as to which Units are to be purchased shall be made on a
random or other reasonable basis (including, without limitation, on the basis of
Car Type) without discrimination based on maintenance status or operating
condition of the Units in question and such notice shall describe the manner in
which Lessee proposes to determine the Units in such Equipment Group which will
be purchased. Lessee shall give Lessor, the Indenture Trustee and the Pass
Through Trustee written notice not less than 90 days and not more than 360 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.
(b) If Lessee elects to exercise the purchase option provided
for in this Section 22.1 with respect to any Units, Lessee shall, as the
purchase price therefor, in the sole discretion of the Lessee, either (i) pay
the Early Purchase Price of such Units, together with all other amounts due and
owing by Lessee under the Operative Agreements with respect to such Units,
including, without limitation, all unpaid Basic Rent therefor due and payable on
or prior to the Early Purchase Date (exclusive of any in advance Basic Rent due
on such date) payable at the place of payment specified in Section 3.6 hereof in
immediately available funds, or (ii) pay the difference between the Early
Purchase Price of such Units and the outstanding principal amount of the
Equipment Notes relating to the purchased Units as of the Early Purchase Date
(determined in accordance with Section 2.10(d) of the Indenture), together with
all other amounts due and owing by Lessee under the Operative Agreements, and
assume on a full recourse basis pursuant to Section 4.01 of the Indenture, and
agree to indemnify Lessor against, all of Lessor's obligations in respect of the
related Equipment Notes; provided, that following such assumption, the purchased
Units shall remain subject to the lien of the Indenture. Lessee will make the
payments required by foregoing clause (i) or make the payments required by
foregoing clause (ii) and assume the Equipment Notes as provided in foregoing
clause (ii) on the Early Purchase Date in the manner specified in Section 3.6
hereof 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 against 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 the Deferred Portion of the
Early Purchase Price, which shall be paid in four (4) installments on the
Quarterly Dates occurring in the 12 months immediately following the Early
Purchase Date, which Deferred Portion (A) may be prepaid by Lessee at any time
in whole and (B) will be secured, at the option of Lessee, by (1) a first lien
on the
44
50
purchased Units (but only if no other indebtedness secured by such Units is then
outstanding), (2) a letter of credit in favor of Lessor in a form, and issued by
a financial institution, reasonably acceptable to Lessor, or (3) such other
collateral as may be mutually acceptable to Lessee and Lessor; and provided,
further, that unless Lessee shall have elected to assume all of the rights and
obligations of Lessor in respect of the related Equipment Notes, the portion of
the Early Purchase Price payable by Lessee on the Early Purchase Date, together
with other amounts of Supplemental Rent paid by Lessee on such date will be
under any circumstances and in any event, at least sufficient to pay in full, as
of the date of payment thereof, the aggregate unpaid principal of and all unpaid
interest on the Equipment Notes issued in respect of such Units and all other
amounts owed by Lessee under the Operative Agreements with respect to such
Units. 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. In the event of any such
purchase and receipt by Lessor and the Indenture Trustee of all of the amounts
provided in this Section 22.1, the obligation of Lessee to pay Basic Rent
hereunder for such Units shall cease and the Lease Term for such Units shall
end.
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, the end of any Fixed Rate Renewal Term or the end
of any Fair Market Renewal Term (as the latter two terms are defined in Section
22.4), Lessee shall give Lessor irrevocable written notice of its decision to
return or retain any or all of the Units at the end of the Basic Term or such
Renewal Term; provided that if Lessee elects to retain less than all of the
Units in an Equipment Group, the determination as to which Units are to be
retained shall be made on a random or other reasonable basis (including, without
limitation, on the basis of Car Type) without discrimination based on
maintenance status or operating condition of the Units in question, and Lessee
shall describe in such notice such manner in which it proposes to determine the
Units in such Equipment Group which will be retained. If Lessee elects to retain
some or all of the 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 180 days' notice
required by this Section 22.2, Lessee shall be deemed to have irrevocably
elected to return 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 Options. Provided that no Lease Event of
Default shall have occurred and be continuing either at the time of notice or
the expiration of the Lease Term (unless Lessor shall have waived such Lease
Event of Default solely for the purpose of this Section 22.3) and Lessee shall
have duly given the notice required by Section 22.2 and by the next succeeding
sentence of this Section 22.3, Lessee shall have the right and, upon the giving
of such notice under this Section 22.3, the obligation to purchase any or all of
the Units (as specified in such notice) (a) at the expiration of the Basic Term
at a price equal to the Basic Term Purchase Price of such Units plus all other
amounts due and owing by Lessee under the Operative Agreements; (b) on March 30,
2021 (the "Outside Date") at a price equal to the
45
51
Outside Date Purchase Price of such Units plus all other amounts due and owing
by Lessee under the Operative Agreements; provided that with respect to such
Units Lessee shall have renewed this Lease through the Outside Date on one or
more occasions pursuant to Section 22.4(a) or (b); or (c) at the expiration of
the Basic Term or any Renewal Term at a price equal to the Fair Market Sales
Value of such Units plus all other amounts due and owing by Lessee under the
Operative Agreements; and provided further that if Lessee elects to purchase
some but less than all of the Units in any Equipment Group, the determination as
to which Units are to be purchased shall be made on a random or other reasonable
basis (including, without limitation, on the basis of Car Type) without
discrimination based on maintenance status or operating condition of the Units
in question, and Lessee shall describe in such notice the manner in which it
proposes to determine the Units in such Equipment Group which will be purchased.
Lessee shall give Lessor written notice not less than 120 days and not more than
360 days prior to the end of the Basic Term, the Outside Date, the Fixed Rate
Renewal Term or the Fair Market 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 3.6 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 against 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 Options. Provided that no Lease Event of
Default shall have occurred and be continuing either at the time of notice or
the expiration of the Lease Term (unless Lessor shall have waived such Lease
Event of Default solely for the purpose of this Section 22.4) and Lessee shall
have duly given the notice required by Section 22.2, 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 any or all of the Units at the
expiration of the Basic Term or any applicable Renewal Term which Lessee has not
elected to purchase pursuant to Section 22.3, which obligation may be fulfilled
by Lessee electing to renew this Lease under either of the following Section
22.4(a) or (b):
(a) Fixed Rate. Lessee may give Lessor written notice not less
than 120 days and not more than 360 days prior to the end of the Basic Term (or,
in the circumstances described in the third sentence of this Section 22.4(a),
the then Fixed Rate Renewal Term) that Lessee elects to renew this Lease under
this Section 22.4(a) with respect to any or all of the Units then leased
hereunder, which notice shall be irrevocable. The foregoing notice from Lessee
shall specify the term (the "Fixed Rate Renewal Term") that Lessee selects for
its initial renewal under this Section 22.4(a), which shall be for one or more
years as Lessee shall select; provided that such Fixed Rate Renewal Term in no
event shall extend beyond the Outside Date. If Lessee selects a Fixed Rate
Renewal Term such that the period following such term until the
46
52
Outside Date is at least one year, then Lessee may elect one or more further
renewals of one or more years pursuant to this Section 22.4(a) so long as no
such term extends beyond the Outside Date. The Basic Rent for each Unit during
any Fixed Rate Renewal Term shall be 57% of the average of the semiannual Basic
Rent installments payable hereunder for such Unit during the Basic Term, payable
semiannually in arrears. Each Fixed Rate Renewal Term shall commence immediately
upon the expiration of the Basic Term or the preceding Fixed Rate Renewal Term,
as the case may be.
(b) Fair Market. Lessee may give Lessor written notice not
less than 120 days and not more than 360 days prior to the end of the Basic
Term, a Fixed Rate Renewal Term or a Fair Market Renewal Term (subject to the
limitations otherwise provided in this Section 22.4(b)), regardless of whether
Lessee is then entitled to renew this Lease for a Fixed Rate Renewal Term, that
Lessee elects to renew this Lease under this Section 22.4(b) with respect to any
or all of the Units then leased hereunder for a term of one or more years as
Lessee shall specify in such notice (the "Fair Market Renewal Term"), which
notice shall be irrevocable; provided that the aggregate of all Fixed Rate
Renewal Terms and Fair Market Renewal Terms shall not extend beyond the Outside
Date. The Basic Rent for the Units leased during the Fair Market Renewal Term
shall be the Fair Market Rental Value thereof, payable semiannually in arrears.
The Fair Market Renewal Term shall commence immediately upon the expiration of
the Base Term or the preceding Fixed Rate Renewal Term or Fair Market Renewal
Term, as the case may be.
(c) Exercise of Renewal Option for less than all Units. If
Lessee elects to renew this Lease under Section 22.4(a) or (b) with respect to
less than all of the Units in any Equipment Group, the determination as to which
Units are to be leased shall be made on a random or other reasonable basis
(including, without limitation, on the basis of Car Type) without discrimination
based on maintenance status or operating condition of the Units in question, and
Lessee shall describe in such notice the manner in which it proposes to
determine the Units in such Equipment Group which are to be leased.
Section 22.5 Appraisal. Promptly following Lessee's written
notice pursuant to Section 22.2 of its election to retain any Units at the end
of the Basic Term or a Renewal Term, as the case may be, Lessor and Lessee shall
determine the useful life (based on the actual condition of a reasonable
sampling of such Units), Fair Market Sales Value and Fair Market Rental Value of
the Units to be retained, in each case assuming the Units are in the condition
required by this Lease.
Section 22.6 Stipulated Loss Value and Termination Value
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 Value and
Termination Value 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
47
53
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 Term shall the Stipulated Loss Value and Termination Value of any Unit
be less than 20% of the Equipment Cost of such Unit.
SECTION 23. LIMITATION OF BANK'S LIABILITY.
It is expressly agreed and understood that all
representations, warranties and undertakings of Lessor hereunder shall be
binding upon Lessor, it being understood that Lessor's liability shall be
limited to the trust estate held by the Owner Trustee under the Trust Agreement
and in no case shall Wilmington Trust Company in its individual capacity 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 Bank (or any successor Owner Trustee) shall not be hereby
released as to any personal liability it may have for its gross negligence or
wilful misconduct and for its breach of its covenants, representations and
warranties, to the extent expressly agreed to, covenanted or made in its
individual capacity in the Participation Agreement or the Trust Agreement. If a
successor Owner Trustee is appointed in accordance with the terms of the Trust
Agreement, such successor shall, without any further act, succeed to all the
rights, duties, immunities and obligations of the Owner Trustee hereunder and
the predecessor Owner Trustee shall thereupon be deemed to be released from all
further duties and obligations hereunder arising after such successor's
appointment.
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
11.2, as the case may be, until paid to Lessee as provided in Section 11.4(a),
11.5 or 12.2 or the curing of Lease Default or a Lease Event of Default or
otherwise applied as provided herein or in the Trust Agreement and Indenture,
shall be invested at the risk and expense of Lessee in Specified Investments by
Lessor (unless the Indenture shall not have been discharged, in which case, by
the Indenture Trustee as provided in Section 6.04(b) of the Indenture) from time
to time as directed by telephone (and confirmed promptly thereafter in writing)
by Lessee if such investments are reasonably available for purchase. There shall
be promptly remitted to Lessee, so long as no Lease Default relating to Section
14(a), (b), (g) or (h) or Lease Event of Default shall have occurred and be
continuing, any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) and Lessee will promptly pay to
Lessor or the Indenture Trustee, as the case may be, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other expenses, if any, incurred in connection with such
investment), such amount to be disposed of in accordance with the terms of the
Trust Agreement and the Indenture. If a Lease Event of
48
54
Default shall have occurred and be continuing, any moneys held pursuant to this
Section 24, and any gain from the investment thereof, may be applied to Lessee's
obligations hereunder.
SECTION 25. MISCELLANEOUS.
Section 25.1 Governing Law; Severability. This Lease, and any
extensions, amendments, modifications, renewals or supplements hereto shall be
governed by and construed in accordance with the internal laws and decisions of
the State of Illinois; provided, however, that the parties shall be entitled to
all rights conferred by any applicable Federal statute, rule or regulation.
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 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," and 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, and that this Lease conveys to Lessee no right, title or interest
in any Unit except as lessee. 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.
49
55
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 Initial Closing Date and the Subsequent 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.
Section 25.9 Directly or Indirectly. 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.
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.
Section 25.11 Lessee's Right of Quiet Enjoyment. So long as no
Lease Event of Default has occurred and is continuing, Lessor shall not take, or
cause to be taken, any action contrary to Lessee's rights under this Lease,
including, without limitation, the right to possession and use by Lessee or any
permitted sublessee of the Equipment.
Section 25.12 Entire Agreement. This Lease, together with the
schedules, exhibits and documents delivered hereunder, and the other Operative
Agreements contain the entire agreement between the parties with respect to the
subject matter covered herein and therein, and supersede all prior agreements
(oral or written), negotiations and discussions between the parties relating
thereto.
50
56
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:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee
under the Trust Agreement
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Financial Services Officer
LESSEE:
UNION TANK CAR COMPANY
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
51
57
State of Delaware )
) SS
County of New Castle )
On this 24th day of March, 1998, before me personally appeared
Xxxxxxxx X. Xxxxx, to me personally known, who being by me duly sworn, say that
she is Financial Services Officer of Wilmington Trust Company, that said
instrument was signed on such date on behalf of said corporation solely in its
capacity as Owner Trustee under the Trust Agreement referred to in said
instrument, and she acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation in such capacity.
/s/ Xxxxxxxx Xxxxxx
---------------------------------------
Notary Public
[Notarial Seal]
My commission expires: August 22, 2000
State of Illinois )
) SS
County of Xxxx )
On this 25th day of March, 1998, before me personally appeared
Xxxx Xxxxxxxx, to me personally known, who being by me duly sworn, say that he
is the Vice President of Union Tank Car Company, that said instrument was signed
on such date on behalf of said corporation by authority of its Board of
Directors, and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation.
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Notary Public
[Notarial Seal]
My commission expires: May 20, 2000
52
58
EXHIBIT A
LEASE SUPPLEMENT NO. ___
(UTC TRUST NO. 1998-A) (L-15)
This Lease Supplement No. , dated , 1998 between Wilmington
Trust Company, a Delaware banking corporation, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement ("Lessor"), and Union
Tank Car Company, a Delaware corporation ("Lessee");
Witnesseth:
Lessor and Lessee have heretofore entered into that certain
Equipment Lease Agreement (UTC Trust No. 1998-A) (L-15) dated March 30, 1998
(the "Lease"). The terms used herein are used with the meanings specified 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 of Equipment 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 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 in
accordance with the internal laws and decisions of the State of Illinois;
provided, however, that the parties shall be entitled to all rights conferred by
any applicable Federal statute, rule or regulation.
5. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
A-1
59
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written and to be
delivered on the date first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee
under the Trust Agreement
By:______________________________________________
Name:
Title:
UNION TANK CAR COMPANY
By:______________________________________________
Name:
Title:
A-2
60
State of )
) SS
County of )
On this ____ day of _______________, 1998, before me
personally appeared ______________________, to me personally known, who being by
me duly sworn, say that he is ____________________________ of Wilmington Trust
Company, that said instrument was signed on such date on behalf of said
corporation solely in its capacity as Owner Trustee under the Trust Agreement
referred to in said instrument, and he acknowledged that the execution of the
foregoing instrument was the free act and deed of said corporation in such
capacity.
___________________________________________
Notary Public
[Notarial Seal]
My commission expires:
State of Illinois )
) SS
County of Xxxx )
On this ____ day of _____________, 1998, before me personally
appeared __________________________, to me personally known, who being by me
duly sworn, say that he is ____________________________ of Union Tank Car
Company, that said instrument was signed on such date on behalf of said
corporation by authority of its Board of Directors, and he acknowledged that the
execution of the foregoing instrument was the free act and deed of said
corporation.
___________________________________________
Notary Public
[Notarial Seal]
My commission expires:
A-3
