EXHIBIT 10.16.1
PARTICIPATION AGREEMENT (TRLI 2001-1A)
Dated as of May 17, 2001
among
TRINITY RAIL LEASING I L.P.,
as Lessee,
TRINITY RAIL MANAGEMENT, INC.,
TRINITY INDUSTRIES LEASING COMPANY,
as Manager,
TRLI 2001-1A RAILCAR STATUTORY TRUST,
BY STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Owner Trustee,
TRIMARAN LEASING, L.P.,
as Owner Participant
and
LASALLE BANK NATIONAL ASSOCIATION,
as Indenture Trustee and Pass Through Trustee
Tank Cars, Covered Xxxxxx Cars and Box Cars
Participation Agreement (TRLI 2001-1A)
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS; INTERPRETATION OF THIS
AGREEMENT.....................................................................4
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN
EQUIPMENT COST; CLOSING; TRANSACTION COSTS....................................4
Section 2.1 Sale and Purchase of Equipment................................................4
Section 2.2 Participation in Equipment Cost...............................................4
Section 2.3 Closing Date; Procedure for Participation.....................................5
Section 2.4 Owner Participant's Instructions to the Owner Trustee; Satisfaction of
Conditions....................................................................6
Section 2.5 Expenses......................................................................7
Section 2.6 Calculation of Adjustments to Basic Rent, Stipulated Loss Value
and Termination Value; Confirmation and Verification.........................10
Section 2.7 Postponement of Closing Date.................................................13
SECTION 3. REPRESENTATIONS AND WARRANTIES...............................................15
Section 3.1 Representations and Warranties of the Trust Company..........................15
Section 3.2 Representations and Warranties of the Lessee.................................18
Section 3.3 Representations and Warranties of the Indenture Trustee......................24
Section 3.4 Representations, Warranties and Covenants Regarding Beneficial
Interest, Equipment Note and Pass Through Certificates.......................25
Section 3.5 Representations and Warranties of the Owner Participant......................27
Section 3.6 Representations and Warranties of TILC.......................................29
Section 3.7 Representations and Warranties of TRMI.......................................34
Section 3.8 Representations and Warranties of the Pass Through Trustee...................36
Section 3.9 Opinion Acknowledgment.......................................................38
SECTION 4. CLOSING CONDITIONS...........................................................38
Section 4.1 Conditions Precedent to Investment by Each Participant.......................38
Section 4.2 Additional Conditions Precedent to Investment by the Loan
Participant..................................................................46
Section 4.3 Additional Conditions Precedent to Investment by the Owner
Participant..................................................................47
Section 4.4 Conditions Precedent to the Obligation of TILC and the Lessee................48
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE....................................49
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE
TRUSTEES AND THE LESSEE......................................................51
Participation Agreement (TRLI 2001-1A)
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Page
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Section 6.1 Restrictions on Transfer of Beneficial Interest..............................51
Section 6.2 Lessor's Liens Attributable to the Owner Participant.........................55
Section 6.3 Lessor's Liens Attributable to Trust Company.................................55
Section 6.4 Liens Created by the Indenture Trustee and the Loan Participant..............55
Section 6.5 Covenants of Owner Trustee, Owner Participant and Indenture
Trustee......................................................................56
Section 6.6 Amendments to Operative Agreements That Are Not Lessee
Agreements...................................................................57
Section 6.7 Certain Representations, Warranties and Covenants............................57
Section 6.8 Covenants of the Manager.....................................................57
Section 6.9 Lessee's Purchase in Certain Circumstances...................................57
Section 6.10 Owner Participant as Affiliate of Lessee.....................................59
Section 6.11 Records; U.S. Income Tax Information.........................................60
SECTION 7. LESSEE'S INDEMNITIES.........................................................60
Section 7.1 General Tax Indemnity........................................................60
Section 7.2 General Indemnification......................................................70
Section 7.3 Indemnification by TILC......................................................76
Section 7.4 Indemnification by TRMI......................................................81
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT............................................86
SECTION 9. SUCCESSOR INDENTURE TRUSTEE..................................................86
SECTION 10. MISCELLANEOUS................................................................86
Section 10.1 Consents.....................................................................86
Section 10.2 Refinancing..................................................................86
Section 10.3 Amendments and Waivers.......................................................89
Section 10.4 Notices......................................................................89
Section 10.5 Survival.....................................................................92
Section 10.6 No Guarantee of Residual Value or Debt.......................................92
Section 10.7 Successors and Assigns.......................................................92
Section 10.8 Business Day.................................................................92
SECTION 10.9 GOVERNING LAW................................................................92
Section 10.10 Severability.................................................................93
Section 10.11 Counterparts.................................................................93
Section 10.12 Headings and Table of Content................................................93
Section 10.13 Limitations of Liability.....................................................93
Section 10.14 Maintenance of Non-Recourse Debt.............................................94
Section 10.15 Ownership of and Rights in Units.............................................95
Section 10.16 No Petition..................................................................95
Section 10.17 Consent To Jurisdiction......................................................96
SECTION 10.18 WAIVER OF JURY TRIAL.........................................................96
Participation Agreement (TRLI 2001-1A)
ii
EXHIBITS AND SCHEDULES
Exhibit A-1 - Form of Certificate of Insurance Broker Confirming Insurance
Coverage (Primary Liability)
Exhibit A-2 - Form of Certificate of Insurance Broker Confirming Insurance
Coverage (Excess Liability)
Exhibit B-1 - Insurance Requirements as to Public Liability Insurance
Exhibit B-2 - Insurance Requirements as to Physical Damage Insurance
Exhibit C - Form of Transfer Agreement
Exhibit D - Form of Notice of Assignment of Sublease
Exhibit E-1 - Form of Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois) Opinion
Exhibit E-2 - Form of Trinity Rail Leasing I L.P., Trinity Industries Leasing
Company and Trinity Rail Management, Inc. Opinion
Exhibit E-3 - Form of Xxxxxxx Xxxx LLP Opinion
Exhibit E-4 - Form of Winston & Xxxxxx Opinion
Exhibit E-5 - Form of Xxxxxx Xxxxxx Capital Corporation Legal Department
Opinion
Exhibit E-6 - Form of Opinion of in-house counsel for the Indenture Trustee
Exhibit E-7 - Form of Xxxxxx & Xxxxxx Opinion
Exhibit E-8 - Form of XxXxxxxx Xxxxxxxx Opinion
Exhibit E-9 - Form of Xxxxxxx & Xxxxx L.L.P. Opinion
Exhibit E-10 - Form of Opinion of in-house counsel for the Pass Through
Trustee
Exhibit E-11 - Form of Morris, James, Hitchens & Xxxxxxxx Opinion
Exhibit F - Form of Officer's Solvency Certificate
Schedule 1 - Description of Equipment, Designation of Basic Groups,
Designation of Functional Groups and Equipment Cost
Schedule 1-A - Description of Pledged Equipment
Schedule 1-B - List of Existing Subleases and Existing Pledged Equipment
Leases
Schedule 2 - Commitment Percentage and Payment Information for
Participants
Schedule 3-A - Schedule of Basic Rent Payments
Schedule 3-B - Basic Rent Allocation Schedule
Schedule 4-A - Schedule of Stipulated Loss Value and Termination Value
Schedule 4-B - Termination Amount Schedule
Schedule 5 - Terms of Equipment Note
Schedule 6 - Purchase Information
Schedule 3.2(m) - Written Information Provided by Trinity Rail Leasing I L.P.,
Trinity Industries Leasing Company and Trinity Rail
Management, Inc.
Participation Agreement (TRLI 2001-1A)
iii
PARTICIPATION AGREEMENT (TRLI 2001-1A)
This
PARTICIPATION AGREEMENT (TRLI 2001-1A), dated as of May 17, 2001
(this "Agreement"), is by and among (i) Trinity Rail Leasing I L.P., a Texas
limited partnership (together with its permitted successors and assigns, the
"Lessee"), (ii) Trinity Rail Management, Inc., a Delaware corporation ("TRMI"),
(iii) Trinity Industries Leasing Company, a Delaware corporation ("TILC"), (iv)
TRLI 2001-1A Railcar Statutory Trust, a Connecticut statutory trust, by State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, ("Trust Company"), not in its individual capacity except as
expressly provided herein but solely as trustee (together with its permitted
successors and assigns, the "Owner Trustee") under the Trust Agreement (such
term and other defined terms used herein shall have the meanings assigned
thereto in Section 1 below), (v) Trimaran Leasing, L.P., a Delaware limited
partnership (together with its permitted successors and assigns, the "Owner
Participant") and (vi) LaSalle Bank National Association, a national banking
association, not in its individual capacity except as expressly provided herein
but solely as pass through trustee under the Pass Through Trust Agreement (in
such capacity, together with its permitted successors and assigns, the "Pass
Through Trustee" or the "Loan Participant"), and as trustee under the Indenture
(in such capacity, together with its permitted successors and assigns, the
"Indenture Trustee"). The Owner Participant and the Loan Participant are
sometimes hereinafter referred to collectively as the "Participants."
WITNESSETH:
WHEREAS, on or prior to the date hereof, the Owner Participant and the
Trust Company have entered into the Trust Agreement pursuant to which the Owner
Trustee has agreed, among other things, to hold the Trust Estate for the benefit
of the Owner Participant thereunder on the terms specified in the Trust
Agreement, subject, however, to the Lien created under the Indenture and,
subject to the terms and conditions hereof, to purchase on the Closing Date the
Equipment described in Schedule 1 hereto from the Lessee and concurrently
therewith to lease such Equipment to the Lessee;
WHEREAS, on or prior to the date hereof and pursuant to the Pass
Through Trust Agreement a grantor trust was created to facilitate the financing
contemplated hereby;
WHEREAS, on the Closing Date, the Owner Trustee and the Indenture
Trustee will enter into the Indenture, pursuant to which the Owner Trustee will
agree, among other things, to borrow from the Loan Participant the loan in
connection with the financing of the Total Equipment Cost and to issue to the
Loan Participant the Equipment Note as evidence of such loan;
Participation Agreement (TRLI 2001-1A)
WHEREAS, TILC will, on the Closing Date, pursuant to the Transfer and
Assignment Agreement (i) sell to the Partnership all of TILC's right, title and
interest in and to the Equipment described on Schedule 1 hereto and (ii) assign
and transfer to the Partnership all of TILC's right, title and interest in and
to any Existing Equipment Subleases;
WHEREAS, TILC will, on the Closing Date, pursuant to the Pledged
Equipment Transfer and Assignment Agreement (i) sell to the Partnership all of
TILC's right, title and interest in and to the Pledged Equipment and (ii) assign
and transfer to the Partnership all of TILC's right, title and interest in and
to any Existing Pledged Equipment Leases;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Participant has authorized and directed the Owner Trustee to, and the Owner
Trustee will, among other things and subject to the terms and conditions of the
Operative Agreements, (i) purchase the Equipment described in Schedule 1 hereto
from the Lessee and accept delivery from the Lessee of the Xxxx of Sale
evidencing the purchase and transfer of title of each Unit to the Owner Trustee,
(ii) own the Equipment described in Schedule 1 hereto as provided in the
Operative Agreements, (iii) accept pursuant to the Assignment the assignment and
transfer from the Lessee of all Lessee's right, title and interest in and to the
Existing Equipment Subleases and (iv) execute and deliver the Lease, pursuant to
which, subject to the terms and conditions set forth therein, the Owner Trustee
agrees to lease to the Lessee, and the Lessee agrees to lease from the Owner
Trustee, each Unit to be delivered on the Closing Date, such lease to be
evidenced by the execution and delivery of the Lease Supplement covering such
Units, and to assign the Existing Equipment Subleases to the Lessee, such
assignment to be evidenced by the execution and delivery of the Assignment
covering such Existing Equipment Subleases;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Lessee, TILC, TRMI, the Owner Trustee, the Indenture Trustee and
the Collateral Agent have entered into the Collateral Agency Agreement, pursuant
to which the Lessee will agree, among other things, to grant to the Collateral
Agent for the security and the benefit of the Owner Trustee a security interest
in the Collateral to secure the performance by the Lessee of its obligations
under the Lease;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Participant has authorized and directed the Owner Trustee to, and the Owner
Trustee will, among other things and subject to the terms and conditions of the
Operative Agreements, grant to the Indenture Trustee for the security and the
benefit of the holder of the Equipment Note a security interest in the Indenture
Estate;
Participation Agreement (TRLI 2001-1A)
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WHEREAS, concurrently with the execution and delivery of this
Agreement, Lessee, Trinity and the Owner Participant (or an Affiliate of the
Owner Participant) will enter into the Tax Indemnity Agreement;
WHEREAS, the proceeds from the sale of the Equipment Note to the Loan
Participant will be applied, together with the equity contribution made by the
Owner Participant pursuant to this Agreement, to effect the purchase of the
Equipment described on Schedule 1 hereto by the Owner Trustee from the Lessee as
contemplated hereby;
WHEREAS, prior to the Closing Date, the Partners made capital
contributions to the Lessee in accordance with the Partnership Agreement and on
the Closing Date the proceeds of such capital contributions will be applied (i)
to effect the purchase of the Pledged Equipment by the Lessee from TILC as
contemplated hereby and (ii) to fund certain reserve accounts of the Lessee as
contemplated hereby and by the Collateral Agency Agreement and the Indemnity
Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Lessee and TILC have entered into the Management Agreement,
pursuant to which TILC will provide management services with respect to the
Equipment and the Pledged Equipment;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Lessee and TILC have entered into the Insurance Agreement,
pursuant to which TILC will provide services to the Lessee in connection with
obtaining, managing and maintaining insurance with respect to the Equipment and
the Pledged Equipment required under the Operative Agreements;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Lessee, the General Partner, the Limited Partner and TRMI have
entered into the Administrative Services Agreement, pursuant to which TRMI will
provide certain administrative services with respect to the Partnership, the
General Partner and the Limited Partner; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, Trinity Industries, Inc. has issued the Trinity Guaranty in favor of
the beneficiaries named therein, pursuant to which Trinity Industries, Inc. will
guarantee performance of the obligations of TILC and TRMI under the Operative
Agreements to which TILC or TRMI is a party, respectively.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:
Participation Agreement (TRLI 2001-1A)
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SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT.
Unless otherwise defined herein or unless the context shall otherwise
require, capitalized terms used in this Agreement shall have the meanings
assigned to such terms in Appendix A to the Equipment Lease Agreement (TRLI
2001-1A), dated as of May 17, 2001, between the Owner Trustee and the Lessee.
Unless otherwise indicated, all references herein to Sections, Schedules and
Exhibits refer to Sections, Schedules and Exhibits of this Agreement.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSING;
TRANSACTION COSTS.
Section 2.1 Sale and Purchase of Equipment. Subject to the terms and
conditions hereof and on the basis of the representations and warranties set
forth herein, the Lessee agrees to sell to the Owner Trustee, and the Owner
Trustee agrees to purchase from the Lessee, on the Closing Date and immediately
following consummation of the transactions described in the third and fourth
recital clauses above, the Equipment described in Schedule 1, and, in connection
therewith, the Owner Trustee agrees to pay to the Lessee the cost for each Unit
as specified in Schedule 1. On the Closing Date, the Lessee shall deliver each
Unit described on Schedule 1 to the Owner Trustee, and the Owner Trustee shall
accept such delivery.
Section 2.2 Participation in Equipment Cost.
(a) Equity Participation. On the Closing Date, subject to the
terms and conditions hereof and on the basis of the representations and
warranties set forth herein, the Owner Participant agrees to participate in the
payment of the Total Equipment Cost for the Units delivered on the Closing Date
by making an equity investment in the beneficial ownership of such Units in the
amount equal to the product of the Total Equipment Cost for such Units delivered
on the Closing Date and the percentage set forth opposite the Owner
Participant's name in Schedule 2 (the "Owner Participant's Commitment"). The
aggregate amount of the Owner Participant's Commitment plus the aggregate amount
of Transaction Costs payable by the Owner Participant shall not exceed the sum
of (x) the Owner Participant's Commitment and (y) 3% of the Total Equipment
Cost. The Owner Participant's Commitment shall be paid to the Indenture Trustee
to be held (but not as part of the Indenture Estate) and applied on behalf of
the Owner Trustee toward payment of the Total Equipment Cost as provided in
Section 2.3.
(b) Debt Participation. On the Closing Date, subject to the
terms and conditions hereof and on the basis of the representations and
warranties set forth
Participation Agreement (TRLI 2001-1A)
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herein, the Loan Participant agrees to participate in the payment of the Total
Equipment Cost for the Units delivered on the Closing Date by making a secured
loan, not from its own funds but solely from funds available to it for such
purposes under the Pass Through Trust Agreement, to be evidenced by the
Equipment Note, to the Owner Trustee in the amount equal to the product of the
Total Equipment Cost for the Units delivered on the Closing Date and the
percentage set forth opposite the Loan Participant's name in Schedule 2 (the
"Loan Participant's Commitment"). The Equipment Note shall bear interest at the
Debt Rate.
Section 2.3 Closing Date; Procedure for Participation.
(a) Notice of Closing Date. Not later than three Business
Days' prior to the Closing Date (or such lesser notice as may be agreed upon by
the Lessee, the Owner Participant and the Loan Participant), the Lessee shall
give the Owner Participant, the Indenture Trustee, the Owner Trustee and the
Loan Participant a notice (a "Notice of Delivery") by facsimile or other form of
telecommunication or telephone (to be promptly confirmed in writing) of the
Closing Date, which Notice of Delivery shall specify in reasonable detail the
number and type of Units to be delivered on such date, the Total Equipment Cost
of such Units, and the respective amounts of the Owner Participant's Commitment
and the Loan Participant's Commitment required to be paid with respect to the
Units. Prior to 11:00 a.m., Chicago time, on the Closing Date, subject to the
satisfaction (or waiver) of the respective conditions specified in Section 4,
the Owner Participant shall make the amount of the Owner Participant's
Commitment required to be paid on the Closing Date available to the Indenture
Trustee, and immediately prior to the delivery and acceptance of the Units as
specified in Section 2.3(b), the Loan Participant shall make the amount of the
Loan Participant's Commitment for the Total Equipment Cost required to be paid
on the Closing Date available to the Indenture Trustee, in either case, by
transferring or delivering such amounts, in funds immediately available on the
Closing Date, to the Indenture Trustee, either directly to, or for deposit in,
the Indenture Trustee's account at LaSalle Bank National Association, ABA No.
000000000, Att.: Xxxxxxxx Xxxxxxxx, Corporate Trust Services Division, Trust
TRLI 2001-1A, Account 608775300. The making available by the Owner Participant
of the amount of the Owner Participant's Commitment for the Total Equipment Cost
shall be deemed a waiver of the Notice of Delivery by the Owner Participant and
the Owner Trustee. The making available by the Loan Participant of the amount of
the Loan Participant's Commitment for the Total Equipment Cost shall be deemed a
waiver of the Notice of Delivery by the Loan Participant and the Indenture
Trustee.
(b) Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place on or before 2:00 p.m., Chicago time, on
the Closing Date at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
(Illinois), or at such
Participation Agreement (TRLI 2001-1A)
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other place or time as the parties hereto shall agree. Upon receipt by the
Indenture Trustee on the Closing Date of the full amount of the Owner
Participant's Commitment and the Loan Participant's Commitment in respect of the
Units delivered on the Closing Date, TILC shall pursuant to the Transfer and
Assignment Agreement deliver the Units described on Schedule 1 hereto to the
Lessee by delivery of the XXXX Xxxx of Sale and shall make an assignment of the
Existing Equipment Subleases to the Lessee by delivery of the TILC Assignment,
and immediately thereafter, (i) the Indenture Trustee, on behalf of the Owner
Trustee, shall, subject to the conditions set forth in Sections 4.1, 4.2 and 4.3
having been fulfilled to the satisfaction of the Participants or waived by the
Participants, pay to the Lessee from the funds then held by it, in immediately
available funds, an amount equal to the Total Equipment Cost for the Units
delivered on the Closing Date, (ii) the Lessee shall pay to TILC pursuant to the
Transfer and Assignment Agreement an amount equal to the Total Equipment Cost
for the Units delivered on the Closing Date, (iii) the Lessee shall deliver the
Units described on Schedule 1 hereto by delivery of the Xxxx of Sale, (iv) the
Owner Trustee shall, pursuant to the Lease, lease and deliver the Units listed
on Schedule 1 hereto to the Lessee, and the Lessee, pursuant to the Lease, shall
accept delivery of the Units described on Schedule 1 hereto under the Lease,
such lease, delivery and acceptance of such Units under the Lease shall be
conclusively evidenced by the execution and delivery by the Lessee and the Owner
Trustee of the Lease Supplement covering the Equipment so delivered as described
in Schedule 1 and (v) the Owner Trustee shall execute and deliver the Equipment
Note relating to such Lease Supplement to the Loan Participant. Concurrently
with the transactions described immediately above, TILC shall pursuant to the
Pledged Equipment Transfer and Assignment Agreement sell the Pledged Units
described on Schedule 1-A hereto to the Lessee by delivery of the Pledged
Equipment Xxxx of Sale and shall make an assignment of the Existing Pledged
Equipment Leases to the Lessee by delivery of the TILC Pledged Equipment
Assignment. Each of the Lessee, the Owner Participant, the Owner Trustee, TILC,
the Loan Participant and the Indenture Trustee hereby agrees to take all actions
required to be taken by it in connection with the Closing as contemplated by
this Section 2.3(b).
Section 2.4 Owner Participant's Instructions to the Owner Trustee;
Satisfaction of Conditions.
(a) The Owner Participant agrees that the making available to
the Indenture Trustee of the amount of the Owner Participant's Commitment for
the Units delivered on the Closing Date in accordance with the terms of this
Section 2 shall constitute, without further act, authorization and direction by
the Owner Participant to the Owner Trustee, subject, on the Closing Date, to the
conditions set forth in Sections 4.1 and 4.3 having been fulfilled to the
satisfaction of the Owner Participant or waived by the Owner Participant, to
take the actions specified in Section 2.04 of the Trust Agreement with respect
to the Units on the Closing Date.
Participation Agreement (TRLI 2001-1A)
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(b) The Owner Participant agrees that the authorization by the
Owner Participant or its counsel to the Indenture Trustee to release to the
Lessee the Owner Participant's Commitment with respect to the Units delivered on
the Closing Date shall constitute, without further act, notice and confirmation
that all conditions to closing set forth in Sections 4.1 and 4.3 were either met
to the satisfaction of the Owner Participant or, if not so met, were waived by
the Owner Participant.
(c) The Loan Participant agrees that the authorization by the
Loan Participant or its counsel to the Indenture Trustee to release to the
Lessee the Loan Participant's Commitment with respect to the Units delivered on
the Closing Date shall constitute, without further act, notice and confirmation
that all conditions to closing set forth in Sections 4.1 and 4.2 were either met
to the satisfaction of the Loan Participant or, if not so met, were waived by
the Loan Participant.
Section 2.5 Expenses.
(a) If the Owner Participant shall have made its investment
provided for in Section 2.2 and the transactions contemplated by this Agreement
are consummated, either the Owner Participant will promptly pay, or the Owner
Trustee will promptly pay, with funds the Owner Participant hereby agrees to pay
(which, together with the Owner Participant's Commitment, shall not exceed the
amount set forth in the second sentence of Section 2.2(a)) to the Owner Trustee,
the following (collectively referred to as the "Transaction Costs") if evidenced
by an invoice delivered to the Owner Participant within four (4) months after
the Closing Date and approved by the Lessee and the Owner Participant (such
approval not to be unreasonably withheld or delayed):
(i) the cost of reproducing, printing and filing the
Operative Agreements, the Equipment Note, the Pass Through Documents and all
amendments and supplements to the foregoing, including all costs and fees in
connection with the initial filing and recording of the Lease, the Indenture and
any other document required to be filed or recorded pursuant to the provisions
hereof or of any other Operative Agreement and the fees and expenses of the
Rating Agency in connection with the rating of the Pass Through Certificates;
(ii) the reasonable out-of-pocket expenses of the
Owner Participant and the reasonable fees of Winston & Xxxxxx, special counsel
for the Owner Participant, plus disbursements, for their services rendered in
connection with the negotiation, execution and delivery of this Agreement and
the other Operative Agreements;
Participation Agreement (TRLI 2001-1A)
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(iii) the initial fees and reasonable out-of-pocket
expenses of the Collateral Agent and the reasonable fees and expenses of Xxxxxxx
& Xxxxx L.L.P., special counsel for the Collateral Agent, for their services
rendered in connection with the negotiation, execution and delivery of the
Operative Agreements;
(iv) the reasonable fees and expenses of Skadden,
Arps, Slate, Xxxxxxx & Xxxx (Illinois), special counsel for TILC, the Lessee and
TRMI, for their services rendered in connection with the preparation of
documentation, negotiation, execution and delivery of this Agreement and the
other Operative Agreements;
(v) the reasonable fees and expenses of Xxxxxx &
Xxxxxx L.L.P., special counsel for the Initial Purchasers, for their services
rendered in connection with the preparation of documentation, negotiation,
execution and delivery of the Pass Through Documents, this Agreement and the
other Operative Agreements;
(vi) the reasonable fees and expenses of (x) Xxxxxx &
Xxxxxx, special STB counsel and (y) XxXxxxxx Xxxxxxxx, special Canadian rail
counsel;
(vii) the reasonable fees and expenses of Xxxxxxx
Xxxx LLP, special counsel for the Owner Trustee, for their services rendered in
connection with the negotiation, execution and delivery of this Agreement and
the other Operative Agreements;
(viii) the reasonable fees and expenses of Schwartz,
Cooper, Xxxxxxxxxxx & Xxxxxx, special counsel for the Indenture Trustee and the
Pass Through Trustee, for their services rendered in connection with the
negotiation, execution and delivery of the Pass Through Documents, this
Agreement and the other Operative Agreements;
(ix) the reasonable fees and expenses payable to the
Arrangers for their services rendered as advisor to the Lessee;
(x) the initial fees and reasonable out-of-pocket
expenses of the Owner Trustee;
(xi) the initial fees and reasonable out-of-pocket
expenses of the Indenture Trustee;
Participation Agreement (TRLI 2001-1A)
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(xii) the initial fees and reasonable out-of-pocket
expenses of the Pass Through Trustee;
(xiii) the reasonable fees of Rail Solutions, Inc.
(which fees shall in no event exceed $22,000 in the aggregate in respect of the
amounts payable hereunder), plus disbursements, for their services rendered in
connection with delivering the Appraisal required by Section 4.3(a) and for
other consulting services;
(xiv) [intentionally omitted];
(xv) the costs incurred in connection with any
adjustment pursuant to Section 2.6(a); and
(xvi) all costs and fees in connection with the
qualification of the Pass Through Certificates under federal or state securities
laws or Blue Sky laws in accordance with the provisions of the Certificate
Purchase Agreement.
Except as expressly provided above, Transaction Costs shall
not include internal costs and expenses such as salaries and overhead of
whatsoever kind or nature of, or costs incurred by, parties to this Agreement
pursuant to arrangements with third parties for services (other than those
expressly referred to above).
(b) Upon the consummation of the transactions contemplated by
this Agreement, the Lessee agrees to be responsible for, and will pay when due
as Supplemental Rent: (i) the reasonable expenses (including reasonable legal
fees and expenses) of the Owner Trustee, the Indenture Trustee and the
Participants incurred subsequent to the delivery of the Equipment on the Closing
Date, in connection with any supplements, amendments, modifications,
alterations, waivers or consents (whether or not consummated) of any of the
Operative Agreements which are either (1) requested by the Lessee or (2)
required by any applicable law or regulation (other than laws or regulations
solely relating to the business of the Lessor, the Indenture Trustee, the Trust
Company, the Pass Through Trustee, the Initial Purchasers, the Collateral Agent
or any Participant) or (3) entered into in connection with, or as a result of, a
Lease Default or (4) required pursuant to the terms of the Operative Agreements
(including such reasonable expenses incurred in connection with any adjustment
pursuant to Section 2.6), (ii) the ongoing fees of the Owner Trustee under the
Trust Agreement; (iii) the ongoing fees of the Indenture Trustee under the
Operative Agreements, (iv) the ongoing fees of the Collateral Agent under the
Collateral Agency Agreement and (v) the ongoing fees of the Pass Through Trustee
under the Pass Through Trust Agreement; provided that following the occurrence
of the "Closing Date" under the Other Participation Agreement, the fees referred
to in
Participation Agreement (TRLI 2001-1A)
9
clauses (iv) and (v) immediately above shall be allocated between the
transactions contemplated hereby and the transactions contemplated by the Other
Participation Agreement on a pro rata basis based on the aggregate commitments
of the Participants hereunder as compared with the aggregate commitments of the
participants under the Other Participation Agreement.
(c) If the transactions contemplated hereby are not
consummated as a result of a default by the Owner Participant in its obligations
to consummate the transactions contemplated hereby, the Owner Participant shall
pay those Transaction Costs referred to in Sections 2.5(a)(ii) and (xiii) above
and the Lessee shall pay the remainder. If the transactions contemplated hereby
are not consummated due to any other reason, the Lessee shall pay all
Transaction Costs.
(d) Notwithstanding the foregoing provisions of this Section
2.5, the Lessee shall have no liability for (i) any costs or expenses relating
to any voluntary transfer of the Owner Participant's interest in the Equipment
pursuant to Section 6.1 other than during the continuance of a Lease Event of
Default and no such costs or expenses shall constitute Transaction Costs, (ii)
any costs or expenses relating to any voluntary transfer of any Loan
Participant's interest in the Equipment Note and (iii) any costs or expenses
relating to any voluntary transfer of any Certificateholder's interest in the
Pass Through Certificates, and in each case no such costs or expenses shall
constitute Transaction Costs.
(e) To the extent Transaction Costs exceed 3% of the Total
Equipment Cost, Lessee shall pay the Transaction Costs specified in Sections
2.5(a) (iv) and (ix) above up to an amount equal to the amount of such excess.
Section 2.6 Calculation of Adjustments to Basic Rent, Stipulated Loss
Value and Termination Value; Confirmation and Verification.
(a) Calculation of Adjustments. In the event that (A) the
Closing Date is other than May 17, 2001, (B) the actual interest rate on the
Equipment Note is different from the Debt Rate or the amortization of the
Equipment Note is different from that set forth on Schedule 5, (C) a refinancing
contemplated by Section 10.2 occurs, (D) the actual aggregate Equipment Cost or
composition of the Units is different from that set forth on Schedule 1, (E) the
actual aggregate amount of Transaction Costs paid pursuant to Section 2.5(a) is
other than an amount equal to 3% of the Total Equipment Cost, (F) there is any
change in, or cost relating to a revision in, the structure of the transaction
contemplated hereby as required by the Rating Agency, or (G) there is any change
in the Code or in the regulations promulgated thereunder or other official
administrative pronouncement, which change is proposed, enacted or effective
after the execution of this Agreement and prior to the Closing Date (provided
that the Owner Participant or the Lessee, as the
Participation Agreement (TRLI 2001-1A)
10
case may be, shall have provided notice to the other prior to the Closing Date),
and which change alters or eliminates any tax assumption used in calculating
Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values,
Termination Amounts, Early Purchase Price, then, in each such case, the Owner
Participant shall recalculate the payments or amounts, as the case may be, of
Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values,
Termination Amounts and Early Purchase Price, (i) to preserve the Net Economic
Return that the Owner Participant would have realized had such event not
occurred, and (ii) to minimize to the greatest extent possible, consistent with
the foregoing clause (i), the present value (discounted monthly at an interest
rate per annum equal to the Debt Rate) of the sum of the payments of Basic Rent
to the Early Purchase Date and the Early Purchase Price; provided, however, that
in no event shall the Early Purchase Price be less than the expected fair market
value of the Equipment on the Early Purchase Date and the Basic Term Expiration
Date, respectively, as determined by the Appraisal. Any such recalculation
performed due to the occurrence of any one or more of the events described in
clause (A), (B), (D), (E), (F) or (G) above shall be made prior to the Closing
Date. In performing any such recalculation and in determining the Owner
Participant's Net Economic Return, the Owner Participant shall utilize the same
methods and assumptions originally used in making the computations of Basic
Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values,
Termination Amounts, Early Purchase Price initially set forth in Schedules 3-A,
3-B, 4-A, 4-B and 6 (other than those assumptions changed as a result of any of
the events described in clauses (A) through (G) of the preceding sentence
necessitating such recalculation; it being agreed that such recalculation shall
reflect solely any changes of assumptions or facts resulting directly from the
event or events necessitating such recalculation). Such adjustments shall comply
(to the extent the original structure complied) with Section 467 of the Code and
the requirements of Sections 4.02(5), 4.07(1) and (2) of Revenue Procedure
2001-28 calculated, except in the case of a refinancing pursuant to Section
10.2, without taking into account any change after the Closing Date in or to
Section 467 of the Code (and any regulations thereunder).
(b) Confirmation and Verification. Upon completion of any
recalculation described in Section 2.6(a), a duly authorized officer of the
Owner Participant shall provide a certificate to the Lessee either (x) stating
that the amounts of Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts,
Termination Values, Termination Amounts and Early Purchase Price as are then set
forth in Schedules 3-A, 3-B, 4-A, 4-B and 6 do not require change, or (y)
setting forth such adjustments to the amounts of Basic Rent, Stipulated Loss
Values, Stipulated Loss Amounts, Termination Values, Termination Amounts or
Early Purchase Price as have been calculated by the Owner Participant in
accordance with Section 2.6(a). Such certificate shall describe in reasonable
detail the basis for any such adjustments, and any such adjustment and
corresponding adjustments to the Stipulated Loss Values, Termination Values and
Early Purchase Price will be computed on a basis
Participation Agreement (TRLI 2001-1A)
11
consistent with that used by the Owner Participant in the original calculation
of Basic Rent. Any such adjustment shall be deemed approved upon notice of such
approval by the Lessee to the Owner Participant or on the thirty-first (31st)
day following delivery of such certificate by the Owner Participant to the
Lessee unless the Lessee, prior to such day, requests verification pursuant to
the following sentence, and shall become effective, in the case of adjustments
made pursuant to clause (A), (B), (D), (E), (F) or (G) of the first sentence of
Section 2.6(a), as of the earlier of (i) the first Rent Payment Date and (ii)
the date the Lessee approves or has been deemed to have approved such
adjustment, and, in the case of an adjustment made pursuant to clause (C) of the
first sentence of Section 2.6(a), as of the date of the refinancing. If the
Lessee shall so request, the recalculation of any such adjustments described in
this Section 2.6 shall be verified by a nationally recognized firm of
independent accountants selected by the Owner Participant and reasonably
acceptable to the Lessee, and any such recalculation of such adjustment as so
verified shall be binding on the Lessee and the Owner Participant. Such
accounting firm shall be requested to make its determination within 30 days. The
Owner Participant shall provide to a representative of such accounting firm, on
a confidential basis, such information as it may reasonably require, including
the original assumptions used by the Owner Participant and the methods used by
the Owner Participant in the original calculation of, and any recalculation of,
Basic Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination Values,
Termination Amounts and Early Purchase Price and such other information as is
necessary to determine whether the computation is accurate and in conformity
with the provisions of this Agreement, provided that in no event shall the Owner
Participant have any obligation to provide the Lessee with any such information;
and provided, further, that the Owner Participant shall have no obligation to
disclose to the Lessee, such accounting firm or any other Person, or to permit
the Lessee, such accounting firm or any other Person, to examine any federal,
state or local income tax returns of the Owner Participant, or books or
accounting records related thereto, for any taxable year. Subject to the
immediately following sentence, the costs of such verification shall be borne by
the Lessee. If such accounting firm's verification shall result in a decrease in
the net present value (expressed as a percentage of Total Equipment Cost,
discounted monthly at a rate per annum equal to the Debt Rate) of the sum of the
Basic Rent to the Early Purchase Date and the Early Purchase Price, calculated
as of the Closing Date, as compared to the net present value of the sum of the
Basic Rent to the Early Purchase Date and the Early Purchase Price, proposed by
the Owner Participant, by more than the greater of (i) ten basis points or (ii)
5% of the proposed adjustment, then the Owner Participant agrees to reimburse
the Lessee for any amounts paid for such verification. Any revised adjustment
resulting from such verification shall become effective on the next Rent Payment
Date after such verification has been concluded (except that, in the case of an
adjustment pursuant to clause (C) of the first sentence of Section 2.6(c), such
adjustment shall be effective as of the date of the refinancing), and shall
Participation Agreement (TRLI 2001-1A)
12
take into account any underpayment or overpayment, together with interest
thereon at the Debt Rate, resulting from an earlier effectiveness of the
original adjustment.
(c) Compliance. Notwithstanding the foregoing, any adjustment
made to the payments of Basic Rent, Stipulated Loss Amounts, Termination Amounts
or Early Purchase Price, pursuant to the foregoing, shall comply with the
following requirements: (i) each installment of Basic Rent, as so adjusted,
under any circumstances and in any event, will be in an amount at least
sufficient for the Owner Trustee to pay in full as of the due date of such
installment any payment of principal of and interest on the Equipment Note
required to be paid on the due date of such installment of Basic Rent in
accordance with the Scheduled Amortization, and (ii) Stipulated Loss Amount,
Termination Amount and Early Purchase Price, as so adjusted, under any
circumstances and in any event, will be an amount which, together with any other
amounts required to be paid by the Lessee under the Lease in connection with an
Event of Loss or a termination of the Lease, as the case may be, will be 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 Note in
accordance with the Scheduled Amortization accrued to the date on which
Stipulated Loss Amount, Termination Amount or Early Purchase Price, as the case
may be, is paid in accordance with the terms of the Lease.
(d) Invoices. All invoices in respect of Transaction Costs to
the extent not delivered on the Closing Date shall be directed to the Owner
Participant at the address set forth in Section 10.4, with a copy to the Lessee.
Section 2.7 Postponement of Closing Date.
(a) If for any reason whatsoever the Closing is not
consummated on the Closing Date provided for pursuant to Section 2.3 (the
"Scheduled Closing Date"), the Closing shall be deemed postponed to the next
Business Day or to such other Business Day on or prior to August 31, 2001 as the
Lessee shall specify by facsimile or telephonic (confirmed in writing) notice to
the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee and the Initial Purchasers, in which case the Participants will
keep their funds available, provided that the notice of postponement shall be
received by each party no later than 4:30 p.m., Chicago time, on the originally
scheduled Closing Date, and the term "Closing Date" as used in this Agreement
shall mean the postponed "Closing Date."
(b) If the closing fails to occur on the Scheduled Closing
Date, the Indenture Trustee shall promptly return to each Participant that makes
funds available to it in accordance with this Section 2 such funds, together
with interest or income earned thereon.
Participation Agreement (TRLI 2001-1A)
13
(c) If the Closing fails to occur on the Scheduled Closing
Date and funds are not returned to each Participant that made funds available by
the Indenture Trustee as provided by Section 2.7(b) above, the Indenture Trustee
shall, if so instructed by the Lessee in the facsimile or telephonic (confirmed
in writing) notice from the Lessee (which notice shall specify the Specified
Investments to be purchased), use reasonable best efforts to invest, at the risk
of the Lessee (except as provided below with respect to the Indenture Trustee's
gross negligence or willful misconduct), the funds received by the Indenture
Trustee from the Participants in Specified Investments in accordance with the
Lessee's instructions. Any such Specified Investments purchased by the Indenture
Trustee upon instructions from the Lessee shall be held in trust by the
Indenture Trustee (but not as part of the Indenture Estate under the Indenture)
for the benefit of the Participants that provided such funds. In order to obtain
funds for the payment of the Equipment Cost for the Units on the Closing Date or
to return funds to the Participants pursuant to Section 2.7(b), the Indenture
Trustee is authorized to sell any Specified Investments purchased as aforesaid.
The Indenture Trustee shall not be liable for failure to invest such funds or
for any losses incurred on such investments except for losses resulting from its
own willful misconduct or gross negligence.
(d) If the Closing fails to occur on the Scheduled Closing
Date, unless the Indenture Trustee returns all funds to the Participants by 2:00
p.m., Chicago time, on the Scheduled Closing Date, the Lessee shall reimburse
each Participant that has made funds available pursuant to this Section 2 for
the loss of the use of its funds an amount equal to the excess, if any, of (x)
interest on such funds at the Debt Rate for the period from and including the
Scheduled Closing Date to but excluding the actual Closing Date or, if earlier,
the day on which such Participant's funds are returned if such return is made by
2:00 p.m., Chicago time (or to but excluding the next following Business Day if
such return is not made by such time); provided that with respect to the Owner
Participant such period shall in any case be at least one day, unless the Owner
Participant shall have received, prior to 12:00 noon (Chicago time) on the
Business Day preceding the Scheduled Closing Date, a notice of postponement of
the Scheduled Closing Date pursuant to Section 2.7(a), over (y) any amount paid
to such Participant in respect of interest or income earned by the Indenture
Trustee on such funds pursuant to Section 2.7(c) above.
(e) If the Closing fails to occur on the Scheduled Closing
Date, the Lessee shall, on the Closing Date or on the date funds are required to
be returned to the Participants pursuant to Section 2.7(b) above, reimburse the
Indenture Trustee, for the benefit of the Participants that provided funds which
are invested by the Indenture Trustee pursuant to this Section 2.7 for any
losses incurred on such investments (except with respect to any Participant, if
the Closing failed to occur as a result of default by such Participant, or with
respect to the Owner Participant, as result of default of the Owner Trustee
(acting pursuant to instructions from the
Participation Agreement (TRLI 2001-1A)
14
Owner Participant)). All income and profits on the investment of such funds
shall be for the respective accounts of such Participants, and the Indenture
Trustee shall not be liable for failure to invest such funds or for any losses
incurred on such investments, except for its willful misconduct or gross
negligence.
(f) Notwithstanding the provisions of Section 2.7(a), the
Participants shall not be under any obligation to make their respective
commitments available beyond 2:00 p.m. (Chicago time) on August 31, 2001.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1 Representations and Warranties of the Trust Company. Trust
Company, in its individual capacity (except with respect to clauses (c), (k) and
(m) (to the extent applicable to Trust Company in its capacity as Owner Trustee)
below) and as Owner Trustee with respect to clauses (c), (f) and (k) (to the
extent applicable to Trust Company in its capacity as Owner Trustee) below,
represents and warrants to each of the Owner Participant, the Indenture Trustee,
the Pass Through Trustee, TILC, TRMI and the Lessee, notwithstanding the
provisions of Section 10.13 or any similar provision in any other Operative
Agreement, that, as of the date hereof:
(a) Trust Company (i) is a national banking association duly
incorporated, validly existing and in good standing under the laws of the United
States of America, (ii) has the full corporate power, authority and legal right
under the laws of the State of Connecticut and the United States pertaining to
its banking, trust and fiduciary powers to carry on its business as now
conducted and execute, deliver and perform its obligations hereunder and under
the Trust Agreement and (iii) assuming due authorization, execution and delivery
of the Trust Agreement by the Owner Participant, has full power and authority,
as Owner Trustee and/or, to the extent expressly provided herein or therein, in
its individual capacity, to execute, deliver and perform its obligations under
each of the Owner Trustee Agreements;
(b) (i) Trust Company has duly authorized, executed and
delivered the Trust Agreement, (ii) assuming the due authorization, execution
and delivery of the Trust Agreement by the Owner Participant, Trust Company in
its trustee capacity and, to the extent expressly provided therein, in its
individual capacity, has, or on or prior to the Closing Date will have, duly
authorized, executed and delivered each of the other Owner Trustee Agreements
and, as of the Closing Date, the Equipment Note, the Lease Supplement and the
Indenture Supplement to be delivered on the Closing Date, (iii) assuming the due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant, the Trust is a Connecticut statutory trust duly organized and
validly existing in good standing under the laws of the State of Connecticut and
(iv) the Trust Agreement constitutes a legal, valid and binding obligation of
Trust Company enforceable against it in accordance with the terms
Participation Agreement (TRLI 2001-1A)
15
thereof except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity;
(c) assuming the due authorization, execution and delivery of
the Trust Agreement by the Owner Participant, each of the Owner Trustee
Agreements (other than the Trust Agreement) to which it is a party constitutes,
or when entered into will constitute, a legal, valid and binding obligation of
the Owner Trustee, enforceable against it in accordance with the terms thereof,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity;
(d) neither the execution and delivery by Trust Company or
Owner Trustee, as the case may be, of the Owner Trustee Agreements or the
Equipment Note to be delivered on the Closing Date, nor the consummation by
Trust Company or Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby, nor the compliance by Trust Company or Owner
Trustee, as the case may be, with any of the terms and provisions hereof and
thereof, (i) requires or will require any approval of its stockholders, or
approval or consent of any trustees or holders of any indebtedness or
obligations of it in its individual capacity, or (ii) violates or will violate
its articles of association or bylaws, or contravenes or will contravene any
provision of, or constitutes or will constitute a default under, or results or
will result in any breach of, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit agreement, license or
other agreement or instrument to which Trust Company is a party or by which it
or any of its properties may be bound or affected, or contravenes or will
contravene any law, governmental rule or regulation of the United States of
America or the State of Connecticut governing the banking, trust or fiduciary
powers of Trust Company, or any judgment or order applicable to or binding on
it;
(e) there are no Taxes payable by Trust Company or the Owner
Trustee, imposed by the State of Connecticut or any political subdivision
thereof in connection with the execution and delivery by Trust Company of the
Trust Agreement, and, as Trust Company or Owner Trustee, as the case may be, of
this Agreement, the other Owner Trustee Agreements (other than the Trust
Agreement) or the Equipment Note to be delivered on the Closing Date solely
because Trust Company is a national banking association with its principal place
of business in Connecticut and performs certain of its duties as Owner Trustee
in the State of Connecticut; and there are no Taxes payable by Trust Company or
the Owner Trustee, as the case may be, imposed by the State of Connecticut or
any political subdivision thereof in connection with the acquisition of its
interest in the Equipment (other than franchise or other taxes based on or
measured by any fees or
Participation Agreement (TRLI 2001-1A)
16
compensation received by Trust Company or the Owner Trustee for services
rendered in connection with the transactions contemplated hereby) solely because
Trust Company is a national banking association with its principal place of
business in Connecticut and performs certain of its duties as Owner Trustee in
the State of Connecticut;
(f) there are no pending or, to its knowledge, threatened
actions or proceedings against Trust Company or the Owner Trustee, before any
court or administrative agency which individually or in the aggregate, if
determined adversely to it, would materially adversely affect the ability of
Trust Company or the Owner Trustee, as the case may be, to perform its
obligations under the Trust Agreement, the other Owner Trustee Agreements or the
Equipment Note to be delivered on the Closing Date;
(g) both its chief executive office, and the place where its
records concerning the Equipment and all its interest in, to and under all
documents relating to the Trust Estate, are located in Hartford, Connecticut,
and Trust Company agrees to give the Owner Participant, the Indenture Trustee
and the Lessee written notice within 30 days following any relocation of said
chief executive office or said place from its present location;
(h) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect of,
any Connecticut state or local governmental authority or agency or any United
States federal governmental authority or agency regulating the banking or trust
powers of Trust Company is required for the execution and delivery of, or the
carrying out by, Trust Company or the Owner Trustee, as the case may be, of any
of the transactions contemplated hereby or by the Trust Agreement or of any of
the transactions contemplated by any of the other Owner Trustee Agreements,
other than any such consent, approval, order, authorization, registration,
notice or action as has been duly obtained, given or taken;
(i) on the Closing Date, the Owner Trustee's right, title and
interest in and to the Equipment delivered on the Closing Date shall be free and
clear of any Lessor's Lien attributable to Trust Company;
(j) proceeds received by the Owner Trustee from the Owner
Participant pursuant to the Trust Agreement will be administered by it in
accordance with Article III of the Trust Agreement;
(k) the Owner Trustee shall receive from the Lessee such title
as was conveyed to it by the Lessee, subject to the rights of the Owner Trustee
and the Lessee under the Lease and the Lien created pursuant to the Indenture
and the
Participation Agreement (TRLI 2001-1A)
17
Indenture Supplement in respect of the Equipment delivered on the Closing Date,
and there will be no Lessor's Liens attributable to the Owner Trustee on the
Equipment or any interest therein or on the Trust Estate;
(l) to its knowledge, no Indenture Default has occurred and is
continuing; and
(m) the Owner Trustee is not engaged in the business of
extending credit for the purposes of purchasing or carrying margin stock, and no
proceeds of the Equipment Note or the Owner Participant's Commitment as
contemplated by this Agreement and the other Operative Agreements will be used
by the Owner Trustee for a purpose which violates, or would be inconsistent
with, Section 7 of the Securities Exchange Act of 1934, as amended, or
Regulations T, U and X of the Federal Reserve System. Terms for which meanings
are provided in Regulations T, U and X of the Federal Reserve System or any
regulations substituted therefor, as from time to time in effect, are used in
this Section 3.1(m) with such meanings.
Section 3.2 Representations and Warranties of the Lessee. The Lessee
represents and warrants to the Owner Trustee, the Indenture Trustee and the
Participants, as of the date hereof:
(a) as to organization, powers and partnership organizational
documents:
(i) the Lessee is a limited partnership duly
organized, validly existing, and in good standing under the laws of the State of
Texas, is duly licensed or qualified and in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on its
ability to carry on its business as now conducted or to enter into and perform
its obligations under the Lessee Agreements, is a special purpose limited
partnership organized to enter into the transactions contemplated by this
Agreement, the other Operative Agreements to which it is a party and the Pass
Through Documents to which it is a party, has the limited partnership power and
authority to sell the Equipment described on Schedule 1 hereto to the Owner
Trustee, to pledge the Pledged Equipment to the Collateral Agent, to assign the
Existing Equipment Subleases and the Existing Pledged Equipment Leases as
contemplated by this Agreement and to carry on its business as now conducted,
has the requisite limited partnership power and authority to execute, deliver
and perform its obligations under the Lessee Agreements and has conducted no
business or operations prior to the date hereof (other than those associated
with its organization and capitalization or as contemplated by the Operative
Agreements),
(ii) the General Partner is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware
Participation Agreement (TRLI 2001-1A)
18
and has the power and authority to execute, deliver and perform its obligations
under the Partnership Agreement and each other organizational document of the
Partnership to which the General Partner is a party,
(iii) the Limited Partner is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware and has the power and authority to execute, deliver and
perform its obligations under the Partnership Agreement and each other
organizational document of the Partnership to which the Limited Partner is a
party,
(iv) the General Partner and the Limited Partner are
the only partners of the Partnership;
(v) the execution, delivery and performance by each
Partner of the Partnership Agreement and each other organizational document of
the Partnership to which such Partner is a party (A) have been duly authorized
by all requisite limited liability company or member action of such Partner and
(B) did not and do not (x) violate (i) any provision of law, statute, rule or
regulation, or of the certificate of formation or limited liability company
agreement or other constitutive documents of such Partner, (ii) any order of any
governmental authority or (iii) any provision of any indenture, agreement or
other instrument to which such Partner is a party or by which it or any of its
property is or may be bound, (y) conflict with, result in a breach of or
constitute (alone or with notice, or lapse of time or both) a default under any
such indenture, agreement or other instrument or (z) result in the creation or
imposition of any Lien upon any property or assets of such Partner,
(vi) each of the Partnership Agreement and each other
organizational document of the Partnership has been duly executed and delivered
by each party thereto and constitutes a legal, valid and binding obligation of
each such party enforceable against such party in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity;
(b) each of the Lessee Agreements and the Pass Through
Documents to which the Lessee is a party have been duly authorized by all
necessary limited partnership action of the Lessee and, if required, limited
liability company action of each Partner, this Agreement has been duly executed
and delivered (and in the case of the other Lessee Agreements, such other Lessee
Agreements will on the Closing Date have been duly executed and delivered) by
the General Partner in its capacity as the general partner of the Lessee, and
constitutes (and in the case of the other Lessee Agreements, such other Lessee
Agreements will on the Closing Date constitute) the legal, valid and binding
obligations of the Lessee (assuming the due
Participation Agreement (TRLI 2001-1A)
19
authorization, execution and delivery by each other party thereto), enforceable
against the Lessee in accordance with their respective terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by
general principles of equity;
(c) the execution, delivery and performance by the Lessee of
each Lessee Agreement and each Pass Through Document to which Lessee is a party
and compliance by the Lessee with all of the provisions thereof do not and will
not contravene any law or regulation, or any order of any court or governmental
authority or agency applicable to or binding on the Lessee or any of its
properties, or contravene the provisions of, or constitute a default by the
Lessee under, or result in the creation of any Lien (except for Permitted Liens)
upon the property of the Lessee under its organizational documents or any
indenture, mortgage, contract or other agreement or instrument to which the
Lessee is a party or by which the Lessee or any of its properties may be bound
or affected;
(d) there are no proceedings pending or, to the knowledge of
the Lessee, threatened against the Lessee or any Partner in any court or before
any governmental authority or arbitration board or tribunal. The Lessee and each
Partner are not subject to any order of any court or governmental authority or
arbitration board or tribunal;
(e) the unaudited balance sheet of the Lessee as at the
Closing Date fairly presents, in conformity with generally accepted accounting
principles applied on a pro forma basis, the pro forma financial position of the
Lessee as of such date;
(f) no consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any trustee or
any holder of indebtedness of the Lessee or any governmental authority on the
part of the Lessee is required in the United States or Canada in connection with
the execution and delivery by the Lessee of the Lessee Agreements or in order
for the Lessee to perform its obligations thereunder in accordance with the
terms thereof, other than (i) notices required to be filed with the STB and the
Registrar General of Canada as described in Section 3.2(g), which notices shall
have been filed on the Closing Date, (ii) as may be required under existing
laws, ordinances, governmental rules and regulations to be obtained, given,
accomplished or renewed at any time after the Closing Date in connection with
the operation and maintenance of the Equipment, the Pledged Equipment and the
Subleases and the Pledged Equipment Leases in accordance with the Operative
Agreements which are routine in nature and are not normally applied for prior to
the time they are required, and which the Lessee has no reason to believe will
not be timely obtained, (iii) as may be required under the Operative Agreements
in connection with any refinancing of the Equipment Notes, (iv) as may be
required
Participation Agreement (TRLI 2001-1A)
20
under the Operative Agreements in consequence of any transfer of the Beneficial
Interest or any transfer of ownership of the Equipment or the Pledged Equipment
and (v) filing and recording to perfect the Liens under the Indenture and the
Collateral Agency Agreement as required thereunder;
(g) the Lease, the Lease Supplement, the Indenture and the
Indenture Supplement (each in respect of the Units delivered on the Closing
Date), the Collateral Agency Agreement (or a memorandum with respect to any or
all of such documents), the Pledged Equipment Xxxx of Sale, the XXXX Xxxx of
Sale, the Xxxx of Sale, the TILC Assignment, the TILC Pledged Equipment
Assignment and the Assignment will on or before the Closing Date be duly filed
with the STB pursuant to 49 U.S.C. Section 11301 and deposited with the
Registrar General of Canada pursuant to Section 105 of the Canada Transportation
Act, and such filing with the STB pursuant to 49 U.S.C. Section 11301 and such
deposit with the Registrar General of Canada will under the laws of the United
States and Canada perfect the Owner Trustee's, the Indenture Trustee's and the
Collateral Agent's rights in such Operative Agreements and in the Units
described on Schedule 1 hereto and the Pledged Units and no other filing,
recording or deposit with, or giving of notice to any other U.S. federal, state
or local government or Canadian national or provincial government or agency
thereof, or any other action, is necessary in order to protect the rights of the
Owner Trustee, the Indenture Trustee and the Collateral Agent in such Operative
Agreements or in such Units in the United States, any state thereof or the
District of Columbia or Canada or any province thereof;
(h) the Equipment described on Schedule 1 hereto is covered by
the insurance required by Section 12 of the Lease and the Pledged Equipment is
covered by the insurance required by Section 6.4 of the Collateral Agency
Agreement, and all premiums due prior to the Closing Date in respect of such
insurance shall have been paid in full and such insurance is in full force and
effect;
(i) no Lease Default has occurred and is continuing and, to
the knowledge of the Lessee, no Event of Loss, Pledged Unit Event of Loss or
event which, with the giving of notice, the passage of time or both, would
constitute an Event of Loss or a Pledged Unit Event of Loss, has occurred;
(j) neither the Lessee nor any Partner is an "investment
company" or an "affiliated person" of an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(k) the acquisition by the Owner Participant of the Beneficial
Interest for its own account will not constitute a prohibited transaction within
the meaning of Section 4975(c)(1)(A) through (D) of the Code or Section
406(a)(1)(A) through (D) of ERISA. The representation made by the Lessee in the
preceding
Participation Agreement (TRLI 2001-1A)
21
clause is made in reliance upon and subject to the accuracy of the
representation of the Owner Participant in Section 3.5(h) and the accuracy of
the representation of the Initial Purchasers set forth in Section 4(e) of the
Certificate Purchase Agreement;
(l) on the Closing Date, (i) the Lessee shall have and shall
pursuant to the Xxxx of Sale relating to the Equipment described on Schedule 1
hereto convey to the Owner Trustee, all legal and beneficial title to such
Equipment free and clear of all Liens (other than Permitted Liens of the type
described in clause (iii) below with respect to the Existing Equipment Subleases
and in clauses (iii), (iv) and (v) of the definition thereof), and such
conveyance will not be void or voidable under any applicable law; (ii) TILC
shall have and shall pursuant to the Pledged Equipment Xxxx of Sale relating to
the Pledged Equipment convey to the Partnership, all legal and beneficial title
to such Pledged Equipment free and clear of all Liens (other than Permitted
Liens of the type described in clause (iii) below with respect to Existing
Pledged Equipment Leases and clauses (iii), (iv) and (v) of the definition
thereof), and such conveyance will not be void or voidable under any applicable
law; (iii) the Lessee shall have, and the Assignment to be delivered on the
Closing Date shall assign to the Owner Trustee, all legal and beneficial title
to the Existing Equipment Subleases, and the Lessee shall have all legal and
beneficial title to the Existing Pledged Equipment Leases, free and clear of all
Liens (other than in each case Permitted Liens of the type described in clauses
(iii), (iv) and (v) of the definition thereof), and such assignment will not be
void or voidable under any applicable law; and (iv) all of the Units delivered
on the Closing Date are subject to Sublease by Sublessees under the Existing
Equipment Subleases and all of the Pledged Units delivered on the Closing Date
under the Existing Pledged Equipment Leases are subject to lease by Pledged
Equipment Lessees on rental and other terms which are no different, taken as a
whole, from those for similar railcars in the rest of the TILC Fleet;
(m) the written information provided by the Lessee or on
behalf of the Lessee to the Owner Participant and/or the Loan Participant in
each document set forth on Schedule 3.2(m) hereto does not contain any untrue
statement of a material fact and does not omit a material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. The assumptions and related financial information
relating to the proposed business and operations of the Lessee and the
Partnership Fleet which are contained in the information on Schedule 3.2(m) have
been prepared in good faith based upon information that the Lessee deems fair
and reasonable, and there are no statements or conclusions therein which are
based on or include information known to the Lessee to be misleading in any
material respect or which fail to take into account material information known
to the Lessee regarding the matters stated therein. Certain information
contained in the information on Schedule 3.2(m) (e.g. statistical information
relating to renewal and remarketing of railcars, potential increases in
Participation Agreement (TRLI 2001-1A)
22
absolute or nominal railcar lease rates, anticipated utilization, and
maintenance costs) is based on the historical experience of TILC. Subject to the
foregoing, there can be no assurance that past experience will be indicative of
future performance with respect to these or other operating and marketing
factors set forth in the information on Schedule 3.2(m);
(n) the Lessee and the Partners are not engaged in the
business of extending credit for the purposes of purchasing or carrying margin
stock, and no proceeds of the Equipment Note or the Owner Participant's
Commitment as contemplated by this Agreement and the other Operative Agreements
will be used by the Lessee or any Partner for a purpose which violates, or would
be inconsistent with, Section 7 of the Securities Exchange Act of 1934, as
amended, or Regulations T, U and X of the Federal Reserve System. Terms for
which meanings are provided in Regulations T, U and X of the Federal Reserve
System or any regulations substituted therefor, as from time to time in effect,
are used in this Section 3.2(n) with such meanings;
(o) the Lessee is not in violation of any term of any of its
organizational documents or any other agreement or instrument to which it is a
party or by which it may be bound. The Lessee is in compliance with all laws,
ordinances, governmental rules and regulations to which it is subject and the
Lessee has obtained all required licenses, permits, franchises and other
governmental authorizations material to the conduct of its business;
(p) on the Closing Date, all sales, use or transfer taxes, if
any, due and payable upon the purchase of the Equipment described on Schedule 1
hereto by the Lessee from TILC and by the Owner Trustee from the Lessee and upon
the lease thereof by the Owner Trustee to the Lessee and, if applicable, upon
the assignment of the Existing Equipment Subleases from TILC to the Lessee and
by the Lessee to the Owner Trustee and upon the purchase of the Pledged
Equipment by the Lessee from TILC and, if applicable, upon the assignment of the
Existing Pledged Equipment Leases from TILC to the Lessee, will have been paid
or such transactions will then be exempt from any such taxes, and the Lessee
will cause any required forms or reports in connection with such taxes to be
filed in accordance with applicable laws and regulations. No taxes, fees or
other charges in connection with the execution and delivery of the Operative
Agreements or the issuance and sale of the Equipment Note to be delivered on the
Closing Date are payable;
(q) no broker's or finder's or placement fee or commission
will be payable with respect to the transactions contemplated by the Operative
Agreements as a result of any action by the Lessee, except for the fees of the
Arrangers, which shall be included in Transaction Costs as provided in this
Agreement, and the Lessee agrees that it will hold the Participants, the
Indenture Trustee, the Pass Through
Participation Agreement (TRLI 2001-1A)
23
Trustee and the Owner Trustee harmless from any claim, demand or liability for
broker's or finder's or placement fees or commission alleged to have been
incurred as a result of any action by the Lessee in connection with this
transaction;
(r) (i) each Unit delivered on the Closing Date, taken as a
whole, and each major component thereof, complies in all material respects with
all applicable laws and regulations, conforms with the specifications for such
Unit contained in the Appraisal referred to in Section 4.3(a) hereof (to the
extent a copy of such Appraisal or a relevant excerpt therefrom has been
delivered to the Lessee) and is substantially complete such that it is ready and
available to operate in commercial service and otherwise perform the function
for which it was designed; and the railcar identification marks shown on
Schedule 1 are the marks presently used on the Units of Equipment set forth on
Schedule 1 and (ii) each Pledged Unit, taken as a whole, and each major
component thereof, complies in all material respects with all applicable laws
and regulations, conforms with the specifications for such Pledged Unit
contained in the Appraisal referred to in Section 4.3(a) hereof (to the extent a
copy of such Appraisal or a relevant excerpt therefrom has been delivered to the
Lessee) and is substantially complete such that it is ready and available to
operate in commercial service and otherwise perform the function for which it
was designed; and the railcar identification marks shown on Schedule 1-A are the
marks presently used on the Pledged Units; and
(s) neither the Lessee nor any Partner is subject to
regulation as a "holding company," an "affiliate" of a "holding company," or a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 3.3 Representations and Warranties of the Indenture Trustee.
The Indenture Trustee represents and warrants to the Owner Participant, the
Owner Trustee, the Pass Through Trustee, TILC, TRMI and the Lessee that, as of
the date hereof:
(a) the Indenture Trustee is a national banking association
duly incorporated, validly existing and in good standing under the laws of the
United States and has the full corporate power, authority and legal right under
the laws of the State of Illinois and the United States pertaining to its
banking, trust and fiduciary powers to execute, deliver and perform its
obligations under each of the Indenture Trustee Agreements;
(b) the execution, delivery and performance by the Indenture
Trustee of each of the Indenture Trustee Agreements have been duly authorized by
the Indenture Trustee and will not violate any applicable federal or Illinois
law governing its banking or trust powers or its charter documents or bylaws or
the
Participation Agreement (TRLI 2001-1A)
24
provisions of any indenture, mortgage, contract or other agreement to which it
is a party or by which it or any of its properties may be bound or affected;
(c) this Agreement has been duly executed and delivered and
constitutes, and each of the other Indenture Trustee Agreements, when executed
and delivered, will constitute (assuming the due authorization, execution and
delivery by each other party thereto) the legal, valid and binding obligation of
the Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(d) there are no proceedings pending or, to the knowledge of
the Indenture Trustee, threatened, and to the knowledge of the Indenture Trustee
there is no existing basis for any such proceedings, against or affecting the
Indenture Trustee in or before any court or before any governmental authority or
arbitration board or tribunal which, individually or in the aggregate, if
adversely determined, might impair the ability of the Indenture Trustee to
perform its obligations under the Indenture Trustee Agreements;
(e) no authorization or approval or other action by, and no
notice to or filing with, any stockholder, trustee or holder of indebtedness or
any federal or Illinois state governmental authority or regulatory body
governing the Indenture Trustee in its trust capacity, is required for the due
execution, delivery and performance by the Indenture Trustee of the Indenture
Trustee Agreements, except as have been previously obtained, given or taken;
(f) the Indenture Trustee is not in default under any of the
Indenture Trustee Agreements; and
(g) neither the Indenture Trustee, nor any Person authorized
to act on behalf of the Indenture Trustee, has directly or indirectly offered
any interest in the Trust Estate or the Equipment Note or any security similar
to either thereof related to this transaction for sale to, or solicited offers
to buy any of the same from, or otherwise approached or negotiated with respect
to any of the same with, any Person other than the Pass Through Trustee and the
Initial Purchasers.
Section 3.4 Representations, Warranties and Covenants Regarding
Beneficial Interest, Equipment Note and Pass Through Certificates.
(a) Owner Trustee and Trust Company. Each of the Owner Trustee
and the Trust Company represents and warrants to the Lessee, the Indenture
Trustee, the Pass Through Trustee, TILC, TRMI and the Owner Participant that, as
of
Participation Agreement (TRLI 2001-1A)
25
the date hereof and as of the Closing Date, except as expressly provided in the
Operative Agreements, neither the Owner Trustee, nor the Trust Company nor any
Person authorized or employed by the Owner Trustee or the Trust Company as agent
or otherwise has directly or indirectly offered or sold any interest in the
Beneficial Interest, the Equipment Note, the Pass Through Certificates or any
part thereof, or in any similar security or lease, the offering of which for the
purposes of the Securities Act would be deemed to be part of the same offering
as the offering of the Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any part thereof or solicited any offer to acquire any of the
same in violation of the registration requirements of Section 5 of the
Securities Act.
(b) Lessee. The Lessee represents and warrants to the Owner
Trustee, the Indenture Trustee, the Owner Participant and the Pass Through
Trustee that, as of the date hereof and as of the Closing Date, neither the
Lessee nor any Person authorized or employed by the Lessee as agent or otherwise
has directly or indirectly offered or sold any interest in the Beneficial
Interest, the Equipment Note, the Pass Through Certificates or any part thereof,
the offering of which for the purposes of the Securities Act would be deemed to
be part of the same offering as the offering of the Beneficial Interest, the
Equipment Note, the Pass Through Certificates or any part thereof or solicited
any offer to acquire any of the same in violation of the registration
requirements of Section 5 of the Securities Act.
(c) TRMI. TRMI represents and warrants to the Owner Trustee,
the Indenture Trustee, the Owner Participant and the Pass Through Trustee that,
as of the date hereof and as of the Closing Date, neither TRMI nor any Person
authorized or employed by TRMI as agent or otherwise has directly or indirectly
offered or sold any interest in the Beneficial Interest, the Equipment Note, the
Pass Through Certificates or any part thereof, the offering of which for the
purposes of the Securities Act would be deemed to be part of the same offering
as the offering of the Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any part thereof or solicited any offer to acquire any of the
same in violation of the registration requirements of Section 5 of the
Securities Act.
(d) TILC. TILC represents and warrants to the Owner Trustee,
the Indenture Trustee, the Owner Participant and the Pass Through Trustee that,
as of the date hereof and as of the Closing Date, neither TILC nor any Person
authorized or employed by TILC as agent or otherwise has directly or indirectly
offered or sold any interest in the Beneficial Interest, the Equipment Note, the
Pass Through Certificates or any part thereof, the offering of which for the
purposes of the Securities Act would be deemed to be part of the same offering
as the offering of the Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any part thereof or solicited any offer to acquire any of the
same in violation of the registration requirements of Section 5 of the
Securities Act.
Participation Agreement (TRLI 2001-1A)
26
(e) Owner Participant. The Owner Participant represents and
warrants to the Owner Trustee, the Indenture Trustee, TILC, TRMI, the Lessee and
the Pass Through Trustee that, as of the date hereof and as of the Closing Date,
neither the Owner Participant nor any Person authorized or employed by the Owner
Participant as agent or otherwise has directly or indirectly offered or sold any
interest in the Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any part thereof, or in any similar security or lease, the
offering of which for the purposes of the Securities Act would be deemed to be
part of the same offering as the offering of the Beneficial Interest, the
Equipment Note, the Pass Through Certificates or any part thereof or solicited
any offer to acquire any of the same in violation of the registration
requirements of Section 5 of the Securities Act.
(f) Pass Through Trustee. The Pass Through Trustee represents
and warrants to the Owner Trustee, the Indenture Trustee, TILC, TRMI, the Lessee
and the Owner Participant that, as of the date hereof and as of the Closing
Date, neither the Pass Through Trustee nor any Person authorized or employed by
the Pass Through Trustee as agent or otherwise has directly or indirectly
offered or sold any interest in the Beneficial Interest, the Equipment Note, the
Pass Through Certificates or any part thereof, the offering of which for the
purposes of the Securities Act would be deemed to be part of the same offering
as the offering of the Beneficial Interest, the Equipment Note, the Pass Through
Certificates or any part thereof or solicited any offer to acquire any of the
same in violation of the registration requirements of Section 5 of the
Securities Act.
(g) Future Actions. Each of the Owner Trustee, the Trust
Company, the Owner Participant, the Lessee, TILC, TRMI, the Indenture Trustee
and the Pass Through Trustee agrees, as to its own actions only, severally but
not jointly, that neither the Owner Trustee, the Trust Company, the Owner
Participant, the Lessee, TILC, TRMI, the Indenture Trustee nor the Pass Through
Trustee nor anyone acting on behalf of the Owner Trustee, the Trust Company, the
Owner Participant, the Lessee, TILC, TRMI, the Indenture Trustee or the Pass
Through Trustee will offer the Beneficial Interest, the Equipment Note, the Pass
Through Certificates or any part thereof or any similar interest for issue or
sale to any prospective purchaser, or solicit any offer to acquire any of the
Beneficial Interest, the Equipment Note, the Pass Through Certificates or any
part thereof so as to cause Section 5 of the Securities Act to apply to the
issuance and sale of the Beneficial Interest, the Equipment Note, the Pass
Through Certificates or any part thereof.
Section 3.5 Representations and Warranties of the Owner Participant.
The Owner Participant represents and warrants to the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee, TILC, TRMI and the Lessee that, as
of the date hereof:
Participation Agreement (TRLI 2001-1A)
27
(a) the Owner Participant is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware and has full limited partnership power and authority to carry on its
business as now conducted;
(b) the Owner Participant has the requisite limited
partnership power and authority to execute, deliver and perform its obligations
under the Owner Participant Agreements, and the execution, delivery and
performance by it thereof do not and will not contravene any law or regulation,
or any order of any court or governmental authority or agency applicable to or
binding on the Owner Participant or any of its properties, or contravene the
provisions of, or constitute a default under, or result in the creation of any
Lien (other than such as are created by the Operative Agreements) upon the
Equipment under, its Certificate of Limited Partnership, limited partnership
agreement or any indenture, mortgage, contract or other agreement or instrument
to which the Owner Participant is a party or by which it or any of its
properties may be bound or affected;
(c) the Owner Participant Agreements have been duly authorized
by all necessary actions on the part of the Owner Participant and its general
partner, do not require any approval not already obtained of the partners of the
Owner Participant or any approval or consent not already obtained of any trustee
or holders of indebtedness or obligations of the Owner Participant, have been,
or on or before the Closing Date will be, duly executed and delivered by the
general partner of the Owner Participant in its capacity as general partner of
the Owner Participant and (assuming the due authorization, execution and
delivery by each other party thereto) constitute, or will constitute, the legal,
valid and binding obligations of the Owner Participant, enforceable against the
Owner Participant in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the rights of creditors generally and by general
principles of equity;
(d) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery or performance by the Owner Participant
of the Trust Agreement, the Tax Indemnity Agreement or this Agreement;
(e) the Trust Estate is free and clear of any Lessor's Lien
attributable to the Owner Participant;
(f) there are no pending or, to the Owner Participant's
knowledge, threatened actions or proceedings against the Owner Participant
before any court or administrative agency which would materially adversely
affect the Owner
Participation Agreement (TRLI 2001-1A)
28
Participant's ability to perform its obligations under the Trust Agreement, the
Tax Indemnity Agreement or this Agreement;
(g) as of the Closing Date, the Owner Participant is
purchasing the Beneficial Interest to be acquired by it for its own account with
no present intention of distributing such Beneficial Interest or any part
thereof in any manner which would violate the Securities Act, but without
prejudice, however, to the right of the Owner Participant at all times to sell
or otherwise dispose of all or any part of such Beneficial Interest in
compliance with the Securities Act and any state securities or "blue sky" laws;
provided, however, that subject to the provisions of Section 6.1, the
disposition of the Beneficial Interest shall at all times be within the Owner
Participant's control. The Owner Participant acknowledges that its Beneficial
Interest has not been registered under the Securities Act, and that neither the
Owner Participant, the Owner Trustee, Trust Company, the Lessee, TRMI nor TILC
contemplates filing, or is legally required to file, any such registration
statement. Notwithstanding the foregoing, the Owner Participant makes no
representation that the Beneficial Interest is a "security" within the meaning
of such term under the Securities Act;
(h) with respect to the source of the amount to be invested by
the Owner Participant pursuant to Section 2.2, no part of such amount
constitutes assets of any employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code; and
(i) no broker's or finder's or placement fee or commission
will be payable with respect to the transactions contemplated by the Operative
Agreements as a result of any action by the Owner Participant, and the Owner
Participant agrees that it will hold TILC, TRMI, the Lessee, the Indenture
Trustee, the Loan Participant and the Owner Trustee harmless from any claim,
demand or liability for broker's or finder's or placement fees or commission
alleged to have been incurred as a result of any action by the Owner Participant
in connection with this transaction.
Section 3.6 Representations and Warranties of TILC. TILC represents and
warrants to each of the Owner Trustee, the Indenture Trustee and the
Participants, as of the date hereof:
(a) TILC is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, is duly licensed
or qualified and in good standing in each jurisdiction in which the failure to
so qualify would have a material adverse effect on its ability to carry on its
business as now conducted or to execute, deliver and perform its obligations
under the TILC Agreements, has the power and authority to carry on its business
as now conducted, and has the
Participation Agreement (TRLI 2001-1A)
29
requisite power and authority to execute, deliver and perform its obligations
under the TILC Agreements;
(b) the TILC Agreements have been duly authorized by all
necessary corporate action, executed and delivered by TILC, and (assuming the
due authorization, execution and delivery by each other party thereto)
constitute the legal, valid and binding obligations of TILC, enforceable against
TILC in accordance with their respective terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of equity;
(c) the execution, delivery and performance by TILC of each
TILC Agreement and compliance by TILC with all of the provisions thereof do not
and will not contravene (i) any law or regulation, or any order of any court or
governmental authority or agency applicable to or binding on TILC or any of its
properties, or (ii) the provisions of, or constitute a default by TILC under,
its certificate of incorporation or bylaws or (iii) any indenture, mortgage,
contract or other agreement or instrument to which TILC is a party or by which
TILC or any of its properties may be bound or affected except, with respect to
clause (iii), where such contravention would not materially adversely affect
TILC's ability to perform its obligations under the TILC Agreements or
materially adversely affect its financial condition or business;
(d) there are no proceedings pending or, to the knowledge of
TILC, threatened against TILC in any court or before any governmental authority
or arbitration board or tribunal which, if adversely determined, would
materially adversely affect TILC's ability to perform its obligations under the
TILC Agreements or materially adversely affect its financial condition or
business;
(e) TILC is not in violation of any term of any charter
instrument or bylaw or any other material agreement or instrument to which it is
a party or by which it may be bound except where such violation would not
materially adversely affect TILC's ability to perform its obligations under the
TILC Agreements or materially adversely affect its financial condition or
business. TILC is in compliance with all laws, ordinances, governmental rules
and regulations to which it is subject, the failure to comply with which would
have a material and adverse effect on its operations or condition, financial or
otherwise, or would impair the ability of TILC to perform its obligations under
the TILC Agreements, and has obtained all required licenses, permits, franchises
and other governmental authorizations material to the conduct of its business;
(f) no consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any trustee or
any holder of
Participation Agreement (TRLI 2001-1A)
30
indebtedness of TILC or any governmental authority on the part of TILC is
required in the United States in connection with the execution and delivery by
TILC of the TILC Agreements, or is required to be obtained in order for TILC to
perform its obligations thereunder in accordance with the terms thereof, other
than (i) as may be required under existing laws, ordinances, governmental rules
and regulations to be obtained, given, accomplished or renewed at any time after
the Closing Date in connection with the performance of its obligations under the
TILC Agreements and which are routine in nature and are not normally applied for
prior to the time they are required, and which TILC has no reason to believe
will not be timely obtained or (ii) as may be required under the Operative
Agreements in consequence of any transfer of ownership of the Equipment or the
Pledged Equipment occurring after the Closing Date;
(g) to the best knowledge of TILC, no casualty event or other
event that may constitute an Event of Loss under the Lease or a Pledged Unit
Event of Loss under the Collateral Agency Agreement has occurred as of the date
of this Agreement with respect to any Unit or Pledged Unit delivered on the
Closing Date;
(h) (i) TILC shall have, and the XXXX Xxxx of Sale to be
delivered on the Closing Date shall convey to the Lessee, all legal and
beneficial title to the Units which are being delivered on the Closing Date,
free and clear of all Liens (other than Permitted Liens of the type described in
clause (ii) below with respect to the Existing Equipment Subleases, and in
clauses (iii), (iv) and (v) of the definition thereof), and such conveyance will
not be void or voidable under any applicable law; (ii) TILC shall have, and the
TILC Assignment to be delivered on the Closing Date shall assign to the Lessee,
all legal and beneficial title to the Existing Equipment Subleases, free and
clear of all Liens (other than Subleases of the Existing Equipment Subleases by
the Sublessees as expressly permitted by the Existing Equipment Subleases and
other than Permitted Liens of the type described in clauses (iii), (iv) and (v)
of the definition thereof), and such assignment will not be void or voidable
under any applicable law; (iii) all of the Units being delivered on the Closing
Date other than an immaterial amount shall be subject to Sublease by the
Sublessees under the Existing Equipment Subleases on rental and other terms
which are no different, taken as a whole, from those for similar railcars in the
rest of the TILC Fleet; (iv) TILC shall have, and the TILC Pledged Equipment
Xxxx of Sale to be delivered on the Closing Date shall convey to the Lessee, all
legal and beneficial title to the Pledged Units which are being delivered on the
Closing Date, free and clear of all Liens (other than Permitted Liens of the
type described in clause (v) below with respect to the Existing Pledged
Equipment Leases, and in clauses (iii), (iv) and (v) of the definition thereof),
and such conveyance will not be void or voidable under any applicable law; (v)
TILC shall have, and the TILC Pledged Equipment Assignment to be delivered on
the Closing Date shall assign to the Lessee, all legal and beneficial title to
the Existing Pledged Equipment Leases, free and clear of all Liens (other than
Participation Agreement (TRLI 2001-1A)
31
leases of the Existing Pledged Equipment Leases by the Pledged Equipment Lessees
as expressly permitted by the Existing Pledged Equipment Leases and other than
Permitted Liens of the type described in clauses (iii), (iv) and (v) of the
definition thereof), and such assignment will not be void or voidable under any
applicable law; and (vi) all of the Pledged Units other than an immaterial
amount shall be subject to lease by the Pledged Equipment Lessees under the
Existing Pledged Equipment Leases on rental and other terms which are no
different, taken as a whole, from those for similar railcars in the rest of the
TILC Fleet;
(i) (a) all sales, use or transfer taxes, if any, due and
payable upon the sale of the Equipment and assignment of Existing Equipment
Subleases by TILC to the Lessee will have been paid or such transactions will
then be exempt from any such taxes and TILC will cause any required forms or
reports in connection with such taxes to be filed in accordance with applicable
laws and regulations; and (b) all sales, use or transfer taxes, if any, due and
payable upon the sale of the Pledged Equipment and assignment of Existing
Pledged Equipment Leases by TILC to the Lessee will have been paid or such
transactions will then be exempt from any such taxes and TILC will cause any
required forms or reports in connection with such taxes to be filed in
accordance with applicable laws and regulations;
(j) all Units delivered on the Closing Date and all Pledged
Units are substantially similar in terms of objectively identifiable
characteristics that are relevant for purposes of the services to be performed
by TILC under the Management Agreement to the equipment in the TILC Fleet;
(k) in selecting the Units to be sold on the Closing Date to
the Lessee pursuant to the XXXX Xxxx of Sale and in selecting the Pledged Units
to be sold to the Lessee pursuant to the TILC Pledged Equipment Xxxx of Sale,
TILC has not discriminated against the Lessee in a negative fashion when such
Units and Pledged Units are compared with the other equipment in the TILC Fleet;
(l) the written information provided by TILC or on behalf of
TILC to the Owner Participant and/or the Loan Participant in each document set
forth on Schedule 3.2(m) hereto does not contain any untrue statement of a
material fact and does not omit a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. The assumptions and related financial information relating to the
proposed business and operations of TILC and the Partnership Fleet which are
contained in the information on Schedule 3.2(m) have been prepared in good faith
based upon information that TILC deems fair and reasonable, and there are no
statements or conclusions therein which are based on or include information
known to TILC to be misleading in any material respect or which fail to take
into account material information known to TILC regarding the matters stated
therein. Certain information contained in the
Participation Agreement (TRLI 2001-1A)
32
information on Schedule 3.2(m) (e.g. statistical information relating to renewal
and remarketing of railcars, potential increases in absolute or nominal railcar
lease rates, anticipated utilization, and maintenance costs) is based on the
historical experience of TILC. Subject to the foregoing, there can be no
assurance that past experience will be indicative of future performance with
respect to these or other operating and marketing factors set forth in the
information on Schedule 3.2(m);
(m) the representations and warranties of the Lessee contained
in Section 3.2(h), clause (iv) of Section 3.2(l), the first sentence of Section
3.2(p) and in Section 3.2(r) (to the extent a copy of such Appraisal or a
relevant excerpt therefrom has been delivered to TILC) are true and correct as
of the date hereof;
(n) TILC is not in default under any Existing Equipment
Subleases or Existing Pledged Equipment Leases, and, to the best of the TILC's
knowledge, there are (i) no defaults by any Sublessee or Pledged Equipment
Lessee thereunder existing as of the date hereof under the Existing Equipment
Subleases or Existing Pledged Equipment Leases, except such defaults as are not
material, (ii) no claims or liabilities arising as a result of the operation or
use of any Unit described on Schedule 1 hereto prior to the date hereof as to
which the Lessor, as owner of the Units delivered on the Closing Date, would be
liable and (iii) no claims or liabilities arising as a result of the operation
or use of any Pledged Unit prior to the date hereof as to which the Lessee, as
owner of the Pledged Units, would be liable;
(o) (i) as of the Closing Date, TILC shall have provided, or
caused to be provided, in either case in accordance with the terms of the
relevant Existing Equipment Sublease, a notice relating to each Existing
Equipment Sublease (which notice shall be substantially in the form attached
hereto as Exhibit D) to the related Sublessee under such Existing Equipment
Sublease and (ii) as of the Closing Date, TILC shall have provided, or caused to
be provided, in either case in accordance with the terms of the relevant
Existing Pledged Equipment Lease, a notice relating to each Existing Pledged
Equipment Lease (which notice shall be substantially in the form attached hereto
as Exhibit D) to the related Pledged Equipment Lessee under such Existing
Pledged Equipment Lease;
(p) (i) the balance sheet of TILC as of March 31, 2000, and
the related statements of operations, stockholders' equity and cash flows for
the period then ended, and (ii) the balance sheet of TILC as of December 31,
2000 and the related statements of income and cash flows of TILC for the nine
month period beginning on April 1, 2000 and ending on December 31, 2000, have
been prepared in accordance with generally accepted accounting principles
(except as may be stated in the notes thereto and except, with respect to
interim financial statements, for year-end audit adjustments), consistently
applied, and fairly set forth, in all material
Participation Agreement (TRLI 2001-1A)
33
respects, the financial condition of TILC as of such dates and the results of
their operations and cash flows for such periods; and
(q) TILC is not engaged in the business of extending credit
for the purposes of purchasing or carrying margin stock, and no proceeds of the
Equipment Note or the Owner Participant's Commitment as contemplated by this
Agreement and the other Operative Agreements will be used by TILC for a purpose
which violates, or would be inconsistent with, Section 7 of the Securities
Exchange Act of 1934, as amended, or Regulations T, U and X of the Federal
Reserve System. Terms for which meanings are provided in Regulations T, U and X
of the Federal Reserve System or any regulations substituted therefor, as from
time to time in effect, are used in this Section 3.6(q) with such meanings.
Section 3.7 Representations and Warranties of TRMI. TRMI represents and
warrants to the Indenture Trustee, the Owner Trustee and the Participants, as of
the date hereof:
(a) TRMI is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, is duly licensed
or qualified and in good standing in each jurisdiction in which the failure to
so qualify would have a material adverse effect on its ability to carry on its
business as now conducted or to execute, deliver and perform its obligations
under the TRMI Agreements, has the power and authority to carry on its business
as now conducted, and has the requisite power and authority to execute, deliver
and perform its obligations under the TRMI Agreements;
(b) the TRMI Agreements have been duly authorized by all
necessary corporate action, executed and delivered by TRMI, and (assuming the
due authorization, execution and delivery by each other party thereto)
constitute the legal, valid and binding obligations of TRMI, enforceable against
TRMI in accordance with their respective terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of equity;
(c) the execution, delivery and performance by TRMI of each
TRMI Agreement and compliance by TRMI with all of the provisions thereof do not
and will not contravene (i) any law or regulation, or any order of any court or
governmental authority or agency applicable to or binding on TRMI or any of its
properties, or (ii) the provisions of, or constitute a default by TRMI under,
its certificate of incorporation or bylaws or (iii) any indenture, mortgage,
contract or other agreement or instrument to which TRMI is a party or by which
TRMI or any of its properties may be bound or affected except, with respect to
clause (iii) above, where such contravention would not materially adversely
affect TRMI's ability to
Participation Agreement (TRLI 2001-1A)
34
perform its obligations under the TRMI Agreements or materially adversely affect
its financial condition or business;
(d) there are no proceedings pending or, to the knowledge of
TRMI, threatened against TRMI in any court or before any governmental authority
or arbitration board or tribunal which, if adversely determined, would
materially adversely affect TRMI's ability to perform its obligations under the
TRMI Agreements or materially adversely affect its financial condition or
business;
(e) TRMI is not in violation of any term of any charter
instrument or bylaw or any other material agreement or instrument to which it is
a party or by which it may be bound except where such violation would not
materially adversely affect TRMI's ability to perform its obligations under the
TRMI Agreements or materially adversely affect its financial condition or
business. TRMI is in compliance with all laws, ordinances, governmental rules
and regulations to which it is subject, the failure to comply with which would
have a material and adverse effect on its operations or condition, financial or
otherwise, or would impair the ability of TRMI to perform its obligations under
the TRMI Agreements, and has obtained all licenses, permits, franchises and
other governmental authorizations material to the conduct of its business;
(f) no consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any trustee or
any holder of indebtedness of TRMI or any governmental authority on the part of
TRMI is required in the United States in connection with the execution and
delivery by TRMI of the TRMI Agreements, or is required to be obtained in order
for TRMI to perform its obligations thereunder in accordance with the terms
thereof, other than those which (i) are routine in nature and are not normally
applied for prior to the time they are required, and which TRMI has no reason to
believe will not be timely obtained or (ii) the failure to obtain would not have
a material and adverse effect on its operations or condition, financial or
otherwise, or would impair the ability of TRMI to perform its obligations under
the TRMI Agreements;
(g) the written information provided by TRMI or on behalf of
TRMI to the Owner Participant and/or the Loan Participant in each document set
forth on Schedule 3.2(m) hereto as of the date such information was provided to
the Owner Participant and/or the Loan Participant, as the case may be, did not
contain any untrue statement of a material fact and did not omit a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. No representation or
warranty is given with respect to any forecasts or projections included therein
or omitted therefrom;
Participation Agreement (TRLI 2001-1A)
35
(h) the representations and warranties of the Lessee contained
in Sections 3.2(a), (b), (c), (d), (e), (f), (g), (i), (j), (k), clauses (i),
(ii) and (iii) of (l), (m), (n), (o), (p) other than the first sentence thereof,
(q) and (s) are true and correct as of the date hereof (except with respect to
representations and warranties made as of an earlier date, in which case such
representations and warranties shall be true as of such earlier date); and
(i) (x) the balance sheet of TRMI as of March 31, 2000, and
the related statements of operations, stockholders' equity and cash flows for
the period then ended, and (y) the balance sheet of TRMI as of December 31, 2000
and the related statements of income and cash flows of TRMI for the nine month
period beginning on April 1, 2000 and ending on December 31, 2000, have been
prepared in accordance with generally accepted accounting principles (except as
may be stated in the notes thereto and except, with respect to interim financial
statements, for year-end audit adjustments), consistently applied, and fairly
set forth, in all material respects, the financial condition of TRMI as of such
dates and the results of their operations and cash flows for the periods then
ended.
Section 3.8 Representations and Warranties of the Pass Through Trustee.
The Pass Through Trustee represents and warrants to the Owner Trustee, the
Indenture Trustee, the Owner Participant, TILC, TRMI and the Lessee that, as of
the date hereof:
(a) the Pass Through Trustee is a national banking association
duly organized and validly existing in good standing under the laws of the
United States of America and has the full corporate power, authority and legal
right under the laws of the United States of America and the State of Illinois
pertaining to its banking, trust and fiduciary powers to execute, deliver and
perform its obligations under the Pass Through Trustee Agreements and the Pass
Through Documents to which it is a party;
(b) this Agreement has been, and on the Closing Date, each of
the other Pass Through Trustee Agreements will have been, duly authorized,
executed and delivered by the Pass Through Trustee; this Agreement constitutes,
and on the Closing Date, each of the other Pass Through Trustee Agreements will
constitute, the legal, valid and binding obligations of the Pass Through
Trustee, enforceable against the Pass Through Trustee in accordance with their
respective terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(c) the execution, delivery and performance by the Pass
Through Trustee of each of the Pass Through Trustee Agreements, the purchase by
the Pass
Participation Agreement (TRLI 2001-1A)
36
Through Trustee of the Equipment Note pursuant to this Agreement, and the
issuance of the Pass Through Certificates pursuant to the Pass Through Trust
Agreement, do not contravene any law, rule or regulation of any federal or
Illinois governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers or any judgment or order applicable to or
binding on the Pass Through Trustee and do not contravene or result in any
breach of, or constitute a default under, the Pass Through Trustee's articles of
association or bylaws or any agreement or instrument to which the Pass Through
Trustee is a party or by which it or any of its properties may be bound or
affected;
(d) neither the execution and delivery by the Pass Through
Trustee of each of the Pass Through Trustee Agreements nor the consummation by
the Pass Through Trustee of any of the transactions contemplated thereby,
requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action with respect to, any
federal or Illinois governmental authority or agency regulating the Pass Through
Trustee's banking, trust or fiduciary powers;
(e) there are no pending or, to its knowledge, threatened
actions or proceedings against the Pass Through Trustee before any court or
administrative agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of the Pass
Through Trustee to perform its obligations under any of the Pass Through Trustee
Agreements;
(f) the Pass Through Trustee is not in default under any Pass
Through Trustee Agreement;
(g) the Pass Through Trustee does not directly or indirectly
control, and is not directly or indirectly controlled by or under common control
with, the Owner Participant, the Owner Trustee, the Initial Purchasers, TILC,
TRMI or the Lessee;
(h) the Pass Through Trustee is purchasing the Equipment Note
for the purposes contemplated by the Operative Agreements and not with a view to
the transfer or distribution of any Equipment Note to any other Person, except
as contemplated by the Operative Agreements; and
(i) except for the issue and sale of the Pass Through
Certificates contemplated hereby and by the other Pass Through Trustee
Agreements, the Pass Through Trustee has not directly or indirectly offered any
Equipment Note or Pass Through Certificate or any interest in or to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, anyone other than the Owner Trustee
and the Owner Participant, and the Pass Through Trustee has not authorized
anyone to act on its behalf to offer directly or
Participation Agreement (TRLI 2001-1A)
37
indirectly any Equipment Note, any Pass Through Certificate or any interest in
and to the Trust Estate, the Trust Agreement or any similar interest related to
this transaction for sale to, or to solicit any offer to acquire any of the same
from, any Person other than the Owner Trustee and the Owner Participant.
Section 3.9 Opinion Acknowledgment. Each of the parties hereto, with
respect to such party, expressly consents to the rendering by its counsel of the
opinion referred to in Section 4.1(e) and acknowledges that such opinion shall
be deemed to be rendered at the request and upon the instructions of such party.
SECTION 4. CLOSING CONDITIONS.
Section 4.1 Conditions Precedent to Investment by Each Participant. The
obligation of each Participant to make the investment specified with respect to
such Participant in Section 2 on the Closing Date shall be subject to the
satisfaction or waiver of the following conditions precedent (except that the
obligations of any Person shall not be subject to such Person's own performance
or compliance):
(a) Execution of Operative Agreements. On or before the
Closing Date, this Agreement, the Trust Agreement, the Lease, the Lease
Supplement in respect of the Units delivered on the Closing Date, the Indenture,
the Indenture Supplement in respect of the Units delivered on the Closing Date,
the Equipment Note, the Pass Through Documents, the Management Agreement, the
Insurance Agreement, the Transfer and Assignment Agreement, the Pledged
Equipment Transfer and Assignment Agreement, the XXXX Xxxx of Sale, the Pledged
Equipment Xxxx of Sale, the TILC Pledged Equipment Assignment, the TILC
Assignment, the Xxxx of Sale, the Assignment, the Collateral Agency Agreement,
the Administrative Services Agreement, the OP Guaranty, the Control Agreement
and the Trinity Guaranty shall each be satisfactory in form and substance to
such Participant, shall have been duly executed and delivered by the parties
thereto (except that the execution and delivery of the documents referred to
above (other than this Agreement) by a party hereto or thereto shall not be a
condition precedent to such party's obligations hereunder), shall each be in
full force and effect, and executed counterparts of each shall have been
delivered to such Participant or its counsel on or before the Closing Date; and
no event shall have occurred and be continuing that constitutes a Lease Default
or an Indenture Default.
(b) Recordation and Filing. On or before the Closing Date
(except as expressly stated below), the Lessee shall have caused the Lease, the
Lease Supplement, the Indenture and the Indenture Supplement (each in respect of
Units delivered on the Closing Date), the Collateral Agency Agreement in respect
of the Pledged Units delivered on the Closing Date, the Pledged Equipment Xxxx
of Sale, the XXXX Xxxx of Sale, the Xxxx of Sale, the TILC Assignment, the TILC
Pledged
Participation Agreement (TRLI 2001-1A)
38
Equipment Assignment and the Assignment to be duly filed, recorded and deposited
in memorandum form with the STB in conformity with 49 U.S.C. Section 11301 and
with the Registrar General of Canada pursuant to Section 105 of the Canada
Transportation Act, and all necessary actions shall have been taken to cause
publication of notice of such deposit in The Canada Gazette in accordance with
said Section 105 and all appropriate Uniform Commercial Code financing
statements to be filed where necessary or reasonably advisable within 10 days
after the Closing Date, and the Lessee shall furnish the Indenture Trustee, the
Owner Trustee, the Collateral Agent and each Participant proof thereof. Without
limiting the representations and warranties set forth in any Operative
Agreement, by such recording or filing of the Lease (or a financing statement or
similar notice thereof), the Owner Trustee and the Lessee are not acknowledging
or implying that the Lease constitutes a "security agreement" or creates a
"security interest" within the meaning of the Uniform Commercial Code in any
applicable jurisdiction.
(c) Representations and Warranties of the Lessee. On the
Closing Date, the representations and warranties of the Lessee contained in
Section 3.2 and Section 3.4(b) hereof shall be true and correct in all material
respects as of the Closing Date as though then made on and as of such date,
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and each of the Owner Trustee, the
Indenture Trustee and the Participants shall have received an Officer's
Certificate to such effect dated such date from the General Partner of the
Lessee certifying to the foregoing matters, and the Lessee shall have performed
and complied with all agreements and conditions herein contained which are
required to be performed or complied with by the Lessee on or before said date.
(d) Representations and Warranties of the Owner Trustee. On
the Closing Date, the representations and warranties of the Trust Company and
the Owner Trustee contained in Section 3.1 and Section 3.4(a) shall be true and
correct in all material respects as of the Closing Date as though then made on
and as of such date except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties were true and correct on and as of such earlier date), and each
of the Lessee, the Indenture Trustee, TILC, TRMI and the Participants shall have
received an Officer's Certificate to such effect dated such date from the Trust
Company (in respect of the Trust Company) and the Owner Trustee (in respect of
the Owner Trustee), and the Trust Company and the Owner Trustee shall have
performed and complied with all agreements and conditions herein contained which
are required to be performed or complied with by the Trust Company and the Owner
Trustee, respectively, on or before said date.
(e) Opinions of Counsel. On the Closing Date, the Owner
Trustee, the Indenture Trustee and each Participant shall have received the
favorable
Participation Agreement (TRLI 2001-1A)
39
written opinion of each of (i) Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois),
special counsel for the Lessee, TILC, Trinity and TRMI, substantially in the
form of Exhibit E-1, (ii) counsel for the Lessee, TILC, Trinity and TRMI (which
counsel shall be the General Counsel of Trinity), substantially in the form of
Exhibit E-2, (iii) Xxxxxxx Xxxx LLP, counsel to the Owner Trustee, substantially
in the form of Exhibit E-3, (iv) Winston & Xxxxxx, special counsel to the Owner
Participant, substantially in the form of Exhibit E-4, (v) Xxxxxx Xxxxxx Capital
Corporation Legal Department, counsel to the Owner Participant, substantially in
the form of Exhibit E-5, (vi) Xxxxxx X. Xxxx, Assistant Counsel to the
Indenture Trustee, substantially in the form of Exhibit E-6, (vii) Xxxxxx &
Xxxxxx, special STB counsel, substantially in the form of Exhibit E-7, (viii)
XxXxxxxx Xxxxxxxx, special Canadian counsel, substantially in the form of
Exhibit E-8, (ix) Xxxxxxx & Xxxxx L.L.P., special counsel for the Collateral
Agent, substantially in the form of Exhibit E-9, (x) Xxxxxx X. Xxxx, Assistant
Counsel to the Pass Through Trustee, substantially in the form of Exhibit E-10
and (xi) Morris, James, Hitchens & Xxxxxxxx, counsel for the Marks Company
Trust, substantially in the form of Exhibit E-11.
(f) Title. On the Closing Date, after giving effect to the
transactions contemplated hereby, (i) the Owner Trustee shall have all legal and
beneficial title to each Unit to be delivered on the Closing Date, free and
clear of all Liens (other than Permitted Liens of the type described in clause
(ii) below with respect to the Existing Equipment Subleases, and in clauses
(iii), (iv) and (v) of the definition thereof), (ii) the Owner Trustee shall
have received all right, title and interest of the Lessee in and to the Existing
Equipment Subleases, free and clear of all Liens (other than Subleases of the
Existing Equipment Subleases by the Sublessees as expressly permitted by the
Existing Equipment Subleases and other than Permitted Liens of the type
described in clauses (iii), (iv) and (v) of the definition thereof) and (iii)
each Sublessee under an Existing Equipment Sublease shall have been notified of
the assignment thereof to the Owner Trustee. In addition, (i) the Lessee shall
have all legal and beneficial title to each Pledged Unit to be delivered on the
Closing Date, free and clear of all Liens (other than Permitted Liens of the
type described in clause (ii) below with respect to the Existing Pledged
Equipment Leases, and in clauses (iii), (iv) and (v) of the definition thereof),
(ii) the Lessee shall have received all right, title and interest of TILC in and
to the Existing Pledged Equipment Leases, free and clear of all Liens (other
than Subleases of the Existing Pledged Equipment Leases by the Pledged Equipment
Lessees as expressly permitted by the Existing Pledged Equipment Leases and
other than Permitted Liens of the type described in clauses (iii), (iv) and (v)
of the definition thereof) and (iii) each Pledged Equipment Lessee under an
Existing Pledged Equipment Lease shall have been notified of the assignment
thereof to the Lessee.
(g) Bills of Sale; Assignments. On the Closing Date, each of
the following documents shall each have been duly executed and delivered: (i)
the TILC
Participation Agreement (TRLI 2001-1A)
40
Xxxx of Sale and the Xxxx of Sale, in each case in form and substance reasonably
satisfactory to the Lessee, the Owner Trustee, the Indenture Trustee and the
Pass Through Trustee, dated such date and covering the Units to be delivered on
such date, transferring to the Owner Trustee and the Lessee, respectively, legal
and beneficial title to such Units free and clear of all Liens (other than
Permitted Liens of the type described in clause (ii) below with respect to the
Existing Equipment Subleases, and in clauses (iii), (iv) and (v) of the
definition thereof) and warranting to the Owner Trustee that at the time of
delivery of each such Unit, TILC and the Lessee, as the case may be, had legal
and beneficial title thereto and good and lawful right to sell the same, and
title thereto was free and clear of all Liens (other than Permitted Liens of the
type described in clause (ii) below with respect to the Existing Equipment
Subleases, and in clauses (iii), (iv) and (v) of the definition thereof and,
with respect to the XXXX Xxxx of Sale, warranting that TILC shall be responsible
for discharging any Permitted Lien of the type described in subclause (iii) or
(iv) of the definition thereof which has attached as of the Closing Date), (ii)
the TILC Assignment and the Assignment, in each case in form and substance
reasonably satisfactory to the Lessee, the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee, dated such date covering the Existing Equipment
Subleases, assigning to the Owner Trustee and Lessee respectively, all right,
title and interest of TILC and the Lessee, respectively, to the Existing
Equipment Subleases, free and clear of all Liens (other than Permitted Liens)
and warranting to the Lessee that, at the time of such assignment, TILC and the
Lessee, respectively, had legal and beneficial title to the Existing Equipment
Subleases and good and lawful right to sell the same, and title thereto was free
and clear of all Liens (other than Permitted Liens); (iii) the TILC Pledged
Equipment Xxxx of Sale in form and substance reasonably satisfactory to the
Lessee, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee,
dated such date and covering the Pledged Units to be delivered on such date,
transferring to the Lessee legal and beneficial title to such Pledged Units free
and clear of all Liens (other than Permitted Liens of the type described in
clause (iv) below with respect to the Existing Pledged Equipment Leases, and in
clauses (iii), (iv) and (v) of the definition thereof) and warranting to the
Lessee that at the time of delivery of each such Pledged Unit, TILC had legal
and beneficial title thereto and good and lawful right to sell the same, and
title thereto was free and clear of all Liens (other than Permitted Liens of the
type described in clause (iv) below with respect to the Existing Pledged
Equipment Leases, and in clauses (iii), (iv) and (v) of the definition thereof
and warranting that TILC shall be responsible for discharging any Permitted Lien
of the type described in subclause (iii) or (iv) of the definition thereof which
has attached as of the Closing Date), and (iv) the TILC Pledged Equipment
Assignment in form and substance reasonably satisfactory to the Lessee, the
Owner Trustee, the Indenture Trustee and the Pass Through Trustee, dated such
date covering the Existing Pledged Equipment Leases, assigning to the Lessee all
right, title and interest of TILC to the Existing Pledged Equipment Leases, free
and clear of all Liens (other than Permitted Liens) and
Participation Agreement (TRLI 2001-1A)
41
warranting to the Lessee that, at the time of such assignment, TILC had legal
and beneficial title to the Existing Pledged Equipment Leases and good and
lawful right to sell the same, and title thereto was free and clear of all Liens
(other than Permitted Liens);
(h) Insurance Certificate. On or before the Closing Date, the
Indenture Trustee and each Participant shall have received (x) each certificate
relating to insurance that is required pursuant to Section 12 of the Lease and
Section 6.4 of the Collateral Agency Agreement and (y) certificates from a
nationally recognized insurance broker substantially in the forms attached
hereto as Exhibits A-1 and A-2 with respect to the public liability insurance
required by Section 12.1(b) of the Lease and Section 6.4 of the Collateral
Agency Agreement.
(i) Corporate, Partnership, Limited Liability Company and
Other Organizational Documents. Each of the Participants shall have received
such documents and evidence with respect to Trinity, TILC, TRMI, the Lessee, the
General Partner, the Limited Partner, the Owner Participant, the Pass Through
Trustee, the Owner Trustee and the Indenture Trustee as the Participants may
reasonably request in order to establish the consummation of the transactions
contemplated by this Agreement and the taking of all corporate, limited
partnership and other proceedings in connection therewith.
(j) No Threatened Proceedings. No action or proceeding shall
have been instituted nor shall governmental action be threatened before any
court or governmental agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency at the time
of the Closing Date, to set aside, restrain, enjoin or prevent the completion
and consummation of this Agreement or the transactions contemplated hereby.
(k) Representations and Warranties of the Owner Participant.
On the Closing Date, the representations and warranties of the Owner Participant
contained in Section 3.4(e) and Section 3.5 hereof shall be true and correct in
all material respects as of the Closing Date as though then made on and as of
such date, except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and warranties
were true and correct on and as of such earlier date), and each of the Lessee,
TILC, TRMI, the Indenture Trustee and the Pass Through Trustee shall have
received an Officer's Certificate to such effect dated such date from the Owner
Participant, and the Owner Participant shall have performed and complied with
all agreements and conditions herein contained which are required to be
performed or complied with by the Owner Participant on or before said date.
Participation Agreement (TRLI 2001-1A)
42
(l) Notice of Delivery. The Indenture Trustee and the
Participants shall have received the Notice of Delivery described in Section
2.3(a).
(m) Representations and Warranties of the Indenture Trustee.
On the Closing Date, the representations and warranties of the Indenture Trustee
contained in Section 3.3 hereof shall be true and correct in all material
respects as of the Closing Date as though then made on and as of such date,
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and each of the Lessee, TILC, TRMI, the
Owner Trustee and the Participants shall have received an Officer's Certificate
to such effect dated such date from the Indenture Trustee, and the Indenture
Trustee shall have performed and complied with all agreements and conditions
herein contained which are required to be performed or complied with by the
Indenture Trustee on or before said date.
(n) No Illegality. No change shall have occurred after the
execution and delivery of this Agreement in applicable law or regulations
thereunder or interpretations thereof by regulatory authorities that, in the
opinion of such Participant or its counsel, would make it illegal for such
Participant to enter into any transaction contemplated by the Operative
Agreements.
(o) Participants' Investments. (i) The Owner Participant shall
have made available the Owner Participant's Commitment in the amount specified
in, and otherwise in accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan
Participant shall have made available the Loan Participant's Commitment in the
amount specified in, and otherwise in accordance with, Sections 2.2(b) and 2.3.
(p) Consents. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee, Trinity, TILC and
TRMI, if any, required to have been obtained in connection with the transactions
contemplated by this Agreement and the other Operative Agreements shall have
been duly obtained and be in full force and effect.
(q) Governmental Actions. All actions, if any, required to
have been taken on or prior to the Closing Date in connection with the
transactions contemplated by this Agreement and the other Operative Agreements
on the Closing Date shall have been taken by any governmental or political
agency, subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such entities
required to be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement and the other Operative Agreements on the Closing
Date shall have been issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect, on the Closing
Date.
Participation Agreement (TRLI 2001-1A)
43
(r) Tax Indemnity Agreement. On or before the Closing Date,
the Tax Indemnity Agreement shall be satisfactory in form and substance to the
Owner Participant, shall have been duly executed and delivered by the Lessee and
the Guarantor and, assuming due authorization, execution and delivery by the
Owner Participant or one of its Affiliates, shall be in full force and effect.
(s) Appointment of Representative. The Owner Trustee shall
have authorized its representative, who shall be an individual designated by the
Lessee and acceptable to the Owner Trustee, to accept the Units being delivered
on the Closing Date from the Lessee and to deliver such Units to the Lessee. The
Lessee shall have authorized its representative (who shall be the same
individual designated by the Lessee under this Section 6.1(s)) to accept
delivery of such Units from the Owner Trustee as Lessor pursuant to the Lease.
(t) Solvency of the Lessee. The Lessee shall have furnished to
the Participants an Officer's Solvency Certificate (substantially in the form
attached hereto as Exhibit F) as to the solvency of the Lessee as of the Closing
Date stating, among other things, that on the Closing Date (i) the Collection
Account has a balance of $541,755, (ii) the Lessee has funded the Liquidity
Reserve Account with $6,750,000 in cash, (iii) the Lessee has delivered the
deposit of $625,000 to an account designated by the Depositary (as defined in
the Pass Through Trust Agreement) (or an Affiliate of the Depositary) as
collateral for the Lessee's obligations under that certain Indemnity Agreement
dated as of the date hereof between the Lessee and the Depositary, (iv) the
Lessee has funded the Special Second Closing Account with $320,000 in cash, (v)
the Lessee has funded the Excess Cash Account with $5,000,000 in cash and (vi)
the Lessee has funded the Pledged Equipment Proceeds Account with $4,232,000 in
cash.
(u) Schedule of Subleases, Pledged Equipment Leases, Units and
Pledged Units. The Participants and the Collateral Agent shall have received a
schedule, certified by the Lessee and TILC, listing the Existing Equipment
Subleases under the Lease, the Sublessee under each thereof and the Units
covered thereby. The Participants and the Collateral Agent shall have also
received a schedule, certified by the Lessee and TILC, listing the Existing
Pledged Equipment Leases, the Pledged Equipment Lessee under each thereof and
the Pledged Units covered thereby.
(v) Projected Coverage Ratio. The Manager shall have furnished
to the Participants and the Collateral Agent that portion of the report provided
for in Section 7.1 of the Management Agreement setting forth the Projected
Coverage Ratio for the six-month period immediately succeeding the Closing Date.
Participation Agreement (TRLI 2001-1A)
44
(w) Representations and Warranties of TILC. On the Closing
Date, the representations and warranties of TILC contained in Section 3.4(d) and
Section 3.6 hereof shall be true and correct in all material respects as of the
Closing Date as though then made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date), and each of the Owner Trustee, the Indenture Trustee and
the Participants shall have received an Officer's Certificate to such effect
dated such date from TILC, and TILC shall have performed and complied with all
agreements and conditions herein contained which are required to be performed or
complied with by TILC on or before said date.
(x) Representations and Warranties of TRMI. On the Closing
Date, the representations and warranties of TRMI contained in Section 3.4(c) and
Section 3.7 hereof shall be true and correct in all material respects as of the
Closing Date as though then made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date), and each of the Owner Trustee, the Indenture Trustee and
the Participants shall have received an Officer's Certificate to such effect
dated such date from TRMI, and TRMI shall have performed and complied with all
agreements and conditions herein contained which are required to be performed or
complied with by TRMI on or before said date.
(y) Representations and Warranties of the Pass Through
Trustee. On the Closing Date, the representations and warranties of the Pass
Through Trustee contained in Sections 3.4(f) and Section 3.8 hereof shall be
true and correct in all material respects as of the Closing Date as though then
made on and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties were true and correct on and as of such earlier date), and each
of the Lessee, TILC, TRMI, the Indenture Trustee, the Owner Trustee and the
Owner Participant shall have received an Officer's Certificate to such effect
dated such date from the Pass Through Trustee, and the Pass Through Trustee
shall have performed and complied with all agreements and conditions herein
contained which are required to be performed or complied with by the Pass
Through Trustee on or before said date.
(z) Representations and Warranties of Trinity. On the Closing
Date, the representations and warranties of Trinity contained in the Trinity
Guaranty shall be true and correct in all material respects as of the Closing
Date as though then made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct on and as of such
earlier date), and each of the
Participation Agreement (TRLI 2001-1A)
45
Owner Trustee, the Indenture Trustee and the Participants shall have received an
Officer's Certificate to such effect dated such date from Trinity, and Trinity
shall have performed and complied with all agreements and conditions herein
contained which are required to be performed or complied with by Trinity on or
before said date.
(aa) Accountant's Letter. The Participants shall have received
an accountant's letter from PriceWaterhouseCoopers L.L.P. in form and substance
reasonably satisfactory to each of them.
(bb) Certificate Rating. On the Closing Date, the Certificates
shall be rated "AA" by Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
(cc) Sublessee and Pledged Equipment Lessee Consents. The
Lessee shall have obtained the consent to assignment from Sublessees under
Existing Equipment Subleases and Pledged Equipment Lessees under Existing
Pledged Equipment Leases, such consents to be in form and substance reasonably
satisfactory to the Participants if not in the form attached hereto as Exhibit
D, with respect to a percentage of Existing Equipment Subleases relating to the
Equipment and Existing Pledged Equipment Leases relating to the Pledged
Equipment acceptable to each Participant.
(dd) Execution and Delivery of Other Agreements. The documents
related to the Marks Company, the 2001-1 SUBI Certificate related to the Marks
Company, the Other Participation Agreement and the Other Trust Agreement shall
have been executed and delivered by the respective parties thereto.
Section 4.2 Additional Conditions Precedent to Investment by the Loan
Participant. The obligation of the Loan Participant to fund the Loan
Participant's Commitment and purchase and pay for the Equipment Note to be
purchased by it pursuant to Sections 2.2(b) and 2.3 on the Closing Date shall be
subject to the satisfaction or waiver of the following additional conditions
precedent:
(a) Equipment Note. The Equipment Note to be delivered on the
Closing Date shall have been duly authorized, executed and delivered to the Loan
Participant by a duly authorized officer of the Owner Trustee and duly
authenticated by the Indenture Trustee.
(b) Sale of Pass Through Certificates. The Pass Through
Certificates shall have been sold to the Initial Purchasers pursuant to the
Certificate Purchase Agreement.
Participation Agreement (TRLI 2001-1A)
46
(c) Appraisal. The Pass Through Trustee and each Initial
Purchaser shall have received the verification of value, useful life and
estimated residual value prepared by the Appraiser in connection with the
Appraisal.
Section 4.3 Additional Conditions Precedent to Investment by the Owner
Participant. The obligation of the Owner Participant to provide the funds
specified with respect to it in Sections 2.2(a) and 2.3 on the Closing Date with
respect to any Unit to be delivered on the Closing Date shall be subject to the
satisfaction or waiver of the following additional conditions precedent:
(a) Appraisal. On or before the Closing Date, the Owner
Participant shall have received an opinion (the "Appraisal") of Rail Solutions,
Inc. (the "Appraiser"), satisfactory in form and substance to the Owner
Participant (with a separate summary or other evidence of such Appraisal as it
relates to fair market value and useful life being provided to the Rating
Agency), concluding that: (i) the fair market value of each Unit being delivered
on the Closing Date is equal to the portion of the Total Equipment Cost with
respect to such Unit; (ii) at the expiration of the Basic Term and any Fixed
Rate Renewal Term, (A) without taking into account inflation or deflation from
and after the Closing Date or the existence of any purchase option, it is
reasonable to expect that each such Unit will have a fair market value of at
least 20% of the Total Equipment Cost with respect to such Unit and (B) the
remaining economic life of each such Unit will be at least equal to 20% of the
economic life of such Unit as estimated in the Appraisal; (iii) as of the Early
Purchase Date, the estimated fair market value of each such Unit being delivered
on the Closing Date, taking into account inflation or deflation from and after
the Closing Date, will not exceed the portion of the Early Purchase Price
attributable to such Unit; (iv) no Unit being delivered on the Closing Date is
Limited Use Property; (v) the Fixed Rate Renewal is greater than or equal to the
fair market rental value of each such Unit and the Lessee is not reasonably
expected to exercise any Fixed Rate Renewal option; and (vi) such other matters
as the Owner Participant may reasonably request; provided that the Lessee makes
no representation as to the fair market value, useful life, fair market rental
value or estimated residual value of the Equipment, and the Lessee shall not be
responsible for, or incur any liabilities as a result of, the contents of such
Appraisal or report to which it relates or, except to the extent provided in the
Tax Indemnity Agreement.
(b) Opinion with Respect to Certain Tax Aspects. On the
Closing Date, the Owner Participant shall have received the opinion of Winston &
Xxxxxx, addressed to the Owner Participant, in form and substance satisfactory
to the Owner Participant, containing such counsel's favorable opinion with
respect to such tax matters as the Owner Participant may reasonably request.
Participation Agreement (TRLI 2001-1A)
47
(c) Absence of Change in Tax Laws. No change or proposed
change shall have occurred after the execution and delivery of this Agreement in
relevant United States tax laws, regulations, or administrative or judicial
interpretation thereof which change would cause an adverse change to the tax
assumptions used to calculate Basic Rent, Stipulated Loss Values, Stipulated
Loss Amounts, Termination Values, Termination Amounts and Early Purchase Price,
unless the adjustment referred to in Section 2.6(a) is made to the Owner
Participant's satisfaction.
Section 4.4 Conditions Precedent to the Obligation of TILC and the
Lessee. The obligation of TILC with respect to the sale of the Units and the
Pledged Units to the Lessee on the Closing Date, the obligation of the Lessee
with respect to the sale of such Units to the Owner Trustee and the obligation
of the Lessee to accept such Units under the Lease as of the Closing Date is
subject to the satisfaction or waiver of the following conditions precedent:
(a) Corporate Documents. On or before the Closing Date, the
Lessee shall have received such documents and evidence with respect to the
Participants, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee as the Lessee may reasonably request in order to establish the
authorization of the consummation of, or otherwise relating to the ability to
consummate, the transactions contemplated by this Agreement and the other
Operative Agreements, the taking of all corporate and other proceedings in
connection therewith and compliance with the conditions herein or therein set
forth.
(b) Operative Agreements. On or before the Closing Date, the
Operative Agreements shall have been duly authorized, executed and delivered by
the respective party or parties thereto (other than the Lessee, Trinity, TILC
and TRMI), and an executed counterpart of each thereof shall have been delivered
to the Lessee or its special counsel.
(c) Representations and Warranties. On the Closing Date, the
representations and warranties of each of the Owner Trustee, the Indenture
Trustee and the Participants contained in Section 3 hereof shall be true and
correct in all material respects as of the Closing Date as though made on and as
of such date, and the Lessee shall have received an Officer's Certificate to
such effect dated such date from each of the Owner Trustee as described in
Section 4.1(d), the Owner Participant as described in Section 4.1(k), the
Indenture Trustee as described in Section 4.1(m) and the Pass Through Trustee as
described in Section 4.1(y).
(d) Opinions of Counsel. On the Closing Date, the Lessee shall
have received the opinions of counsel referred to in Section 4.1(e) (other than
that set forth in clauses (i) and (ii) therein), addressed to the Lessee.
Participation Agreement (TRLI 2001-1A)
48
(e) No Threatened Proceedings. No action or proceeding shall
have been instituted nor shall governmental action be threatened before any
court or governmental agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency at the time
of the Closing Date, to set aside, restrain, enjoin or prevent the completion
and consummation of this Agreement or the transactions contemplated hereby.
(f) No Illegality. No change shall have occurred after the
execution and delivery of this Agreement in applicable law or regulations
thereunder or interpretations thereof by regulatory authorities that, in the
opinion of the Lessee or its counsel, would make it illegal for the Lessee to
enter into any transaction contemplated by the Operative Agreements.
(g) Participants' Investments. (i) The Owner Participant shall
have made available the Owner Participant's Commitment in the amount specified
in, and otherwise in accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan
Participant shall have made available the Loan Participant's Commitment in the
amount specified in, and otherwise in accordance with, Sections 2.2(b) and 2.3.
(h) Absence of Change in Tax Laws. No change shall have
occurred after the execution and delivery of this Agreement in relevant United
States tax laws or regulations, which change would cause an increase in the net
present value (expressed as a percentage of Total Equipment Cost) of the Basic
Rent (discounted monthly at a rate per annum equal to the Debt Rate) to exceed
100 basis points.
(i) No Adverse Accounting Treatment. The Lessee shall not have
been advised by its independent accountants that the Lessee or its affiliates
will not be afforded "off-balance sheet" accounting treatment with respect to
the Lease and the transactions contemplated by the Operative Agreements;
provided, that the Lessee shall not have deliberately caused the loss of
"off-balance sheet" accounting treatment to provoke non-satisfaction of such
condition precedent pursuant to this Section 4.4(i).
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE.
The Lessee agrees during the Lease Term and (if longer, in the event
that the Lessee has assumed all of the rights and obligations of the Lessor
under the Indenture in respect of the Equipment Notes) so long as any Equipment
Note remains outstanding, that it will furnish directly to each Participant the
following:
Participation Agreement (TRLI 2001-1A)
49
(a) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year, a balance sheet
of the Lessee as at the end of such quarter, together with the related
consolidated statements of income and cash flows of the Lessee for the period
beginning on the first day of such fiscal year and ending on the last day of
such quarter, setting forth in each case (except for the balance sheet) in
comparative form the figures for the corresponding periods of the previous
fiscal year, all in reasonable detail and prepared in accordance with generally
accepted accounting principles;
(b) as soon as available and in any event within 120 days
after the last day of each fiscal year, a copy of the Lessee's audited annual
report covering the operations of the Lessee including a balance sheet, and
related statements of income and retained earnings and statement of cash flows
of the Lessee for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, which statements will have been certified by a firm of
independent public accountants of recognized national standing selected by the
Lessee;
(c) within the time period prescribed in paragraph (a) above,
a certificate, signed by the Treasurer or principal financial officer of the
General Partner, (i) to the effect that such officer is not aware (without any
obligation of due inquiry), as of the date of such certificate, of any Lease
Default, and if a Lease Default shall exist, specifying such Lease Default, the
nature and status thereof and what action Lessee is taking or plans to take with
respect thereto and (ii) setting forth the Historical Coverage Ratio and the
Projected Coverage Ratio as of the last Business Day of the immediately
preceding calendar quarter;
(d) within the time period prescribed in paragraph (b) above,
a certificate, signed by the Treasurer or principal financial officer of the
General Partner, (i) to the effect that the signer has reviewed the Operative
Agreements and activities and records of the Lessee during the immediately
preceding fiscal year and that, after due inquiry, such officer is not aware, as
of the date of such certificate, of any Lease Default, and if a Lease Default
shall exist, specifying such Lease Default, the nature and status thereof and
what action Lessee is taking or plans to take with respect thereto, (ii) setting
forth the Historical Coverage Ratio and the Projected Coverage Ratio as of the
last Business Day of the preceding fiscal year and (iii) setting forth in
summary terms the Lessee's compliance with Section 8.3 of the Lease as to new
Subleases entered into by the Lessee, and sub-Subleases entered into by any
Sublessee, during such fiscal year, including without limitation as to whether
such new Subleases are subject and subordinate to the terms of the Lease;
Participation Agreement (TRLI 2001-1A)
50
(e) within the time periods presented in Section 7 of the
Management Agreement, each of the reports referred to therein delivered by the
Manager to the Lessee; and
(f) promptly after request therefor, such additional
information with respect to the financial condition or business of the Lessee as
the Owner Participant or the Indenture Trustee may from time to time reasonably
request.
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE
LESSEE.
Section 6.1 Restrictions on Transfer of Beneficial Interest. The Owner
Participant agrees that it shall not, directly or indirectly, sell, convey,
assign, pledge, mortgage or otherwise transfer all or any part of the Beneficial
Interest (collectively, for purposes of this Section 6.1, a "transfer") prior to
the expiration or earlier termination of the Lease Term without the Lessee's
prior written consent (which consent shall not be unreasonably withheld);
provided, however, no such consent shall be required in connection with any
indirect transfer of the Beneficial Interest resulting from (i) any direct or
indirect change of control of Xxxxxx Xxxxxx Capital Corporation or change of
control of any direct or indirect parent of Xxxxxx Xxxxxx Capital Corporation or
(ii) any transfer of substantially all of the assets of Xxxxxx Xxxxxx Capital
Corporation as an entirety; provided, further, that no such consent shall be
required if the following conditions are satisfied:
(a) the Person to whom such transfer is to be made (a
"Transferee") is (i) an institutional or corporate investor with tangible net
worth or, in the case of a bank or lending institution, combined capital and
surplus at the time of such transfer, of at least $75,000,000, determined in
accordance with generally accepted accounting principles, as of the date of such
transfer, or (ii) an Affiliate of an institutional or corporate investor that
satisfies the requirements set forth in clause (i) above if such investor
guarantees pursuant to a guaranty in form and substance satisfactory to the
Lessee the obligations of the Owner Participant under the Operative Agreements
assumed by such Affiliate as required herein or (iii) an Affiliate of the Owner
Participant; provided that in the event of a transfer pursuant to clause (iii)
which does not qualify under clauses (i) or (ii), the Owner Participant shall
remain liable for all of its obligations under this Agreement and the other
Operative Agreements;
(b) so long as no Lease Event of Default has occurred and is
continuing, neither the Transferee nor any of its Affiliates shall compete
(directly or indirectly) (other than as a passive investor or loan participant
in the financing of equipment or facilities used in railcar leasing) with the
Lessee or TILC (unless such non-competition requirement has been waived in
writing by the Lessee and TILC) in
Participation Agreement (TRLI 2001-1A)
51
any respect material to the full service railcar leasing business of the Lessee
or TILC; provided, that no Transferee or Affiliate thereof shall be deemed to
(i) be engaged in railcar leasing or (ii) hold (directly or indirectly) any
material interest in any business that is competitive with Lessee's or TILC's
railcar leasing business, solely by reason of any sale, lease or other
disposition (or any actions in furtherance of any of the foregoing) of any of
such Person's interest in any equipment or facilities directly or indirectly
owned, leased or otherwise controlled pursuant to any such Person's passive
investment or loan participation in the financing of any such equipment or
facilities used in railcar leasing or any re-leasing or sale of any rail
equipment which is returned to or repossessed by or on behalf of such Person
from a lessee or borrower in connection with a lease financing or lender
transaction entered into by such Person as a passive lessor, investor or lender;
(c) each of the Indenture Trustee, the Owner Trustee and the
Lessee shall have received 10 days (or, if a Lease Event of Default shall have
occurred and is continuing and the proposed Transferee or any of its Affiliates
would not, but for the occurrence of such Lease Event of Default, have satisfied
the requirements set forth in Section 6.1(b) above or Section 6.1(l) below,
fifteen (15) Business Days) prior written notice of such transfer specifying the
name and address of any proposed Transferee and such additional information as
shall be necessary to determine whether the proposed transfer satisfies the
requirements of this Section 6.1;
(d) such Transferee enters into an agreement (i) in the form
attached hereto as Exhibit C or (ii) otherwise in form and substance
satisfactory to each of the Lessee and the Owner Trustee and not reasonably
objected to by the Indenture Trustee whereby such Transferee confirms that it
shall be deemed a party to this Agreement and each other Operative Agreement to
which the transferring Owner Participant is a party, and agrees to be bound by
all the terms of, and to undertake all of the obligations and liabilities of the
transferring Owner Participant contained in, this Agreement and such other
Operative Agreements and in which the Transferee shall make representations and
warranties comparable to those of the Owner Participant contained herein and
therein;
(e) an opinion of counsel of the Transferee (which counsel
shall be reasonably acceptable to the Lessee, the Owner Trustee and the
Indenture Trustee and which may be internal counsel of the Transferee),
confirming (i) the existence, corporate power and authority of, and due
authorization, execution and delivery of all relevant documentation by, the
Transferee (with appropriate reliance on certificates of corporate officers or
public officials as to matters of fact), (ii) that each agreement referred to in
Section 6.1(d) above is the legal, valid, and binding obligation of the
Transferee, enforceable against the Transferee in accordance with its terms
(subject to customary qualifications as to bankruptcy and equitable principles)
and (iii)
Participation Agreement (TRLI 2001-1A)
52
compliance of the transfer with applicable requirements of federal securities
laws and securities laws of the Transferee's domicile, shall be provided, prior
to such transfer, to each of the Lessee, the Owner Trustee and the Indenture
Trustee, which opinion shall be in form and substance reasonably satisfactory to
the Lessee, the Owner Trustee and the Indenture Trustee;
(f) such transfer complies in all respects with and does not
violate any applicable provisions of the federal securities laws and the
securities law of any applicable state or any other applicable law;
(g) except as specifically consented to in writing by each of
the Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee, the terms of the Operative Agreements shall not be altered;
(h) after giving effect to such transfer, the Beneficial
Interest and the beneficial interest with respect to the Other Trust shall be
held by not more than two Persons in the aggregate; provided that for the
purpose of calculating the number of Persons under this Section 6.1(h), Persons
that are Affiliates of each other shall be considered to be one Person;
(i) all reasonable expenses of the parties hereto (including,
without limitation, reasonable legal fees and expenses of special counsel)
incurred in connection with each transfer of such Beneficial Interest shall be
paid by the transferring Owner Participant;
(j) such transfer either (i) does not involve the use of any
funds which constitute assets of an employee benefit plan subject to Title I of
ERISA or Section 4975 of the Code or (ii) if clause (i) is not applicable, will
not constitute a prohibited transaction under ERISA or the Code;
(k) as a result of and following such transfer, no Indenture
Default attributable to the Owner Participant or the Owner Trustee shall have
occurred and be continuing;
(l) unless a Lease Event of Default shall have occurred and is
continuing, the transfer does not involve the sale of the stock of any Owner
Participant, the sole asset of which is all or a portion of the Beneficial
Interest, to, or the merger of any such Owner Participant with or into, any
Person who is a competitor of the Lessee or TILC as described in Section 6.1(b),
provided that the Lessee may waive this requirement in writing;
(m) the Transferee (i) is a "United States Person" within the
meaning of Section 7701(a)(30) of the Code or (ii) is engaged in a United States
Participation Agreement (TRLI 2001-1A)
53
trade or business for purposes of Subtitle A, Chapter 1, Subchapter N of the
Code and is acquiring such Beneficial Interest in connection with such trade or
business; and
(n) the Owner Participant shall deliver to the Lessee an
Officer's Certificate certifying as to compliance with the transfer requirements
contained herein; provided that no such Officer's Certificate is required in
case of a transfer of the Beneficial Interest to the Lessee (or Lessee's
designee) pursuant to Section 6.9.
Upon any such transfer (i) except as the context otherwise requires,
such Transferee shall be deemed the "Owner Participant" for all purposes, and
shall enjoy the rights and privileges and perform the obligations of the Owner
Participant to the extent of the interest transferred hereunder and under each
other Operative Agreement to which the Owner Participant is a party, and, except
as the context otherwise requires, each reference in this Agreement and each
other Operative Agreement to the "Owner Participant" shall thereafter be deemed
to include such Transferee for all purposes to the extent of the interest
transferred, and (ii) the transferor, except to the extent provided in Section
6.1(i) hereof and except in the case of a transfer to a Transferee described in
the proviso to Section 6.1(a)(iii) hereof, shall be released from all
obligations hereunder and under each other Operative Agreement to which such
transferor is a party or by which such transferor is bound solely to the extent
such obligations are expressly assumed by a Transferee; and provided, further,
that in no event shall any such transfer or assignment waive or release the
transferor from any liability on account of any breach existing prior to such
transfer of any of its representations, warranties, covenants or obligations set
forth herein or in any of the other Operative Agreements or for any fraudulent
or willful misconduct. Subject to Section 6.1(l), the provisions of this Section
6.1 shall not be construed to restrict the Owner Participant from consolidating
with or merging into any other corporation or restricting another corporation
from merging into or consolidating with the Owner Participant. Notwithstanding
any transfer, the transferor Owner Participant shall be entitled to all benefits
accrued and all rights vested prior to such transfer, including, without
limitation, rights to indemnification under any of the Operative Agreements. No
transfer hereunder shall, by virtue of the Transferee engaging in a business or
activity not generally conducted by other institutional or corporate investors
in lease transactions, increase the Lessee's indemnification obligations under
Section 7.1 or 7.2. The Owner Participant hereby acknowledges and agrees (and
each Transferee by virtue of any transfer shall be deemed to have acknowledged
and agreed) to the terms of the Collateral Agency Agreement.
The Lessee agrees to provide notice to the Rating Agency of any
proposed transfer by an Owner Participant no later than 5 days after Lessee's
receipt of notice of such proposed transfer from an Owner Participant.
Participation Agreement (TRLI 2001-1A)
54
Section 6.2 Lessor's Liens Attributable to the Owner Participant. The
Owner Participant hereby unconditionally agrees with and for the benefit of each
of the other parties to this Agreement that the Owner Participant shall not
directly or indirectly create, incur, assume or suffer to exist any Lessor's
Lien attributable to the Owner Participant on or against all or any portion of
the Indenture Estate or the Equipment, and the Owner Participant agrees that it
shall, at its own cost and expense, take such action as may be necessary to duly
discharge and satisfy in full any such Lessor's Lien; provided that the Owner
Participant may contest any such Lessor's Lien in good faith by appropriate
proceedings so long as such proceedings do not involve any material danger of
the sale, forfeiture or loss of the Equipment or any interest therein or
interference with the use, operation, or possession of the Equipment or any
portion thereof by the Lessee under the Lease or the rights of the Indenture
Trustee under the Indenture.
Section 6.3 Lessor's Liens Attributable to Trust Company. Trust Company
hereby unconditionally agrees with and for the benefit of each of the other
parties to this Agreement that it shall not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Lien attributable to it on or
against all or any portion of the Trust Estate or the Equipment, the Trust
Company agrees that it shall, at its own cost and expense, take such action as
may be necessary to duly discharge and satisfy in full any such Lessor's Lien;
provided that the Trust Company may contest any such Lessor's Lien in good faith
by appropriate proceedings so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of the Equipment or any interest
therein or interference with the use, operation, or possession of the Equipment
or any portion thereof by the Lessee under the Lease or the right of the
Indenture Trustee under the Indenture.
Section 6.4 Liens Created by the Indenture Trustee and the Loan
Participant.
(a) The Indenture Trustee, in its individual capacity,
covenants and agrees with each of the Lessee, the Owner Trustee, the Owner
Participant and the Loan Participant that it shall not cause or permit to exist
any Lien on or against all or any portion of the Equipment, the Pledged
Equipment, the Trust Estate or the Indenture Estate arising as a result of (i)
claims against the Indenture Trustee in its individual capacity not related to
its interest in the Equipment, the Pledged Equipment and the Trust Estate, or to
the administration of the Indenture Estate pursuant to the Indenture, (ii) acts
of the Indenture Trustee in its individual capacity not contemplated by, or
failure of the Indenture Trustee to take any action it is expressly required to
perform by, any of the Operative Agreements, (iii) claims against the Indenture
Trustee attributable to the actions of the Indenture Trustee in its individual
capacity relating to Taxes or expenses that are not indemnified against by
Participation Agreement (TRLI 2001-1A)
55
the Lessee pursuant to Section 7 or (iv) claims against the Indenture Trustee
arising out of the transfer by the Indenture Trustee of all or any portion of
its interest in the Equipment, the Pledged Equipment, the Indenture Estate or
the Operative Agreements, other than a transfer permitted by the Operative
Agreements and with respect to which the Indenture Trustee will, at its own cost
and expense (and without any right of reimbursement from any other party
hereto), promptly take such action as may be necessary duly to discharge any
such Lien.
(b) The Loan Participant covenants and agrees with each of the
Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee that
the Loan Participant shall not cause or permit to exist any Lien on or against
all or any portion of the Equipment, the Pledged Equipment, the Trust Estate or
the Indenture Estate arising as a result of (i) claims against the Loan
Participant not related to its interest in the Equipment, the Pledged Equipment
and the Trust Estate, (ii) acts of the Loan Participant not contemplated by, or
failure of the Loan Participant to take any action it is expressly required to
perform by, any of the Operative Agreements, (iii) claims against the Loan
Participant relating to Taxes or expenses that are not indemnified against by
the Lessee pursuant to Section 7, or (iv) claims against the Loan Participant
arising out of the transfer by the Loan Participant of all or any portion of its
interest in the Equipment, the Pledged Equipment, the Indenture Estate or the
Operative Agreements, other than a transfer permitted by the Operative
Agreements and with respect to which the Loan Participant will, at its own cost
and expense (and without any right of reimbursement from the Lessee), promptly
take such action as may be necessary duly to discharge any such Lien.
Section 6.5 Covenants of Owner Trustee, Owner Participant and Indenture
Trustee. Each of the Owner Participant and Trust Company, in its individual and
trust capacities, hereby agrees, as to its own actions only and severally and
not jointly, with (a) the Loan Participant and the Indenture Trustee (so long as
the Equipment Notes remain outstanding), not to amend, supplement, or otherwise
modify any provision of the Trust Agreement in such a manner as to adversely
affect the rights of the Loan Participant or the Indenture Trustee without the
prior written consent of such party and (b) with the Lessee, not to terminate or
revoke the Trust Agreement or the trust created by the Trust Agreement prior to
the payment in full and discharge of the Equipment Notes and all other
indebtedness secured by the Indenture and the final discharge thereof. Each of
the Trust Company and the Indenture Trustee agrees, for the benefit of the
Lessee and the Owner Participant, to comply with the provisions of the Indenture
and not to amend, supplement, or otherwise modify any provision of the Indenture
except in the manner provided in Article IX thereof. Notwithstanding anything to
the contrary contained herein or in any of the other Operative Agreements, the
Indenture Trustee's obligation to take or refrain from taking any actions, or to
use its discretion (including, but not limited to, the giving or withholding of
consent or approval and the exercise of any rights or
Participation Agreement (TRLI 2001-1A)
56
remedies under such Operative Agreement), and any liability therefor, shall, in
addition to any other limitations provided herein or in any of the other
Operative Agreements, be limited by the provisions of the Indenture.
Section 6.6 Amendments to Operative Agreements That Are Not Lessee
Agreements. Unless a Lease Event of Default shall have occurred and be
continuing, the Owner Trustee, the Indenture Trustee and the Participants shall
not terminate the Operative Agreements to which the Lessee is not or will not be
a party, or amend, supplement, waive or modify in any manner such Operative
Agreements to which the Lessee is not or will not be a party, (i) except in
accordance with such Operative Agreements in effect on the date hereof (as
amended, modified or supplemented from time to time in accordance with the terms
hereof and of such Operative Agreements), or (ii) adverse to the Lessee or to
any of its rights or interests under any of the Operative Agreements, except
with the prior written consent of the Lessee. Without limiting the generality of
the foregoing, each of the Owner Participant and the Owner Trustee, the Pass
Through Trustee and the Indenture Trustee (as applicable) agrees that, in any
event, unless a Lease Event of Default shall have occurred and be continuing, it
will not amend Section 2.10 or Article IX of the Indenture or Article IX of the
Trust Agreement without the prior written consent of the Lessee.
Section 6.7 Certain Representations, Warranties and Covenants. The
Lessee hereby confirms its representations, warranties and covenants in Article
6 of the Collateral Agency Agreement, which are hereby incorporated in this
Agreement by this reference as fully as if set forth herein in their entirety.
Section 6.8 Covenants of the Manager. The Manager hereby confirms the
covenants in Article 7 of the Management Agreement, which are hereby
incorporated in this Agreement by this reference as fully as if set forth herein
in their entirety.
Section 6.9 Lessee's Purchase in Certain Circumstances.
(a) If (A) the Owner Participant or any Affiliate thereof is
or acquires, is acquired by, merges or otherwise consolidates with any company
or Affiliate thereof who would not be an eligible "Transferee" by reason of
Section 6.1(b) (and, in the case of an Affiliate, such entity continues to be an
Affiliate of the Owner Participant after such acquisition, merger or
consolidation), or (B) the Lessee shall have requested a waiver pursuant to
Section 12.3(c) of the Lease and the Lessor and the Owner Participant shall have
refused to grant such waiver or shall have granted such waiver but shall have
refused to further waive the requirement that amounts be deposited in the
Special Insurance Reserves Account pursuant to the Collateral Agency Agreement
in connection with the granting of the initial waiver, or
Participation Agreement (TRLI 2001-1A)
57
(C) the Lessee shall have elected to purchase, or arrange a purchase of, the
Beneficial Interest pursuant to Section 22.1 of the Lease, the Lessee may elect
either to:
(i) keep the Lease and the Equipment Notes in place
and require that the Owner Participant, and the Owner Participant agrees to,
transfer its Beneficial Interest in accordance with the terms of Section 6.1
(other than provisions of Sections 6.1(a), (b), (i), (l) and (n)) to the Lessee
or such other transferee as the Lessee may designate (such transfer to occur on
a Determination Date which is designated by the Lessee by written notice to the
Owner Participant not less than 60 days prior to such Determination Date) at a
purchase price (the "Beneficial Interest Purchase Price") equal to (1) the
Equity Portion of Termination Amount as of the date of such transfer, plus (2)
in the case of clause (B) above, the excess, if any, of the Fair Market Sales
Value of the Equipment calculated as of such date over the Termination Value as
of such date, plus (3) the Equity Portion of Basic Rent accrued and unpaid
therefor as of the date of such transfer (exclusive of any Basic Rent payable on
such date), plus (4) without duplication or limitation of any amount under
clauses (1) to (3) above, the sum of the Accumulated Equity Deficiency Amount
and Late Payment Interest related thereto, plus (5) without duplication or
limitation of any amount under clauses (1) to (4) above, that portion of
Supplemental Rent due and unpaid on such date that is payable to the Owner
Participant; provided, however, that, without regard to such Owner Participant's
obligations under the Operative Agreements relating to the period prior to such
transfer, any transfer of the Beneficial Interest pursuant to this Section 6.9
shall be without additional representations or warranties of or other
liabilities or obligations on such Owner Participant other than those expressly
set forth in the Owner Participant Agreements; provided, further, that in case
such Owner Participant holds less than 100% of the Beneficial Interest (after
excluding any Beneficial Interests held by the Lessee, TILC or any Affiliate of
either thereof), the purchase price for such Owner Participant's Beneficial
Interest shall be equal to (x) (i) the sum of the amounts calculated under
clauses (1), (2), (3) and (4) above multiplied by (ii) a fraction equal to the
portion such Owner Participant's Beneficial Interest bears to 100% of the
Beneficial Interests, plus (y) without duplication or limitation of any amount
under clause (x) above, that portion of Supplemental Rent due and unpaid on such
date that is payable to such Owner Participant; or
(ii) on a Determination Date which is designated by
the Lessee by written notice to the Owner Trustee and the Indenture Trustee not
less than 60 days prior to such Determination Date, purchase the Equipment for a
purchase price equal to (I) the Termination Amount calculated as of such
Determination Date, plus (II) in the case of clause (B) of the lead paragraph of
this Section 6.9(a), the excess, if any, of the Fair Market Sales Value of the
Equipment calculated as of such date over the Termination Value as of such
Determination Date, plus (III) without duplication or limitation, all other
amounts due and owing by the Lessee under the
Participation Agreement (TRLI 2001-1A)
58
Operative Agreements with respect to the Equipment, including, without
limitation, all accrued and unpaid Basic Rent therefor as of such Determination
Date (exclusive of any Basic Rent payable on such date), Make-Whole Amount then
payable on the Equipment Notes pursuant to Section 2.10(c) of the Indenture with
respect to the Equipment and Late Payment Premium, if any, due and owing under
the Operative Agreements with respect to the Equipment so that, after receipt
and application of all such payments the Owner Participant shall be entitled
under the terms of the Collateral Agency Agreement to receive, and does receive,
in respect of all such Units, the sum of the Accumulated Equity Deficiency
Amount (without duplication of any amount provided under clauses (I) - (III)
above) and Late Payment Interest related thereto and any other amounts of
Supplemental Rent due and unpaid on such Determination Date that are payable to
the Owner Participant.
(b) If the Lessee elects to exercise the option to purchase
the Equipment (as opposed to such Owner Participant's Beneficial Interest) as
provided in Section 6.9(a), the Lessee shall, as the purchase price therefor pay
the purchase price, as specified in Section 6.9(a)(ii), with respect to the
Equipment, together with all other amounts due and owing by the Lessee under the
Operative Agreements.
(c) In connection with any purchase of the Equipment under
this Section 6.9, the Lessee will make the payments required by Section
6.9(a)(ii) in immediately available funds against delivery of a xxxx of sale
transferring and assigning to the Lessee all right, title and interest of the
Lessor in and to the Equipment on an "as-is" "where-is" basis and containing a
warranty with respect to the absence of any Lessor's Lien. In such event, the
costs of preparing the xxxx of sale or other transfer documents and all other
documentation relating to such purchase and the costs of any necessary filings
related thereto will be borne by the Lessee.
If the Lessee shall fail to fulfill its obligations under
Sections 6.9(b) and (c), all of the Lessee's obligations under the Lease and the
Operative Agreements, including, without limitation, the Lessee's obligation to
pay installments of Rent, with respect to the Equipment shall continue.
Section 6.10 Owner Participant as Affiliate of Lessee. If at any time
the original or any successor Owner Participant shall be an Affiliate of the
Lessee, such Owner Participant and the Lessee agree that, notwithstanding
Section 9.5 of the Indenture, they will not vote its Beneficial Interest in any
respect if there is another Owner Participant not affiliated with the Lessee,
and, if there is no such Owner Participant, they will not vote its Beneficial
Interest to modify, amend or supplement any provision of the Lease or this
Agreement or give, or permit the Owner Trustee to give, any consent, waiver,
authorization or approval thereunder if any such action could reasonably be
expected to adversely affect in a material manner the Indenture
Participation Agreement (TRLI 2001-1A)
59
Trustee or any holder of an Equipment Note unless such action shall have been
consented to by the Pass Through Trustee.
Section 6.11 Records; U.S. Income Tax Information. Each of the Lessee,
TRMI and TILC covenants that it will maintain or cause to be maintained and
retain sufficient factual records (to the extent such records are maintained by
the Lessee, TRMI and TILC respectively, any sublessee, or any trustee for or
Affiliate of any thereof, in the ordinary course of their respective businesses)
to enable the Owner Participant to prepare required United States federal, state
and local tax returns. Upon request of the Owner Participant, the Lessee, TRMI
and TILC, respectively, shall deliver such records to the Owner Participant at
the expense of the Owner Participant. In addition, as soon as practicable, the
Lessee, TRMI and TILC, respectively, shall provide or cause to be provided (at
the expense of the Lessee) to the Owner Participant such information (in form
and substance reasonable satisfactory to the Owner Participant) as the Owner
Participant may reasonably request from and as shall be reasonably available to
the Lessee, TRMI and TILC, respectively, to enable the Owner Participant to
fulfill its tax return filing obligations, to respond to requests for
information, to verify information in connection with any income tax audit and
to participate effectively in any tax contest. Such information may include,
without limitation, information as to the location of and use of the Equipment
from time to time (to the extent such information is available on the basis of
the records regularly maintained by the Lessee, TRMI and TILC, respectively, any
sublessee, or any trustee for or Affiliate of any thereof, in the ordinary
course of their respective businesses).
SECTION 7. LESSEE'S INDEMNITIES.
Section 7.1 General Tax Indemnity.
(a) Tax Indemnitee Defined. For purposes of this Section 7.1,
"Tax Indemnitee" means the Pass Through Trustee, both in its individual capacity
and as trustee, the Owner Participant, its Affiliates (including, without
limitation, Xxxxxx Xxxxxx Capital Corporation, Grant Holdings, Inc., Trimaran
Leasing Investors, L.L.C. I, Trimaran Leasing Investors, L.L.C. II and Trimaran
Leasing, L.P.), the Owner Trustee, the Trust Company, the Indenture Trustee,
both in its individual capacity and as trustee, each of their successors or
assigns permitted under the terms of the Operative Agreements, any officer,
director, employee or agent of any of the foregoing, the Trust Estate and the
Indenture Estate; "Equity Tax Indemnitee" means the Owner Participant, its
Affiliates, the Owner Trustee, the Trust Company, and each of their respective
successors, assigns, officers, directors, employees and agents and the Trust
Estate; "Lender Tax Indemnitee" means each Tax Indemnitee which is not an Equity
Tax Indemnitee.
Participation Agreement (TRLI 2001-1A)
60
(b) Taxes Indemnified. Except as provided below, all payments
by the Lessee to any Tax Indemnitee in connection with the transactions
contemplated by the Operative Agreements shall be free of withholdings of any
nature whatsoever (and at the time that any payment is made upon which any
withholding is required the Lessee shall pay an additional amount such that the
net amount actually received will, after such withholding and on an After-Tax
Basis, equal the full amount of the payment then due) and shall be free of
expense to each Tax Indemnitee for collection or other charges. The Lessee shall
defend, indemnify and save harmless each Tax Indemnitee from and against, and as
between the Lessee and each Tax Indemnitee the Lessee hereby assumes liability
with respect to, all fees (including, without limitation, license fees and
registration fees), taxes (including, without limitation, income, gross
receipts, franchise, sales, use, value added, property and stamp taxes),
assessments, levies, imposts, duties, charges or withholdings of any nature
whatsoever, together with any and all penalties, additions to tax, fines or
interest thereon ("Taxes") imposed against any of the Tax Indemnitees, any item
of Equipment or Pledged Equipment or the Lessee, upon, arising from or relating
to
(i) any item of the Equipment or the Pledged
Equipment,
(ii) the construction, manufacture, financing,
purchase, delivery, ownership, acceptance, rejection, possession, improvement,
use, operation, leasing, subleasing, condition, maintenance, repair,
refinancing, registration, sale, return, replacement, storage, abandonment or
other application or disposition of any item of the Equipment or the Pledged
Equipment,
(iii) the rental payments, receipts or earnings
arising from any item of the Equipment or the Pledged Equipment or payable
pursuant to the Operative Agreements, or
(iv) the Operative Agreements, the Equipment Note or
any Sublease or any Pledged Equipment Lease or otherwise with respect to or in
connection with the transactions contemplated thereby.
(c) Taxes Excluded. The indemnity provided in Section 7.1(b)
shall not include:
(i) as to any Equity Tax Indemnitee, any Income Tax
imposed by the United States federal government (but not excluding any Income
Tax required to make a payment on an After-Tax Basis);
(ii) as to any Equity Tax Indemnitee, any Income Tax
imposed by any state, local or foreign government or taxing authority or
subdivision
Participation Agreement (TRLI 2001-1A)
61
thereof; provided, however, that this exclusion shall not apply to the extent
such Taxes (but not including Income Taxes imposed on net income) are
attributable to (I) the use or location of any item of the Equipment or the
activities of the Lessee or its Affiliates or any sublessee in the taxing
jurisdiction, (II) the presence or organization of the Lessee or any sublessee
in the taxing jurisdiction, (III) the status of the Lessee or any sublessee as a
foreign entity or as an entity owned by a foreign person or (IV) Lessee or
sublessee having made (or deemed to have made) payments to the Tax Indemnitee
from the relevant jurisdiction; provided, further, however, that the preceding
proviso shall not apply to any jurisdiction where the Owner Trust, the Owner
Trustee (other than in its individual capacity) or the Owner Participant has its
legal domicile or principal place of business (determined without regard to the
transactions contemplated by the Operative Agreement);
(iii) as to any Equity Tax Indemnitee, any Tax that
is imposed as a result of the sale, transfer or other disposition, by the Lessor
or the Owner Participant of any of its rights with respect to any item of
Equipment or the Owner Participant's interest in the Trust Estate unless such
sale, transfer or other disposition is a result of an Event of Default, results
from any substitution, repair or replacement of any item of Equipment under the
Lease, or results from any sale, transfer or disposition required under the
Lease (including but not limited to Section 10 of the Lease);
(iv) as to any Equity Tax Indemnitee, any Taxes to
the extent they exceed the Taxes that would have been imposed had an Equity Tax
Indemnitee not transferred, sold or disposed of its interest or rights in any
item of the Equipment to a non-U.S. Person;
(v) Taxes imposed on a Lender Tax Indemnitee with
respect to any period after the payment in full of the Equipment Notes; provided
that the exclusion set forth in this clause (v) shall not apply to Taxes to the
extent such Taxes relate to events occurring or matters arising prior to or
simultaneously with the applicable time of payment of the Equipment Notes or
relate to any payment made by the Lessee after such date;
(vi) as to any Tax Indemnitee, Taxes to the extent
caused by any misrepresentation or breach of warranty or covenant by such Tax
Indemnitee or a Related Party under any of the Operative Agreements or by the
gross negligence or willful misconduct of such Tax Indemnitee or a Related
Party;
(vii) as to any Lender Tax Indemnitee, Taxes which
become payable as a result of a sale, assignment, transfer or other disposition
(whether voluntary or involuntary) by such Lender Tax Indemnitee of all or any
portion of its interest in the Equipment or any part thereof, the Pledged
Equipment or
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62
any part thereof, the Trust Estate, the Indenture Estate or any of the Operative
Agreements or rights created thereunder, other than as a result of (A) the
substitution, modification or improvement of the Equipment or any part thereof
or the Pledged Equipment or any part thereof, (B) a modification to the
Operative Agreements, or (C) a disposition which occurs as the result of the
exercise of remedies upon a Lease Event of Default; provided, that,
notwithstanding the foregoing, the Lessee shall not be obligated to indemnify
any Lender Tax Indemnitee with respect to net income taxes imposed within the
United States as the result of a sale, assignment, transfer or other disposition
by such Lender Tax Indemnitee or any Taxes imposed as a result of the status of
the Lender Tax Indemnitee as other than a resident of the United States for tax
purposes;
(viii) as to any Lender Tax Indemnitee, Taxes imposed
as the result of such Lender Tax Indemnitee not being a resident of the United
States for tax purposes;
(ix) as to any Lender Tax Indemnitee, Income Taxes or
transfer taxes relating to any payments of principal, interest or Make Whole
Amount, if any, on the Equipment Notes or the Pass Through Certificates paid to
any such Tax Indemnitee that are imposed by (A) any other jurisdiction in which
such Indemnitee is subject to such Taxes as a result of it or an Affiliate being
organized in such jurisdiction or conducting activities in that jurisdiction
unrelated to the transactions contemplated by the Operative Agreements, (B) the
United States federal government or (C) any state or local government within the
United States;
(x) Taxes to the extent directly resulting from or
that would not have been imposed but for (x) in the case of Taxes imposed on or
with respect to any Equity Tax Indemnitee, the existence of any Lessor Liens
with respect to such Equity Tax Indemnitee, (y) in the case of Taxes imposed on
or with respect to any Lender Tax Indemnitee, the existence of any Liens
attributable to the Indenture Trustee or Liens attributable to the Pass Through
Trustee;
(xi) Taxes imposed on a Tax Indemnitee to the extent
that such Taxes would not have been imposed upon such Tax Indemnitee but for any
failure of such Tax Indemnitee or a Related Party to comply with (x) any
certification, information, documentation, reporting or other similar
requirements concerning the nationality, residence, identity or connection with
the jurisdiction imposing such Taxes, if such compliance is required under the
laws or regulations of such jurisdiction to obtain or establish relief or
exemption from or reduction in such Taxes and the Tax Indemnitee or such Related
Party was eligible to comply with such requirement or (y) any other
certification, information, documentation, reporting or other similar
requirements under the Tax laws or regulations of the jurisdiction imposing such
Taxes that would establish entitlement to otherwise applicable relief
Participation Agreement (TRLI 2001-1A)
63
or exemption from such Taxes; provided, however, that the exclusion set forth in
this clause (xii) shall not apply (I) if such failure to comply was due to a
failure of the Lessee to provide reasonable assistance on request in complying
with such requirement, (II) if, in the case of Taxes imposed on the Owner
Participant, in the good faith judgment of the Owner Participant there is a risk
of adverse consequence to the Owner Participant or any Affiliate from such
compliance against which the Owner Participant is not satisfactorily
indemnified, (III) in the case of Taxes imposed on the Owner Participant, if any
such failure to comply on the part of the Owner Trustee was the result of the
Owner Trustee's gross negligence or failure to act in accordance with
instructions of the Owner Participant, or (IV) in the case of any Tax
Indemnitee, unless Lessee shall have given such Tax Indemnitee prior written
notice of such requirements;
(xii) Taxes that are imposed with respect to any
period after the earlier of (x) return of the Equipment to the Lessor in
accordance with, and at a time and place contemplated by the Lease (including
the payment of all amounts due at such time) and (y) the termination of the Term
pursuant to Section 6, 10, 11, 15 or 22 of the Lease and the discharge in full
of Lessee's payment obligation's thereunder unless the Equipment is thereafter
required to be returned, in which case, after such return; provided, however,
that the exclusion set forth in this clause (xii) shall not apply to Taxes to
the extent such Taxes relate to events occurring or matters arising prior to or
simultaneously with such return or termination;
(xiii) as to any Lender Tax Indemnitee, Taxes in the
nature of an intangible or similar tax upon or with respect to the value of the
interest of such Lender Tax Indemnitee in the Indenture Estate, in any Equipment
Note or Pass Through Certificate imposed as a result of such Lender Tax
Indemnitee or any Affiliate of such Lender Tax Indemnitee being organized in, or
conducting activities unrelated to the contemplated transactions in, the
jurisdiction imposing such Taxes;
(xiv) Taxes imposed on the Owner Trustee or the
Indenture Trustee that are on, based on or measured by any trustee fees for
services rendered by such Tax Indemnitee in its capacity as trustee under the
Operative Agreements;
(xv) Taxes imposed on any Tax Indemnitee, or any
other person who, together with such Tax Indemnitee, is treated as one employer
for employee benefit plan purposes, as a result of, or in connection with, any
"prohibited transaction," within the meaning of the provisions of the Code or
regulations thereunder or as set forth in Section 406 of ERISA or the
regulations implementing ERISA or Section 4975 of the Code or the regulations
thereunder;
Participation Agreement (TRLI 2001-1A)
64
(xvi) Taxes for so long as (x) such Taxes are being
contested in accordance with the provisions of Section 7.1(e) hereof, (y) the
Lessee is in compliance with its obligations under Section 7.1(e), and (z) the
payment of such Taxes is not required pursuant to Section 7.1(e);
(xvii) Taxes as to which such Tax Indemnitee is
indemnified pursuant to the Tax Indemnity Agreement;
(xviii) any Taxes imposed on or with respect to any
Certificateholder; and
(xix) Taxes imposed as a result of the authorization
or giving of any future amendments, supplements, waivers or consents with
respect to any Operative Agreement other than (w) those which are legally
required, (x) in connection with the exercise of remedies pursuant to Section 15
of the Lease, (y) such as have been proposed by the Lessee or consented to by
the Lessee or (z) those that are required pursuant to the terms of the Operative
Agreements.
(d) Payments to Tax Indemnitee. The Lessee agrees to pay, on
demand, any and all Taxes indemnified under this Section 7.1 ("Indemnified
Taxes"), and to keep at all times all and every part of each item of the
Equipment and Pledged Equipment free and clear of all Indemnified Taxes which
might in any way affect the interest of any Tax Indemnitee therein or result in
a Lien upon any such item of the Equipment or Pledged Equipment; provided,
however, that the Lessee shall be under no obligation to pay any Tax so long as
either the Tax Indemnitee or the Lessee is contesting in good faith and by
appropriate legal proceedings such tax and the nonpayment thereof does not, in
the reasonable opinion of the Tax Indemnitee, materially adversely affect the
interest of any Tax Indemnitee hereunder or under the Indenture.
Subject to Section 7.1(e), if any Indemnified Taxes shall have
been charged or levied against any Tax Indemnitee directly and paid by such Tax
Indemnitee after such Tax Indemnitee shall have given written notice thereof to
the Lessee and the same shall have remained unpaid for a period of ten Business
Days thereafter, the Lessee shall reimburse such Tax Indemnitee payment.
(e) Contests. If a written claim is made by any taxing
authority against a Tax Indemnitee for any Taxes with respect to which the
Lessee may be required to indemnify against hereunder (a "Tax Claim"), such Tax
Indemnitee shall give the Lessee written notice of such Tax Claim promptly (but
in any event within twenty (20) days) after its receipt, and shall furnish
Lessee with copies of such Tax Claim and all other writings received from the
taxing authority to the extent relating to such claim (but failure to so notify
the Lessee shall relieve the Lessee of its
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65
obligations hereunder only to the extent it effectively precludes a contest of
the claim). The Tax Indemnitee shall not pay such Tax Claim until at least
thirty (30) days after providing the Lessee with such written notice, unless (a)
the Tax Indemnitee is required to do so by law or regulation and (b) in the
written notice described above, the Tax Indemnitee has notified the Lessee of
such requirement. If the Lessee shall so request within 30 days after receipt of
such notice, then such Tax Indemnitee shall in good faith at Lessee's expense
contest such Tax; provided, however, that to the extent the contest involves
only Taxes constituting property taxes, sales taxes, or use taxes and does not
involve any taxes or other issues relating to a Tax Indemnitee which are
unrelated to the transactions contemplated by the Operative Agreements and if no
Equity Insufficiency Circumstance exists, such contest shall be undertaken by
the Lessee at the Lessee's expense and at no-after-tax cost to the Lessor or the
Owner Participant, but if such contest would involve any other type of Tax or
any taxes or issues relating to a Tax Indemnitee which are unrelated to the
transactions contemplated by Operative Agreements or if an Equity Insufficiency
exists, then such Tax Indemnitee may, in its sole discretion, control such
contest (including selecting the forum for such contest, and determining whether
any such contest shall be conducted by (i) paying such Tax under protest or (ii)
resisting payment of such Tax or (iii) paying such Tax and seeking a refund
thereof; provided, further, however, that at such Tax Indemnitee's option, such
contest shall be conducted by the Lessee in the name of such Tax Indemnitee). In
no event shall such Tax Indemnitee be required or the Lessee be permitted to
contest any Tax for which the Lessee is obligated to indemnify pursuant to this
Section unless: (i) the Lessee shall have acknowledged in writing its liability
to such Tax Indemnitee for an indemnity payment pursuant to this Section as a
result of such claim if and to the extent such Tax Indemnitee or the Lessee, as
the case may be, shall not prevail in the contest of such claim; provided,
however, that the Lessee shall not be required to indemnify for such Taxes to
the extent the results of the contest clearly and unambiguously demonstrate that
the Tax is not an indemnified Tax; (ii) such Tax Indemnitee shall have received
the opinion of independent tax counsel selected by the Tax Indemnitee and
reasonably satisfactory to the Lessee furnished at the Lessee's sole expense, to
the effect that a reasonable basis exists for contesting such claim or, in the
event of an appeal of a court decision, that it is more likely than not that an
appellate court or an administrative agency with appellate jurisdiction, as the
case may be, will reverse or substantially modify the adverse determination;
(iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at
no after-tax costs to the Lessor and the Owner Participant) all reasonable costs
and expenses that such Tax Indemnitee may incur in connection with contesting
such claim (including, without limitation, all costs, expenses, reasonable legal
and accounting fees, disbursements, penalties, interest and additions to the
Tax); (iv) no Lease Default described in Section 14(a), 14(b), 14(g) or 14(h) of
the Lease or a Lease Event of Default shall have occurred and shall have been
continuing, unless the Lessee shall have posted a satisfactory bond or other
security with respect to the costs of such
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66
contest and the Taxes which may be required to be indemnified; (v) such Tax
Indemnitee shall have determined that the action to be taken will not result in
any substantial danger of sale, forfeiture or loss of, or the creation of any
Lien, or the Lessee shall have or otherwise made a provision to protect the
interest of such Tax Indemnitee (in a manner satisfactory to such Tax
Indemnitee), on the Equipment or any portion thereof or any interest therein;
(vi) the amount of such claims alone, or, if the subject matter thereof shall be
of a continuing or recurring nature, when aggregated with substantially
identical potential claims shall be (A) at least $5,000 in the event of a Lessee
controlled contest, or (B) $25,000 in the event of a Tax Indemnitee controlled
contest; and (vii) if such contest shall be conducted in a manner requiring the
payment of the claim, the Lessee shall have paid the amount required (and at no
after-tax costs to the Lessor and the Owner Participant). The Lessee shall
cooperate with the Tax Indemnitee with respect to any contest controlled and
conducted by the Tax Indemnitee and the Tax Indemnitee shall consult with the
Lessee regarding the conduct of such contest. The Tax Indemnitee shall cooperate
with respect to any contest controlled and conducted by the Lessee and the
Lessee shall consult with the Tax Indemnitee regarding the conduct of such
contest.
Notwithstanding anything to the contrary contained in this
Section 7.1, no Tax Indemnitee shall be required to contest any claim if the
subject matter thereof shall be of a continuing or recurring nature and shall
have previously been adversely decided to the Tax Indemnitee pursuant to the
contest provisions of this Section unless there shall have been a change in the
law (including, without limitation, amendments to statutes or regulations,
administrative rulings or court decisions) enacted, promulgated or effective
after such claim shall have been so previously decided, and such Tax Indemnitee
shall have received an opinion of independent tax counsel selected by the Tax
Indemnitee and reasonably satisfactory to the Lessee, furnished at the Lessee's
sole expense, to the effect that such change is favorable to the position which
such Tax Indemnitee or the Lessee, as the case may be, had asserted in such
previous contest and as a result of such change, there is a reasonable basis to
contest such claim.
Notwithstanding anything contained in this Section 7.1, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without the Lessee's consent if
such Tax Indemnitee (A) shall waive its right to indemnity under this Section
7.1 with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim) and (B)
shall pay to the Lessee any amount previously paid or advanced by the Lessee
pursuant to this Section 7.1 with respect to such Tax, plus interest at the rate
that would have been payable by the relevant taxing authority with respect to a
refund of such Tax.
Participation Agreement (TRLI 2001-1A)
67
(f) Payments to Lessee. With respect to any payment or
indemnity hereunder, such payment or indemnity shall have included an amount
payable to the Tax Indemnitee sufficient to hold such Tax Indemnitee harmless on
an After- Tax Basis from all Taxes required to be paid by such Tax Indemnitee
with respect to such payment or indemnity under the laws of any federal, state
or local government or taxing authority in or of the United States, or under the
laws of any taxing authority or governmental subdivision in or of a foreign
country; provided that, if any Tax Indemnitee realizes and recognizes a
permanent tax benefit by reason of such payment or indemnity (whether such tax
benefit shall be by means of a foreign tax credit, investment tax credit,
depreciation or recovery deduction or otherwise), such Tax Indemnitee shall pay
to the Lessee an amount equal to the sum of such tax benefit plus any tax
benefit realized as the result of any payment made pursuant to this proviso,
when, as, if and to the extent realized; provided further that, (i) if at the
time such payment shall be due to the Lessee, a Lease Event of Default shall
have occurred and be continuing, such amount shall not be payable until such
Lease Event of Default shall have been cured, and (ii) the amount which such Tax
Indemnitee shall be required to pay to the Lessee shall not exceed the amounts
which the Lessee has theretofore paid such Tax Indemnitee hereunder with respect
to such indemnity or a substantially identical indemnity.
For purposes of this Section 7.1, in determining the order in
which the consolidated (for federal income tax purposes) group to which such Tax
Indemnitee belongs utilizes withholding or other foreign taxes as a credit
against such group's United States income taxes, such Tax Indemnitee (and such
group) shall be deemed to utilize (i) first, all foreign taxes other than those
described in clauses (ii) and (iii) below; provided, however, that such other
foreign taxes which are carried back to the taxable year for which a
determination is being made pursuant to such clause (i) shall be deemed utilized
after the foreign taxes described in clause (ii) below, (ii) then, on a pari
passu basis, the foreign taxes indemnified hereunder together with all other
foreign taxes (including fees, taxes and other charges hereunder) with respect
to which such Tax Indemnitee (or any member of such group) is entitled to obtain
indemnification pursuant to an indemnification provision contained in any lease,
loan agreement, financing document or participation agreement (including,
without limitation, this Agreement) pursuant to which there is an agreement that
foreign taxes shall be, or shall be deemed to be, utilized on a basis no less
favorable to the indemnitor than those contemplated in this paragraph, and (iii)
third, foreign taxes attributable to transactions entered into by such Tax
Indemnitee (or any member of such group) which did not provide for foreign taxes
to be utilized or deemed utilized on at least a pari passu basis.
(g) Reports. In the event any reports with respect to
Indemnified Taxes are required to be made, the Lessee will either prepare and
file such reports (and in the case of reports which are required to be filed on
the basis of individual
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68
items of Equipment, such reports shall be prepared and filed in such manner as
to show, if required, the interest of each Tax Indemnitee in such items of
Equipment) or, if it shall not be permitted to file the same, it will notify
each Tax Indemnitee of such reporting requirements, prepare such reports in such
manner as shall be satisfactory to each Tax Indemnitee and deliver the same to
each Tax Indemnitee within a reasonable period prior to the date the same is to
be filed. The Lessee shall provide such information as the Owner Participant or
the Lessor may reasonably require from the Lessee to enable the Owner
Participant and the Lessor to fulfill their respective tax filing, tax audit,
and tax litigation obligations.
(h) Survival. In the event that, during the continuance of
this Agreement, any Indemnified Tax accrues or becomes payable or is levied or
assessed (or is attributable to the period of time during which the Lease is in
existence or prior to the return of Equipment in accordance with the provisions
of the Lease) which the Lessee is or will be obligated to pay or reimburse,
pursuant to this Section 7.1, such liability shall continue, notwithstanding the
expiration of the Lease, until all such Taxes are paid or reimbursed by the
Lessee.
(i) Affiliated Group. For purposes of applying this Section
7.1 with respect to any Tax, the term "Owner Participant" shall include each
member of the affiliated group of corporations with which Grant Holdings, Inc.
(and its successors and assigns) files consolidated or combined tax returns
relating to such Imposition.
(j) Income Tax. For purposes of this Section 7.1, the term
"Income Tax" means any Tax based on or measured by or with respect to gross or
net income (including without limitation, capital gains taxes, personal holding
company taxes, minimum taxes and tax preferences) or gross or net receipts and
Taxes which are capital, net worth, conduct of business, franchise or excess
profits taxes and interest, additions to tax, penalties, or other charges in
respect thereof (provided, however, that Taxes that are, or are in the nature
of, sales, use, rental, value-added, excise, ad valorem, or property (whether
tangible or intangible) taxes shall not constitute an Income Tax).
(k) Certain Withholding. If the Indenture Trustee fails to
withhold any Tax required to be withheld with respect to any payment to a Lender
Tax Indemnitee or any claim is otherwise asserted by a taxing authority against
any Equity Tax Indemnitee for or on account of any amount required to be
withheld from any payment to a Lender Tax Indemnitee or Certificateholder, the
Lessee will indemnify each Equity Tax Indemnitee (without regard to any
exclusions in Section 7.1(c) hereof) on an After-Tax Basis against any Taxes
required to be withheld and any interest, penalties, and additions to tax with
respect thereto, along with other costs (including attorneys' fees) incurred in
connection with such claim.
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69
Section 7.2 General Indemnification.
(a) Claims Defined. For the purposes of Sections 7.2, 7.3 and
7.4, "Claims" shall mean any and all costs, expenses, liabilities, obligations,
losses, damages, penalties, actions or suits or claims of whatsoever kind or
nature (whether or not on the basis of negligence, strict or absolute liability
or liability in tort) which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, any Unit or any Pledged Unit and, except
as otherwise expressly provided in Section 7.2, 7.3 and 7.4, shall include, but
not be limited to, all reasonable out-of-pocket costs, disbursements and
expenses (including legal fees and expenses) paid or incurred by an Indemnified
Person in connection therewith or related thereto.
(b) Indemnified Person Defined. For the purposes of Sections
7.2, 7.3 and 7.4, "Indemnified Person" means the Owner Participant, the Owner
Trustee, Trust Company, the Indenture Trustee, the Pass Through Trustee, each of
their Affiliates and each of their respective directors, officers, employees,
successors and permitted assigns, agents and servants, the Trust Estate and the
Indenture Estate (the respective directors, officers, employees, successors and
permitted assigns, agents and servants of the Owner Participant, the Owner
Trustee, Trust Company, the Indenture Trustee, the Pass Through Trustee and each
of their Affiliates, as applicable, together with the Owner Participant, the
Owner Trustee, Trust Company, the Indenture Trustee, the Pass Through Trustee
and each of their Affiliates, as the case may be, being referred to herein
collectively as the "Related Indemnitee Group" of the Owner Participant, the
Indenture Trustee, the Owner Trustee, the Pass Through Trustee and the Trust
Company, respectively).
(c) Claims Indemnified. Whether or not any Unit is accepted
under the Lease, or the Closing occurs, and subject to the exclusions stated in
Section 7.2(d) below, Lessee agrees to indemnify, protect, defend and hold
harmless each Indemnified Person on an After-Tax Basis against Claims directly
or indirectly resulting from or arising out of or alleged to result from or
arise out of (whether or not such Indemnified Person shall be indemnified as to
such Claim by any other Person but subject to Section 7.2(g)):
(i) this Agreement or any other Operative Agreement
or any of the transactions contemplated hereby and thereby or any Unit or
Pledged Unit or the ownership, lease, operation, possession, modification,
improvement, abandonment, use, non-use, maintenance, lease, Sublease,
substitution, control, repair, storage, alteration, transfer or other
application or disposition, return, overhaul, testing, servicing, replacement or
registration of any Unit or Pledged Unit (including, without limitation, injury,
death or property damage of passengers, shippers or others, and environmental
control, noise and pollution regulations, or the
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70
presence, discharge, treatment, storage, handling, generation, disposal,
spillage, release, escape of or exposure of any Person or thing to (directly or
indirectly) Hazardous Substances or damage to the environment (including,
without limitation, costs of investigations or assessments, clean-up costs,
response costs, remediation costs, removal costs, restoration costs, monitoring
costs, costs of corrective actions and natural resource damages)) whether or not
in compliance with the terms of the Lease or the Collateral Agency Agreement, as
applicable, or by any of the commodities, items or materials from time to time
contained in any Unit or Pledged Unit, whether or not in compliance with the
terms of the Lease or the Collateral Agency Agreement, as applicable, or by the
inadequacy of any Unit or Pledged Unit or deficiency or defect in any Unit or
Pledged Unit or by any other circumstances in connection with any Unit or
Pledged Unit or by the performance of any Unit or Pledged Unit or any risks
relating thereto;
(ii) the construction, manufacture, financing,
refinancing, design, purchase, acceptance, rejection, delivery, non-delivery or
condition of any Unit or any Pledged Unit (including, without limitation, latent
and other defects, whether or not discoverable, and any claim for patent,
trademark or copyright infringement);
(iii) any act or omission (whether negligent or
otherwise) or any breach of or failure to perform or observe, or any other
non-compliance with, any covenant, condition or agreement to be performed by, or
other obligation of, the Lessee or any Affiliate of the Lessee under any of the
Operative Agreements, or the falsity of any representation or warranty of the
Lessee or any Affiliate of the Lessee in any of the Operative Agreements to
which it is a party or in any document or certificate delivered by the Lessee or
any Affiliate of the Lessee in connection therewith other than representations
and warranties in the Tax Indemnity Agreement;
(iv) the offer, sale or delivery of any Equipment
Notes or Pass Through Certificates or any interest in the Trust Estate or in
connection with a refinancing in accordance with the terms hereof; and
(v) any violation of law, rule, regulation or order
by the Lessee or any Affiliate of Lessee or any Sublessee or any Pledged
Equipment Lessee or their respective directors, officers, employees, agents or
servants.
(d) Claims Excluded. The following are excluded from the
Lessee's agreement to indemnify under this Section 7.2:
(i) Claims with respect to any Unit to the extent
attributable to acts or events occurring after (except (A) in any case where
remedies
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71
are being exercised under Section 15 of the Lease for so long as the Lessor
shall be entitled to exercise remedies under such Section 15, or (B) the Lessee
has assumed any of the obligations with respect to the Equipment Notes under
Section 3.6 of the Indenture and the Equipment Notes remain outstanding under
the Indenture) the later to occur of (x) with respect to such Unit, the earlier
to occur of the termination of the Lease or the expiration of the Lease Term in
accordance with the terms thereof, and (y) with respect to such Unit, the return
of such Unit to the Lessor in accordance with the terms of the Lease (it being
understood that, so long as any such Unit is in storage as provided in Section
6.1(c) of the Lease, the date of return thereof for the purpose of this clause
(i) shall be the last day of the Storage Period);
(ii) Claims which are Taxes, whether or not the
Lessee is required to indemnify therefor under Section 7.1 hereof or under the
Tax Indemnity Agreement or any loss of tax benefits or increases in tax
liability whether or not the Lessee is required to indemnify a Indemnified
Person elsewhere in the Operative Agreements; provided that this clause (ii)
shall not apply to Taxes necessary to pay Claims on an After-Tax Basis;
(iii) with respect to any particular Indemnified
Person, Claims to the extent resulting from (x) the gross negligence or willful
misconduct of such Indemnified Person or a Related Party, or (y) any breach of
any covenant to be performed by such Indemnified Person or a Related Party under
any of the Operative Agreements, or the falsity of any representation or
warranty of such Indemnified Person or a Related Party in any of the Operative
Agreements or in a document or certificate delivered in connection therewith;
(iv) Claims to the extent attributable to any
transfer by the Lessor of the Equipment or any portion thereof or any transfer
by the Owner Participant of all or any portion of its interest in the Trust
Estate other than (A) any transfer after a Lease Event of Default, (B) the
transfer of all or any portion of the Equipment or any Owner Participant's
interest in the Equipment to the Lessee, (C) the transfer of all or any portion
of the Equipment to a third party pursuant to Lessee's election to terminate the
Lease or (D) any transfer of all or any portion of the Equipment pursuant to
Section 6.9;
(v) with respect to any particular Indemnified
Person, unless such transfer is required by the terms of the Operative
Agreements or occurs during the continuance of a Lease Event of Default, Claims
relating to any offer, sale, assignment, transfer or other disposition
(voluntary or involuntary) (a) in the case of the Owner Participant, of any of
its interest in the Beneficial Interest (other than pursuant to Section 6.9) or
(b) with respect to the Loan Participant, of all or any portion of the Loan
Participant's interest in the Equipment Notes or the collateral therefor;
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72
(vi) with respect to any particular Indemnified
Person, Claims resulting from the imposition of (x) any Lessor's Lien
attributable to such Indemnified Person or a Related Party or (y) any Lien
attributable to such Indemnified Person or a Related Party not expressly
permitted under the Operative Agreements or which such Indemnified Person is
required to remove pursuant to the terms of the Operative Agreements;
(vii) with respect to any particular Indemnified
Person, Claims to the extent the risk thereof has been expressly assumed by such
Indemnified Person in connection with the exercise by such Indemnified Person of
the right of inspection granted under Section 6.2 of the Lease, inspection or
restenciling under Section 6.1(c) of the Lease or inspection under Section 13.2
of the Lease;
(viii) Claims relating to any amount that constitutes
principal of, or interest or premium on the Equipment Notes or the Pass Through
Certificates;
(ix) Claims relating to the payment of any amount
which constitutes Transaction Costs which the Owner Trustee is obligated to pay
pursuant to Section 2.5(a) (other than those that the Lessee may be required to
pay under Section 2.5(c) or Section 2.5(e)) or any other amount to the extent
such Indemnified Person or a Related Party has expressly agreed to pay such
amount without a right of reimbursement, or any Claim payable by any Indemnified
Person pursuant to any provision of any Operative Agreement that expressly
states that such Claim is not subject to indemnification or reimbursement by the
Lessee, or any Claim arising out of obligations expressly assumed by the
Indemnified Person seeking indemnification or a Related Party;
(x) Claims relating to any amount that is an ordinary
and usual operating or overhead expense of any Indemnified Person (it being
understood out-of-pocket expenses payable to third parties do not constitute
"ordinary and usual operating or overhead expenses");
(xi) Claims relating to an Indenture Event of Default
that is not attributable to a Lease Event of Default;
(xii) with respect to the Owner Trustee in its
individual and trust capacities, and its Related Indemnitee Group, Claims
relating to a failure on the part of the Owner Trustee to distribute in
accordance with the Trust Agreement any amounts distributable by it thereunder;
Participation Agreement (TRLI 2001-1A)
73
(xiii) with respect to the Indenture Trustee in its
individual and trust capacities, Claims relating to failure on the part of the
Indenture Trustee to distribute in accordance with the Indenture any amounts
distributable by it thereunder;
(xiv) with respect to the Pass Through Trustee in its
individual and trust capacities, Claims relating to failure on the part of the
Pass Through Trustee to distribute in accordance with the Pass Through Trust
Agreement any amounts distributable by it thereunder;
(xv) Claims relating to the offer, sale or delivery
of any Equipment Note or any interest in the Trust Estate;
(xvi) Claims relating to any sale, transfer or
holding of the Equipment Notes or Pass Through Certificates being deemed to
result in a "prohibited transaction" under ERISA; or
(xvii) without affecting Lessee's obligations under
Section 2.5(b), Claims relating to the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any of
the Operative Agreements which amendments, supplements, waivers or consents are
not requested by Lessee or are not specifically required by the Operative
Agreements.
(e) Insured Claims. In the case of any Claim indemnified by
the Lessee hereunder which is covered by a policy of insurance maintained by the
Lessee pursuant to Section 12 of the Lease or otherwise, each Indemnified Person
agrees to provide reasonable cooperation to the insurers in the exercise of
their rights to investigate, defend, settle or compromise such Claim as may be
required to retain the benefits of such insurance with respect to such Claim.
(f) Claims Procedure. An Indemnified Person shall, after
obtaining knowledge thereof, promptly notify the Lessee of any Claim as to which
indemnification is sought; provided, however, that the failure to give such
notice shall not release the Lessee from any of its obligations under this
Section 7.2, except (but only if neither the Lessee nor TILC shall have actual
knowledge of such Claim) to the extent that failure to give notice of any
action, suit or proceeding against such Indemnified Person shall have a material
adverse effect on Lessee's ability to defend such Claim or recover proceeds
under any insurance policies maintained by the Lessee or to the extent Lessee's
indemnification obligations are increased as a result of such failure. The
Lessee shall, after obtaining knowledge thereof, promptly notify each
Indemnified Person of any indemnified Claim affecting such Indemnified Person.
Subject to the provisions of the following paragraph, the Lessee shall at its
sole cost and expense be entitled to control, and shall assume full
responsibility for,
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74
the defense of such claim or liability; provided that the Lessee shall confirm
to such Indemnified Person Lessee's obligations to indemnify hereunder for such
Claim, shall keep the Indemnified Person which is the subject of such proceeding
fully apprised of the status of such proceeding and shall provide such
Indemnified Person with all information with respect to such proceeding as such
Indemnified Person shall reasonably request. To the extent that a Claim is made
against Lessee pursuant to this Section 7.2 at a time when an identical claim
for indemnification arising from substantially similar facts and circumstances
is being asserted against TILC, TRMI and/or Trinity pursuant to this Section 7
or Section 4 of the Trinity Guaranty, if Lessee is entitled to control the
defense of such Claim pursuant to this Section 7.2 and at the same time TILC,
TRMI and/or Trinity, as the case may be, is entitled to control the defense of
such claim or liability pursuant to this Section 7 or Section 4 of the Trinity
Guaranty, Lessee's indemnification obligations under this Section 7.2 shall not
be reduced as a result of the inability of Lessee to control the defense of such
Claim where such inability to control the defense of such Claim is caused by the
exercise by TILC, TRMI and/or Trinity, as applicable, of such Person's right to
control the defense of such indemnified claim as provided by this Section 7 or
Section 4 of the Trinity Guaranty.
Notwithstanding any of the foregoing to the contrary, the
Lessee shall not be entitled to control and assume responsibility for the
defense of any Claim if (1) a Lease Event of Default shall have occurred and be
continuing, (2) such proceeding will involve any material danger of the sale,
forfeiture or loss of, or the creation of any Lien (other than any Lien
permitted under the Operative Agreements or a Lien which is adequately bonded to
the satisfaction of such Indemnified Person) on, any Unit or Pledged Unit, (3)
in the good faith opinion of such Indemnified Person, there exists an actual or
potential conflict of interest such that it is advisable for such Indemnified
Person to retain control of such proceeding, (4) such Claim involves the
possibility of criminal sanctions or liability to such Indemnified Person or (5)
an Equity Insufficiency Circumstance shall exist. In the circumstances described
in clauses (1) - (5), the Indemnified Person shall be entitled to control and
assume responsibility for the defense of such claim or liability at the expense
of the Lessee. In addition, any Indemnified Person may participate in any
proceeding controlled by the Lessee pursuant to this Section 7.2, but only to
the extent that such Person's participation does not in the reasonable opinion
of counsel to the Lessee materially interfere with such control, at its own
expense, in respect of any such proceeding as to which the Lessee shall have
acknowledged in writing its obligation to indemnify the Indemnified Person
pursuant to this Section 7.2, and at the expense of the Lessee in respect of any
such proceeding as to which the Lessee shall not have so acknowledged its
obligation to the Indemnified Person pursuant to this Section 7.2. The Lessee
may in any event participate in all such proceedings at its own cost. Nothing
contained in this Section 7.2(f) shall be deemed to require an Indemnified
Person to contest any Claim or to assume responsibility for or control of any
judicial
Participation Agreement (TRLI 2001-1A)
75
proceeding with respect thereto. No Indemnified Person shall enter into any
settlement or other compromise with respect to any Claim without the prior
written consent of the Lessee unless the Indemnified Person waives its rights to
indemnification hereunder.
(g) Subrogation. If a Claim indemnified by the Lessee under
this Section 7.2 is paid in full by the Lessee and/or an insurer under a policy
of insurance maintained by the Lessee, the Lessee and/or such insurer, as the
case may be, shall be subrogated to the extent of such payment to the rights and
remedies of the Indemnified Person (other than under insurance policies
maintained by such Indemnified Person) on whose behalf such Claim was paid with
respect to the transaction or event giving rise to such Claim. Should an
Indemnified Person receive any refund, in whole or in part, with respect to any
Claim paid by the Lessee hereunder, it shall promptly pay over the amount
refunded (but not in excess of the amount the Lessee or any of its insurers has
paid) to the Lessee; provided, however, so long as a Lease Event of Default
shall have occurred and be continuing, such amount may be held by the Collateral
Agent as security for the Lessee's obligations under the Lease and the other
Operative Agreements; provided, further, only with respect to the Owner
Participant and its Related Indemnitee Group, so long as an event referred to in
clause (5) of Section 7.2(f) hereof shall have occurred and be continuing, such
amount may be held by the Owner Trustee as security for the Lessee's obligations
with respect to the Equity Insufficiency Circumstance.
Section 7.3 Indemnification by TILC.
(a) Claims Indemnified. Whether or not any Unit is accepted
under the Lease, or the Closing occurs, and subject to the exclusions stated in
Section 7.3(b) below, TILC agrees to indemnify, protect, defend and hold
harmless each Indemnified Person on an After-Tax Basis against Claims directly
or indirectly resulting from or arising out of or alleged to result from or
arise out of (whether or not such Indemnified Person shall be indemnified as to
such Claim by any other Person but subject to Section 7.3(d)):
(i) any breach of or any inaccuracy in any
representation or warranty made by TILC in this Agreement or any of the other
Operative Agreements or in any certificate delivered by TILC pursuant hereto or
thereto;
(ii) any breach of or failure by TILC to perform any
covenant or obligation of TILC set out in or contemplated by this Agreement or
any of the other Operative Agreements; and
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76
(iii) any violation of law, rule, regulation or order
by TILC or its directors, officers, employees, agents or servants.
(b) Claims Excluded. The following are excluded from TILC's
agreement to indemnify under this Section 7.3:
(i) Claims with respect to any Unit to the extent
attributable to acts or events occurring after (except (A) in any case where
remedies are being exercised under Section 15 of the Lease for so long as the
Lessor shall be entitled to exercise remedies under such Section 15, or (B) the
Lessee has assumed any of the obligations with respect to the Equipment Notes
under Section 3.6 of the Indenture and the Equipment Notes remain outstanding
under the Indenture) the later to occur of (x) with respect to such Unit, the
earlier to occur of the termination of the Lease or the expiration of the Lease
Term in accordance with the terms thereof, and (y) with respect to such Unit,
the return of such Unit to the Lessor in accordance with the terms of the Lease
(it being understood that, so long as any Unit is in storage as provided in
Section 6.1(c) of the Lease, the date of return thereof for the purpose of this
clause (i) shall be the last day of the Storage Period);
(ii) Claims which are Taxes or any loss of tax
benefits or increases in tax liability; provided that this clause (ii) shall not
apply to Taxes necessary to pay Claims on an After-Tax Basis;
(iii) with respect to any particular Indemnified
Person, Claims to the extent resulting from (x) the gross negligence or willful
misconduct of such Indemnified Person or a Related Party, or (y) any breach of
any covenant to be performed by such Indemnified Person or a Related Party under
any of the Operative Agreements, or the falsity of any representation or
warranty of such Indemnified Person or a Related Party in any of the Operative
Agreements or in a document or certificate delivered in connection therewith;
(iv) Claims to the extent attributable to any
transfer by the Lessor of the Equipment or any portion thereof or any transfer
by the Owner Participant of all or any portion of its interest in the Trust
Estate other than (A) any transfer after a Lease Event of Default, (B) the
transfer of all or any portion of the Equipment or any Owner Participant's
interest in the Equipment to the Lessee, (C) the transfer of all or any portion
of the Equipment to a third party pursuant to Lessee's election to terminate the
Lease or (D) any transfer of all or any portion of the Equipment pursuant to
Section 6.9;
(v) with respect to any particular Indemnified
Person, unless such transfer is required by the terms of the Operative
Agreements or occurs during the continuance of a Lease Event of Default, Claims
relating to any offer, sale,
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77
assignment, transfer or other disposition (voluntary or involuntary) (a) in the
case of the Owner Participant, of any of its interest in the Beneficial Interest
(other than pursuant to Section 6.9), or (b) with respect to the Loan
Participant, of all or any portion of its interest in the Equipment Notes or the
collateral therefor;
(vi) with respect to any particular Indemnified
Person, Claims resulting from the imposition of (x) any Lessor's Lien
attributable to such Indemnified Person or a Related Party or (y) any Lien
attributable to such Indemnified Person or a Related Party not expressly
permitted under the Operative Agreements or which such Indemnified Person is
required to remove pursuant to the terms of the Operative Agreements;
(vii) with respect to any particular Indemnified
Person, Claims to the extent the risk thereof has been expressly assumed by such
Indemnified Person in connection with the exercise by such Indemnified Person of
the right of inspection granted under Section 6.2 of the Lease, inspection or
restenciling under Section 6.1(c) of the Lease or inspection under Section 13.2
of the Lease;
(viii) Claims relating to any amount that constitutes
principal of, or interest or premium on the Equipment Notes or the Pass Through
Certificates;
(ix) Claims relating to the payment of any amount
which constitutes Transaction Costs which the Owner Trustee is obligated to pay
pursuant to Section 2.5(a) (other than those that the Lessee may be required to
pay under Section 2.5(c) or Section 2.5(e)) or any other amount to the extent
such Indemnified Person or a Related Party has expressly agreed to pay such
amount without a right of reimbursement, or any Claim payable by any Indemnified
Person pursuant to any provision of any Operative Agreement that expressly
states that such Claim is not subject to indemnification or reimbursement by the
Lessee, or any Claim arising out of obligations expressly assumed by the
Indemnified Person seeking indemnification or a Related Party;
(x) Claims relating to any amount that is an ordinary
and usual operating or overhead expense of any Indemnified Person (it being
understood out-of-pocket expenses payable to third parties do not constitute
"ordinary and usual operating or overhead expenses");
(xi) Claims relating to an Indenture Event of Default
that is not attributable to a Manager Default;
(xii) with respect to the Owner Trustee in its
individual and trust capacities, and its Related Indemnitee Group, Claims
relating to a failure on
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78
the part of the Owner Trustee to distribute in accordance with the Trust
Agreement any amounts distributable by it thereunder;
(xiii) with respect to the Indenture Trustee in its
individual and trust capacities, Claims relating to failure on the part of the
Indenture Trustee to distribute in accordance with the Indenture any amounts
distributable by it thereunder;
(xiv) with respect to the Pass Through Trustee in its
individual and trust capacities, Claims relating to failure on the part of the
Pass Through Trustee to distribute in accordance with the Pass Through Trust
Agreement any amounts distributable by it thereunder;
(xv) Claims relating to the offer, sale or delivery
of any Equipment Note or any interest in the Trust Estate;
(xvi) Claims relating to any sale, transfer or
holding of the Equipment Notes or Pass Through Certificates being deemed to
result in a "prohibited transaction" under ERISA; or
(xvii) Claims relating to the authorization or giving
or withholding of any future amendments, supplements, waivers or consents with
respect to any of the Operative Agreements which amendments, supplements,
waivers or consents are not requested by TILC or are not specifically required
by the Operative Agreements.
(c) Claims Procedure. An Indemnified Person shall, after
obtaining knowledge thereof, promptly notify TILC of any Claim as to which
indemnification is sought; provided, however, that the failure to give such
notice shall not release TILC from any of its obligations under this Section
7.3, except (but only if TILC shall not have actual knowledge of such Claim) to
the extent that failure to give notice of any action, suit or proceeding against
such Indemnified Person shall have a material adverse effect on TILC's ability
to defend such Claim or recover proceeds under any insurance policies maintained
by TILC or to the extent TILC's indemnification obligations are increased as a
result of such failure. TILC shall, after obtaining knowledge thereof, promptly
notify each Indemnified Person of any indemnified Claim affecting such
Indemnified Person. Subject to the provisions of the following paragraph, TILC
shall at its sole cost and expense be entitled to control, and shall assume full
responsibility for, the defense of such claim or liability; provided that TILC
shall confirm to such Indemnified Person TILC's obligations to indemnify
hereunder for such Claim, shall keep the Indemnified Person which is the subject
of such proceeding fully apprised of the status of such proceeding and shall
provide such Indemnified Person with all information with respect to such
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79
proceeding as such Indemnified Person shall reasonably request. To the extent
that a Claim is made against TILC pursuant to this Section 7.3 at a time when an
identical claim for indemnification arising from substantially similar facts and
circumstances is being asserted against Lessee, TRMI and/or Trinity pursuant to
this Section 7 or Section 4 of the Trinity Guaranty, if TILC is entitled to
control the defense of such Claim pursuant to this Section 7.3 and at the same
time Lessee, TRMI and/or Trinity, as the case may be, is entitled to control the
defense of such claim or liability pursuant to this Section 7 or Section 4 of
the Trinity Guaranty, TILC's indemnification obligations under this Section 7.3
shall not be reduced as a result of the inability of TILC to control the defense
of such Claim where such inability to control the defense of such Claim is
caused by the exercise by Lessee, TRMI and/or Trinity, as applicable, of such
Person's right to control the defense of such indemnified claim as provided by
this Section 7 or Section 4 of the Trinity Guaranty.
Notwithstanding any of the foregoing to the contrary, TILC
shall not be entitled to control and assume responsibility for the defense of
any Claim if (1) a Lease Event of Default shall have occurred and be continuing,
(2) such proceeding will involve any material danger of the sale, forfeiture or
loss of, or the creation of any Lien (other than any Lien permitted under the
Operative Agreements or a Lien which is adequately bonded to the satisfaction of
such Indemnified Person) on, any Unit or Pledged Unit, (3) in the good faith
opinion of such Indemnified Person, there exists an actual or potential conflict
of interest such that it is advisable for such Indemnified Person to retain
control of such proceeding, (4) such Claim involves the possibility of criminal
sanctions or liability to such Indemnified Person or (5) an Equity Insufficiency
Circumstance shall exist. In the circumstances described in clauses (1) - (5),
the Indemnified Person shall be entitled to control and assume responsibility
for the defense of such claim or liability at the expense of TILC. In addition,
any Indemnified Person may participate in any proceeding controlled by TILC
pursuant to this Section 7.3, but only to the extent that such Person's
participation does not in the reasonable opinion of counsel to TILC materially
interfere with such control, at its own expense, in respect of any such
proceeding as to which TILC shall have acknowledged in writing its obligation to
indemnify the Indemnified Person pursuant to this Section 7.3, and at the
expense of TILC in respect of any such proceeding as to which TILC shall not
have so acknowledged its obligation to the Indemnified Person pursuant to this
Section 7.3. TILC may in any event participate in all such proceedings at its
own cost. Nothing contained in this Section 7.3(c) shall be deemed to require an
Indemnified Person to contest any Claim or to assume responsibility for or
control of any judicial proceeding with respect thereto. No Indemnified Person
shall enter into any settlement or other compromise with respect to any Claim
without the prior written consent of TILC unless the Indemnified Person waives
its rights to indemnification hereunder.
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80
(d) Subrogation. If a Claim indemnified by TILC under this
Section 7.3 is paid in full by TILC and/or an insurer under a policy of
insurance maintained by TILC, TILC and/or such insurer, as the case may be,
shall be subrogated to the extent of such payment to the rights and remedies of
the Indemnified Person (other than under insurance policies maintained by such
Indemnified Person) on whose behalf such Claim was paid with respect to the
transaction or event giving rise to such Claim. Should an Indemnified Person
receive any refund, in whole or in part, with respect to any Claim paid by TILC
hereunder, it shall promptly pay over the amount refunded (but not in excess of
the amount TILC or any of its insurers has paid) to TILC; provided, however, so
long as a Lease Event of Default shall have occurred and be continuing, such
amount may be held by the Collateral Agent as security for TILC's obligations
under the Management Agreement and the other Operative Agreements; provided,
further, only with respect to the Owner Participant and its Related Indemnitee
Group, so long as an event referred to in clause (5) of Section 7.3(c) hereof
shall have occurred and be continuing, such amount may be held by the Owner
Trustee as security for the Lessee's obligations with respect to the Equity
Insufficiency Circumstance.
Section 7.4 Indemnification by TRMI.
(a) Claims Indemnified. Whether or not any Unit is accepted
under the Lease, or the Closing occurs, and subject to the exclusions stated in
Section 7.4(b) below, TRMI agrees to indemnify, protect, defend and hold
harmless each Indemnified Person on an After-Tax Basis against Claims directly
or indirectly resulting from or arising out of or alleged to result from or
arise out of (whether or not such Indemnified Person shall be indemnified as to
such Claim by any other Person but subject to Section 7.4(d)):
(i) any breach of or any inaccuracy in any
representation or warranty made by TRMI in this Agreement or any of the other
Operative Agreements or in any certificate delivered by TRMI pursuant hereto or
thereto;
(ii) any breach of or failure by TRMI to perform any
covenant or obligation of TRMI set out in or contemplated by this Agreement or
any of the other Operative Agreements; and
(iii) any violation of law, rule, regulation or order
by TRMI or its directors, officers, employees, agents or servants.
(b) Claims Excluded. The following are excluded from TRMI's
agreement to indemnify under this Section 7.4:
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81
(i) Claims with respect to any Unit to the extent
attributable to acts or events occurring after (except (A) in any case where
remedies are being exercised under Section 15 of the Lease for so long as the
Lessor shall be entitled to exercise remedies under such Section 15, or (B) the
Lessee has assumed any of the obligations with respect to the Equipment Notes
under Section 3.6 of the Indenture and the Equipment Notes remain outstanding
under the Indenture) the later to occur of (x) with respect to such Unit, the
earlier to occur of the termination of the Lease or the expiration of the Lease
Term in accordance with the terms thereof, and (y) with respect to each Unit,
the return of such Unit to the Lessor in accordance with the terms of the Lease
(it being understood that, so long as any Unit is in storage as provided in
Section 6.1(c) of the Lease, the date of return thereof for the purpose of this
clause (i) shall be the last day of the Storage Period);
(ii) Claims which are Taxes or any loss of tax
benefits or increases in tax liability; provided that this clause (ii) shall not
apply to Taxes necessary to pay Claims on an After-Tax Basis;
(iii) with respect to any particular Indemnified
Person, Claims to the extent resulting from (x) the gross negligence or willful
misconduct of such Indemnified Person or a Related Party, or (y) any breach of
any covenant to be performed by such Indemnified Person or a Related Party under
any of the Operative Agreements, or the falsity of any representation or
warranty of such Indemnified Person or a Related Party in any of the Operative
Agreements or in a document or certificate delivered in connection therewith;
(iv) Claims to the extent attributable to any
transfer by the Lessor of the Equipment or any portion thereof or any transfer
by the Owner Participant of all or any portion of its interest in the Trust
Estate other than (A) any transfer after a Lease Event of Default, (B) the
transfer of all or any portion of the Equipment or any Owner Participant's
interest in the Equipment to the Lessee, (C) the transfer of all or any portion
of the Equipment to a third party pursuant to Lessee's election to terminate the
Lease or (D) any transfer of all or any portion of the Equipment pursuant to
Section 6.9;
(v) with respect to any particular Indemnified
Person, unless such transfer is required by the terms of the Operative
Agreements or occurs during the continuance of a Lease Event of Default, Claim
relating to any offer, sale, assignment, transfer or other disposition
(voluntary or involuntary) (a) in the case of the Owner Participant, of any of
its interest in the Beneficial Interest (other than pursuant to Section 6.9), or
(b) with respect to the Loan Participant, of all or any portion of its interest
in the Equipment Notes or the collateral therefor;
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82
(vi) with respect to any particular Indemnified
Person, Claims resulting from the imposition of (x) any Lessor's Lien
attributable to such Indemnified Person or a Related Party or (y) any Lien
attributable to such Indemnified Person or a Related Party not expressly
permitted under the Operative Agreements or which such Indemnified Person is
required to remove pursuant to the terms of the Operative Agreements;
(vii) with respect to any particular Indemnified
Person, Claims to the extent the risk thereof has been expressly assumed by such
Indemnified Person in connection with the exercise by such Indemnified Person of
the right of inspection granted under Section 6.2 of the Lease, inspection or
restenciling under Section 6.1(c) of the Lease or inspection under Section 13.2
of the Lease;
(viii) Claims relating to any amount that constitutes
principal of, or interest or premium on the Equipment Notes or the Pass Through
Certificates;
(ix) Claims relating to the payment of any amount
which constitutes Transaction Costs which the Owner Trustee is obligated to pay
pursuant to Section 2.5(a) (other than those that the Lessee may be required to
pay under Section 2.5(c) or Section 2.5(e)) or any other amount to the extent
such Indemnified Person or a Related Party has expressly agreed to pay such
amount without a right of reimbursement, or any Claim payable by any Indemnified
Person pursuant to any provision of any Operative Agreement that expressly
states that such Claim is not subject to indemnification or reimbursement by the
Lessee, or any Claim arising out of obligations expressly assumed by the
Indemnified Person seeking indemnification or a Related Party;
(x) Claims relating to any amount that is an ordinary
and usual operating or overhead expense of any Indemnified Person (it being
understood out-of-pocket expenses payable to third parties do not constitute
"ordinary and usual operating or overhead expenses");
(xi) Claims relating to an Indenture Event of Default
that is not attributable to a Manager Default;
(xii) with respect to the Owner Trustee in its
individual and trust capacities, and its Related Indemnitee Group, any Claims
relating to a failure on the part of the Owner Trustee to distribute in
accordance with the Trust Agreement any amounts distributable by it thereunder;
(xiii) with respect to the Indenture Trustee in its
individual and trust capacities, any Claims relating to failure on the part of
the
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83
Indenture Trustee to distribute in accordance with the Indenture any amounts
distributable by it thereunder;
(xiv) with respect to the Pass Through Trustee in its
individual and trust capacities, any Claims relating to failure on the part of
the Pass Through Trustee to distribute in accordance with the Pass Through Trust
Agreement or Pass Through Trust Supplement any amounts distributable by it
thereunder;
(xv) Claims relating to the offer, sale or delivery
of any Equipment Note or any interest in the Trust Estate;
(xvi) Claims relating to any sale, transfer or
holding of the Equipment Notes or Pass Through Certificates being deemed to
result in a "prohibited transaction" under ERISA; or
(xvii) any Claims relating to the authorization or
giving or withholding of any future amendments, supplements, waivers or consents
with respect to any of the Operative Agreements which amendments, supplements,
waivers or consents are not requested by TRMI or are not specifically required
by the Operative Agreements.
(c) Claims Procedure. An Indemnified Person shall, after
obtaining knowledge thereof, promptly notify TRMI of any Claim as to which
indemnification is sought; provided, however, that the failure to give such
notice shall not release TRMI from any of its obligations under this Section
7.4, except (but only if TRMI shall not have actual knowledge of such Claim) to
the extent that failure to give notice of any action, suit or proceeding against
such Indemnified Person shall have a material adverse effect on TRMI's ability
to defend such Claim or recover proceeds under any insurance policies maintained
by TRMI or to the extent TRMI's indemnification obligations are increased as a
result of such failure. TRMI shall, after obtaining knowledge thereof, promptly
notify each Indemnified Person of any indemnified Claim affecting such
Indemnified Person. Subject to the provisions of the following paragraph, TRMI
shall at its sole cost and expense be entitled to control, and shall assume full
responsibility for, the defense of such claim or liability; provided that TRMI
shall confirm to such Indemnified Person TRMI's obligations to indemnify
hereunder for such Claim, shall keep the Indemnified Person which is the subject
of such proceeding fully apprised of the status of such proceeding and shall
provide such Indemnified Person with all information with respect to such
proceeding as such Indemnified Person shall reasonably request. To the extent
that a Claim is made against TRMI pursuant to this Section 7.4 at a time when an
identical claim for indemnification arising from substantially similar facts and
circumstances is being asserted against Lessee, TILC and/or Trinity pursuant to
this Section 7 or Section 4 of the Trinity Guaranty, if TRMI is entitled to
control the defense of such
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84
Claim pursuant to this Section 7.4 and at the same time Lessee, TILC and/or
Trinity, as the case may be, is entitled to control the defense of such claim or
liability pursuant to this Section 7 or Section 4 of the Trinity Guaranty,
TRMI's indemnification obligations under this Section 7.4 shall not be reduced
as a result of the inability of TRMI to control the defense of such Claim where
such inability to control the defense of such Claim is caused by the exercise by
Lessee, TILC and/or Trinity, as applicable, of such Person's right to control
the defense of such indemnified claim as provided by this Section 7 or Section 4
of the Trinity Guaranty.
Notwithstanding any of the foregoing to the contrary, TRMI
shall not be entitled to control and assume responsibility for the defense of
any Claim if (1) a Lease Event of Default shall have occurred and be continuing,
(2) such proceeding will involve any material danger of the sale, forfeiture or
loss of, or the creation of any Lien (other than any Lien permitted under the
Operative Agreements or a Lien which is adequately bonded to the satisfaction of
such Indemnified Person) on, any Unit or Pledged Unit, (3) in the good faith
opinion of such Indemnified Person, there exists an actual or potential conflict
of interest such that it is advisable for such Indemnified Person to retain
control of such proceeding, (4) such Claim involves the possibility of criminal
sanctions or liability to such Indemnified Person or (5) an Equity Insufficiency
Circumstance shall exist. In the circumstances described in clauses (1) - (5),
the Indemnified Person shall be entitled to control and assume responsibility
for the defense of such claim or liability at the expense of TRMI. In addition,
any Indemnified Person may participate in any proceeding controlled by TRMI
pursuant to this Section 7.4, but only to the extent that such Person's
participation does not in the reasonable opinion of counsel to TRMI materially
interfere with such control, at its own expense, in respect of any such
proceeding as to which TRMI shall have acknowledged in writing its obligation to
indemnify the Indemnified Person pursuant to this Section 7.4, and at the
expense of TRMI in respect of any such proceeding as to which TRMI shall not
have so acknowledged its obligation to the Indemnified Person pursuant to this
Section 7.4. TRMI may in any event participate in all such proceedings at its
own cost. Nothing contained in this Section 7.4(c) shall be deemed to require an
Indemnified Person to contest any Claim or to assume responsibility for or
control of any judicial proceeding with respect thereto. No Indemnified Person
shall enter into any settlement or other compromise with respect to any Claim
without the prior written consent of TRMI unless the Indemnified Person waives
its rights to indemnification hereunder.
(d) Subrogation. If a Claim indemnified by TRMI under this
Section 7.4 is paid in full by TRMI and/or an insurer under a policy of
insurance maintained by TRMI, TRMI and/or such insurer, as the case may be,
shall be subrogated to the extent of such payment to the rights and remedies of
the Indemnified Person (other than under insurance policies maintained by such
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85
Indemnified Person) on whose behalf such Claim was paid with respect to the
transaction or event giving rise to such Claim. Should an Indemnified Person
receive any refund, in whole or in part, with respect to any Claim paid by TRMI
hereunder, it shall promptly pay over the amount refunded (but not in excess of
the amount TRMI or any of its insurers has paid) to TRMI; provided, however, so
long as a Lease Event of Default shall have occurred and be continuing, such
amount may be held by the Collateral Agent as security for TRMI's obligations
under the Administrative Services Agreement and the other Operative Agreements;
provided, further, only with respect to the Owner Participant and its Related
Indemnitee Group, so long as an event referred to in clause (5) of Section
7.4(c) hereof shall have occurred and be continuing, such amount may be held by
the Owner Trustee as security for the Lessee's obligations with respect to the
Equity Insufficiency Circumstance.
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT.
Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Lease, and expressly, severally and as to its
own actions only, agrees that, so long as no Lease Event of Default has occurred
and is continuing, it shall not take or cause to be taken any action contrary to
the Lessee's rights under the Lease, including, without limitation, the right to
possession, use and quiet enjoyment by the Lessee of the Equipment, or by any
Sublessee of the Equipment or by any Pledged Equipment Lessee of the Pledged
Equipment.
SECTION 9. SUCCESSOR INDENTURE TRUSTEE.
In the event that the Indenture Trustee gives notice of its resignation
pursuant to Section 8.2 of the Indenture, the Owner Trustee shall promptly
appoint a successor Indenture Trustee reasonably acceptable to the Lessee.
SECTION 10. MISCELLANEOUS.
Section 10.1 Consents. Each Participant covenants and agrees (subject,
in the case of the Loan Participant, to all of the terms and provisions of the
Indenture) that it shall not unreasonably withhold its consent to any consent
requested by the Lessee, TILC, TRMI, the Owner Trustee, the Pass Through Trustee
or the Indenture Trustee, as the case may be, under the terms of the Operative
Agreements that by its terms is not to be unreasonably withheld by the Owner
Trustee or the Indenture Trustee.
Section 10.2 Refinancing. So long as no Lease Event of Default shall
have occurred and be continuing, the Lessee shall have the right, at any time
following the fifth anniversary of the Closing Date, and provided that Lessee is
simultaneously exercising the refinancing option provided by Section 10.2 of the
Other Participation
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86
Agreement, to request the Owner Participant and the Owner Trustee to effect an
optional prepayment of all, but not less than all, of the Equipment Notes
pursuant to Section 2.10(d) of the Indenture as part of a refunding or
refinancing operation, provided that the Lessee shall obtain the prior consent
of the Owner Participant to be granted in the sole discretion of the Owner
Participant acting in good faith if such refinancing imposes any increased risk
or liability on or otherwise adversely affects, the Owner Participant; provided
further, that the Owner Participant shall not withhold such consent if in its
sole judgment (i) any increased risk, or liability is both remote and not
material, (ii) the Lessee is at the time at least as creditworthy as on the
Closing Date and (iii) Lessee provides an indemnity, in form and substance
satisfactory to the Owner Participant, for such increased risk or liability. As
soon as practicable after receipt of such request and consent, if required, the
Owner Participant and the Lessee will enter into an agreement, in form and
substance satisfactory to the parties thereto, as to the terms of such refunding
or refinancing as follows:
(a) the Lessee, the Owner Participant, the Indenture Trustee,
the Owner Trustee, and any other appropriate parties will enter into a financing
or loan agreement (which may involve an underwriting agreement in connection
with a public offering), in form and substance reasonably satisfactory to the
parties thereto, providing for (i) the issuance and sale by the Owner Trustee or
such other party as may be appropriate on the date specified in such agreement
(for the purposes of this Section 10.2, the "Refunding Date") of debt securities
in an aggregate principal amount (in the lawful currency of the United States)
equal to the principal amount of the Equipment Notes outstanding on the
Refunding Date, having the same maturity date as said Equipment Notes and having
a weighted average life which is not less than or greater than (in either case,
by more than three months) the Remaining Weighted Average Life of said Equipment
Notes, (ii) the application of the proceeds of the sale of such debt securities
to the prepayment of all such Equipment Notes on the Refunding Date, and (iii)
payment by Lessee to the Person or Persons entitled thereto of all other
amounts, in respect of accrued interest, any Make Whole Amount or other premium,
if any, payable on such Refunding Date;
(b) the Lessee and the Owner Trustee will amend the Lease in a
manner such that (i) if the Refunding Date is not a Rent Payment Date and the
accrued and unpaid interest on the Equipment Notes is not otherwise paid
pursuant to Section 10.2(a), the Lessee shall on the Refunding Date prepay that
portion of the next succeeding installment of Basic Rent as shall equal the
aggregate interest accrued on the Equipment Notes outstanding to the Refunding
Date, (ii) Basic Rent payable in respect of the period from and after the
Refunding Date shall be recalculated to preserve the Net Economic Return which
the Owner Participant would have realized had such refunding not occurred,
provided that the net present value of Basic Rent shall be minimized to the
extent consistent therewith, and (iii)
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87
amounts payable in respect of Stipulated Loss Value, Stipulated Loss Amount,
Early Purchase Price, Termination Value and Termination Amount from and after
the Refunding Date shall be appropriately recalculated to preserve the Net
Economic Return which the Owner Participant would have realized had such
refunding not occurred (it being agreed that any recalculations pursuant to
subclauses (ii) and (iii) of this clause (b) shall be performed in accordance
with the requirements of Section 2.6 hereof);
(c) the Owner Trustee will enter into an agreement to provide
for the securing thereunder of the debt securities issued by the Owner Trustee
pursuant to clause (a) of this Section 10.2 in like manner as the Equipment
Notes and/or will enter into such amendments and supplements to the Indenture as
may be necessary to effect such refunding or refinancing, which agreements,
amendments and/or supplements shall be reasonably satisfactory in form and
substance to the Owner Participant; provided that, no such agreement or
amendment shall provide for any increase in the security for the new debt
securities; and provided further that, notwithstanding the foregoing (but
subject to the provisions of clauses (a) and (b) and the lead in paragraph of
this Section 10.2 above), the Lessee reserves the right to set the economic
terms and other terms not customarily negotiated between an owner participant
and a lender of the refunding or refinancing transaction except to the extent
adversely affecting cash flow, coverage ratios and reserve accounts as to the
Owner Participant to be so offered to the extent that they are passed through to
the Lessee in, or define rights or obligations of the Lessee under, the
Operative Agreements; provided, further, that no such amendment or supplement
will in the sole judgment of the Owner Participant increase its obligations or
impair its rights under the Operative Agreements or otherwise adversely affect
it without the consent of the Owner Participant;
(d) (i) in the case of a refunding or refinancing involving a
public offering of debt securities, neither the Owner Trustee nor the Owner
Participant shall be an "issuer" for securities law purposes or an "obligor"
within the meaning of the Trust Indenture Act of 1939, as amended, the offering
materials (including any registration statement) for the refunding or
refinancing transaction shall be reasonably satisfactory to the Owner
Participant and (ii) the Lessee shall provide satisfactory indemnity to the
Owner Trustee and Owner Participant with respect to the refunding or
refinancing;
(e) unless otherwise agreed by the Owner Participant, the
Lessee shall pay to the Owner Trustee as Supplemental Rent an amount, on an
After-Tax Basis, equal to any Make-Whole Amount, Late Payment Premium, if any,
payable in respect of Equipment Notes outstanding on the Refunding Date pursuant
to the Indenture, all interest which is accrued and unpaid in respect of late
payments of Basic Rent or any part thereof, all reasonable fees, costs, expenses
of such refunding
Participation Agreement (TRLI 2001-1A)
88
or refinancing and of the parties hereto incurred in connection with such
refunding or refinancing (including all reasonable out-of-pocket legal fees and
expenses and the reasonable fees of any financial advisors);
(f) the Lessee shall give the Indenture Trustee, the Pass
Through Trustee and the Owner Participant not less than 25 days prior written
notice of the Refunding Date;
(g) the Owner Participant, the Owner Trustee, the Pass Through
Trustee and the Indenture Trustee shall have received (i) such opinions of
counsel as they may reasonably request concerning compliance with the Securities
Act of 1933, as amended, and any other applicable law relating to the sale of
securities and (ii) such other opinions of counsel and such certificates and
other documents, each in form and substance reasonably satisfactory to them, as
they may reasonably request in connection with compliance with the terms and
conditions of this Section 10.2; and
(h) all necessary authorizations, approvals and consents shall
have been obtained and shall be in full force and effect.
The Lessee shall pay to or reimburse the Participants, the
Owner Trustee and the Indenture Trustee for all costs and expenses (including
reasonable attorneys' and accountants' fees) paid or incurred by them in
connection with such refunding or refinancing.
Section 10.3 Amendments and Waivers. Except as otherwise provided in
the Indenture, no term, covenant, agreement or condition of this Agreement 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 against which enforcement of the
termination, amendment or waiver is sought.
Section 10.4 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, and any such notice shall become effective (i) upon
personal delivery thereof, including, without limitation, by reputable overnight
courier, or (ii) in the case of notice by facsimile, upon confirmation of
receipt thereof, provided such transmission is promptly further confirmed by any
of the methods set forth in clause (i) above, in each case addressed to each
party hereto at its address set forth below or, in the case of any such party
hereto, at such other address as such party may from time to time designate by
written notice to the other parties hereto:
Participation Agreement (TRLI 2001-1A)
89
If to the Lessee:
Trinity Rail Leasing I L.P.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Vice President Leasing Operations
Re: (TRLI 2001-1A)
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to TILC:
Trinity Industries Leasing Company
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Vice President Leasing Operations
Re: (TRLI 2001-1A)
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to TRMI:
Trinity Rail Management, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Vice President Leasing Operations
Re: (TRLI 2001-1A)
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to the Owner Trustee:
TRLI 2001-1A Railcar Statutory Trust
c/o State Street Bank and Trust Company of
Connecticut, National Association
000 Xxxxxx Xxxxxx, Xxxxxxx Square,
Xxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Facsimile No.: (000) 000-0000
Confirmation No.:(000) 000-0000
with a copy to:
the Owner Participant at the address set forth below
Participation Agreement (TRLI 2001-1A)
90
If to the Owner Participant:
Trimaran Leasing, L.P.
c/o Xxxxxx Xxxxxx Capital Corporation
000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Vice President, Structured Finance
Fax No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to the Indenture Trustee:
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxx,
Corporate Trust Services Division
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to the Pass Through Trustee:
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxx,
Corporate Trust Services Division
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
If to the Rating Agency:
Standard & Poor's Corporation
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Confirmation No.: (000) 000-0000
Participation Agreement (TRLI 2001-1A)
91
Section 10.5 Survival. All warranties, representations, indemnities and
covenants made by any party hereto, herein or in any certificate or other
instrument delivered by any such party or on the behalf of any such party under
this Agreement, shall be considered to have been relied upon by each other party
hereto and shall survive the consummation of the transactions contemplated
hereby on the Closing Date regardless of any investigation made by any such
party or on behalf of any such party.
Section 10.6 No Guarantee of Residual Value or Debt. Nothing contained
herein or in the Lease, the Indenture, the Trust Agreement or the Tax Indemnity
Agreement or in any certificate or other statement delivered by the Lessee in
connection with the transactions contemplated hereby shall be deemed to be (i) a
guarantee by the Lessee, TILC or TRMI to the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Pass Through Trustee or the Loan
Participant that the Equipment will have any residual value or useful life, or
(ii) a guarantee by the Indenture Trustee, the Owner Trustee, the Owner
Participant, the Lessee, TILC or TRMI of payment of the principal of, premium,
if any, or interest on the Equipment Notes.
Section 10.7 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and assigns as permitted by and in
accordance with the terms hereof, including each successive holder of the
Beneficial Interest permitted under Section 6.1 hereof and each successive
holder of any Equipment Note permitted under the Indenture issued and delivered
pursuant to this Agreement or the Indenture. The parties hereto agree that the
Collateral Agent shall be a third party beneficiary of this Agreement. Except as
expressly provided herein or in the other Operative Agreements, no party hereto
may assign their interests herein without the consent of the parties hereto.
Section 10.8 Business Day. Notwithstanding anything herein or in any
other Operative Agreement to the contrary, if the date on which any payment is
to be made pursuant to this Agreement or any other Operative Agreement is not a
Business Day, the payment otherwise payable on such date shall be payable on the
next succeeding Business Day with the same force and effect as if made on such
succeeding Business Day and (provided 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 10.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).
Participation Agreement (TRLI 2001-1A)
92
Section 10.10 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.11 Counterparts. This Agreement may be executed in any
number of counterparts, each executed counterpart constituting an original but
all together only one Agreement.
Section 10.12 Headings and Table of Contents. The headings of the
Sections of this Agreement 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.
Section 10.13 Limitations of Liability; Extent of Interest.
(a) Liabilities of Participants. Neither the Indenture
Trustee, the Owner Trustee nor any Participant shall have any obligation or duty
to the Lessee, to TILC, TRMI, to any other Participant or to others with respect
to the transactions contemplated hereby, except those obligations or duties of
such Participant expressly set forth in this Agreement and the other Operative
Agreements, and neither the Indenture Trustee nor any Participant shall be
liable for performance by any other party hereto of such other party's
obligations or duties hereunder. Without limitation of the generality of the
foregoing, under no circumstances whatsoever shall the Indenture Trustee or any
Participant be liable to the Lessee, TILC or TRMI for any action or inaction on
the part of the Owner Trustee in connection with the transactions contemplated
herein, whether or not such action or inaction is caused by willful misconduct
or gross negligence of the Owner Trustee, unless such action or inaction is at
the direction of the Indenture Trustee or any Participant, as the case may be,
and such action or inaction is expressly prohibited hereby.
(b) No Recourse to the Owner Trustee. It is expressly
understood and agreed by and between Trust Company, the Owner Trustee, the
Lessee, the Owner Participant, the Indenture Trustee, and the Loan Participant,
and their respective successors and permitted assigns that, subject to the
proviso contained in this Section 10.13(b), all representations, warranties and
undertakings of the Owner Trustee hereunder shall be binding upon the Owner
Trustee only in its capacity as Owner Trustee under the Trust Agreement, and
(except as expressly provided herein) Trust Company shall not be liable for any
breach thereof, except for its gross
Participation Agreement (TRLI 2001-1A)
93
negligence or willful misconduct, or for breach of its covenants,
representations and warranties contained herein, except to the extent covenanted
or made in its individual capacity; provided, however, that nothing in this
Section 10.13(b) shall be construed to limit in scope or substance those
representations and warranties of Trust Company made expressly in its individual
capacity set forth herein. The term "Owner Trustee" as used in this Agreement
shall include any successor trustee under the Trust Agreement, or the Owner
Participant if the trust created thereby is revoked.
(c) Extent of Interest of Holders of Equipment Notes. No
holder of an Equipment Note shall have any further interest in, or other right
with respect to, the mortgage and security interests created by the Indenture
when and if the principal of and interest on all Equipment Notes held by such
holder and all other sums payable to such holder hereunder, under the Indenture
and under such Equipment Notes shall have been paid in full. Each holder of the
Equipment Notes by its acceptance of an Equipment Note, agrees that it will look
solely to the income and proceeds from the Indenture Estate to the extent
available for distribution to such holder as provided in Article III of the
Indenture and that neither TILC, TRMI, the Lessee, the Owner Participant, the
Indenture Trustee nor the Owner Trustee shall be personally liable to any holder
of the Equipment Notes for any amounts payable under the Equipment Notes, the
Indenture or hereunder, except as expressly provided in the Operative
Agreements.
(d) Loan Participant's Source of Funds. It is expressly
understood and agreed by and between the Owner Trustee, the Lessee, the Owner
Participant, the Indenture Trustee and the Loan Participant, and their
respective successors and permitted assigns that, subject to the proviso
contained in this Section 10.13(d), the undertakings of the Loan Participant
hereunder are limited to the application of the proceeds of the sale of the Pass
Through Certificates to the purchase by the Pass Through Trustee of the
Equipment Notes; provided, however, that nothing in this Section 10.13(d) shall
be construed to limit in scope or substance those representations and warranties
of the Loan Participant made expressly in its individual capacity set forth
herein.
Section 10.14 Maintenance of Non-Recourse Debt. The parties hereto
agree that if the Owner Trustee becomes a debtor subject to the reorganization
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code") or any successor provision, the parties hereto will make an
election under 1111(b)(1)(A)(i) of the Bankruptcy Code. If (a) the Owner Trustee
becomes a debtor subject to the reorganization provisions of the Bankruptcy Code
or any successor provision, (b) pursuant to such reorganization provisions the
Owner Trustee is required, by reason of the Owner Trustee being held to have
recourse liability to the Pass Through Trustee or the Indenture Trustee,
directly or indirectly, to make payment on account of any amount payable under
the Equipment Notes or any of the other Operative
Participation Agreement (TRLI 2001-1A)
94
Agreements and (c) the Indenture Trustee and/or the Pass Through Trustee
actually receives any Excess Amount (as hereinafter defined) which reflects any
payment by the Owner Trustee on account of (b) above, then the Indenture Trustee
and/or the Pass Through Trustee, as the case may be, shall promptly refund to
the Owner Trustee such Excess Amount. For purposes of this Section 10.14,
"Excess Amount" means the amount by which such payment exceeds the amount which
would have been received by the Indenture Trustee or the Pass Through Trustee if
the Owner Trustee had not become subject to the recourse liability referred to
in (b) above.
Section 10.15 Ownership of and Rights in Units and Pledged Units. The
sale of the Units described on Schedule 1 hereto, the Existing Equipment
Subleases, the Pledged Units and the Existing Pledged Equipment Leases by TILC
contemplated hereby is intended for all purposes to be a true sale of all of
TILC's right, title and interest in and to such Units, the Existing Equipment
Subleases, the Pledged Units and the Existing Pledged Equipment Leases to the
Lessee, which shall be the legal owner thereof upon such sale. Upon consummation
of the sale and leaseback transactions contemplated hereby, the Lessee's
interest in such Units is intended to be that of a lessee only. It is intended
that for federal and state income tax purposes the Owner Participant will be the
owner of such Units. The rights of the Indenture Trustee in and to such Units
pursuant to the Indenture is intended to be that of a secured party holding a
security interest, subject to the Lease and the rights of the Lessee thereunder.
No holder of an Equipment Note is intended to have any right, title or interest
in or to such Units except as a beneficiary of the Lien granted by the Owner
Trustee to the Indenture Trustee pursuant to the Indenture in trust for the
equal and ratable benefit of the holders from time to time of the Equipment
Notes.
Section 10.16 No Petition. Each party hereto agrees that, prior to the
date which is one year and one day after payment in full of all outstanding
Equipment Notes and all obligations of the Lessee under the Operative Agreements
and release of all Collateral held under the Collateral Agency Agreement (i) no
party hereto shall authorize the Lessee to commence a voluntary winding-up or
other voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to the Lessee or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect in any jurisdiction
or seeking the appointment of an administrator, a trustee, receiver, liquidator,
custodian or other similar official of the Lessee or any substantial part of its
property or to consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against the Lessee, or to make a general assignment for the benefit of
any party hereto or any other creditor of the Lessee, and (ii) none of the
parties hereto shall commence or join with any other Person in commencing any
proceeding against the Lessee under any bankruptcy, reorganization, liquidation
or insolvency law or statute now or hereafter in effect in any jurisdiction.
Each of the parties hereto agrees that, prior to the date which is one year and
one day after the
Participation Agreement (TRLI 2001-1A)
95
payment in full of all outstanding Equipment Notes and all obligations of the
Lessee under the Operative Agreements and release of all Collateral held under
the Collateral Agency Agreement, it will not institute against, or join any
other Person in instituting against, Lessee an action in bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or similar
proceeding under the laws of the United States or any state of the United
States.
Section 10.17 Consent To Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Operative Agreement
or for recognition and enforcement of any judgment in respect hereof or thereof,
to the nonexclusive general jurisdiction of the courts of the State of
New York,
the courts of the United States of America for the Southern District of
New
York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may
be brought in such courts, and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage prepaid, to
each party hereto at its address set forth in Section 10.4 hereof, or at such
other address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction.
SECTION 10.18 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH THIS AGREEMENT.
* * *
Participation Agreement (TRLI 2001-1A)
96
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered, all as of the date first above written.
Lessee:
TRINITY RAIL LEASING I L.P.
By TILX GP I, LLC
its General Partner
By:
----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
TILC:
TRINITY INDUSTRIES LEASING COMPANY
By:
--------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
TRMI:
TRINITY RAIL MANAGEMENT, INC.
By:
--------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
Participation Agreement (TRLI 2001-1A)
Owner Trustee:
TRLI 2001-1A RAILCAR STATUTORY TRUST,
By: State Street Bank and Trust Company
of Connecticut, National Association,
not in its individual capacity except
as expressly provided herein but
solely as Owner Trustee
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Participation Agreement (TRLI 2001-1A)
Owner Participant:
TRIMARAN LEASING, L.P.
By: Trimaran Leasing Investors, L.L.C.-I,
its General Partner
By: Grant Holdings, Inc.,
its sole member
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Participation Agreement (TRLI 2001-1A)
Indenture Trustee:
LASALLE BANK NATIONAL ASSOCIATION,
not in its individual capacity except
as expressly provided herein but solely
as Indenture Trustee
By:
--------------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
Pass Through Trustee:
LASALLE BANK NATIONAL ASSOCIATION,
not in its individual capacity except as
expressly provided herein but solely as
Pass Through Trustee
By:
--------------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
Participation Agreement (TRLI 2001-1A)
