1
EXHIBIT 4(b)(1)
Participation Agreement
(UTC Trust No. 1998-A)
(L-15)
Dated as of March 18, 1998
among
Union Tank Car Company,
as Lessee
Wilmington Trust Company,
not in its individual capacity
(except to the extent expressly set forth herein),
but solely as Owner Trustee
FNBC Leasing Corporation,
as Owner Participant
▇▇▇▇▇▇ Trust and Savings Bank,
as Indenture Trustee
and
▇▇▇▇▇▇ Trust and Savings Bank,
as Pass Through Trustee
Tank Cars and Covered Hoppers
2
Table of Contents
Page
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SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSINGS; TRANSACTION COSTS . . . . . . 2
Section 2.1. Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2. Participation in Equipment Cost . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3. Closing Dates; Procedure for Participation . . . . . . . . . . . . . . . . . . . 4
Section 2.4. Owner Participant's Instructions to the Owner Trustee;
Satisfaction of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6. Calculation of Adjustments to Basic Rent, Stipulated Loss
Value and Termination Value; Confirmation and Verification . . . . . . . . . . 9
Section 2.7. Postponement of Closing Dates . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1. Representations and Warranties of the Bank and the Owner
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Representations and Warranties of the Lessee . . . . . . . . . . . . . . . . . . 16
Section 3.3. Representations and Warranties of the Indenture Trustee . . . . . . . . . . . . 20
Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes . . . . . . . . . . . . . . . . . . . . 21
Section 3.5. Representations and Warranties of the Pass Through Trustee . . . . . . . . . . . 21
Section 3.6. Representations and Warranties of the Owner Participant . . . . . . . . . . . . 23
Section 3.7. Opinion Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.1. Conditions Precedent to Investment by Each Participant . . . . . . . . . . . . . 24
Section 4.2. Additional Conditions Precedent to Investment by Pass
Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.3. Additional Conditions Precedent to Investment by Owner
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.4. Conditions Precedent to the Obligation of the Lessee . . . . . . . . . . . . . . 30
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE LESSEE . . . . . . . . . . . . . 33
Section 6.1. Restrictions on Transfer of Beneficial Interest . . . . . . . . . . . . . . . . 33
Section 6.2. Lessor's Liens Attributable to the Owner Participant . . . . . . . . . . . . . . 36
Section 6.3. Lessor's Liens Attributable to the Owner Trustee . . . . . . . . . . . . . . . . 36
Section 6.4. Liens Created by the Indenture Trustee and the Loan
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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Section 6.5. Covenants of Owner Trustee, Owner Participant and Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.6. Amendments to Operative Agreements . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.7. Covenant of the Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.8. Merger Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.9. Lessee's Purchase in Certain Circumstances . . . . . . . . . . . . . . . . . . . 39
Section 6.10. Owner Participant an Affiliate of Lessee . . . . . . . . . . . . . . . . . . . . 40
Section 6.11. Corporate Existence; Place of Business . . . . . . . . . . . . . . . . . . . . . 40
Section 6.12. No Impairment of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7. LESSEE'S INDEMNITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.1. General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.2. General Indemnification and Waiver of Certain Claims . . . . . . . . . . . . . . 48
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9. SUCCESSOR INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.1. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.2. Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.3. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.6. No Guarantee of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.8. Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.12. Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.13. Limitations of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.14. Maintenance of Non-Recourse Debt . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.15. Ownership of and Rights in Units . . . . . . . . . . . . . . . . . . . . . . . . 59
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EXHIBITS
Exhibit A - Insurance
Exhibit B - Form of Guaranty
SCHEDULES
Schedule 1A - Description of Equipment (Equipment Group A) and Equipment
Cost (Initial Closing)
Schedule 1B - Description of Equipment (Equipment Group B) and Equipment
Cost (Initial Closing)
Schedule 1C - Description of Equipment (Equipment Group A) and Equipment
Cost (Subsequent Closing)
Schedule 2 - Payment Information for Participants; Commitment Percentages
Schedule 3A - Schedule of Basic Rent Payments (Equipment Group A) (Initial
Closing)
Schedule 3B - Schedule of Basic Rent Payments (Equipment Group B) (Initial
Closing)
Schedule 3C - Schedule of Basic Rent Payments (Equipment Group A)
(Subsequent Closing)
Schedule 4A - Schedule of Stipulated Loss Value (Equipment Group A) (Initial
Closing)
Schedule 4B - Schedule of Stipulated Loss Value (Equipment Group B) (Initial
Closing)
Schedule 4C - Schedule of Stipulated Loss Value (Equipment Group A)
(Subsequent Closing)
Schedule 5A - Schedule of Termination Value (Equipment Group A) (Initial
Closing)
Schedule 5B - Schedule of Termination Value (Equipment Group B) (Initial
Closing)
Schedule 5C - Schedule of Termination Value (Equipment Group A) (Subsequent
Closing)
Schedule 6 - Terms of Equipment Notes
Schedule 7 - Early Purchase Information
Schedule 7A - Early Purchase Information (Equipment Group A) (Initial
Closing)
Schedule 7B - Early Purchase Information (Equipment Group B) (Initial
Closing)
Schedule 7C - Early Purchase Information (Equipment Group A) (Subsequent
Closing)
Schedule 8 - Basic Term Purchase Information
Schedule 8A - Basic Term Purchase Information (Equipment Group A) (Initial
Closing)
Schedule 8B - Basic Term Purchase Information (Equipment Group B) (Initial
Closing)
Schedule 8C - Basic Term Purchase Information (Equipment Group A)
(Subsequent Closing)
Schedule 9 - Outside Date Purchase Information
Schedule 9A - Outside Date Purchase Information (Equipment Group A) (Initial
Closing)
Schedule 9B - Outside Date Purchase Information (Equipment Group B) (Initial
Closing)
Schedule 9C - Outside Date Purchase Information (Equipment Group A)
(Subsequent Closing)
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PARTICIPATION AGREEMENT (UTC TRUST NO. 1998-A) (L-15)
This Participation Agreement (UTC Trust No. 1998-A) (L-15), dated as
of March 18, 1998 (this "Agreement"), among (i) Union Tank Car Company, a
Delaware corporation (herein, together with its successors and assigns, called
the "Lessee"), (ii) Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity except as expressly stated herein, but solely as
trustee under the Trust Agreement (as hereinafter defined) (herein, together
with its successors and assigns, in its trust capacity called the "Owner
Trustee" and in its individual capacity, called the "Bank"), (iii) FNBC Leasing
Corporation, a Delaware corporation (herein, together with its successors and
assigns, called the "Owner Participant"), (iv) ▇▇▇▇▇▇ Trust and Savings Bank,
an Illinois banking corporation, as trustee under the Indenture (as defined
below) (herein in such capacity, together with its successors and assigns,
called the "Indenture Trustee"), and (v) ▇▇▇▇▇▇ Trust and Savings Bank of
Chicago, an Illinois banking corporation, not in its individual capacity, but
solely as Pass Through Trustee under the Pass Through Trust Agreement (as
hereinafter defined) (herein in such capacity, together with its successors and
assigns, called the "Pass Through Trustee" or the "Loan Participant"). The
Owner Participant and the Loan Participant are herein sometimes referred to
together as the "Participants".
WITNESSETH:
WHEREAS, subsequent to the execution and delivery of this Agreement,
the Owner Participant intends to enter into the Trust Agreement (UTC Trust No.
1998-A) (L-15) pursuant to which the Owner Trustee will agree, 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 from the Lessee on the Initial Closing Date the Units of
Equipment described in Schedules 1A and 1B hereto and purchase from the Lessee
on the Subsequent Closing Date the Units of Equipment described in Schedule 1C
hereto and concurrently with such purchases to lease such Units of Equipment to
the Lessee;
WHEREAS, pursuant to the Pass Through Trust Agreement, on or prior to
the Debt Closing Date, a grantor trust will be created to facilitate the
financing contemplated hereby;
WHEREAS, subsequent to the execution and delivery of this Agreement,
the Owner Trustee intends to enter into the Indenture with the Indenture
Trustee pursuant to which Indenture the Owner Trustee will agree, among other
things, for the benefit of the holder or holders of the Equipment Notes, to
issue to the Pass Through Trustee as Loan Participant, the Equipment Notes as
evidence of the loan made by the Loan Participant in connection with the
financing of the Equipment Cost for the Equipment;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee is authorized and directed by the Owner Participant (i) to accept
delivery of a ▇▇▇▇ of Sale evidencing the purchase and transfer of title of
each Unit of Equipment to the Owner Trustee and (ii) to execute and deliver the
Lease pursuant to which, subject to the terms and conditions
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set forth therein, the Owner Trustee agrees to lease to the Lessee, and the
Lessee agrees to lease from the Owner Trustee, each Unit of Equipment to be
delivered on the Initial Closing Date and the Subsequent Closing Date, such
lease to be evidenced by the execution and delivery of Lease Supplements
covering such Units;
WHEREAS, subsequent to the execution and delivery of this Agreement,
the Lessee and the Owner Participant will enter into the Tax Indemnity
Agreement relating to the Equipment; and
WHEREAS, the proceeds from the sale of the Equipment Notes 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 by the Owner Trustee contemplated hereby.
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:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT.
The capitalized terms used in this Agreement (including the foregoing
recitals) and not otherwise defined herein shall have the respective meanings
specified in Appendix A hereto, unless the context hereof shall otherwise
require. All references to Sections, Schedules and Exhibits herein are to
Sections, Schedules and Exhibits of this Agreement unless otherwise indicated.
All accounting terms not otherwise defined herein or in Appendix A hereto have
the meanings assigned to them in accordance with generally accepted accounting
principles. The words herein, hereof and hereunder and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSINGS;
TRANSACTION COSTS.
Section 2.1. Sale and Purchase. 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, (i) on the Initial Closing Date,
the Units described in Schedules 1A and 1B as hereinafter provided, and (ii) on
the Subsequent Closing Date, the Units described in Schedule 1C as hereinafter
provided, and in connection therewith, the Owner Trustee agrees to pay to the
Lessee the Equipment Cost for each of the various Units as specified in
Schedules 1A, 1B and 1C; provided, however, that the Owner Trustee shall not be
obligated to purchase on the Initial Closing Date or the Subsequent Closing
Date any Unit that is destroyed, damaged, defective, in unsuitable condition or
otherwise unacceptable to the Lessee for lease pursuant to the Lease. The
Lessee shall deliver said Units of Equipment to the Owner Trustee and the Owner
Trustee shall accept such delivery on delivery dates as more fully provided
herein (the first such delivery date being referred to herein as the "Initial
Closing Date" and the second such delivery date being referred to herein as the
"Subsequent Closing Date"); provided that the Initial Closing Date shall occur
on or prior
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to April 30, 1998 and the Subsequent Closing Date shall occur on or prior to
June 15, 1998. Each of the Initial Closing Date and the Subsequent Closing Date
are herein sometimes referred to individually as a "Closing Date" and together
as the "Closing Dates".
Section 2.2. Participation in Equipment Cost.
(a) Equity Participation. Subject to the terms and conditions
hereof and on the basis of the representations and warranties set forth herein,
on the Initial Closing Date and on the Subsequent Closing Date the Owner
Participant agrees to participate in the payment of the Equipment Cost for the
Units delivered on the Initial Closing Date and the Subsequent Closing Date, as
the case may be, by making an equity investment in the beneficial ownership of
such Units in the amount equal to the product of the aggregate Equipment Cost
for the Units delivered on the Initial Closing Date and the Subsequent Closing
Date, as the case may be, and the percentage set forth opposite the Owner
Participant's name in Schedule 2 (the respective amounts payable by the Owner
Participant on the Initial Closing Date and the Subsequent Closing Date being
referred to herein as the Owner Participant's "Commitment"). The aggregate
amount of the Owner Participant's Commitment together with Transaction Costs to
be funded by the Owner Participant and Interim Interest shall not exceed
$38,500,000. 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 the payment of the Equipment Cost for the
Units as provided in Section 2.3.
(b) Debt Participation. Subject to the terms and conditions
hereof and on the basis of the representations and warranties set forth herein,
on the Initial Closing Date and on the Subsequent Closing Date the Loan
Participant agrees to participate in the payment of the Equipment Cost for the
Units delivered on the Initial Closing Date and the Subsequent Closing Date, as
the case may be, by making a secured loan, to be evidenced by the Equipment
Notes, to the Owner Trustee in the amount equal to the product of the aggregate
Equipment Cost for the Units delivered on the Initial Closing Date and the
Subsequent Closing Date, as the case may be, and the percentage set forth
opposite the Loan Participant's name in Schedule 2 (the respective amounts
payable by the Loan Participant on the Initial Closing Date and the Subsequent
Closing Date being referred to herein as the Loan Participant's "Commitment").
The aggregate amount of the Loan Participant's Commitment shall not exceed
$97,852,000. The Equipment Notes shall bear interest at the rates set forth on
Schedule 6.
(c) Interim Interest Payment. On the Interim Interest Payment
Date, the Owner Trustee covenants and agrees that it will pay, using funds that
are to be advanced by the Owner Participant on such date, to the Indenture
Trustee the interest (the "Interim Interest") due and payable to the Loan
Participant on such date under the Equipment Notes. The Owner Participant
shall have no personal liability to advance any such funds and shall notify the
Owner Trustee and the Lessee at least five Business Days prior to the Interim
Interest Payment Date if the Owner Participant will not advance Interim
Interest to the Owner Trustee. The Owner Trustee shall promptly notify the
Lessee if the Owner Participant fails to advance Interim Interest pursuant to
this Section 2.2(c). The Owner Participant hereby agrees to the terms and
conditions set forth in Section 3.5 of the Lease.
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Section 2.3. Closing Dates; Procedure for Participation.
(a) Notice of Initial Closing Date. Not later than the Debt Closing
Date, the Lessee shall give the Owner Participant, the Indenture Trustee, the
Owner Trustee and the Loan Participant notice (a "Notice of Delivery") by
telex, telegraph, facsimile or other form of telecommunication or telephone (to
be promptly confirmed in writing) of the Initial Closing Date, which Notice of
Delivery shall specify in reasonable detail the number and type of Units and
identification numbers to be delivered on such date, the aggregate 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 such Units. Prior to 12:00 noon, Chicago time, on the Initial
Closing Date, the Owner Participant shall make the amount of the Owner
Participant's Commitment required to be paid on the Initial Closing Date
available to the Indenture Trustee, and immediately prior to the delivery and
acceptance of the Units specified in Section 2.3(b), the Loan Participant shall
make the amount of the Loan Participant's Commitment for the Equipment Cost
required to be paid on the Initial Closing Date available to the Indenture
Trustee, in either case, by transferring or delivering such amounts, in funds
immediately available on the Initial Closing Date, to the Indenture Trustee,
either directly to, or for deposit in, the Indenture Trustee's account at
▇▇▇▇▇▇ Trust and Savings Bank, ABA No. ▇▇▇▇▇▇▇▇▇, Trust Department Account No.
109- 211-3, for credit to trust number 1046705, Attention: Bond Service
Unit-UTC Trust No. 1998-A (L-15). The making available by the Owner
Participant of the amount of its Commitment for the Equipment Cost required to
be paid on the Initial Closing Date shall be deemed a waiver of the Notice of
Delivery by the Owner Participant and the Owner Trustee and the making
available by the Loan Participant of the amount of its Commitment for the
Equipment Cost required to be paid on the Initial Closing Date shall be deemed
a waiver of the Notice of Delivery by the Loan Participant and the Indenture
Trustee.
(b) Initial Closing. The initial closing of the transactions
contemplated hereby (the "Initial Closing") shall take place beginning at 10:00
a.m., Chicago time, on the Initial Closing Date at the offices of ▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other
place or time as the parties hereto shall agree. Upon receipt by the Indenture
Trustee on the Initial Closing Date of the full amount of the Owner
Participant's Commitment in respect of the Units delivered on the Initial
Closing Date and the Loan Participant's Commitment in respect of the Units
delivered on the Initial Closing Date, the Indenture Trustee on behalf of the
Owner Trustee shall, subject 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, pay to the Lessee from the funds then held by
it, in immediately available funds, an amount equal to the Equipment Cost for
the Units delivered on the Initial Closing Date, and simultaneously therewith,
(i) the Lessee shall, pursuant to the ▇▇▇▇ of Sale, deliver such Units to the
Owner Trustee, (ii) the Owner Trustee shall, pursuant to the Lease, lease and
deliver the Equipment delivered on the Initial Closing Date to the Lessee, and
the Lessee, pursuant to the Lease, shall accept delivery of such Units under
the Lease, such lease, delivery and acceptance of the Units under the Lease
shall be conclusively evidenced by the execution and delivery by the Lessee and
Owner Trustee of a Lease Supplement covering the Equipment so delivered as
described in Schedules 1A and 1B, (iii) the Owner Trustee shall
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execute and deliver to the Loan Participant an Equipment Note relating to such
Lease Supplement. Each of the Lessee, the Owner Participant, the Owner
Trustee, the Loan Participant and the Indenture Trustee hereby agree to take
all actions required to be taken by it in connection therewith and pursuant to
this Section 2.3(b).
(c) Notice of Subsequent Closing Date. Not later than the fourth
Business Day prior to the Subsequent Closing Date, the Lessee shall give the
Owner Participant, the Indenture Trustee, the Owner Trustee and the Loan
Participant notice (a "Notice of Delivery") by telex, telegraph, facsimile or
other form of telecommunication or telephone (to be promptly confirmed in
writing) of the Subsequent Closing Date, which Notice of Delivery shall specify
in reasonable detail the number and type of Units and identification numbers to
be delivered on such date, the aggregate 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 such Units.
Immediately prior to the delivery and acceptance of the Units specified in
Section 2.3(d), the Owner Participant shall make the amount of the Owner
Participant's Commitment required to be paid on the Subsequent Closing Date
available to the Indenture Trustee, and the Loan Participant shall make the
amount of the Loan Participant's Commitment for the Equipment Cost required to
be paid on the Subsequent Closing Date available to the Indenture Trustee, in
each case, by transferring or delivering such amounts, in funds immediately
available on the Subsequent Closing Date, to the Indenture Trustee, either
directly to, or for deposit in, the Indenture Trustee's account described in
Section 2.3(a). The making available by the Owner Participant of the amount of
its Commitment for the Equipment Cost required to be paid on the Subsequent
Closing Date shall be deemed a waiver of the Notice of Delivery by the Owner
Participant and the Owner Trustee and the making available by the Loan
Participant of the amount of its Commitment for the Equipment Cost required to
be paid on the Subsequent Closing Date shall be deemed a waiver of the Notice
of Delivery by the Loan Participant and the Indenture Trustee.
(d) Subsequent Closing. The subsequent closing of the
transactions contemplated hereby (the "Subsequent Closing") shall take place
beginning at 10:00 a.m., Chicago time, on the Subsequent Closing Date (which
date shall be June 8, 1998 unless another date is specified in the Notice of
Delivery) at the offices of ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place or time as the parties hereto
shall agree. Upon receipt by the Indenture Trustee on the Subsequent Closing
Date of the full amount of the Owner Participant's Commitment in respect of the
Units delivered on the Subsequent Closing Date and the Loan Participant's
Commitment in respect of the Units delivered on the Subsequent Closing Date,
the Indenture Trustee on behalf of the Owner Trustee shall, subject 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, pay
to the Lessee from the funds then held by it, in immediately available funds,
an amount equal to the Equipment Cost for the Units delivered on the Subsequent
Closing Date, and simultaneously therewith, (i) the Lessee shall, pursuant to
the ▇▇▇▇ of Sale, deliver such Units to the Owner Trustee, (ii) the Owner
Trustee shall, pursuant to the Lease, lease and deliver the Equipment delivered
on the Subsequent Closing Date to the Lessee, and the Lessee, pursuant to the
Lease, shall accept delivery of such Units under the Lease, such lease,
delivery and acceptance of the Units under the Lease shall be conclusively
evidenced by the execution and delivery by the Lessee and Owner Trustee of
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a Lease Supplement covering the Equipment so delivered as described in Schedule
1C, (iii) the Owner Trustee shall execute and deliver to the Loan Participant
an Equipment Note relating to such Lease Supplement. Each of the Lessee, the
Owner Participant, the Owner Trustee, the Loan Participant and the Indenture
Trustee hereby agree to take all actions required to be taken by it in
connection therewith and pursuant to this Section 2.3(d).
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 its Commitment for the Units delivered on
the Closing Dates 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 Dates, 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 the Trust Agreement with respect to the Units on
the Closing Dates.
(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 Dates 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 it with respect to such Units and shall be conclusive evidence
of the authorization and direction of the Owner Trustee set forth in Section
2.4(a).
Section 2.5. Expenses.
(a) If the Owner Participant shall have made its investments 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 to the Owner Trustee, the following (the "Transaction Costs") if evidenced
by an invoice delivered to the Owner Participant and approved by the Lessee
prior to the Basic Term Commencement Date:
(i) the cost of reproducing, printing and filing the
Operative Agreements, the Equipment Notes, the Pass Through
Certificates, the Registration Statement, the base prospectus, the
preliminary prospectus supplement, the final prospectus supplement and
the Underwriting Agreement and all amendments and supplements to the
foregoing, including all costs and fees in connection with filing the
Registration Statement and 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 agencies in
connection with rating the Pass Through Certificates;
(ii) the fees of Winston & ▇▇▇▇▇▇, special counsel for the
Owner Participant, in the amount of $85,000, plus reasonable
disbursements, for their services rendered in
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connection with the negotiation, execution and delivery of this
Participation Agreement and the Operative Agreements related hereto;
(iii) all costs and fees in connection with the qualification
of the Pass Through Certificates under securities or Blue Sky laws in
accordance with the provisions of Section 5(e) of the Underwriting
Agreement, including filing fees and the fees and disbursements of
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ in connection therewith and in connection with
the preparation of any Blue Sky memorandum;
(iv) the reasonable fees and expenses of Ernst & Young LLP,
the Lessee's independent auditors, for their services rendered in
connection with issuing "comfort letters" to the Underwriters;
(v) the fees of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, special counsel for the
Underwriter, in the amount of $80,000, plus reasonable disbursements,
for their services rendered in connection with the preparation of
documentation, negotiation, execution and delivery of the base
prospectus, preliminary prospectus supplement, the final prospectus
supplement, the Underwriting Agreement, this Agreement and the
Operative Agreements related hereto;
(vi) the reasonable fees and expenses of ▇▇▇▇▇ & ▇▇▇▇▇▇▇,
special regulatory counsel, and Osler, ▇▇▇▇▇▇ & Harcourt, special
Canadian counsel, for the Owner Participant and the Indenture Trustee;
(vii) the reasonable fees and expenses of Morris, James,
Hitchens & ▇▇▇▇▇▇▇▇, special counsel for the Owner Trustee, for their
services rendered in connection with the negotiation, execution and
delivery of this Agreement and the Operative Agreements related hereto
and representation of the Bank at or in connection with the Initial
Closing and Subsequent Closing;
(viii) the commissions payable to the Underwriter in
connection with the sale of that principal amount of Pass Through
Certificates which is equal to the aggregate principal amount of the
Equipment Notes;
(ix) the initial fees and expenses of the Owner Trustee;
(x) the initial fees and expenses of the Indenture Trustee;
(xi) the initial fees and expenses of the Pass Through
Trustee;
(xii) the reasonable fees and expenses of Rail Solutions,
Inc. for their services rendered in connection with delivering the
Appraisal required by Section 4.3(a); and
(xiii) the reasonable out-of-pocket expenses of the Owner
Participant, including the reasonable fees and expenses of the Owner
Participant's insurance consultant; and
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(xiv) the costs incurred in connection with any adjustment
pursuant to Section 2.6(a).
Notwithstanding the foregoing, Transaction Costs shall not include
internal costs and expenses such as salaries and overhead of whatsoever kind or
nature of, nor costs incurred by, parties to this Participation Agreement
pursuant to arrangements with third parties for services (other than those
expressly referred to above), such as computer time procurement, financial
analysis and consulting, advisory services and costs of a similar nature.
(b) Upon the consummation of the transactions contemplated by this
Agreement, the Lessee agrees to pay when due: (i) the reasonable expenses
(including reasonable legal fees and expenses) of the Bank and the Owner
Trustee, the Indenture Trustee and the Participants incurred subsequent to the
delivery of the Equipment on the Initial Closing Date and the Subsequent
Closing Date, in connection with any supplements, amendments, modifications,
alterations, waivers or consents of or with respect to any of the Operative
Agreements which are (1) requested by, or necessitated by action or inaction on
the part of, the Lessee or by any applicable law or regulation (other than laws
or regulations solely relating to the business of the Lessor or the Owner
Participant) or entered into in connection with, or as a result of, a Lease
Default or (2) necessary or required to effectuate the purpose or intent of any
Operative Agreement (including costs incurred in connection with any adjustment
pursuant to Section 2.6); (ii) the ongoing reasonable fees and expenses
(including reasonable legal fees and expenses) of the Bank and the Owner
Trustee under the Trust Agreement; (iii) the ongoing reasonable fees and
expenses of the Indenture Trustee under the Operative Agreements; and (iv) the
ongoing reasonable fees and expenses of the Pass Through Trustee under the Pass
Through Trust Agreement.
(c) If the transactions contemplated hereby are not consummated as
a result of (i) the Lessee's default in its obligations to consummate the
transactions contemplated hereby, (ii) the Lessee's failure to consummate the
transactions contemplated hereby after the satisfaction or waiver of the
conditions set forth in Section 4 (other than conditions the satisfaction of
which are solely in the control of the Lessee), or (iii) subject to the next
sentence, in any other circumstance, the Lessee shall pay all Transaction
Costs; provided, however, that if the Initial Closing occurs but the Subsequent
Closing does not occur as the result of a circumstance described in clause (i),
(ii) or (iii) above, the Lessee shall pay all Transaction Costs incurred in
connection with or otherwise relating to the Subsequent Closing.
Notwithstanding anything contained herein to the contrary, if the transactions
contemplated hereby are not consummated as a result of (x) the Owner
Participant's default in its obligations to consummate the transactions
hereunder, or (y) the Owner Participant's failure to make its equity
investments as required by Section 2.2(a) after the conditions specified in
Section 4 have been satisfied or waived by it in writing (other than conditions
the satisfaction of which are solely in the control of the Owner Participant),
the Owner Participant shall pay its expenses, including the fees and expenses
of its counsel and of its insurance consultant in connection with the
transactions contemplated hereby; provided, however, that if the Initial
Closing occurs but the Subsequent Closing does not occur as a result of a
circumstance described in clause (x) or (y) above, the Owner Participant shall
pay its expenses and the expenses of its counsel incurred in connection with or
otherwise relating to the Subsequent Closing.
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(d) Notwithstanding the foregoing provisions of this Section 2.5,
except as specifically provided in Section 7.2 or in any other Operative
Agreement, the Lessee shall have no liability for any costs or expenses
relating to any voluntary transfer of the Owner Participant's interest in the
Equipment including any transfer prior to the Initial Closing Date or the
Subsequent Closing Date of the Owner Participant's obligation to fund its
participation pursuant to Section 2 (other than in connection with any transfer
pursuant to Section 6.9 of this Agreement, Sections 8.3, 10.2, 11.4, 22.1 or
22.3 of the Lease or a Lease Event of Default) and no such costs or expenses
shall constitute Transaction Costs and the Lessee will not have any obligation
with respect to the costs and expenses resulting from any voluntary transfer of
any equity interest by any transferee of the Owner Participant, whenever
occurring (other than in connection with a Lease Event of Default).
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 Initial
Closing Date is other than March 30, 1998 or the Subsequent Closing Date is
other than June 8, 1998, the interest rate on any of the Equipment Notes or the
amortization in respect thereof is other than as set forth on Schedule 6 or (B)
the Transaction Costs paid by the Owner Participant pursuant to Section 2.5
prior to the Basic Term Commencement Date are less or more than 1.307% of the
Total Equipment Cost pertaining to the Equipment sold on the Initial Closing
Date or 0.90% of the Total Equipment Cost pertaining to the Equipment sold on
the Subsequent Closing Date or (C) a refinancing contemplated or required by
Section 10.2 occurs, or (D) the Equipment made subject to the Lease on the
Initial Closing Date or on the Subsequent Closing Date is other than as
described in Schedule 1A, 1B or 1C or (E) subsequent to the execution of the
Participation Agreement but prior to the acceptance of the Units to be
delivered on the Initial or Subsequent Closing Date: (1) there shall have
occurred a Change in Tax Law and (2) after having been advised in writing by
the Owner Participant of such Change in Tax Law and the proposed adjustment to
the payments of Basic Rent payable in respect of such Units resulting
therefrom, the Lessee shall have waived its right under Section 4.4 of this
Agreement to decline to proceed with the transaction or the Owner Participant
shall have agreed to limit the amount of such proposed adjustment as set forth
in such Section 4.4, or (F) with respect to the Units to be delivered on the
Subsequent Closing Date, the average yield of the five year U.S. Government
Treasury constant maturities as reported in the Federal Reserve statistical
release H.15 report calculated over the five business days ending on the Friday
preceding the week containing the Subsequent Closing Date (the "Average Yield")
is other than 5.52%, 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, Termination Values, Early Purchase Price, Basic Term
Purchase Price and, in the case of the occurrence of an event described in
clause (D) above, the Outside Date Purchase Price, (i) to preserve the Net
Economic Return that the Owner Participant would have realized had the Initial
Closing Date been March 30, 1998 or the Subsequent Closing Date been June 8,
1998, had the interest on all Equipment Notes and the amortization in respect
thereof been as set forth on Schedule 6, had the Transaction Costs equaled
1.307% of the Total Equipment Cost pertaining to the Equipment sold on the
Initial Closing Date or 0.90% of the Total Equipment Cost pertaining to the
Equipment sold on the Subsequent Closing Date, had the Equipment made subject
to the Lease on the Initial Closing Date or on the Subsequent Closing
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Date been as so described, had such refinancing or Change in Tax Law not
occurred and had the Average Yield equaled 5.52% and (ii) to minimize to the
greatest extent possible, consistent with the foregoing clause (i), the present
value (discounted semiannually at an interest rate per annum equal to the Debt
Rate) of the payments of Basic Rent; provided, however, that any such
recalculation performed due to the occurrence of an event described in clause
(A) above shall be made only in respect of Units delivered on the Initial
Closing Date or the Subsequent Closing Date, as the case may be. Any such
recalculation performed due to the occurrence of an event described in clause
(A), (B), (D), (E) or (F) above shall be made prior to the Basic Term
Commencement 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, Termination Values, Early Purchase Price,
Basic Term Purchase Price and Outside Date Purchase Price with respect to the
Basic Term initially set forth in Schedules 3A, 3B, 3C, 4A, 4B, 4C, 5A, 5B, 5C,
7, 7A, 7B, 7C, 8, 8A, 8B, 8C and 9, 9A, 9B, 9C to this Participation Agreement
(other than those assumptions changed as a result of any of the events
described in clauses (A) through (E) 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) and 4.08(1) of Revenue
Procedure 75-28, as amended, calculated, except in the case of a refinancing
pursuant to Section 10.2 or any rent adjustment pursuant to Section 5(a)(3)(B)
of the Tax Indemnity Agreement, without taking into account any change after
the Subsequent Closing Date in or to Section 467 of the Code (and any
regulations thereunder) and such requirements of Revenue Procedure 75-28.
(b) Confirmation and Verification. Upon completion of any
recalculation described above in this Section 2.6, a duly authorized officer of
the Owner Participant shall provide a certificate to the Lessee either (x)
stating that the payments of Basic Rent, Stipulated Loss Values, Termination
Values, Early Purchase Price, Basic Term Purchase Price and Outside Date
Purchase Price with respect to the Basic Term as are then set forth in
Schedules 3A, 3B, 3C, 4A, 4B, 4C, 5A, 5B, 5C, 7, 7A, 7B 7C, 8, 8A, 8B, 8C and
9, 9A, 9B, 9C of this Participation Agreement do not require change, or (y)
setting forth such adjustments to the payments of Basic Rent, Stipulated Loss
Values, Termination Values, Early Purchase Price, Basic Term Purchase Price or
Outside Date Purchase Price with respect to the Basic Term as have been
calculated by the Owner Participant in accordance with Section 2.6(a) above.
Such certificate shall describe in reasonable detail the basis for any such
adjustments. Any such adjustment shall become effective on the thirty-first
(31st) day following delivery by the Owner Participant of such certificate to
the Lessee unless Lessee, prior to such day, requests verification pursuant to
the following sentence. Any such adjustment and corresponding adjustments to
the Stipulated Loss Values, Termination Values, Early Purchase Price, Basic
Term Purchase Price and Outside Date Purchase Price will be computed on a basis
consistent with that used by the Owner Participant in the original calculation
of Basic Rent. 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
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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, Termination Values, Early Purchase Price, Basic Term Purchase
Price and Outside Date 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. The Owner
Participant and the Lessee hereby agree that the sole responsibility of such
accounting firm shall be to verify the Owner Participant's computations under
this Section 2.6 and that the matters of interpretation of the Lease or any
other Operative Agreement are not within the scope of the accounting firm's
responsibilities. The costs of such verification shall be borne by the Lessee;
provided, however, if such accounting firm's verification shall result in a
decrease in the net present value (expressed as a percentage of Total Equipment
Cost) of the Basic Rent (discounted semiannually at a rate per annum equal to
the Debt Rate) under the Lease calculated as of the Initial Closing Date in the
case of Units delivered at the Initial Closing or as of the Subsequent Closing
Date in the case of Units delivered at the Subsequent Closing Date, as compared
to the net present value of Basic Rent proposed by the Owner Participant, by
more than the greater of (x) 10 basis points or (y) 10% 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, and shall 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 Values, Termination Values
or Early Purchase Price with respect to the Basic Term, pursuant to the
foregoing, shall comply with the following requirements: (i) each installment
of Basic Rent (together with any Advance payable under Section 3.5 of the
Lease), 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 Notes required to be paid on the due date of such installment of
Basic Rent (or such Advance) and (ii) Stipulated Loss Value, Termination Value
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, Make-Whole Amount, if any, and all unpaid interest on the Equipment Notes,
accrued to the date on which Stipulated Loss Value, Termination Value or Early
Purchase Price, as the case may be, is paid in accordance with the terms of the
Lease.
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(d) Invoices. All invoices in respect of Transaction Costs to the
extent not delivered on or before the Subsequent Closing Date shall be directed
to the Owner Participant at the address set forth in Section 10.4, with a copy
to the Lessee.
(e) Further Assurances. At the time any adjustment is made
pursuant to this Section 2.6, the parties hereto agree to enter into, at the
Lessee's expense, a supplement to this Participation Agreement to reflect such
adjustment and to enter into such amendments and supplements to the other
Operative Agreements and do such further acts as may be reasonably required in
order to effectuate such adjustment; provided, that such adjustment shall
become effective as provided in Section 2.6(b) without regard to the date on
which such supplement to this Participation Agreement is executed and
delivered.
Section 2.7. Postponement of Closing Dates.
(a) The scheduled Closing Dates may be postponed from time to time
with respect to all of the Units for any reason (but to no later than April 30,
1998 in the case of the Initial Closing Date and June 15, 1998 in the case of
the Subsequent Closing Date) if the Lessee gives the Owner Participant, the
Indenture Trustee, the Pass Through Trustee and the Owner Trustee telex,
telegraphic, facsimile or telephonic (confirmed in writing) notice of the
postponement and notice of the date to which such Closing Date has been
postponed, the notice of postponement to be received by each party no later
than 5:30 P.M., New York City time, on the originally scheduled Closing Date,
and the term "Initial Closing Date", "Subsequent Closing Date" and "Closing
Dates" as used in this Agreement shall mean the postponed "Initial Closing
Date", "Subsequent Closing Date" and "Closing Dates", as the case may be.
(b) In the event of any postponement of the originally scheduled
Initial Closing Date or Subsequent Closing Date pursuant to this Section 2.7
(such originally scheduled Initial Closing Date or Subsequent Closing Date
being referred to as a "Scheduled Closing Date" for the purposes of this
Section 2.7): (i) the Lessee will reimburse the Owner Participant for the loss
of the use of its funds with respect to each such Unit occasioned by such
postponement or failure to deliver or accept (unless such failure to accept is
caused by a default by the Owner Participant hereunder or by the Owner Trustee
(acting pursuant to instructions from the Owner Participant) under the Trust
Agreement, the Lease or the Indenture) by paying to the Owner Participant on
demand interest at the Debt Rate, for the period from and including the
Scheduled Closing Date to but excluding the earlier of the date upon which such
funds are returned to the Owner Participant (unless such returned funds are
received after 1:00 p.m. (Chicago time) in which case such date of return shall
be included) or the actual Initial Closing Date or Subsequent Closing Date, as
the case may be; provided that the Lessee shall in any event pay to the Owner
Participant at least one day's interest at the Debt Rate on the amount of such
funds, unless the Owner Participant shall have received, prior to 1:00 p.m.
(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)
and (ii) the Indenture Trustee will return not later than 10:00 a.m. Chicago
time on the first Business Day following the Scheduled Closing Date, any funds
which it shall have received from the Owner Participant as its Commitment for
such Units, absent joint
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instructions from the Lessee and the Owner Participant to retain such funds
until the specified date of postponement established under Section 2.7(a).
(c) The Indenture Trustee agrees that, in the event it has
received telephonic notice (to be confirmed promptly in writing) from the
Lessee on the Scheduled Closing Date that such Scheduled Closing Date is to be
postponed, it will if instructed in the aforementioned notice from the Lessee
(which notice shall specify the securities 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 it from the Owner Participant with respect to its Commitment
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 Owner
Participant whose funds are invested in Specified Investments upon instructions
from the Lessee and any net profits on the investment of such funds (including
interest), if any, shall be for the account of and shall on the Initial Closing
Date or Subsequent Closing Date, as the case may be, or on the date such funds
are returned to the Owner Participant, be paid over to, the Lessee. The Lessee
shall pay to the Indenture Trustee on the Initial Closing Date or Subsequent
Closing Date, as the case may be (if such Unit or Units are delivered and
accepted pursuant hereto), the amount of any net loss on the investment of such
funds invested at the instruction of the Lessee. If the funds furnished by the
Owner Participant with respect to such Unit or Units are required to be
returned to the Owner Participant, the Lessee shall, on the date on which such
funds are so required to be returned, reimburse the Indenture Trustee, for the
benefit of the Owner Participant, for any net losses incurred on such
investments. The Indenture Trustee shall not be liable for failure to invest
such funds or for any losses incurred on such investments except for its own
willful misconduct or gross negligence. In order to obtain funds for the
payment of the Equipment Cost for such Unit or Units or to return funds
furnished by the Owner Participant to the Indenture Trustee for the benefit of
the Owner Participant with respect to such Unit or Units, the Indenture Trustee
is authorized to sell any Specified Investments purchased as aforesaid with the
funds received by it from the Owner Participant in connection with such Unit or
Units.
(d) Notwithstanding the provisions of Section 2.7(a), the Owner
Participant shall not be under any obligation to make its Commitment available
beyond 2:00 P.M. (Chicago time) on April 30, 1998 in respect of the Units to be
delivered on the Initial Closing Date or June 15, 1998 in respect of the Units
to be delivered on the Subsequent Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1. Representations and Warranties of the Bank and the
Owner Trustee. The Bank, both in its individual capacity and as Owner Trustee
(except that (x) the representations and warranties in Sections 3.1(a)(i),
3.1(a)(ii), 3.1(b)(i) and 3.1(b)(iii) are made solely by the Bank, in its
individual capacity, and (y) the representations and warranties in Sections
3.1(c), 3.1(k) and 3.1(l) are made by the Owner Trustee solely in its capacity
as such), represents and warrants to the Owner Participant, the Indenture
Trustee, the Pass Through Trustee 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:
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(a) the Bank (i) is a banking corporation duly organized and
validly existing in good standing under the laws of the State of Delaware, (ii)
has full corporate power and authority to carry on its business as now
conducted and to enter into 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 enter into and perform its obligations under each
of the Owner Trustee Agreements;
(b) (i) the Bank, in its individual capacity, 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) the Owner Trustee in its trust capacity and, to the extent
expressly provided therein, the Bank in its individual capacity, has duly
authorized, executed and delivered each of the other Owner Trustee Agreements
and, as of the Initial Closing Date and the Subsequent Closing Date, each of
the Owner Trustee Agreements to be delivered on such Closing Date and (iii) the
Trust Agreement constitutes a legal, valid and binding obligation of the Bank,
in its individual capacity, enforceable against it in its individual capacity
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;
(c) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, each of the other Owner Trustee
Agreements 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 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) neither the execution and delivery by the Bank, in its
individual capacity, or the Owner Trustee, as the case may be, of the Owner
Trustee Agreements or the Equipment Notes, nor the consummation by the Bank, in
its individual capacity, or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or thereby, nor the compliance by the
Owner Trustee, in its individual capacity, or the 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 the Bank's stockholders, or approval or consent
of any trustees or holders of any indebtedness or obligations of the Bank in
its individual capacity, or (ii) violates or will violate the Bank's
certificate of incorporation or by-laws, 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 the Bank in its individual capacity is a
party or by which it is bound, or result in the creation of any Lien (except
for Permitted Liens upon the Units) upon the Trust Estate attributable to the
Bank and unrelated to the transactions contemplated by the Operative
Agreements, or contravenes or will contravene any law, governmental rule or
regulation of the State of Delaware governing the banking or trust powers of
the Bank, or any judgment or order applicable to or binding on it;
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(e) there are no Taxes payable by the Bank, either in its
individual capacity or as Owner Trustee, imposed by the State of Delaware or
any political subdivision thereof in connection with the execution and delivery
by the Bank in its individual capacity of the Trust Agreement, and, in its
individual capacity or as Owner Trustee, as the case may be, of this Agreement,
the other Owner Trustee Agreements or the Equipment Notes solely because the
Bank in its individual capacity is a banking corporation with its principal
place of business in Delaware and performs certain of its duties as Owner
Trustee in Delaware; and there are no Taxes payable by the Bank, in its
individual capacity or as Owner Trustee, as the case may be, imposed by the
State of Delaware 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 compensation received by the Owner
Trustee for services rendered in connection with the transactions contemplated
hereby) solely because the Bank in its individual capacity is a Delaware
banking corporation with its principal place of business in Delaware and
performs certain of its duties as Owner Trustee in Delaware;
(f) there are no pending or, to its knowledge, threatened actions
or proceedings against the Bank, either in its individual capacity or as 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 the Bank, in its individual capacity or as Owner Trustee, as the
case may be, to perform its obligations under the Trust Agreement, the other
Owner Trustee Agreements or the Equipment Notes or which question the validity
of any Owner Trustee Agreement or any action taken or to be taken pursuant
thereto. The Bank, in its individual capacity and as Owner Trustee, is not in
default with respect to any order of any court or governmental authority or
arbitration board or tribunal, the default under which would affect adversely
the ability of the Bank, in its individual capacity or as Owner Trustee, to
perform its obligations under the Owner Trustee Agreements;
(g) the Bank's 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 at ▇▇▇▇▇▇ Square North,
1100 N. Market Street, Wilmington, Delaware, and the Bank, in its individual
capacity, 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 State of Delaware or local governmental authority or agency or any United
States federal governmental authority or agency regulating the banking or trust
powers of the Bank, in its individual capacity, is required for the execution
and delivery of, or the carrying out by, the Bank in its individual capacity or
as 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 Initial Closing Date and the Subsequent Closing Date,
the Owner Trustee's right, title and interest in and to the Equipment delivered
on such Closing Date shall be free of
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any Liens attributable to the Bank in its individual capacity except Liens
created by or otherwise related to the terms of the Operative Agreements;
(j) the proceeds received by the Owner Trustee from the Owner
Participant pursuant to the Trust Agreement will be administered by it in
accordance with applicable provisions 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 security interest created pursuant to
the Indenture and the Indenture Supplements in respect of the Units delivered
on the Initial Closing Date and the Subsequent Closing Date; and
(l) the Owner Trustee is not in default under any of the Owner
Trustee Agreements and, to its knowledge, no Indenture Default or Indenture
Event of Default has occurred and is continuing.
Section 3.2. Representations and Warranties of the Lessee. The
Lessee represents and warrants to the Bank, the Indenture Trustee, the Pass
Through Trustee and the Owner Participant that, as of the date hereof:
(a) the Lessee 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 enter into and perform its obligations under
the Lessee Agreements, has the corporate 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 Lessee Agreements;
(b) the Lessee Agreements have been duly authorized by all
necessary corporate action (no stockholder approval being required), and will
on the Initial Closing Date or the Subsequent Closing Date, as the case may be,
have been duly executed and delivered by the Lessee and, assuming the due
authorization, execution and delivery by each other party thereto, will on such
Closing Date constitute the legal, valid and binding obligations of the Lessee,
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 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 certificate of
incorporation or by-laws 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 property is bound or affected;
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21
(d) except for those matters discussed in the financial statements
provided to the Participants under Section 3.2(e), there are no proceedings
pending or, to the knowledge of the Lessee, threatened against the Lessee or
any Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which individually or in the aggregate would, if
determined adversely to it, materially and adversely affect the financial
condition or business of the Lessee and its consolidated Subsidiaries, taken as
a whole, or impair the ability of the Lessee to perform its obligations under
the Lessee Agreements or which questions the validity of any Lessee Agreement
or any action taken or to be taken pursuant thereto. Neither the Lessee nor any
Subsidiary is in default with respect to any order of any court or governmental
authority or arbitration board or tribunal, the default under which would
affect adversely the ability of the Lessee to perform its obligations under the
Lessee Agreements;
(e) the audited consolidated balance sheets and consolidated
statements of income and retained earnings and cash flows of the Lessee as of
and for the fiscal year ended December 31, 1996, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Lessee and its Subsidiaries as of such date and the results of
their operations for the period then ended. Since December 31, 1996, there has
been no material adverse change in the condition, financial or otherwise, of
the Lessee and its consolidated Subsidiaries, taken as a whole, as shown on the
financial statements of 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 Lessee or any governmental authority on the part
of the Lessee is required in connection with the execution and delivery by the
Lessee of the Lessee Agreements, other than (i) the filing with the Securities
and Exchange Commission of the Registration Statement under which the Pass
Through Certificates will be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and each amendment thereto; (ii) the
qualification of the Pass Through Trust Agreement under the Trust Indenture Act
of 1939, as amended, and (iii) the filings and registrations contemplated by
Section 16 of the Lease and such other filings and registrations as are
expressly contemplated by the other Operative Agreements;
(g) the Lease, the Indenture, the Lease Supplements in respect of
the Units delivered on the Initial Closing Date and the Subsequent Closing Date
and the Indenture Supplements in respect of the Units delivered on the Initial
Closing Date and the Subsequent Closing Date will on or before each such
Closing Date be duly filed with the STB pursuant to 49 U.S.C. Section 11301 and
deposited in the office of 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 in the office of the Registrar General
of Canada, along with the other filings contemplated by Section 16 of the
Lease, will perfect the Owner Trustee's and the Indenture Trustee's rights in
such Operative Agreements and in the Units as required by Section 16 of the
Lease and, except as otherwise expressly contemplated by Section 16 of the
Lease or by any other Operative Agreements, and except for any filing or
recording necessary with respect to any subleases entered into by the Lessee as
permitted in Section 8.3 of the Lease, no other filing, recording or deposit
with, or giving of notice to any other federal, state, provincial or local
government or agency thereof is necessary in order to protect the rights of the
Owner
- 17 -
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Trustee and the Indenture Trustee in such Operative Agreements or in such Units
in the United States, any state thereof, the District of Columbia or to protect
the rights of the Owner Trustee and the Indenture Trustee in such Operative
Agreements or in such Units in Canada or any province thereof as long as the
Units are located on the rails of a railway (as such term is defined in the
Canada Transportation Act);
(h) the Units to be delivered on the Initial Closing Date are, and
the Units to be delivered on the Subsequent Closing Date will be, covered by
the insurance required by Section 12 of the Lease and all premiums due prior to
each such Closing Date in respect of such insurance shall have been paid in
full;
(i) the Lessee has timely filed all United States Federal income
tax returns and all other material tax returns which are required to be filed
by it and has paid all taxes due pursuant to such returns or pursuant to any
assessment made against the Lessee or any of its assets (other than
assessments, the payment of which is being contested in good faith by
appropriate proceedings by the Lessee and none of which are material), and no
tax liens have been filed and no claims are being asserted with respect to any
such taxes, fees or other charges which could reasonably be expected to have a
materially adverse effect on its ability to perform its obligations under the
Lessee Agreements. The provision for taxes on the books of the Lessee is
adequate for all open years and for its current fiscal period;
(j) no Lease Default or Lease Event of Default has occurred and is
continuing and to the knowledge of Lessee, no Event of Loss, or event with
which the giving of notice and/or the passage of time would constitute an Event
of Loss, has occurred;
(k) the Lessee is not an "investment company" or an "affiliated
person" of an "investment company" within the meaning of the Investment Company
Act of 1940;
(l) the acquisition and holding 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 a "Prohibited Transaction" under ERISA. The representation made by the
Lessee in the preceding clause is made in reliance upon and subject to the
accuracy of the representation of the Owner Participant in Section 3.6(h) of
this Agreement;
(m) on the Initial Closing Date and the Subsequent Closing Date,
Lessee shall have, and the ▇▇▇▇ of Sale to be delivered on each such Closing
Date shall convey, to the Owner Trustee all legal and beneficial title to the
Units being delivered on such Closing Date, free and clear of all Liens (other
than Permitted Liens of the type described in clause (ii) with respect to
sublessees, and in clauses (iii), (iv), (vi) and (vii) of the definition
thereof), and such conveyance is not void or voidable under any applicable law;
(n) the financial statements referred to in Section 3.2(e) do not,
nor does the Registration Statement relating to the Pass Through Certificates
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which the Lessee has not disclosed in writing which materially
affects adversely or, so far as the Lessee can now reasonably foresee, will
materially
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affect adversely the properties, business, prospects, results of operations or
condition (financial or otherwise) of the Lessee and its Subsidiaries, taken as
a whole;
(o) none of the transactions contemplated by the Operative
Agreements (including, without limitation, the use of the proceeds from the
sale of the Equipment Notes) will result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System, 12 C.F.R., Chapter II;
(p) the Lessee is not in violation of any term of any charter
instrument, by-law or in any material respect of any other material 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, 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 the Lessee to perform its obligations under the
Operative Agreements to which it is a party, and has obtained all licenses,
permits, franchises and other governmental authorizations material to the
conduct of its business;
(q) on the Initial Closing Date and the Subsequent Closing Date
all sales, use or transfer taxes due and payable upon the purchase of Units on
such Closing Date by the Lessor and on the lease thereof 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 are payable in connection with the execution and
delivery of the Operative Agreements or the issuance and sale of the Equipment
Notes to be delivered on the Initial Closing Date or the Subsequent Closing
Date;
(r) 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 Lessee, except for the fees of ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney and commissions payable to the Underwriter, which shall be
included in Transaction Costs, and Lessee agrees that it will hold the Owner
Participant, the Owner Trustee and the Indenture Trustee harmless from any
claim, demand or liability for any other broker's or finder's or placement fees
or commission alleged to have been incurred as a result of any action by Lessee
in connection with such transactions;
(s) each Unit of Equipment, taken as a whole, and each major
component thereof, will comply as of the Initial Closing Date or the Subsequent
Closing Date, as the case may be, in all material respects with all applicable
laws and regulations, will conform as of such Closing Date with the
specifications for such Unit contained in the Appraisals referred to in Section
4.3(a) hereof and will as of such Closing Date be substantially complete such
that it is ready and available to operate as of such date in commercial service
and otherwise perform the function for which it was designed; and
(t) the Lessee is not 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.
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Section 3.3. Representations and Warranties of the Indenture
Trustee. The Indenture Trustee represents and warrants to the Owner
Participant, the Owner Trustee, the Bank and the Lessee that, as of the date
hereof:
(a) the Indenture Trustee is a banking corporation duly organized
and validly existing and in good standing under the laws of the State of
Illinois and has the full corporate power, authority and legal right under the
laws of the State of Illinois pertaining to its banking, trust and fiduciary
powers to execute, deliver and carry out the terms of 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 law or its
articles of association or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or by which it is
bound;
(c) this Agreement has been duly executed and delivered and
constitutes, and the other Indenture Trustee Agreements, when executed and
delivered, will constitute its legal, valid and binding obligation enforceable
against it to the extent that such agreements are enforceable against the other
parties thereto (as to which the Indenture Trustee makes no representation or
warranty) 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
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 Notes 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, the
Underwriters and the initial purchasers of the Pass Through Certificates.
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Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes.
(a) The Owner Trustee represents and warrants to the Lessee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant that, as
of the date hereof and as of each Closing Date, neither the Owner Trustee nor
any Person authorized or employed by the Owner Trustee as agent or otherwise in
connection with the placement of the Beneficial Interest or the Equipment Notes
or any similar interest has offered any of the Beneficial Interest or the
Equipment Notes or any similar interest for sale to, or solicited offers to buy
any thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, except for the Owner Participant with respect
to the Beneficial Interest and the Pass Through Trustee with respect to the
Equipment Notes.
(b) The Lessee represents and warrants to the Indenture Trustee,
the Pass Through Trustee, the Bank, the Owner Trustee and the Owner Participant
that, as of the date hereof and as of each Closing Date, neither the Lessee nor
any Person authorized or employed by the Lessee as agent or otherwise in
connection with the placement of the Beneficial Interest or the Equipment Notes
or any similar interest has offered any of the Beneficial Interest or the
Equipment Notes or similar interest for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto with,
any Person other than the Owner Participant and not more than 35 other
institutional investors with respect to the Beneficial Interest, and, except
for the issue and sale of the Pass Through Certificates as contemplated by the
Registration Statement, the base prospectus and the prospectus supplement, the
Pass Through Trustee with respect to the Equipment Notes.
(c) Each of the Owner Trustee, the Owner Participant and the
Lessee agree, as to its own actions only, severally but not jointly, that
neither the Owner Trustee, the Owner Participant nor the Lessee nor anyone
acting on behalf of the Owner Trustee, the Owner Participant or the Lessee will
offer the Beneficial Interest, the Equipment Notes, 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 Notes, or any
part thereof so as to bring the issuance and sale of the Beneficial Interest,
the Equipment Notes, or any part thereof within the provisions of Section 5 of
the Securities Act, except as provided for in the Registration Statement.
Section 3.5. Representations and Warranties of the Pass Through
Trustee. The Pass Through Trustee represents and warrants to the Owner
Participant, the Bank, the Owner Trustee, the Indenture Trustee, and the Lessee
that, as of the date hereof:
(a) the Pass Through Trustee is a banking corporation duly
organized and validly existing in good standing under the laws of the State of
Illinois, and has the full corporate power, authority and legal right under the
laws of the State of Illinois pertaining to its banking, trust and fiduciary
powers to execute, deliver and carry out the terms of the Pass Through Trust
Agreement and this Agreement;
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(b) the Pass Through Trust Agreement and this Agreement have been
duly authorized, executed and delivered by the Pass Through Trustee; this
Agreement and the Pass Through Trust Agreement constitute the legal, valid and
binding obligation of the Pass Through Trustee enforceable against it to the
extent that such agreements are enforceable against the other parties thereto
(as to which the Pass Through Trustee makes no representation or warranty) 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;
(c) the execution, delivery and performance by the Pass Through
Trustee of the Pass Through Trust Agreement and this Agreement, the purchase by
the Pass Through Trustee of the Equipment Notes 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 United
States of America 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 by-laws 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;
(d) neither the execution and delivery by the Pass Through Trustee
of the Pass Through Trust Agreement or this Agreement nor the consummation by
the Pass Through Trustee of any of the transactions contemplated hereby or
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
governmental authority or agency or any governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers;
(e) there are no pending or 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 effect the ability of the Pass Through Trustee to perform
its obligations under this Agreement or the Pass Through Trust Agreement;
(f) the Pass Through Trustee is not in default under the Pass
Through Trust Agreement;
(g) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner Participant,
the Owner Trustee, the Underwriter or the Lessee;
(h) the Pass Through Trustee is purchasing the Equipment Notes 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
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(i) except for the issue and sale of the Pass Through Certificates
contemplated hereby, 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 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 each Owner Trustee and the Owner Participant, and
the Pass Through Trustee is not in default under the Pass Through Trust
Agreement.
Section 3.6. Representations and Warranties of the Owner
Participant. The Owner Participant represents and warrants to the Bank, the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Lessee
that, as of the date hereof:
(a) the Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to carry on its business as now conducted;
(b) the Owner Participant has the requisite power and authority to
enter into the Owner Participant Agreements and to perform its obligations
thereunder, and the execution, delivery and performance 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
incorporation or by-laws 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 property is bound or affected;
(c) the Owner Participant Agreements have been duly authorized by
all necessary corporate action on the part of the Owner Participant, do not
require any approval not already obtained of the stockholders 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
at the time of execution will be, duly executed and delivered by the Owner
Participant and (assuming the due authorization, execution and delivery by each
other party thereto) 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, reorganization, moratorium or 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
Owner Participant Agreements;
(e) the Trust Estate is free of any Lessor's Liens attributable to
the Owner Participant;
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(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 Participant's financial condition or its ability to perform its
obligations under the Trust Agreement, the Tax Indemnity Agreement or this
Agreement;
(g) as of the Initial Closing Date the Owner Participant is
purchasing the Beneficial Interest to be acquired by it for its 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; 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 Trustee nor the Lessee contemplates filing, or is
legally required to file, any registration statement with respect thereto;
(h) with respect to the source of the amount to be advanced 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;
(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;
(j) the Owner Participant's net worth exceeds US$75,000,000
determined in accordance with generally accepted accounting principles.
Section 3.7. 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 its investment
specified with respect to such Participant in Section 2 on the Initial Closing
Date and the Subsequent Closing Date shall be subject to the following
conditions (except that paragraph (k) and clause (i) of paragraph (p) shall not
be conditions precedent to the Owner Participant's obligations hereunder and
paragraph (n) and (s) and clause (ii) of paragraph (p) shall not be conditions
precedent to the Loan Participant's obligations hereunder):
(a) Execution of Operative Agreements. (i) On or before the Debt
Closing Date this Agreement and the Pass Through Trust Agreement, (ii) on or
before the Initial Closing Date, the Trust Agreement, the Lease, the Lease
Supplement in respect of the Units delivered on the
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Initial Closing Date, the Indenture, the Indenture Supplement, the Residual
Value Guaranty and the insurance Letter Agreement in respect of the Units
delivered on the Initial Closing Date and the Equipment Notes in respect of the
Units delivered on the Initial Closing Date, and (iii) on or before the
Subsequent Closing Date, the Lease Supplement, the Indenture Supplements and
the Equipment Notes in respect of the Units delivered on the Subsequent Closing
Date, 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 such 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 Initial Closing
Date, the Lessee shall have caused the Lease, the Lease Supplement in respect
of the Units delivered on the Initial Closing Date, the Indenture and the
Indenture Supplement in respect of the Units delivered on the Initial Closing
Date, and on or before the Subsequent Closing Date, the Lessee shall have
caused the Lease Supplement and the Indenture Supplement in respect of the
Units delivered on the Subsequent Closing Date to be duly filed, recorded and
deposited with the STB in conformity with 49 U.S.C. Section 11301 and in the
office of 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 without delay, and the Lessee shall furnish the Indenture
Trustee, the Owner Trustee and each Participant proof thereof. In addition, on
or before the Initial Closing Date or as soon thereafter as is reasonably
practicable (but in no event more than 30 days after such Closing Date), the
Lessee shall cause the Lease, the Lease Supplement in respect of the Units
delivered on the Initial Closing Date, the Indenture and the Indenture
Supplement in respect of the Units delivered on the Initial Closing Date, and
on or before the Subsequent Closing Date or as soon thereafter as is reasonably
practicable (but in no event more than 30 days after such Closing Date) the
Lessee shall have caused the Lease Supplement and the Indenture Supplement in
respect of the Units delivered on the Subsequent Closing Date, to be deposited
in the appropriate offices in the Canadian provinces of Ontario, Manitoba,
Saskatchewan, Alberta, British Columbia, Quebec, Nova Scotia and New Brunswick.
Precautionary Uniform Commercial Code financing statements naming the Lessee as
debtor, the Owner Trustee as secured party and the Indenture Trustee as
assignee of the secured party shall have been filed by the Lessee in the State
of Illinois.
(c) Representations and Warranties of Lessee. On the Initial
Closing Date and the Subsequent 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 such 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 the Bank, the Owner Trustee, the Indenture Trustee and each
Participant shall have received an Officer's Certificate dated such Closing
Date from the Lessee certifying to the foregoing matters, and the Lessee shall
have
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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 Owner Trustee. On the
Initial Closing Date and the Subsequent Closing Date, the representations and
warranties of the Owner Trustee contained in Section 3.1 and Section 3.4(a)
shall be true and correct in all material respects as of such 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 the Lessee, the Indenture Trustee, the Pass Through Trustee
and each Participant shall have received an Officer's Certificate dated such
Closing Date from the Owner Trustee 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 Owner Trustee on or before
said date.
(e) Opinions of Counsel. On the Initial Closing Date and the
Subsequent Closing Date, the Bank, the Owner Trustee, the Indenture Trustee and
each Participant shall have received the favorable written opinion of each of
(i) the Lessee's special counsel and General Counsel, (ii) counsel to the Owner
Trustee, (iii) special counsel to the Owner Participant, (iv) counsel to the
Pass Through Trustee, (v) counsel to the Indenture Trustee, (vi) special
regulatory counsel to the Lessee and (vii) special Canadian counsel to the
Lessee, in form and substance satisfactory to each Participant; provided that,
except as otherwise provided herein, receipt by a party hereto of a favorable
written opinion from counsel to such party shall not be a condition precedent
to such party's obligations hereunder.
(f) Title. On the Initial Closing Date and the Subsequent Closing
Date, after giving effect to the transactions contemplated hereby, the Owner
Trustee shall have all legal and beneficial title to each Unit to be delivered
on such Closing Date, free and clear of all Liens (other than Permitted Liens
of the type described in clause (ii) with respect to sublessees, and in clauses
(iii), (iv), (vi) and (vii) of the definition thereof).
(g) Bills of Sale. On the Initial Closing Date and the Subsequent
Closing Date the Lessee shall have delivered to the Owner Trustee (with copies
to the Indenture Trustee and each Participant) the ▇▇▇▇ of Sale, in form and
substance reasonably satisfactory to the Owner Trustee, dated such date
covering the Units to be settled for on such Closing Date, transferring to the
Owner Trustee legal and beneficial title to such Units free of all claims,
liens and encumbrances of any nature (other than Permitted Liens of the type
described in clause (ii) with respect to sublessees and in clauses (iii), (iv),
(vi) and (vii) of the definition thereof) and warranting to the Owner Trustee
that at the time of delivery of each such Unit, the Lessee 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) with respect to sublessees, and in clauses (iii),
(iv), (vi) and (vii) of the definition thereof).
(h) Insurance Certificates. On or before the Initial Closing Date
and the Subsequent Closing Date, the Bank, the Owner Trustee, the Indenture
Trustee and each Participant shall have received (x) any certificate relating
to insurance that is required pursuant to Section 12 of
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the Lease and (y) a certificate from a nationally recognized insurance broker
in the form attached hereto as Exhibit A.
(i) Corporate Documents. Each of the Participants shall have
received such documents and evidence with respect to the Lessee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee as the Participants may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement, the taking of
all corporate and other proceedings in connection therewith and compliance with
the conditions herein or therein set forth.
(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 as of the Initial
Closing Date or the Subsequent Closing Date, to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the transactions
contemplated hereby.
(k) Closing Certificates of Owner Participant. On the Initial
Closing Date and the Subsequent Closing Date, the Bank, the Lessee, the
Indenture Trustee and the Pass Through Trustee shall have received an Officer's
Certificate dated such Closing Date from the Owner Participant, to the effect
that the representations and warranties of the Owner Participant contained in
Section 3.6 are true and correct in all material respects on such Closing Date
with the same effect as though made on and as of said 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 that the Owner Participant has 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.
(l) Closing Notice. The Indenture Trustee and the Participants
shall have received the Notices of Delivery required pursuant to Section 2.3.
(m) Closing Certificates of Indenture Trustee. On the Initial
Closing Date and the Subsequent Closing Date, the Lessee, the Owner Trustee and
each Participant shall have received an Officer's Certificate dated such
Closing Date from the Indenture Trustee, to the effect that the representations
and warranties of the Indenture Trustee contained in Section 3.3 are true and
correct in all respects on such Closing Date with the same effect as though
made on and as of said 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 that
the Indenture Trustee has 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) Closing Certificates of the Pass Through Trustee. On the
Initial Closing Date and the Subsequent Closing Date, the Lessee, the Owner
Trustee and the Owner Participant shall have received an Officer's Certificate
dated such Closing Date from the Pass Through Trustee,
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to the effect that the representations and warranties of the Pass Through
Trustee contained in Section 3.5 are true and correct in all respects on such
Closing Date with the same effect as though made on and as of said 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 that the Pass Through Trustee has
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.
(o) No Illegality. No change shall have occurred after the date
of 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.
(p) Participants' Investments. (i) The Owner Participant shall
have made available its Commitment in the respective amounts specified in, and
otherwise in accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan
Participant shall have made available its Commitment in the respective amounts
specified in, and otherwise in accordance with, Sections 2.2(b) and 2.3.
(q) Consents. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee which are required in
connection with the transactions contemplated by this Agreement, shall have
been duly obtained and be in full force and effect.
(r) Governmental Actions. All actions, if any, required to have
been taken on or prior to the Initial Closing Date and the Subsequent Closing
Date in connection with the transactions contemplated by this Agreement on such
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 Initial Closing Date and the Subsequent Closing Date in
connection with the transactions contemplated by this Agreement on such Closing
Date shall have been issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect, on such Closing
Date.
(s) Tax Indemnity Agreement. On or before the Initial 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, assuming due authorization, execution and delivery by the Owner
Participant, shall be in full force and effect.
(t) Securities Act Compliance. On or before the Debt Closing
Date, if filing of the final base prospectus, and the supplement thereto is
required pursuant to Rule 424(b) as promulgated pursuant to the Securities Act,
the final base prospectus and such supplement shall have been filed in the
manner and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
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(u) 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 Initial Closing Date and the Subsequent 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 paragraph) to accept delivery of the Units from the Owner Trustee as the
Lessor pursuant
to the Lease.
(v) No Event of Default. No event or condition shall have
occurred and be continuing or would result from the purchase, sale or lease of
the Equipment to be purchased on the Initial Closing Date or the Subsequent
Closing Date or the taking of any other act as contemplated hereby, which
constitutes a Lease Default or a Lease Event of Default.
(w) No Event of Loss. Nothing shall have come to the attention of
any party to this Agreement to indicate that any Unit to be purchased on the
Initial Closing Date or the Subsequent Closing Date shall have been subject to
an Event of Loss on such closing date, or that any event shall have occurred
and be continuing which, given the passage of time, would constitute an Event
of Loss as to such Unit on such closing date.
Section 4.2. Additional Conditions Precedent to Investment by
Pass Through Trustee. The obligation of the Pass Through Trustee to purchase
and pay for the Equipment Notes to be purchased by it pursuant to Sections
2.2(b) and 2.3 on the Closing Date shall be subject to the additional
conditions that the Equipment Notes to be delivered on the Closing Date shall
have been duly authorized, executed and delivered to the Pass Through Trustee
by a duly authorized officer of the Owner Trustee and duly authenticated by the
Indenture Trustee and that on the Closing Date the Pass Through Trustee shall
have received the proceeds from the sale of the Pass Through Certificates.
Section 4.3. Additional Conditions Precedent to Investment by
Owner Participant. The obligation of the Owner Participant to make available
its Commitment pursuant to Sections 2.2(a) and 2.3 on the Initial Closing Date
and the Subsequent Closing Date with respect to any Unit to be delivered on
such Closing Date shall be subject to the following additional conditions:
(a) Appraisals. On or before the Initial Closing Date and the
Subsequent Closing Date, the Owner Participant shall have received an opinion
(each, an "Appraisal") of Rail Solutions, Inc., satisfactory in form and
substance to the Owner Participant, concluding that: (i) the fair market value
of each Unit being delivered on the Initial Closing Date or the Subsequent
Closing Date, as the case may be, is equal to the allocable portion of Total
Equipment Cost with respect to such Unit; (ii) the Basic Rents for the Basic
Term are fair market rents; (iii) at the expiration of the Basic Term and the
maximum fixed rate renewal period, (A) the remaining economic life of each Unit
will be at least equal to 20% of the original economic life of such Unit as
estimated in the Appraisal and (B) without taking into account inflation or
deflation from and after the Initial Closing Date or the Subsequent Closing
Date, as the case may be, or the existence of any purchase option, each Unit
will have a fair market
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value of at least 20% of the Total Equipment Cost with respect to such Unit;
(iv) as of the Early Purchase Date, the estimated fair market value of such
Equipment, taking into account a reasonable annual rate of inflation or
deflation from and after the Initial Closing Date or the Subsequent Closing
Date, as the case may be, will be less than the Early Purchase Price for such
Unit; (v) as of the end of the Basic Term, the estimated fair market value of
each Unit, taking into account a reasonable annual rate of inflation or
deflation from and after the Initial Closing Date or the Subsequent Closing
Date, as the case may be, will be less than the Basic Term Purchase Price for
such Unit; (vi) as of the Outside Date, the estimated fair market value of each
Unit, taking into account a reasonable annual rate of inflation or deflation
from and after the Initial Closing Date or the Subsequent Closing Date, as the
case may be, will be less than the Outside Date Purchase Price for such Unit,
(vii) such Equipment is not Limited Use Property; (viii) Basic Rents from the
Early Purchase Date to the end of the Basic Term are fair market rents; (ix)
Basic Rents for the Fixed Rate Renewal Term are fair market rents; and (x) such
other matters as the Owner Participant reasonably may require; provided that the
Lessee makes no representation as to the fair market value, useful life 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 either
Appraisal or report to which it relates or, except to the extent provided in the
Tax Indemnity Agreement, any information supplied by Lessee in connection
therewith.
(b) Opinion with Respect to Certain Tax Aspects. On the Initial
Closing Date and the Subsequent Closing Date, the Owner Participant shall have
received the opinion of Winston & ▇▇▇▇▇▇ 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.
(c) No Tax Law Change. No Change in Tax Law affecting Net
Economic Return shall have occurred or shall have been proposed on or prior to
the purchase of any Equipment on the Initial Closing Date or the Subsequent
Closing Date unless the Lessee shall have agreed to an adjustment to Basic Rent
in accordance with Section 2.6 of this Agreement to preserve the Owner
Participant's Net Economic Return.
Section 4.4. Conditions Precedent to the Obligation of the
Lessee. The obligation of the Lessee with respect to the sale of the Units to
the Owner Trustee and acceptance of the Units under the Lease is subject to the
following conditions as of the Initial Closing Date and the Subsequent Closing
Date (except for the condition set forth in Section 4.4(g) which is only
applicable to the sale and acceptance of Units on the Subsequent Closing Date):
(a) Corporate Documents. On or before the Initial Closing Date
and the Subsequent Closing Date, the Lessee shall have received such documents
and evidence with respect to the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee as the Lessee may reasonably
request in order to establish the consummation on such Closing Date of the
transactions contemplated by this Agreement, the taking of all corporate and
other proceedings in connection therewith and compliance with the conditions
herein or therein set forth.
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(b) Operative Agreements. On or before the Initial Closing Date
and the Subsequent Closing Date, the Operative Agreements shall have been duly
authorized, executed and delivered by the respective party or parties thereto
(other than the Lessee), and an executed counterpart of each thereof shall have
been delivered to the Lessee or its special counsel.
(c) Representations and Warranties True. On the Initial Closing
Date and the Subsequent Closing Date, the representations and warranties of the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner
Participant contained in Section 3 hereof shall be true and correct in all
material respects as of such Closing Date as though made on and as of such
Closing Date, and the Lessee shall have received an Officer's Certificate 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(n), addressed to the Lessee and certifying as to the foregoing
matters insofar as they relate to the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Pass Through Trustee, as the case may be.
(d) Opinions of Counsel. On the Initial Closing Date and the
Subsequent Closing Date, the Lessee shall have received the opinions of counsel
referred to in Section 4.1(e) (other than those set forth in clause (i)
therein), addressed to the Lessee.
(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 as of the Initial
Closing Date or the Subsequent Closing Date, to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the transactions
contemplated hereby.
(f) Participants' Investments. (i) The Owner Participant shall
have made available its 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 its Commitment in the amount specified in, and otherwise in
accordance with, Sections 2.2(b) and 2.3.
(g) No Change in Tax Law. No Change in Tax Law shall have
occurred nor shall any Change in Tax Law have been proposed subsequent to the
Initial Closing Date and prior to the acceptance and delivery of Units to be
delivered on the Subsequent Closing Date which, if enacted, adopted or made
effective, in the same or substantially similar form, would, as a consequence
of an adjustment to Basic Rent in respect thereof pursuant to Section 2.6,
cause the net present value of the installments of Basic Rent in respect of the
Units to be delivered on the Subsequent Closing Date, as so adjusted, payable
by the Lessee during the Basic Term (discounted at the Debt Rate), expressed as
a percentage of Total Equipment Cost, to be increased to an amount which is
more than 100 basis points higher than the net present value of the
installments of Basic Rent in respect of the Units to be delivered on the
Subsequent Closing Date, without giving effect to such adjustment, payable by
the Lessee during the Basic Term (similarly discounted), expressed as a
percentage of the aggregate Equipment Cost of such Units, such adjustments and
calculations to be determined and to be subject to verification in the
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manner provided in Section 2.6. Notwithstanding the occurrence of any such
Change in Tax Law or rendering of such a judicial opinion, the condition
precedent set forth herein shall be deemed to have been satisfied if the Owner
Participant agrees that such increase in the present value of the installments
of Basic Rent payable by the Lessee during the Basic Term as a consequence of
such adjustment shall not exceed 100 basis points.
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE.
The Lessee agrees that it will furnish directly to each Participant
the following:
(a) unless included in a Form 10-Q delivered under clause (c)
below within the 60-day period specified in this clause (a), as soon as
available and in any event within 60 days after the end of each quarterly
period, except the last, of each fiscal year, the consolidated balance sheet of
the Lessee and its consolidated Subsidiaries as at the end of such period,
together with the related consolidated statements of income and cash flows of
the Lessee and its consolidated Subsidiaries for the period beginning on the
first day of such fiscal year and ending on the last day of such quarterly
period, setting forth in each case (except for the consolidated 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) unless included in a Form 10-K delivered under clause (c)
below within the 120-day period specified in this clause (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 financial statements covering the
operations of the Lessee and its consolidated Subsidiaries, including a
consolidated balance sheet, and related consolidated statements of income and
retained earnings and consolidated statement of cash flows of the Lessee and
its consolidated Subsidiaries 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) as soon as available, one copy of each Annual Report on Form
10-K (or any successor form) and Quarterly Report on Form 10-Q (or any
successor form) filed by the Lessee with the Securities and Exchange Commission
or any successor agency;
(d) within the time period prescribed in subparagraph (b) above, a
certificate, signed by the Treasurer or principal financial officer of the
Lessee, to the effect that the signer has reviewed the activities of the Lessee
during the immediately preceding fiscal year and that he is not aware of any
default in compliance by the Lessee with any of the covenants, terms and
provisions of the Participation Agreement or the Lease (except as specified),
and if a Lease Default or Lease Event of Default shall exist, specifying such
Lease Default or Lease Event of Default and the nature and status thereof and
the action, if any, that the Lessee is taking to remedy such Lease Default or
Lease Event of Default;
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(e) promptly, all material reports or statements which the Lessee may make
to, or file with, the Securities and Exchange Commission or any successor
thereto (excluding such reports or statements which are treated as confidential
and not available to the public, in accordance with applicable law, by the
Securities and Exchange Commission, for so long as such confidentiality shall be
maintained); and
(f) promptly, such additional information with respect to the financial
condition or business of the Lessee as any Participant 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 sell, convey, assign, pledge, mortgage or
otherwise transfer any of its Beneficial Interest prior to the expiration or
earlier termination of the Lease Term without the Lessee's and, so long as any
Equipment Notes are outstanding, the Indenture Trustee's consent (which consent
shall not be unreasonably withheld) and absent indemnifying the Lessee to its
reasonable satisfaction unless:
(a) the Person to whom such transfer is to be made (a "Transferee") is (i)
an institutional or corporate investor with 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 US$75,000,000 determined in accordance with generally
accepted accounting principles or (ii) any Affiliate of any such institutional
or corporate investor if such investor guarantees the obligations so assumed by
such Affiliate pursuant to an instrument or instruments identical to Exhibit B
hereto in all material respects or otherwise reasonably satisfactory to the
Lessee, the Owner Trustee and the Indenture Trustee 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 and any guarantee given pursuant to clause (ii) shall
remain in full force and effect;
(b) the Owner Participant is not in default under the Lease;
(c) neither the Transferee nor any of its Affiliates shall be a direct
competitor (other than as a passive investor or loan participant in the
financing of equipment or facilities used in full service railcar leasing) of
the Lessee in the business of leasing rail cars under full service operating
leases; provided, that no Transferee or Affiliate thereof shall be deemed to (i)
be engaged in full service railcar leasing or (ii) hold (directly or indirectly)
any material interest in any business that is competitive with the Lessee's full
service 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 full service railcar leasing or any re-leasing or sale of any
rail equipment which is returned to or repossessed by or on behalf of the Owner
Participant or any Affiliate of the Owner Participant from a lessee
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or borrower in connection with a lease financing or lender transaction entered
into by the Owner Participant or such Affiliate as a passive lessor, investor or
lender;
(d) the Indenture Trustee, the Bank and the Lessee shall have received 10
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; provided, however, that such 10 days prior written notice need not
be given to the Indenture Trustee and the Lessee if such sale, conveyance,
assignment, pledge, mortgage or other transfer is to an Affiliate of the Owner
Participant;
(e) so long as any Interim Interest has become due and payable but has not
been paid by, or reimbursed by, the Owner Participant, the Lessee shall have
consented in writing to such transfer;
(f) such Transferee enters into an agreement or agreements in form and
substance reasonably satisfactory to the Lessee, the Owner Trustee and 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;
(g) such transfer complies in all respects with and does not violate any
applicable federal securities law and the securities law of any applicable
state;
(h) an opinion of counsel to the Transferee (which counsel shall be
reasonably acceptable to the Lessee, the Bank and the Indenture Trustee and
which may be internal counsel of the Transferee), confirming (i) the existence,
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 subparagraph (f) above is the legal,
valid, binding and enforceable obligation of the Transferee (subject to
customary qualifications as to bankruptcy and equitable principles) and (iii)
compliance of the transfer with applicable federal securities laws and material
laws of the Transferee's domicile and other material laws applicable to the
Transferee, shall be provided, prior to such transfer, to the Lessee and the
Indenture Trustee, which opinion shall be in form and substance reasonably
satisfactory to each of them;
(i) except as specifically consented to in writing by the Lessee and the
Indenture Trustee, the terms of the Operative Agreements shall not be altered;
(j) such transfer shall not result in an increase in the Lessee's
obligations under Section 7.1 or under the Tax Indemnity Agreement;
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(k) no Owner Participant shall hold less than 20% of the Beneficial
Interest after giving effect to such transfer and the Beneficial Interest shall
be held by not more than four Owner Participants;
(l) all reasonable expenses of the parties hereto (including, without
limitation, 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 or the Transferee;
(m) such transfer (i) does not involve the use of an amount which
constitutes assets of an employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code or (ii) will not constitute a prohibited transaction
under ERISA;
(n) as a result of such transfer, no Indenture Default attributable to the
Owner Participant or the Owner Trustee shall have occurred and be continuing;
(o) as long as no Lease Event of Default has 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 described in
paragraph (c) of this Section 6.1;
(p) 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 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;
(q) the Owner Participant shall have made available its Commitment in
respect of Units to be delivered on the Subsequent Closing Date; and
(r) the Owner Participant shall deliver an Officer's Certificate
certifying as to compliance with the transfer requirements contained herein.
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 as provided in Section 6.1(l)
hereof and except in the case of a transfer to a Transferee described in 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 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 immediately prior to such transfer of any of its
representations, warranties, covenants or obligations set forth in the Operative
Agreements or for any fraudulent or willful misconduct. Any transfer or
assignment of the Beneficial
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Interest in violation of this Section 6.1 shall be void and of no effect as
between the parties to this Agreement. Subject to the rights of the Lessee
pursuant to subsection 6.1(o), 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. No consent of the Lessee otherwise
required hereunder shall be required if any Lease Event of Default shall have
occurred and be continuing. 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 Operative Agreements.
Section 6.2. Lessor's Liens Attributable to the Owner Participant. The
Owner Participant hereby unconditionally agrees with and for the benefit of the
other parties to this Agreement that the Owner Participant will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Liens on or
against any part of the Trust Estate or the Equipment attributable to the Owner
Participant, and the Owner Participant agrees that it will, 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 (by bonding or otherwise, so long as Lessee's
operation and use of the Equipment and the interest of the Indenture Trustee in
the Indenture Estate is not impaired); 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 by the Lessee under the Lease or the
rights of the Indenture Trustee under the Indenture.
Section 6.3. Lessor's Liens Attributable to the Owner Trustee. The Bank,
in its individual capacity, hereby unconditionally agrees with and for the
benefit of the other parties to this Agreement that the Bank in its individual
capacity will not directly or indirectly create, incur, assume or suffer to
exist any Lessor's Liens on or against any part of the Trust Estate or the
Equipment attributable to the Bank in its individual capacity and unrelated to
the transactions contemplated by the Operative Agreements, and the Bank in its
individual capacity agrees that it will, 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 attributable to the Bank in its individual capacity (by bonding or
otherwise, so long as Lessee's operation and use of the Equipment and the
interest of the Indenture Trustee in the Indenture Estate is not impaired);
provided that the Bank 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 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 the Lessee, the Owner Trustee, the Owner Participant and the Loan
Participant that it shall not cause or permit to exist any Lien on the Equipment
or all or any portion of any Trust Estate or the Indenture Estate arising as a
result of (i) claims against the Indenture Trustee in its individual
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capacity not related to its interest in the Equipment and any 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
any lien arising out of the gross negligence or wilful misconduct of the
Indenture Trustee in performing its duties and obligations under, the Operative
Agreements, (iii) claims against the Indenture Trustee in its individual
capacity relating to Taxes or expenses that are not indemnified against by the
Lessee pursuant to Section 7 attributable to the actions of the Indenture
Trustee, solely in its individual capacity, 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 Indenture Estate or the Operative
Agreements, other than a transfer permitted by the Operative Agreements and that
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 the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee that it shall not cause
or permit to exist any Lien on the Equipment or all or any portion of any Trust
Estate or the Indenture Estate arising as a result of (i) claims against such
Loan Participant not related to its interest in the Equipment and any Trust
Estate, (ii) acts of such Loan Participant not contemplated by, or failure of
such Loan Participant to take any action it is expressly required to perform by,
the Operative Agreements, (iii) claims against such Loan Participant relating to
Taxes or expenses that are not indemnified against by the Lessee pursuant to
Section 7, or (iv) claims against such Loan Participant arising out of the
transfer by such Loan Participant of all or any portion of its interest in the
Equipment, the Indenture Estate or the Operative Agreements, other than a
transfer permitted by the Operative Agreements and that such 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. The Owner Participant, and the Bank in its individual and trust
capacity, hereby agree, as to their own actions only, severally and not jointly,
with the Lessee, the Loan Participant and the Indenture Trustee (a) 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 Lessee, the Loan
Participant or the Indenture Trustee without the prior written consent of such
party and (b) not to terminate or revoke the Trust Agreement or the trusts
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 pursuant to Section 7.1 thereof or prior to the
expiration or early termination of the Lease. Each of the Owner Trustee 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 any provision herein or
in any of the Operative Agreements to the contrary, the Indenture Trustee's
obligation to take or refrain from taking any actions, or to use its discretion
(including, but not limited to, the giving or withholding of consent or approval
and the exercise of any rights or remedies under such Operative Agreements), and
any liability therefor, shall, in addition to any other limitations provided
herein or in the other Operative Agreements, be limited by the provisions of the
Indenture.
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Section 6.6. Amendments to Operative Agreements. The Trustees and
Participants will not terminate the Operative Agreements to which the Lessee is
not or will not be a party, or amend, supplement, waive or modify such Operative
Agreements in any manner that increases the obligations or liabilities, or
decreases the rights, of the Lessee under such Operative Agreements, 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). The Owner Participant and the Trustees
(as applicable) agree that, in any event, they 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. Covenant of the Lessee. The Lessee hereby agrees with the
Owner Trustee, each Participant and the Indenture Trustee to deliver to the
Owner Trustee on the Initial Closing Date and the Subsequent Closing Date a ▇▇▇▇
of Sale evidencing the purchase and transfer of title of each Unit to be settled
for on such Closing Date.
Section 6.8. Merger Covenant. The Lessee shall not consolidate with or
merge into any other Person, or permit any other Person to merge into it, or
convey, transfer or lease substantially all of its assets as an entirety to any
Person unless (i) the Person formed by such consolidation or surviving such
merger (if other than the Lessee) or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of the Lessee as an entirety
is a corporation organized and existing under the laws of the United States or
any state thereof or the District of Columbia and shall execute and deliver to
the Owner Trustee, the Owner Participant and the Indenture Trustee an agreement
containing the assumption by such successor corporation of the due and punctual
performance and observance of each covenant and condition of this Agreement and
each of the other Lessee Agreements to be performed or observed by the Lessee,
(ii) immediately prior to and immediately after giving effect to such
transaction, no Lease Default or Lease Event of Default shall have occurred,
whether as a result of such consolidation or merger or such conveyance, transfer
or lease or otherwise, (iii) the Lessee shall have made all filings necessary or
appropriate in the reasonable opinion of the Owner Trustee and the Indenture
Trustee in order to preserve and protect the rights of the Lessor under the
Lease and of the Indenture Trustee under the Indenture and (iv) there shall have
been delivered to the Owner Participant, the Owner Trustee and the Indenture
Trustee an Officer's Certificate of the successor to the Lessee (or such Person
as is the surviving corporation) and an opinion of counsel (which may be such
Person's in-house counsel) in form and substance reasonably satisfactory to the
Owner Participant, the Owner Trustee and the Indenture Trustee, each stating
that such consolidation, merger, conveyance, transfer or lease and the
assumption agreement mentioned in clause (i) above comply with this Section 6.8.
Upon such consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Lessee as an entirety in accordance with
this Section 6.8, the successor corporation formed by such consolidation or into
which the Lessee is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the other Operative Agreements
with the same effect as if such successor corporation had been named as the
Lessee herein.
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Section 6.9. Lessee's Purchase in Certain Circumstances. If an Owner
Participant, any Transferee or any Affiliate of such Owner Participant or
Transferee is engaged, or acquires, is acquired by, merges or otherwise
consolidates with any company or Affiliate thereof engaged, in full service
railcar leasing, whether or not a direct competitor to the Lessee or any
Affiliate thereof, or by or with any Person that has a material interest
(whether held directly or indirectly) in an enterprise that engages in a
business that is competitive with the Lessee's full service railcar leasing
business, the Lessee may, on a Determination Date which is designated by the
Lessee by written notice to the Owner Trustee, the Indenture Trustee and the
Pass Through Trustee not less than 25 days prior to such Determination Date,
purchase all, but not less than all, the Equipment for a purchase price equal to
the greater of Termination Value or the Fair Market Sales Value, each calculated
as of such Determination Date, plus in either case all accrued and unpaid Rent
for the Equipment as of the date of purchase and any Make-Whole Amount then
payable on the Equipment Notes pursuant to Section 2.10(c) of the Indenture;
provided, that the Lessee's rights to purchase the Equipment pursuant to this
Section 6.9 shall terminate on the earlier to occur of (i) the 90th day after
receipt by the Lessee of written notice from the Owner Participant or any
Transferee or any Affiliate thereof, that it is engaged in full service railcar
leasing or of any such acquisition, merger or consolidation and (ii) the 90th
day after the Lessee otherwise obtains actual knowledge of any such occurrence;
provided further, that an institutional investor which is a passive investor in
the financing of equipment or facilities used in full service railcar leasing
shall not, solely by reason of such investment, be deemed to be engaged in such
business; provided, further, that neither the Owner Participant or any
Transferee nor Affiliate thereof shall be deemed to (i) be engaged in full
service railcar leasing or (ii) hold (directly or indirectly) any material
interest in any business that is competitive with the Lessee's full service
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 full service railcar leasing or any re-leasing or sale of any
rail equipment which is returned to or repossessed by or on behalf of the Owner
Participant or any Affiliate from a lessee or borrower in connection with a
lease financing or lender transaction entered into by the Owner Participant or
such Affiliate as a passive lessor, investor or lender.
If the Lessee elects to exercise the purchase option provided for in this
Section 6.9, Lessee shall, as the purchase price therefor, in the sole
discretion of the Lessee, either (i) pay the Termination Value or the Fair
Market Sales Value, as specified in the paragraph above, together with all other
amounts due and owing by Lessee under the Operative Agreements, or (ii) pay the
difference between the Termination Value or the Fair Market Sales Value, as
applicable, and the outstanding principal amount of the Equipment Notes as of
the Determination Date, together with all other amounts due and owing by the
Lessee under the Operative Agreements, and assume on a full recourse basis
pursuant to Section 4.01 of the Indenture, and agree to indemnify the Lessor
against, all of the Owner Trustee's obligations in respect of the related
Equipment Notes; provided, that, following such assumption, the purchased Units
shall remain subject to the lien of the Indenture. The Lessee will make the
payments required by foregoing clause (i) or assume the Equipment Notes as
provided in foregoing clause (ii) on the Determination Date against delivery of
a ▇▇▇▇ of sale transferring and assigning to the Lessee all
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right, title and interest of the Lessor in and to such Units on an "as-is"
"where-is" basis and containing a warranty against the Lessor's Liens. The
Lessor shall not be required to make any other representation or warranty as to
the condition of such Units or any other matters, and may specifically disclaim
any such representations or warranties.
Section 6.10. Owner Participant an 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 10.05
of the Indenture such Owner Participant 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 would adversely affect in a material
manner the Indenture Trustee or any holder of an Equipment Note unless such
action shall have been consented to by a Majority in Interest.
Section 6.11. Corporate Existence; Place of Business. The Lessee shall at
all times maintain its corporate existence except as permitted by Section 6.8;
and it shall do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate rights, powers, privileges and franchises
except for any corporate right, power, privilege or franchise that it in good
faith determines is no longer necessary or desirable in the conduct of its
business.
Section 6.12. No Impairment of Warranties. From and after the Closing Date
and throughout the Lease Term, the Lessee shall not take any action (or fail to
take any action) if the result of such action (or failure to act) would abrogate
or invalidate or otherwise materially adversely affect the validity of any
warranties applicable to the Units which would otherwise be available with
respect to the Units.
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 Owner Participant, its Affiliates, the Pass Through
Trustee, both in its individual capacity and as trustee, the Bank both in its
individual capacity and as Owner Trustee, the Indenture Trustee both in its
individual capacity and as trustee, each of their respective 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.
(b) Taxes Indemnified. 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 the
Lessee is required to make any payment 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. If, for any reason, the Lessee is
required to make any payment to a taxing authority with respect to, or as a
result of, any withholding tax imposed
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on any Tax Indemnitee in respect of the transactions contemplated by the
Operative Agreements which withholding tax is not the responsibility of the
Lessee under this Section 7.1, then such Tax Indemnitee shall pay to the Lessee
within 30 days of a demand an amount which equals the amount paid by the Lessee
with respect to, or as a result of, such withholding tax, plus interest computed
at such Tax Indemnitee's cost of funds rate during the period commencing on the
date the Lessee shall have paid an additional amount pursuant to the first
sentence of this paragraph and ending on the date prior to the date the Lessee
actually receives such payment. Subject to the exclusions stated in subsection
(c) below, whether or not any Unit is accepted under the Lease the Lessee agrees
to indemnify and hold harmless each Tax Indemnitee, on an After-Tax Basis,
taking into account the income tax consequences to the Tax Indemnitee of the
accrual or receipt of an indemnity payment, against all fees (including, without
limitation, license, documentation or other fees and registration fees), taxes
(including, without limitation, income, gross receipts, franchise, sales, use,
rental, turnover, business, occupation, excise, value-added, tangible and
intangible personal property and stamp taxes), levies, assessments, imposts,
duties, charges or withholdings of any nature, together with any and all
penalties, additions to tax, fines or interest thereon ("Taxes") imposed upon
any Tax Indemnitee, the Lessee or any Person in possession of the Equipment or
all or any part of the Equipment by any federal, state or local government,
political subdivision, or taxing authority in the United States or its
possessions, by any government or taxing authority of or in a foreign country or
by any international authority, upon, with respect to or in connection with:
(i) the Equipment or any part of any of the Equipment or
interest therein;
(ii) the acquisition, financing, ownership, leasing, possession,
purchase, acceptance, rejection, condition, registration, return, use,
storage, operation, transfer of title, maintenance, repair, improvement,
replacement, substitution, delivery, redelivery, non-delivery, transport,
preparation, assembly, insurance, construction, manufacture, insuring,
modification, transfer, control, occupancy, servicing, mortgaging,
location, refinancing, disposition, subleasing, repossession, abandonment,
sale or other application or disposition of or with respect to the
Equipment or any part of any of the Equipment or interest therein;
(iii) the rental payments, receipts of earnings arising from any
Unit of Equipment or payable pursuant to the Lease;
(iv) the Equipment Notes, their issuance, acquisition, transfer
or refinancing or (as between the Lessee and any Tax Indemnitee other
than the Indenture Estate) the payment of principal, interest or
Make-Whole Amount or other amounts with respect thereto;
(v) the Operative Agreements or otherwise in connection with the
transactions contemplated thereby; and
(vi) any acquisition, issuance, transfer or holding of Equipment
Notes or Pass Through Certificates being deemed to result in a "prohibited
transaction" under ERISA or the Code.
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(c) Taxes Excluded. The indemnity provided for in paragraph (b) above
shall not extend to any of the following:
(i) In the case of the Owner Participant, the Owner Trustee or
the Trust Estate, Income Taxes (as defined in Section 7.1(l), below)
imposed by (A) the United States federal government, other than any United
States federal Income Taxes imposed by way of deduction or withholding upon
or with respect to payments on any Equipment Notes, together with any
penalties, fines, additions to Tax or interest related thereto (provided
that this subclause (A) shall not be construed as preventing Lessee from
recouping any such deduction or withholding from the Indenture Trustee, the
Pass Through Trustee or any Certificateholder or as giving to the Indenture
Trustee a right to indemnification by the Lessee for Taxes payable pursuant
to Section 6.09 of the Indenture), (B) any state or local tax jurisdiction
in the United States or any foreign government or any political subdivision
or taxing authority thereof or any territory or possession of the United
States or by any international authority (unless such Tax Indemnitee would
not have been subject to tax in such jurisdiction but for this transaction
(including the operation or presence of any Unit (or part thereof)) or the
Lessee making payment from or performing other actions in such jurisdiction
contemplated by the Operative Agreements)), provided, however, that for
purposes of this clause (B), the determination of whether any such Tax
Indemnitee is deemed to be subject to tax in any state or local tax
jurisdiction but for this transaction under this clause (B), shall be made
by treating each corporation which is a Tax Indemnitee on a stand-alone
basis and without regard to any Affiliates, related Tax Indemnitees or
other entities, except to the extent that such Tax Indemnitee files
combined or consolidated tax returns in such jurisdiction, with one or more
Affiliates which are also Tax Indemnitees, or (C) any government or
jurisdiction described in (A) or (B) of this clause (i) because the
applicable Tax Indemnitee is not a resident of the United States for tax
purposes.
(ii) Taxes imposed with respect to any period after the earliest
of (x) the return of possession of the Equipment to the Owner Participant
or the placement of the Equipment in storage at the request of the Owner
Participant, in either case pursuant to Section 6 of the Lease, (y) the
termination of the Lease Term pursuant to Section 22.1 or Section 22.3 of
the Lease with respect to all the Equipment, or (z) the discharge in full
of the Lessee's obligation to pay the Termination Value or the Stipulated
Loss Value and all other amounts due, if any, under Section 10 or 11.2 of
the Lease, as the case may be, with respect to the Equipment; provided that
the exclusion set forth in this clause (ii) shall not apply to Taxes to the
extent such Taxes relate to events occurring or matters arising prior to or
simultaneously with such time;
(iii) As to any Tax Indemnitee, Taxes to the extent caused by any
misrepresentation or breach of warranty or covenant under the Operative
Agreements or by the gross negligence or willful misconduct of such Tax
Indemnitee;
(iv) As to any Tax Indemnitee, Taxes which become payable as a
result of (x) a voluntary sale, assignment, transfer or other disposition
by such Tax Indemnitee of all or any portion of its interest in the
Equipment or any part thereof, the Trust Estate
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or any of the Operative Agreements or rights created thereunder or (y) a
disposition by such Tax Indemnitee of all or any portion of its interest in
the Equipment or any part thereof, the Trust Estate or any of the Operative
Agreements or rights created thereunder in connection with a bankruptcy or
similar proceeding involving such Tax Indemnitee, other than as a result of
the replacement, sublease, substitution, modification or improvement of the
Equipment or any part thereof or a disposition which occurs as the result
of the exercise of remedies for a Lease Event of Default, any disposition
which occurs during the continuance of a Lease Event of Default or a
purchase of any Unit pursuant to the Lease; provided, that, notwithstanding
the foregoing, Lessee shall not be obligated to indemnify any 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 Tax Indemnitee or any Taxes imposed as a result of the status of
the Tax Indemnitee as other than a resident of the United States for tax
purposes;
(v) Taxes which result from the Owner Trustee's engaging on
behalf of the Trust Estate in transactions unrelated to those permitted or
contemplated by the Operative Agreements;
(vi) As to any Tax Indemnitee, Taxes to the extent they exceed
the Taxes that would have been imposed had the initial Tax Indemnitee not
transferred, sold or otherwise disposed of any interest held by such Tax
Indemnitee pursuant to any of the Operative Agreements;
(vii) Taxes imposed on the Bank based on the Bank's fee for
services as Owner Trustee under the Trust Agreement;
(viii) Taxes on any item of "tax preference" or any "minimum tax;"
(ix) Taxes imposed by any jurisdiction to the extent that such
Taxes would have been imposed on the Tax Indemnitee for activities in such
jurisdiction unrelated to the transactions contemplated in the Operative
Agreements; and
(x) Taxes imposed on the Tax Indemnitee or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Tax Indemnitee as the
result of any prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code, occurring with respect to the
acquisition or holding of any Pass Through Certificate (or any funded
participation therein) involving the exercise of discretion or control by
such Tax Indemnitee but only to the extent the Tax Indemnitee knew or
should have known in the case of a purchase, or had actual knowledge in the
case of a holding, that the transaction was a prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975(c)(1) of the
Code.
(d) Other Obligations. Notwithstanding any other provision anywhere
contained in the Operative Agreements, it is understood that except as provided
in Section 6.2, with respect
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to the Owner Participant, and Section 6.3, with respect to the Owner Trustee or
the Bank, the Owner Participant, the Owner Trustee and the Bank shall have no
obligations with respect to Taxes or other charges to the Indenture Trustee or
the Loan Participant imposed under Section 7.16 of the Pass Through Trust
Agreement or Section 6.09 of the Indenture, or otherwise.
(e) Payments to Lessee.
(i) If any Tax Indemnitee shall realize a Tax benefit (net of
any Tax detriment not otherwise paid or indemnified against by the Lessee
hereunder) as a result of any Taxes paid or indemnified against by the
Lessee under this Section 7.1 (whether by way of deduction, credit,
allocation or apportionment or otherwise), such Tax Indemnitee shall pay to
the Lessee an amount equal to the amount of such Tax benefit, increased by
the Tax Indemnitee's additional saved Taxes attributable to the payment
being made to the Lessee hereunder.
(ii) Upon receipt by a Tax Indemnitee of a refund or credit of
all or part of any Taxes paid or indemnified against by the Lessee, such
Tax Indemnitee shall pay to the Lessee an amount equal to the amount of
such refund plus any interest received by or credited to such Tax
Indemnitee with respect to such refund increased or decreased, as the case
may be, by the Tax Indemnitee's net additional or saved taxes attributable
to the receipt of such amounts from the taxing authority and the payment
being made to the Lessee hereunder.
(iii) To the extent the amount of a payment by the Tax Indemnitee
to the Lessee under clause (i) or (ii) above would exceed the amount of all
prior payments by the Lessee to the Tax Indemnitee pursuant to paragraph
(b) less the amount of all prior payment by the Tax Indemnitee pursuant to
this paragraph (e), such excess shall not be paid but instead shall be
carried forward and shall reduce the Lessee's obligations to make
subsequent payments under paragraph (b) to the Tax Indemnitee.
(iv) The Tax Indemnitee shall in good faith file its Tax returns
and deal with taxing authorities to seek and claim any such tax benefits or
refunds.
(f) Procedures. Lessee will determine and timely pay to the applicable
taxing authority all Taxes which it is obligated to indemnify under this Section
7.1, except those that are being contested pursuant to Section 7.1(g). Any
amount payable to a Tax Indemnitee pursuant to paragraph (b) shall be paid
within 30 days after receipt of a written demand therefor from such Tax
Indemnitee accompanied by a written statement describing in reasonable detail
the basis for such indemnity and the computation of the amount so payable,
provided that such amount need not be paid prior to (i) the date on which such
Taxes are due, or (ii) in the case of amounts which are being contested pursuant
to paragraph (g) hereof, the time such Taxes are due and payable pursuant to the
resolution of such contest (including all appeals). Any amount payable to the
Lessee pursuant to paragraph (e) shall be paid within 30 days after the Tax
Indemnitee realizes a net tax benefit or receives a refund giving rise to a
payment under paragraph (e), and shall be accompanied by a written statement by
the Tax Indemnitee setting
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forth in reasonable detail the basis for computing the amount of such payment.
Within 15 days following the Lessee's receipt of any computation from the Tax
Indemnitee, the Lessee may request that the accounting firm that regularly
prepares the certified financial statements of the Tax Indemnitee determine
whether such computations of the Tax Indemnitee are correct. Such accounting
firm shall be requested to make the determination contemplated by this paragraph
(f) within 30 days of its selection. In the event such accounting firm shall
determine that such computations are incorrect, then such firm shall determine
what it believes to be the correct computations. The Tax Indemnitee shall
cooperate with such accounting firm and supply it with all information necessary
to permit it to accomplish such determination on a confidential basis. The
computations of such accounting firm shall be final, binding and conclusive upon
the parties and the Lessee shall have no right to inspect the books, records or
tax returns of the Tax Indemnitee to verify such computation or for any other
purpose. All fees and expenses of the accounting firm payable under this Section
7.1(f) shall be borne by the Lessee except that if such accounting firm
determines that the Tax Indemnitee's computations were incorrect and understated
the payments owing to the Lessee or overstated the payments owing to such Tax
Indemnitee by the greater of $5,000 or 10% or more of the correct amount as
determined by such accounting firm, then the Tax Indemnitee shall bear the fees
and expenses of such accounting firm.
(g) Contest. If a written claim is made against a Tax Indemnitee for Taxes
with respect to which the Lessee may be liable for indemnity hereunder, the Tax
Indemnitee shall give the Lessee prompt notice in writing of such claim (and in
any event within 30 days after its receipt) and shall promptly furnish the
Lessee with copies of the claim and all other writings received from the taxing
authority relating to the claim; provided however, that the failure of such Tax
Indemnitee to timely provide such written notice shall not affect the Lessee's
obligations under this Section 7.1(g) except to the extent that the same
materially adversely affects the ability of the Lessee to contest such Taxes.
The Tax Indemnitee shall not pay such claim prior to the 30 days after providing
the Lessee with such written notice, unless required to do so by law or unless
deferral of payment would cause adverse consequences to the Tax Indemnitee. The
Tax Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if requested in writing by the Lessee, contest (including pursuing all
appeals permitted hereby) in the name of the Tax Indemnitee (or, if requested by
the Lessee and permissible as a matter of law, in the name of the Lessee), or
shall permit the Lessee to contest, if the conduct of the contest cannot
adversely affect the Tax liability of the Tax Indemnitee, in either the name of
the Lessee, or with the Tax Indemnitee's consent in the name of the Tax
Indemnitee, the validity, applicability or amount of such Taxes by,
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if protest is
necessary and proper;
(iii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; or
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(iv) taking such other reasonable action as is reasonably
requested by the Lessee from time to time.
provided, however, that to the extent the contest is carried on in the name of
the Lessee or an Affiliate, or is brought in the name of a Tax Indemnitee and
the claim for Taxes involves only Taxes for which the Lessee is or will be
liable hereunder, such contest shall be undertaken by the Lessee at the Lessee's
expense (unless at any time the Tax Indemnitee determines in its reasonable good
faith judgment that based upon the Lessee's conduct of such contest the Lessee's
continued control of such contest is reasonably likely to have a material
adverse impact on the Tax Indemnitee) and at no-after-tax cost to any Tax
Indemnitee, but if such contest would involve any other Taxes or any Taxes in
the nature of a tax on net income then such Tax Indemnitee may in its sole
discretion control such contest (including selecting the forum for such
contest). In no event shall any Tax Indemnitee be required or the Lessee be
permitted to contest any Taxes for which the Lessee is obligated to indemnify
pursuant to this Section unless: (i) such Lessee shall have acknowledged 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 Indemnitee or the
Lessee, as the case may be, shall not prevail in the contest of such claim; (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 Lessee's sole expense, to the effect that a reasonable basis
consistent with ABA Opinion 85-352 exists for contesting such claim or, in the
event of an appeal, that it is more likely than not that an appellate court will
reverse or substantially modify the adverse determination (and provided that no
appeal shall be required to the United States Supreme Court); (iii) the Lessee
shall have agreed to pay such Tax Indemnitee on demand (and at no after-tax cost
to any Tax Indemnitee) all reasonable costs and expenses that such Tax
Indemnitee actually incurs in connection with contesting such claim (including,
without limitation, all costs, expenses, reasonable legal and accounting fees,
disbursements, penalties, interest and additions to the Taxes); (iv) no Lease
Event of Default shall have occurred and shall have been continuing; (v) such
Tax Indemnitee shall have determined that the action to be taken will not result
in any risk of imposition of criminal sanctions or penalties or material civil
liability or danger of sale, forfeiture or loss of, or the creation of any Lien
(except if such Lessee shall have adequately bonded such Lien or otherwise made
provision to protect the interests of such Tax Indemnitee in a manner reasonably
satisfactory to such Tax Indemnitee) on the Equipment or any portion thereof or
any interest therein; (vi) if such contest shall be conducted in a manner
requiring the payment of the claim, the Lessee shall have paid the amount
required (at no after-tax cost to such Tax Indemnitee); and (vii) the amount of
such claims alone, or, if the subject matter thereof shall be of a continuing or
recurring nature, when aggregated with identical potential claims with respect
to this transaction shall be at least $25,000. 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 the Lessee
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 contained in this Section to the contrary, 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 or the
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Lessee, as the case may be, 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 Lessee, reasonably acceptable to the Tax
Indemnitee, 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.
In no event will a Tax Indemnitee be required to contest any Taxes if such
Tax Indemnitee shall waive its right to an indemnity under this Section 7.1.
Unless a Tax Indemnitee obtains the consent of the Lessee, which consent shall
not be unreasonably withheld (provided, however, the Lessee shall not be
considered to have unreasonably withheld such consent because of the Lessee's
consideration of the effects of such settlement on issues of the Lessee which
are not the subject of such claim), the settlement of any contest required under
Section 7.1 by a Tax Indemnitee shall constitute a waiver by such Tax Indemnitee
of its rights to indemnification hereunder as to such contest and as to any
future claims for which the Lessee's right to contest shall have been precluded
by such Tax Indemnitees' failure to contest.
(h) For purposes of this Section 7.1 and Section 7.2, in determining the
order in which any Tax Indemnitee utilizes withholding or other foreign taxes as
a credit against such Tax Indemnitee's United States income taxes, such Tax
Indemnitee shall be deemed to utilize (i) first, all foreign taxes other than
those described in clause (ii) below; provided, however, that such other foreign
taxes which are carried back to the taxable year for which a determination is
being made (other than any carrybacks which are known to be available at the
time such determination is made) pursuant to such clause (i) shall be deemed
utilized after the foreign taxes described in clause (ii) below, and (ii) then,
on a pro rata basis, all foreign taxes (including fees, taxes and other charges
hereunder) with respect to which such Tax Indemnitee is entitled to obtain
indemnification pursuant to an indemnification provision contained in any lease,
loan agreement, financing document or participation agreement (including the
Lease).
(i) In the event any reports with respect to 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 items of
Equipment, such reports shall be prepared and filed in such manner as to show as
required the interests of each Tax Indemnitee in such item 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
reasonably 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.
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(j) The provisions of this Section 7.1 shall continue in full force and
effect, notwithstanding the expiration or termination of any Operative
Agreement, until all obligations hereunder have been met and all liabilities
hereunder paid in full.
(k) Any amount payable to the Lessee pursuant to the terms of this Section
7.1 shall not be paid or retained by the Lessee if at the time of such payment
or retention a Lease Default relating to Sections 14(a), 14(b), 14(g) or 14(h)
or a Lease Event of Default shall have occurred and be continuing. Such
otherwise paid or retained amounts may be applied by the related Tax Indemnitee
to satisfy the obligations of the Lessee under the Operative Agreements. At such
time as there shall not be continuing any such Lease Default or Lease Event of
Default, such amount shall be paid to the Lessee without interest to the extent
not previously applied in accordance with the preceding sentence.
(l) For purposes of this Section 7.1, the term "Income Tax" means any Tax
based on or measured by or with respect to gross, adjusted gross or net income
(including without limitation, capital gains 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
sales, use, rental, value-added (other than a value-added tax which is a tax or
is in the nature of a tax on net or adjusted gross income), excise, or property
taxes shall not constitute an Income Tax).
Section 7.2. General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this Section 7.2, "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, as defined herein, or any Unit and, except as otherwise
expressly provided in this Section 7.2, 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 this Section 7.2,
"Indemnified Person" means the Owner Participant, the Bank, in its individual
capacity and as Owner Trustee, the Indenture Trustee and the Pass Through
Trustee, and each of their respective Affiliates, 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 Bank, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee,
as applicable, together with the Owner Participant, the Bank, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee, as the case may be, being
referred to herein collectively as the "Related Indemnitee Group" of the Owner
Participant, the Indenture Trustee, the Bank, the Owner Trustee and the Pass
Through Trustee, respectively).
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(c) Claims Indemnified. Whether or not any Unit is accepted under the
Lease, or a closing occurs with respect thereto, and subject to the exclusions
stated in subsection (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):
(i) this Agreement or any other Operative Agreement or any of
the transactions contemplated hereby and thereby or any Unit or the
acquisition, ownership, lease, operation, possession, modification,
improvement, abandonment, use, non-use, maintenance, sublease,
substitution, control, repair, storage, alteration, transfer,
transportation or other application or disposition, return, overhaul,
testing, servicing, replacement or registration of any Unit (including,
without limitation, injury, death or property damage of passengers,
shippers or others, and environmental control, noise and pollution
regulations, or the discharge, spillage, release or escape of Hazardous
Substances or damage to the environment (including, without limitation,
clean-up costs, response costs, costs of corrective actions and natural
resource damages)) whether or not in compliance with the terms of the
Lease, or by any of the commodities, items or materials from time to time
contained in any Unit, whether or not in compliance with the terms of the
Lease, or by the inadequacy of any Unit or deficiency or defect in any Unit
or by any other circumstances in connection with any Unit, or by the
performance of any Unit or any risks relating thereto, or by any
interruption of service, loss of business or anticipated profits or
consequential damages;
(ii) the construction, manufacture, financing, refinancing,
design, purchase, acceptance, rejection, delivery, non-delivery or
condition of any 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, Lessee under any of the Operative Agreements, or the falsity
of any representation or warranty of the Lessee in any of the Operative
Agreements or in any document or certificate delivered in connection
therewith other than representations and warranties in the Tax Indemnity
Agreement;
(iv) the offer, sale, delivery, refunding or refinancing of any
Equipment Notes or Pass Through Certificates or any interest in the Trust
Estate (including, without limitation, any claim arising out of the
Securities Act, the Securities Exchange Act of 1934, as amended, or any
other applicable law or at common law or otherwise relating to securities);
(v) any strict liability or negligence in tort or violation of
law, rule, regulation or order by the Lessee or any sublessee or their
respective directors, officers, employees, agents or servants; and
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(vi) any issuance, transfer or holding of Equipment Notes or Pass
Through Certificates being deemed to result in a "prohibited transaction"
under ERISA or the Code.
(d) Lessee's Claims Excluded. The following are excluded from the
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 (A) in the case of the exercise by the
Lessee of a purchase option with respect to such Unit under Section 22.1
or 22.3 of the Lease, the exercise by the Lessee of an early termination
option with respect to such Unit under Section 10 of the Lease, the
exercise by the Lessee of its right to purchase the Equipment under
Section 6.9 of this Agreement, the occurrence of an Event of Loss with
respect to such Unit under Section 11 of the Lease, or the election to
replace such Unit under Section 8.1(b), 8.3, 8.4 or 9.1 of the Lease, the
last to occur of (x) the payment of all amounts due from the Lessee in
connection with any such event, (y) the release of the Lien of the
Indenture on such Unit, and (z) legal transfer of title to such Unit to
any Person other than Lessor, except in the case of a retention of any
Unit by Lessor pursuant to the terms and provisions of Section 10.3 of the
Lease, and in the case of any such retention, upon the effective date of
the termination of the Lease Term with respect to such Unit retained by
Lessor pursuant to Section 10.3 or (B) in all other cases (except in any
case where remedies are being exercised under Section 15 of the Lease),
the last 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, (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 6.3(c) of the Lease, the
date of return thereof for the purpose of this clause (B) shall be the
last day of the Storage Period), and (z) the release of the Lien of the
Indenture on such Unit, except, in any instance referenced in the
foregoing subsection (i), to the extent such Claim is fairly attributable
to acts or events occurring prior to any such date or occurrence;
(ii) Claims which are Taxes, whether or not the Lessee is
required to indemnify therefor under Section 7.1 hereof or the Tax
Indemnity Agreement;
(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 (y) any breach of any covenant to be performed
by such Indemnified Person under any of the Operative Agreements, or the
falsity of any representation or warranty of such Indemnified Person in any
of the Operative Agreements or in a document or certificate delivered in
connection therewith;
(iv) any Claim 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 Default or Lease Event of Default, (B)
the transfer of the Equipment or any Owner Participant's interest in the
Equipment to the Lessee, (C) the transfer of the Equipment to a third party
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pursuant to Lessee's election to terminate the Lease or (D) any transfer of
the Equipment pursuant to Section 6.9;
(v) with respect to any particular Indemnified Person, any Claim
resulting from the imposition of any Lessor's Lien attributable to such
Indemnified Person; or
(vi) with respect to any particular Indemnified Person, any
Claim, to the extent the risk thereof has been assumed by such Indemnified
Person in connection with the exercise by such Indemnified Person of the
right of inspection granted under Section 6.1, inspection or restenciling
under Section 6.1 or inspection under Section 13.1 of the Lease.
(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 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 to the extent that failure to give notice of any action,
suit or proceeding against such Indemnified Person shall have a material adverse
affect on Lessee's ability to defend such Claim or recover proceeds under any
insurance policies maintained by Lessee hereunder. The Lessee shall, after
obtaining knowledge thereof, promptly notify each Indemnified Person of any
indemnified Claim affecting such 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, the defense of such claim
or liability; provided that the Lessee 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.
Upon the request of the Lessee, the Indemnified Person which is the subject of
any Claim will cooperate in all reasonable respects, at the expense of the
Lessee, in the defense thereof.
Notwithstanding any of the foregoing to the contrary, the Lessee shall not
be entitled to control and assume responsibility for the defense of such claim
or liability if (1) a Lease Default or 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
Permitted Lien or a Lien which is adequately bonded to the satisfaction of such
Indemnified Person) on, any Unit, (3) the amounts involved, in the good faith
opinion of such Indemnified Person, are likely to have a materially adverse
effect on the business of such Indemnified Person other than the ownership,
leasing and financing of the Equipment, (4) 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, (5) such claim or liability involves the possibility of criminal
liability to such
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Indemnified Person, or (6) Lessee shall not have acknowledged its obligation to
indemnify such Indemnified Person with respect to all liabilities in connection
with such contest. In the circumstances described in clauses (1) - (6), 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, 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 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 proceeding with respect thereto.
(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 in full with respect to
the transaction or event giving rise to such Claim. So long as no Lease Default
under Section 14(a), (b), (g) or (h) of the Lease or no Lease Event of Default
shall have occurred and be continuing, should an Indemnified Person receive any
refund, in whole or in part, with respect to any Claim paid in full 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.
(h) Waiver of Certain Claims. The Lessee hereby waives and releases any
Claim now or hereafter existing against any Indemnified Person arising out of
death or personal injury to personnel of the Lessee, pollution incidents, loss
or damage to property of the Lessee, or the loss of profits or use of any
property of the Lessee, which may result from or arise out of the condition, use
or operation of the Equipment during the Lease Term, including, without
limitation, any latent or patent defect whether or not discoverable.
(i) No Guaranty. The general indemnification provisions of this Section
7.2 do not constitute a guaranty by the Lessee that the principal of, interest
on or any amounts payable with respect to the Equipment Notes will be paid.
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 or any permitted sublessee of
the Equipment.
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SECTION 9. SUCCESSOR INDENTURE TRUSTEE.
In the event that the Indenture Trustee gives notice of its resignation
pursuant to Section 8.02 of the Trust Indenture, the Owner Trustee shall
promptly appoint a successor Indenture Trustee reasonably acceptable to the
Lessee and the Pass Through Trustee.
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
Trust Indenture) that it shall not unreasonably withhold its consent to any
consent requested of the Owner 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 Default or Lease Event of
Default shall have occurred and be continuing, the Lessee shall have the right
not more than twice during the Lease Term to request the Owner Participant and
the Owner Trustee to effect an optional prepayment of all, and not less than
all, of the Equipment Notes pursuant to Section 2.10(e) of the Indenture as part
of a refunding or refinancing. The Owner Participant agrees to cooperate in good
faith with the Lessee in effecting or arranging any such refunding or
refinancing and, as soon as practicable after receipt of such request, the Owner
Participant and the Lessee will enter into good faith negotiations in order to
document 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 the Remaining
Weighted Average Life of said Equipment Notes by more than three months, (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 the 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 in
form and substance reasonably satisfactory to the Owner Participant 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
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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) amounts payable in
respect of Stipulated Loss Value, Early Purchase Price, Basic Term Purchase
Price and Termination Value 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
clause (a) 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 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 increase the obligations or impair the rights of
the Owner Participant under the Operative Agreements without the consent of the
Owner Participant;
(d) 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 the Lessee shall provide
satisfactory indemnity to the Owner Trustee and Owner Participant with respect
thereto;
(e) unless otherwise agreed by the Owner Participant, the Lessee shall pay
to the Owner Trustee as Supplemental Rent an amount equal to the Make-Whole
Amount or other premium, if any, payable in respect of Equipment Notes
outstanding on the Refunding Date, and all reasonable fees, costs, expenses of
such refunding or refinancing;
(f) the Lessee shall give the Indenture Trustee and the Pass Through
Trustee not less than 25 days prior written notice of the Refunding Date;
(g) the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee shall have received (i) such opinions of counsel as
they may reasonably request concerning compliance with the Securities Act 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 satisfactory to them, as they may reasonably request in connection
with compliance with the terms and conditions of this Section 10.2; and
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59
(h) all necessary authorizations, approvals and consents shall have been
obtained;
provided, however, that the Lessee will, to the extent then known, promptly
provide to the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee substantially final terms and conditions of any such
refunding or refinancing within 20 days prior to the execution and delivery of
the documents contemplated hereunder in connection therewith; and provided,
further, that (v) no refunding or refinancing of the Equipment Notes will be
permitted unless within 20 days after receipt by the Owner Participant of a
request from the Lessee to effect a refunding or refinancing pursuant to this
Section 10.2 and of information regarding the terms of such refunding or
refinancing necessary to render the opinion referred to below, the Lessee has
provided the Owner Participant with (a) a tax opinion from ▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ or other independent tax counsel reasonably acceptable to the Owner
Participant to the effect that there will be no adverse federal income tax
consequences for the Owner Participant as a result of such refunding or
refinancing and (b) an agreement to indemnify the Owner Participant against any
adverse federal income tax consequence suffered as a result of such refinancing
or refunding; alternatively, in the event such tax opinion cannot be provided
and the Lessee wishes to effect such refunding or refinancing, the Lessee will,
at such time as the Lessee receives written notice from the Owner Participant
that the Owner Participant has filed any income tax return wherein such adverse
income tax consequences are recognized, make an indemnity payment to the Owner
Participant in the incremental amount of such adverse tax consequence (on an
After-Tax Basis) attributable to such refunding or refinancing; (w) 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; (x) no refunding or refinancing of the Equipment Notes will be
permitted if it shall cause the Owner Participant to account for the transaction
contemplated hereby as other than a "leveraged lease" under the Financial
Accounting Standards Board ("FASB") Statement No. 13, as amended (including any
amendment effected by means of the adoption by FASB of a new statement in lieu
of FASB Statement No. 13); (y) no refunding or refinancing of the Equipment
Notes may, without the consent of the Owner Participant, constitute assets of
any "employee benefit plan" (as defined in Section 3(3) of ERISA) or any other
entity subject to Section 4975 of the Code other than a "governmental plan" or
"church plan" (as defined in Section 3(32) of ERISA) organized in a jurisdiction
not having prohibitions on transactions with such governmental plan or church
plan substantially similar to those contained in Section 406 of ERISA or Section
4975 of the Code, unless such refunding or refinancing is effected in connection
with a public offering in reliance on the underwriter's exemption; and (z) in no
event, in connection with or after giving effect to such refunding or
refinancing shall the Owner Participant be exposed to any unindemnified non-de
minimis loss, expense or risk (including tax risk) to which it is not exposed
prior to 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.
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60
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 overnight mail or
courier service, (ii) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(iii) 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 clauses (i) or (ii) 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:
If to the Lessee:
Union Tank Car Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
(UTC Trust No. 1998-A)
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Owner Trustee:
Wilmington Trust Company
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
the Owner Participant at the
address set forth below
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61
If to the Owner Participant:
FNBC Leasing Corporation
One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Contract Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: UTC Trust No. 1998-A
If to the Indenture Trustee or the Pass Through Trustee:
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Indenture Trust/▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 Debt. Nothing contained herein or in the
Lease (except, in the context of clause (i) below, for the provisions of Section
6.3 thereof), the Trust Indenture, the Trust Agreement, the Pass Through Trust
Agreement, 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 to the Owner Trustee, the
Owner Participant, the Indenture Trustee or the Loan Participant that the
Equipment will have any residual value or useful life, or (ii) a guarantee by
the Indenture Trustee or the Lessee of payment of the principal of, Make-Whole
Amount, 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 issued and delivered pursuant to this Agreement or
the Indenture. 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.
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62
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 in all respects
governed by and construed in accordance with the laws of the State of Illinois
including all matters of construction, validity and performance; provided,
however, that the parties hereto shall be entitled to all rights conferred by
any applicable federal statute, rule or regulation.
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.
(a) Liabilities of Participants. Neither the Indenture Trustee, the Owner
Trustee nor any Participant shall have any obligation or duty to the Lessee, 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, 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 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 direction is expressly permitted
hereby.
(b) No Recourse to the Owner Trustee. 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(b), all representations, warranties and undertakings of
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63
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) the Bank shall not be liable in its individual capacity for any
breach thereof, provided, however, that the Bank shall be liable to the parties
hereto to the extent of its gross negligence or willful misconduct, or for
breach of its covenants, representations and warranties expressly set forth
herein, to the extent covenanted or made in its individual capacity; and nothing
in this Section 10.13(b) shall be construed to limit in scope or substance those
representations and warranties of the Bank made expressly in its individual
capacity expressly 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.
Section 10.14. Maintenance of Non-Recourse Debt. The parties hereto agree
that if the Owner Trustee or the Trust Estate becomes a debtor subject to the
reorganization provisions of the Bankruptcy Code, 11 U.S.C. ss.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
or the Trust Estate 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 or the Owner Participant, as the
case may be, is required, by reason of the Owner Trustee or the Owner
Participant, as the case may be, 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 Agreements and (c) the Pass Through Trustee and/or the Indenture
Trustee actually receives any Excess Amount (as hereinafter defined) which
reflects any payment by the Owner Trustee or the Owner Participant, as the case
may be, on account of (b) above, then the Pass Through Trustee and/or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant, as the case may be, 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 Pass Through
Trustee or the Indenture Trustee if the Owner Trustee or the Owner Participant,
as the case may be, had not become subject to the recourse liability referred to
in (b) above.
Section 10.15. Ownership of and Rights in Units. The sale of the Units
contemplated hereby is intended for all purposes to be a true sale of all of the
Lessee's right, title and interest in and to the Units to the Owner Trustee,
which shall be the legal owner thereof. Upon consummation of the sale and
leaseback transactions contemplated hereby, the Lessee's interest in the 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 the Units.
The rights of the Indenture Trustee in and to the 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 the
Units except as a beneficiary of the security interest 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.
* * * * *
- 59 -
64
In Witness Whereof, the parties hereto have caused this Participation
Agreement to be executed and delivered, all on the date first above written.
LESSEE:
UNION TANK CAR COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
OWNER TRUSTEE:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee
under the Trust Agreement
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Financial Services Officer
OWNER PARTICIPANT:
FNBC LEASING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
INDENTURE TRUSTEE:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK, not
in its individual capacity except
as expressly provided herein but
solely as Indenture Trustee
By: /s/ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
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65
PASS THROUGH TRUSTEE:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK, not
in its individual capacity except
as expressly provided herein but
solely as Pass Through Trustee
By: /s/ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
- 61 -
66
EXHIBIT A
CERTIFICATE OF INSURANCE BROKER CONFIRMING INSURANCE COVERAGE
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
individually and as Pass Through Trustee
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
individually and as Indenture Trustee
WILMINGTON TRUST COMPANY,
individually and as Owner Trustee
FNBC LEASING CORPORATION,
as Owner Participant
Re: Union Tank Car Company Equipment Lease Agreement (L-15)
with Wilmington Trust Company
Gentlemen:
We hereby certify that the Lessee is insured under various policies, effective
January 1, 1998 to January 1, 1999, that provide primary and excess public
liability coverage for personal injury and property damage, subject to the
policy terms, conditions and exclusions. We further certify that said policies:
a. afford limits of liability as indicated on the attached
AppendixE"A" excess of various underlying insurance or retained amounts and
subject to aggregates where applicable;
b. are in full force and effect and all premiums due with respect
to said policies have been paid in full; and
c. comply with all of the requirements listed on the attached
AppendixE"B".
We hereby agree on each of the times specified in SectionE12.4 of the Lease to
issue a certificate (1)Edescribing in reasonable detail the insurance carried by
the Lessee relating to the Equipment and (2)Econfirming that all premiums due
thereon have been paid.
Capitalized terms not otherwise defined herein or in the exhibits attached
hereto have the meaning assigned thereto in the Lease.
Best regards,
[Name]
[Title]
67
APPENDIX "A"
UNION TANK CAR COMPANY
PRIMARY AND EXCESS LIABILITY PROGRAM
JANUARY 1, 1998 TO JANUARY 1, 1999
COMMERCIAL GENERAL LIABILITY - OCCURRENCE BASIS
National Union Fire Insurance Company CGI
Policy #RMGL 113 5562 $1,000,000 General
Aggregate Limit
$2,000,000
Products/Completed
Operations Aggregate
Limit $1,000,000
Personal & Advertising
Injury Limit $1,000,000
Each Occurrence Limit
UMBRELLA LIABILITY - OCCURRENCE BASIS
▇▇▇▇▇▇▇-Konzern Allgemeine Versicherungs-A.G. $40,000,000 Each
Policy #LK 980 2140 Occurrence
and Aggregate as
Applicable Excess of
$25,000,000 Each Claim
and Aggregate as
Applicable
EXCESS LIABILITY - OCCURRENCE BASIS
American International Specialty Lines $35,000,000 Each Claim
Insurance Company and Aggregate as
Policy #818 9836 Applicable, Excess of
$40,000,000 Each Claim
and Aggregate as
Applicable, In Turn
Excess of $25,000,000
Each Claim and
Aggregate as Applicable
68
APPENDIX "B"
INSURANCE REQUIREMENTS
The following applies to the policies indicated on Appendix "A":
1. The policies are in such amounts and for such risks and with such insurance
companies and subject to such self-insurance not less comprehensive in
amounts and against risks customarily insured against by Lessee in respect
of other similar equipment owned or leased by it:
2. The policies:
(i) provide that if any such insurance is cancelled or terminated
(other than for normal expiration) for any reason whatsoever, the
Lessor, Indenture Trustee and Owner Participant shall receive 30
days prior notice of such cancellation or termination,
(ii) name the Owner Participant, Lessor (both as lessor of the Equipment
and in its individual capacity) and the Indenture Trustee as
additional insured as their interests may appear (but only as
respects liability arising out of the Operative Agreements or the
Equipment),
(iii) provide that in as much as such public liability insurance policies
cover more than one insured, all terms, conditions, insuring
agreements and endorsements, with the exceptions of limits of
liability and liability for premiums, commissions, assessments or
calls, operate in the same manner as if there were a separate
policy or policies covering each insured,
(iv) provide that, as a result of Lessee's waiver of subrogation
contained in Section 12.3 (d) of the Lease, the insurer shall have
no rights of subrogation against the Owner Participant, Lessor
(both as lessor of the Equipment and in its individual capacity)
and the Indenture Trustee,
(v) provide that neither the Owner Participant, Lessor (both as lessor
of the Equipment and in its individual capacity) nor the Indenture
Trustee shall have any liability or obligation for insurance
premiums whether for coverage before or after cancellation or
termination of any such policies,
(vi) shall be primary without contribution from any similar insurance
maintained by Owner Participant, Lessor or Indenture Trustee.
The following extension has been requested from the underwriters, but unless
otherwise noted, has not as yet been granted:
69
(vii) Such policies shall not invalidate coverage as to the Owner
Participant, Lessor (as lessor of the Equipment and in its
individual capacity) and the Indenture Trustee due to any action or
inaction of the Lessee or any other Person (other than the Owner
Participant, the Lessor or the Indenture Trustee, but only in
respect to their respective coverages). The ▇▇▇▇▇▇▇/AISLIC policies
contain such a provision.
70
EXHIBIT B
FORM OF GUARANTY
[Name of Guarantor]
Dated as of ________ ___,
To: Each of the Institutions listed
on Schedule A attached hereto and
their successors and permitted assigns
Gentlemen:
Reference is hereby made to the Participation Agreement (UTC Trust No.
1998-A) (L-15) dated March __, 1998 (as amended, modified or supplemented from
time to time, the "Participation Agreement"), among Union Tank Car Company, as
Lessee; Wilmington Trust Company, as Owner Trustee; FNBC Leasing Corporation, as
Owner Participant; and ▇▇▇▇▇▇ Trust and Savings Bank, as Indenture Trustee and
as Pass Through Trustee. Capitalized terms used herein without definition which
are defined in the Participation Agreement are used herein with the respective
meanings given such terms in the Participation Agreement.
In connection with the transfer by the Owner Participant of _____% of its
Beneficial Interest to ___________________ (the "Subsidiary"),
___________________ (the "Guarantor") hereby represents, warrants, covenants and
agrees as follows:
1. Representations and Warranties. The Guarantor owns [all] of the issued
and outstanding shares of capital stock of the Subsidiary. The Guarantor is duly
incorporated and validly existing in good standing under the laws of the State
of _____________________. The execution, delivery and performance of this
Agreement are within the Guarantor's corporate powers and have been duly
authorized. This Agreement constitutes a legal, valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its terms
except as such enforceability may be limited by insolvency, reorganization,
receivership, liquidation or similar laws and equitable principles affecting the
rights of creditors generally. The execution, delivery and performance of this
Agreement does not and will not conflict with or result in any violation of or
default under any provision of the Certificate of Incorporation of the Guarantor
or any indenture, contract or other instrument to which the Guarantor is a party
or to which it or any of its properties are bound, or any law, rule or
regulation to which the Guarantor is a party or to which it or any of its
properties are bound, or any law, rule or regulation to which the Guarantor is
subject or violate any judgment or order applicable to the Guarantor or require
the creation or imposition of any Lien on any of the properties or revenues of
the Guarantor pursuant to any requirement of law or contractual obligation of
the Guarantor
71
and does not require any consent, approval or authorization of, or registration,
or filing with, any governmental authority. The Guarantor has, as of the date
hereof a net worth of at least $____________ as determined in accordance with
generally accepted principles.
2. Guaranty. (a) The Guarantor does hereby unconditionally and irrevocably
guarantee to each Beneficiary, as a primary obligor and not merely as surety,
(i) the due and punctual performance and observance by the Subsidiary of each
term, provision and condition for which it is personally liable contained in the
Trust Agreement, the Participation Agreement and the Tax Indemnification
Agreement (such agreements, collectively, the "Subsidiary Documents") and (ii)
the due and punctual payment of each amount which the Subsidiary is or may
become personally obligated to pay under the Subsidiary Documents as and when
the same may become due and payable.
(b) This is a guaranty of payment and not of collection. Except as
provided in Section 2(d) hereof, the Guarantor hereby waives notice, promptness
and diligence as to the obligations guaranteed hereby and acceptance of this
guaranty, and agrees that it shall not be required to consent to, or receive any
notice of, any amendment or modification of, or waiver, consent or extension
with respect to, the Subsidiary Documents that may be made or given as provided
therein.
(c) The obligations of the Guarantor hereunder are absolute and
unconditional irrespective of the legality, validity or binding effect of the
Subsidiary Documents and will not be discharged or otherwise affected by: (i)
any extension or renewal with respect to any obligation of the Subsidiary under
any Subsidiary Document; (ii) any modification of, or amendment or supplement
to, any Subsidiary Document or any other agreement or instrument referred to
therein; (iii) any furnishings or acceptance of additional security or any
release of any security; (iv) any waiver, consent or other action or inaction or
any exercise or non-exercise of any right, remedy or power with respect to the
Subsidiary; (v) any change in the structure or organization of the Subsidiary or
any determination that the Subsidiary does not constitute a corporation or
otherwise lacks capacity or authority to contract; (vi) any insolvency,
bankruptcy, reorganization, arrangement, composition, liquidation, dissolution,
or similar proceedings with respect to the Subsidiary; (vii) any legal
prohibition against the exercise of any remedies against the Subsidiary under
any of the Subsidiary Documents which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, and (viii) any other
occurrence or circumstance whatsoever which might otherwise constitute a legal
or equitable discharge or defense of a surety or guaranty, except, without
regard to the consequence or effect of any of the foregoing actions or events,
(A) payment in full of all amounts payable by the Subsidiary under the
Subsidiary Documents for which the Subsidiary is personally liable and
performance in full of all obligations of the Subsidiary in respect of which the
Subsidiary is personally liable, in each case in accordance with the terms and
conditions of the Subsidiary Documents, unless such obligations of the
Subsidiary are sooner terminated pursuant to the provisions of the
B-2
72
Subsidiary Documents and (B) payment and performance in full of the obligations
of the Guarantor hereunder.
(d) Notwithstanding any provision contained herein to the contrary,
the Guarantor shall have no obligation to make any payment or perform any
obligation hereunder unless the Guarantor shall have received notice of the
breach, failure, noncompliance, action or inaction on the part of the Subsidiary
giving rise to such payment or performance obligation and a demand for payment
under this guaranty (unless at the time a Beneficiary is prevented by applicable
law from giving such notice or making such demand).
3. Related Provisions. (a) The obligations of the Guarantor hereunder
shall continue to be effective, or shall be reinstated, if any payment by the
Subsidiary under any Subsidiary Document is rescinded or must otherwise be
restored for any reason, all as though such payment had not been made.
(b) The payment obligations of the Guarantor hereunder shall be
made without set-off, counterclaim, deduction or withholding, and shall be made
in U.S. Dollars.
(c) Guarantor hereby waives any right to which it may become
entitled, whether by subrogation, contribution or otherwise, against the
Subsidiary or any of its properties by reason of the performance by the
Guarantor of its obligations under this guaranty; provided, however that the
foregoing notwithstanding Guarantor shall be entitled to all such rights on and
after the date one year and five days after the date on which all amounts and
performance owing by the subsidiary under the Subsidiary Documents are paid and
performed in full.
(d) This guaranty shall not be deemed to create any right in any
person except a party or parties to a Subsidiary Document and the successors and
assigns of each such Party and shall not be construed in any respect to be a
contract in whole or in part for the benefit of any other person.
(e) This guaranty is a guarantee of payment and not of collection
and the Guarantor waives any right to require that any action be brought against
the Subsidiary or any other person or to require that resort be made to any
security.
(f) This guaranty shall be binding upon the successors and assigns
of the Guarantor and shall be governed, construed, applied and enforced in
accordance with the laws of the State of Illinois.
(g) The Guarantor agrees to pay the reasonable costs and expenses
(including reasonable legal fees) incurred by any Beneficiary in enforcing this
guaranty.
B-3
73
4. Termination. The obligations of the Guarantor hereunder shall remain in
full force and effect until such time as (A) the Subsidiary shall have a net
worth or capital and surplus of at least $____________ at the end of any fiscal
year, (B) such amount of net worth or capital and surplus shall be as shown on a
balance sheet of the Subsidiary at such date furnished by the Guarantor to each
Beneficiary and prepared in accordance with generally accepted accounting
principles and accompanied by an opinion of nationally recognized independent
certified public accountants or as otherwise evidenced in a manner and
reasonably acceptable to the Beneficiaries and (C) no Indenture Event of Default
which is not attributable to a Lease Event of Default shall have occurred and be
continuing.
5. Notices. All notices, demands, requests, consents, approvals and other
communications required under the terms and provisions hereof shall be in
writing and may be given by airmail, telegram, cable, telex, telecopy or any
other customary means of communication, and any such notice shall be effective
when delivered, (i) if to the Guarantor, at ___________________________________
______________________, Attention: _______________________, Telecopy: (____)_
__ - _____ or at such other address as the Guarantor shall from time to time
designate in writing to the Beneficiaries, and (b) if to any Beneficiary,
addressed to it at the address set forth in the Participation Agreement.
Very truly yours,
____________________________
By:_________________________
Title: _________________
B-4
74
SCHEDULE A
TO EXHIBIT B
Union Tank Car Company
Wilmington Trust Company, in its individual capacity and as Owner Trustee
▇▇▇▇▇▇ Trust and Savings Bank, as Indenture Trustee and as Pass Through Trustee
B-5
75
Schedule 1A
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (INITIAL CLOSING)
(Equipment Group A)
See attached.
76
Schedule 1B
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (INITIAL CLOSING)
(Equipment Group B)
See attached.
77
Schedule 1C
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (SUBSEQUENT CLOSING)
(Equipment Group A)
See attached.
78
Schedule 2
Participation Agreement
PAYMENT INFORMATION FOR PARTICIPANTS
Participant's
Commitment
Percentage
1. Payments to Loan Participant to be made as follows:
By wire transfer of immediately available funds to:
▇▇▇▇▇▇ Trust and Savings Bank 75.26454775%
ABA No. ▇▇▇▇▇▇▇▇▇
Trust Department Account No. ▇▇▇-▇▇▇-▇
for credit to trust number 1046705
Reference: Union Tank Car Company
Pass Through Certificates, Series 1998-A
Attention: Bond Service Unit
2. All payments to FNBC Leasing Corporation, as Owner
Participant, should be made by wire transfer of
immediately available funds to:
The First National Bank of Chicago 24.73545225%
ABA#: ▇▇▇▇▇▇▇▇▇
Account Name: FNBC Leasing Corporation
Account #: 58-13603
Reference: UTC Trust No. 1998-A
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
79
Schedule 3A
Participation Agreement
SCHEDULE OF BASIC RENT PAYMENTS (INITIAL CLOSING)
(Equipment Group A)
80
Schedule 3B
Participation Agreement
SCHEDULE OF BASIC RENT PAYMENTS (INITIAL CLOSING)
(Equipment Group B)
81
Schedule 3C
Participation Agreement
SCHEDULE OF BASIC RENT PAYMENTS (SUBSEQUENT CLOSING)
(Equipment Group A)
82
Schedule 4A
Participation Agreement
SCHEDULE OF STIPULATED LOSS VALUE
The Stipulated Loss Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 1 as of the Basic Term Commencement Date and each Rent
Payment Date shall be an amount equal to the percentage of the Equipment Cost
for such Unit set opposite such date in this schedule.
83
Schedule 4B
Participation Agreement
SCHEDULE OF STIPULATED LOSS VALUE
The Stipulated Loss Value for a Unit of Equipment in Equipment Group B under
Lease Supplement No. 1 as of the Basic Term Commencement Date and each Rent
Payment Date shall be an amount equal to the percentage of the Equipment Cost
for such Unit set opposite such date in this schedule.
84
Schedule 4C
Participation Agreement
SCHEDULE OF STIPULATED LOSS VALUE
The Stipulated Loss Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 2 as of the Basic Term Commencement Date and each Rent
Payment Date shall be an amount equal to the percentage of the Equipment Cost
for such Unit set opposite such date in this schedule.
85
Schedule 5A
Participation Agreement
SCHEDULE OF TERMINATION VALUE
The Termination Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 1 as of each Rent Payment Date and Determination Date shall
be an amount equal to the percentage of the Equipment Cost for such Unit set
opposite such date in this schedule.
86
Schedule 5B
Participation Agreement
SCHEDULE OF TERMINATION VALUE
The Termination Value for a Unit of Equipment in Equipment Group B under
Lease Supplement No. 1 as of each Rent Payment Date and Determination Date shall
be an amount equal to the percentage of the Equipment Cost for such Unit set
opposite such date in this schedule.
87
Schedule 5C
Participation Agreement
SCHEDULE OF TERMINATION VALUE
The Termination Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 2 as of each Rent Payment Date and Determination Date shall
be an amount equal to the percentage of the Equipment Cost for such Unit set
opposite such date in this schedule.
88
Schedule 6
Participation Agreement
TERMS OF EQUIPMENT NOTES
Note Principal Amount Interest Rate Final Maturity
Amortization Schedule
89
Schedule 7
Participation Agreement
EARLY PURCHASE INFORMATION
The Early Purchase Price for a Unit of Equipment listed on Schedule 1A is
set forth on Schedule 7A. The Early Purchase Price for a Unit of Equipment
listed on Schedule 1B is set forth on Schedule 7B. The Early Purchase Price for
a Unit of Equipment listed on Schedule 1C is set forth on Schedule 7C.
90
Schedule 7A
Participation Agreement
EARLY PURCHASE INFORMATION (EQUIPMENT GROUP A) (INITIAL CLOSING)
91
Schedule 7B
Participation Agreement
EARLY PURCHASE INFORMATION (EQUIPMENT GROUP B) (INITIAL CLOSING)
92
Schedule 7C
Participation Agreement
EARLY PURCHASE INFORMATION (EQUIPMENT GROUP A) (SUBSEQUENT CLOSING)
93
Schedule 8
Participation Agreement
BASIC TERM PURCHASE INFORMATION
The Basic Term Purchase Price for a Unit of Equipment listed on Schedule 1A
is set forth on Schedule 8A. The Basic Term Purchase Price for a Unit of
Equipment listed on Schedule 1B is set forth on Schedule 8B. The Basic Term
Purchase Price for a Unit of Equipment listed on Schedule 1C is set forth on
Schedule 8C.
94
Schedule 8A
Participation Agreement
BASIC TERM PURCHASE INFORMATION (EQUIPMENT GROUP A) (INITIAL CLOSING)
95
Schedule 8B
Participation Agreement
BASIC TERM PURCHASE INFORMATION (EQUIPMENT GROUP B) (INITIAL CLOSING)
96
Schedule 8C
Participation Agreement
BASIC TERM PURCHASE INFORMATION (EQUIPMENT GROUP A) (SUBSEQUENT CLOSING)
97
Schedule 9
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION
The Outside Date Purchase Price for a Unit of Equipment listed on Schedule
1A is set forth on Schedule 9A. The Outside Date Purchase Price for a Unit of
Equipment listed on Schedule 1B is set forth on Schedule 9B. The Outside Date
Purchase Price for a Unit of Equipment listed on Schedule 1C is set forth on
Schedule 9C.
98
Schedule 9A
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION (EQUIPMENT GROUP A) (INITIAL CLOSING)
99
Schedule 9B
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION (EQUIPMENT GROUP B) (INITIAL CLOSING)
100
Schedule 9C
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION (EQUIPMENT GROUP A) (SUBSEQUENT CLOSING)