<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UNION TANK CAR COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-3104688
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
225 WEST WASHINGTON STREET
CHICAGO, ILLINOIS 60606
(312) 372-9500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
PROCOR LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CANADA NONE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATE OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
2001 SPEERS ROAD
OAKVILLE, ONTARIO, CANADA L6J 5E1
(905) 827-4111
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
WILLIAM M. HOLZMAN, ESQ.
NEAL, GERBER & EISENBERG
TWO NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
(312) 269-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
BARRY P. BIGGAR, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019
(212) 506-2500
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box / /.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box / /.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering / /.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering / /.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box / /.
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pass Through Certificates, Series
1996-A............................... $122,000,000 100% $122,000,000 $42,069
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457 solely for the purpose of determining
the registration fee.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION MARCH 22, 1996
PROSPECTUS
$122,000,000
UNION TANK CAR COMPANY
1996-A PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES, SERIES 1996-A
Each Pass Through Certificate offered hereby will represent a fractional
undivided interest in one of two separate Union Tank Car Company 1996-A Pass
Through Trusts (the "Pass Through Trusts") to be formed pursuant to two separate
pass through trust agreements. One pass through trust agreement is between Union
Tank Car Company (the "Company") and , as Pass Through Trustee (the
"Pass Through Trustee"), establishing Pass Through Trust 1996-A1, and the other
pass through trust agreement is among the Company, Procor Limited, an indirect
wholly-owned subsidiary of the Company ("Procor"), and the Pass Through Trustee
establishing Pass Through Trust 1996-A2. The property of Pass Through Trust
1996-A1 will consist of $ aggregate principal amount of equipment notes
(the "Equipment Notes") to be issued on a nonrecourse basis by the trustee of
separate owner trusts (each, an "Owner Trustee") in connection with
separate leveraged lease transactions to finance not more than 80% of the cost
of certain tank cars and covered hopper cars (each rail car a "Unit" and,
collectively, the "Equipment") that will be purchased by the Owner Trustees from
the Company and leased to the Company. The property of Pass Through Trust
1996-A2 will consist of (i) $ aggregate principal amount of Equipment
Notes to be issued in the same leveraged lease transactions as the Equipment
Notes to be held by Pass Through Trust 1996-A1, (ii) $ aggregate
principal amount of equipment trust certificates (the "Company ETCs") to be
issued pursuant to an equipment trust agreement between the Company and
, as trustee, and (iii) a $ principal amount equipment trust
certificate (the "Procor ETC") to be issued pursuant to an equipment trust
agreement between Procor and , as trustee. Amounts unconditionally
payable under the leases will be sufficient to pay in full when due all payments
of principal of, Make-Whole Amount (as hereinafter defined), if any, and
interest on the Equipment Notes held in each Pass Through Trust, except for the
prepayment of principal required to be made as part of a mandatory refinancing
of certain Equipment Notes on the final distribution date applicable to the Pass
Through Certificates issued by Pass Through Trust 1996-A2. Amounts payable
pursuant to the equipment trust agreements will be sufficient to pay in full
when due all payments of principal of and interest on the Company ETCs and the
Procor ETC. The Equipment Notes are not obligations of, or guaranteed by the
Company; however, the Company will fully and unconditionally guarantee (i) the
payment as and when due of the principal of and interest on the Company ETCs and
(ii) the due and punctual distribution to Certificateholders of principal and
interest payable in respect of the Procor ETC.
The Equipment Notes will be issued in two series under indentures and will
be secured by a security interest in the Equipment leased by the Company under
the lease relating to such indenture and by an assignment of certain of the
Owner Trustee's rights under such lease, including the right to receive rent
payable by the Company in respect of such Equipment pursuant to such lease.
Interest paid on the Equipment Notes, the Company ETCs and the Procor ETC held
in the Pass Through Trusts will be passed through to the Certificateholders on
and of each year, commencing on , 199[6], at the rate
per annum set forth below until the final distribution date as set forth below
for such Pass Through Trust. The principal of the Equipment Notes held in Pass
Through Trust 1996-A1 will be paid and passed through to the Certificateholders
in scheduled amounts on or , or both, of each year, commencing
on , 199 and continuing until the final distribution date set forth
below for such Pass Through Trust. The Equipment Notes held in Pass Through
Trust 1996-A2 will amortize as to principal commencing on 200 , with
the final payment of principal due on , 20 ; however, such Equipment
Notes are required to be prepaid pursuant to a mandatory refinancing on
, 20 . The Equipment Notes may be prepaid under certain circumstances.
The Company ETCs and the Procor ETC held in Pass Through Trust 1996-A2 will not
amortize as to principal, and the entire principal amount thereof will be paid
and passed through to Certificateholders on , 200 . Neither the
Company ETCs nor the Procor ETC are redeemable prior to maturity.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FINAL
PASS THROUGH PRINCIPAL INTEREST INITIAL PRINCIPAL FINAL PRICE TO
CERTIFICATES AMOUNT RATE DISTRIBUTION DATE DISTRIBUTION DATE PUBLIC(1)(2)
<S> <C> <C> <C> <C> <C>
1996-A1....................... $ % 100%
1996-A2....................... $ % 100%
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from May , 1996.
(2) The underwriting commission is $ , which constitutes . % of the
principal amount of the Pass Through Certificates. The underwriting
commission, and certain other expenses estimated at $ , will be
payable by the Owner Trustees in the leveraged lease transactions and by the
Company and Procor. All of the proceeds from the sale of the Pass Through
Certificates will be used to purchase the Equipment Notes, the Company ETCs
and the Procor ETC.
The Pass Through Certificates are offered by the Underwriters subject to prior
sale, when, as and if accepted by the Underwriters and subject to approval of
certain legal matters by Mayer, Brown & Platt, counsel for the Underwriters. It
is expected that delivery of the Pass Through Certificates in book-entry form
will be made on or before May , 1996 through the facilities of The Depository
Trust Company, against payment therefor in immediately available funds.
SALOMON BROTHERS INC MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus is May , 1996
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE PASS THROUGH
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company and Procor have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Pass Through Certificates. This
Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information pertaining to the Pass Through Certificates,
the Company and Procor, reference is made to the Registration Statement. Any
statement contained herein concerning the provisions of any document is not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Information
concerning the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and New York Regional Office, 7 World Trade Center, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
REPORTS TO CERTIFICATEHOLDERS BY THE TRUSTEE
, as trustee under the Pass Through Trust
Agreements, will provide to Certificateholders certain periodic statements
concerning distributions made with respect to the Pass Through Trusts. See
"Description of the Pass Through Certificates--Reports to Certificateholders."
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, as filed with the Commission pursuant to the Exchange Act, is
incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Pass Through Certificates shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written request of such person, a copy (without
exhibits) of any or all documents incorporated by reference in this Prospectus.
Requests for such copies should be directed to the General Counsel and
Secretary, Union Tank Car Company, 225 West Washington Street, Chicago, Illinois
60606, telephone (312) 372-9500.
2
<PAGE> 4
SUMMARY
The following summary of provisions relating to the Pass Through
Certificates does not purport to be complete and is qualified in its entirety by
the detailed information appearing elsewhere or incorporated by reference in
this Prospectus.
GLOSSARY...................... Included at the end of this Prospectus as
Appendix I is a Glossary of certain of the
significant defined terms used herein.
PASS THROUGH TRUSTS........... Each of the Union Tank Car Company 1996-A Pass
Through Trusts (the "Pass Through Trusts") will
be formed pursuant to one of two separate Pass
Through Trust Agreements (collectively, the
"Agreements"), one between Union Tank Car
Company (the "Company") and
, as Pass Through Trustee (the
"Pass Through Trustee"), and the other among
the Company, Procor Limited, an indirect
wholly-owned subsidiary of the Company
("Procor"), and the Pass Through Trustee. Each
Pass Through Trust will be a separate entity.
PASS THROUGH TRUST PROPERTY... The property of Pass Through Trust 1996-A1 will
consist of $ aggregate principal
amount of equipment notes (the "Equipment
Notes") to be issued on a non-recourse basis by
, as owner trustee (each,
an "Owner Trustee") of separate owner
trusts, for the benefit of certain
institutional investors (each, an "Owner
Participant") in connection with separate
leveraged lease transactions to finance not
more than 80% of the cost to the Owner Trustees
of certain tank cars and covered hopper cars
(each rail car a "Unit" and, collectively, the
"Equipment") that will be purchased by the
Owner Trustees, on behalf of the Owner
Participants, from the Company and leased to
the Company. Until all of such Equipment Notes
are issued, the Pass Through Trustee will hold
in cash an amount equal to the aggregate
principal amount of unissued Equipment Notes.
Such cash shall be invested by the Pass Through
Trustee in Specified Investments. See
"Description of the Pass Through
Certificates--General". The Equipment Notes
will be issued in series in connection with
such leveraged lease transactions under
indentures (each, an "Indenture").
The property of Pass Through Trust 1996-A2 will
consist of:
(a) $ aggregate principal amount of
Equipment Notes to be issued in the same
leveraged lease transactions as the
Equipment Notes to be held by Pass Through
Trust 1996-A1.
(b) $ aggregate principal amount of
equipment trust certificates (the "Company
ETCs") to be issued pursuant to an
equipment trust agreement between the
Company and , as
trustee (the "Company Trust Agreement").
Until all the Company ETCs are issued, the
Pass Through Trustee will hold in
3
<PAGE> 5
cash an amount equal to the aggregate
principal amount of Company ETCs not yet
issued. Such cash will be invested by the
Pass Through Trustee in Specified
Investments. See "Description of the Pass
Through Certificates--General."
(c) a $ principal amount equipment
trust certificate (the "Procor ETC") to be
issued pursuant to an equipment trust
agreement between Procor and
, as trustee (the
"Procor Trust Agreement").
Pass Through Trust 1996-A1 will acquire
Equipment Notes having an interest rate equal
to the interest rate applicable to the Pass
Through Certificates, Series 1996-A1. Pass
Through Trust 1996-A2 will acquire Equipment
Notes, the Company ETCs and the Procor ETC
having an interest rate equal to the interest
rate applicable to the Pass Through
Certificates, Series 1996-A2 (together with
Pass Through Certificates, Series 1996-A1, the
"Pass Through Certificates"). The Equipment
Notes acquired by Pass Through Trust 1996-A1
will mature on the final distribution date
applicable to the Pass Through Certificates
issued by such Pass Through Trust. The
Equipment Notes acquired by Pass Through Trust
1996-A2 will mature after the final
distribution date applicable to such Pass
Through Trust; however, such Equipment Notes
are required to be prepaid on such final
distribution date pursuant to a mandatory
refinancing. The Company ETCs and the Procor
ETC acquired by Pass Through Trust 1996-A2 will
mature on the final distribution date
applicable to the Pass Through Certificates,
Series 1996-A2. The aggregate principal amount
of the Equipment Notes, the Company ETCs and
the Procor ETC to be held in the Pass Through
Trusts will be the same as the aggregate
principal amount of the Pass Through
Certificates issued by the Pass Through Trusts.
PASS THROUGH CERTIFICATES;
BOOK-ENTRY REGISTRATION....... Each Pass Through Certificate will represent a
fractional undivided interest in the related
Pass Through Trust. The Pass Through
Certificates will be issued in fully registered
form only. See "Description of the Pass Through
Certificates--General." The Pass Through
Certificates will be registered in the name of
Cede & Co. ("Cede"), as the nominee of The
Depository Trust Company ("DTC"). No person
acquiring an interest in the Pass Through
Certificates will be entitled to receive a
definitive certificate (a "Registered
Certificate") representing such person's
interest in a Pass Through Trust, except in the
event that Registered Certificates are issued
under the limited circumstances described
herein. See "Description of the Pass Through
Certificates--Book-Entry Registration" and
"--Registered Certificates."
4
<PAGE> 6
DENOMINATIONS................. The Pass Through Certificates will be issued in
minimum
denominations of $1,000 and any integral
multiple of $1,000 in excess thereof. See
"Description of the Pass Through
Certificates--General."
REGULAR DISTRIBUTION DATES.... and .
SPECIAL DISTRIBUTION DATES.... Regular Distribution Dates or, in certain
cases, any Business Day.
RECORD DATES.................. The fifteenth day preceding a Regular
Distribution Date or a Special Distribution
Date.
INITIAL AVERAGE LIFE DATE..... The initial average life date of the Pass
Through Certificates issued by Pass Through
Trust 1996-A1 is . The
initial average life date of the Pass Through
Certificates issued by Pass Through Trust
1996-A2 is .
DISTRIBUTIONS................. Payments of interest on the Equipment Notes,
the Company ETCs and the Procor ETC held in the
Pass Through Trusts are scheduled to be
received in specified amounts by the Pass
Through Trustee of the applicable Pass Through
Trust on and of
each year, commencing ,
199[6], and are to be distributed to the
Certificateholders on the corresponding Regular
Distribution Dates. Payments of principal of
the Equipment Notes held in Pass Through Trust
1996-A1 are scheduled to be received in
specified amounts by the Pass Through Trustee
of the applicable Pass Through Trust on
or , or both, of
each year, commencing on ,
199 and are to be distributed to the
Certificateholders on the corresponding Regular
Distribution Dates. The payment of the
outstanding principal amount of the Equipment
Notes, the Company ETCs and the Procor ETC held
in Pass Through Trust 1996-A2 is scheduled to
be received by the Pass Through Trustee on
, 200 and is to be
distributed to the Certificateholders on such
date. Payments of principal of, Make-Whole
Amount, if any, and interest on the Equipment
Notes resulting from prepayments thereof, if
any, will be distributed on a Special
Distribution Date after not less than 15 days'
notice from the Pass Through Trustee to the
Certificateholders of such Pass Through Trust.
For a discussion of distributions upon an Event
of Default, see "Description of the Pass
Through Certificates--Events of Default and
Certain Rights Upon an Event of Default."
EXTRAORDINARY DISTRIBUTIONS... It is anticipated that (i) approximately
$ principal amount of Equipment Notes,
$ principal amount of Company ETCs and
a $ principal amount Procor ETC will
be acquired by the Pass Through Trusts
immediately after the issuance of the Pass
Through Certificates and (ii) approximately
$ principal amount of Equipment Notes
and $ principal amount of Company ETCs
will be acquired by the Pass Through Trusts on
or about June ,
5
<PAGE> 7
1996. All proceeds of the issuance of the Pass
Through Certificates not immediately used to
purchase Equipment Notes and Company ETCs will
be held by the Pass Through Trustee and
invested in Specified Investments at the
direction of and for the account of the
Company. To the extent that the return on the
Specified Investments is less than the return
that would have been received on the remaining
Equipment Notes and Company ETCs had they been
purchased immediately after the issuance of the
Pass Through Certificates, the Company will
make up any shortfall in an amount equal to the
amount that would have been distributable to
Certificateholders on the first Regular
Distribution Date had all of such proceeds been
used to purchase Equipment Notes and Company
ETCs on the date of issuance of the Pass
Through Certificates. To the extent that the
remaining Equipment Notes and Company ETCs are
not purchased by the Pass Through Trustee on or
prior to June , 1996, the unexpended
proceeds, together with interest thereon at the
rate applicable to the Pass Through
Certificates, will be distributed to
Certificateholders on July , 1996. See
"Description of the Pass Through
Certificates--Delayed Purchase; Extraordinary
Distribution."
METHOD OF DISTRIBUTIONS....... So long as the Pass Through Certificates are
registered in the name of Cede, as the nominee
of DTC, distributions by the Pass Through
Trustee will be made in same-day funds to DTC,
which in turn will make distributions to
participants in DTC ("DTC Participants") in
same-day funds. The final distribution of
principal with respect to the Pass Through
Certificates will be made by DTC to DTC
Participants in same-day funds. Responsibility
for distributions by DTC Participants to
beneficial owners of the Pass Through
Certificates will be the responsibility of such
DTC Participants and will be made in accordance
with customary industry practices. See
"Description of the Pass Through
Certificates--Payments and Distributions." At
such time, if any, as Registered Certificates
are issued representing the Pass Through
Certificates and are not registered in the name
of Cede, as the nominee of DTC, distributions
by the Pass Through Trustee to
Certificateholders, other than the final
distribution, will be made by check mailed to
each Certificateholder of record on the
applicable record date at its address appearing
on the register. The final distribution with
respect to the Pass Through Certificates will
be made only upon surrender and presentation
thereof at the office or agency of the Pass
Through Trustee. See "Description of the Pass
Through Certificates--Payments and
Distributions."
INTEREST...................... Interest on the Pass Through Certificates of
each Pass Through Trust will be passed through
to the Certificateholders at the rate per annum
indicated on the cover of this Prospectus for
such Pass Through Trust, which is the interest
rate borne by the Equipment Notes held in the
respective Pass Through Trust, and in the case
of Pass Through Trust
6
<PAGE> 8
1996-A2, the Company ETCs and the Procor ETC to
be held in such Pass Through Trust. Interest is
calculated on the basis of a 360-day year
consisting of twelve 30-day months. See
"Description of the Pass Through Certificates--
General."
PRINCIPAL..................... The principal of the Equipment Notes held in
Pass Through Trust 1996-A1 is payable in
scheduled amounts on or ,
or both, of each year, commencing on
, . The principal of the
Equipment Notes held in Pass Through Trust
1996-A2 is payable in scheduled amounts
commencing on , 200 ; however,
such Equipment Notes are required to be prepaid
pursuant to a mandatory refinancing on
, 200 , the final distribution
date for such Pass Through Trust. The Company
ETCs and the Procor ETC will not amortize as to
principal, and the entire principal amount
thereof is payable on , 20 . See
"Description of the Pass Through
Certificates--Payments and Distributions,"
"Description of the Equipment Notes--Principal
Payments" and "Description of the ETCs--Payment
of Principal and Interest."
EQUIPMENT NOTES: GENERAL...... Interest will be payable in arrears on the
Equipment Notes on the unpaid principal amount
thereof on and of each
year, commencing on , 199[6]. The
principal of each Equipment Note is payable in
accordance with the principal repayment
schedule set forth herein under "Description of
the Equipment Notes--Principal Payments."
EQUIPMENT NOTES: PREPAYMENT... One or more of the Equipment Notes may be
prepaid, in whole or in part, under the
following circumstances:
(a) If an Event of Loss to a Unit shall occur
and the Company does not substitute like
kind equipment of equal or greater value
for such Unit, it is obligated to pay the
Stipulated Loss Value of such Unit. Such
payment will be used to prepay a portion of
the Equipment Notes issued under the
Indenture relating to such Unit on (i) the
next Regular Distribution Date following
the election by the Company to make such
payment rather than substitute like kind
equipment or (ii) in the case of the
occurrence of an Event of Loss in respect
of more than ten Units since the end of the
last six month reporting period under a
Lease (a "Multiple Loss"), on the first
Business Day succeeding the 60th day
following the date on which the Company is
required to report such Multiple Loss. The
amount prepaid will be equal to the sum of
(i) as to principal, an amount equal to the
product obtained by multiplying the
aggregate unpaid principal amount of the
Equipment Notes issued under the Indenture
to which such Unit relates as of the
prepayment date (after deducting therefrom
the scheduled principal installment, if
any, due on the prepayment date) by a
fraction, the numerator of which shall be
the
7
<PAGE> 9
Equipment Cost of such Unit and the
denominator of which shall be the aggregate
Equipment Cost of all Equipment securing
such Indenture immediately prior to the
prepayment date, and (ii) as to interest,
the aggregate amount of interest accrued
and unpaid to but not including the
prepayment date in respect of the principal
amount to be prepaid pursuant to clause (i)
above on such prepayment date. No
Make-Whole Amount will be payable in the
event of a prepayment under such
circumstances.
(b) If (i) on or after March , 200 the
Company elects to exercise its right to
terminate a Lease pursuant to the terms
thereof with respect to some or all of the
Units leased thereunder as a result of such
Units becoming obsolete or surplus, or (ii)
on , 200 the Company exercises
its option to purchase some or all of the
Units in accordance with the terms of the
applicable Lease or (iii) the Company
elects to exercise its right under a
Participation Agreement to purchase
Equipment as a result of an Owner
Participant (or an affiliate thereof)
engaging in a business that is in
competition with the Company's full service
railcar leasing business, a portion of the
proceeds from the Company's payment of the
Termination Value of such Units or the
exercise price of such purchase option, as
the case may be, will be used to prepay
Equipment Notes relating to such Equipment,
unless the Company elects in connection
with the exercise of a purchase option to
assume on a full recourse basis all of the
Owner Trustee's obligations in respect of
the related Equipment Notes and acquires
such purchased Units subject to the lien of
the related Indenture. Any such prepayment
will be in an amount at least equal to the
principal and accrued interest thereon,
computed as provided in paragraph (a)
above, plus a Make-Whole Amount. See
"Description of the Equipment
Notes--Prepayment" for a description of the
manner of computing the Make-Whole Amount.
(c) Subject to certain restrictions, the
Company may require an Owner Trustee to
effect a prepayment of the Equipment Notes
issued under an Indenture at a price equal
to the aggregate unpaid principal amount
thereof, together with accrued interest
thereon, plus a Make-Whole Amount, as part
of a refunding or refinancing which will
result in the prepayment of the Pass
Through Certificates. The Equipment Notes
held in Pass Through Trust 1996-A2 are
required to be prepaid as part of a
mandatory refinancing on the final
distribution date applicable to the Pass
Through Certificates issued by such Pass
Through Trust.
(d) If under any Indenture an Indenture Default
shall have occurred and be continuing and
(i) the Indenture Trus-
8
<PAGE> 10
tee shall give notice of its intent to
accelerate the Equipment Notes thereunder
or to exercise other remedies available to
it or (ii) the Indenture Trustee shall not
have taken action with respect to such
Indenture Default for a period of not less
than 180 days, the applicable Owner Trustee
may elect to prepay or purchase all of the
then outstanding Equipment Notes issued
under such Indenture at a price equal to
the unpaid principal amount thereof,
together with accrued interest thereon to
the date of prepayment or purchase, but
without any Make-Whole Amount.
See "Description of the Equipment
Notes--Prepayment."
EQUIPMENT NOTES: SECURITY..... The Equipment Notes issued under each Indenture
will be secured by a security interest in the
Equipment leased by the Company under the Lease
relating to such Indenture and an assignment to
the Indenture Trustee of certain of the Owner
Trustee's rights under the Lease covering such
Equipment, including the right to receive rent
payable by the Company thereunder.
Equipment Notes issued under the Indentures are
not cross-collateralized and, consequently, the
Equipment Notes issued under one Indenture are
not secured by any of the Equipment securing
the other Indenture or by the Lease related
thereto. There are no cross-default provisions
in the Indentures and, consequently, if the
Equipment Notes issued under one Indenture are
in default, the Equipment Notes issued under
the other Indenture may not be in default and,
if not in default, no remedies will be
exercisable under such Indenture. See
"Description of the Equipment Notes--Security."
Although the Equipment Notes are not direct
obligations of, or guaranteed by, the Company,
the amounts unconditionally payable by the
Company under the Leases will be sufficient to
pay in full when due all payments of principal
of, Make-Whole Amount, if any, and interest on
the Equipment Notes, except for the prepayment
of principal required to be made as part of a
mandatory refinancing on the final distribution
date applicable to the Pass Through
Certificates issued by Pass Through Trust
1996-A2 of the Equipment Notes held by such
Pass Through Trust. See "Description of the
Equipment Notes--General."
COMPANY ETCS: GENERAL......... Interest will be payable in arrears on the
Company ETCs on the unpaid principal amount
thereof on and of each
year, commencing on , 199[6]. The
Company ETCs, which will not amortize as to
principal, mature on , 20 .
COMPANY ETCS: REDEMPTION...... The Company ETCs are not redeemable prior to
maturity.
COMPANY ETCS: SECURITY........ The Company Trust Agreement will provide for
(i) the sale by the Company to the trustee
thereunder of certain tank
9
<PAGE> 11
cars and other rail cars having an estimated
cost of approximately 133 1/3% of the aggregate
principal amount of the Company ETCs and (ii)
the lease of such equipment by the trustee to
the Company. The rent and other amounts payable
by the Company will be sufficient to enable the
trustee to pay when due the principal of and
interest on the Company ETCs. At the
termination of the lease, such payments will be
treated as purchase money as the full purchase
price of the equipment, and title to all such
equipment will vest in the Company.
PROCOR ETC: GENERAL........... Interest will be payable in arrears on the
Procor ETC on the unpaid principal amount
thereof on and of each
year, commencing on , 199[6]. The
Procor ETC, which will not amortize as to
principal, matures on , 20 .
PROCOR ETC: REDEMPTION........ The Procor ETC is not redeemable prior to
maturity.
PROCOR ETC: SECURITY.......... The Procor Trust Agreement will provide for (i)
the sale by Procor to the trustee thereunder of
certain tank cars and other rail cars having an
estimated cost of approximately 133 1/3% of the
principal amount of the Procor ETC and (ii) the
conditional sale of such equipment by the
trustee to Procor. The payments in respect of
the purchase of such equipment and other
amounts payable by Procor will be sufficient to
enable the trustee to pay when due the
principal of and interest on the Procor ETC.
After all such payments have been made by
Procor, such payments will be deemed to
represent payment of the full purchase price of
the equipment, and title to all such equipment
will vest in Procor.
PROCOR ETC: GUARANTEE......... The Company will fully and unconditionally
guarantee the due and punctual distribution to
Certificateholders of principal and interest
payable in respect of the Procor ETC. In
addition, the Company will fully and
unconditionally guarantee the due and punctual
performance by Procor of its obligations under
the Procor Trust Agreement.
USE OF PROCEEDS............... The proceeds from the sale of the Pass Through
Certificates will be used by the Pass Through
Trustee for each Pass Through Trust to purchase
the Equipment Notes, and in the case of Pass
Through Trust 1996-A2, the Company ETCs and the
Procor ETC. The Owner Trustees will use the
proceeds from the sale of the Equipment Notes
to finance not more than 80% of the Equipment
Cost of the Equipment, representing in the
aggregate the entire debt portion of the
separate leveraged lease
transactions. The net proceeds to the Company
from the sale of the Equipment will be used by
the Company for general corporate purposes. The
net proceeds to the Company from the issuance
of the Company ETCs will be used to provide
long-term financing for the addition of rail
cars to the Company's fleet. The net proceeds
to Procor from the issuance of the Procor
10
<PAGE> 12
ETC will be used for general corporate
purposes. See "Use of Proceeds."
PASS THROUGH TRUSTEE.......... will act as trustee under
each Pass Through Agreement and as paying agent
and registrar for the Pass Through
Certificates. also will act
as the Indenture Trustee under each Indenture
and as the trustee under the Company and Procor
equipment trust agreements.
FEDERAL INCOME TAX
CONSEQUENCES.................. Each Pass Through Trust [will] be classified as
a grantor trust for federal income tax
purposes, and each Certificate Owner of each
Pass Through Trust [will] be treated as the
owner of a pro rata undivided interest in each
of the Equipment Notes and, in the case of Pass
Through Trust 1996-A2, the Company ETCs and the
Procor ETC held by such Pass Through Trust and
any other property held in such Pass Through
Trust and should report on its federal income
tax return its pro rata share of income from
such Equipment Notes, Company ETCs and Procor
ETC and any other property held, as the case
may be, by such Pass Through Trust in
accordance with such Certificate Owner's method
of accounting. See "Certain Federal Income Tax
Consequences."
ERISA CONSIDERATIONS.......... The Pass Through Certificates, with certain
limited exceptions, are eligible for purchase
by employee benefit plans. See "ERISA
Considerations."
11
<PAGE> 13
FORMATION OF THE PASS THROUGH TRUSTS
The Pass Through Trusts will be formed pursuant to two separate Pass
Through Trust Agreements (each, an "Agreement"), one Agreement between the
Company and the Pass Through Trustee and the other Agreement by and among the
Company, Procor and the Pass Through Trustee. Upon or prior to the execution and
delivery of the Agreements, the Pass Through Trustee, on behalf of each Pass
Through Trust, will enter into separate participation agreements with
the Company, the Indenture Trustee, the applicable Owner Trustee and the
applicable Owner Participant (in each case, a "Participation Agreement")
pursuant to which such Pass Through Trust will, among other things, purchase
certain Equipment Notes. Concurrently, Pass Through Trust 1996-A2 will purchase
a portion of the Company ETCs and the Procor ETC. Pass Through Trust 1996-A1
will acquire Equipment Notes and Pass Through Trust 1996-A2 will acquire
Equipment Notes, the Company ETCs and the Procor ETC, in each case having an
interest rate corresponding to the interest rate borne by the Pass Through
Certificates that will be issued by such Pass Through Trust. The Company ETCs
and the Procor ETC acquired by Pass Through Trust 1996-A2 will mature on the
final distribution date applicable to the Pass Through Certificates issued by
such Pass Through Trust. The Equipment Notes acquired by Pass Through Trust
1996-A1 will mature on the final distribution date applicable to the Pass
Through Certificates issued by such Pass Through Trust. The Equipment Notes
acquired by Pass Through Trust 1996-A2 will mature after the final distribution
date applicable to such Pass Through Trust; however, such Equipment Notes are
required to be prepaid pursuant to a mandatory refinancing on such final
distribution date. The two Pass Through Trusts, taken together, will hold all of
the Equipment Notes, representing in the aggregate the entire debt portion of
the separate leveraged lease transactions, as well as the Company ETCs
and the Procor ETC. The Pass Through Trustee will distribute to the
Certificateholders of the relevant Pass Through Trust the payments of principal,
Make-Whole Amount, if any, and interest received by it as the holder of the
Equipment Notes, the Company ETCs and the Procor ETC. See "Description of the
Pass Through Certificates--General", "Description of the Equipment
Notes--General" and "Description of the ETCs."
12
<PAGE> 14
DESCRIPTION OF PAYMENT FLOWS
LEVERAGED LEASE TRANSACTIONS
The following diagram illustrates certain aspects of the payment flows in
each separate leveraged lease transaction among the Company, an Owner Trustee,
an Owner Participant, the Indenture Trustee, the Pass Through Trustee and the
Certificateholders.
In each of the separate leveraged lease transactions, the Company will
lease certain Equipment from an Owner Trustee, as lessor of such Equipment under
a Lease. Equipment Notes with respect to such Equipment will be issued under an
Indenture by the Owner Trustee and will be purchased by the Pass Through Trustee
for the benefit of the Certificateholders. Rent is payable under the Lease to
the Owner Trustee, as lessor. However, as a result of the assignment of the
Lease to the Indenture Trustee, the Company will make rental payments directly
to the Indenture Trustee. From these rental payments the Indenture Trustee will,
on behalf of the Owner Trustee, first make payments to the Pass Through Trustee
as required to meet the Owner Trustee's obligations under the Equipment Notes
relating to such Equipment and will pay the remaining balance to the Owner
Trustee, for the benefit of the Owner Participant. The Pass Through Trustee will
distribute payments received in respect of the Equipment Notes relating to such
Equipment (together with payments received in respect of the Equipment Notes
relating to the other Equipment which is the subject of the other lease
transactions) held in such Pass Through Trust to the Certificateholders as
required under the terms of the Pass Through Certificates.
will act initially both as Pass Through Trustee of
the two Pass Through Trusts and as Indenture Trustee under the Indentures.
________________________
| UNION TANK CAR COMPANY |
|________________________|
|
| Lease Rental Payments
| Assigned by Owner Trustee
| to Indenture Trustee
|
|
|
_________________
| INDENTURE |
| TRUSTEE |
|_________________|
| |
| |
| |
| |
Excess | | Equipment
Payments | | Note payments
___________________| |________________
| |
| |
| |
_____________ ______________________
| OWNER | | PASS THROUGH TRUSTEE |
| TRUSTEE | |______________________|
|_____________| |
| |
| |
| |
| Excess | Pass Through
| Payments | Certificate
| | Distributions
| |
_______________ _________________________
| OWNER | | HOLDERS OF PASS THROUGH |
| PARTICIPANT | | CERTIFICATES |
|_______________| |_________________________|
13
<PAGE> 15
COMPANY ETCS AND PROCOR ETC
The following diagram illustrates certain aspects of the payment flows in
the other financing transactions to which this Prospectus relates.
The Company will lease and Procor will conditionally purchase the Trust
Equipment (as hereinafter defined) from , as
trustee (in such capacity, the "Equipment Trust Trustee"). The Equipment Trust
Trustee will issue under the Company Trust (as hereinafter defined) the Company
ETCs and under the Procor Trust (as hereinafter defined) the Procor ETC, which
will be purchased by the Pass Through Trustee of Pass Through Trust 1996-A2 for
the benefit of the Certificateholders of such Pass Through Trust. The Company
will make rental and Procor will make conditional sale payments to the Equipment
Trust Trustee. From these payments, the Equipment Trust Trustee will make
principal and interest payments to the Pass Through Trustee of Pass Through
Trust 1996-A2 as required to meet the obligations under the Company ETCs and the
Procor ETC. The Pass Through Trustee will distribute such payments to the
Certificateholders of such Pass Through Trust as required under the terms of the
Pass Through Certificates. The Company will fully and unconditionally guarantee
the due and punctual distribution to Certificateholders of principal and
interest payable in respect of the Procor ETC.
<TABLE>
<CAPTION>
<S><C>
_______________________ _______________________
| UNION TANK CAR | | |
| COMPANY | | PROCOR LIMITED |
|_______________________| |_______________________|
| |
Lease Rental | Conditional Sale |
Payments | Payments |
| |
_______________________ _______________________
| EQUIPMENT TRUST | | EQUIPMENT TRUST |
| TRUSTEE | | TRUSTEE |
|_______________________| |_______________________|
| |
| |
Company ETC | | Procor ETC
Payments | _________________________________ | Payments
| | | |
| _______ | PASS THROUGH TRUSTEE | _______ |
|_________________________________|
| ____________________________
Certificate | Distributions | UNION TANK CAR |
| | COMPANY |
| |____________________________|
| Guarantee of the |
| Distribution of Principal |
| and Interest Payable in |
| Respect of the Procor ETC |
| |
_________________________________ |
| HOLDERS OF PASS | |
| THROUGH CERTIFICATES |_______________________________|
|_________________________________|
</TABLE>
14
<PAGE> 16
USE OF PROCEEDS
A portion of the proceeds from the sale of Pass Through Certificates will
be used by each Pass Through Trustee to purchase for the Pass Through Trusts
$ aggregate principal amount of Equipment Notes issued by the Owner
Trustees which, in turn, will use the proceeds, together with funds provided by
the Owner Participants, to purchase the Equipment from the Company, on behalf of
the Owner Participants.
The Equipment Notes will be issued under separate Trust Indenture and
Security Agreements (each an "Indenture"), each such Indenture being between
, as trustee thereunder (in such capacity, the "Indenture
Trustee"), and , not in its individual capacity (except as
expressly set forth therein) but solely as owner trustee (each, an "Owner
Trustee") of a separate trust for the benefit of an institutional investor (the
"Owner Participant"). Each Owner Participant will provide from sources other
than the Equipment Notes at least 20% of the cost of the related Equipment as an
equity investment. No Owner Participant, however, will be liable for any amount
payable under the related Indenture or any Equipment Notes issued thereunder.
The net proceeds to the Company from the sale of the Equipment will be used
by the Company for general corporate purposes.
The following table sets forth information with respect to the Equipment
(consisting of an aggregate of [2,146] rail cars, all of which were manufactured
in [1995 or 1996]) expected to be purchased by the Owner Trustees and leased to
the Company in the leveraged lease transactions:
<TABLE>
<CAPTION>
TYPE OF CAR NO. OF CARS
--------------------------------------------------------- -----------
<S> <C>
Covered Hopper........................................... [965]
Tank (general purpose)................................... [616]
Tank (pressure).......................................... [565]
-----
Total............................................... [2,146]
=====
</TABLE>
The following table sets forth information with respect to each of the
Leases:
<TABLE>
<CAPTION>
AGGREGATE COST
OF EQUIPMENT PRINCIPAL
TO OWNER AMOUNT OF
LEASE NO. TRUSTEES EQUIPMENT NOTES
------------------------------------- -------------- ---------------
<S> <C> <C>
1.................................. $ $
2..................................
------- -------
Total........................... $ $
======= =======
</TABLE>
The remaining proceeds from the sale of the Pass Through Certificates,
Series 1996-A2 will be used by the Pass Through Trustee for Pass Through Trust
1996-A2 to purchase $ aggregate principal amount of equipment trust
certificates (the "Company ETCs") to be issued pursuant to an equipment trust
agreement (the "Company Trust Agreement") between the Company and
, as trustee, and a $ principal amount equipment trust
certificate (the "Procor ETC" and, together with the Company ETCs, the "ETCs")
to be issued pursuant to an equipment trust agreement (the "Procor Trust
Agreement" and, together with the Company Trust Agreement, the "Trust
Agreements") between Procor and , as trustee. The net proceeds to
the Company from the issuance of the Company ETCs will be used to provide
long-term financing for the addition of rail cars to the Company's fleet. These
rail cars were initially financed with cash provided by operating activities.
The net proceeds to Procor from the issuance of the Procor ETC will be used for
general corporate purposes.
Immediately following the issuance of the Pass Through Certificates, the
Pass Through Trusts will purchase an aggregate of approximately $
principal amount of Equipment Notes, and Pass Through Trust 1996-A2 will
purchase an aggregate of approximately $ principal
15
<PAGE> 17
amount of ETCs. Pending the scheduled purchase on or about June , 1996 of the
remaining $ aggregate principal amount of Equipment Notes and
$ principal amount of Company ETCs, the unexpended proceeds from the
sale of Pass Through Certificates will be held by the Pass Through Trustee and
invested in Specified Investments. Any shortfall between the earnings on such
investments and the amount to be paid Certificateholders shall be paid by the
Company. See "Description of the Pass Through Certificates--Delayed Purchases;
Extraordinary Distribution."
16
<PAGE> 18
THE COMPANY
Union Tank Car Company (with its wholly-owned subsidiaries herein
collectively referred to, except as the context otherwise requires, as the
"Company") and Procor are principally engaged in the leasing of railway tank
cars and other rail cars to United States, Canadian and Mexican manufacturers
and other shippers of chemical products, including liquid fertilizers, petroleum
products, including liquid petroleum gas, food products and bulk plastics. The
Company owns and operates one of the largest fleets of privately-owned railway
tank cars in the world.
The Company, which was incorporated in Delaware in 1980 and is the
successor to a business which was incorporated in New Jersey in 1891 and
reincorporated in Delaware in 1968, is a wholly-owned subsidiary of Marmon
Industrial Corporation, an indirect wholly-owned subsidiary of Marmon Holdings,
Inc. Substantially all the stock of Marmon Holdings, Inc. is owned, directly or
indirectly, by trusts for the benefit of certain members of the Pritzker family.
As used herein, "Pritzker family" refers to the lineal descendants of Nicholas
J. Pritzker, deceased. Procor, which was incorporated in Canada in 1952, is an
indirect wholly-owned subsidiary of the Company.
The Company's principal executive offices are located at 225 West
Washington Street, Chicago, Illinois 60606, and its telephone number is (312)
372-9500. Procor's principal executive offices are located at 2001 Speers Road,
Oakville, Ontario, Canada L6J 5E1, and its telephone number is (905) 827-4111.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1995 and as adjusted to give effect to the issuance of
the Company ETCs and the Procor ETC. The table does not give effect to the sale
of the Pass Through Certificates because the Pass Through Certificates are not
direct obligations of the Company. In addition, because the Leases are expected
to be classified as operating, rather than capital, leases, there will be no
related obligation recorded on the Company's consolidated balance sheet.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Borrowed debt:
Equipment obligations, payable periodically through 2009 at
6.50%-15.55% (average rate 8.97% at December 31, 1995)....... $ 631,840 $
Senior notes, 9.75% due in 1997................................. 143,000 143,000
Other long-term borrowings, payable periodically through 2005
(average rate 12.2%)......................................... 26,745 26,745
---------- --------
Total borrowed debt..................................... 801,585
Stockholder's equity:
Common stock, no par value: 1,000 shares authorized and issued.. 106,689 106,689
Additional capital.............................................. 4,652 4,652
Retained earnings............................................... 419,132 419,132
---------- --------
Total stockholder's equity.............................. 530,473 530,473
---------- --------
Total capitalization............................... $ 1,332,058 $
========== ========
</TABLE>
18
<PAGE> 20
SELECTED FINANCIAL INFORMATION
The selected financial information set forth below as of December 31, 1991
through 1995 and for the years then ended, with the exception of the operating
fleet data, has been derived from the Company's audited financial statements
contained in the Company's Annual Reports on Form 10-K. The audited financial
statements contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, together with the report of the Company's independent
auditors, Ernst & Young LLP, are incorporated herein by reference. See
"Documents Incorporated by Reference." The selected financial information should
be read in conjunction with such financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income Statement
Services and net sales(1)......................... $856,229 $720,864 $504,823 $618,007 $483,416
Other income...................................... 19,607 15,959 17,033 22,374 37,406
Total revenues.................................... 875,836 736,823 521,856 640,381 520,822
Cost of services and sales........................ 608,534 487,742 280,161 400,177 269,748
General and administrative........................ 55,630 54,120 54,629 53,609 52,560
Interest expense.................................. 81,179 91,442 96,584 105,417 117,263
Income before income taxes and cumulative effect
of change in accounting principle............... 130,493 103,519 90,482 81,178 81,251
Income before cumulative effect of a change in
accounting principle............................ 84,465 63,378 49,730 48,382 45,024
Cumulative effect of a change in accounting
principle(2).................................... -- -- 80,000 -- --
Net income........................................ 84,465 63,378 129,730 48,382 45,024
BALANCE SHEET(3)
Total assets...................................... 2,003,346 2,017,772 2,054,867 2,063,267 2,253,760
Borrowed debt..................................... 801,585 882,407 951,031 942,907 1,131,558
Stockholder's equity.............................. 530,473 505,008 485,630 445,900 430,518
OTHER
Ratio of earnings to fixed charges(4)............. 2.41x 2.05x 1.89x 1.76x 1.69x
OPERATING FLEET(3)
Tank cars......................................... 53,669 52,090 51,021 49,580 48,837
Other railway cars................................ 13,943 13,300 13,515 13,633 14,334
</TABLE>
- ---------------
(1) In 1995, 1994 and 1992, the Company entered into sale-leaseback transactions
pursuant to which it sold and leased back an aggregate of $130.5 million,
$125.5 million and $124.9 million, respectively, of railcars. The unusually
high sales and cost of sales figures in 1995, 1994 and 1992 as compared to
other periods are primarily attributable to these transactions.
(2) The $80 million cumulative effect of a change in accounting principle for
the year ended December 31, 1993 resulted from the Company's adoption of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." As more fully discussed in the Company's Annual Report on
Form 10-K for the year ended December 31, 1993, effective January 1, 1993,
the Company prospectively adopted the provisions of this new accounting
standard and, accordingly, changed to the asset and liability approach of
accounting for income taxes. The cumulative effect of this change in
accounting principle was an $80 million non-cash credit to earnings, which
represents the new, lower net deferred income tax liability calculated under
the new accounting method as compared to the net liability recorded under
the former income tax accounting method. Adoption of the new accounting
method had no impact on pre-tax income and has not and will not impact cash
flows related to income taxes.
(3) As of the end of the period indicated.
(4) The ratio of earnings to fixed charges represents the number of times that
interest expense, amortization of debt discount and the interest component
of rent expense were covered by income before income taxes and such
interest, amortization and the interest component of rentals. In addition to
fluctuations in the ratio of earnings to fixed charges resulting from
changes in the Company's operations, the ratio of earnings to fixed charges
for the periods beginning in 1991 was reduced because of the incurrence of
additional interest expense relating to the Company's commercial paper
program, which program was suspended effective May 1994.
19
<PAGE> 21
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
The Pass Through Certificates offered hereby will be issued pursuant to two
separate Agreements, one between the Company and the Pass Through Trustee and
the other among the Company, Procor and the Pass Through Trustee. Each Agreement
will be qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and will contain substantially the same terms and conditions,
except that the interest rate, scheduled repayments of principal, and maturity
dates applicable to the Equipment Notes held in each Pass Through Trust, the
aggregate principal amount of Equipment Notes held in each Pass Through Trust,
and the final distribution date applicable to each Pass Through Trust will
differ. In addition, Pass Through Trust 1996-A1 will only hold certain Equipment
Notes, and Pass Through Trust 1996-A2 will hold certain Equipment Notes and the
ETCs. The statements under this caption are a summary only and do not purport to
be complete. The summary makes use of terms defined in the Agreements and is
qualified in its entirety by reference to all of the provisions of the
Agreements. Except as otherwise indicated, the following summary relates to the
Agreements, the Pass Through Trusts formed thereby and the Pass Through
Certificates issued by the Pass Through Trusts. Citations to the relevant
sections of the Agreements appear below in parentheses unless otherwise
indicated.
GENERAL
The Pass Through Certificates will be issued in fully registered form only.
Each Pass Though Certificate will represent a fractional, undivided interest in
the Pass Through Trust created by the Agreement pursuant to which such Pass
Through Certificate was issued. The property of each Pass Through Trust will
include (i) the Equipment Notes, and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC, held in such Pass Through Trust, (ii) all
monies at any time paid with respect to such Equipment Notes, and in the case of
Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC, (iii) all
monies due and to become due thereunder and (iv) funds from time to time
deposited with the Pass Through Trustee in accounts relating to such Pass
Through Trust. Each Pass Through Certificate will correspond to a pro rata share
of the outstanding principal amount of the Equipment Notes, and in the case of
Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC, to be held in
the related Pass Through Trust and will be issued in minimum denominations of
$1,000 or any integral multiple of $1,000 in excess thereof. (Sections 2.1 and
3.1) The Pass Through Certificates will be registered in the name of Cede & Co.
("Cede") as the nominee of The Depository Trust Company ("DTC"). No person
acquiring an interest in the Pass Through Certificates (a "Certificate Owner")
will be entitled to receive a certificate representing such persons interest in
the Pass Through Certificates, except as set forth below under "Registered
Certificates." Unless and until Registered Certificates are issued under the
limited circumstances described herein, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
DTC Participants (as defined below), and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer, as the case
may be, to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Pass Through Certificates, or to DTC Participants for
distribution to Certificate Owners in accordance with DTC procedures. See
"Book-Entry Registration." (Section 3.9)
Interest will be passed through to Certificateholders of each Pass Through
Trust at the rate per annum set forth on the cover page of this Prospectus,
which is calculated on the basis of a 360-day year of twelve 30-day months.
The Pass Through Certificates represent interests in the respective Pass
Through Trusts and do not represent an interest in or obligation of the Company,
Procor, the Pass Through Trustee, any Owner Participant, any Owner Trustee in
its individual capacity, or any affiliate of any such person. (Section 3.8)
20
<PAGE> 22
Neither the Agreements, the Indentures nor the Trust Agreements contain any
financial or operating covenants nor any "event risk" provisions specifically
designed to afford Certificate Owners protection in the event of a highly
leveraged transaction which may or may not result in a change of control of the
Company or Procor. However, the Certificate Owners have the indirect benefit of,
among other things, a lien on the Equipment and an assignment of rights to lease
payments securing the respective Equipment Notes, and in the case of Certificate
Owners of Pass Through Trust 1995-A2, title to the Trust Equipment securing the
Company ETCs and the Procor ETC as well as the Company's full and unconditional
guarantee of (i) the payment as and when due of the principal of and interest on
the Company ETCs and (ii) the due and punctual distribution to
Certificateholders of principal and interest payable in respect of the Procor
ETC. See "--Guarantee," "Description of the Equipment Notes--Security,"
"Description of the ETCs--Guarantees" and "--Security."
BOOK-ENTRY REGISTRATION
DTC has advised the Company that DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to Section
17A of the Exchange Act. DTC was created to hold securities for its participants
("DTC Participants") and to facilitate the clearance and settlement of
securities transactions between DTC Participants through electronic
book-entries, thereby eliminating the need for physical movement of
certificates. DTC Participants include securities brokers and dealers (including
Salomon Brothers Inc), banks, trust companies and clearing corporations.
Indirect access to the DTC system also is available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a DTC Participant either directly or indirectly ("Indirect
Participants").
Certificate Owners that are not DTC Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Pass Through Certificates may do so only through DTC Participants
and Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Pass Through Trustee through
DTC Participants or Indirect Participants, as the case may be. Under a
book-entry format, Certificate Owners may experience some delay in their receipt
of payments, as such payments will be forwarded by the Pass Through Trustee to
Cede, as nominee for DTC. DTC will forward such payments to DTC Participants,
which thereafter will forward them to Indirect Participants or Certificate
Owners, as the case may be, in accordance with customary industry practices. The
forwarding of such distributions to the Certificate Owners will be the
responsibility of such DTC Participants. The only "Certificateholder" will be
Cede, as nominee of DTC. Certificate Owners will not be recognized by the Pass
Through Trustee as Certificateholders, as such term is used in the Agreements,
and Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Pass Through Certificates among DTC Participants on whose behalf it acts with
respect to the Pass Through Certificates and to receive and transmit
distributions of principal of, Make-Whole Amount, if any, and interest on, the
Pass Through Certificates. DTC Participants and Indirect Participants with which
Certificate Owners have accounts with respect to the Pass Through Certificates
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners will not possess Pass Through Certificates, the
Rules provide a mechanism by which Certificate Owners will receive payments and
will be able to transfer their interests.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, the ability of a Certificate Owner to pledge
Pass Through Certificates to persons or
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<PAGE> 23
entities that do not participate in the DTC system, or to otherwise act with
respect to such Pass Through Certificates, may be limited due to the lack of a
physical certificate for such Pass Through Certificates.
DTC has advised the Company that it will take any action permitted to be
taken by a Certificateholder under the Agreements only at the direction of one
or more DTC Participants to whose accounts with DTC the Pass Through
Certificates are credited, which DTC Participants represent the percentage
interest of the Pass Through Trust necessary to provide such direction under the
Agreements. Additionally, DTC may take conflicting actions with respect to an
undivided interest held by a DTC Participant to the extent that it is directed
to do so by such DTC Participant as a result of instructions from various
Certificate Owners.
Neither the Company, Procor nor the Pass Through Trustee will have any
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Pass Through Certificates held by Cede,
as nominee for DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
REGISTERED CERTIFICATES
The Pass Through Certificates will be issued in fully registered,
certificated form ("Registered Certificates") to Certificate Owners or their
nominees, rather than to DTC or its nominee, only if (i) the Company advises the
Pass Through Trustee in writing that DTC (or a successor thereto) is no longer
willing or able to discharge properly its responsibilities as depository with
respect to the Pass Through Certificates and the Pass Through Trustee or the
Company is unable to locate a qualified successor, (ii) the Company, at its
option, elects to terminate the book-entry system through DTC (or a successor
thereto) or (iii) after the occurrence of an Event of Default, Certificate
Owners representing an aggregate percentage interest in the Pass Through Trust
of not less than a majority advise the Pass Through Trustee through DTC in
writing that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in the Certificate Owners best interest. (Section 3.9)
Upon the occurrence of any event described in the immediately preceding
paragraph, the Pass Through Trustee will be required to notify all Certificate
Owners through DTC Participants of the availability of Registered Certificates.
Upon surrender by DTC of the certificates representing the Pass Through
Certificates and receipt of instructions for re-registration, the Pass Through
Trustee will reissue the Pass Through Certificates as Registered Certificates to
Certificate Owners or their nominees. (Section 3.9)
Distribution of principal of, Make-Whole Amount, if any, and interest on
the Pass Through Certificates will thereafter be made by the Pass Through
Trustee directly to holders of Registered Certificates in accordance with the
procedures set forth in the Agreement. Such distributions will be made by check
mailed to the address of such holder as it appears on the register maintained by
the Pass Through Trustee. The final payment on any Pass Through Certificate,
however, will be made only upon presentation and surrender of such Pass Through
Certificate at the office or agency specified in the notice of final
distribution to Certificateholders. (Sections 4.2 and 11.1)
Registered Pass Through Certificates will be freely transferable and
exchangeable at the office of the Pass Through Trustee upon compliance with the
requirements set forth in the Agreement. No service charge will be imposed for
any registration of transfer or exchange, but payment of a sum sufficient to
cover any tax or other governmental charge will be required. (Sections 3.4 and
11.1)
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Pass Through Certificates will be required to be made in
immediately available funds. All payments made by the Company to each Indenture
Trustee as assignee of an Owner Trustee's rights under the corresponding Lease,
as well as all payments made by the
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<PAGE> 24
Company and Procor in respect of the Company ETCs and the Procor ETC, will be in
immediately available funds and will be passed through to DTC in immediately
available funds to the extent such payments are required to pay principal of,
Make-Whole Amount, if any, or interest on the Equipment Notes or to pay
principal or interest on the Company ETCs and the Procor ETC.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. Secondary trading in pass
through certificates such as the Pass Through Certificates is generally settled
in immediately available funds. The Pass Through Certificates will trade in DTCs
Same-Day Funds Settlement System until maturity, and secondary market trading
activity in the Pass Through Certificates will therefore be required by DTC to
settle in immediately available funds.
PAYMENTS AND DISTRIBUTIONS
Payments of principal of, Make-Whole Amount, if any, and interest on the
Equipment Notes, and in the case of Pass Through Trust 1995-A2, the Company ETCs
and the Procor ETC, held in each Pass Through Trust received by the Pass Through
Trustee will be distributed by the Pass Through Trustee to Certificateholders of
such Pass Through Trust on the date such receipt is confirmed, except in certain
cases when some or all of such Equipment Notes, Company ETCs or the Procor ETC,
as the case may be, are in default. See "Description of the Pass Through
Certificates--Events of Default and Certain Rights Upon an Event of Default."
Payments of interest on the unpaid principal amount of the Equipment Notes, and
in the case of Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC,
held in such Pass Through Trust are scheduled to be received by the Pass Through
Trustee on and of each year, commencing ,
199[6], until the final distribution date for the Pass Through Trust. Payments
of principal of the Equipment Notes held in Pass Through Trust 1996-A1 are
scheduled to be received by the Pass Through Trustee on or
or both, of each year, commencing , 199[ ] (such scheduled payments
of interest and principal are herein referred to as "Scheduled Payments", and
and of each year, commencing , 199[6], are
herein referred to as "Regular Distribution Dates"). The payment of the
outstanding principal amount of the Equipment Notes (as a result of the
mandatory refinancing of such Equipment Notes), the Company ETCs and the Procor
ETC held in Pass Through Trust 1996-A2 is scheduled to be received by the Pass
Through Trustee on , 200 . The Pass Through Trustee will distribute
on each Regular Distribution Date to the Certificateholders all Scheduled
Payments the receipt of which is confirmed by the Pass Through Trustee on such
Regular Distribution Date. Each such distribution of Scheduled Payments will be
made by the Pass Through Trustee to the holders of record of the Pass Through
Certificates as of the Record Date preceding such Regular Distribution Date.
(Sections 4.1 and 4.2) If a Scheduled Payment is not received by the Pass
Through Trustee on a Regular Distribution Date, it will be distributed on the
date received to such holders of record. (Section 4.2)
Each Certificate Owner will be entitled to receive a pro rata share of any
distribution in respect of Scheduled Payments of principal and interest made on
the Equipment Notes, the Company ETCs and the Procor ETC held in the related
Pass Through Trust. Scheduled Payments of principal of the Equipment Notes held
in Pass Through Trust 1996-A1 are set forth below under "Description of the
Equipment Notes--Principal Payments." After a prepayment of some or all of the
Equipment Notes or a default in respect of some or all of such Equipment Notes,
Company ETCs or the Procor ETC, a Certificate Owner should refer to the
information with respect to the Pool Balance and the Pool Factor reported
periodically by the Pass Through Trustee of such Pass Through Trust. See
"Description of the Pass Through Certificates--Pool Factors" and "Description of
the Pass Through Certificates--Reports to Certificateholders."
Payments of principal, Make-Whole Amount, if any, and interest received by
the Pass Through Trustee on account of the prepayment, if any, of the Equipment
Notes relating to certain Equipment, and payments received by the Pass Through
Trustee following a default in respect of the Equipment
23
<PAGE> 25
Notes relating to certain Equipment, Company ETCs or the Procor ETC (including
payments received by the Pass Through Trustee on account of the purchase by the
Owner Trustee of such Equipment Notes or payments received on account of the
sale of such Equipment Notes, Company ETCs or the Procor ETC by the Pass Through
Trustee) ("Special Payments") will be distributed (i) in the case of prepayments
with respect to a voluntary termination of a Lease, the purchase of any Units by
the Company or an ordinary Event of Loss, on a Regular Distribution Date, (ii)
in the case of prepayments with respect to a Multiple Loss (as hereinafter
defined), a refunding or refinancing of the Equipment Notes or a purchase of the
Equipment by the Company from an Owner Trustee of a competitive Owner
Participant, on any Business Day following 15 days notice from the Pass Through
Trustee to DTC and (iii) in the case of payments received following a default in
respect of any Equipment Note, a Company ETC or the Procor ETC, on the [second
day of any month] (each, a "Special Distribution Date"). The Pass Through
Trustee will mail notice to the Certificateholders of record not less than 15
days prior to the Special Distribution Date on which any Special Payment is
scheduled to be distributed by the Pass Through Trustee stating such anticipated
Special Distribution Date. (Section 4.2) Each distribution of a Special Payment,
other than a final distribution, on a Special Distribution Date will be made by
the Pass Through Trustee to the holders of record of the Pass Through
Certificates as of the Record Date preceding such Special Distribution Date. See
"Description of the Pass Through Certificates--Events of Default and Certain
Rights Upon an Event of Default" and "Description of the Equipment
Notes--Prepayment."
Each Agreement requires that the Pass Through Trustee establish and
maintain, for the Pass Through Trust created by such Agreement and for the
benefit of the Certificateholders, one or more non-interest bearing accounts
(the "Certificate Account") for the deposit of payments representing Scheduled
Payments. Each Agreement also requires that the Pass Through Trustee establish
and maintain, for the Pass Through Trust created by such Agreement and for the
benefit of the Certificateholders of such Pass Through Trust, one or more
non-interest bearing accounts (the "Special Payments Account") for the deposit
of payments representing Special Payments. Pursuant to the terms of each
Agreement, the Pass Through Trustee is required to deposit any Scheduled
Payments received by it in the Certificate Account and to deposit any Special
Payments so received by it in the Special Payments Account. (Section 4.1) All
amounts so deposited will be distributed by the Pass Through Trustee on a
Regular Distribution Date or a Special Distribution Date, as appropriate.
(Section 4.2)
At such time, if any, as the Pass Through Certificates are issued in the
form of Registered Certificates and not to Cede, as nominee for DTC,
distributions by the Pass Through Trustee from the Certificate Account or the
Special Payments Account on a Regular Distribution Date or a Special
Distribution Date will be made by check mailed to each Certificateholder of
record of such Pass Through Trust on the applicable record date at its address
appearing on the register maintained with respect to such Pass Through Trust.
(Section 4.2) The final distribution for each Pass Through Trust, however, will
be made only upon presentation and surrender of the Pass Through Certificates
for such Pass Through Trust at the office or agency of the Pass Through Trustee
specified in the notice given by the Pass Through Trustee of such final
distribution. The Pass Through Trustee will mail such notice of the final
distribution to the Certificateholders, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.1) See
"Description of the Pass Through Certificates--Termination of the Pass Through
Trusts."
If any Regular Distribution Date or Special Distribution Date is not a
Business Day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date may be made on the next succeeding Business
Day without any additional interest. (Section 12.11)
GUARANTEE
The Company will fully and unconditionally guarantee the due and punctual
distribution to Certificateholders of principal and interest payable in respect
of the Procor ETC. In addition, the
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<PAGE> 26
Company will fully and unconditionally guarantee the due and punctual
performance by Procor of its obligations under the Procor Trust Agreement.
POOL FACTORS
Unless there has been a prepayment or purchase of any Equipment Notes or a
default in respect of any Equipment Notes, a Company ETC or the Procor ETC held
in a Pass Through Trust, as described below in "Events of Default--Events of
Default and Certain Rights Upon an Event of Default" and "Description of the
Equipment Notes--Prepayment", the Pool Factor for each Pass Through Trust will
decline in proportion to the scheduled repayments of principal of the Equipment
Notes, and in the case of Pass Through Trust 1996-A2, the Company ETCs and the
Procor ETC, held in such Pass Through Trust as described under "Description of
the Equipment Notes--Principal Payments" and "Description of the ETCs--Payment
of Principal and Interest." In the event of such a prepayment, purchase or
default, the Pool Factor and the Pool Balance of each Pass Through Trust so
affected will be recomputed after giving effect thereto and notice thereof will
be mailed to Certificateholders of such Pass Through Trust.
The "Pool Balance" for each Pass Through Trust indicates, as of any Regular
Distribution Date or Special Distribution Date, the aggregate unpaid principal
amount of the Equipment Notes, and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC held in each Pass Through Trust on such date
plus any amounts in respect of principal of such Equipment Notes, and in the
case of Pass Through Trust 1996-A2, such Company ETCs and the Procor ETC held by
the Pass Through Trustee and not yet distributed. The Pool Balance as of any
Regular Distribution Date or Special Distribution Date, if any, shall be
computed after giving effect to the payment of principal, if any, of the
Equipment Notes, and in the case of Pass Through Trust 1996-A2, the Company ETCs
and the Procor ETC held in the Pass Through Trust and distribution thereof to be
made on that date. (Section 1.1)
The "Pool Factor" for each Pass Through Trust as of any Regular
Distribution Date or Special Distribution Date is the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
aggregate original principal amount of the Pass Through Certificates issued by
such Pass Through Trust. The Pool Factor for each Pass Through Trust as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, of the Equipment Notes, and
in the case of Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC,
held in such Pass Through Trust and distribution thereof to be made on that
date. (Section 1.1) The Pool Factor for each Pass Through Trust will initially
be 1.0000000; thereafter, the Pool Factor will decline as described above to
reflect reductions in the Pool Balance of such Pass Through Trust. The amount of
a Certificateholder's pro rata share of the Pool Balance of a Pass Through Trust
can be determined by multiplying the original denomination of such holder's Pass
Through Certificate of such Pass Through Trust by the Pool Factor for such Pass
Through Trust as of the Regular Distribution Date or Special Distribution Date.
The Pool Factor and the Pool Balance for each Pass Through Trust will be mailed
to Certificateholders of record of such Pass Through Trust on each Regular
Distribution Date and Special Distribution Date.
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<PAGE> 27
As of the date of issuance of the Pass Through Certificates and assuming
that all proceeds are used to purchase Equipment Notes, Company ETCs and the
Procor ETC on or before June , 1996, and that no prepayment or purchase in
respect of any Equipment Notes or default in respect of any Equipment Notes,
Company ETCs or the Procor ETC shall occur, the scheduled payment of principal
of the Equipment Notes, Company ETCs and the Procor ETC and the resulting Pool
Factors for the Pass Through Trusts after taking into account each such payment
are set forth below:
<TABLE>
<CAPTION>
PASS THROUGH PASS THROUGH
TRUST 1996-A1 TRUST 1996-A2
SCHEDULED PASS THROUGH SCHEDULED PASS THROUGH
PRINCIPAL TRUST 1996-A1 PRINCIPAL TRUST 1996-A2
REGULAR DISTRIBUTION DATE PAYMENTS POOL FACTOR PAYMENTS POOL FACTOR
- ---------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
.........................
.........................
.........................
.........................
</TABLE>
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date or Special Distribution Date, the Pass
Through Trustee will include with each distribution of a Scheduled Payment or
Special Payment to Certificateholders of record of the related Pass Through
Trust a statement, giving effect to such distribution to be made on such Regular
Distribution Date or Special Distribution Date, setting forth the following
information (per a $1,000 principal amount Pass Through Certificate of such Pass
Through Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to Make-Whole Amount, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Pass Through
Trust. (Section 4.3)
So long as any Pass Through Certificates are registered in the name of
Cede, as nominee for DTC, on the Record Date prior to each Regular Distribution
Date and Special Distribution Date, the Pass Through Trustee will request from
DTC a securities position listing setting forth the names of all participants
reflected on DTC's books as holding interests in the Pass Through Certificates
on such Record Date. On each Regular Distribution Date and Special Distribution
Date, the Pass Through Trustee will mail to each such DTC Participant the
statement described above, and will make available additional copies as
requested by such DTC Participant, to be available for forwarding to Certificate
Owners. (Section 3.9)
In addition, after the end of each calendar year, the Pass Through Trustee
will prepare for each Certificateholder of record of each Pass Through Trust at
any time during the preceding calendar year a report containing the sum of the
amounts determined pursuant to clauses (i) and (ii) above with respect to such
Pass Through Trust for such calendar year or, in the event such person was a
Certificateholder of record during a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to the Pass Through Trustee and which a Certificateholder shall
reasonably request as necessary for the purpose of such Certificateholders'
preparation of its federal income tax returns. (Section 4.3) Such report and
such other items shall be prepared on the basis of information supplied to the
Pass Through Trustee by the DTC Participants, and shall be delivered by the Pass
Through Trustee to such DTC Participants to be available for forwarding by such
DTC Participants to Certificate Owners.
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<PAGE> 28
At such time, if any, as the Pass Through Certificates are issued in the
form of Registered Certificates, the Pass Through Trustee will prepare and
deliver the information described above to each Certificateholder of record of
each Pass Through Trust as the name of such Certificateholder appears on the
records of the Registrar of the Pass Through Certificates.
VOTING OF THE EQUIPMENT NOTES AND THE ETCS
The Pass Through Trustee, as holder of the Equipment Notes, and in the case
of Pass Through Trust 1996-A2, the ETCs in the respective Pass Through Trust,
has the right to vote and give consents and waivers in respect of such Equipment
Notes and ETCs, as applicable. Each Agreement sets forth the circumstances in
which the Pass Through Trustee shall direct any action or cast any vote as the
holder of the Equipment Notes held in the applicable Pass Through Trust at its
own discretion and the circumstances in which the Pass Through Trustee shall
seek instructions from the Certificateholders of such Pass Through Trust. Prior
to an Event of Default (as defined below) with respect to either Pass Through
Trust, all Equipment Notes and in the case of Pass Through Trust 1996-A2, all
ETCs held in such Pass Through Trust shall be voted for or against any action in
the same proportion as the Pass Through Certificates held by the
Certificateholders of such Pass Through Trust were actually voted. (Sections 6.1
and 10.1) Whenever the Agreements require or permit actions to be taken based
upon instructions or directions of Certificateholders of such Pass Through Trust
holding a specified percentage interest of a Pass Through Trust, DTC shall be
deemed to represent such percentage interest only to the extent that it has
received instructions to such effect from Certificate Owners and/or DTC
Participants owning or representing, respectively, such required percentage
interest and has delivered such instructions to the Pass Through Trustee.
(Section 3.9)
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
An event of default under an Agreement (an "Event of Default") is defined
as the occurrence and continuance of (i) an event of default under one or more
of the Indentures (an "Indenture Default") or (ii) an event of default under the
Company Trust Agreement or the Procor Trust Agreement (an "Equipment Trust
Default"). For a description of the Indenture Defaults under the Indentures, see
"Description of the Equipment Notes--Indenture Defaults, Notice and Waiver." For
a description of the Equipment Trust Defaults under the Trust Agreements, see
"Description of the ETCs--Equipment Trust Defaults and Provisions Relating
Thereto." Each Pass Through Trust will hold Equipment Notes issued pursuant to
each of the Indentures, which means a continuing Indenture Default under any one
Indenture will result in an Event of Default under each of the Agreements and
therefore will affect each of the Pass Through Trusts. There are, however, no
cross-default provisions in the Indentures and events resulting in an Indenture
Default under any particular Indenture will not necessarily result in an
Indenture Default occurring under any other Indenture. See "Description of the
Equipment Notes--Indenture Defaults, Notice and Waiver." If an Indenture Default
occurs with respect to fewer than all of the Indentures, the Equipment Notes
issued pursuant to the Indentures with respect to which an Indenture Default has
not occurred will continue to be held in the Pass Through Trusts, and payments
of principal and interest on such Equipment Notes will continue to be
distributed to the holders of the Pass Through Certificates as originally
scheduled. Similarly, there are no cross-default provisions in the Trust
Agreements, and an Equipment Trust Default under the Company Trust Agreement
will not constitute an Equipment Trust Default under the Procor Equipment Trust
Agreement, nor will an Equipment Trust Default under the Procor Trust Agreement
(other than a Company bankruptcy related default) constitute an Equipment Trust
Default under the Company Trust Agreement. Accordingly, if an Equipment Trust
Default occurs with respect to one Trust Agreement, but no Equipment Trust
Default has occurred with respect to the other Trust Agreement, the ETCs under
the non-defaulted Trust Agreement will continue to be held in Pass Through Trust
1996-A2, and payments of principal and interest on such ETCs will continue to be
distributed to the holders of such Certificates as originally scheduled.
However, a failure by the Company to perform in respect of its guarantee of the
due and punctual
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<PAGE> 29
distribution to Certificateholders of principal and interest payable in respect
of the Procor ETC and the due and punctual performance by Procor of its
obligations under the Procor Trust Agreement will constitute an Equipment Trust
Default under the Company Trust Agreement. (Section 6.1) In addition, an
Indenture Default will not necessarily result in an Equipment Trust Default nor
will an Equipment Trust Default necessarily result in an Indenture Default.
Under each Indenture, the Owner Trustee and the Owner Participant have the
right under certain circumstances to cure Indenture Defaults that result from
the occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee or the Owner Participant chooses to exercise such cure right, the
Indenture Default and consequently the Event of Default under each Agreement
will be deemed to be cured. In addition, in circumstances where (i) the
Indenture Trustee has given notice of its intent to accelerate the Equipment
Notes issued under such Indenture or to exercise other remedies or (ii) the
Indenture Trustee shall not have taken action for a period of not less than 180
days with respect to such Indenture Default, the Owner Trustee has the option to
prepay or purchase such Equipment Notes at a price equal to the unpaid principal
amount thereof together with accrued interest thereon to the date of prepayment
or purchase, but without Make-Whole Amount. See "Description of the Equipment
Notes--Indenture Defaults, Notice and Waiver."
Each Indenture provides that, if an Indenture Default shall occur and be
continuing thereunder, the Indenture Trustee may, and upon the instructions of
the holders of a majority in aggregate principal amount of the Equipment Notes
outstanding under such Indenture shall, declare the unpaid principal amount of
the Equipment Notes issued under such Indenture to be immediately due and
payable, together with any accrued and unpaid interest thereon. Each Indenture
further provides that, if an Indenture Default shall occur and be continuing
thereunder, the holders of a majority in aggregate principal amount of the
Equipment Notes outstanding under such Indenture may direct the Indenture
Trustee with respect to the exercise of remedies thereunder. See "Description of
the Equipment Notes--Remedies." Accordingly, the ability of the holders of the
Pass Through Certificates issued with respect to either Pass Through Trust to
cause the Indenture Trustee to accelerate the Equipment Notes issued under an
Indenture or to direct the exercise of remedies by the Indenture Trustee under
an Indenture will depend, in part, upon the proportion between the aggregate
principal amount of the Equipment Notes issued under such Indenture and held in
such Pass Through Trust and the aggregate principal amount of all Equipment
Notes issued under such Indenture. If, for example, the Equipment Notes held in
a Pass Through Trust constitute only 45% in aggregate principal amount of the
Equipment Notes issued under an Indenture, even if all of the Certificateholders
of such Pass Through Trust were to instruct the Pass Through Trustee to direct
the Indenture Trustee to accelerate the Equipment Notes issued under such
Indenture, the Equipment Notes so voted by such Pass Through Trust in favor of
acceleration would not alone be sufficient under the terms of the Indenture to
compel the Indenture Trustee to act. Moreover, there can be no assurance that
the Certificateholders of the other Pass Through Trust would at such time vote
the Equipment Notes held in such Pass Through Trust in favor of acceleration.
Each Pass Through Trust will hold Equipment Notes with different terms than the
Equipment Notes held in the other Pass Through Trust and therefore the
Certificateholders of one Pass Through Trust may have divergent or conflicting
interests from those of the Certificateholders of the other Pass Through Trust.
In addition, so long as the same institution acts as Pass Through Trustee of
both Pass Through Trusts, in the absence of instructions from the
Certificateholders of any such Pass Through Trust, the Pass Through Trustee
could for the same reason be faced with a potential conflict of interest upon an
Indenture Default.
Each Agreement provides that, so long as an Indenture Default under any
Indenture shall have occurred and be continuing, the Pass Through Trustee of the
Pass Through Trust created by such Agreement may vote all of the Equipment Notes
issued under such Indenture, and upon the direction of the holders of Pass
Through Certificates evidencing fractional undivided interests aggregating not
less than a majority in interest of such Pass Through Trust, the Pass Through
Trustee shall vote a corresponding majority of such Equipment Notes in favor of
directing the
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<PAGE> 30
Indenture Trustee to declare the unpaid principal amount of all Equipment Notes
issued under such Indenture and any accrued and unpaid interest thereon to be
due and payable. Each Agreement also provides that, if an Indenture Default
under any Indenture shall have occurred and be continuing, the Pass Through
Trustee of the Pass Through Trust created by such Agreement may, and upon the
direction of the holders of the Pass Through Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of such
Pass Through Trust shall, vote all of the Equipment Notes issued under such
Indenture in favor of directing the Indenture Trustee as to the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee or of exercising any trust or power conferred on the Indenture Trustee
under such Indenture. (Sections 6.1 and 6.4)
As an additional remedy, if an Indenture Default under an Indenture shall
have occurred and be continuing, each Agreement provides that the Pass Through
Trustee of the Pass Through Trust created by such Agreement may, and upon the
direction of the holders of Pass Through Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of such
Pass Through Trust shall, sell all or part of the Equipment Notes issued under
such Indenture that are held in such Pass Through Trust for cash to any person.
In addition, if an Owner Trustee elects to purchase all of the outstanding
Equipment Notes issued under such Indenture in lieu of prepayment, the Pass
Through Trustee shall sell such Equipment Notes to such Owner Trustee at a price
equal to the unpaid principal amount thereof together with accrued and unpaid
interest thereon. (Sections 6.1 and 6.2) Any proceeds received by the Pass
Through Trustee upon any such sale shall be deposited in the Special Payments
Account for such Pass Through Trust and shall be distributed to the
Certificateholders on a Special Distribution Date. (Sections 4.1 and 4.2) The
market for Equipment Notes in default may be very limited and there can be no
assurance that they could be sold for a reasonable price. Furthermore, so long
as the same institution acts as Pass Through Trustee of both Pass Through
Trusts, it may be faced with a conflict in deciding from which Pass Through
Trust to sell Equipment Notes to available buyers. If the Pass Through Trustee
sells any Equipment Notes with respect to which an Indenture Default exists for
less than their outstanding principal amount, the Certificateholders of such
Pass Through Trust will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against the Company,
the applicable Owner Participant, the applicable Owner Trustee in its individual
capacity or any affiliate thereof, or the Pass Through Trustee. Furthermore,
neither the Pass Through Trustee nor the Certificateholders of such Pass Through
Trust could take any action with respect to any remaining Equipment Notes so
long as no Indenture Defaults existed with respect thereto. (Sections 4.1 and
4.2)
Each Trust Agreement provides that, if an Equipment Trust Default shall
occur and be continuing thereunder, the Equipment Trust Trustee may, and upon
the instructions of the holders of a majority in aggregate principal amount of
the ETCs issued thereunder shall, declare the unpaid principal amount of such
ETCs to be immediately due and payable, together with any accrued and unpaid
interest thereon. Each Trust Agreement further provides that, if an Equipment
Trust Default shall occur and be continuing thereunder, the holders of a
majority in aggregate principal amount of the ETCs issued thereunder may direct
the Equipment Trust Trustee with respect to the exercise of remedies thereunder.
See "Description of the ETCs--Equipment Trust Defaults and Provisions Relating
Thereto." Accordingly, since all of the ETCs will be held in Pass Through Trust
1996-A2, the holders of such Pass Through Certificates will have the ability to
cause the Equipment Trust Trustee to accelerate the ETCs issued under a Trust
Agreement and to direct the exercise of remedies by the Equipment Trust Trustee
under a Trust Agreement.
The Agreement creating Pass Through Trust 1996-A2 provides that, so long as
an Equipment Trust Default under either Trust Agreement shall have occurred and
be continuing, the Pass Through Trustee may vote the ETCs issued under the
defaulted agreement and, upon the direction of the holders of Pass Through
Certificates evidencing fractional undivided interests aggregating not less than
a majority in interest in such Pass Through Trust, the Pass Through Trustee
shall vote a
29
<PAGE> 31
corresponding majority of the principal amount of the ETCs under the defaulted
agreement in favor of directing the Equipment Trust Trustee to declare the
unpaid principal amount of such ETCs and any accrued and unpaid interest thereon
to be due and payable. Such Agreement also provides that, if an Equipment Trust
Default under either Trust Agreement shall have occurred and be continuing, the
Pass Through Trustee of the Pass Through Trust 1996-A2 may, and upon the
direction of the holders of the Pass Through Certificates, Series 1996-A2
evidencing fractional undivided interests aggregating not less than a majority
in interest in such Pass Through Trust shall, vote the ETCs issued thereunder in
favor of directing the Equipment Trust Trustee as to the time, method and place
of conducting any proceeding for any remedy available to such Equipment Trust
Trustee or of exercising any trust or power conferred on the Equipment Trust
Trustee. In addition, if an Equipment Trust Default has occurred and is
continuing under the Procor ETC, the Pass Through Trustee may, and upon
direction of the holders of Certificates evidencing fractional undivided
interests aggregating not less than a majority in interest of such Pass Through
Trust shall, commence the exercise of remedies against the Company under its
guarantee of the due and punctual distribution to Certificateholders of
principal and interest payable in respect of the Procor ETC. (Sections 6.1, 6.4)
As an additional remedy, if an Equipment Trust Default shall have occurred
and be continuing, the Agreement creating Pass Through Trust 1996-A2 provides
that the Pass Through Trustee of such Pass Through Trust may, and upon the
direction of the holders of Certificates evidencing fractional undivided
interests aggregating not less than a majority in interest of such Pass Through
Trust shall sell the ETCs in default or a portion thereof for cash to any
person. The Pass Through Trustee is required to give notice to Procor of its
proposed sale of the Procor ETC at least 20 days prior to such proposed sale.
Such notice shall constitute an offer to sell the Procor ETC to Procor for a
price equal to the outstanding principal amount thereof, plus all accrued and
unpaid interest thereon, and all other amounts due and owing with respect
thereto. If, prior to the expiration of such 20 day period, Procor pays such
purchase price to the Pass Through Trustee, the Procor ETC will be transferred
to Procor. If Procor does not pay such purchase price prior to the expiration of
such period, the Pass Through Trustee may sell the Procor ETC to any person.
(Section 6.1) Any proceeds received by the Pass Through Trustee upon any such
sale shall be deposited in the Special Payments Account and shall be distributed
to the Certificateholders on a Special Distribution Date. (Sections 4.1, 4.2,
6.2) The market for equipment trust certificates in default may be very limited
and there can be no assurance that an ETC in default could be sold for a
reasonable price. If the Pass Through Trustee sells a Company ETC for less than
its outstanding principal amount, the Certificateholders of Pass Through Trust
1995-A2 will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall amount against the
Company or the Pass Through Trustee. If the Pass Through Trustee sells the
Procor ETC for less than its outstanding principal amount, plus all accrued and
unpaid interest thereon and all other amounts due and owing with respect
thereto, the Certificateholders will have a claim for the shortfall amount
against the Company pursuant to its guarantee. See "--Guarantee."
Any amount distributed to the Pass Through Trustee of either Pass Through
Trust following an Indenture Default under an Indenture and any amount
distributed to the Pass Through Trustee of Pass Through Trust 1996-A2 following
an Equipment Trust Default under either Trust Agreement shall be deposited in
the Special Payments Account for such Pass Through Trust and shall be
distributed to the Certificateholders of such Pass Through Trust on a Special
Distribution Date. In addition, if, following an Indenture Default under any
Indenture, the applicable Owner Trustee exercises its option to prepay or
purchase the outstanding Equipment Notes issued under such Indenture as
described below under "Description of the Equipment Notes--Prepayment," the
amount paid by such Owner Trustee to the Pass Through Trustee for the Equipment
Notes issued under such Indenture shall be deposited in the Special Payments
Account for such Pass Through Trust and shall be distributed to the
Certificateholders of such Pass Through Trust on a Special Distribution Date.
(Sections 4.1 and 4.2)
30
<PAGE> 32
Any funds representing payments received with respect to an Equipment Note
or ETC in default, or the proceeds from the sale by the Pass Through Trustee of
such Equipment Note or ETC, held by the Pass Through Trustee in the Special
Payments Account for such Pass Through Trust shall, to the extent practicable,
be invested and reinvested by the Pass Through Trustee in Permitted Investments
pending the distribution of such funds on a Special Distribution Date. (Sections
1.1 and 4.4)
Each Agreement provides that the Pass Through Trustee shall, within 30 days
after the occurrence of a default (as defined below) in respect of the Pass
Through Trust created by such Agreement, give to the Certificateholders of such
Pass Through Trust notice, transmitted by mail, of all uncured or unwaived
defaults under such Agreement known to it; provided that, except in the case of
default in the payment of principal of, Make-Whole Amount, if any, or interest
on an Equipment Note or an ETC, as applicable, the Pass Through Trustee shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the Certificateholders. The
term "default," for the purpose of the provision described in this paragraph
only, shall mean the occurrence of any Event of Default under an Agreement,
except that in determining whether any such Event of Default has occurred any
grace period or notice in connection therewith shall be disregarded. (Section
7.2)
Each Agreement contains a provision entitling the Pass Through Trustee,
subject to the duty of the Pass Through Trustee during a default to act with the
required standard of care, to obtain security from or be indemnified by the
holders of the Pass Through Certificates of the Pass Through Trust relating to
such Agreement before proceeding to exercise any right or power under such
Agreement at the request of such Certificateholders. (Section 7.3)
The holders of Pass Through Certificates of a Pass Through Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Pass Through Trust may on behalf of the holders of all Pass Through
Certificates of such Pass Through Trust instruct the Pass Through Trustee to
waive any past default or Event of Default under the related Agreement and
thereby annul any direction given by the Pass Through Trustee to the Indenture
Trustee or the Equipment Trust Trustee with respect thereto, except (i) a
default in payment of principal of, Make-Whole Amount, if any, or interest on,
an Equipment Note or an ETC, as applicable, and (ii) a default in respect of any
covenant or provision of the related Agreement that cannot be modified or
amended without the consent of each Certificateholder of such Pass Through Trust
affected thereby. (Section 6.5) Each Indenture provides that, with certain
exceptions, the holders of a majority in aggregate unpaid principal amount of
the Equipment Notes thereunder may on behalf of all such holders waive any past
default or Indenture Default thereunder. (Indentures, Section 5.06) For a
discussion of waivers of Indenture Defaults under the Indentures, see
"Description of the Equipment Notes--Indenture Defaults, Notice and Waiver."
Each Trust Agreement provides that, with certain exceptions, the holders of a
majority in aggregate unpaid principal amount of the ETCs outstanding thereunder
may on behalf of all such holders waive any past default or Equipment Trust
Default thereunder. Therefore, if the Certificateholders of a Pass Through Trust
or Trusts waive a past default or Event of Default under the respective related
Agreements such that the principal amount of the Equipment Notes or ETCs, as
applicable, held either individually in such Pass Through Trust or in the
aggregate in such Pass Through Trusts constitutes the required majority in
aggregate unpaid principal amount under the applicable Indenture or Trust
Agreement, as applicable, such past default or Indenture Default under such
Indenture or Equipment Trust Default under such Equipment Trust Agreement, as
applicable, shall be waived. For a discussion of waivers of Equipment Trust
Defaults under the Trust Agreements, see "Description of the ETCs--Equipment
Trust Defaults and Provisions Relating Thereto."
MODIFICATION OF THE AGREEMENTS
Each Agreement contains provisions permitting the Company and Procor and
requiring the Pass Through Trustee to enter into supplements to such Agreements,
without the consent of the
31
<PAGE> 33
holders of any of the Pass Through Certificates of the Pass Through Trust
created by such Agreement, among other things (i) to evidence the succession of
another corporation to the Company or Procor and the assumption by such
corporation of the Company's or Procor's obligations under the Agreement, (ii)
to add to the covenants of the Company or Procor, as the case may be, for the
benefit of holders of the applicable Pass Through Certificates or to surrender
any of the Company's or Procor's, as the case may be, rights under such
Agreement and (iii) to cure any ambiguity, to correct any manifest error, to
correct or supplement any defective or inconsistent provision of such Agreement
or any supplement to such Agreement, or to make any other provisions with
respect to matters or questions arising under such Agreement, provided such
action shall not adversely affect the interests of the holders of such Pass
Through Certificates. (Section 9.1)
Each Agreement also contains provisions permitting the Company and the Pass
Through Trustee and, in the case of Pass Through Trust 1996-A2, Procor, with the
consent of the holders of Pass Through Certificates or the Pass Through Trust
created by such Agreement evidencing fractional undivided interests aggregating
not less than a majority in interest of such Pass Through Trust, to enter into
supplements to such Agreement adding any provisions to or changing or
eliminating any of the provisions of such Agreement or modifying the rights of
the Certificateholders, except that no such supplement to such Agreement may,
without the consent of each Certificateholder so affected (i) reduce in any
manner the amount of, or delay the timing of, any receipt by the Pass Through
Trustee of payments on the Equipment Notes or ETCs, as applicable, held in such
Pass Through Trust, or distributions in respect of any related Pass Through
Certificate, or change any date of payment on any such Pass Through Certificate,
or make distributions payable at a place, or in coin or currency, other than
that provided for in such Pass Through Certificates, or impair the right of any
Certificateholder of such Pass Through Trust to institute suit for the
enforcement of any such payment when due, (ii) permit the disposition of the
Equipment Notes or the ETCs, as applicable, held in such Pass Through Trust,
except as provided in such Agreement or (iii) reduce the percentage of the
aggregate fractional undivided interests of the Pass Through Trust provided for
in such Agreement, the consent of the holders of which is required for any such
supplement to such Agreement or for any waiver provided for in such Agreement.
(Section 9.2)
MODIFICATION OF LEVERAGED LEASE AND TRUST AGREEMENTS
In the event that the Pass Through Trustee, as the holder of any Equipment
Note or, in the case of Pass Through Trust 1996-A2 ETC held in a Pass Through
Trust, receives a request for its consent to any amendment, modification or
waiver under the Indenture, Lease or other document relating to such Equipment
Notes or under a Trust Agreement or other agreement relating to an ETC, the Pass
Through Trustee shall mail a notice of such proposed amendment, modification or
waiver to each Certificateholder of such Pass Through Trust as of the date of
such notice. The Pass Through Trustee shall request instructions from the
Certificateholders as to whether or not to consent to such amendment,
modification or waiver. The Pass Through Trustee shall vote or consent with
respect to all such Equipment Notes or, in the case of Pass Through Trust
1996-A2, ETCs in such Pass Through Trust in the same proportion as the Pass
Through Certificates of such Pass Through Trust were actually voted by the
holders thereof by a certain date. Notwithstanding the foregoing, if any Event
of Default under the related Agreement shall have occurred and be continuing,
the Pass Through Trustee may in its own discretion consent to such amendment,
modification or waiver, and may so notify the Indenture Trustee to which such
consent relates. (Section 10.1)
TERMINATION OF THE PASS THROUGH TRUSTS
Each Agreement will terminate upon the distribution to all
Certificateholders of the Pass Through Trust of all amounts required to be
distributed to them pursuant to such Agreement and the disposition of all
property held in such Pass Through Trust. The Pass Through Trustee will mail to
each Certificateholder of record of such Pass Through Trust notice of the
termination of such Pass
32
<PAGE> 34
Through Trust, the amount of the proposed final payment and the proposed date
for the distribution of such final payment. The final distribution to any
Certificateholder of such Pass Through Trust will be made only upon surrender of
such Certificateholder's Pass Through Certificates at the office or agency of
the Pass Through Trustee specified in such notice of termination. (Section 11.1)
DELAYED PURCHASE; EXTRAORDINARY DISTRIBUTION
Earnings on Specified Investments in the escrow account in excess of
amounts required to be paid to Certificateholders for each Pass Through Trust
will be paid to the Company periodically and the Company will be responsible for
any losses. To the extent that the full amount of the proceeds from the sale of
the Pass Through Certificates is not used to purchase Equipment Notes and ETCs
on or prior to June , 1996, whether due to the physical unavailability of
Units, the failure by an Owner Trustee to issue Equipment Notes on or prior to
such date, the failure of an Equipment Trust Trustee to issue ETCs on or prior
to such date or otherwise, an amount equal to the unexpended proceeds, together
with interest thereon, from the date of issuance of the Pass Through
Certificates to but not including July , 1996, at the rate appertaining to the
applicable Pass Through Certificates, but without premium, will be distributed
on July , 1996 to the Certificateholders of record as of June , 1996.
(Section 2.1 (b)).
The Company will pay to the Pass Through Trustee on July , 1996 an amount
equal to the amount, if any, distributable by the Pass Through Trustee on such
date and thereupon will be entitled to any balance in the escrow account. On the
Regular Distribution Date occurring on , 199[6], the Company will
also pay to the Pass Through Trustee an amount equal to the difference between
the interest accrued on any Equipment Notes or ETCs, as applicable, purchased
after the issuance of the Pass Through Certificates and the interest that would
have accrued on such Equipment Notes or ETCs if they had been purchased at the
time of issuance of the Pass Through Certificates.
THE PASS THROUGH TRUSTEE
will be the Pass Through Trustee for each of the
two Pass Through Trusts. The Pass Through Trustee and any of its affiliates may
hold Pass Through Certificates in their own names. (Section 7.5) With certain
exceptions, the Pass Through Trustee makes no representations as to the validity
or sufficiency of the Agreements, the Pass Through Certificates, the Equipment
Notes, the ETCs, the Indentures, the Leases, the Trust Agreements or other
related documents. (Section 7.4) also will initially be
the Indenture Trustee of each of the Indentures under which the Equipment Notes
are issued and the Equipment Trust Trustee under the Trust Agreements.
The Pass Through Trustee may resign with respect to either or both of the
Pass Through Trusts at any time, in which event the Company and Procor will be
obligated to appoint a successor trustee. If the Pass Through Trustee fails to
comply with certain provisions of the Trust Indenture Act; ceases to be eligible
to continue as Pass Through Trustee under the related Agreement; becomes
incapable of acting as Pass Through Trustee; or becomes adjudged a bankrupt or
insolvent, the Company or Procor may remove the Pass Through Trustee, or any
holder of Pass Through Certificates of such Pass Through Trust for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Pass Through Trustee and
the appointment of a successor trustee. Any resignation or removal of the Pass
Through Trustee with respect to a Pass Through Trust and appointment of a
successor trustee for such Pass Through Trust does not become effective until
acceptance of the appointment by the successor trustee. (Section 7.9) Pursuant
to such resignation and successor trustee provisions, it is possible that a
different trustee could be appointed to act as the successor trustee under each
Agreement with respect to the related Pass Through Trust. All references in this
Prospectus to the Pass Through Trustee are to the Pass Through Trustee acting in
such capacity under each of the Pass Through Trusts and should be read to take
into account the possibility that the two Pass
33
<PAGE> 35
Through Trusts could each have a different successor trustee in the event of
such a resignation or removal.
Each Agreement provides that the Company and, in the case of Pass Through
Trust 1996-A2, Procor, will pay the Pass Through Trustee's fees and expenses,
other than a portion of the initial fees and reasonable actual disbursements of
the Pass Through Trustee, which shall be paid by the Owner Trustees. Each
Agreement further provides that the Pass Through Trustee will be entitled to
indemnification by the Company and, in the case of Pass Through Trust 1996-A2,
Procor, for, and will be held harmless against, any loss, liability or expense
incurred by the Pass Through Trustee (other than through its own wilful
misconduct, bad faith or negligence or by reason of a breach of any of its
representations or warranties set forth in the related Agreement), except to the
extent that such loss, liability or expense is for or with respect to taxes, in
which case the Pass Through Trustee may be entitled to be reimbursed by the Pass
Through Trust. (Section 7.7)
[Describe prior relationships, if any, between the Company and/or Procor
and the Pass Through Trustee.]
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<PAGE> 36
DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption are a summary only and do not purport to
be complete. The summary makes use of terms defined in, and is qualified in its
entirety by reference to all of the provisions of, the Equipment Notes, the
Indentures, the Leases and the Participation Agreements, the forms of which are
available without charge to each person to whom this Prospectus is delivered,
upon request of such person to the General Counsel and Secretary, Union Tank Car
Company, 225 West Washington Street, Chicago, Illinois 60606 (telephone
312/372-9500). Except as otherwise indicated, the following summary relates to
the Equipment Notes, the Indentures, the Leases and the Participation
Agreements.
GENERAL
Each series of Equipment Notes will be issued under one of
Indentures between , as Owner Trustee of an
owner trust for the benefit of an Owner Participant, and
, as Indenture Trustee.
Each Owner Trustee will lease Equipment to the Company pursuant to a Lease
under which the Company is obligated to pay rent to such Owner Trustee in
respect of the Equipment covered thereby. The amounts unconditionally payable
under each Lease will be sufficient to pay when due all payments of principal
of, Make-Whole Amount, if any, and interest on the Equipment Notes issued in
respect of the Equipment subject to such Lease. The Equipment Notes are not,
however, obligations of, or guaranteed by, the Company. The Company's rental
obligations under each Lease are general obligations of the Company.
PAYMENTS OF PRINCIPAL AND INTEREST
The aggregate principal amounts of the Equipment Notes issued with respect
to the Equipment covered by each Lease are as follows:
<TABLE>
<CAPTION>
LEASE
NO. SERIES A1 SERIES A2
------ --------- ---------
<S> <C> <C>
1........................................................... $ $
2...........................................................
-------- --------
Total.............................................. $
======== ========
</TABLE>
35
<PAGE> 37
Interest will be payable on each Equipment Note at the rate applicable to
such Equipment Note on the unpaid principal amount thereof on and
of each year, commencing , 199[6]. Such interest will be
computed on the basis of a 360-day year of twelve 30-day months. The principal
of each % Equipment Note issued on the date hereof (Note A) and each
Equipment Note issuable on or about June , 1996 (Note B) held in Pass Through
Trust 1996-A1 will be payable as set forth below:
<TABLE>
<CAPTION>
NOTE A NOTE B
PRINCIPAL PRINCIPAL PRINCIPAL
PAYMENT DATES PAYMENT PAYMENT PAYMENT
------------------------------------------------ --------- --------- ---------
<S> <C> <C> <C>
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
-------- -------- --------
Total................................. $ $ $
======== ======== ========
</TABLE>
The % Equipment Notes held in Pass Through Trust 1996-A2, in an aggregate
principal amount of $ , will amortize as to principal commencing on
, 200 , with the final payment of principal due on ,
20 ; however, such Equipment Notes are required to be prepaid on ,
pursuant to a mandatory refinancing. See "-- Prepayment."
If any date scheduled for any payment of principal of, Make-Whole Amount,
if any, or interest on the Equipment Notes is not a Business Day, such payment
may be made on the next Business Day without any additional interest.
PREPAYMENT
The Equipment Notes may be prepaid under the following circumstances:
Mandatory Prepayments. If an Event of Loss to a Unit shall occur and like
kind equipment of equal or greater fair market sales value, utility, remaining
useful life, residual value and condition (assuming such Unit was in the
condition required to be maintained) is not substituted for the affected Unit in
accordance with the terms of the applicable Lease, then the Company is obligated
to pay the Stipulated Loss Value of such Unit. Such payment will be used to
prepay a portion of the Equipment Notes issued with respect to the Equipment of
which such Unit is a part on (i) the next Regular Distribution Date following
the election by the Company to pay the Stipulated Loss Value of such Units
rather than substitute like kind equipment or (ii) in the case of the occurrence
of an Event of Loss in respect of more than ten Units since the end of the last
six month reporting period under a Lease (a "Multiple Loss"), on the first
Business Day succeeding the 60th day following the date on which the Company is
required to report such Multiple Loss. The amount prepaid will be equal to the
sum of (i) as to principal, an amount equal to the product obtained by
multiplying the aggregate unpaid principal amount of the Equipment Notes issued
under the Indenture to which such Equipment relates as of the prepayment date
(after deducting therefrom the scheduled principal installment, if any, due on
the prepayment date) by a fraction, the numerator of which shall
36
<PAGE> 38
be the Equipment Cost of such Unit and the denominator of which shall be the
aggregate Equipment Cost of all Equipment securing such Indenture immediately
prior to the prepayment date, and (ii) as to interest, the aggregate amount of
interest accrued and unpaid to but not including the prepayment date in respect
of the principal amount to be prepaid pursuant to clause (i) above on such
prepayment date. No Make-Whole Amount (as defined below) will be payable in the
event of a prepayment under such circumstances. See "Description of the
Equipment Notes--The Leases-- Events of Loss." (Leases, Section 11; Indentures,
Section 2.10)
In addition, under the Leases the Company may, so long as no Lease Event of
Default has occurred and is continuing, terminate a Lease at its option (i) at
any time after , 200 , with respect to any Unit, if the Company
determines in good faith that (A) such Unit has become obsolete or surplus to
its requirements, or (B) any modification to a Unit required by law would be
economically impractical, or (ii) on , 200 with respect to any or
all of the Units (the "Early Purchase Date") if the Company exercises its option
to purchase such Unit or (iii) if the Company elects to exercise its right to
purchase Equipment as a result of an Owner Participant (or an affiliate thereof)
engaging in a business that is in competition with the Company's full service
railcar leasing business. Unless the Company elects in connection with the
exercise of a purchase option to assume on a full recourse basis all of the
Owner Trustee's obligations in respect of the related Equipment Notes and
acquires the purchased Units subject to the lien of the related Indentures, the
amount of Equipment Notes to be prepaid in the event of any such Lease
termination will be equal to the sum of (i) as to principal, an amount equal to
the product obtained by multiplying the aggregate unpaid principal amount of the
Equipment Notes issued under the Indenture to which such Unit relates as of the
prepayment date (after deducting therefrom the scheduled principal installment,
if any, due on the prepayment date) by a fraction, the numerator of which shall
be the Equipment Cost of such Unit and the denominator of which shall be the
aggregate Equipment Cost of all Equipment securing such Indenture immediately
prior to the prepayment date, and (ii) as to interest the aggregate amount of
interest accrued and unpaid to but not including the prepayment date in respect
of the principal amount to be prepaid pursuant to clause (i) of this on such
prepayment date, plus a premium as set forth below (a "Make-Whole Amount"). Such
prepayment is to be made on the date which is the Lease termination date for
such Unit. See "Description of the Equipment Notes--The Leases--Termination."
(Leases, Section 10 and 22.1; Indentures, Section 2.10; Participation
Agreements, Section 6.9)
The Equipment Notes held in Pass Through Trust 1996-A2 are required to be
prepaid at a price equal to the unpaid principal amount thereof, together with
accrued but unpaid interest thereon to but not including the prepayment date, as
part of a mandatory refinancing, to be arranged by the Company, of the Equipment
Notes held by such Pass Through Trust on the final distribution date applicable
to the Pass Through Certificates, Series 1996-A2.
Voluntary Prepayments. Subject to certain restrictions, the Company may
require the relevant Owner Participant and Owner Trustee and the Pass Through
Trustee to effect an optional prepayment of the Equipment Notes at a price equal
to the unpaid principal amount thereof, together with accrued but unpaid
interest thereon to but not including the specified prepayment date (which shall
be a Special Distribution Date), plus a Make-Whole Amount, as part of a
refunding or refinancing which will result in the prepayment of the Pass Through
Certificates. (Participation Agreements, Section 10.2; Indentures, Section 2.10)
The Equipment Notes are also subject to purchase in whole by the Owner
Trustee upon at least 30 days' notice on a Special Distribution Date, in the
case of (i) any acceleration of such Equipment Notes, (ii) the Indenture
Trustee, as assignee of a Lease, having exercised (or given notice of its
intention to exercise) any remedy in respect of the Units under such Lease,
(iii) one or more Lease Events of Default having occurred under a Lease and
continuing for a period of 180 days or more during which period such Equipment
Notes could, but shall not, have been accelerated by the Indenture Trustee or
(iv) the Indenture Trustee having commenced foreclosure of the lien of the
Indenture or otherwise exercised remedies which would result in the exclusion of
the Owner Trustee
37
<PAGE> 39
from any property subject to the lien of the Indenture or any part thereof (or
given notice of its intention to foreclose or exercise remedies). Such purchase
would be at a price equal to the unpaid principal amount thereof and accrued
interest on such Equipment Notes to the date of payment, but without the payment
of any Make-Whole Amount except in the case of a purchase of the Equipment Notes
pursuant to clause (iv) above, if the right to exercise any remedies arises from
action attributable to the Owner Trustee or the Owner Participant. (Indentures,
Section 5.04(b))
The term "Make-Whole Amount" means, with respect to the principal amount of
any Equipment Note to be prepaid on any prepayment date, the amount to be
determined as of the third Business Day prior to the applicable prepayment date,
equal to the product obtained by multiplying (a) the excess, if any, of (i) the
sum of the present values of all the remaining scheduled payments of principal
and interest from the prepayment date to maturity of such Equipment Note,
discounted semi-annually on each and at a rate equal to the
Treasury Rate, based on a 360-day year of twelve 30-day months, over (ii) the
aggregate unpaid principal amount of such Equipment Note plus any accrued but
unpaid interest thereon by (b) a fraction the numerator of which shall be the
principal amount of such Equipment Note to be prepaid on such prepayment date
and the denominator of which shall be the aggregate unpaid principal amount of
such Equipment Note; provided that the aggregate unpaid principal amount of such
Equipment Note for the purpose of clause (a)(ii) and (b) of this definition
shall be determined after deducting the principal installment, if any, due on
such prepayment date. The Make-Whole Amount will be calculated by an independent
investment banking institution of national standing appointed by the Company or,
if the Indenture Trustee does not receive notice of such appointment at least
ten days prior to a scheduled prepayment date or if a Lease Event of Default
under the applicable Lease shall have occurred and be continuing, appointed by
the Indenture Trustee (an "Independent Investment Banker"). In calculating the
Make-Whole Amount, the Independent Investment Banker will first determine the
Treasury Rate applicable to the relevant Equipment Note.
For purposes of determining the Make-Whole Amount, "Treasury Rate" means,
with respect to prepayment of each Equipment Note, a per annum rate (expressed
as a semiannual equivalent and as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield), determined to be the per
annum rate equal to the semiannual yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note, as
determined by interpolation between the most recent weekly average yields to
maturity for two series of United States Treasury securities, (A) one maturing
as close as possible to, but earlier than, the Average Life Date of such
Equipment Note and (B) the other maturing as close as possible to, but later
than, the Average Life Date of such Equipment Note, in each case as published in
the most recent H.15(519) (or, if a weekly average yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Equipment
Note is reported in the most recent H.15(519), as published in H.15(519)).
H.15(519) means "Statistical Release H.15(519), Selected Interest Rates," or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The most recent H.15(519) means the latest H.15(519) which is
published prior to the close of business on the third Business Day preceding the
scheduled prepayment date. As used herein, "Remaining Weighted Average Life"
means, with respect to any date of prepayment or any date of determination of
any Equipment Note, the number of days equal to the quotient obtained by
dividing (a) the sum of the products obtained by multiplying (i) the amount of
each then remaining principal payment on such Equipment Note by (ii) the number
of days from and including the prepayment date or date of determination to but
excluding the scheduled payment date of such principal payment by (b) the unpaid
principal amount of such Equipment Note. As used herein, "Average Life Date"
means, with respect to an Equipment Note, the date which follows the prepayment
date or, in the case of an Equipment Note not being prepaid, the date of such
determination, by a period equal to the Remaining Weighted Average Life of such
Equipment Note.
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SECURITY
The Equipment Notes issued with respect to the Equipment purchased by each
Owner Trustee will be secured by (i) an assignment by such Owner Trustee to the
Indenture Trustee of such Owner Trustee's rights (other than certain excepted
rights reserved to the Owner Trustee) under the Lease relating to such Equipment
including the right to receive payments of rent thereunder and (ii) a security
interest held by the Indenture Trustee in all such Equipment, subject to the
rights of the Company under such Lease.
Unless and until an Indenture Default has occurred and is continuing, the
Indenture Trustee may not exercise certain rights of the Owner Trustee under the
related Lease; however, for so long as Equipment Notes under such Indenture are
outstanding, the Indenture Trustee shall retain the right to receive payments of
rent due under such Lease. The assignment by the Owner Trustee to the Indenture
Trustee of its rights under each Lease excludes certain rights of the Owner
Trustee and the applicable Owner Participant including rights relating to
indemnification by the Company for certain matters and to insurance proceeds
payable to such Owner Trustee in its individual capacity and as Owner Trustee
and to such Owner Participant under liability insurance maintained by the
Company under such Lease. (Indentures, Granting Clauses)
Funds, if any, held from time to time by the Indenture Trustee with respect
to any Equipment, including funds held as the result of an Event of Loss to such
Equipment or termination of the Lease relating thereto, will be invested and
reinvested by the Indenture Trustee, at the direction of the Company (except in
the case of a Lease Event of Default under the applicable Lease), in certain
investments described in such Lease. The Company will pay the amount of any loss
resulting from any such investment directed by it. (Indentures, Section 7.04)
LIMITATION OF LIABILITY
The Equipment Notes are nonrecourse notes. All payments of principal of,
Make-Whole Amount, if any, and interest on the Equipment Notes (other than
payments made in connection with an optional or mandatory prepayment or purchase
by the Owner Trustee) will be made only from the assets subject to the lien of
the Indenture with respect to such Equipment or the income and proceeds received
by the Indenture Trustee therefrom (including rent payable by the Company under
the Lease with respect to such Equipment). The Equipment Notes are not
obligations of, or guaranteed by, the Company. None of the Owner Participants or
the Indenture Trustee, or any affiliates thereof, shall be liable to any holder
of an Equipment Note or, in the case of the Owner Participants, to the Indenture
Trustee for any amounts payable under the Equipment Notes or, except as provided
in each Indenture, for any liability under such Indenture. (Indentures, Section
2.03)
Except as otherwise provided in the Indentures, the Owner Trustee in its
individual capacity shall not be answerable or accountable under the Indentures
or under the Equipment Notes under any circumstances except for its own wilful
misconduct or gross negligence. None of the Owner Participants will have any
duty or responsibility under any of the Indentures or the Equipment Notes to the
Indenture Trustee or to any holder of any Equipment Note. (Indentures, Section
2.03)
INDENTURE DEFAULTS, NOTICE AND WAIVER
Indenture Events of Default under each Indenture include: (a) a Lease Event
of Default, (b) default by the Owner Trustee in making payments when due of
principal of, premium, if any, or interest on any Equipment Note and continuance
of that default for 10 Business Days, (c) failure by the Owner Trustee to prepay
the Equipment Notes on the final distribution date for the Pass Through
Certificates, (d) failure by the Owner Trustee or the Owner Participant to
perform any covenant contained in the Indenture, the Equipment Notes or in the
Participation Agreement continuing for a period of 30 days after written notice
by the Indenture Trustee or any holder of an Equipment Note issued under such
Indenture, (e) any representation or warranty made by the
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Owner Trustee in such Indenture or made by the Owner Trustee (except to the
extent made with respect to in its individual capacity) or
the Owner Participant in the Participation Agreement or in any document or
certificate furnished to the Indenture Trustee being incorrect in any material
respect as of the date made and remaining material and continuing unremedied for
a period of 30 days after written notice to the Owner Trustee and Owner
Participant, and (f) the occurrence of certain events of bankruptcy,
reorganization or insolvency of the Owner Participant or the Owner Trustee.
(Indentures, Section 5.01)
In the event that (i) at any time one or more Lease Events of Default shall
occur and shall have continued for a period of 180 days or more during which
time the Equipment Notes could, but shall not, have been accelerated, (ii) the
Equipment Notes shall have been accelerated, (iii) the Indenture Trustee, as
assignee of such Lease, shall have exercised (or given notice of its intention
to exercise) any remedies in respect of the Units under such Lease or (iv) the
Indenture Trustee shall commence foreclosure of the lien of the Indenture or
otherwise exercise remedies which would result in the exclusion of the Owner
Trustee from any property subject to the lien of the Indenture or any part
thereof (or given notice of its intention to foreclose or exercise remedies),
upon 30 days' notice the Owner Trustee may elect to purchase all, but not less
than all, of the Equipment Notes then outstanding under such Indenture from the
holders thereof by paying to each such holder an amount equal to the aggregate
unpaid principal amount of all such Equipment Notes then held by such holder,
together with accrued and unpaid interest thereon to the date of payment, but
without the payment of any Make-Whole Amount except in the case of a purchase of
the Equipment Notes pursuant to clause (iv) above if the right to exercise any
remedies arises because of action attributable to the Owner Trustee or the Owner
Participant. (Indentures, Section 5.04(b))
In the event the Company fails to make any semiannual basic rental payment
within 10 Business Days after the date the same shall become due under a Lease,
then and as long as no other Indenture Event of Default under the Indenture
(which is not being concurrently cured) shall have occurred and be continuing
the Owner Participant or the Owner Trustee may, during the 10 Business Days
after receiving written notice of such failure from the Indenture Trustee, pay
to the Indenture Trustee the amount of such rental payment together with any
interest thereon on account of the delayed payment thereof, in which event such
payment by the Owner Participant or the Owner Trustee shall be deemed to cure
any Indenture Event of Default which arose from such failure of the Company (but
such cure shall not relieve the Company of any of its obligations); provided,
that the Owner Participant and the Owner Trustee, collectively, shall not be
entitled to cure more than three consecutive or six total failures to make
semiannual basic rental payments. In the event there shall occur a Lease Event
of Default under a Lease in respect of any other payment of rent, or which is
curable by the payment of money, then and as long as no other Indenture Event of
Default under the Indenture (which is not being concurrently cured) shall have
occurred and be continuing the Owner Participant or the Owner Trustee may,
during the 30 days after receiving written notice of such Lease Event of Default
from the Indenture Trustee, pay to the Indenture Trustee the amount of such
rental payment together with any interest thereon on account of the delayed
payment thereof, or otherwise make such payment as shall effect such cure, in
which event such payment by the Owner Participant or the Owner Trustee shall be
deemed to cure any Indenture Event of Default which arose as a result of such
Lease Event of Default (but such cure shall not relieve the Company of any of
its obligations); provided, that the Owner Participant and the Owner Trustee,
collectively, shall not be entitled to cure such other Lease Events of Default
if the unreimbursed amount of such payments shall exceed in the aggregate
$ , as adjusted annually for inflation. (Indentures, Section 5.04(a))
Each Indenture provides that the Indenture Trustee shall, upon the
occurrence of any event known to it that is an Indenture Default or Indenture
Event of Default thereunder, give notice thereof to the holders of the Equipment
Notes issued thereunder, the Company, the Owner Trustee and the Owner
Participant. (Indentures, Section 6.01)
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The holders of a majority in aggregate principal amount of the outstanding
Equipment Notes issued under an Indenture, by notice to the Indenture Trustee,
may on behalf of all holders waive any past default under the Indenture except a
default in the payment of the principal of, Make-Whole Amount, if any, or
interest on any such Equipment Note or a default in respect of any covenant or
provision of such Indenture that cannot be modified or amended without the
consent of each holder of an Equipment Note affected thereby. (Indentures,
Section 5.06)
REMEDIES
If an Indenture Default shall occur and be continuing under an Indenture,
the Indenture Trustee may, and when instructed by the holders of at least a
majority in aggregate principal amount of the Equipment Notes outstanding under
such Indenture shall, declare the unpaid principal of all such Equipment Notes
outstanding under such Indenture immediately due and payable, together with all
accrued but unpaid interest thereon. The holders of a majority in aggregate
principal amount of Equipment Notes outstanding under such Indenture may rescind
any such declaration by the Indenture Trustee or by the holders at any time
prior to the sale of the Equipment covered by such Indenture after such an
Indenture Default if (i) there has been paid to or deposited with the Indenture
Trustee an amount sufficient to pay all due or overdue installments of principal
of, premium, if any, and interest on any such Equipment Notes that have become
due otherwise than by such declaration of acceleration, (ii) the rescission
would not conflict with any judgment or decree and (iii) all other Indenture
Defaults under such Indenture have been cured or waived except nonpayment of
principal of, premium, if any, or interest on any such Equipment Notes that have
become due solely because of acceleration. (Indentures, Section 5.02)
Each Indenture provides that if any Indenture Default under such Indenture
has occurred and is continuing the Indenture Trustee may exercise certain rights
or remedies available to it under applicable law, including (if the
corresponding Lease has been declared in default) one or more of the remedies
under such Indenture or such Lease. The Indenture Trustee's right to exercise
remedies under an Indenture is subject in certain circumstances to its having
proceeded to exercise one or more remedies under the Lease with respect to the
Equipment, unless at the time, the Indenture Trustee is stayed or otherwise
prevented from doing so by operation of law, in which case the Indenture Trustee
has agreed to refrain from exercising remedies under such Indenture for a period
of 90 days. Further, the Indenture Trustee may not exercise remedies under an
Indenture in those circumstances in which the Company, as the debtor in a
bankruptcy proceeding, shall have affirmed the Lease and no Lease Event of
Default (other than a Lease Event of Default arising from the bankruptcy of the
Company) has occurred and is continuing. See "Description of the Equipment
Notes -- The Lease -- Lease Events of Default." Such remedies may be exercised
by the Indenture Trustee to the exclusion of the Owner Trustee and, subject to
the terms of the Lease, the Company. Any Equipment sold in the exercise of such
remedies will be free and clear of any rights of those parties including the
rights of the Company under the Lease with respect to such Equipment; provided
that no exercise of any remedies by the Indenture Trustee may affect the rights
of the Company under the Lease unless a Lease Event of Default under the Lease
has occurred and is continuing. (Indentures, Sections 5.03(a) and (c), 5.04(c)
and 5.05; Leases, Section 15)
The holders of a majority in aggregate principal amount of the Equipment
Notes outstanding under the Indenture may instruct the Indenture Trustee to give
such notice, direction or consent, or exercise such right, remedy or power under
the Indenture or the Lease or in respect of the property subject to the lien of
the Indenture or take such other action as shall be specified in such
instructions, but in such event the Indenture Trustee shall not be required to
take or refrain from taking any action in connection therewith if it shall have
reasonable grounds to believe that adequate indemnity against such risk is not
reasonably assured to it. (Indentures, Sections 6.02 and 6.03)
If an Indenture Event of Default occurs and is continuing under the
Indenture and the Indenture Trustee (as security assignee) has declared the
Lease to be in default or the Equipment Notes outstanding under the Indenture
have been accelerated or the Indenture Trustee has exercised any
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remedies under the Indenture, any sums held or received by the Indenture Trustee
may be applied to reimburse the Indenture Trustee for any tax, expense or other
loss incurred by it and to pay any other amounts then due the Indenture Trustee
prior to any payments to holders of the Equipment Notes. (Indentures, Section
3.03)
In the event of a bankruptcy or reorganization of the Company, the right of
the Indenture Trustee to repossess or dispose of the Equipment would be subject
to the provisions of the Bankruptcy Code applicable to industrial companies
generally, and not those provisions applicable to railroads, particularly
Section 1168 of the Bankruptcy Code.
In the event of the bankruptcy of an Owner Participant, it is possible
that, notwithstanding that the applicable Equipment is owned by the Owner
Trustee in trust for the benefit of such Owner Participant, such Equipment and
the related Lease and Equipment Notes might become part of the bankruptcy
proceeding. In such event, payments under such Lease or on such Equipment Notes
might be interrupted and the ability of the Indenture Trustee to exercise its
remedies under the applicable Indenture might be restricted, although the
Indenture Trustee would retain its status as a secured creditor in respect of
the Lease and the Equipment subject thereto.
If the Company were to become a debtor in a bankruptcy or reorganization
case under the Bankruptcy Code, the Company or its bankruptcy trustee could
reject any or all Leases to which it is a party. In such event, there could be
no assurance that the amount of any claim for damages under such Leases that
would be allowed in such bankruptcy case would be in an amount sufficient to
provide for the repayment of the applicable Equipment Notes. In any case,
rejection of a Lease by the Company or its bankruptcy trustee would not deprive
the Indenture Trustee of its security interest in the applicable Units.
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in unpaid principal amount of
the Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and the Lease and the Participation Agreement corresponding thereto
may not be amended or modified, except to the extent indicated below.
Certain provisions of each Lease and Participation Agreement may be amended
or modified by the parties thereto without the consent of any holders of the
Equipment Notes outstanding under the Indenture so long as no Indenture Event of
Default shall have occurred and be continuing. In the case of each Lease, such
provisions include, among others, provisions relating to (i) rental payments and
other payments, except to the extent indicated in clause (a) of the following
paragraph, (ii) the maintenance of the Equipment covered by such Lease,
modifications to the Units and the return to the Owner Trustee of the Equipment
at the end of the term of the Lease and (iii) the renewal of such Lease and the
option of the Company at the end of the term of the Lease to purchase any or all
of the Equipment subject to such Lease. (Indentures, Section 10.05)
Without the consent of the holder of each Equipment Note outstanding under
an Indenture, no amendment or modification of such Indenture may (a) change the
final maturity of, or reduce the principal amount of, or premium, if any, or
interest payable on any Equipment Notes issued under such Indenture or impair
the right to institute suit for the enforcement of any such payment or change
the date on which any principal or premium, if any, or interest is due and
payable, (b) create any lien with respect to the property subject to the Lien of
the Indenture ranking prior to or on a parity with the security interest created
by the Indenture, except as permitted in the Indenture, or deprive any holder of
any Equipment Note issued under such Indenture of the benefit of the Lien of the
Indenture or (c) reduce the percentage in principal amount of outstanding
Equipment Notes issued under such Indenture necessary to modify or amend any
provision of the Indenture or to waive compliance therewith. (Indentures,
Section 10.01)
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THE LEASES
Terms and Rentals. The Equipment subject to each Lease will be leased by
the Owner Trustee to the Company for a term commencing on the delivery date
thereof and expiring on , , unless previously terminated
as permitted by each Lease. The rent payments under each Lease will be payable
on and (or, if such day is not a Business Day, on
the next succeeding Business Day), commencing on , 199[6], and
will be used to make payments of principal of and interest due on the Equipment
Notes issued under the Indenture corresponding to such Lease, which will in turn
furnish the funds to be distributed by the Pass Through Trustee to the
Certificateholders on and of each year. (Leases,
Section 3.2; Indentures, Section 3.01) The Company has also agreed to pay under
each Lease on , 199[6] such amounts (to the extent not paid by the
Owner Participant) as necessary to enable the Indenture Trustee to receive the
scheduled payment of principal and interest on the Equipment Notes relating to
such Lease. (Leases, Section 3.5) Rental payments that the Company is obligated
to make or cause to be made under each Lease will not be less than the scheduled
payments of principal of and interest on the Equipment Notes under the
Indenture, except for the prepayment of principal required to be made as part of
a mandatory refinancing of the Equipment Notes held by Pass Through Trust
1996-A2 on the final distribution date for such Pass Through Trust. In certain
cases, the semiannual basic rent payments under a Lease may be adjusted, but,
except as described below, under no circumstances will such rent payments be
adjusted so as to be less than the corresponding scheduled payments of principal
of and interest on the Equipment Notes issued under the Indenture corresponding
to such Lease. (Participation Agreements, Section 2.6; Leases, Section 3) The
balance of any such semi-annual rent payment under a Lease, after payment of the
scheduled principal of, and interest on the Equipment Notes issued under the
Indenture corresponding to such Lease, will be paid over to or for the account
of the applicable Owner Participant as the beneficial owner of the Equipment
covered by the Lease. (Leases, Section 3)
Net Lease; Modifications. The Company's obligations in respect of the
Equipment are those of a lessee under a "net lease." Accordingly, the Company is
and will be obligated, at its expense, to pay all costs and expenses of
operating the Equipment and to maintain, service and repair the Equipment so as
to keep the Units included therein in good operating order, ordinary wear and
tear excepted. (Leases, Sections 8 and 19)
Subject to certain exceptions, the Company will, at its expense, make all
alterations, replacements or modifications required to be made by the
Association of American Railroads, the United States Department of
Transportation, or any other United States, state or local governmental agency
or other applicable law. The Company will have the right, at its expense, to
make other modifications, alterations and improvements, provided that such
modifications do not diminish the value, utility or remaining useful life of
such Unit or cause it to become "limited use" property. Severable modifications
that are not required by law will remain the property of the Company but may be
purchased by the Owner Trustee at fair market value upon termination of the
Lease. The Owner Trustee will acquire title to all nonseverable modifications
and severable modifications required by law. (Leases, Section 9)
Sublease; Possession and Use. The Company is in the business of leasing
railway tank cars and other railcars to third parties under full-service
operating leases. These leases vary in nature based on the needs of the
sublessee and the Company. The Company shall have the right to use the
Equipment, subject to the applicable Lease, and to sublease the Equipment to any
railroad company incorporated in the United States, Canada or Mexico or to any
other responsible company which is not a railroad company for use in its
business; provided that the Units are used primarily on domestic routes in the
United States and that at no time shall more than 20% of the Units be used (as
determined by mileage records) outside the continental United States (exclusive
of Alaska) during any taxable year in which certain specified events occur; and
further provided that if the Company subleases any Units to a sublessee which
operates primarily in Mexico, subject to the
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provisions of each Lease, the Company shall make all registration filings and
deposits necessary or advisable under then-current prudent industry practice
(including any actions reasonably requested by the Owner Trustee or the
Indenture Trustee) to protect the interest of the Owner Trustee under the Lease
and the Indenture Trustee under the Indenture corresponding to such Lease. The
Company may not sublease any Unit for a term that extends beyond the term of the
Lease nor may it sublease any Unit on terms and conditions that are not
consistent with the terms of the Lease unless the Company replaces such Unit on
or prior to the expiration of the Lease term in accordance with the provisions
of the Lease. No sublease will discharge the Company of its obligations under
the Lease. (Leases, Sections 8.2 and 8.3) If any Unit is leased or the
possession is otherwise transferred, such Unit will remain subject to the lien
of the related Indenture.
Maintenance. The Company, at its own cost and expense, shall maintain,
repair and keep each Unit (i) according to prudent industry practice, in good
working order, and in good physical condition for railcars of a similar age and
usage, normal wear and tear excepted, (ii) in a manner consistent with
maintenance practices used by the Company in respect of equipment owned or
leased by the Company similar in type to such Unit, (iii) in accordance in all
material respects with all manufacturers' warranties and in accordance with all
applicable provisions, if any, of insurance policies required to be maintained
pursuant to the Lease and (iv) in compliance in all material respects with all
applicable laws and regulations other than those being contested in good faith
in any reasonable manner which does not create any risk or danger of (x)
material interference with the use, possession, operation or return of any Unit,
or materially adversely affecting the rights or interests of the Company and the
Indenture Trustee in the Equipment, (y) the imposition of any criminal sanctions
on the part of the Owner Trustee, the Indenture Trustee or the Owner
Participant, or (z) the release of the Company from the obligation to return the
Equipment in compliance with the Lease. (Leases, Section 8)
Liens. The Equipment will be maintained free of any liens, other than the
respective rights of the Owner Participants, the Owner Trustee, the Indenture
Trustee, the holders of the Equipment Notes, the Company and any permitted
sublessee arising under the Leases, the Indentures, the Participation Agreements
and the separate Trust Agreements between the Owner Trustee and the Owner
Participants pursuant to which the Owner Trustee acts as trustee for the benefit
of the Owner Participants, and other than, in the case of the Equipment, certain
limited liens permitted under the Leases and the Indentures, including liens for
taxes either not yet due and payable or being contested in good faith (so long
as there exists no material risk of sale, forfeiture, loss or loss of use of the
Equipment or any interest therein), materialmen's, mechanics' and other similar
liens arising in the ordinary course of business and either not yet due and
payable or being contested (so long as there exists no material risk of sale,
forfeiture, loss or loss of use of the Equipment or any interest therein),
judgment liens that are being appealed in good faith and whose enforcement has
been stayed pending such appeal, and salvage rights of insurers under insurance
policies maintained pursuant to the Lease. (Leases, Section 7)
Insurance. The Company will at all times prior to the return of the
Equipment to the Owner Trustee, at its own expense, cause to be carried and
maintained insurance in respect of the Equipment in amounts and against such
risks and with deductibles and terms and conditions not less than the insurance,
if any, maintained by the Company in respect of similar equipment owned or
leased by the Company, but in no event shall such coverage be for amounts or
against risks less than the prudent industry standard for companies engaged in
full service leasing of tank and hopper cars. (Leases, Section 12) The Company
does not maintain casualty insurance with respect to the Equipment.
Termination. So long as no Lease Event of Default or event which, with
notice or the lapse of time or both, would become a Lease Event of Default
thereunder shall have occurred and be continuing, the Company may, upon at least
120 days prior written notice, terminate each Lease with respect to specific
groups of Equipment subject to such Lease (provided that if such termination is
for less than all of the Units in any one specific group of Equipment (as set
forth in the Leases), the
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determination as to which Units are subject to termination shall be made by the
Company on a random or other reasonable basis without regard to maintenance
status or operating condition) (the "Terminated Units"), at its option any time
after , 200 , if the Company determines in good faith (as
evidenced by a certified copy of a resolution adopted by its Board of Directors
and a certificate executed by the Chief Financial Officer of the Company) that
such Terminated Units have become obsolete or surplus to its requirements for
any reason or that any modification required by law to such Terminated Units
would be economically impractical. The Company will act as agent for the Owner
Trustee in obtaining bids for the Terminated Units and, if the Company succeeds
in locating the eventual purchaser of the Terminated Units, the Owner Trustee
shall transfer all of its right, title and interest in and to the Terminated
Units to the bidder which has submitted the highest cash bid (who may not be the
Company or any affiliate of the Company but who may be the Owner Trustee or any
affiliate of the Owner Trustee) on the termination date. The net proceeds of
such sale shall be paid to the Owner Trustee. If the net proceeds received from
such sale are less than the Termination Value for the Terminated Units, the
Company shall pay to the Owner Trustee an amount equal to the difference between
such proceeds and such Termination Value, together with certain other amounts
including, the MakeWhole Amount, if any. All funds to be paid to or deposited
with the Owner Trustee as described in this paragraph shall, so long as the
Indenture shall not have been discharged, be deposited directly with the
Indenture Trustee. Amounts in excess of the outstanding principal amount of the
Equipment Notes issued in respect of such Terminated Units, the MakeWhole
Amount, if applicable, and the then accrued and unpaid interest thereon will be
distributed by the Indenture Trustee in accordance with the terms of the
Indenture. The lien of the Indenture shall terminate with respect to the
Terminated Units after the full Termination Value and any rent due has been
received by the Indenture Trustee and, if all amounts due such Owner Participant
have also been paid, the Lease with respect to such Terminated Units shall
terminate and the obligation of the Company thereafter to make rent payments
with respect thereto shall cease. (Leases, Sections 3.6, 10.1, 10.2 and 10.4,
Indentures, Section 3.02)
The Owner Trustee shall have the option to retain the Terminated Units, but
it may do so only if the Owner Trustee shall pay, or cause to be paid, to the
Indenture Trustee funds in an amount equal to the principal of and accrued
interest on the outstanding Equipment Notes with respect to such Terminated
Units and, if applicable, an amount equal to the Make-Whole Amount. (Leases,
Section 10.3)
Purchase Options. So long as no Lease Event of Default or event which, with
notice or the lapse of time or both, would become a Lease Event of Default
thereunder, shall have occurred and be continuing, the Company shall have the
right to purchase on , any or all of such Units subject to
each Lease at the option prices set forth in the Leases. The Company may
exercise its early purchase option in whole or in part by giving written notice
to the Owner Trustee at least 90 days prior to the Early Purchase Date. If the
Company exercises its early purchase option, a portion of the purchase price
shall be used to prepay the Equipment Notes relating to the purchased Units
unless the Company elects to assume on a full recourse basis all of the Owner
Trustee's obligations in respect of the related Equipment Notes and acquires the
purchased Units subject to the lien of the related Indenture. (Leases, Section
22.1) See "Description of the Equipment Notes -- Prepayment."
Events of Loss. If an Event of Loss occurs with respect to a Unit, the
Company shall give notice to the Owner Trustee in accordance with the terms of
the related Lease and, if the Indenture has not been discharged, to the
Indenture Trustee, and shall either (i) pay to the Owner Trustee the Stipulated
Loss Value of such Unit or (ii) substitute for such Unit like kind equipment, of
equal or greater fair market sales value, utility, remaining economic useful
life and residual value as the Unit being replaced (assuming such Unit was in
the condition required under the Lease). If the Company elects not to substitute
for the applicable Unit, Stipulated Loss Value will be paid on (i) the next
Regular Distribution Date following the election by the Company to pay the
Stipulated Loss Value of
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such Unit rather than substitute like kind Equipment or (ii) in the case of the
occurrence of a Multiple Loss, on the first Business Day succeeding the 60th day
following the date on which the Company is required to report such Multiple
Loss. If the Company elects to substitute for the applicable Unit, it shall so
substitute for such Unit on (i) the Rent Payment Date immediately following the
date the Company delivers notice of such election or (ii) in the case of the
occurrence of a Multiple Loss, on the first Business Day succeeding the 60th day
following the date on which the Company is required to report such Multiple
Loss. All funds to be paid or deposited with the Owner Trustee as described in
this paragraph shall, so long as the applicable Indenture shall not have been
discharged, be deposited directly with the Indenture Trustee and shall be
applied to prepay all or a portion of the Equipment Notes as provided in the
Indenture. See "Description of the Equipment Notes -- Prepayment." If the
Company pays the Stipulated Loss Value of a Unit subject to an Event of Loss and
any rent due, the lien of the Indenture and the Lease relating to such Unit
shall terminate with respect to such Unit, title thereto shall be transferred to
the Company and the obligation of the Company thereafter to make rent payments
with respect thereto shall cease, except for indemnification obligations which
otherwise may have accrued. (Leases, Section 11) Amounts in excess of the
amounts applied to prepay Equipment Notes in accordance with the Indenture will
be distributed by the Indenture Trustee in accordance with the terms of the
Indenture.
An Event of Loss with respect to any Unit shall mean any of the following
events: (i) damage or contamination of such Unit which, in the Company's
reasonable judgment (as evidenced by an Officers' Certificate to such effect),
makes repair uneconomic or renders such Unit unfit for commercial use, (ii)
destruction of such Unit or theft or disappearance thereof for a period
exceeding twelve months, (iii) the permanent return of such Unit to the
manufacturer pursuant to any patent indemnity provisions, (iv) the taking or
appropriating of title to such Unit by any governmental authority under the
power of eminent domain or otherwise, (v) the actual or constructive total loss
of the Unit, (vi) in the normal course of interstate rail transportation, the
Unit shall be prohibited from being used for a continuous period in excess of
six months as a result of any rule, regulation, order or other action by the
United States government or any agency or instrumentality thereof, (vii) the
Unit shall be subject to a sublease with any person which operates primarily
outside of the United States and shall not be returned to the Company within 60
days of a demand by the Company for return of such Unit following the
termination of such sublease or (viii) the taking or requisitioning of such Unit
for use by any governmental authority or any agency or instrumentality thereof
under the power of eminent domain or otherwise and such taking or requisition is
for a period that exceeds the remaining Basic Term or any Renewal Term then in
effect (unless such taking or requisition is by Mexico or any governmental
authority, agency or instrumentality thereof, in which case such period shall be
the lesser of the period described above or 365 days). (Leases, Section 11.1)
Lease Events of Default. Events of default (each, a "Lease Event of
Default") under the Lease include, among other things: (a) failure by the
Company to make any payment of Basic Rent, any purchase price to be paid by the
Company for any Units pursuant to the Lease or the Participation Agreement,
Stipulated Loss Value or Termination Value, within 10 Business Days after the
same shall have become due, (b) failure by the Company to make any payment of
Supplemental Rent, including indemnity or tax indemnity payments, but not
including any purchase price to be paid by the Company for any Units pursuant to
the Lease or the Participation Agreement, Stipulated Loss Value or Termination
Value, after the same shall become due and such failure shall continue
unremedied for 10 Business Days after receipt by the Company of written notice
of such failure from the Owner Trustee or Indenture Trustee, (c) failure to
maintain in effect insurance as required by the Lease, such failure not having
been waived, (d) the Company shall make or permit any possession of the
Equipment of any portion thereof not permitted by the Lease, provided that such
unauthorized possession shall not constitute a Lease Event of Default for a
period of 45 days after the occurrence thereof, or the Company shall make or
permit an unauthorized assignment or transfer of the Lease, (e) failure by the
Company to observe or perform any of the agreements or covenants relating to the
merger, consolidation or transfer of assets of the Company and such
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failure continues unremedied for 30 days, (f) failure by the Company to perform
or observe any other covenant or agreement to be performed or observed by it
under any Lessee Agreement (other than the Tax Indemnity Agreement) continuing
for a period of 30 days after notice of such failure from the Owner Trustee or
the Indenture Trustee, or, if such failure is capable of being remedied (and the
remedy requires an action other than, or in addition to, the payment of money),
for a period of 90 days after receipt of such notice so long as the Company is
diligently proceeding to remedy such failure, (g) any representation or warranty
made by the Company in any Lessee Agreement (other than the Tax Indemnity
Agreement) being untrue or incorrect in any material respect at the time made
and such untruth or incorrectness continues to be material and unremedied for a
period of 30 days after notice thereof or, if such untruth or incorrectness is
capable of being remedied, for a period of 60 days after receipt of such notice
so long as the Company is diligently proceeding to remedy such untruth or
incorrectness and any adverse effects thereof, (h) failure of the Owner Trustee
to effect a mandatory refinancing of the Equipment Notes held by Pass Through
Trust 1996-A2 and (i) the occurrence of certain events of bankruptcy,
reorganization or insolvency of the Company. (Leases, Section 14)
If a Lease Event of Default under a Lease has occurred and is continuing,
and such Lease has been declared to be in default, the Indenture Trustee, as
assignee of the Owner Trustee's rights under the Lease, may exercise one or more
of the remedies provided in the Lease with respect to the Equipment subject
thereto. These remedies include the right to repossess and use or operate the
Equipment to sell or release the Equipment free and clear of the Company's
rights and retain the proceeds and to require the Company to pay liquidated
damages specified therein. (Leases, Section 15)
THE PARTICIPATION AGREEMENTS
The Company is required to indemnify each Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee for certain losses
and claims and for certain other matters. In addition, the Company is required
under certain circumstances to indemnify each Owner Participant for the loss of
depreciation deductions and certain other benefits allowable for certain income
tax purposes with respect to the applicable Equipment. (Participation
Agreements, Section 7) Subject to certain restrictions, each Owner Participant
may transfer its beneficial interest in the related owner trust.
Each Participation Agreement provides that if the Owner Participant or any
affiliate thereof is 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 of the Company or any
affiliate of the Company, or any person that has a material interest in an
enterprise that engages in a business that is in competition with the Company's
full service railcar operating leasing business, the Company may purchase the
applicable Equipment for a purchase price equal to the greater of the
Termination Value or the then appraised fair market value, each calculated as of
the designated Special Distribution Date, plus certain other amounts including,
if applicable, the Make-Whole Amount. If the Company elects to exercise its
right to purchase the applicable Equipment, unless the Company elects to assume
the related Equipment Notes on a full recourse basis, the purchase price shall
be used to prepay the related Equipment Notes and the applicable Make-Whole
Amount shall be paid. Each Participation Agreement requires the Owner Trustee to
effect a refinancing of the Equipment Notes held by Pass Through Trust 1996-A2
on or prior to the final distribution date for the Pass Through Certificates
issued thereunder. See "Description of the Equipment Notes -- Prepayment."
(Participation Agreements, Section 6.9)
Under each Participation Agreement, the Company will be prohibited from
consolidating or merging with or into any other corporation or transferring
substantially all of its assets to another corporation unless (a) the successor
corporation, if other than the Company, shall be a corporation organized and
existing under the laws of the United States or any state or the District of
Columbia and shall expressly assume the due and punctual performance and
observance of all the covenants
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and conditions of the operative agreements to be performed by the Company, (b)
immediately prior to and immediately after giving effect to such transaction, no
Lease Event of Default, or event which with notice or the passage of time or
both would become a Lease Event of Default, shall have occurred, whether as a
result of such transaction or otherwise, and (c) the Company 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
Owner Trustee under the related Lease and of the Indenture Trustee under the
related Indenture. (Participation Agreements, Section 6.8)
DESCRIPTION OF THE ETCS
The Company ETCs are to be issued under and pursuant to the provisions of
the Company Trust Agreement between the Company and , as
trustee (the "Equipment Trust Trustee"), creating Union Tank Car Company
Equipment Trust (Series 26) (the "Company Trust"). The Procor ETC is to be
issued under and pursuant to the provisions of the Procor Trust Agreement
between Procor and the Equipment Trust Trustee, creating Procor Limited
Equipment Trust (Series 26-Can) (the "Procor Trust"). The statements under this
caption are a summary only and do not purport to be complete. The summary makes
use of terms defined in, and is qualified in its entirety by reference to all of
the provisions of, the ETCs and the Trust Agreements. Citations to the relevant
sections of the Trust Agreements appear below in parentheses.
ISSUANCE
The Company ETCs will be limited to $ aggregate principal amount,
and the Procor ETC will be limited to $ aggregate principal amount. The
Company ETCs and the Procor ETC will be issued against the deposit with the
Equipment Trust Trustee by the Pass Through Trustee of like amounts of Deposited
Cash. The Company ETCs will represent an interest equal to the aggregate
principal amount thereof in the Company Trust, and the Procor ETC will represent
an interest equal to the principal amount thereof in the Procor Trust.
PAYMENT OF PRINCIPAL AND INTEREST
The ETCs, which will not amortize as to principal, mature on ,
200 . Interest will be payable on the unpaid principal amount of the ETCs at
the rate of % per annum on and of each year,
commencing , 199[6]. (Section 2.02)
GUARANTIES
The Company will fully and unconditionally guarantee (i) the payment as and
when due of the principal of and interest on the Company ETCs and (ii) the due
and punctual distribution to Certificateholders of principal and interest
payable in respect of the Procor ETC and the due and punctual performance by
Procor of its obligations under the Procor Trust Agreement. For a description of
the Company's guarantee of Procor's obligations under the Procor Trust
Agreement, see "Description of the Pass Through Certificates--Guarantee." Procor
will fully and unconditionally guarantee the payment as and when due of the
principal of and interest on the Procor ETC.
REDEMPTION
The ETCs are not redeemable prior to maturity.
SECURITY
The Company Trust Agreement will provide for the sale by the Company to the
Equipment Trust Trustee of railway tank cars and other rail cars of the types
used in the Company's business having an estimated cost of approximately
$ (133 1/3% of the aggregate principal amount of the
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Company ETCs). (Section 3.01) The Procor Trust Agreement will provide for the
sale by Procor to the Equipment Trust Trustee of railway tank cars and other
rail cars of the types used in Procor's business having an estimated cost of
approximately $(133 1/3% of the aggregate principal amount of the Procor ETC).
(Section 3.01) None of the Equipment to be initially subject to the Company
Trust or the Procor Trust will have been in use prior to or
, respectively. For the purpose of determining the cost of any unit
of Equipment built by the Company or Procor, so-called "car builder's cost"
(which includes direct cost of labor, material and overhead, but excludes any
manufacturing profit) will be used; otherwise the actual cost to the Company or
Procor will be used. (Sections 1.01) Of the Equipment which the Company and
Procor initially propose to subject to the Company Trust and the Procor Trust,
all of the railway tank cars have been or will be built either by the Company or
Procor, and all of the other rail cars have been built by other manufacturers.
When and as any of the Trust Equipment shall be delivered to the Equipment
Trust Trustee, the Equipment Trust Trustee will pay to the Company or Procor, as
applicable, out of Deposited Cash an amount which will not exceed 75% of the
aggregate cost (without deduction for depreciation) of such Trust Equipment, and
the balance of the cost will be paid by the Equipment Trust Trustee from advance
rentals paid to the Equipment Trust Trustee by the Company or Procor, as
applicable. (Sections 3.01, 3.02, 3.03) Until so paid out, Deposited Cash and
other funds held by the Equipment Trust Trustee pending delivery to it of Trust
Equipment may be invested, at the risk of the Company or Procor, as applicable,
in direct obligations of the United States, in certain obligations guaranteed by
the United States, in certificates of deposit or time deposits or in prime
commercial paper. (Sections 1.01, 8.04)
The Trust Agreements will contain provisions requiring the Company and
Procor to cause such agreements and each supplement thereto, promptly after the
execution and delivery thereof, to be recorded with the Surface Transportation
Board of the Department of Transportation and the Registrar General of Canada.
In addition, the Company and Procor will be required to take similar actions in
all other jurisdictions required by law or reasonably requested by the Equipment
Trust Trustee for the purposes of proper protection of the Equipment Trust
Trustee's title to the Trust Equipment subject thereto and the rights of the
holders of the ETCs; provided, however, that the Company and Procor shall not be
required to so record in any jurisdiction if (1) in the opinion of the Company
or Procor, as applicable, such recording would be unduly burdensome, and (2)
after giving effect to such failure to record, the Company or Procor, as
applicable, has taken all action required by law to protect the title of the
Equipment Trust Trustee to Trust Equipment subject to the Company Trust or the
Procor Trust having a value (defined as the greater of (a) the actual value of
such Trust Equipment and (b) the cost thereof less 1/20th of such cost for each
year the Trust Equipment has been in use) of not less than 90% of the value of
all such Trust Equipment. (Section 6.04)
The Company Trust Agreement will provide for the lease to the Company of
all the Trust Equipment subject to such agreement for a period commencing on
, with respect to Trust Equipment sold to the Equipment Trust
Trustee on such date and on the date (which shall be not later than June ,
1996) on which the other Trust Equipment is sold to the Equipment Trust Trustee
and ending . The rent and other amounts payable by the Company will
be sufficient to enable the Equipment Trust Trustee to pay when due the
principal of and interest on the Company ETCs, as well as all the expenses of
the Company Trust and certain other charges. At the termination of the lease and
after all payments due or to become due from the Company under the Company Trust
Agreement shall have been fully made, such payments shall be applied and treated
as purchase money as the full purchase price of the Trust Equipment, and title
to all Trust Equipment held in the Company Trust shall vest in the Company.
(Sections 4.01, 4.04, 4.05)
The Procor Trust Agreement will provide for the conditional sale to Procor
of all the Trust Equipment subject to such agreement and will obligate Procor to
make payments to the Equipment Trust Trustee during the period commencing on
, and ending . The payments in respect of the
purchase of the Trust Equipment and other amounts payable will be
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sufficient to enable the Equipment Trust Trustee to pay when due the principal
of and interest on the Procor ETC, as well as all the expenses of the Procor
Trust and certain other charges. After all payments due or to become due from
Procor under the Procor Trust Agreement shall have been fully made, such
payments shall be deemed to represent payment of the full purchase price for
Procor's purchase of the Trust Equipment, and title to all Trust Equipment held
in the Procor Trust shall vest in Procor. (Sections 4.01, 4.04, 4.05)
Each Trust Agreement will permit the possession and use of the Trust
Equipment in the Company's or Procor's business, as applicable, including the
sublease thereof to others subject to the terms and conditions of such equipment
trust agreement. (Section 4.09)
The Trust Equipment subject to the Company Trust Agreement will not secure
the payment of the Procor ETC, and the Trust Equipment subject to the Procor
Trust Agreement will not secure the payment of the Company ETCs. The Trust
Equipment subject to the Company Trust Agreement will secure the Company ETC
issued on , as well as the Company ETC to be issued not later
than June , 1996, and a default under either Company ETC will constitute a
default under the other Company ETC.
MAINTENANCE, RELEASE AND SUBSTITUTION OF TRUST EQUIPMENT
The Company and Procor will be required to maintain and keep the relevant
Trust Equipment in good order and proper repair unless and until it becomes worn
out, unsuitable for use, lost or destroyed (a "Casualty Occurrence"). The Trust
Agreements will provide that, whenever Trust Equipment having a value of
$250,000 shall have suffered a Casualty Occurrence, the Company or Procor, as
applicable, shall either deposit with the Equipment Trust Trustee an amount in
cash equal to the value of such Trust Equipment as of the date of the Casualty
Occurrence or convey to the Equipment Trust Trustee units of Equipment with a
value at least equal to the value of such Trust Equipment as of the date of the
Casualty Occurrence. (Section 4.08)
Each Trust Agreement will provide that if the aggregate cost of the Trust
Equipment initially delivered to the Equipment Trust Trustee by the Company or
Procor, as applicable, shall exceed 133 1/3% of the aggregate principal amount
of the relevant Company ETC or the relevant Procor ETC, the Equipment Trust
Trustee, upon request of the Company or Procor, as applicable, shall release
Trust Equipment from the Company Trust or the Procor Trust, as applicable,
having an aggregate cost of not more than the amount of such excess. (Section
3.01)
Each Trust Agreement will provide for the release by the Equipment Trust
Trustee of any Trust Equipment upon request of the Company or Procor, as
applicable, and upon (a) the conveyance to the Equipment Trust Trustee of other
Equipment (irrespective of when first put into use) of value not less than the
value of the Trust Equipment to be released or (b) the payment to the Equipment
Trust Trustee of cash in an amount not less than the value of the Trust
Equipment to be released. Any cash so deposited (and any cash deposited as
provided in the second preceding paragraph) will be paid over by the Equipment
Trust Trustee to the Company or Procor, as applicable, against the conveyance to
the Equipment Trust Trustee of additional Equipment having a value not less than
the amount of cash to be paid over. (Sections 4.03, 4.07)
INFORMATION CONCERNING THE EQUIPMENT TRUST TRUSTEE
will be the Equipment Trust Trustee under each Trust
Agreement. will also be the Pass Through Trustee and the
Indenture Trustee. See "Description of the Pass Through
Certificates -- Information Concerning the Pass Through Trustee."
EQUIPMENT TRUST DEFAULTS AND PROVISIONS RELATING THERETO
Equipment Trust Defaults will be defined in each Trust Agreement as being:
default for more than 10 Business Days in the payment of any rental payable
under the Company Trust Agreement or
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any amount payable under the Procor Trust Agreement; any unauthorized assignment
or transfer of the Company's or Procor's rights under such Trust Agreement,
continuing as provided therein; any unauthorized transfer, sublease or parting
with the possession of any of the Trust Equipment, continuing as provided
therein; any failure or refusal to perform any other covenant in such Trust
Agreement for the shorter of (i) 60 days after the Equipment Trust Trustee shall
have demanded in writing such performance and (ii) 30 days after the Company or
Procor has knowledge of any such failure; certain events of bankruptcy; or the
termination of the lease provided for in the Company Trust Agreement or the
security interest provided for in the Procor Trust Agreement by operation of law
or by the Equipment Trust Trustee in the event of any unauthorized assignment or
transfer of the Company's or Procor's rights under such equipment trust
agreement or any unauthorized transfer or sublease of any of the Trust
Equipment. (Section 5.01) The appointment of a receiver or trustee in bankruptcy
or reorganization for the Company or Procor or for their respective property
will be deemed to be an unauthorized assignment if, prior to the exercise of the
remedies of the Equipment Trust Trustee under such Trust Agreement, such
receiver or trustee shall not be discharged or duly assume the Company's or
Procor's obligations under such Trust Agreement. (Section 4.09) In addition, (i)
the Company Trust Agreement provides that a failure by the Company to perform in
respect of its guarantee of the due and punctual distribution to
Certificateholders of principal and interest payable in respect of the Procor
ETC and the due and punctual performance by Procor of its obligations under the
Procor Trust Agreement will constitute an Equipment Trust Default under the
Company Trust Agreement, and (ii) the Procor Trust Agreement provides that
certain events of bankruptcy of the Company will constitute an Equipment Trust
Default under the Procor Trust Agreement. Each Trust Agreement will provide that
the Equipment Trust Trustee shall promptly after the occurrence of any Equipment
Trust Default thereunder known to it, give to the holders of the Company ETCs or
the Procor ETC, as applicable, notice of the occurrence thereof. However, unless
such default is the failure to make payments in respect of the principal of or
interest on an ETC, the Equipment Trust Trustee shall be protected in
withholding such notice if and so long as it in good faith determines that the
withholding of such notice is in the interest of the holders of the defaulted
ETC. (Section 5.07)
In the event of the bankruptcy or reorganization of the Company, the right
of the Equipment Trust Trustee to repossess or dispose of Trust Equipment
subject to the Company Trust Agreement would be subject to the provisions of the
Bankruptcy Code of 1978, as amended, applicable to industrial companies
generally, and not those provisions applicable to railroads, particularly
Section 1168 thereof. In the event of the bankruptcy or reorganization of
Procor, the right of the Equipment Trust Trustee to repossess or dispose of
Trust Equipment subject to the Procor Trust Agreement would be subject to the
provisions of the Canadian federal Bankruptcy and Insolvency Act and the
Companies' Creditors Arrangement Act and applicable provincial legislation which
governs the manner in which creditors can enforce interests in the assets of a
debtor.
Upon the happening of an Equipment Trust Default, the Equipment Trust
Trustee or the holders of not less than a majority in aggregate principal amount
of the outstanding Company ETCs or Procor ETC, as applicable, may declare the
principal thereof and all accrued interest thereon to be due and payable.
(Section 5.01) Subject to certain conditions, however, any such declaration may
be rescinded by the holders of a majority in principal amount of the outstanding
Company ETCs or the Procor ETC upon payment of all sums then due otherwise than
by acceleration. Prior to such declaration, the holders of a majority in
principal amount of the outstanding Company ETCs or the Procor ETC may waive any
past Equipment Trust Default, except an Equipment Trust Default in the payment
of rentals or conditional sale payments due in respect of the principal of or
interest on the Company ETCs or the Procor ETC. (Section 5.04)
The right of any holder of the Company ETCs or the Procor ETC to institute
action for any remedy under the Company Trust Agreement or the Procor Trust
Agreement (except his right to enforce payment of the principal of and interest
on the Company ETCs or the Procor ETC when due if such enforcement will not
impair the Equipment Trust Trustee's title to the Trust Equipment) will
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be subject to certain conditions precedent, including a written request by the
holders of not less than a majority in principal amount of the outstanding
Company ETCs or the Procor ETC to the Equipment Trust Trustee to take action,
and an offer to the Equipment Trust Trustee of reasonable indemnification
against liabilities incurred by it in so doing. (Section 5.09)
The Company Trust Agreement and the Procor Trust Agreement will require the
annual filing by the Company and Procor, respectively, with the Equipment Trust
Trustee of a certificate as to the absence of default and as to compliance with
the terms of the relevant equipment trust agreement. (Section 4.08)
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion by the Company of the anticipated
material federal income tax consequences of the purchase, ownership and
disposition of Pass Through Certificates. This summary is based on laws,
regulations, rulings and court decisions now in effect, all of which are subject
to change by legislative, administrative or judicial action, which change may be
retroactive. The statements of law and legal conclusions contained herein are
based on the opinion of Neal, Gerber & Eisenberg, counsel to the Company. The
discussion below does not purport to address federal income tax consequences
applicable to particular categories of investors, some of which (for example,
banks, tax exempt organizations, insurance companies or foreign investors) may
be subject to special rules. Investors should consult their own tax advisors in
determining the federal, state, local and foreign tax consequences to them of
the purchase, ownership and disposition of Pass Through Certificates, including
the advisability of making any election discussed below. Prospective investors
should note that no rulings have been or will be sought from the Internal
Revenue Service (the "IRS") with respect to any of the federal income tax
consequences discussed below and no assurance can be given that the IRS will not
take contrary positions. The Pass Through Trusts are not indemnified for any
federal income taxes that may be imposed upon them, the imposition of which
could significantly reduce the amounts available for distribution to the
Certificate Owners. For purposes of this "Certain Federal Income Tax
Consequences" section, the terms "Pass Through Certificate" and "Certificate"
also refer to an indirect interest in a Pass Through Certificate held by a
Certificate Owner.
GENERAL
Based upon an interpretation of analogous authorities under currently
applicable law, neither Pass Through Trust [will] be classified as an
association taxable as a corporation, but rather each [will] be classified as a
grantor trust for purposes of Sections 671 through 679 of the Internal Revenue
Code of 1986, as amended (the "Code"), and each Certificate Owner of each Pass
Through Trust [will] be treated as owning a pro rata undivided interest in each
of the Equipment Notes and, in the case of Pass Through Trust 1996-A2, the ETCs
and the Procor ETC, and any other property held in such Pass Through Trust.
The Company believes that each Certificate Owner of a Pass Through Trust
will be required to report on its federal income tax return its pro rata share
of the entire income from the Equipment Notes and, in the case of Pass Through
Trust 1996-A2, the Company ETCs and the Procor ETC, and any other property in
such Pass Through Trust, in accordance with such Certificate Owner's method of
accounting. A Certificate Owner using the cash method of accounting should take
into account its pro rata share of income as and when received by the Pass
Through Trustee. A Certificate Owner using the accrual method of accounting
should take into account its pro rata share of income as it accrues or is
received by the Pass Through Trustee, whichever is earlier. The Company believes
that the Make-Whole Amount described under "Description of the Equipment
Notes--Prepayment" should be taxed as contingent interest when it becomes fixed
and unconditionally payable.
A purchaser of a Pass Through Certificate should be treated as purchasing
an interest in each Equipment Note and, in the case of Pass Through Trust
1996-A2, the Company ETCs and the
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Procor ETC, and any other property in the Pass Through Trust at a price
determined by allocating the purchase price paid for the Pass Through
Certificate among the related Equipment Notes, ETCs and other property in
proportion to their fair market values at the time of purchase of the Pass
Through Certificate. The Company believes that when each Pass Through Trust has
acquired all the Equipment Notes and, in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC, the purchase price paid for a Pass Through
Certificate by an original purchaser of such certificate will be allocated among
the Equipment Notes and, in the case of Pass Through Trust 1996-A2, the Company
ETCs and the Procor ETC in such Pass Through Trust in proportion to their
respective purchase prices.
SALES OF PASS THROUGH CERTIFICATES
A Certificate Owner that sells or exchanges a Pass Through Certificate will
recognize gain or loss (in the aggregate) equal to the difference between its
adjusted tax basis in the Pass Through Certificate and the amount realized
(except to the extent attributable to accrued interest, which would be taxable
as interest income). Subject to the market discount provisions of the Code
(described below), if the Certificate Owner held such Pass Through Certificate
as a capital asset, any such gain or loss should be capital gain or loss, which
will be long-term capital gain or loss if the Pass Through Certificate was held
for more than one year (but only to the extent the Pass Through Trust also held
the underlying Equipment Notes and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC for more than one year). Any long term
capital gains realized on a sale or exchange of Pass Through Certificates will
be taxable under current law to corporate taxpayers at the rates applicable to
ordinary income, and to individual taxpayers at their applicable marginal rate
for capital gains. Any capital losses realized generally will be deductible by a
corporate taxpayer only to the extent of capital gains and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
ORIGINAL ISSUE DISCOUNT
It is anticipated that neither the Equipment Notes, the Company ETCs nor
the Procor ETC will be issued with original issue discount.
MARKET DISCOUNT
A subsequent purchaser of a Pass Through Certificate will be considered to
have acquired an interest in an Equipment Note, Company ETC or Procor ETC held,
as the case may be, in a Pass Through Trust at a "market discount" to the extent
the remaining aggregate principal amount of such Equipment Note, Company ETC or
Procor ETC exceeds the Certificate Owner's tax basis allocable to such Equipment
Note, Company ETC or Procor ETC, provided such excess exceeds a prescribed de
minimis amount. If such excess exceeds the de minimis amount, the Certificate
Owner will be subject to the market discount rules of Section 1276 of the Code
with regard to its interest in such Equipment Note, Company ETC or Procor ETC.
In the case of a sale or other disposition of indebtedness subject to the
market discount rules, Section 1276 of the Code requires that gain, if any, from
such sale or other disposition be treated as ordinary income to the extent such
gain represents market discount that has accrued during the period in which the
indebtedness was held.
In the case of a partial principal payment on indebtedness subject to the
market discount rules, Section 1276 of the Code requires that such payment be
included in gross income as ordinary income to the extent such payment does not
exceed the market discount that has accrued during the period such indebtedness
was held. The amount of any accrued market discount later required to be
included in income upon a disposition, or subsequent partial principal payment,
will be reduced by the amount of accrued market discount previously included in
income.
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Market discount generally accrues under either a straight line method or,
at the election of the taxpayer, a constant interest rate method. However, in
the case of installment obligations (such as certain of the Equipment Notes),
determination of the manner in which market discount is to be accrued has been
left to Treasury regulations not yet issued. Until such Treasury regulations are
issued, the Conference Committee Report to the Tax Reform Act of 1986 (the
"Conference Report") indicates that holders of installment obligations with
market discount may elect to accrue market discount either (i) on the basis of a
constant interest rate or (ii) by treating as accrued market discount an amount
equal to total remaining market discount times a fraction, the numerator of
which is the amount of stated interest paid in the accrual period and the
denominator of which is the total amount of stated interest remaining to be paid
on the installment obligation as of the beginning of such period.
Under Section 1277 of the Code, if in any taxable year interest paid or
accrued on indebtedness incurred or continued to purchase or carry indebtedness
subject to the market discount rules exceeds the interest currently includible
in income with respect to such indebtedness, deduction of the excess interest
must be deferred to the extent of the market discount allocable to the taxable
year. The deferred portion of any interest expense will generally be deductible
when such market discount is included in income upon the sale or other
disposition (including repayment) of the indebtedness.
A taxpayer may elect to include market discount in gross income currently.
If such election is made, the rules of Sections 1276 and 1277 (described above)
will not apply to the taxpayer.
PREMIUM
A Certificate Owner will generally be considered to have acquired an
interest in an Equipment Note, Company ETC or Procor ETC held, as the case may
be, in a Pass Through Trust at a premium to the extent the purchaser's tax basis
allocable to such interest exceeds the remaining aggregate principal amount of
the Equipment Note, Company ETC or Procor ETC allocable to such interest. In
that event, a Certificate Owner who holds a Pass Through Certificate as a
capital asset may elect to amortize that premium as an offset to interest income
under Section 171 of the Code, with corresponding reductions in the Certificate
Owner's tax basis in its interest in the Equipment Note, Company ETC or Procor
ETC. Generally, such amortization is on a constant yield basis. However, in the
case of installment obligations (such as certain of the Equipment Notes), the
Conference Report indicates a Congressional intent that amortization will be in
accordance with the same rules that will apply to the accrual of market discount
on installment obligations (see the discussion above).
In the case of obligations that may be called at a premium prior to
maturity (such as the Equipment Notes), amortizable bond premium may be
determined by reference to an early call date. Due to the complexities of the
amortizable premium rules, particularly where there is more than one possible
call date and the amount of any premium is uncertain, Certificate Owners are
urged to consult their own tax advisors as to the amount of any amortizable
premium.
BACKUP WITHHOLDING
Payments made on the Pass Through Certificates and proceeds from the sale
of the Pass Through Certificates to or through certain brokers may be subject to
a "backup" withholding tax of 31% unless the Certificate Owner complies with
certain reponing procedures or is an exempt recipient under Section 6049(b) (4)
of the Code. Any such withheld amounts will be allowed as a credit against the
Certificate Owner's federal income tax.
54
<PAGE> 56
CERTAIN CANADIAN TAX CONSEQUENCES
In the opinion of Osler, Hoskin & Harcourt, Canadian counsel for the
Company and Procor, the following is, as of the date hereof, a fair and accurate
summary of the principal Canadian federal income tax consequences to a
Certificate Owner who is a non-resident of Canada and who purchased Pass Through
Certificates issued by Pass Through Trust 1996-A2 in connection with this
offering. This summary is based on the current provisions of the Income Tax Act
(Canada) (the "Tax Act") and the regulations thereunder, counsel's understanding
of the current administrative practices published by Revenue Canada and all
specific proposals to amend the Tax Act and the regulations announced by the
Minister of Finance prior to the date hereof. This summary does not otherwise
take into account or anticipate changes in the law, whether by judicial,
governmental or legislative decision or action, nor does it take into account
tax legislation or considerations of any province or territory of Canada or any
jurisdiction other than Canada.
This summary is of a general nature only and is not intended to be, and
should not be construed as, legal or tax advice to any particular Certificate
Owner. Purchasers of Pass Through Certificates, Series 1996-A2 should consult
their own tax advisors with respect to their particular circumstances.
The payment by Procor of interest and principal on the Procor ETC to the
Pass Through Trustee of Pass Through Trust 1996-A2 will be exempt from Canadian
withholding tax. Also, the payment by such Pass Through Trustee of interest and
principal on the Pass Through Certificates, Series 1996-A2 to a Certificate
Owner will be exempt from Canadian withholding tax for a Certificate Owner who
is, or is deemed to be, a non-resident of Canada and with whom the Company and
Procor deal at arm's length, within the meaning of the Tax Act, at the time of
making the payment. For the purposes of the Tax Act, related persons (as therein
defined) are deemed not to deal at arm's length, and it is a question of fact
whether persons not related to each other deal at arm's length.
No other taxes on income (including taxable capital gains) will be payable
under the Tax Act in respect of the holding or disposition of the Procor ETC, or
the receipt of interest thereon, by the Pass Through Trustee of Pass Through
Trust 1996-A2. No other taxes on income (including taxable capital gains) will
be payable under the Tax Act in respect of the acquisition, holding or
disposition of the Pass Through Certificates, Series 1996-A2 or the receipt of
interest thereon by Certificate Owners who are, or are deemed to be,
non-residents of Canada for purposes of the Tax Act at any time during which
they hold Pass Through Certificates and who do not use or hold and are not
deemed by such laws to use or hold the Pass Through Certificates in carrying on
business in Canada for the purposes of the Tax Act, and, in the case of a
Certificate Owner who carries on an insurance business in Canada and elsewhere,
whose Pass Through Certificates are not effectively connected with its Canadian
insurance business.
CERTAIN TAXES
The Pass Through Trustee is a with its principal corporate
trust office in . , counsel to ,
has advised the Company that, in its opinion, under currently applicable law,
[assuming that neither Pass Through Trust is taxable as a corporation, but,
rather, each is classified as a grantor trust under subpart E, Part I of
Subchapter J of the Code,] (i) neither Pass Through Trust will be subject to any
tax (including, without limitation, net or gross income, tangible or intangible
property, net worth, capital, franchise or doing business tax), fee or other
governmental charge under the laws of the State of or any political
subdivision thereof, (ii) Certificate Owners who are not residents of or
otherwise subject to tax in will not be subject to any tax (including,
without limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of or any political subdivision
thereof solely as a result of purchasing, holding (including receiving payments
with respect to) or disposing of a Pass Through Certificate, except to the
extent the Indenture Trustee forecloses on the Equipment and any of the
Equipment is located in or (iii) the Equipment Trust Trustee
forecloses on the Trust
55
<PAGE> 57
Equipment and any of the Trust Equipment is located in or to the
extent the Indenture Trust, the Company Trust, the Procor Trust or the Pass
Through Trust, as applicable, engages in business in as a result of
such foreclosure. Neither of the Pass Through Trusts nor the Certificate Owners
will be indemnified for any state or local taxes imposed on them, the imposition
of which on a Pass Through Trust could reduce the amounts available for
distribution to the Certificate Owners of such Pass Through Trust. In general,
should a Certificate Owner or a Pass Through Trust be subject to any state or
local tax which would not be imposed if the Pass Through Trustee were located in
a different jurisdiction in the United States, the Pass Through Trustee will
resign and a new Pass Through Trustee in such other jurisdiction will be
appointed.
ERISA CONSIDERATIONS
Pass Through Certificates may be purchased by an employee benefit plan (a
"Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). A fiduciary of a Plan must determine that the purchase of a
Pass Through Certificate is consistent with its fiduciary duties under ERISA and
does not result in a non-exempt prohibited transaction as defined in Section 406
of ERISA or Section 4975 of the Code. Employee benefit plans which are
governmental plans (as defined in Section 3(33) of ERISA) and certain church
plans (as defined in Section 3(33) of ERISA) are not subject to the fiduciary
responsibility provisions of ERISA. Any Plan that purchases a Pass Through
Certificate must be an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D promulgated under the Securities Act.
The United States Department of Labor has granted to each of Salomon
Brothers Inc and Morgan Stanley & Co. Incorporated an administrative exemption
(Prohibited Transaction Exemption 89-89, Exemption Application No. D-6446, et
al. 54 Fed. Reg. 42,589 (1989) as amended, 55 Fed. Reg. 48,939 (1990)) and
Prohibited Transaction Exemption 90-24 et al., Exemption Application No. D-8019
et al., 55 Fed. Reg. 20, 548 (1990) (collectively, the "Exemptions") from
certain of the prohibited transaction rules of ERISA and the Code with respect
to the initial purchase, the holding and the subsequent resale by a Plan of
certificates in certain pass through trusts, the assets of which consist of
secured credit instruments that bear interest, including qualified equipment
notes secured by leases. A number of conditions must be satisfied in order for
the Exemptions to apply, including the requirement that at the time of their
purchase by a Plan the Pass Through Certificates have a specified credit rating.
Under the Exemptions an equipment note secured by a lease will be considered
qualified only if it is a note (a) which is secured by equipment which is
leased, (b) which is secured by the obligation of the lessee to pay rent under
the equipment lease and (c) with respect to which the trust's security interest
is at least as protective of the rights of the trust as the trust would have if
the equipment note were secured only by the equipment and not by the lease.
It is not clear whether the Exemptions apply to participant directed plans
described in Section 404(c) of ERISA or plans that are subject to Section 4975
of the Code but not Title I of ERISA, such as individual retirement plans and
certain plans for self-employed individuals. In addition, there are various
other terms and conditions to the applicability of the Exemptions. Accordingly,
each fiduciary of a Plan should independently determine if its purchase of a
Pass Through Certificate will require an exemption, and if so, whether the
Exemptions apply to the purchase, or whether any other prohibited transaction
exemption is available.
56
<PAGE> 58
UNDERWRITING
Under the terms of and subject to the conditions contained in an
Underwriting Agreement dated the date hereof, Salomon Brothers Inc and Morgan
Stanley & Co. Incorporated (the "Underwriters") have agreed to purchase from the
Pass Through Trustee the principal amount of Pass Through Certificates set forth
opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITER PASS THROUGH CERTIFICATES
- ---------------------------------------------------------------------- -------------------------
<S> <C>
Salomon Brothers Inc.................................................. $
Morgan Stanley & Co. Incorporated.....................................
--------
Total....................................................... $
========
</TABLE>
The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Pass Through Certificates is subject to,
among other things, the approval of certain legal matters by their counsel and
certain other conditions. The Underwriters are obligated to take and pay for all
of the Pass Through Certificates to be purchased by them if any are taken.
The Underwriters propose to offer all or part of the Pass Through
Certificates directly to the public at the public offering prices per Pass
Through Certificate set forth on the cover page of this Prospectus and may offer
a portion of the Pass Through Certificates to dealers at a price which
represents a concession not in excess of the amounts set forth below. The
Underwriters may allow, and such dealers may reallow, concessions not in excess
of the amounts set forth below to certain other dealers. After the initial
public offering, the public offering price and such concessions may be changed.
<TABLE>
<CAPTION>
PASS THROUGH CERTIFICATE CONCESSIONS TO DEALERS REALLOWANCE CONCESSIONS
- ----------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
1996-A1........................................ % %
1996-A2........................................ % %
</TABLE>
The Company and Procor have agreed to indemnify the Underwriters and the
Underwriters have agreed to indemnify the Company and Procor against certain
liabilities, including liabilities under the Securities Act.
The Company and Procor do not intend to apply for listing of the Pass
Through Certificates on a national securities exchange, but has been advised by
the Underwriters that the Underwriters presently intend to make a market in the
Pass Through Certificates, as permitted by applicable laws and regulations. The
Underwriters are not obligated, however, to make a market in the Pass Through
Certificates and any such market making may be discontinued at any time at the
sole discretion of either Underwriter. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Pass Through Certificates.
LEGAL OPINIONS
The validity of the Pass Through Certificates is being passed upon for the
Company by Neal, Gerber & Eisenberg, Chicago, Illinois, and for the Underwriters
by Mayer, Brown & Platt, New York, New York. Both Neal, Gerber & Eisenberg and
Mayer, Brown & Platt will rely on the opinion of as to
matters relating to the authorization, execution, authentication, issuance and
delivery of the Pass Through Certificates under the Agreements.
57
<PAGE> 59
EXPERTS
The consolidated financial statements of Union Tank Car Company appearing
in Union Tank Car Company's Annual Report (Form 10-K) for the year ended
December 31, 1995 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
58
<PAGE> 60
APPENDIX I
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus. The
definitions of terms used in this glossary that are also used in the Agreements,
Indentures, Leases or Participation Agreements are qualified in their entirety
by reference to the definitions of such terms contained therein.
"Agreement" means each of the two separate Pass Through Trust Agreements by
and among as Pass Through Trustee, the Company and Procor,
pursuant to which the two separate Union Tank Car Company 1996-A Pass Through
Trusts will be formed.
"Basic Rent" means, with respect to any Unit, all scheduled rent payable by
the Company pursuant to each Lease.
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in New York, New York, Chicago,
Illinois, the city and state (if different from the foregoing) in which the
principal corporate trust office of the Owner Trustee is located, or, until the
lien of the Indenture has been discharged, the city and state (if different from
the foregoing) in which the principal corporate trust office of the Indenture
Trustee is located.
"Certificate Account" means the one or more accounts established and
maintained pursuant to an Agreement for the benefit of the Certificateholders of
such Pass Through Trust, for the deposit of payments representing Scheduled
Payments on the Equipment Notes, Company ETCs and the Procor ETC held in such
Pass Through Trust.
"Certificate Owner" means a person acquiring an interest in a Pass Through
Certificate registered in the name of Cede & Co. as the nominee of The
Depository Trust Company.
"Certificateholder" means any holder of a Pass Through Certificate.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company ETCs" means the equipment trust certificates issued pursuant to
the Company Trust Agreement.
"Company Trust Agreement" means the equipment trust agreement between the
Company and , as trustee.
"ETCs" means the Company ETCs and the Procor ETC.
"Equipment Cost" means the cost to an Owner Trust of Equipment purchased by
it from the Company.
"Equipment Notes" means the equipment notes issued on a nonrecourse basis
by the Owner Trustees pursuant to the Indentures and Indenture Supplements.
"Equipment Trust Default" means each of the events designated as an "Event
of Default" in the Company Trust Agreement or the Procor Trust Agreement.
"Equipment Trust Trustee" means in its capacity as trustee
under each Trust Agreement, and its successors and assigns thereunder.
"Event of Default" means, with respect to an Agreement, the occurrence and
continuance of an Indenture Default under one or more of the Indentures.
"Event of Loss" means each of the events designated as such in a Lease.
<PAGE> 61
"Indenture" means each of the separate Trust Indenture and Security
Agreements to be entered into with respect to certain designated groups of
Equipment between an Owner Trustee and the Indenture Trustee and pursuant to
which such Owner Trustee will issue the Equipment Notes with respect to such
groups of Equipment, as such Trust Indenture and Security Agreements may from
time to time be amended or supplemented.
"Indenture Default" means each of the events designated as an "Indenture
Event of Default" in an Indenture. For a description of certain events
constituting Indenture Defaults, see "Description of the Equipment
Notes -- Indenture Defaults, Notice and Waiver."
"Indenture Trustee" means , in its capacity as indenture
trustee under each Indenture, and its successors and assigns thereunder.
"Lease" means each of the separate Lease Agreements to be entered into
with respect to the Equipment subject thereto between an Owner Trustee and the
Company, as such Lease Agreements may from time to time be amended or
supplemented.
"Lease Default" means any event which, with notice or the passage of time
or both, would become a Lease Event of Default.
"Lease Event of Default" means each of the events designated as an event of
default in a Lease. For a description of certain events constituting Lease
Events of Default, see "Description of the Equipment Notes -- The
Leases -- Lease Events of Default."
"Owner Participant" means the owner participant for whose benefit an Owner
Trustee owns Equipment leased to the Company pursuant to a Lease and its
permitted successors and assigns.
"Owner Trustee" means , not in its individual capacity but
solely as trustee of
separate owner trusts, each for the benefit of an Owner Participant, its
successors and assigns.
"Participation Agreement" means each of the separate Participation
Agreements to be entered into in connection with the leveraged lease financing
of the Equipment, as such Participation Agreements may from time to time be
amended or supplemented.
"Pass Through Certificate" means each of the Pass Through Certificates,
Series 1996-A to be issued by the Pass Through Trustee pursuant to the
Agreements.
"Pass Through Trust" means each of two separate Union Tank Car Company
1996-A Pass Through Trusts to be formed pursuant to the Agreements.
"Pass Through Trustee" means , in its capacity as Pass Through
Trustee under each Agreement, and each other person which may from time to time
act as successor Pass Through Trustee under such Agreement.
"Permitted Investment" means each of (i) direct obligations of the United
States of America and agencies thereof, (ii) obligations fully guaranteed by the
United States of America, (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $100,000,000, having general
obligations rated at least A1 by Moody's Investors Service, Inc. or A+ by
Standard & Poor's Corporation (but excluding any new investment as to which
there is a public announcement by the rating agency providing a rating thereon
that such rating is under consideration for a possible downgrade below A1 or A+,
as the case may be), including the Owner Trustee in its individual capacity or
the Indenture Trustee in its individual capacity if such conditions are met,
(iv) commercial paper of any holding company of a bank, trust company or
national banking association described in clause (iii), (v) bearer note deposits
with, or certificates of deposit issued by, or promissory notes of, any
subsidiary incorporated under the laws of Canada (or any province thereof) of
any bank, trust company or national banking association described in clause
(iii), (vi) commercial paper of companies having a rating of A-1/P-1 or better
assigned to
I-2
<PAGE> 62
such commercial paper by Standard & Poor's Corporation or Moody's Investors
Service, Inc. (or, if neither such organization shall rate such commercial paper
at any time, by any nationally recognized rating organization in the United
States of America), (vii) U.S. dollar-denominated certificates of deposit issued
by, or time deposits with, the European subsidiaries of any bank, trust company
or national banking association described in clause (iii), (viii) Canadian
Treasury Bills fully hedged to U.S. dollars, (ix) bonds, notes or other
obligations of any state of the United States of America, or any political
subdivision of any such state, or any agencies or other instrumentalities of any
such state, including, but not limited to, industrial development bonds,
pollution control revenue bonds, public power bonds, housing bonds, other
revenue bonds or any general obligation bonds; provided that, at the time of
their purchase, such obligations are rated in the highest rating category by
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if neither
such organization shall rate such obligations at such time, by any nationally
recognized rating organization in the United States of America), and (x) bonds
or other debt instruments of any company, if such bonds or other debt
instruments, at the time of their purchase, are rated in the highest rating
category by Standard & Poor's Corporation or Moody's Investors Service, Inc.
(or, if neither such organization shall rate such obligations at such time, by
any nationally recognized rating organization in the United States of America);
provided that no investment shall be eligible as and included within the
definition of the term "Permitted Investment" unless either (x) the final
maturity or date of return of such investment is equal to one year or less from
the date of purchase thereof or (y) in the case of any investment referred to in
the foregoing clause (i) or (ii) only, such investment has a final maturity or
date of return greater than one year from the date of purchase thereof and
closing prices on a national securities exchange or bid and asked prices,
closing prices or yields to maturity for such investment are reported in The
Wall Street Journal (or if The Wall Street Journal is not at the time published
or ceases to report such prices, such prices are reported by any other
publication of nationally recognized standing of general circulation in New York
City).
"Pool Balance" means, for each Pass Through Trust, as of any Regular
Distribution Date or Special Distribution Date, the aggregate unpaid principal
amount of the Equipment Notes, and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC, held in such Pass Through Trust plus any
amounts in respect of principal on such Equipment Notes, Company ETCs and the
Procor ETC held, as the case may be, by the Pass Through Trustee and not yet
distributed plus any proceeds of the sale of the Pass Through Certificates held
in the Pass Through Trust and not yet used to purchase Equipment Notes, or in
the case of Pass Through Trust 1996-A2 Company ETCs. The Pool Balance as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, of the Equipment Notes,
Company ETCs and the Procor ETC, as the case may be, and distribution thereof to
be made on that date.
"Pool Factor" means, for each Pass Through Trust, as of any Regular
Distribution Date or Special Distribution Date, if any, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
aggregate original principal amount of Pass Through Certificates issued by such
Pass Through Trust. The Pool Factor for each Pass Through Trust as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the Equipment Notes, and
in the case of Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC,
held in such Pass Through Trust and distribution thereof to be made on that
date.
"Procor ETC" means the equipment trust certificate issued pursuant to the
Procor Trust Agreement.
"Procor Trust Agreement" means the equipment trust agreement between Procor
and , as trustee.
"Record Date" means the fifteenth day preceding a Regular Distribution Date
or Special Distribution Date.
"Registrar" shall have the meaning specified in Section 2.3 of the
Indenture.
I-3
<PAGE> 63
"Regular Distribution Date" means and of each year,
commencing , 199[6]
"Scheduled Payment" means each payment of principal of or interest on an
Equipment Note, and in the case of Pass Through Trust 1996-A2, a Company ETC or
the Procor ETC, scheduled to be received by the Pass Through Trustee on
or of each year, commencing , 199[6] until
the final distribution date for the relevant Pass Through Trust, which payment
represents the payment of principal at stated maturity of, or the scheduled
payment or prepayment of principal of, such Equipment Note, Company ETC or
Procor ETC, or the regularly scheduled payment of interest accrued on such
Equipment Note, Company ETC or Procor ETC.
"Special Distribution Date" means each day on which a Special Payment will
be distributed as specified in the Prospectus.
"Special Payment" means any payment of principal, Make-Whole Amount, if
any, and interest received by the Pass Through Trustee on account of the
prepayment, if any, of the Equipment Notes (or portion thereof) held in a Pass
Through Trust; any payment received by the Pass Through Trustee following an
Indenture Default in respect of the Equipment Notes, Company ETCs or the Procor
ETC held in a Pass Through Trust, including payments received by the Pass
Through Trustee on account of the purchase by the applicable Owner Trustee of
such Equipment Notes; payments received by the Pass Through Trustee on account
of the sale by it of such Equipment Notes, Company ETCs or the Procor ETC; and
any return of escrowed funds which have not been used to purchase Equipment
Notes, Company ETCs or the Procor ETC plus any payment of amounts received by
the Pass Through Trustee representing interest that would have been paid on such
escrowed funds had Equipment Notes, Company ETCs or the Procor ETC been
purchased with such escrowed funds.
"Special Payment Account" means the one or more accounts established and
maintained pursuant to the Agreement and for the benefit of the
Certificateholders of such Pass Through Trust, for the deposit of payments
representing Special Payments.
"Specified Investments" means (i) direct obligations of the United States
of America and agencies thereof for which the full faith and credit of the
United States of America is pledged, (ii) obligations fully guaranteed by the
United States of America, (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $500,000,000 (including any Indenture
Trustee or Owner Trustee, in their respective individual capacities if such
conditions are met), (iv) commercial paper of companies, banks, trust companies
or national banking associations incorporated or doing business under the laws
of the United States of America or one of the States thereof and in each case
having a rating of A-1/P-1 or better assigned to such commercial paper by
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if neither
such organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States of America) and
(v) repurchase agreements with any financial institution having a combined
capital and surplus of at least $750,000,000 fully collateralized by obligations
of the type described in clauses (i) through (iv) above; provided, however, that
if all of the above investments are unavailable, the entire amount to be
invested may be used to purchase Federal Funds from an entity described in (iii)
above; and provided, further, that no investment shall be eligible as a
"Specified Investment" unless the final maturity or date of return of such
investment occurs no later than June , 1996.
"Stipulated Loss Value" means, as to a Unit, the amount payable under a
Lease upon the occurrence of an Event of Loss with respect to such Unit subject
to such Lease.
"Termination Value" means, as to a Unit, the amount required to be received
by an Owner Trustee under a Lease following certain early terminations of such
Lease with respect to such Unit.
"Trust Agreements" means the Company Trust Agreement and the Procor Trust
Agreement.
I-4
<PAGE> 64
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................... 2
Reports to Certificateholders by the
Trustee................................. 2
Documents Incorporated by Reference....... 2
Summary................................... 3
Formation of the Pass Through Trusts...... 12
Description of Payment Flows.............. 13
Use of Proceeds........................... 15
The Company............................... 17
Capitalization............................ 18
Selected Financial Information............ 19
Description of the Pass Through
Certificates............................ 20
Description of the Equipment Notes........ 35
Description of the ETCs................... 48
Certain Federal Income Tax Consequences... 52
Certain Canadian Tax Consequences......... 55
Certain Taxes.............. 55
ERISA Considerations...................... 56
Underwriting.............................. 57
Legal Opinions............................ 57
Experts................................... 58
Glossary of Certain Terms...........Appendix I
</TABLE>
UNTIL , 1996 (90 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE PASS THROUGH CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
$122,000,000
UNION TANK CAR
COMPANY
1996-A
PASS THROUGH
TRUSTS
PASS THROUGH CERTIFICATES,
SERIES 1996-A
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
PROSPECTUS
DATED MAY , 1995
<PAGE> 65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses (other than
underwriting discounts and commissions) to be incurred by the registrant in
connection with the offering described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... $42,069
Blue Sky filing and counsel fees.................................. *
Trustees' fees and expenses....................................... *
Printing expenses................................................. *
Auditors' fees and expenses....................................... *
Attorneys' fees and expenses...................................... *
Rating agency fees................................................ *
Miscellaneous..................................................... *
-------
Total................................................... $ *
=======
</TABLE>
- ---------------
* To be provided by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, Article Sixth of the
Company's Restated Certificate of Incorporation and Article VIII of the
Company's By-Laws authorize and empower the Company to indemnify its directors,
officers, employees and agents against liabilities incurred in connection with,
and related expenses resulting from, any claim, action or suit brought against
any such person as a result of such person's relationship with the Company,
provided that such persons acted in accordance with a stated standard of conduct
in connection with the acts or events on which such claim, action or suit is
based. The finding of either civil or criminal liability on the pan of such
persons in connection with such acts or events is not necessarily determinative
of the question of whether such persons have met the required standard of
conduct and are, accordingly, entitled to be indemnified.
Section 124 of the Canada Business Corporations Act and Section 33 of
By-law 15 of Procor authorize and empower Procor to indemnify its directors and
officers against all costs, charges and expenses including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by him in respect of
any civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a director or officer of Procor, if he
acted honestly and in good faith with a view to the best interests of Procor
and, in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, if he had reasonable grounds for believing that
his conduct was lawful.
Reference is made to Section 8 of the form of Underwriting Agreement filed
as Exhibit I hereto for provisions regarding indemnification of the Company and
Procor and their respective officers, directors and controlling persons against
certain liabilities.
II-1
<PAGE> 66
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
-------- ----------------------------------------------------------------------
<S> <C>
1 Form of Underwriting Agreement.
4(a)(1) Form of Pass Through Trust Agreement 1996 A-1 between the Pass Through
Trustee and the Company relating to the Pass Through Certificates.**
4(a)(2) Form of Pass Through Trust Agreement 1996 A-2 among the Pass Through
Trustee, the Company and Procor relating to the Pass Through
Certificates.
4(a)(3) Form of Pass Through Certificate, Series 1996-A1 (included in Exhibit
4(a)(1)).**
4(a)(4) Form of Pass Through Certificate, Series 1996-A2 (included in Exhibit
4(a)(2)).
4(b)(1) Form of Participation Agreement among the Company, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Pass
Through Trustee relating to each separate leveraged lease
transaction.*
4(b)(2) Form of Lease Agreement between the Company and the Owner Trustee.*
4(b)(3) Form of Trust Indenture and Security Agreement between the Indenture
Trustee and the Owner Trustee.*
4(b)(4) Form of Equipment Note (included in Exhibit 4(b)(3)).
4(b)(5) Form of Trust Agreement between the Owner Participant and the Owner
Trustee.**
4(c)(1) Form of Equipment Trust Agreement (Series 26) between the Company and
the Equipment Trust Trustee relating to the Company ETCs.
4(c)(2) Form of the Company ETC (included in Exhibit 4(c)(1)).
4(c)(3) Form of Equipment Trust Agreement (Series 26-Can) between Procor and
the Equipment Trust Trustee relating to the Procor ETC.
4(c)(4) Form of the Procor ETC (included in Exhibit 4(c)(3)).
5(a) Opinion of Neal, Gerber & Eisenberg, counsel for the Company.**
5(b) Opinion of , counsel for the Pass Through
Trustee.**
8(a) Tax Opinion of Neal, Gerber & Eisenberg, counsel for the Company.**
8(b) Tax Opinion of Osler, Hoskin & Harcourt, counsel for Procor.**
8(c) Tax Opinion of , counsel for the Pass Through
Trustee.**
12 Computation of Ratios of Earnings to Fixed Charges.***
23(a) Consent of Ernst & Young LLP, Independent Auditors.
23(b) Consent of Neal, Gerber & Eisenberg (included in Exhibits 5(a) and
8(a)).**
23(c) Consent of (included in Exhibit 5(b) and
8(c)).**
23(d) Consent of Osler, Hoskin & Harcourt (included in Exhibit 8(b)).**
24 Powers of Attorney.
26 Statement of Eligibility of Pass Through Trustee on Form T-1.**
</TABLE>
- ---------------
* separate Participation Agreements, Trust Indentures and Security
Agreements, Trust Agreements and Lease Agreements will be entered into with
respect to separate leveraged lease transactions. Except for differences in
parties, dollar amounts, interest rates, percentages and the like, there are
no material details in which the indicated agreements relating to such
equipment not filed herewith differ from the corresponding exhibit for the
form of such document.
II-2
<PAGE> 67
** To be filed by amendment.
*** The computation for each of the five fiscal years ended December 31, 1995,
1994, 1993, 1992 and 1991 is incorporated herein by reference to Exhibit 12
to the Company's Annual Report on Form 10-K for the year ended December 31,
1995.
ITEM 17. UNDERTAKINGS
A. Undertaking Regarding Documents Subsequently Filed Under the Exchange
Act.
The Company and Procor hereby undertake that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a)or Section 15(d) of the Exchange Act that
is incorporated by reference in this Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
B. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company and Procor pursuant to the provisions described under Item 15 above, or
other vise, the Company and Procor have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company or Procor of expenses incurred or paid by a director, officer or
controlling person of the Company or Procor in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company or Procor
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
C. Undertakings Pursuant to Rule 430A
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company or Procor pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE> 68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Union Tank Car
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois on the 21st day of March,
1996.
UNION TANK CAR COMPANY
/s/ R.C. GLUTH
--------------------------------------
Robert C. Gluth,
Executive Vice President,
Treasurer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 21st day of March, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- ------------------------------------------
<S> <C>
* /s/ JAY A. PRITZKER Chairman of the Board and Director
- -----------------------------------------------
Jay A. Pritzker
* /s/ ROBERT A. PRITZKER President and Director
- ----------------------------------------------- (principal executive officer)
Robert A. Pritzker
/s/ R.C. GLUTH Executive Vice President,
- ----------------------------------------------- Treasurer and Director
Robert C. Gluth (principal financial and accounting
officer)
* /s/ K.P. FISCHL Director
- -----------------------------------------------
K.P. Fischl
*By: /s/ R.C. GLUTH
- -----------------------------------------------
Robert C. Gluth
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Procor Limited
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois on the 21st day of March,
1996.
PROCOR LIMITED
/s/ R.C. GLUTH
--------------------------------------
Robert C. Gluth,
Vice President,
Treasurer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 21st day of March, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- ------------------------------------------
<S> <C>
* /s/ FRANK D. LESTER President
- ----------------------------------------------- (principal executive officer)
Frank D. Lester
/s/ R.C. GLUTH Vice President,
- ----------------------------------------------- Treasurer and Director
Robert C. Gluth (principal financial and accounting
officer)
* /s/ DAVID H. PATTERSON Director
- -----------------------------------------------
David H. Patterson
* /s/ K.P. FISCHL Director
- -----------------------------------------------
K.P. Fischl
* /s/ PETER E. LAWFORD Director
- -----------------------------------------------
Peter E. Lawford
* /s/ S. DONALD HAMILTON Director
- -----------------------------------------------
S. Donald Hamilton
*By: /s/ R.C. GLUTH
- -----------------------------------------------
Robert C. Gluth
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 70
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS PAGE NO.
- -------- --------------------------------------------------------------------- --------
<S> <C> <C>
1 Form of Underwriting Agreement.......................................
4(a)(1) Form of Pass Through Trust Agreement 1996 A-1 between the Pass
Through Trustee and the Company relating to the Pass Through
Certificates**.......................................................
4(a)(2) Form of Pass Through Trust Agreement 1996 A-2 among the Pass Through
Trustee, the Company and Procor relating to the Pass Through
Certificates.........................................................
4(a)(3) Form of Pass Through Certificate, Series 1996-A1 (included in Exhibit
4(a)(1))**...........................................................
4(a)(4) Form of Pass Through Certificate, Series 1996-A2 (included in Exhibit
4(a)(2)).............................................................
4(b)(1) Form of Participation Agreement among the Company, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Pass
Through Trustee relating to each separate leveraged lease
transaction*.........................................................
4(b)(2) Form of Lease Agreement between the Company and the Owner Trustee*...
4(b)(3) Form of Trust Indenture and Security Agreement between the Indenture
Trustee and the Owner Trustee*.......................................
4(b)(4) Form of Equipment Note (included in Exhibit 4(b)(3)).................
4(b)(5) Form of Trust Agreement between the Owner Participant and the Owner
Trustee**............................................................
4(c)(1) Form of Equipment Trust Agreement (Series 26) between the Company and
the Equipment Trust Trustee relating to the Company ETCs.............
4(c)(2) Form of the Company ETC (included in Exhibit 4(c)(1))................
4(c)(3) Form of Equipment Trust Agreement (Series 26-Can) between Procor and
the Equipment Trust Trustee relating to the Procor ETC...............
4(c)(4) Form of the Procor ETC (included in Exhibit 4(c)(3)).................
5(a) Opinion of Neal, Gerber & Eisenberg, counsel for the Company**.......
5(b) Opinion of , counsel for the Pass Through Trustee**...
8(a) Tax Opinion of Neal, Gerber & Eisenberg, counsel for the Company**...
8(b) Tax Opinion of Osler, Hoskin & Harcourt, counsel for Procor**........
8(c) Tax Opinion of , counsel for the Pass Through
Trustee**............................................................
12 Computation of Ratios of Earnings to Fixed Charges**.................
23(a) Consent of Ernst & Young LLP, Independent Auditors...................
23(b) Consent of Neal, Gerber & Eisenberg (included in Exhibits 5(a) and
8(a))**..............................................................
23(c) Consent of (included in Exhibit 5(b) and 8(c))**......
23(d) Consent of Osler, Hoskin & Harcourt (included in Exhibit 8(b))**.....
24 Powers of Attorney...................................................
26 Statement of Eligibility of Pass Through Trustee on Form T-1**.......
</TABLE>
- ---------------
* separate Participation Agreements, Trust Indentures and Security
Agreements, Trust Agreements and Lease Agreements will be entered into with
respect to separate leveraged lease transactions. Except for
differences in parties, dollar amounts, interest rates, percentages and the
like, there are no material details in which the indicated agreements
relating to such equipment not filed herewith differ from the corresponding
exhibit for the form of such document.
** To be filed by amendment.
*** The computation for each of the five fiscal years ended December 31, 1995,
1994, 1993, 1992 and 1991 is incorporated herein by reference to Exhibit 12
to the Company's Annual Report on Form 10-K for the year ended December 31,
1995.
<PAGE> 1
EXHIBIT 1
Union Tank Car Company
and
Procor Limited
$122,000,000
Pass Through Certificates, Series 1996-A
Underwriting Agreement
New York, New York
May , 1996
Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Dear Ladies and Gentlemen:
Union Tank Car Company, a Delaware corporation ("Union"), and Procor
Limited, a Canadian corporation and an indirect wholly-owned subsidiary of
Union ("Procor" and, together with Union, the "Companies") propose to cause to
be sold to you the underwriters (the "Underwriters") $122,000,000 aggregate
principal amount of Pass Through Certificates, Series 1996-A1 and Pass Through
Certificates, Series 1996-A2 (together with the guarantee of Union of the due
and punctual distribution to holders of such certificates of principal and
interest payable in respect of the Procor ETC (as hereinafter defined) to be
endorsed on Pass Through Certificates, Series 1996-A2, the "Union Guarantee"),
with the interest rates and final distribution dates as set forth in Schedule A
hereto (the "Pass Through Certificates"), in the respective aggregate principal
amounts set forth on Schedule B hereto, to be issued under (i) the Pass Through
Trust Agreement 1996-A1, dated May __, 1996 (the "Pass Through Trust Agreement
1996-A1"), between Union and _________________, as Pass Through Trustee (the
"Pass Through Trustee") and (ii) the Pass Through Trust Agreement 1996-A2,
dated May __, 1996 (the "Pass Through Trust Agreement 1996-A2", and together
with the
<PAGE> 2
Pass Through Trust Agreement 1996-A1, the "Pass Through Trust Agreements")
among Union, Procor and the Pass Through Trustee, respectively.
The property to be purchased by the Pass Through Trustee under Pass
Through Agreement 1996-A1 and contained in such trust shall consist of
$___________ principal amount Equipment Notes, Series A to be issued under the
Indenture. The property to be purchased by the Pass Through Trustee under Pass
Through Trust Agreement 1996-A2 and contained in such trust shall consist of
(i) $_____________ principal amount Equipment Notes, Series B, (ii) an
aggregate of $_____________ principal amount Equipment Trust Certificates,
Series 26 of Union (together with the guarantee of Union to be endorsed
thereon, the "Union ETCs") to be issued by Union pursuant to an Equipment Trust
Agreement, dated May __, 1996, as may be amended or supplemented from time to
time (the "Union Equipment Trust Agreement"), between Union and
___________________, as trustee (the "Union Equipment Trust Trustee"), and
(iii) a $______________ principal amount Equipment Trust Certificate, Series
26-Can of Procor (together with the guarantee of Procor endorsed thereon, the
"Procor ETC") to be issued by Procor pursuant to an Equipment Trust Agreement,
dated May __, 1996, as may be amended or supplemented from time to time (the
"Procor Equipment Trust Agreement", and together with the Union Equipment Trust
Agreement, the "Equipment Trust Agreements"), between Procor and
________________, as trustee (the "Procor Equipment Trust Trustee", and
together with the Union Equipment Trust Trustee, the "Equipment Trust
Trustees").
All capitalized terms used, but not defined herein, shall have the
meanings attributed to them in the Pass Through Trust Agreements. As used in
this Agreement, the term "Operative Agreements" shall have the meaning set
forth in the Participation Agreement. All other capitalized terms used herein
shall, for the purposes hereof, have the meanings attributed to them in this
Agreement.
1. Representations and Warranties. The Companies represent and
warrant to, and agree with you, that:
(a) The Companies meet the requirements for use of Form
S-3 under the Securities Act of 1933, as amended (the "Act"), and have
filed with the Securities and Exchange Commission (the "Commission") a
registration statement (file number ___________) on such Form,
including a related Preliminary Prospectus (as hereinafter defined),
for the registration under the Act of the offering and sale of the
Pass Through Certificates. The Companies may have filed one or more
amendments thereto, including the related Preliminary Prospectus, each
of which has previously been furnished to you. The Companies will
next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment to
such registration statement, including the form of final prospectus or
(ii) a final prospectus in accordance with Rules 430A and 424(b)(1) or
(4) under the Act. In the case of clause (ii), the Companies have
included in such registration
- 2 -
<PAGE> 3
statement, as amended at the Effective Date (as hereinafter defined)
all information (other than Rule 430A Information (as hereinafter
defined)) required by the Act and the rules thereunder to be included
in the Prospectus (as hereinafter defined) with respect to the Pass
Through Certificates and the offering thereof. As filed, such
amendment and form of final prospectus, or such final prospectus,
shall contain all Rule 430A Information, together with all other such
required information, with respect to the Pass Through Certificates
and the offering thereof and, except to the extent you shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time (as hereinafter
defined) or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the
Companies have advised you, prior to the Execution Time, will be
included or made therein.
(b) On the Effective Date (as hereinafter defined), the
Registration Statement did or will, and when the Prospectus is first
filed (if required) in accordance with Rule 424(b) and on the Closing
Date (as hereinafter defined), the Prospectus (as hereinafter defined)
(and any supplements thereto) will, comply in all material respects
with the applicable requirements of the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the
respective rules and regulations thereunder; on the Effective Date,
the Registration Statement (as hereinafter defined) did not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; on the Effective Date
and on the Closing Date (as hereinafter defined), the Pass Through
Trust Agreements did or will comply in all material respects with the
requirements of the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the rules thereunder; and, on the
Effective Date, the Prospectus, if not filed pursuant to Rule 424(b),
did not or will not, and on the date of any filing pursuant to Rule
424(b) and on the Closing Date, the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Companies make no representations or warranties as to (i) that part of
the Registration Statement which shall constitute the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act
of the Pass Through Trustee and (ii) the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by you specifically
for use in connection with the preparation of the Registration
Statement or the Prospectus (or any supplement thereto).
(c) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "Effective Date" shall
mean each date that the
- 3 -
<PAGE> 4
Registration Statement and any post-effective amendment or amendments
thereto became or becomes effective. "Execution Time" shall mean the
date and time that this Agreement is executed and delivered by the
parties hereto. "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in paragraph (a) above, and any preliminary
prospectus included in the Registration Statement at the Effective
Date that omits Rule 430A Information. "Prospectus" shall mean the
prospectus relating to the Pass Through Certificates that is first
filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Pass Through Certificates included in
the Registration Statement at the Effective Date. "Registration
Statement" shall mean the registration statement referred to in
paragraph (a) above, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time (or, if not
effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 424", "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Act.
"Rule 430A Information" means information with respect to the Pass
Through Certificates and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective pursuant to
Rule 430A. Any reference herein to the Registration Statement, a
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date or the issue date of such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference
herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date of the
Registration Statement, or, the issue date of any Preliminary
Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
(d) The consolidated financial statements incorporated by
reference in the Registration Statement and Prospectus present fairly
the consolidated financial position of Union and its subsidiaries as
at the dates indicated and the consolidated results of their
operations and cash flows for the periods specified and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved, except as
indicated therein, and the supporting schedules incorporated by
reference in the Registration Statement present fairly the information
required to be stated therein.
(e) The documents incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all
- 4 -
<PAGE> 5
material respects with the requirements of the Exchange Act, and the
rules and regulations thereunder.
(f) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein or contemplated thereby, there has been no
material adverse change in the condition, financial or otherwise,
results of operations or general affairs of Union and its
subsidiaries, taken as a whole.
(g) Union and each Significant Subsidiary (with such term
having the meaning attributed to it under Rule 405 under the Act) of
Union (including Procor) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification wherein it
owns or leases material properties or conducts material business,
except in such jurisdictions in which the failure to so qualify would
not have a material adverse effect on Union and its subsidiaries,
taken as a whole. Union owns either directly, or through wholly-owned
subsidiaries, all of the issued and outstanding capital stock of
Procor.
(h) The execution and delivery by Union or Procor, as the
case may be, of this Agreement, the Participation Agreement, the Pass
Through Trust Agreements, the Lease, the Equipment Trust Agreements
and the other Operative Agreements to which Union or Procor, as the
case may be, is, or is to be, a party, the consummation by the
Companies of the transactions herein and therein contemplated, and the
compliance by the Companies with the terms hereof and thereof do not
and will not conflict with, or result in a breach of any of the terms
or provisions of, or constitute a default under, the Certificate of
Incorporation or by-laws, as amended, of Union, or the corporate
charter or by-laws, as amended, of Procor, or any of their respective
subsidiaries or any material indenture, mortgage, or other agreement
or instrument to which the Companies or any of their respective
subsidiaries is a party or by which any of their respective properties
are bound, or any applicable law, rule, regulation, judgment, order or
decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Companies or any of
their respective subsidiaries or any of their respective properties;
and, assuming due authorization, execution and delivery by all parties
thereto other than the Companies, no consent, approval, authorization,
order or license of, or filing with or notice to any government,
governmental instrumentality, regulatory body or authority or court,
domestic or foreign, is required for the valid authorization, issuance
and delivery of the Pass Through Certificates, the ETCs and the
Equipment Notes, the valid authorization, execution, delivery and
performance by Union and Procor, as the case
- 5 -
<PAGE> 6
may be, of this Agreement, the Participation Agreement, the Pass
Through Trust Agreements, the Equipment Trust Agreements and the Lease
and other Operative Agreements to which Union or Procor, as the case
may be, is, or is to be, a party, or the consummation by the Companies
of the transactions contemplated by this Agreement, the Participation
Agreement, the Pass Through Trust Agreements, the Equipment Trust
Agreements and the Lease and other Operative Agreements to which Union
or Procor, as the case may be, is, or is to be, a party, except (w)
such as are required under the Act, the Trust Indenture Act and the
securities or Blue Sky laws of the various states, (x) such filings,
recordings or registrations with the Surface Transportation Board of
the Department of Transportation (the "STB") and under Section 90 of
the Railway Act (Canada) as may be required, (y) the filing of Uniform
Commercial Code financing statements in various jurisdictions and the
filing of continuation statements with respect thereto required to be
filed at periodic intervals under the Uniform Commercial Code and (z)
such other filings, recordings or registrations as may be required
under the Operative Agreements.
(i) This Agreement, the Participation Agreement, the Pass
Through Trust Agreements, the Equipment Trust Agreements and the Lease
and the other Operative Agreements to which Union or Procor, as the
case may be, is, or is to be, a party, have each been duly authorized
by Union or Procor, as the case may be, and, when executed and
delivered by Union or Procor, as the case may be, will constitute
valid and binding obligations of Union or Procor, as the case may be,
and the Pass Through Trust Agreements will have been duly qualified
under the Trust Indenture Act. On the Closing Date, the Equipment
Trust Agreements, the Lease and other Operative Agreements to which
Union or Procor, as the case may be, is, or is to be, a party will
constitute the valid and binding obligations of Union or Procor, as
the case may be. The Pass Through Certificates, the ETCs, the
Equipment Notes, the Indenture, the Participation Agreement, the Pass
Through Trust Agreements, the Equipment Trust Agreements and the Lease
and the other Operative Agreements to which Union or Procor, as the
case may be, is, or is to be, a party will conform in all material
respects to the descriptions thereof in the Prospectus.
(j) Ernst & Young LLP ("Ernst & Young"), who reported on
the consolidated financial statements of Union as of December 31, 1995
and for the year then ended, which statements are incorporated by
reference in the Registration Statement and Prospectus, were, as of
the date of its report on such consolidated financial statements,
independent auditors as required by the Act and the rules and
regulations thereunder.
(k) The Pass Through Certificates, when duly executed,
authenticated and delivered by the Pass Through Trustee in accordance
with the terms of the Pass Through Trust Agreements and this
Agreement, will be duly issued under the Pass Through Trust Agreements
and will constitute valid and binding obligations of the
- 6 -
<PAGE> 7
Pass Through Trustee; and the holders thereof will be entitled to the
benefits of the Pass Through Trust Agreements.
(l) Assuming due authorization, execution and delivery of
the Equipment Notes to be issued under the Indenture by the Owner
Trustee and due authentication of such Equipment Notes by the
Indenture Trustee in accordance with the terms of the Indenture, the
Equipment Notes will be duly issued under the Indenture and will
constitute valid and binding obligations of such Owner Trustee; and
the holders thereof will be entitled to the benefits of the Indenture.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the
Companies agree to request the Pass Through Trustee to sell to each of you, in
the respective aggregate principal amounts set forth on Schedule B hereto, and
each of you severally, not jointly, agrees to purchase from the Pass Through
Trustee, at a purchase price of 100% of the principal amount thereof, the
respective aggregate principal amounts of Pass Through Certificates set forth
on such Schedule B.
As compensation to each of you for its commitment and obligations
hereunder in respect of the Pass Through Certificates, including its
undertaking to distribute the Pass Through Certificates, the Owner Trustee has,
pursuant to Section 2.5 of the Participation Agreement, undertaken to pay, or
if the Owner Trustee does not pay when due, Union will pay when due, to you an
amount equal to the product of ____% times a fraction, the numerator of which
is the aggregate principal amount of Equipment Notes to be purchased by the
Pass Through Trusts and the denominator of which is the original principal
amount of the Pass Through Certificates purchased by you. Union will pay to
you when due an amount equal to ____% of the original aggregate principal
amount of the Union ETCs and Procor will pay to you when due an amount equal to
____% of the original aggregate principal amount of the Procor ETC. Subject to
the terms hereof, Procor's obligation to make such payment is hereby
unconditionally guaranteed by Union. Such payments shall be made
simultaneously with the payment by you to the Pass Through Trustee of the
purchase price of the Pass Through Certificates as specified in Section 3
hereof. Payment of such compensation shall be made by Federal funds check or
other immediately available funds to the order of Salomon Brothers Inc.
3. Delivery and Payment. Delivery of and payment for the Pass
Through Certificates shall be made at the offices of Neal, Gerber & Eisenberg,
Two North LaSalle Street, Chicago, Illinois, at 10:00 a.m. C.S.T., on May __,
1996 or such later date and time (not later than May __, 1996) as the Companies
and you shall determine (such date and time of delivery and payment for the
Pass Through Certificates being herein called the "Closing Date"). Delivery of
the Pass Through Certificates shall be made to your account at The Depository
Trust Company against payment by you of the purchase price thereof to or upon
the order of the Pass Through Trustee by Federal funds check or other
immediately available
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<PAGE> 8
funds. The Pass Through Certificates shall be registered in such names and in
such denominations as you may request not less than three full business days in
advance of the Closing Date or such other date as may be agreed upon.
The Companies agree to have the Pass Through Certificates available
for inspection, checking and packaging by you in New York City, not later than
1:00 p.m. (New York City time) on the business day prior to the Closing Date.
4. Offering by Salomon Brothers Inc. and Morgan Stanley & Co.
Incorporated. It is understood that, after the Registration Statement becomes
effective, each of you propose to offer the Pass Through Certificates for sale
to the public as set forth in the Prospectus.
5. Agreements. The Companies agree with you that:
(a) The Companies will each use their reasonable best
efforts to cause the Registration Statement, if not effective at the
Execution Time, and any amendment thereof, to become effective and the
Pass Through Trust Agreement to be qualified under the Trust Indenture
Act. The Companies will not file any amendment of the Registration
Statement or supplement to the Prospectus unless the Companies have
furnished you a copy for your review prior to filing and will not file
any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, if filing of the
prospectus is required under Rule 424(b), the Companies will cause the
Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Companies will
promptly advise you (i) when the Registration Statement, if not
effective at the Execution Time, and any amendment thereto, shall have
become effective, (ii) when the Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (iii) when, prior to termination of the
offering of the Pass Through Certificates, any amendment to the
Registration Statement shall have been filed or become effective, (iv)
of any request by the Commission for any amendment of the Registration
Statement or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose (and
each of the Companies agree that it will each use its reasonable best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof), (vi) of the
receipt by the Companies of any notification with respect to the
suspension of the qualification of the Pass Through Certificates for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and (vii) during the period when a
prospectus relating to the Pass Through Certificates is required to be
delivered under the Act, of the mailing or the delivery to the
Commission for filing of any document to be filed pursuant to the
Exchange Act.
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<PAGE> 9
(b) If, at any time when a prospectus relating to the
Pass Through Certificates is required to be delivered under the Act,
any event occurs as a result of which the Prospectus as then
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the
Exchange Act or the respective rules and regulations thereunder, the
Companies promptly will prepare and file with the Commission, subject
to paragraph (a) of this Section 5, an amendment or supplement which
will correct such statement or omission or an amendment which will
effect such compliance.
(c) As soon as practicable, Union will make generally
available to its security holders and to the Underwriters an earnings
statement or statements of Union and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and the applicable
rules and regulations thereunder.
(d) The Companies will furnish to you and your counsel,
without charge, signed copies of the Registration Statement (including
exhibits thereto) and, so long as delivery of a prospectus by you or a
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any amendments thereof and
supplements thereto as you may reasonably request. Subject to the
provisions of Section 2.5 of the Participation Agreement, the
Companies will pay the expenses of printing all documents relating to
the offering.
(e) The Companies will cooperate with you and your
special counsel to arrange for the qualification of the Pass Through
Certificates for sale under the laws of such jurisdictions as you may
reasonably designate, will maintain such qualifications in effect so
long as required for the distribution of the Pass Through Certificates
and will arrange for the determination of the legality of the Pass
Through Certificates for purchase by institutional investors;
provided, however, that the Companies will not be required to qualify
to do business in any jurisdiction in order to effect such
qualification.
(f) Between the date of this Agreement and the Closing
Date, the Companies will not without your prior written consent offer,
sell, or enter into any agreement to sell, any public debt securities
registered under the Act (other than the Pass Through Certificates).
(g) The Companies confirm as of the date hereof that each
is in compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Companies further agree that if either Union or Procor
commences engaging in business with the government of Cuba
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<PAGE> 10
or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported
in the Prospectus, if any, concerning Union's or Procor's business
with Cuba or with any person or affiliate located in Cuba changes in
any material way, the Companies will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the
Department.
6. Conditions to the Obligations of Salomon Brothers Inc and
Morgan Stanley & Co. Incorporated. Your obligations to purchase the Pass
Through Certificates shall be subject to the accuracy of the representations
and warranties on the part of the Companies contained herein as of the
Execution Time and the Closing Date, to the accuracy of the statements of the
Companies made in any certificates delivered pursuant to the provisions hereof,
to the performance by the Companies of their obligations hereunder and to the
following additional conditions:
(a) The Registration Statement shall have become
effective not later than (i) 5:00 p.m., New York City time, on the
date of determination of the public offering price, if such
determination occurred at or prior to 3:00 p.m., New York City time,
on such date or (ii) 12:00 noon, New York City time, on the business
day following the day on which the public offering price was
determined, if such determination occurred after 3:00 p.m., New York
City time, on such date; if filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be 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
issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Companies shall have furnished to you and to
Moody's Investors Service and Standard and Poor's Corp. (together, the
"Rating Agencies"), if requested by you, the opinion of Neal, Gerber &
Eisenberg, special counsel to Union (incorporating and relying upon
the opinions of Peter E. Lawford, Esquire, General Counsel of Procor,
and Osler, Hoskin & Harcourt, special Canadian counsel to Procor, as
to Canadian law matters, and Hogan & Hartson, special STB counsel to
Union, as to STB matters), dated the Closing Date, in form reasonably
satisfactory to you and to Mayer, Brown & Platt, special counsel of
the Underwriters, to the effect that:
(i) Each of Union and its Significant Subsidiaries
(including Procor) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with
full corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and is
duly qualified to do
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<PAGE> 11
business as a foreign corporation and is in good standing
under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business, except in such jurisdictions in
which the failure to so qualify would not have a material
adverse effect on Union and its subsidiaries, taken as a
whole.
(ii) all the outstanding shares of capital stock of
Procor have been duly and validly authorized and issued and
are fully paid and nonassessable, and, all such capital stock
of Procor is owned by Union, either directly or through wholly
owned subsidiaries, free and clear of any perfected security
interest and, to the knowledge of such counsel, after due
inquiry, any other security interest, claims, liens or
encumbrances.
(iii) each of Union and Procor has the corporate
power and authority under the laws of the jurisdiction in
which it is chartered or organized to perform its obligations
hereunder and under the Participation Agreement, the Pass
Through Trust Agreements, the Equipment Trust Agreements, the
Lease and the other Operative Agreements to which Union or
Procor, as the case may be, is, or is to be, a party;
(iv) subject to the limitations and qualifications
set forth in clause (xvi) of this Section 6(b), assuming that
the Pass Through Certificates have been duly authorized and
validly executed, authenticated, issued and delivered by the
Pass Through Trustee pursuant to the Pass Through Trust
Agreements, the holders of such Pass Through Certificates are
entitled to the benefits of the Pass Through Trust Agreements;
(v) the Pass Through Certificates conform in all
material respects to the description thereof contained in the
Prospectus, and such description conforms in all material
respects to the rights set forth in the instruments defining
the same;
(vi) no authorization, approval, consent, order or
license of or filing with or notice to any government,
governmental instrumentality, regulatory body or authority or
court is required for the valid authorization, execution,
delivery and performance by the Companies of this Agreement,
the Participation Agreement, the Pass Through Trust
Agreements, the Equipment Trust Agreements, the Lease and the
other Operative Agreements to which Union or Procor, as the
case may be, is, or is to be, a party, or the consummation by
Union or Procor, as the case may be, of the transactions
contemplated by this Agreement, the Participation Agreement,
the Pass Through Trust Agreements, the Equipment Trust
Agreements, the Lease and the other Operative Agreements to
which Union or Procor, as the case may
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<PAGE> 12
be, is, or is to be, a party, except (w) such as are required
under the Act, the Trust Indenture Act and the securities or
Blue Sky laws of the various states, (x) such filings,
recordings or registrations with the STB and under Section 90
of the Railway Act (Canada) as may be required, (y) the filing
of Uniform Commercial Code financing statements in various
jurisdictions and the filing of continuation statements with
respect thereto required to be filed at periodic intervals
under the Uniform Commercial Code and (z) such other filings,
recordings or registrations as may be required under the
Operative Agreements;
(vii) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Companies or any of their respective
subsidiaries, of a character required to be disclosed in the
Registration Statement or the Prospectus which is not
adequately disclosed, and there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an
exhibit, which is not described or filed as required;
(viii) the Registration Statement has become
effective under the Act; any required filing of the
Prospectus, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); the Pass Through Trust Agreements
have become qualified under the Trust Indenture Act; to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened, and the Registration Statement, the Prospectus and
each amendment thereof or supplement thereto (other than the
financial statements and related schedules and other financial
and statistical information, including the notes thereto,
included or incorporated by reference therein as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act
and the Exchange Act and the respective rules and regulations
thereunder; the Pass Through Trust Agreements and the
Statement of Eligibility and Qualification of the Pass Through
Trustee on Form T-1 comply as to form in all material respects
with the requirements of the Trust Indenture Act and the rules
and regulations thereunder; and each document filed pursuant
to the Exchange Act and incorporated by reference in the
Prospectus (except for the financial statements, including the
notes thereto, and related schedules and other financial and
statistical information included or incorporated by reference
therein, as to which such counsel need express no opinion)
appeared on its face, as of its respective filing date, to
comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder;
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<PAGE> 13
(ix) title to the equipment to be subjected to the
Lease will, when such equipment shall have been transferred to
the Owner Trustee as provided in the Participation Agreement,
be validly vested in the Owner Trustee, subject to no liens or
encumbrances of record at the STB;
(x) other than rights of the Companies under the
respective Equipment Trust Agreements, title to the equipment
to be subjected to the Equipment Trust Agreements will, when
such equipment shall have been transferred to the Equipment
Trust Trustees as provided in the Equipment Trust Agreements,
be validly vested in the respective Equipment Trust Trustee;
the Equipment Trust Agreements have been duly filed and
recorded with the STB and the Registrar General of Canada and
such equipment is subject to no liens or encumbrances of
record at the STB and the Registrar General of Canada;
(xi) this Agreement, the Pass Through Trust
Agreements, the Participation Agreement, the Equipment Trust
Agreements, the Lease, and all the other Operative Agreements
to which Union or Procor is, or is to be, a party have been
duly authorized and, on the Closing Date, assuming due
authorization, execution and delivery by the parties thereto
other than Union or Procor, as the case may be, upon execution
and delivery by Union or Procor, as the case may be, will be
valid and binding obligations of Union or Procor, as the case
may be, enforceable against Union or Procor, as the case may
be, in accordance with their respective terms, except (i) as
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of
creditors' rights generally and by general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), (ii) in the case of the
Lease, as limited by applicable laws which may affect the
remedies provided in the Lease, which laws, however, do not in
such counsel's opinion make the remedies provided in the Lease
inadequate for the practical realization of the rights and
benefits provided thereby and (iii) in the case of this
Agreement, as to provisions relating to indemnification or
contribution for liabilities arising under the Act, as to
which such counsel need express no opinion;
(xii) the Pass Through Trust Agreements, the
Equipment Notes, the ETCs, the Indenture, the Participation
Agreement, the Equipment Trust Agreements, the Lease and the
other Operative Agreements (to the extent described therein)
conform in all material respects to the descriptions thereof
contained in the Prospectus;
(xiii) the execution and delivery by the Companies
of this Agreement, the Participation Agreement, the Pass
Through Trust Agreements, the Equipment Trust Agreements, the
Lease and the other Operative Agreements
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<PAGE> 14
to which Union or Procor, as the case may be, is, or is to be,
a party, the consummation by the Companies of the transactions
herein and therein contemplated and in the manner herein and
therein contemplated and compliance by the Companies with the
terms hereof and thereof, do not and will not conflict with,
or result in a breach by the Companies of, any of the terms or
provisions of, or constitute a default under, any material
indenture or other agreement or instrument known to such
counsel to which the Companies are a party or by which the
Companies are bound, or any law, rule, regulation, judgment or
order known to such counsel to be applicable to the Companies
of any court, regulatory body, administrative agency,
government or governmental body having jurisdiction over the
Companies, except that such counsel need express no opinion or
belief as to the accuracy or completeness of the Registration
Statement or Prospectus except for the opinions expressed in
clauses (v), (xii), and (xiv) (except that such counsel need
not express any opinion as to any violation of any such law,
rule or regulation, judgment or order (a) which does not
materially affect the validity of the Equipment Notes, the
ETCs or the Pass Through Certificates or (b) which reflects
conclusions based on misrepresentations to, concealment of
information from or other fraudulent acts perpetrated on such
counsel);
(xiv) the statements in the Registration Statement
and Prospectus under the headings "Certain Federal Income Tax
Consequences", "Certain _________ Taxes" and "ERISA
Considerations", to the extent that they constitute matters of
law or legal conclusions with respect thereto, have been
prepared or reviewed by such counsel and are correct in all
material respects;
(xv) neither Union nor Procor is an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended;
(xvi) on the Closing Date, assuming due
authorization, execution, issuance and delivery of the ETCs by
their respective Equipment Trust Trustee as contemplated by
the related Equipment Trust Agreement, and assuming due
authorization, execution, issuance and delivery of the
Equipment Notes by the Owner Trustee as contemplated by the
Indenture, and due authentication of such ETCs by the
respective Equipment Trust Trustee and of such Equipment Notes
by the Indenture Trustee, each of the ETCs and the Equipment
Notes when issued will constitute valid and binding
obligations of such Equipment Trust Trustee and the Owner
Trustee, respectively, enforceable against such Equipment
Trust Trustee and the Owner Trustee, respectively, in
accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (regardless of
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<PAGE> 15
whether enforcement is considered in a proceeding in equity or
at law); and the holders of the ETCs will be entitled to the
benefits of the respective Equipment Trust Agreement, and the
holders of the Equipment Notes will be entitled to the
benefits of the Indenture;
(xvii) assuming due authorization, execution and
delivery of the Pass Through Trust Agreements by the Pass
Through Trustee, each of the Pass Through Trust Agreements
constitutes the valid and binding obligation of each of the
Companies party to such Pass Through Agreement enforceable in
accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or
at law);
(xviii) neither trust created by the Pass Through
Trust Agreements [will] be classified as an association
taxable as a corporation for federal income tax purposes, but
rather, each [will] be classified as a grantor trust under
subpart E, Part I of Subchapter J of the Internal Revenue Code
of 1986, as amended (the "Code"), and each Certificate Owner
will be treated as the owner of a pro rata undivided interest
in each of the ETCs and Equipment Notes, as the case may be,
and any other property held in such Pass Through Trusts;
(xix) although counsel is not aware of any judicial
authority, the Pass Through Trusts are not required to be
registered under the Investment Company Act of 1940, as
amended;
(xx) assuming due authorization, execution and
delivery of the Indenture by the parties thereto, the
Indenture will subject the Indenture Estate covered by the
Indenture to the security interests created thereby;
(xxi) there are no taxes, fees or other governmental
charges payable under the laws of the State of __________ or
any political subdivision thereof in connection with the
execution and delivery by the Pass Through Trustee, in its
individual capacity or as Pass Through Trustee, the Equipment
Trust Trustee or Indenture Trustee, as the case may be, of the
Participation Agreement, the Pass Through Trust Agreements,
the Equipment Trust Agreements and the Operative Agreements,
as the case may be, or in connection with the issuance,
execution, authentication and delivery of the Pass Through
Certificates by the Pass Through Trustee pursuant to the Pass
Through Trust Agreements or the issuance, authentication or
delivery of the ETCs and the Equipment Notes;
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<PAGE> 16
(xxii) Except to the extent the Indenture Trustee
forecloses on the Equipment and any of the Equipment is
located in _________ or the Equipment Trust Trustee forecloses
on the Trust Equipment and any of the Trust Equipment is
located in the State of ___________ or to the extent the
Indenture Estate, the trust created by the Union Equipment
Trust Agreement, the trust created by the Procor Equipment
Trust Agreement or the trusts created by the Pass Through
Trust Agreements, as applicable, engages in business in
__________ as a result of such foreclosure:
(I) neither the trusts created by the Pass
Through Trust Agreements, the Equipment Trust Agreements, the
Indenture Estate nor the Pass Through Trustee (either in its
individual capacity or as Pass Through Trustee), nor their
respective affiliates, successors or assigns, will be subject
to any tax (including, without limitation, net or gross
income, tangible or intangible property, net worth, capital,
franchise or doing business tax), fee or other governmental
charge under the laws of the State of __________ or any
political subdivision thereof (other than taxes imposed on the
fees received by the Pass Through Trustee for acting as Pass
Through Trustee under the Pass Through Trust Agreements).
(II) Certificate Owners who are not residents
of or otherwise subject to tax in the State of ____________
will not be subject to any tax (including, without limitation,
net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other
governmental charge under the laws of the State of __________
or any political subdivision thereof as a result of
purchasing, holding (including receiving payments with respect
to) or selling a Certificate.
(III) There are no applicable taxes under the
laws of the State of ______________ or any political
subdivision thereof upon or with respect to (a) the
construction, mortgaging, financing, refinancing, purchase,
acquisition, acceptance, rejection, delivery, nondelivery,
transport, location, ownership, insurance, control, assembly,
possession, repossession, operation, use, condition,
maintenance, repair, sale, return, abandonment, replacement,
preparation, installation, storage, redelivery, manufacture,
leasing, subleasing, modification, rebuilding, importation,
transfer of title, transfer of registration, exportation or
other application or disposition of the Equipment or any
interest in any thereof, (b) payments of Rent or the receipts,
income or earnings arising therefrom or received with respect
to the Equipment or any interest in any thereof or payable
pursuant to the Lease, (c) any amount paid or payable pursuant
to any Operative Agreement, (d) the Equipment or any interest
therein or the applicability of the Lease to the Equipment or
any interest thereof, (e) any or all of the Operative
Agreements, any or all of the ETCs or
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<PAGE> 17
the Equipment Notes or any interest in any or all thereof or
the offering, registration, reregistration, issuance,
acquisition, modification, assumption, reissuance, refinancing
or refunding or any or all thereof, and any other documents
contemplated hereby or thereby and amendments and supplements
hereto and thereto, (f) the payment of the principal of, or
interest or premium on, or other amounts payable with respect
to, any or all of the ETCs or the Equipment Notes, whether as
originally issued or pursuant to any refinancing, refunding,
assumption, modification, or reissuance, or any other
obligation evidencing any loan in replacement of the loan
evidenced by any or all of the ETCs or the Equipment Notes,
(g) the property, or the income, earnings, receipts or other
proceeds received with respect to the property, held by the
Indenture Trustee under the Indenture or held by the Equipment
Trust Trustees under the respective Equipment Trust Agreements
or (h) otherwise with respect to or in connection with the
transactions contemplated by the Operative Agreements, which
would not have been imposed if the Indenture Trustee or the
Equipment Trust Trustees had not had their principal place of
business in, had not performed (either in its individual
capacity or as Indenture Trustee) any or all of their
administrative duties under the Operative Agreements in, and
had not engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in, the
State of ___________;
(xxiii) the Union Guarantee contained in Pass
Through Agreement 1996-A2 and endorsed on the Pass Through
Certificates issued under such agreement has been duly
authorized, executed and delivered by Union and assuming the
due authorization, execution and delivery of the Pass Through
Trust Agreement 1996-A2 and the due authentication of such
Pass Through Certificates by the Pass Through Trustee,
constitutes a valid and binding obligation of Union,
enforceable against Union in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of
creditors' rights generally and by general principals of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law); and
(xxiv) neither the Union Equipment Trust Agreement
can be terminated by Union nor the Procor Equipment Trust
Agreement can be terminated by Procor so long as the Union ETC
and the Procor ETC, respectively, are outstanding.
In passing on the form of the Registration Statement and the
Prospectus and each amendment and supplement thereof, such counsel may
state that it has not independently verified the accuracy,
completeness or fairness of the statements made or included therein
and takes no responsibility therefor and that such opinion is based
upon such counsel's examination of the Registration Statement, the
Prospectus as
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<PAGE> 18
amended or supplemented, its activities in connection with the
preparation thereof and its participation in conferences with certain
officers and employees of Union, Procor and their respective
subsidiaries and with representatives of Ernst & Young and any others
referred to in such opinion, and subject to the same qualifications,
such counsel may also state that, although they are not passing upon,
and do not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement
and Prospectus and have not made any independent check or verification
thereof, nothing has come to their attention in their examination of
the Registration Statement, their participation in the preparation
thereof and participation in the above-referenced conferences that has
caused them to believe that the Registration Statement, at the time it
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or the
Prospectus, as of its date and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In
rendering such opinion, such counsel may state that it expresses no
opinion as to the laws of any jurisdiction other than the State of
__________, the General Corporation Law of the State of Delaware and
the Federal law of the United States of America and may rely (A) as to
matters involving the application of (x) laws of Canada or its
Provinces and (y) laws, rules and regulations with respect to the STB
to the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing whom such counsel believes
to be reliable and who are satisfactory to you and your counsel; and
(B) as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public
officials, and may assume for purposes of its opinion with respect to
this Agreement set forth in Section 6(b)(xi) that the laws of the
State of New York are identical to the laws of the State of
______________.
(c) The Companies shall have furnished to you and the
Rating Agencies if requested by you, the opinion of Olser, Hoskin &
Harcourt, special Canadian counsel to Procor, as to Canadian law
matters, to the effect that
(i) the payment by Procor of interest and principal
on the Procor ETC to the Pass Through Trustee will be exempt
from Canadian withholding tax; the payment by the Pass Through
Trustee of interest and principal on the Pass Through
Certificate, Series 1996-A2 to a holder thereof will be exempt
from Canadian withholding tax for a holder who is, or is
deemed to be, a non-resident of Canada and with whom Union and
Procor deals at arm's length, within the meaning of the Income
Tax Act (Canada) (the "Tax Act"), at the time of making the
payment; and
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<PAGE> 19
(ii) no other taxes on income (including taxable
capital gains) will be payable under the Tax Act in respect of
the holding or disposition of the Procor ETC, or the receipt
of interest thereon, by the Pass Through Trustee; no other
taxes on income (including taxable capital gains) will be
payable under the Tax Act in respect of the acquisition,
holding or disposition of the Pass Through Certificates,
Series 1996-A2, or the receipt of interest thereon by holders
who are, or are deemed to be, non-residents of Canada for the
purposes of the Tax Act at any time during which they hold
Pass Through Certificates, Series 1996-A2 and who do not use
or hold and are not deemed by such laws to use or hold the
Pass Through Certificates, Series 1996-A2 in carrying on
business in Canada for the purposes of the Tax Act, and, in
the case of a Certificate Owner who carries on an insurance
business in Canada and elsewhere whose Pass Through
Certificates are not effectively connected with its Canadian
insurance business. In rendering such opinion, such counsel
may state that it expresses no opinion as to the laws of any
jurisdiction other than Canada or its Provinces.
(d) You shall have received from the ________________,
counsel for _______________, individually, as Pass Through Trustee,
Equipment Trust Trustee and Indenture Trustee, an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to you and
Mayer, Brown & Platt, your special counsel to the effect that:
(i) ________________ is a national banking
association validly existing and holding a valid certificate
to do business as a national banking association with trust
powers, and, in its individual capacity or as Pass Through
Trustee, Equipment Trust Trustee or Indenture Trustee, as the
case may be, has full corporate power and authority to
execute, deliver and carry out the terms of the Indenture, the
Equipment Trust Agreements, the Participation Agreement, the
Pass Through Trust Agreements and the other Operative
Agreements to which it is a party;
(ii) _____________ (in its individual capacity, to
the extent provided therein), the Pass Through Trustee, the
Equipment Trust Trustee or the Indenture Trustee, as the case
may be, has duly authorized, executed and delivered the
Indenture, the Participation Agreement, the Equipment Trust
Agreements, the Pass Through Trust Agreements and the other
Operative Agreements to which it is a party and each of such
agreements constitutes the valid and binding obligations of
________________ (in its individual capacity, to the extent
provided therein), the Pass Through Trustee, the Equipment
Trust Trustee or the Indenture Trustee, as the case may be,
enforceable against _______________ (in its individual
capacity, to the extent provided therein), the Pass Through
Trustee, the Equipment Trust Trustee or the Indenture
- 19 -
<PAGE> 20
Trustee, as the case may be, in accordance with their
respective terms, except as limited by bankruptcy, insolvency,
moratorium reorganization, receivership, fraudulent conveyance
or other similar laws affecting enforcement of creditors'
rights generally, and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at
law);
(iii) the Pass Through Certificates have been duly
authorized and validly executed, authenticated, issued and
delivered by the Pass Through Trustee pursuant to the Pass
Through Trust Agreements; and the holders of the Pass Through
Certificates are entitled to the benefits of the Pass Through
Trust Agreements;
(iv) the authorization, execution, delivery and
performance by _____________ (in its individual capacity, to
the extent provided therein), the Pass Through Trustee, the
Equipment Trust Trustee or the Indenture Trustee, as the case
may be, of the Indenture, the Participation Agreement, the
Equipment Trust Agreements, the Pass Through Trust Agreements
and the other Operative Agreements to which it is or will be
party and the consummation of the transactions therein
contemplated and compliance with the terms thereof and
issuance of the Pass Through Certificates thereunder do not
and will not result in the violation of the provisions of the
Articles of Association or By-Laws of ____________, and do not
and will not conflict with, or result in a breach of any terms
or provisions of, or constitute a default under, or result in
the creation or the imposition of any lien, charge or
encumbrance upon any property or assets of ______________, the
Pass Through Trustee, the Equipment Trust Trustee or the
Indenture Trustee, as the case may be, under any indenture,
mortgage or other agreement or instrument known to such
counsel to which the Pass Through Trustee, the Equipment Trust
Trustee or the Indenture Trustee, as the case may be, is a
party or by which it or any of its property is bound, or any
___________ or Federal law, rule or regulation governing
_______________, the Pass Through Trustee's, the Equipment
Trust Trustee's or the Indenture Trustee's banking or trust
powers, or of any judgment, order of decree known to such
counsel to be applicable to _______________, the Pass Through
Trustee, the Equipment Trust Trustee or the Indenture Trustee,
as the case may be, of any court, regulatory body,
administrative agency, government or governmental body having
jurisdiction over ______________, the Pass Through Trustee,
the Equipment Trust Trustee or the Indenture Trustee or its
respective properties;
(v) no authorization, approval, consent, license or
order of, giving of notice to, registration with, or taking of
any other action in respect of, any Federal or state
governmental authority or agency pursuant to any Federal or
____________ law governing the banking or trust powers of
_______________, the Pass Through Trustee, the Equipment Trust
Trustee or
- 20 -
<PAGE> 21
the Indenture Trustee is required for the authorization,
execution, delivery and performance by _____________, (in its
individual capacity, to the extent provided therein), the Pass
Through Trustee, the Equipment Trust Trustee or the Indenture
Trustee of the Indenture, the Participation Agreement, the
Equipment Trust Agreements, the Pass Through Trust Agreement
and the other Operative Agreements to which it is or will be a
party or the consummation of any of the transactions by the
Pass Through Trustee, the Equipment Trust Trustee or Indenture
Trustee contemplated thereby or the issuance of the Pass
Through Certificates under the Pass Through Trust Agreements
(except as shall have been duly obtained, given or taken); and
such authorization, execution, delivery, performance,
consummation and issuance do not conflict with or result in a
breach of the provisions of any such law.
In giving such opinion, _________________ (A) may state that no opinion is
expressed as to laws other than the laws of the State of ___________ and the
Federal law of the United States of America, (B) may assume as to the opinions
expressed in clause (ii) relating to any of the Operative Agreements, insofar
as they involve matters relating to the laws of any jurisdiction other than
______________, that such Operative Agreements constitute legal, valid and
binding instruments under such laws and (C) may include such other reasonable
assumptions as are customary in legal opinions delivered in connection with
transactions of this type.
(e) You shall have received from Mayer, Brown & Platt,
your special counsel, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Pass Through
Certificates, the Pass Through Trust Agreements, the Registration
Statement, the Prospectus and other related matters as you may
reasonably require, and the Companies shall have furnished to such
counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(f) You shall have been furnished with a certificate of
each of the Companies, signed by the President or any Vice President
and the principal financial officer of each of the Companies,
respectively, each dated the Closing Date, to the effect that the
signers of such certificates have carefully examined the Registration
Statement, the Prospectus and this Agreement and that:
(i) the representations and warranties of the
Companies in this Agreement are true and correct in all
material respects on and as of the Closing Date with the same
effect as if made on the Closing Date and the Companies have
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
- 21 -
<PAGE> 22
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the
Companies' knowledge, no proceedings for that purpose have
been instituted or threatened; and
(iii) since the date of the most recent financial
statements incorporated by reference in the Prospectus, there
has been no material adverse change in the condition
(financial or other), earnings, business or properties of the
Companies and their respective subsidiaries, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus.
(g) The representations and warranties of each of the
Companies contained in the Equipment Trust Agreements, the
Participation Agreement, the Lease and the other Operative Agreements
to which it is a party shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such
date, and each of the Companies shall have delivered to you a
certificate, each dated the Closing Date, signed in each case by its
President or any Vice President and its principal financial or
accounting officer to the effect that the signers of such certificate
have carefully examined the Equipment Trust Agreements, the
Participation Agreement, the Lease and the other Operative Agreements
to which it is a party, the Registration Statement, the Preliminary
Prospectus and the Prospectus and that:
(i) the representations and warranties of such
Company in the Equipment Trust Agreements, Participation
Agreement, the Lease and the other Operative Agreements to
which it is a party are true and correct in all material
respects on and as of the Closing Date as if made on and as of
the Closing Date;
(ii) such Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied on or prior to the Closing Date
pursuant to the terms of the Equipment Trust Agreements, the
Participation Agreement, the Lease and other Operative
Agreements to which it is a party; and
(iii) nothing has come to the attention of such
person that would lead him or her to believe that the
Registration Statement contains any untrue statement of
material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) At the Execution Time and at the Closing Date, Ernst
& Young shall have furnished to you a letter or letters, dated,
respectively, as of the Execution Time
- 22 -
<PAGE> 23
and as of the Closing Date, in form and substance satisfactory to you,
confirming that:
(i) they are independent auditors within the meaning
of the Act and the applicable published rules and regulations
thereunder and stating in effect that in their opinion the
audited consolidated financial statements and schedules
thereto incorporated by reference in the Registration
Statement and the Prospectus and reported on by them comply as
to form in all material respects with the applicable
accounting requirements of the Act and the applicable
published rules and regulations thereunder with respect to
registration statements on Form S-3; and that nothing came to
their attention which caused them to believe that the amounts
under the caption "Selected Financial Information" for each of
the five years ended December 31, 1995 included in the
Registration Statement and the Prospectus, do not agree with
the corresponding amounts in the audited financial statements
from which such amounts were derived; and as to the periods
for which it served as Union's independent auditor, such
financial statements were covered by unqualified reports
issued by them; and
(ii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of
Union) set forth in the Registration Statement and the
Prospectus, including the information set forth under the
captions "Selected Financial Information", and in Exhibit 12
to the Registration Statement agrees with the accounting
records and schedules of the Company and its subsidiaries,
excluding any questions of legal interpretation.
(i) In addition, Ernst & Young shall have furnished to
you a letter or letters, dated, respectively, as of the Execution Time
and as of the Closing Date, in form and substance satisfactory to you,
to the effect that on the basis of a reading of the unaudited
condensed financial statements of Union contained in Union's Quarterly
Reports on Form 10-Q for the quarter ended March 31, 1996 incorporated
by reference in the Registration Statement, the amounts set forth
under the captions "Selected Financial Information" and
"Capitalization" included in the Registration Statement and the
Prospectus and of the latest unaudited consolidated financial
statements made available to them by Union and its subsidiaries;
carrying out certain specified procedures (but not an audit in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and executive committees of
Union and its subsidiaries; and inquiries of certain officials of
Union who have responsibility for financial and
- 23 -
<PAGE> 24
accounting matters of Union and its subsidiaries as to transactions
and events subsequent to December 31, 1995 nothing came to their
attention which caused them to believe that (A) the unaudited
consolidated financial statements of Union incorporated by reference
in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the rules and regulations thereunder as they
apply to Form 10-Q or are not presented in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial statements
of Union incorporated by reference in the Registration Statement, and
(B) with respect to the period subsequent to December 31, 1995, there
were any changes, at a specified date not more than five business days
prior to the date of the letter, in the borrowed debt of Union and its
subsidiaries or capital stock of Union or decreases in the
stockholder's equity of Union and its subsidiaries as compared with
the amounts shown on the December 31, 1995, unaudited consolidated
balance sheet data included in "Selected Financial Information" in the
Registration Statement and the Prospectus, or for the period from
December 31, 1995 to such specified date, there were any decreases, as
compared with the corresponding period in the preceding year, in total
revenues from net sales and services, or in income before income taxes
or net income, of Union and its subsidiaries, except in all instances
for changes or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by Union as to the
significance thereof unless said explanation is not deemed necessary
by you.
References to the Prospectus in paragraphs (h) and (i) include any
supplement thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been (i) any change
or decrease specified in the letters referred to in paragraphs (g) and
(h) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the business or properties of
Union and its subsidiaries taken as a whole the effect of which, in
any case referred to in clause (i) or (ii) above, is, in your
judgment, so material and adverse as to make it impractical or
inadvisable to proceed with the public offering or the delivery of the
Pass Through Certificates as contemplated by the Registration
Statement and the Prospectus.
(k) Subsequent to the Execution Time and prior to the
Closing Date, there shall not have occurred any downgrading, nor shall
any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change in the rating
accorded Union's debt securities by the Rating Agencies as of the
Execution Time.
- 24 -
<PAGE> 25
(l) Prior to the Closing Date, the Companies shall have
furnished to you and the Rating Agencies such further information,
certificates and documents as you and they may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to you and your counsel, this Agreement and all your obligations
hereunder may be canceled at, or at any time prior to, the Closing Date by you.
Notice of such cancellation shall be given to the Companies in writing or by
telephone or telegraph confirmed in writing.
7. Reimbursement of the Underwriters' Expenses. If the sale of
the Pass Through Certificates provided for herein is not consummated because
any condition to your obligation set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 9 hereof or because
of any refusal, inability or failure on the part of the Companies to perform
any agreement herein or comply with any provision hereof other than by reason
of a default by you, the Companies will reimburse you upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by you in connection with the proposed purchase
and sale of the Pass Through Certificates.
8. Indemnification and Contribution. (a) Union agrees to
indemnify and hold harmless you and each person who controls you within the
meaning of either the Act or the Exchange Act from and against any and all
losses, claims, damages or liabilities, joint or several, to which you or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Pass Through Certificates as originally filed or in any amendment thereof,
or in any Preliminary Prospectus or the Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse you and
each such controlling person for any legal or other expenses reasonably
incurred by you or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) Union will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Companies by or on behalf of you specifically for use in connection with
the preparation thereof, and (ii) such indemnity with respect to any
Preliminary Prospectus shall not inure to your benefit (or to the benefit of
any
- 25 -
<PAGE> 26
person controlling you) if the person asserting any such loss, claim, damage or
liability purchased the Pass Through Certificates which are the subject thereof
did not receive a copy or the Prospectus (or the Prospectus as amended or
supplemented) excluding documents incorporated therein by reference at or prior
to the confirmation of the sale of such Pass Through Certificates to such
person in any case where such delivery is required by the Act and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented). This indemnity agreement will be in addition to any liability
which Union may otherwise have.
(b) You severally (and not jointly) agree to indemnify and hold
harmless each of the Companies, each of their respective directors, each of
their respective officers who signs the Registration Statement, and each person
who controls the Companies within the meaning of either the Act or the Exchange
Act, to the same extent as the foregoing indemnity from Union to you, but only
with reference to written information relating to you furnished to the
Companies by or on behalf of you specifically for use in preparation of the
documents referred to in clause (a) of this Section 8. This indemnity
agreement will be in addition to any liability which you may otherwise have.
The Companies acknowledge that the statements set forth in the last paragraph
of the cover page and under the heading "Underwriting" in any Preliminary
Prospectus and the Prospectus and the stabilization language included on the
inside front cover of any Preliminary Prospectus and the Prospectus constitute
the only information furnished in writing by or on behalf of you for inclusion
in any Preliminary Prospectus or the Prospectus, and you confirm that such
statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought
against any indemnified party, and the indemnified party notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to appoint counsel satisfactory to such indemnified party to represent
the indemnified party in such action; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of the indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified
- 26 -
<PAGE> 27
party under this Section 8 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by you in the case of subparagraph (a), representing
the indemnified parties under subparagraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of
this Section 8 is due in accordance with its terms but is for any reason held
by a court to be unavailable from Union on grounds of policy or otherwise,
Union and you shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) to which Union and you may be
subject in such proportion so that each of you are responsible only for that
portion represented by the percentage that the aggregate underwriting
commission in respect of the Pass Through Certificates appearing on the cover
page of the Prospectus attributable to Pass Through Certificates sold by you
bears to the aggregate public offering price in respect of such Pass Through
Certificates appearing thereon and Union is responsible for the balance;
provided, however, that (y) in no case shall you be responsible for any amount
in excess of such respective underwriting commissions and (z) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person
who controls you within the meaning of the Act shall have the same rights to
contribution as you, and each person who controls the Companies within the
meaning of the Act, each officer of the Companies who shall have signed the
Registration Statement and each director of the Companies shall have the same
rights to contribution as the Companies, subject in each case to clauses (y)
and (z) of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contributions may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (d).
9. Termination. This Agreement shall be subject to termination
in your absolute discretion by notice given to the Companies prior to delivery
of and payment for the Pass
- 27 -
<PAGE> 28
Through Certificates, if prior to such time (i) trading in securities generally
on the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal, New York State or ___________ State
authorities or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it, in your
judgment, impracticable to market the Pass Through Certificates.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Companies or their respective officers and of you set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of you or the Companies or any of their
respective officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Pass Through
Certificates. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to you, will be mailed, delivered or
telegraphed and confirmed in the case of Solomon Brothers Inc at 7 World Trade
Center, New York, New York 10048, Attention: Legal Department; in the case of
Morgan Stanley & Co. Incorporated at 1251 Avenue of the Americas, New York, New
York 10020, Attention: Legal Department; or, if sent to the Companies, will
be mailed, delivered or telegraphed and confirmed to it at 225 West Washington
Street, Chicago, Illinois 60606, Attention: Secretary and to Procor at 2001
Speers Road, Oakville, Ontario, Canada L6J 5E1, Attention: President.
12. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
- 28 -
<PAGE> 29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, Procor and you.
Very truly yours,
UNION TANK CAR COMPANY
By
----------------------------------
Name:
Title:
PROCOR LIMITED
By
-----------------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted as of the
date first written above.
SALOMON BROTHERS INC
MORGAN STANLEY & CO. INCORPORATED
By SALOMON BROTHERS INC
Acting on behalf of itself and
Morgan Stanley & Co. Incorporated
By
--------------------------
Name:
Title:
- 29 -
<PAGE> 30
Schedule A
<TABLE>
<CAPTION>
Pass Through Principal Final Distribution
Certificate Amount Interest Rates Dates
<S> <C> <C> <C>
1996-A1 $___________ ____% ______________
1996-A2 $___________ ____% _______________
</TABLE>
<PAGE> 31
Schedule B
<TABLE>
<CAPTION>
Pass Through Certificate Pass Through Certificate
Series 1996 - A1 Series 1996 - A2
Aggregate Principal Aggregate Principal
Amount Amount
-------------------------------- ---------------------------------------
<S> <C> <C>
Salomon Brothers Inc
Morgan Stanley & Co.
Incorporated
Total
</TABLE>
<PAGE> 1
Exhibit 4(a)(2)
================================================================================
PASS THROUGH TRUST AGREEMENT 1996-A2
Dated May __, 1996
among
UNION TANK CAR COMPANY,
PROCOR LIMITED
and
_______________________________________,
as Pass Through Trustee
================================================================================
$__________
Union Tank Car Company
1996-A2 Pass Through Trust
Pass Through Certificates,
Series 1996-A2
<PAGE> 2
TABLE OF CONTENTS TO PASS THROUGH TRUST AGREEMENT 1996-A2
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.3. Form of Documents Delivered to
Pass Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.4. Acts of Certificateholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
ACQUISITION OF EQUIPMENT NOTES AND ETCs;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1. Issuance of Certificates; Acquisition of
Equipment Notes and ETCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.2. Declaration of Trust; Acceptance By Pass Through Trustee . . . . . . . . . . . . . . . . . 18
SECTION 2.3. Limitation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.4. Sale of Equipment Notes Under Certain Circumstances . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
THE CERTIFICATES
SECTION 3.1. Form, Denomination and Execution of Certificates . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.2. Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.3. Temporary Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.4. Registration of Transfer and Exchange
of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.6. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.7. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.8. Limitation of Liability for Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.9. Book-Entry and Registered Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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<TABLE>
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ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
SECTION 4.1. Certificate Account and Special Payments Account . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.2. Distribution from Certificate Account and
Special Payments Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.3. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.4. Investment of Special Payment Money . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
THE COMPANIES
SECTION 5.1. Maintenance of Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.2. Consolidation, Merger or Sale of Assets Permitted . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
DEFAULT
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.2. Incidents of Sale of Equipment Notes and ETCs . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.3. Judicial Proceedings Instituted by Pass Through Trustee . . . . . . . . . . . . . . . . . 31
SECTION 6.4. Control by Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.5. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.6. Undertaking to Pay Court Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.7. Right of Certificateholders to Receive Payments Not
to Be Impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.8. Certificateholders May Not Bring Suit Except
Under Certain Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.9. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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<TABLE>
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ARTICLE VII
THE PASS THROUGH TRUSTEE
SECTION 7.1. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.2. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.3. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.4. Not Responsible for Recitals or Issuance of Certificates . . . . . . . . . . . . . . . . . 37
SECTION 7.5. May Hold Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.6. Money Held in Pass Through Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.7. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.8. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.9. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.10. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.11. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.12. Maintenance of Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.13. Money for Certificate Payments to Be Held in
Pass Through Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.14. Registration of Equipment Notes and ETCs in
Pass Through Trustee's Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.15. Representations and Warranties of Pass Through Trustee . . . . . . . . . . . . . . . . . . 45
SECTION 7.16. Withholding Taxes; Information Reporting . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.17. Trustee's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.18. Preferential Collection of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY PASS THROUGH TRUSTEE
SECTION 8.1. The Companies to Furnish Pass Through Trustee
with Names and Addresses of Certificateholders . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.2. Preservation of Information; Communications
to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.3. Reports by Pass Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.4. Reports by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
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ARTICLE IX
SUPPLEMENTS TO PASS THROUGH TRUST AGREEMENT
SECTION 9.1. Supplements to Pass Through Trust Agreement
Without Consent of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.2. Supplements to Pass Through Trust Agreement
with Consent of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.3. Documents Affecting Immunity or Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.4. Execution of Supplements to Pass Through
Trust Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.5. Effect of Supplements to Pass Through
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.6. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.7. Reference in Certificates to Supplements to Pas0
Through Trust Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE X
AMENDMENTS TO INDENTURE, NOTE DOCUMENTS,
EQUIPMENT TRUST AGREEMENTS AND ETC DOCUMENTS
ARTICLE XI
TERMINATION OF PASS THROUGH TRUST
ARTICLE XII
GUARANTEE OF UNION
SECTION 12.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.2. Execution and Delivery of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 12.3. Limitation of Union's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 12.4. Guarantee Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 13.2. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 13.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 13.4. Communication by Certificateholder with
Other Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 13.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 13.6. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.7. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.8. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.9. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.10. Benefits of Pass Through Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.11. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Exhibit A - Form of Certificate
Exhibit B - Guarantee
Exhibit C - Form of DTC Letter of Representations
Schedule I - Description of Equipment Notes to be Issued under the Indenture
Schedule II - Description of ETCs to be Issued under Equipment Trust Agreements
</TABLE>
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<PAGE> 7
This PASS THROUGH TRUST AGREEMENT 1996-A2, dated May __, 1996, is made
with respect to the formation of the Union Tank Car Company 1996-A2 Pass
Through Trust, among UNION TANK CAR COMPANY, a Delaware corporation ("Union"),
PROCOR LIMITED, a Canadian corporation and an indirect wholly-owned subsidiary
of Union ("Procor" and together with Union, the "Companies") and
_______________________________________, solely as Pass Through Trustee and not
in its individual capacity.
WITNESSETH:
WHEREAS, an initial $__________ aggregate principal amount Equipment
Trust Certificate, Series 26 and a subsequent $_________ aggregate principal
amount Equipment Trust Certificate, Series 26 (together with the guarantee of
Union to be endorsed thereon, the "Union ETCs"), will be issued pursuant to an
Equipment Trust Agreement, dated May __, 1996 as may be amended or supplemented
from time to time (the "Union Equipment Trust Agreement"), between Union and
_______________________________________, as trustee (the "Union Equipment Trust
Trustee");
WHEREAS, a $__________ aggregate principal amount Equipment Trust
Certificate, Series 26-Can (together with the guarantee of Procor endorsed
thereon, the "Procor ETC" and, together with the Union ETCs, the "ETCs"), will
be issued pursuant to an Equipment Trust Agreement, dated May __, 1996, as may
be amended or supplemented from time to time (the "Procor Equipment Trust
Agreement") between Procor and _______________________________________, as
trustee (the "Procor Equipment Trust Trustee");
WHEREAS, the Union Equipment Trust Trustee will issue the Union ETCs
in connection with the financing of railway tank cars and other rail cars of
the type used in Union's business (the "Union Trust Equipment") and the Procor
Equipment Trust Trustee will issue the Procor ETC in connection with the
financing of railway tank cars and other rail cars of the type used in Procor's
business (the "Procor Trust Equipment");
WHEREAS, pursuant to the terms of this Pass Through Trust Agreement,
the Union Equipment Trust Agreement and the Procor Equipment Trust Agreement,
the Union ETCs and the Procor ETC are to be sold upon their issuance to the
Pass Through Trustee, and the Pass Through Trustee shall purchase the ETCs upon
their issuance and shall hold such ETCs in trust for the benefit of the
Certificateholders;
WHEREAS, a certain Owner Trustee, on behalf of a certain Owner
Participant, will purchase certain Equipment (as defined) from Union;
WHEREAS, the Owner Trustee will lease the Equipment to Union pursuant
to the Lease;
<PAGE> 8
WHEREAS, such Owner Trustee will issue on a nonrecourse basis
Equipment Notes, under the Indenture, in order to finance not more than 80% of
the purchase price to be paid to Union for the Equipment subject to the Lease;
WHEREAS, pursuant to the terms and conditions of this Pass Through
Trust Agreement and the Participation Agreement, such agreements to be entered
into by the Pass Through Trustee contemporaneously with the execution and
delivery of this Pass Through Trust Agreement, certain Equipment Notes are to
be sold, from time to time, to the Pass Through Trustee, and the Pass Through
Trustee shall purchase, from time to time, such Equipment Notes and shall hold
such Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Pass Through Trustee, upon execution and delivery of this
Pass Through Trust Agreement, hereby declares the creation of this Pass Through
Trust for the benefit of the Certificateholders, and the initial
Certificateholders as the grantors of the Pass Through Trust, by their
respective acceptances of the Certificates, join in the creation of this Pass
Through Trust with the Pass Through Trustee;
WHEREAS, to facilitate the sale of the ETCs and certain Equipment
Notes to the Pass Through Trustee and the purchase of such ETCs and Equipment
Notes by the Pass Through Trustee, each of Union and Procor has duly authorized
the execution and delivery of this Pass Through Trust Agreement as an "issuer",
as such term is defined in and solely for purposes of the Securities Act of
1933, as amended, of the Certificates being issued hereunder and as an
"obligor", as such term is defined in and solely for purposes of the Trust
Indenture Act of 1939, as amended, with respect to the Certificates and is
undertaking to perform certain administrative and ministerial duties hereunder
and is also undertaking to pay the fees and expenses of the Pass Through
Trustee; and
WHEREAS, this Pass Through Trust Agreement is subject to the
provisions of the Trust Indenture Act of 1939, as amended, and shall, to the
extent applicable, be governed by such provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
(a) For all purposes of this Pass Through Trust Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
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<PAGE> 9
(i) the terms used herein that are defined in this Article
have the meanings assigned to them in this Article, and include the
plural as well as the singular;
(ii) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(iii) all references in this Pass Through Trust Agreement to
designated "Articles", "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Pass
Through Trust Agreement; and
(iv) the words "herein", "hereof " and "hereunder" and other
words of similar import refer to this Pass Through Trust Agreement as
a whole and not to any particular Article, Section or other
subdivision.
(b) For all purposes of this Pass Through Trust Agreement, the
following capitalized terms have the following respective meanings:
"Act," with respect to any Certificateholder, has the meaning
specified in Section 1.4.
"Affiliate" of any Person shall mean any other Person which directly
or indirectly controls, or is controlled by, or is under a common control with,
such Person. The term "control", as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Authorized Agent" means any Paying Agent or Registrar.
"Avoidable Tax" has the meaning specified in Section 7.9(e).
"Book-Entry Certificates" means a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.9.
"Business Day" means any day other than a Saturday or a Sunday or a
day on which commercial banking institutions or trust companies are authorized
or required by law, regulation or executive order to be closed in New York, New
York, Chicago, Illinois, or, solely with respect to payments under the Procor
Equipment Trust Agreement, Toronto, Ontario, Canada, or, so long as any
Certificate is outstanding, a city and state in which the respective Corporate
Trust Office of the Owner Trustee, the Pass Through Trustee, the Indenture
Trustee, any Equipment Trust Trustee or Paying Agent is located.
"Certificate" means any one of the certificates executed and
authenticated by the Pass Through Trustee, substantially in the form of Exhibit
A hereto.
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<PAGE> 10
"Certificate Account" means the account or accounts created and
maintained pursuant to Section 4.1(a).
"Certificateholder" means the Person in whose name a Certificate is
registered in the Register.
"Certificate Owner" means, when used in Section 3.9, the Person who
owns a Book Entry Certificate.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects, directly or indirectly, book-entry transfers and pledges of
securities deposited with the Clearing Agency.
"Closing Date" means May __, 1996.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Companies" means Union Tank Car Company, a Delaware corporation, and
Procor Limited, a Canadian corporation, or their respective successors in
interest pursuant to Section 5.2, or any other obligor with respect to the
Certificates (within the meaning of the Trust Indenture Act).
"Corporate Trust Office" means, with respect to the Pass Through
Trustee, any Equipment Trustee and the Indenture Trustee, the office of such
trustee in the city at which at any particular time its corporate trust
business shall be principally administered.
"De Minimis Certificate" has the meaning specified in Section 3.1.
"Direction" has the meaning specified in Section 1.4(c).
"Equipment" means, with respect to the Union ETCs, all of the Union
Trust Equipment, with respect to the Procor ETC, all of the Procor Trust
Equipment, and with respect to the Equipment Notes, all of the Units covered by
the Lease; or as the context may require, all of the Equipment covered by the
ETCs and the Equipment Notes.
"Equipment Note" means any one of the Equipment Notes (as defined in
the Indenture) described on Schedule I attached hereto, including any Equipment
Note (as so defined) issued under the Indenture as a replacement or
substitution therefor, held by the Pass Through Trustee.
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<PAGE> 11
"Equipment Trust Agreement" means either of the Union Equipment Trust
Agreement or the Procor Equipment Trust Agreement, each dated May __, 1996, as
each such Equipment Trust Agreement may be amended or supplemented from time to
time in accordance with its respective terms; and "Equipment Trust Agreements"
means both of such agreements.
"Equipment Trust Default" means, with respect to either Equipment
Trust Agreement, any Event of Default (as such term is defined in such
Equipment Trust Agreement).
"Equipment Trust Trustee" means the Union Equipment Trust Trustee and
the Procor Equipment Trust Trustee.
"ETC" means any one of the Equipment Trust Certificates described in
Schedule II attached hereto, including any ETC (as so defined) issued under the
applicable Equipment Trust Agreement as a replacement or substitution therefor,
held by the Pass Through Trustee.
"ETC Documents", with respect to an ETC, means the applicable
Equipment Trust Agreement.
"Guarantee" means the guarantee of Union set forth in Article XII
hereof and on each of the Certificates.
"Escrow Account" has the meaning specified in Section 2.1(b).
"Escrowed Funds" has the meaning specified in Section 2.1(b).
"Event of Default" means an event described in Section 6.1.
"Fractional Undivided Interest" means the undivided interest in the
Pass Through Trust that is evidenced by an Outstanding Certificate expressed as
a fraction of the total undivided interests in the Pass Through Trust
represented by all Outstanding Certificates.
"Indenture" means the Trust Indenture and Security Agreement (UTC
Trust No. 1996-A) (L-___), dated May __, 1996, between the Owner Trustee and
the Indenture Trustee, as the Indenture may be amended or supplemented from
time to time in accordance with its terms. The term "Indenture" includes each
Indenture Supplement entered into pursuant to the terms of the Indenture.
"Indenture Default" means, with respect to the Indenture, any
Indenture Event of Default (as such term is defined in the Indenture).
"Indenture Trustee" means _______________________________________, in
its capacity as indenture trustee under the Indenture, and any other Person
which may from time to time be acting as Indenture Trustee in accordance with
the provisions of the Indenture.
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<PAGE> 12
"Initial Cut-off Date" means May __, 1996.
"Issuance Date" means the date of the issuance of the Certificates.
"Lease" means the Equipment Lease Agreement (UTC Trust No. 1996-A)
(L-14_) with respect to the Equipment between the Owner Trustee, as the lessor,
and Union, as the lessee, as the Lease may be amended or supplemented from time
to time in accordance with its terms. Such term shall include each Lease
Supplement entered into pursuant to the terms of the Lease.
"Lease Event of Default" means, with respect to the Lease, an Event of
Default under the Lease as specified in Section 14 thereof.
"Lease Supplement" has the meaning assigned to that term in the Lease.
"Letter of Representations" means the agreement among the Companies,
the Pass Through Trustee and the initial Clearing Agency substantially in the
form attached hereto as Exhibit C.
"Make-Whole Amount" has the meaning assigned to that term in the
Indenture.
"Note Documents," with respect to any Equipment Note, means the
Indenture, the Lease and the Participation Agreement.
"Officer's Certificate" means a certificate signed, (a) in the case of
either of the Companies, by (i) the Treasurer, any Assistant Treasurer, the
Controller or any Assistant Controller of such Company, signing alone, or (ii)
any Vice President signing together with the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of such Company, or (b) in
the case of the Owner Trustee, an Equipment Trust Trustee or the Indenture
Trustee, a Responsible Officer of such Owner Trustee, Equipment Trust Trustee
or Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel, who (i)
in the case of counsel for either of the Companies may be (A) a lawyer employed
by such Company, (B) Neal Gerber & Eisenberg, or (C) such other counsel
designated by such Company and reasonably acceptable to the Pass Through
Trustee and (ii) in the case of the Owner Trustee, any Equipment Trust Trustee
or the Indenture Trustee, such counsel as may be designated by any of them
whether or not such counsel is an employee of any of them, and who shall be
acceptable to the Pass Through Trustee.
"Outstanding," with respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered under
this Pass Through Trust Agreement, except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Pass Through Trustee or the Registrar for
cancellation;
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<PAGE> 13
(ii) Certificates for which money in the full amount required
to make the final distribution payment to be made pursuant to Section
11.1 hereof has been theretofore deposited with the Pass Through
Trustee in trust for the Certificateholders as provided in Section 4.1
pending distribution of such money to the Certificateholders pursuant
to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Pass Through Trust Agreement.
"Owner Participant" means the "Owner Participant" referred to in the
Participation Agreement and any permitted successor or assign of any such Owner
Participant.
"Owner Trustee," with respect to any Equipment Note or the Indenture
or the Lease, means State Street Bank and Trust Company, not in its individual
capacity but solely as owner trustee of an owner trust for the benefit of the
Owner Participant, and each other Person which may from time to time be acting
as Owner Trustee in accordance with the provisions of the Note Documents.
"Participation Agreement" means the Participation Agreement (UTC Trust
No. 1996-A) (L-14_), dated May __, 1996, and to which the Pass Through Trustee,
the Owner Trustee, the Indenture Trustee, the Owner Participant, and Union are
parties, as the Participation Agreement may be amended or supplemented from
time to time in accordance with its respective terms.
"Pass Through Trust" means the trust created by this Pass Through
Trust Agreement, the estate of which consists of the Trust Property.
"Pass Through Trust Agreement" means this Pass Through Trust
Agreement, as it may be amended from time to time in accordance with the terms
hereof.
"Pass Through Trustee" means the institution executing this Pass
Through Trust Agreement as Pass Through Trustee, or its successor in interest,
and any successor trustee appointed as provided herein.
"Paying Agent" means the paying agent maintained and appointed
pursuant to Section 7.12.
"Permitted Investments" means each of (i) direct obligations of the
United States of America and agencies thereof; (ii) obligations fully
guaranteed by the United States of America; (iii) certificates of deposit
issued by, or bankers' acceptances of, or time deposits with, any bank, trust
company or national banking association incorporated or doing business under
the laws of the United States of America or one of the states thereof having
combined capital and surplus and retained earnings of at least $100,000,000,
having general obligations rated at least A1 by Moody's Investors Service, Inc.
or A+ by Standard & Poor's Corporation (but excluding any new investment as to
which there is a public announcement by the rating agency providing
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<PAGE> 14
a rating thereon that such rating is under consideration for a possible
downgrade below A1 or A+, as the case may be), including the Owner Trustee in
its individual capacity or the Indenture Trustee in its individual capacity if
such conditions are met; (iv) commercial paper of any holding company of a
bank, trust company or national banking association described in clause (iii);
(v) bearer note deposits with, or certificates of deposit issued by, or
promissory notes of, any subsidiary incorporated under the laws of Canada (or
any province thereof) of any bank, trust company or national banking
association described in clause (iii); (vi) commercial paper of companies
having a rating of A-l/P-l or better assigned to such commercial paper by
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if
neither such organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States of America);
(vii) U.S. dollar-denominated certificates of deposit issued by, or time
deposits with, the European subsidiaries of any bank, trust company or national
banking association described in clause (iii); (viii) Canadian Treasury Bills
fully hedged to U.S. dollars; (ix) bonds, notes or other obligations of any
state of the United States of America, or any political subdivision of any such
state, or any agencies or other instrumentalities of any such state, including,
but not limited to, industrial development bonds, pollution control revenue
bonds, public power bonds, housing bonds, other revenue bonds or any general
obligation bonds; provided that, at the time of their purchase, such
obligations are rated in the highest rating category by Standard & Poor's
Corporation or Moody's Investors Service, Inc. (or, if neither such
organization shall rate such obligations at such time, by any nationally
recognized rating organization in the United States of America); or (x) bonds
or other debt instruments of any company, if such bonds or other debt
instruments, at the time of their purchase, are rated in the highest rating
category by Standard & Poor's Corporation or Moody's Investors Service, Inc.
(or, if neither such organization shall rate such obligations at such time, by
any nationally recognized rating organization in the United States of America);
provided that no investment shall be eligible as and included within the
definition of the term "Permitted Investment" unless either (x) the final
maturity or date of return of such investment is equal to one year or less from
the date of purchase thereof, or (y) in the case of any investment referred to
in the foregoing clause (i) or (ii) only, such investment has a final maturity
or date of return greater than one year from the date of purchase thereof and
closing prices on a national securities exchange or bid and asked prices,
closing prices or yields to maturity for such investment are reported in The
Wall Street Journal (or if The Wall Street Journal is not at the time published
or ceases to report such prices, such prices are reported by any other
publication of nationally recognized standing of general circulation in New
York City).
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Pool Balance" means, as of any date, the aggregate unpaid principal
amount of the ETCs and the Equipment Notes held in the Pass Through Trust on
such date plus the amount of the principal payments on the ETCs and the
Equipment Notes held by the Pass Through Trustee and not yet distributed plus
the amount of any moneys held in the Escrow Account (other than earnings
thereon). The Pool Balance as of any Regular Distribution Date or Special
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Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes held in the Pass Through Trust and
distribution thereof to be made on that date.
"Pool Factor" means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
aggregate original principal amount of the Certificates issued under the Pass
Through Trust. The Pool Factor as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the ETCs and the Equipment Notes held in the Pass Through
Trust and distribution thereof to be made on that date.
"Postponed Notes" means the Equipment Notes or ETCs as to which a
Postponement Notice shall have been delivered pursuant to Section 2.1(b).
"Postponement Notice" means a certificate of Union signed by an
officer of Union (i) requesting that the Pass Through Trustee execute and
deliver the Participation Agreement but temporarily postpone payment of the
purchase price of the Equipment Notes or ETCs to a date later than the Issuance
Date, (ii) identifying the amount of the purchase price of each Equipment Note
or ETC and the aggregate purchase price of all such Equipment Notes or ETCs,
(iii) setting forth the reasons for such postponement and (iv) with respect to
the Participation Agreement referred to in clause (i), either (A) setting or
resetting a new Closing Date (which shall be on or prior to the Initial Cut-off
Date) for payment by the Pass Through Trustee of such purchase price and
issuance of the Equipment Note or ETC, or (B) indicating that such new Closing
Date (which shall be on or prior to the Initial Cut-Off Date) will be set by
subsequent written notice not less than one Business Day prior to such new
Closing Date.
"Procor Equipment Trust Trustee" means
_______________________________________, in its capacity as the trustee under
the Procor Equipment Trust Agreement, and any other Person which from time to
time will be acting as Equipment Trust Trustee in accordance with the
provisions of the Procor Equipment Trust Agreement.
"Record Date" means the Business Day preceding a Regular Distribution
Date or a Special Distribution Date, as applicable.
"Register" has the meaning specified in Section 3.4.
"Registered Certificates" has the meaning specified in Section 3.1.
"Registrar" has the meaning specified in Section 3.4.
"Regular Distribution Date" means, with respect to distributions of
Scheduled Payments, _________ and _________ of each year, commencing on
_________, 1996, until payment of all the Scheduled Payments to be made under
the Equipment Notes and the ETCs has been made.
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"Request" means a request by Union, on behalf of the Companies,
setting forth the subject matter of the request accompanied by an Officer's
Certificate and an Opinion of Counsel as provided in Section 1.2 of this Pass
Through Trust Agreement.
"Responsible Officer" means (i) with respect to the initial Pass
Through Trustee, any initial Equipment Trust Trustee or the initial Indenture
Trustee, any officer in the Corporate Trust Office or any other office at which
the Pass Through Trustee, any Equipment Trust Trustee or the Indenture Trustee
conducts corporate trust business; and (ii) with respect to any successor Pass
Through Trustee, successor Equipment Trust Trustee, successor Indenture Trustee
or the Owner Trustee, the chairman or vice-chairman of the board of directors
or trustees, the chairman or vice-chairman of the executive or standing
committee of the board of directors or trustees, the president, the chairman of
the committee on trust matters, any vice-president, any second vice-president,
the secretary, any assistant secretary, the treasurer, any assistant treasurer,
the cashier, any assistant cashier, any trust officer or assistant trust
officer, the comptroller and any assistant comptroller. Responsible Officer
also means, with respect to the Pass Through Trustee, any Equipment Trust
Trustee, the Indenture Trustee and the Owner Trustee, any other officer of the
Pass Through Trustee, the Owner Trustee, such Equipment Trust Trustee or the
Indenture Trustee customarily performing functions similar to those performed
by the persons who at the time shall be any of the above designated officers,
and with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Scheduled Payment" means, with respect to a Regular Distribution
Date, any payment (other than a Special Payment) of interest on or principal of
and interest on: (i) an Equipment Note due from the Owner Trustee which issued
such Equipment Note, which payment represents the installment of principal at
the stated maturity of such installment of principal on such Equipment Note, or
the payment of regularly scheduled interest accrued on the unpaid principal
amount of such Equipment Note, or both, to be made on such Regular Distribution
Date pursuant to the terms of such Equipment Note; or (ii) an ETC, to be made
on such Regular Distribution Date pursuant to the terms of such ETC.
"Special Distribution Date" means (i) in the case of prepayments with
respect to a voluntary termination of the Lease, the purchase of any Units by
Union pursuant to Section 22.1 of the Lease or an ordinary Event of Loss under
the Lease, on a Regular Distribution Date, (ii) in the case of prepayments with
respect to a Multiple Loss under the Lease, a refunding or refinancing of the
Equipment Notes or a purchase of the Equipment by Union from an Owner Trustee
of a competitor Owner Participant, on any Business Day following 15 days notice
from the Pass Through Trustee to The Depository Trust Company and (iii) in the
case of payments received following a default in respect of any Equipment Note,
on the second day of any month, and (iv) with respect to an ETC, the earliest
day of a month for which it is practicable for the Pass Through Trustee to give
notice pursuant to Section 4.2(c) 20 days prior thereto.
"Special Payment" means (i) with respect to an Equipment Note (or
portion thereof), any payment of principal of, Make-Whole Amount, if any, and
interest on such Equipment Note (or
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portion thereof) resulting from the prepayment of such Equipment Note (or
portion thereof) pursuant to Section 2.10 of the applicable Indenture, (ii)
with respect to an Equipment Note, any payment of principal of and interest
(including any interest accruing upon default) on, or any other amount in
respect of, such Equipment Note upon an Indenture Default in respect thereof,
including payments received on account of the purchase by the Owner Trustee of
such Equipment Notes, (iii) the amounts required to be distributed pursuant to
the fifth paragraph of Section 2.1(b), (iv) any proceeds from the sale of any
Equipment Note by the Pass Through Trustee pursuant to Article VI hereof; (v)
with respect to an ETC, any payment of principal of and interest (including any
interest accruing upon default) on, or any other amount in respect of, such ETC
upon an Equipment Trust Default in respect thereof or upon an acceleration
under the Equipment Trust Agreement relating to such ETC, or (vi) any proceeds
from the sale of an ETC by the Pass Through Trustee pursuant to Article VI
hereof; and "Special Payments" means all of such Special Payments.
"Special Payments Account" means the account or accounts created and
maintained pursuant to Section 4.1(b).
"Specified Investments" means (i) direct obligations of the United
States of America and agencies thereof for which the full faith and credit of
the United States of America is pledged, (ii) obligations fully guaranteed by
the United States of America, (iii) certificates of deposit issued by, or
bankers' acceptances of, or time deposits (including overnight deposits) with,
any bank, trust company or national banking association incorporated or doing
business under the laws of the United States of America or one of the States
thereof having combined capital and surplus and retained earnings of at least
$500,000,000 (including the Indenture Trustee or Owner Trustee, in their
respective individual capacities, if such conditions are met), (iv) commercial
paper of companies, banks, trust companies or national banking associations
incorporated or doing business under the laws of the United States of America
or one of the States thereof and in each case having a rating of A-l/P-l or
better assigned to such commercial paper by Standard & Poor's Corporation or
Moody's Investors Service, Inc. (or, if neither such organization shall rate
such commercial paper at any time, by any nationally recognized rating
organization in the United States of America) and (v) repurchase agreements
with any financial institution described in clause (iii) above having a
combined capital and surplus of at least $750,000,000 fully collateralized by
obligations of the type described in clauses (i) through (iv) above; provided,
however, that if all of the above investments are unavailable, the entire
amount to be invested may be used to purchase Federal Funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment occurs no later than ___________, 1996.
"Subsequent Cut-off Date" means June __, 1996.
"Trust Indenture Act" means, except as otherwise provided in Section
9.6, the Trust Indenture Act of 1939 as in force at the date as of which this
instrument was executed.
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"Trust Property" means the Union ETCs, the Procor ETC, the Guarantee
and the Equipment Notes held as the property of the Pass Through Trust and all
moneys at any time paid thereon and all moneys due and to become due
thereunder, funds from time to time deposited in the Escrow Account (other than
earnings on Specified Investments), the Certificate Account and the Special
Payments Account and any proceeds from the sale by the Pass Through Trustee
pursuant to Article VI hereof of any Equipment Note.
"Trustee's Liens" means any Lien (within the meaning specified in
Appendix A to the Participation Agreement) arising as a result of (a) any claim
against the Pass Through Trustee or _______________________________________, in
its individual capacity, respectively, not resulting from the actions
contemplated by the Operative Agreements (within the meaning specified in
Appendix A to the Participation Agreement), (b) any act or omission of the Pass
Through Trustee or _______________________________________, in its individual
capacity, respectively, which is not required or permitted by the Operative
Agreements or is in violation of any of the terms of the Operative Agreements,
(c) any claim against the Pass Through Trustee or
_______________________________________, in its individual capacity,
respectively, with respect to Taxes (within the meaning specified in Appendix A
to the Participation Agreement) or Transaction Costs (within the meaning
specified in Appendix A to the Participation Agreement) against which Union is
not required to indemnify the Pass Through Trustee,
_______________________________________, in its individual capacity, pursuant
to the Participation Agreement or (d) any claim arising out of any transfer by
the Pass Through Trustee, of all or any portion of its interests in the
Equipment, the Trust Property or the Operative Agreements other than the
transfer of title to or possession of any Equipment by the Pass Through Trustee
pursuant to and in accordance with the applicable Equipment Trust Agreement or
the Indenture or pursuant to the exercise of the remedies set forth in the
Lease; provided, however, that any Trustee Lien which is attributable solely to
the Pass Through Trustee or _______________________________________, in its
individual capacity and would otherwise constitute a Trustee Lien shall not
constitute a Trustee Lien so long as (i) the existence of such Trustee Lien
poses no material risk of the sale, forfeiture or loss of any Unit or any
interest therein, including Equipment Notes, (ii) the existence of such Trustee
Lien does not interfere in any way with the quiet enjoyment of any Unit by
Union, as lessee and (iii) the Pass Through Trustee or
[_______________________________________], in its individual capacity, is
diligently contesting such Trustee Lien by appropriate proceedings.
"Unit" has the meaning assigned to that term in the Lease.
"Union Equipment Trust Trustee" means
_______________________________________, in its capacity as trustee under the
Union Equipment Trust Agreement, and any other Person which may from time to
time be acting as Equipment Trust Trustee in accordance with the provisions of
the Union Equipment Trust Agreement.
SECTION 1.2. Compliance Certificates and Opinions. Upon any
application or request by the Companies to the Pass Through Trustee to take any
action under any provision of this Pass Through Trust Agreement, Union shall
furnish to the Pass Through Trustee an Officer's
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Certificate stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Pass Through Trust Agreement relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that in the case of any such application
or request as to which the furnishing of such documents is specifically
required by any provision of this Pass Through Trust Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Pass Through Trust Agreement (other
than a certificate provided pursuant to Section 8.4(d)) shall include:
(i) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are used;
(iii) a statement that, in the opinion of each such
individual, he or she has made such examination or investigation as
necessary to enable him or her to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3. Form of Documents Delivered to Pass Through Trustee. In
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Pass Through Trust Agreement, they may, but need not, be
consolidated and form one instrument.
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SECTION 1.4. Acts of Certificateholders.
(a) Any direction, consent, waiver or other action provided by this
Pass Through Trust Agreement to be given or taken by Certificateholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent duly appointed
in writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the
Pass Through Trustee and, where it is hereby expressly required, to the
Companies, any Equipment Trust Trustee or the Indenture Trustee. Such
instrument or instrument (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Certificateholders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Pass Through Trust Agreement and conclusive
in favor of the Pass Through Trustee, the Companies, any Equipment Trust
Trustee and the Indenture Trustee, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds
or administer oaths that the Person executing such instrument acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or such other officer and where such execution
is by an officer of a corporation or association or a member of a partnership,
on behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact
and date of the execution of any such instrument or writing, or the authority
of the Person executing the same, may also be proved in any other reasonable
manner which the Pass Through Trustee deems sufficient. In the absence of bad
faith on the part of the Pass Through Trustee, an Officer's Certificate may be
deemed to be conclusively proved.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
direction, consent or waiver (a "Direction"), under this Pass Through Trust
Agreement, Certificates owned by either of the Companies, the Owner Trustee,
the Owner Participant or any Affiliate of any such Person shall be disregarded
and deemed not to be Outstanding under this Pass Through Trust Agreement for
purposes of any such determination. In determining whether the Pass Through
Trustee shall be protected in relying upon any such Direction, only
Certificates which the Pass Through Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100%
of the Certificates Outstanding, such Certificates shall not be so disregarded
as aforesaid, and (ii) if any amount of Certificates so owned by any such
Person have been pledged in good faith, such Certificates shall not be
disregarded as aforesaid if the pledgee establishes to the satisfaction of the
Pass Through Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not either of the Companies, the Owner
Trustee, the Pass Through Trustee, the Owner Participant or any Affiliate of
any such Person.
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(d) Union, on behalf of the Companies, may at its option by delivery
of an Officer's Certificate to the Pass Through Trustee set a record date to
determine the Certificateholders entitled to give any consent, request, demand,
authorization, direction, notice, waiver or other Act. Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be the record date
specified in such Officer's Certificate which shall be a date not more than 30
nor less than 15 days prior to the first solicitation of Certificateholders in
connection therewith. If such a record date is fixed, such consent, request,
demand, authorization, direction, notice, waiver or other Act may be given
before or after such record date, but only the Certificateholders of record at
the close of business on such record date shall be deemed to be
Certificateholders for the purposes of determining whether Certificateholders
of the requisite proportion of Outstanding Certificates have authorized or
agreed or consented to such consent, request, demand, authorization, direction,
notice, waiver or other Act, and for that purpose the Outstanding Certificates
shall be computed as of such record date; provided that no such consent,
request, demand, authorization, direction, notice, waiver or other act by the
Certificateholders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Agreement not later
than one year after the record date.
(e) Any direction, consent, waiver or other action by the
Certificateholder of any Certificate shall bind the Certificateholder of every
Certificate issued upon the transfer thereof or in exchange thereof or in lieu
thereof, whether or not notation of such action is made upon such Certificate.
(f) Except as otherwise provided in Section 1.4(c), Certificates
owned by or pledged to any Person shall have an equal and proportionate benefit
under the provisions of this Pass Through Trust Agreement, without preference,
priority, or distinction as among all of the Certificates.
ARTICLE II
ACQUISITION OF EQUIPMENT NOTES AND ETCs;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1. Issuance of Certificates; Acquisition of Equipment Notes and
ETCs.
(a) Upon request of Union, the Pass Through Trustee shall execute,
authenticate and deliver Certificates with an aggregate principal amount
equalling the aggregate principal amount of the Equipment Notes and ETCs, as
the case may be, to be purchased by the Pass Through Trustee pursuant to the
Equipment Trust Agreements, this Pass Through Trust Agreement and the
Participation Agreement and evidencing the entire ownership of the Pass Through
Trust. The Pass Through Trustee, not in its individual capacity but solely as
Pass Through Trustee, shall issue and sell such Certificates, in authorized
denominations and in such Fractional Undivided Interests, so as to result in
the receipt of consideration in an amount equal to the aggregate principal
amount of the Equipment Notes and ETCs to be issued from time to time,
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as contemplated by the Participation Agreement and the Equipment Trust
Agreements, respectively, and, concurrently therewith, the Pass Through Trustee
shall purchase, in the case of the Equipment Notes pursuant to the terms and
conditions of the Participation Agreement, the Equipment Notes (except
Postponed Notes, if any) then issued and, in the case of the ETCs pursuant to
the terms and conditions of the Union Equipment Trust Agreement, the ETCs
(except Postponed Notes, if any) then issued, at a purchase price equal to the
amount of consideration received by the Pass Through Trustee with respect to
such Equipment Notes and ETCs, respectively. Upon the issuance after the
Issuance Date of any Equipment Notes and Union ETCs not previously purchased by
the Pass Through Trustee, the Pass Through Trustee shall purchase at such time
such Equipment Notes and Union ETCs at a purchase price equal to the amount of
consideration received by the Pass Through Trustee with respect to such
Equipment Notes and Union ETCs. Except as provided in Sections 3.4 and 3.5
hereof, the Pass Through Trustee shall not execute, authenticate or deliver
Certificates in excess of the aggregate amount specified in this paragraph.
The provisions of this Subsection (a) are subject to the provisions of
Subsections (b) and (c) below.
(b) If Union shall deliver to the Pass Through Trustee on or prior
to the Issuance Date a Postponement Notice, the Pass Through Trustee shall
postpone the purchase of the Equipment Notes or ETCs (the "Postponed Notes")
referred to in such Postponement Notice and shall promptly deposit into an
escrow account (the "Escrow Account") an amount equal to the purchase price of
such Postponed Notes (the "Escrowed Funds"). The Escrowed Funds so deposited
into the Escrow Account shall be invested by the Pass Through Trustee at the
written direction and risk of, and for the benefit of, Union in Specified
Investments maturing (i) no later than the Initial Cut-off Date or (ii) if
Union has given notice to the Pass Through Trustee that the Postponed Notes
will not be issued, on the next Special Distribution Date, if such investments
are reasonably available for purchase. The Pass Through Trustee shall make
withdrawals from the Escrow Account only as provided in this Pass Through Trust
Agreement. An account statement delivered by the Pass Through Trustee to Union
shall be deemed written confirmation by Union that the investment transactions
identified therein accurately reflect the investment directions given to the
Pass Through Trustee by Union, unless Union notifies the Pass Through Trustee
in writing to the contrary within thirty (30) days of receipt of such
statement.
The Pass Through Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer such Specified
Investments. If Specified Investments held in the Escrow Account mature prior
to the Initial Cut-off Date, any proceeds received on the maturity of such
Specified Investments (other than any earnings thereon) shall be reinvested by
the Pass Through Trustee at the written direction and risk of, and for the
benefit of, Union in Specified Investments maturing (i) no later than the
Initial Cut-off Date or (ii) if Union has given notice to the Pass Through
Trustee that the Postponed Notes will not be issued, on the next Special
Distribution Date, if such investments are reasonably available for purchase.
Any earnings on Specified Investments received from time to time by
the Pass Through Trustee shall be promptly distributed to Union to an account
specified in writing by Union.
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Union shall pay to the Pass Through Trustee for deposit to the Escrow Account
an amount equal to any losses on Specified Investments as incurred.
On or prior to the Initial Cut-off Date, upon the written request of
Union and the satisfaction of the closing conditions specified in the
Participation Agreement and the Union Equipment Trust Agreement, as the case
may be, the Pass Through Trustee shall purchase the Postponed Notes with the
Escrowed Funds. The purchase price shall equal the principal amount of such
Postponed Notes.
If any of the Postponed Notes will not be issued on or prior to the
Initial Cut-off Date for any reason, Union shall so notify the Pass Through
Trustee and Union shall pay to the Pass Through Trustee on ___________, 1996
for deposit in the Special Payments Account, in immediately available funds, an
amount equal to the interest that would have accrued on such Postponed Notes at
a rate or rates equal to the interest rate or rates applicable to the
Certificates issued under the Pass Through Trust from the Issuance Date to, but
not including, ___________, 1996 and the Pass Through Trustee shall transfer an
amount equal to that amount of Escrowed Funds that would have been used to
purchase such Postponed Notes and the amount paid by Union under this paragraph
to the Special Payments Account for distribution as a Special Payment in
accordance with the provisions hereof.
(c) Notwithstanding the foregoing Subsection (b), with respect to
amounts received by the Pass Through Trustee for the purchase of Equipment
Notes and Union ETCs to be issued after the Initial Cut-off Date pursuant to
the terms and conditions of the Participation Agreement or the Union Equipment
Trust Agreement, the Pass Through Trustee shall promptly deposit into the
Escrow Account an amount equal to the purchase price of such Equipment Notes or
Union ETCs. The Escrowed Funds so deposited into the Escrow Account shall be
invested by the Pass Through Trustee at the written direction and risk of, and
for the benefit of, Union in Specified Investments maturing (i) no later than
the Subsequent Cut-off Date or (ii) if Union has given notice to the Pass
Through Trustee that the aforementioned Equipment Notes or Union ETCs will not
be issued, on the next Special Distribution Date, if such investments are
reasonably available for purchase. The Pass Through Trustee shall make
withdrawals from the Escrow Account only as provided in this Pass Through Trust
Agreement. An account statement delivered by the Pass Through Trustee to Union
shall be deemed written confirmation by Union that the investment transactions
identified therein accurately reflect the investment directions given to the
Pass Through Trustee by Union, unless Union notifies the Pass Through Trustee
in writing to the contrary within thirty (30) days of receipt of such
statement.
The Pass Through Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer such Specified
Investments. If Specified Investments held in the Escrow Account mature prior
to the Subsequent Cut-off Date, any proceeds received on the maturity of such
Specified Investments (other than any earnings thereon) shall be reinvested by
the Pass Through Trustee at the written direction and risk of, and for the
benefit of, Union in Specified Investments maturing (i) no later than the
Subsequent Cut-off Date or (ii) if Union has given notice to the Pass Through
Trustee that the aforementioned Equipment Notes or Union
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ETCs will not be issued, on the next Special Distribution Date, if such
investments are reasonably available for purchase.
Any earnings on Specified Investments received from time to time by
the Pass Through Trustee shall be promptly distributed to Union to an account
specified in writing by Union. Union shall pay to the Pass Through Trustee for
deposit to the Escrow Account an amount equal to any losses on Specified
Investments as incurred.
On or prior to the Subsequent Cut-off Date, upon the written request
of Union and the satisfaction of the closing conditions specified in the
Participation Agreement and the Union Equipment Trust Agreement, the Pass
Through Trustee shall purchase the applicable Equipment Notes and Union ETCs
with the Escrowed Funds. The purchase price shall equal the principal amount
of such Postponed Notes.
If any of the applicable Equipment Notes or Union ETCs will not be
issued on or prior to the Subsequent Cut-off Date for any reason, Union shall
so notify the Pass Through Trustee and Union shall pay to the Pass Through
Trustee on December 30, 1996 for deposit in the Special Payments Account, in
immediately available funds, an amount equal to the interest that would have
accrued on such Equipment Notes or Union ETCs, as the case may be, at a rate or
rates equal to the interest rate or rates applicable to the Certificates issued
under the Pass Through Trust from the Issuance Date to, but not including,
December 30, 1996 and the Pass Through Trustee shall transfer an amount equal
to that amount of Escrowed Funds that would have been used to purchase such
Equipment Notes or Union ETCs and the amount paid by Union under this paragraph
to the Special Payments Account for distribution as a Special Payment in
accordance with the provisions hereof.
SECTION 2.2. Declaration of Trust; Acceptance By Pass Through
Trustee. The Pass Through Trustee, upon the execution and delivery of this
Pass Through Trust Agreement, acknowledges its acceptance of all right, title,
and interest in and to the Equipment Notes and the ETCs, as the case may be,
acquired pursuant to Section 2.1 hereof and, in the case of the Equipment
Notes, the Participation Agreement, and declares that the Pass Through Trustee
holds and will hold such right, title, and interest, together with all other
property constituting the Trust Property, for the benefit of all present and
future Certificateholders, upon the trusts herein set forth. By its payment
for and acceptance of each Certificate issued to it hereunder, each initial
Certificateholder as grantor of the Trust thereby joins in the creation and
declaration of the Trust.
SECTION 2.3. Limitation of Powers. The Pass Through Trust is
constituted solely for the purpose of making the investment in the Equipment
Notes and the ETCs, and, except as set forth herein, the Pass Through Trustee
is not authorized or empowered to acquire any other investments or engage in
any other activities and, in particular, the Pass Through Trustee is not
authorized or empowered to do anything that would cause the Pass Through Trust
to fail to qualify as a "grantor trust" for federal income tax purposes
(including as subject to this restriction, acquiring any Equipment (as defined
in the Indenture) by bidding the Equipment
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Notes, the ETCs or otherwise, or taking any action with respect to any such
Equipment once acquired).
SECTION 2.4. Sale of Equipment Notes Under Certain Circumstances. If
Union elects, in accordance with Section 10.2 of the Participation Agreement,
to refund or refinance Equipment Notes, the Pass Through Trustee shall, upon
satisfaction of the conditions set forth in Section 10.2 of the Participation
Agreement, transfer such Equipment Notes to the Person designated by Union and
will take any other action reasonably required to effect such refunding.
ARTICLE III
THE CERTIFICATES
SECTION 3.1. Form, Denomination and Execution of Certificates. The
Certificates shall be issued in fully registered form without coupons and shall
be substantially in the form attached hereto as Exhibit A, together with the
Guarantee of Union attached thereto in substantially the form attached hereto
as Exhibit B, with such omissions, variations and insertions as are permitted
by this Pass Through Trust Agreement, and may have such letters, numbers or
other marks of identification and such legends or endorsements printed,
lithographed, typewritten or engraved thereon, as may be required to comply
with the rules of any securities exchange on which the Certificates may be
listed or to conform to any usage in respect thereof, or as may, consistently
herewith, be prescribed by the Pass Through Trustee or by the officer executing
such Certificates, such determination by such officer to be evidenced by his or
her signing of the Certificates.
Except as provided in Section 3.9, the definitive Certificates (the
"Registered Certificates") shall be printed, lithographed, typewritten or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Certificates may be listed, all as determined by the officer executing such
Certificates, as evidenced by his execution of such Certificates.
The Certificates shall be issued in minimum denominations of $1,000 or
any integral multiple of $1,000 in excess thereof, except that one Certificate
may be issued in a denomination of less than $1,000 (the "De Minimis
Certificate").
The Certificates shall be executed on behalf of the Pass Through
Trustee by manual or facsimile signature of a Responsible Officer of the Pass
Through Trustee. Certificates bearing the manual or facsimile signature of an
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Pass Through Trustee shall be valid and binding
obligations of the Pass Through Trustee, notwithstanding that such individual
has ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such office at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Pass Through Trust
Agreement, or be valid for any purpose, unless there appears on such
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Certificate a certificate of authentication substantially in the form set forth
in Exhibit A hereto executed by the Pass Through Trustee by manual signature,
and such certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
SECTION 3.2. Authentication of Certificates. The Pass Through
Trustee shall duly authenticate and deliver Certificates in authorized
denominations equalling in the aggregate the aggregate principal amount of the
Equipment Notes and the ETCs, as the case may be, to be purchased by the Pass
Through Trustee pursuant to the Equipment Trust Agreements, this Pass Through
Trust Agreement and the Participation Agreement, and evidencing the entire
ownership of the Trust.
SECTION 3.3. Temporary Certificates. Pending the preparation of
Registered Certificates, the Pass Through Trustee may execute, authenticate and
deliver temporary Certificates which are printed, lithographed, typewritten, or
otherwise produced, in any denomination, containing substantially the same
terms and provisions as set forth in Exhibit A, except for such appropriate
insertions, omissions, substitutions and other variations relating to their
temporary nature as the officer executing such temporary Certificates may
determine, as evidenced by their execution of such temporary Certificates.
The Companies will cause Registered Certificates to be prepared
without unreasonable delay after such Registered Certificates are required to
be issued pursuant to Section 3.9(d). After the preparation of Registered
Certificates, the temporary Certificates shall be exchangeable for Registered
Certificates upon surrender of the temporary Certificates at the Corporate
Trust Office of the Pass Through Trustee, or at the office or agency of the
Pass Through Trustee maintained in accordance with Section 7.12, without charge
to the holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Pass Through Trustee shall execute, authenticate and deliver
in exchange therefor Registered Certificates of authorized denominations of a
like aggregate Fractional Undivided Interest; shall destroy any such temporary
Certificate(s) theretofore delivered and exchanged; and shall certify, in
writing, to the Companies such destruction. Until so exchanged, such temporary
Certificates shall in all respects be entitled to the same benefits under this
Pass Through Trust Agreement as Registered Certificates.
SECTION 3.4. Registration of Transfer and Exchange of Certificates.
The Pass Through Trustee shall cause to be kept at the Corporate Trust Office
or the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 a register (the "Register") in which, subject to
such reasonable regulations as it may prescribe, the Pass Through Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Pass Through Trustee shall initially be
the registrar (the "Registrar") for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided.
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Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office or such other office or agency, the Pass Through Trustee
shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate Fractional Undivided Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of authorized denominations of a like aggregate
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Pass Through Trustee shall execute, authenticate
and deliver the Certificates that the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Pass Through Trustee
and the Registrar duly executed by the Certificateholder thereof or its
attorney duly authorized in writing.
No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Pass Through
Trustee shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be canceled and subsequently destroyed by the Pass Through Trustee. The
Pass Through Trustee shall provide the Companies with written certification as
to the destruction of all such Certificates.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Registrar, or the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Registrar and the Pass Through
Trustee such security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the Registrar or the
Pass Through Trustee that such Certificate has been acquired by a bona fide
purchaser, the Pass Through Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Fractional Undivided Interest with the
same final Regular Distribution Date. In connection with the issuance of any
new Certificate under this Section 3.5, the Pass Through Trustee shall require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Pass Through Trustee and the Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section 3.5 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Pass Through Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Pass Through Trustee, the
Registrar, and any Paying Agent of the Pass Through Trustee may treat the
person in whose name any Certificate is registered as the
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owner of such Certificate for the purpose of receiving distributions pursuant
to Section 4.2 and for all other purposes whatsoever, and neither the Pass
Through Trustee, the Registrar, nor any Paying Agent of the Pass Through
Trustee shall be affected by any notice to the contrary.
SECTION 3.7. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to any Person party hereto other
than the Registrar, be delivered to the Registrar for cancellation. No
Certificates shall be authenticated in lieu of or in exchange for any
Certificates canceled as provided in this Section, except as expressly
permitted by this Pass Through Trust Agreement. All canceled Certificates held
by the Registrar shall be destroyed and a certification of their destruction
delivered to the Pass Through Trustee and the Companies.
SECTION 3.8. Limitation of Liability for Payments. All payments or
distributions made to Certificateholders under this Pass Through Trust
Agreement shall be made only from the Trust Property and only to the extent
that the Pass Through Trustee shall have sufficient income or proceeds from the
Trust Property to make such payments in accordance with the terms of Article IV
of this Pass Through Trust Agreement. Each Certificateholder, by its
acceptance of a Certificate, agrees that it will look solely to the income and
proceeds from the Trust Property to the extent available for distribution to
the Certificateholder thereof as provided in this Pass Through Trust Agreement.
SECTION 3.9. Book-Entry and Registered Certificates.
(a) Except for the De Minimis Certificate (if any), the Certificates
may be issued in the form of one or more typewritten Certificates representing
the Book-Entry Certificates, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the Certificate Owners. In
such case, the Certificates delivered to The Depository Trust Company shall
initially be registered on the Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Certificate Owner will receive a
Registered Certificate representing such Certificate Owner's interest in the
Certificates, except as provided above and in Subsection (d) below. Except
with respect to the De Minimis Certificate (if any), unless and until
Registered Certificates have been issued pursuant to Subsection (d) below:
(i) the provisions of this Section 3.9 shall be in full force
and effect;
(ii) the Companies, the Paying Agent, the Registrar and the
Pass Through Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Certificates)
as the authorized representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 3.9
conflict with any other provisions of this Pass Through Trust
Agreement, the provisions of this Section 3.9 shall control;
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(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Certificate Owners and the Clearing
Agency Participants; and until Registered Certificates are issued
pursuant to Subsection (d) below, the Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest and
Make-Whole Amount, if any, on the Certificates to such Clearing Agency
Participants; and
(v) whenever this Pass Through Trust Agreement requires or
permits actions to be taken based upon instructions or directions of
Certificateholders holding Certificates evidencing a specified
percentage of the Fractional Undivided Interests, the Clearing Agency
shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Certificate Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
Certificates and has delivered such instructions to the Pass
Through Trustee. The Pass Through Trustee shall have no obligation to
determine whether the Clearing Agency has in fact received any such
instructions.
(b) Except with respect to the De Minimis Certificate (if any),
whenever notice or other communication to the Certificateholders is required
under this Pass Through Trust Agreement, unless and until Registered
Certificates shall have been issued pursuant to Subsection (d) below, the Pass
Through Trustee shall give all such notices and communications specified herein
to be given to Certificateholders to the Clearing Agency and/or the Clearing
Agency Participants, and shall make available additional copies as requested by
such Clearing Agency Participants.
(c) Unless and until Registered Certificates are issued pursuant to
Subsection (d) below, on the Record Date prior to each Regular Distribution
Date and Special Distribution Date, the Pass Through Trustee will request from
the Clearing Agency a Securities Position Listing setting forth the names of
all Clearing Agency Participants reflected on the Clearing Agency's books as
holding interests in the Certificates on such Record Date. The Pass Through
Trustee will mail to each such Clearing Agency Participant the statements
described in Section 4.3 hereof.
(d) If (i) Union, on behalf of the Companies, advises the Pass
Through Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities and the Pass Through Trustee or
Union, on behalf of the Companies is unable to locate a qualified successor,
(ii) Union, on behalf of the Companies, at its option, advises the Pass Through
Trustee in writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default,
Certificate Owners of Book-Entry Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Pass Through
Trust, by act of such Certificate Owners delivered to the Companies, and the
Pass Through Trustee, advise the Pass Through Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best
interests of the Certificate Owners, then the Pass Through Trustee shall notify
all Certificate Owners, through the Clearing Agency,
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of the occurrence of any such event and of the availability of Registered
Certificates. Upon surrender to the Pass Through Trustee of all the
Certificates held by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration of Registered
Certificates in the names of Certificate Owners, the Pass Through Trustee shall
issue and deliver the Registered Certificates in accordance with the
instructions of the Clearing Agency. Upon the issuance of Registered
Certificates pursuant to this Section 3.9(d), the Record Date with respect to
such Registered Certificates shall be the fifth Business Day preceding a
Regular Distribution Date or Special Distribution Date, as applicable. Neither
the Companies, the Registrar, the Paying Agent nor the Pass Through Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such registration
instructions. Upon the issuance of Registered Certificates, the Pass Through
Trustee shall recognize the Persons in whose name the Registered Certificates
are registered as the Certificateholders hereunder. Neither the Companies nor
the Pass Through Trustee shall be liable if the Pass Through Trustee or Union,
on behalf of the Companies is unable to locate a qualified successor Clearing
Agency.
(e) The Pass Through Trustee shall enter into the Letter of
Representations and fulfill its responsibilities thereunder.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
SECTION 4.1. Certificate Account and Special Payments Account.
(a) The Pass Through Trustee shall establish and maintain on behalf
of the Certificateholders the Certificate Account as one or more accounts,
which shall be non-interest bearing accounts. The Pass Through Trustee shall
hold the Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals therefrom only as
provided in this Pass Through Trust Agreement. On each day when a Scheduled
Payment is made under the Indenture or an Equipment Trust Agreement to the Pass
Through Trustee, as holder of either the Equipment Notes or the ETCs issued
under the Indenture or such Equipment Trust Agreement, as the case may be, the
Pass Through Trustee upon receipt shall immediately deposit the aggregate
amount of such Scheduled Payment in the Certificate Account.
(b) The Pass Through Trustee shall establish and maintain on behalf
of the Certificateholders the Special Payments Account as one or more accounts,
which shall be non-interest bearing except as provided in Section 4.4. The
Pass Through Trustee shall hold the Special Payments Account in trust for the
benefit of the Certificateholders, and shall make or permit withdrawals
therefrom only as provided in this Pass Through Trust Agreement. On each day
when one or more Special Payments (other than a Special Payment that represents
the proceeds of any sale pursuant to Article VI by the Pass Through Trustee of
an Equipment Note)
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are made under an Equipment Trust Agreement or the Indenture to the Pass
Through Trustee, as holder of either the Equipment Notes or the ETCs issued
under the Indenture or such Equipment Trust Agreement, as the case may be, the
Pass Through Trustee upon receipt shall immediately deposit the aggregate
amounts of such Special Payments in the Special Payments Account. On the day
Union makes the payment to the Pass Through Trustee described in the fifth
paragraph of Section 2.1(b), the Pass Through Trustee upon receipt shall
immediately deposit the aggregate amount thereof in the Certificate Account.
Upon the sale of any Equipment Note or ETC by the Pass Through Trustee pursuant
to Article VI and the realization of any proceeds thereof, the Pass Through
Trustee shall deposit the aggregate amount of such proceeds as a Special
Payment in the Special Payments Account.
(c) The Pass Through Trustee shall present to the Indenture Trustee
to which an Equipment Note relates such Equipment Note on the date of its
stated final maturity, or in the case of any Equipment Note which is to be
prepaid in whole pursuant to the relevant Indenture, on the applicable
prepayment date under the Indenture.
(d) The Pass Through Trustee shall present to the Equipment Trust
Trustee to which an ETC relates such ETC on the date of its stated final
maturity.
SECTION 4.2. Distribution from Certificate Account and Special
Payments Account.
(a) On each Regular Distribution Date or as soon thereafter as the
Pass Through Trustee has confirmed receipt of the payment of the Scheduled
Payments due with respect to the Equipment Notes or ETCs on such date, the Pass
Through Trustee shall distribute to the Certificateholders of the Pass Through
Trust out of the Certificate Account the entire amount deposited therein
pursuant to Section 4.1(a). There shall be so distributed to each
Certificateholder of record on the Record Date with respect to such Regular
Distribution Date (other than as provided in Section 11.1 concerning the final
distribution) by check mailed to such Certificateholder at the address
appearing in the Register, such Certificateholder's pro rata share (based on
the aggregate Fractional Undivided Interest held by such Certificateholder) of
the aggregate amount in the Certificate Account; provided, however, that prior
to the time that any Certificates are issued in the form of Registered
Certificates, each Certificateholder may request in writing that such amounts
be distributed by wire transfer of immediately available funds to an account
specified by such Certificateholder. If a Scheduled Payment is not received by
the Pass Through Trustee on a Regular Distribution Date but is received on a
later date, it shall be distributed on the date received in the manner
described in the preceding sentence to the Certificateholders of record on the
Record Date with respect to such Regular Distribution Date.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Pass Through Trustee has confirmed receipt
of the Special Payments due on the Equipment Notes or ETCs or realized upon the
sale of any Equipment Note or ETCs, the Pass Through Trustee shall distribute
out of the Special Payments Account the entire amount deposited therein
pursuant to Section 4.1(b) of such Special Payment. There shall be so
distributed to each Certificateholder of record on the Record Date with respect
to such Special Distribution Date (other than as provided in Section 11.1
concerning the final distribution) by
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check mailed to such Certificateholder at the address appearing in the
Register, such Certificateholder's pro rata share (based on the aggregate
Fractional Undivided Interest held by such Certificateholder) of the aggregate
amount in the Special Payments Account on account of such Special Payment;
provided, however, that prior to the time that any Certificates are issued in
the form of Registered Certificates, each Certificateholder may request in
writing that such amount be distributed by wire transfer of immediately
available funds to an account specified by such Certificateholder.
(c) The Pass Through Trustee shall at the expense of the Companies
cause notice of each Special Payment to be mailed to each Certificateholder at
his address as it appears in the Register. In the case of a Special Payment
other than pursuant to the fifth paragraph of Section 2.1(b) or the fifth
paragraph of Section 2.1(c), such notice shall be mailed not less than 15 days
prior to the date any such Special Payment is scheduled to be distributed. In
the case of a Special Payment pursuant to the fifth paragraph of Section 2.1(b)
or the fifth paragraph of Section 2.1(c) such notice should be given as
promptly as practicable after the receipt of notice from the Companies that
Postponed Notes or the Equipment Notes or Union ETCs referred to in Section
2.1(c) will not be issued. In the case of any other Special Payments, such
notice shall be mailed as soon as practicable after the Pass Through Trustee
has confirmed that it has received funds for such Special Payment. Notices
mailed by the Pass Through Trustee shall set forth:
(i) the Special Distribution Date and the Record Date
therefor (except as otherwise provided in Section 11.1),
(ii) the amount of the Special Payment for each $1,000 face
amount Certificate (taking into account any payment to be made by the
Companies pursuant to Section 2.1(b) or (c), as applicable) and the
amount thereof constituting principal, Make-Whole Amount, if any, and
interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a
Regular Distribution Date, the total amount to be received on such
date for each $1,000 face amount Certificate.
If the amount of Make-Whole Amount, if any, payable upon the
prepayment of an Equipment Note has not been calculated at the time that the
Pass Through Trustee mails notice of a Special Payment, it shall be sufficient
if the notice sets forth the other amounts to be distributed and states that
any Make-Whole Amount received will also be distributed.
If any prepayment of the Equipment Notes is canceled, the Pass Through
Trustee, as soon as possible after learning thereof, shall cause notice thereof
to be mailed to each Certificateholder at its address as it appears on the
Register.
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SECTION 4.3. Statements to Certificateholders.
(a) On each Regular Distribution Date and Special Distribution Date,
the Pass Through Trustee will include with each distribution of a Scheduled
Payment or a Special Payment to Certificateholders a statement, giving effect
to such distribution to be made on such Regular Distribution Date or Special
Distribution Date, as the case may be, setting forth the following information
(for each $1,000 face amount Certificate as to (i) and (ii) below):
(i) The amount of such distribution allocable to principal
and the amount allocable to Make-Whole Amount, if any;
(ii) The amount of such distribution allocable to interest;
and
(iii) The Pool Balance and the Pool Factor.
(b) Within a reasonable period of time after the end of each calendar
year but not later than the latest date permitted by law, the Pass Through
Trustee shall furnish to each Person who at any time during such calendar year
was a Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i) and (a)(ii) of this Section 4.3 with
respect to the Pass Through Trust for such calendar year or, in the event such
Person was a Certificateholder of record during a portion of such calendar
year, for the applicable portion of such year, and such other items as are
readily available to the Pass Through Trustee and which a Certificateholder
shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its Federal income tax returns. Such report
and such other items shall be prepared on the basis of information supplied to
the Pass Through Trustee by the Clearing Agency Participants and shall be
delivered by the Pass Through Trustee to such Clearing Agency Participants to
be available for forwarding by such Clearing Agency Participants to Certificate
Owners.
SECTION 4.4. Investment of Special Payment Money. Any money received
by the Pass Through Trustee pursuant to Section 4.1(b) representing a Special
Payment which is not to be promptly distributed shall, to the extent
practicable, be invested in Permitted Investments by the Pass Through Trustee
pending distribution of such Special Payment pursuant to Section 4.2. Any
investment made pursuant to this Section 4.4 shall be in such Permitted
Investments having maturities not later than the date that such moneys are
required to be used to make the payment required under Section 4.2 on the
applicable Special Distribution Date and the Pass Through Trustee shall hold
any such Permitted Investments until maturity. The Pass Through Trustee shall
have no liability with respect to any investment made pursuant to this Section
4.4, other than by reason of the willful misconduct or gross negligence of the
Pass Through Trustee. All income and earnings from such investments shall be
distributed to the Certificateholders on such Special Distribution Date as part
of such Special Payment.
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ARTICLE V
THE COMPANIES
SECTION 5.1. Maintenance of Corporate Existence. Each of the
Companies, at its own cost and expense, will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises, except as otherwise specifically permitted in
Section 5.2; provided, however, that neither of the Companies shall be required
to preserve any right or franchise if it shall determine that the preservation
thereof is no longer desirable in the conduct of its business.
SECTION 5.2. Consolidation, Merger or Sale of Assets Permitted.
(a) Union shall not consolidate with or merge into any other
corporation or sell or convey all or substantially all of its assets to any
Person, nor shall Union permit Procor to consolidate with or merge into any
other corporation or sell or convey all or substantially all of its assets to
any Person (other than an Affiliate of Union), unless the corporation formed by
such consolidation or into which Union or Procor, as applicable, is merged or
the Person which acquires by sale or conveyance all or substantially all of the
assets of Union or Procor, as applicable, shall be a corporation organized and
existing under the laws of the United States of America or any State or the
District of Columbia or, in the case of Procor any province of Canada, and
shall execute and deliver to the Pass Through Trustee an agreement in form
reasonably satisfactory to the Pass Through Trustee containing an assumption by
such successor corporation of the due and punctual performance and observance
of each covenant and condition of this Agreement to which Union or Procor, as
applicable, is a party.
(b) Immediately after giving effect to such transaction, no Event of
Default, no Indenture Default, no Equipment Trust Default, and no event that,
after notice or lapse of time, or both, would become an Event of Default, an
Indenture Default or an Equipment Trust Default, shall have occurred and be
continuing.
Upon any consolidation or merger, or any sale or conveyance, of all or
substantially all of the assets of Union or Procor, as the case may be, the
successor corporation formed by such consolidation or into which Union or
Procor, as the case may be, is merged or to which such sale or conveyance is
made shall succeed to, and be substituted for, and may exercise every right and
power of, Union or Procor, as the case may be, under this Agreement with the
same effect as if such successor corporation had been named as Union or Procor,
as the case may be, herein. No such sale or conveyance of all or substantially
all of the assets of Union or Procor, as the case may be, as an entirety shall
have the effect of releasing Union or Procor, as the case may be, or any
successor corporation which shall theretofore have become such from its
liability hereunder.
(c) The Pass Through Trustee may accept an Officer's Certificate and
an Opinion of Counsel of Union, on behalf of the Companies, as conclusive
evidence that any such
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consolidation, merger, sale, lease or conveyance, and any such assumption
complies with the provisions of this Section 5.2.
ARTICLE VI
DEFAULT
SECTION 6.1. Events of Default. If an Indenture Default under the
Indenture or an Equipment Trust Default under either Equipment Trust Agreement
(an "Event of Default") shall occur and be continuing, then, and in each and
every case, so long as such Event of Default shall be continuing, the Pass
Through Trustee may vote all of the Equipment Notes issued under the Indenture
or ETCs issued under either of the Equipment Trust Agreements, as the case may
be, to which such Event of Default relates that are held in the Trust Property,
and upon the direction of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Pass Through Trust, the Trustee shall vote a corresponding
majority of such Equipment Notes or such ETCs, as the case may be, in favor of
directing the Indenture Trustee under the Indenture or the Equipment Trust
Trustee under such Equipment Trust Agreement, as the case may be, to declare
the unpaid principal amount of all Equipment Notes then outstanding under the
Indenture or the ETCs then outstanding under such Equipment Trustee Agreement,
as the case may be, and accrued interest thereon to be due and payable under,
and in accordance with the provisions of, the Indenture or such Equipment Trust
Agreement, as the case may be. In addition, if an Indenture Default shall have
occurred and be continuing under the Indenture or an Equipment Trust Default
shall have occurred and be continuing under either Equipment Trust Agreement,
the Pass Through Trustee may, and upon the direction of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Pass Through Trust, shall, vote all of
the Equipment Notes issued under such Indenture or the ETCs issued under such
Equipment Trust Agreement, as the case may be, to which such Event of Default
relates that are held in the Pass Through Trust to direct such Indenture
Trustee or such Equipment Trust Trustee, as the case may be, regarding the
exercise of remedies provided in Article V of the Indenture or Article V of
such Equipment Trust Agreement, as the case may be. In addition, if an
Equipment Trust Default has occurred and is continuing under the Procor ETC,
the Pass Through Trustee in its own name, or as trustee of an express trust, or
as attorney-in-fact for the Certificateholders, may, and upon direction of
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Pass Through
Trust, shall, pursue such remedies as available to the Pass Through Trustee
against Union under the Guarantee.
In addition, after an Event of Default shall have occurred and be
continuing with respect to any Equipment Notes or ETCs, the Pass Through
Trustee may in its discretion, and upon the direction of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Pass Through Trust shall, by such
officer or agent as it may appoint, sell, convey, transfer and deliver (to the
extent permitted by
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applicable law) all or part of such Equipment Notes or ETCs, without recourse
to or warranty by the Pass Through Trustee or any Certificateholder, to any
Person. In any such case, the Pass Through Trustee shall sell, assign,
contract to sell or otherwise dispose of and deliver such Equipment Note or
Equipment Notes or ETC or ETCs in one or more parcels at public or private sale
or sales, at any location or locations at the option of the Pass Through
Trustee, all upon such terms and conditions as it may reasonably deem advisable
and at such prices as it may reasonably deem advisable, for cash. If the Pass
Through Trustee so decides or is required to sell or otherwise dispose of any
Equipment Note or ETC pursuant to this Section, the Pass Through Trustee shall
take such of the actions described above as it may reasonably deem most
effectual to complete the sale or other disposition of such Equipment Note or
ETC, so as to provide for the payment in full of all amounts due on the
Certificates. Notwithstanding the foregoing, any action taken by the Pass
Through Trustee under this Section shall not, in the reasonable judgment of the
Pass Through Trustee, be adverse to the best interests of the
Certificateholders and the Pass Through Trustee shall give written notice to
Procor of its proposed sale of the Procor ETC or any part thereof at least 20
days prior to the proposed sale. Such notice shall constitute an offer to
Procor to sell the Procor ETC or such part thereof to Procor for a price equal
to the outstanding principal amount thereof, plus all accrued and unpaid
interest thereon, including interest at the Penalty Rate (as defined in the
Procor Equipment Trust Agreement), if any, plus all other amounts due and owing
thereunder and the costs and expenses incurred by the Pass Through Trustee, the
Certificateholders and the Certificate Owners in connection with the collection
thereof and enforcement of remedies relating thereto. If prior to the
expiration of such 20 day period, Procor pays the purchase price aforesaid to
the Pass Through Trustee, the Pass Through Trustee shall transfer all of its
right, title and interest in and to the Procor ETC or such part thereof to
Procor. If Procor does not pay such purchase price to the Pass Through Trustee
prior to the expiration of such 20 day period, the Pass Through Trustee shall
be free to sell the Procor ETC under this paragraph to any Person. The Pass
Through Trustee shall be required to give no more than one notice under this
paragraph and Procor acknowledges that the failure of any proposed sale of the
Procor ETC or part thereof shall not entitle Procor to receive any additional
notice hereunder.
If, with respect to any Equipment Notes, an Indenture Default shall
have occurred and be continuing and the Owner Trustee, which is a party to the
Indenture has elected, in accordance with the provisions of Section 5.04(b) of
the Indenture, to purchase all of the then outstanding Equipment Notes issued
under the Indenture at a price equal to the aggregate unpaid principal amount
thereof, together with accrued interest thereon to the date of such purchase,
then the Pass Through Trustee shall sell to such Owner Trustee all of the
Equipment Notes issued under the Indenture held in the Pass Through Trust at a
price equal to the aggregate unpaid principal amount thereof, together with
accrued interest thereon to the date of such sale.
In no event shall (i) an Indenture Default constitute an Equipment
Trust Default or (ii) an Equipment Trust Default constitute an Indenture
Default.
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SECTION 6.2. Incidents of Sale of Equipment Notes and ETCs. Upon any
sale of all or any part of the Equipment Notes or ETCs, as the case may be,
made either under the power of sale given under this Pass Through Trust
Agreement or otherwise for the enforcement of this Pass Through Trust
Agreement, the following shall be applicable:
(i) Certificateholders and Pass Through Trustee May Purchase
Equipment Notes or ETCs. Any Certificateholder, the Pass Through
Trustee in its individual or any other capacity or any other Person
may bid for and purchase any of the Equipment Notes or ETCs, as the
case may be, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Equipment Notes or ETCs, as the
case may be, in their own absolute right without further
accountability; provided, however, that this provision shall not apply
to the sale of Equipment Notes or ETCs, as the case may be, pursuant
to the last paragraph of Section 6.1.
(ii) Receipt of Pass Through Trustee Shall Discharge
Purchaser. The receipt of the Pass Through Trustee or of the officer
making such sale shall be a sufficient discharge to any purchaser for
his purchase money, and, after paying such purchase money and
receiving such receipt, such purchaser or its personal representative
or assigns shall not be obliged to see to the application of such
purchase money, or be in any way answerable for any loss,
misapplication or non-application thereof.
(iii) Application of Moneys Received Upon Sale. Any moneys
collected by the Pass Through Trustee upon any sale made either under
the power of sale given by this Pass Through Trust Agreement or
otherwise for the enforcement of this Pass Through Trust Agreement,
shall be applied as provided in Section 4.2(b).
SECTION 6.3. Judicial Proceedings Instituted by Pass Through Trustee.
(a) Pass Through Trustee May Bring Suit. If there shall be a failure
to make payment of the principal of, Make-Whole Amount, if any, or interest on
any Equipment Note or ETC, or if there shall be any failure to pay Rent (as
defined in the Lease) under the Lease when due and payable, then the Pass
Through Trustee, in its own name, and as trustee of an express trust, as holder
of such Equipment Notes or ETC, shall be, to the extent permitted by and in
accordance with the terms of the Note Documents or ETC Documents, entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or ETCs or under the Lease and may prosecute any such claim or proceeding
to judgment or final decree with respect to the whole amount of any such sums
so due and unpaid.
(b) Pass Through Trustee May File Proofs of Claim; Appointment of
Pass Through Trustee as Attorney-in-Fact in Judicial Proceedings. The Pass
Through Trustee in its own name, or as trustee of an express trust, or as
attorney-in- fact for the Certificateholders, or in any one or more of such
capacities (irrespective of whether distributions on the Certificates shall
then be due and payable, or the payment of the principal on the Equipment Notes
or ETCs, as the
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case may be, shall then be due and payable, as therein expressed or by
declaration or otherwise and irrespective of whether the Pass Through Trustee
shall have made any demand to the Indenture Trustee for the payment of overdue
principal, Make-Whole Amount (if any) or interest on Equipment Notes or ETCs,
as the case may be), shall be entitled and empowered to file such proofs of
claim and other papers or documents as may be necessary or advisable in order
to have the claims of the Pass Through Trustee and of the Certificateholders
allowed in any receivership, insolvency, bankruptcy, liquidation, readjustment,
reorganization or any other judicial proceedings relative to the Companies, the
Owner Trustee, the Owner Participant, the Equipment Trust Trustees or their
respective creditors or property. Any receiver, assignee, trustee, liquidator,
sequestrator (or similar official) in any judicial proceeding is hereby
authorized by each Certificateholder to make payments in respect of such claim
to the Pass Through Trustee and, in the event that the Pass Through Trustee
shall consent to the making of such payments directly to the
Certificateholders, to pay to the Pass Through Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the Pass
Through Trustee, its agents and counsel. Nothing contained in this Pass
Through Trust Agreement shall be deemed to give to the Pass Through Trustee any
right to accept or consent to any plan of reorganization or otherwise by action
of any character in any such proceeding to waive of change in any way any right
of any Certificateholder.
SECTION 6.4. Control by Certificateholders. Subject to Section 2.3,
the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Pass Through
Trust shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Pass Through Trustee, or
exercising any trust or power conferred on the Pass Through Trustee under this
Pass Through Trust Agreement, including any right of the Pass Through Trustee
as holder of the Equipment Notes or ETCs, provided that:
(i) such direction shall not be in conflict with any rule of
law or with this Pass Through Trust Agreement and would not involve
the Pass Through Trustee in personal liability or expense,
(ii) the Pass Through Trustee shall not determine that the
action so directed would be unjustly prejudicial to the
Certificateholders not taking part in such direction,
(iii) the Pass Through Trustee may take any other action
deemed proper by the Pass Through Trustee which is not inconsistent
with such direction, and
(iv) if an Indenture Default under the Indenture or an
Equipment Trust Default under either Equipment Trust Agreement shall
have occurred and be continuing, such direction shall not obligate the
Trustee to vote more than a corresponding majority of the related
Equipment Notes or ETCs, as the case may be, held by the Trust in
favor of directing any action by the Indenture Trustee with respect to
such Indenture Default or by the Equipment Trust Trustee with respect
to such Equipment Trust Default, as the case may be.
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SECTION 6.5. Waiver of Past Defaults. The Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Pass Through Trust may on behalf of all of
the Certificateholders waive any past Event of Default hereunder and its
consequences or may instruct the Pass Through Trustee to waive any past default
under the Indenture, either Equipment Trust Agreement or this Agreement and its
consequences, except a default (i) in the payment of the principal of,
Make-Whole Amount, if any, or interest on any Equipment Notes or ETCs, as the
case may be, or (ii) in respect of a covenant or provision hereof which under
Article IX hereof cannot be modified or amended without the consent of the
Certificateholder holding each Outstanding Certificate affected.
Upon any such waiver, such default shall cease to exist with respect
to this Pass Through Trust Agreement, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Pass
Through Trust Agreement and any direction given by the Pass Through Trustee on
behalf of such Certificateholders to the Indenture Trustee or Equipment Trust
Trustee, as the case may be, shall be annulled with respect thereto; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon. Upon any such waiver, the Pass Through
Trustee shall vote all the Equipment Notes issued under the Indenture or ETCs
issued under the relevant Equipment Trust Agreement, as the case may be, to
waive the corresponding Default.
SECTION 6.6. Undertaking to Pay Court Costs. All parties to this
Pass Through Trust Agreement, and each Certificateholder by his acceptance of a
Certificate, shall be deemed to have agreed that any court may in its
discretion require, in any suit, action or proceeding for the enforcement of
any right or remedy under this Pass Through Trust Agreement, or in any suit,
action or proceeding against the Pass Through Trustee for any action taken or
omitted by it as Pass Through Trustee hereunder, the filing by any party
litigant in such suit, action or proceeding of an undertaking to pay the costs
of such suit, action or proceeding, and that such court may, in its discretion,
assess reasonable costs, including reasonable attorney's fees, against any
party litigant in such suit, action or proceeding, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
provided, however, that the provisions of this Section shall not apply to (a)
any suit, action or proceeding instituted by any Certificateholder or group of
Certificateholders evidencing Fractional Undivided Interests aggregating more
than 10% of the Pass Through Trust, (b) any suit, action or proceeding
instituted by any Certificateholder for the enforcement of the distribution of
payments pursuant to Section 4.2 hereof on or after the respective due dates
expressed herein or (c) any suit, action or proceeding instituted by the Pass
Through Trustee or as to which the Pass Through Trustee is made a party.
SECTION 6.7. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Pass Through Trust Agreement to the contrary
notwithstanding, including without limitation Section 6.8 hereof, the right of
any Certificateholder to receive distributions of payments required pursuant to
Section 4.2 hereof on the Certificates when due, or to institute suit for the
enforcement of any such payment on or after the applicable Regular Distribution
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Date or Special Distribution Date, shall not be impaired or affected without
the consent of such Certificateholder.
SECTION 6.8. Certificateholders May Not Bring Suit Except Under
Certain Conditions. A Certificateholder shall not have the right to institute
any suit, action or proceeding at law or in equity or otherwise with respect to
this Pass Through Trust Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Pass Through Trust Agreement,
unless:
(i) such Certificateholder previously shall have given
written notice to the Pass Through Trustee of a continuing Event of
Default;
(ii) the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the
Pass Through Trust shall have requested the Pass Through Trustee in
writing to institute such action, suit or proceeding and shall have
offered to the Pass Through Trustee indemnity as provided in Section
7.3(v);
(iii) the Pass Through Trustee shall have refused or
neglected to institute any such action, suit or proceeding for 60 days
after receipt of such notice, request and offer of indemnity; and
(iv) no direction inconsistent with such written request has
been given to the Pass Through Trustee during such 60-day period by
the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than an a majority in
interest in the Pass Through Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatever hereunder or
under the Certificates to (x) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of the Indenture or
any Equipment Trust Agreement on any property subject thereto, or the rights of
the Certificateholders or the holders of the Equipment Notes or ETCs, as the
case may be, (y) obtain or seek to obtain priority over or preference to any
other such Certificateholder or (z) enforce any right under this Pass Through
Trust Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all the Certificateholders subject to the
provisions of this Pass Through Trust Agreement.
SECTION 6.9. Remedies Cumulative. Every remedy given hereunder to
the Pass Through Trustee or to any of the Certificateholders shall not be
exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.
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ARTICLE VII
THE PASS THROUGH TRUSTEE
SECTION 7.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(i) the Pass Through Trustee undertakes to perform only such
duties as are specifically set forth in this Pass Through Trust
Agreement, and no implied covenants, duties or obligations shall be
read into this Pass Through Trust Agreement against the Pass Through
Trustee; and
(ii) in the absence of bad faith on its part, the Pass
Through Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Pass Through Trustee and
conforming to the requirements of this Pass Through Trust Agreement;
but in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Pass
Through Trustee, the Pass Through Trustee shall be under a duty to
examine the form of the same to determine whether or not they
substantially conform to the requirements of this Pass Through Trust
Agreement, but shall be under no duty to investigate the facts
contained therein.
(b) In case an Event of Default has occurred and is continuing, the
Pass Through Trustee shall exercise such of the right and powers vested in it
by this Pass Through Trust Agreement, and use the same degree of care and skill
in its exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(c) No provision of this Pass Through Trust Agreement shall be
construed to relieve the Pass Through Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that
(i) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;
(ii) the Pass Through Trustee shall not be liable for any
error of judgement made in good faith by a Responsible Officer of the
Pass Through Trustee;
(iii) the Pass Through Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Certificateholders evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the Pass Through Trust relating to the time, method and
place of conducting any proceeding for any remedy available to the
Pass Through Trustee, or
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exercising any trust or power conferred upon the Pass Through Trustee,
under this Pass Through Trust Agreement; and
(iv) no provision of this Pass Through Trust Agreement shall
require the Pass Through Trustee to expend or risk its own funds in
the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for
believing that payment of such funds or adequate indemnity against
such risk is not reasonably assured to it.
(d) Whether or not herein expressly so provided, every provision of
this Pass Through Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Pass Through Trustee shall be
subject to the provisions of this Section.
SECTION 7.2. Notice of Defaults. As promptly as practicable after,
and in any event within 30 days after, the occurrence of any default (as such
term is defined below) hereunder, the Pass Through Trustee shall transmit by
mail to the Certificateholders, the Companies, the Owner Trustee, the Equipment
Trust Trustees and the Indenture Trustees in accordance with Section 313(c) of
the Trust Indenture Act, notice of such default hereunder known to the Pass
Through Trustee, unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of (or Make-Whole Amount, if any) or interest on any Equipment Note or ETC, as
the case may be, the Pass Through Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the Pass
Through Trustee in good faith determine that the withholding of such notice is
in the interests of the Certificateholders. For the purpose of this Section,
the term "default" means the occurrence of any Event of Default, except that in
determining whether any such Event of Default has occurred for the purposes of
this paragraph any grace period or notice in connection therewith shall be
disregarded.
SECTION 7.3. Certain Rights of Trustee. Except as otherwise provided
in Section 7.1:
(i) the Pass Through Trustee may rely and shall be protected
in acting or refraining from acting in reliance upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) any request or direction of the Companies mentioned
herein shall be sufficiently evidenced by a Request;
(iii) whenever in the administration of this Pass Through
Trust Agreement the Pass Through Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Pass Through Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its
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part, rely upon an Officer's Certificate of Union, on behalf of the
Companies, the Owner Trustee, the Equipment Trust Trustee or the
Indenture Trustee;
(iv) the Pass Through Trustee may consult with counsel and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(v) the Pass Through Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Pass Through
Trust Agreement at the request or direction of any of the
Certificateholders pursuant to this Pass Through Trust Agreement,
unless such Certificateholders shall have offered to the Pass Through
Trustee reasonable security or indemnity against the cost, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(vi) the Pass Through Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document;
(vii) the Pass Through Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Pass Through Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder; and
(viii) to the extent the provisions of this Section 7.3 are
inconsistent with the duties of the Pass Through Trustee as required
by Section 315 of the Trust Indenture Act, the requirements of such
Section 315 shall prevail.
SECTION 7.4. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, except
the certificates of authentication, shall not be taken as the statements of the
Pass Through Trustee, and the Pass Through Trustee assumes no responsibility
for their correctness. Subject to Section 7.15, the Pass Through Trustee makes
no representations as to the validity or sufficiency of this Pass Through Trust
Agreement, any Note Document, any ETC Document, the Participation Agreement,
the Equipment Notes, the ETCs or the Certificates, except that the Pass Through
Trustee hereby represents and warrants that this Pass Through Trust Agreement
has been, and each Certificate will be, executed and delivered by one of its
officers who is duly authorized to execute and deliver such document on its
behalf.
SECTION 7.5. May Hold Certificates. The Pass Through Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other agent, in their
respective individual or any other capacity, may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture
Act, may otherwise deal with the Companies, the Owner Trustee, the
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Equipment Trust Trustees or the Indenture Trustee with the same rights it would
have if it were not Pass Through Trustee, Paying Agent, Registrar or such other
agent.
SECTION 7.6. Money Held in Pass Through Trust. Money held by the
Pass Through Trustee or the Paying Agent in trust hereunder need not be
segregated from other funds except to the extent required herein or by law and
neither the Pass Through Trustee nor the Paying Agent shall have any liability
for interest upon any such moneys except as provided for herein.
SECTION 7.7. Compensation and Reimbursement. The Companies agree,
severally and not jointly:
(i) to pay, or cause to be paid, pursuant to separate
agreements between the Companies and the Pass Through Trustee to the
Pass Through Trustee from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust), except for the Pass Through Trustee's
initial fees, which fees shall be paid by the Owner Trustee;
(ii) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Pass Through Trustee upon
its request for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by the Pass Through Trustee in
accordance with any provision of this Pass Through Trust Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence,
willful misconduct or bad faith or as may be incurred due to the Pass
Through Trustee's breach of its representations and warranties set
forth in Sections 7.4 and 7.15 and except for the initial reasonable
actual disbursements made by the Pass Through Trustee, which
disbursements shall be reimbursed by the Owner Trustee;
(iii) to indemnify, or cause to be indemnified, the Pass
Through Trustee, in its individual and trust capacities, for, and to
hold it harmless against, any loss, liability or expense (other than
for or with respect to any tax) incurred without negligence, willful
misconduct or bad faith, on its part, arising out of or in connection
with the acceptance or administration of this Pass Through Trust,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except for any such loss, liability or
expense incurred by reason of the Pass Through Trustee's breach of its
representations and warranties set forth in Sections 7.4 and 7.15.
The Pass Through Trustee shall notify the Companies promptly of any
claim for which it may seek indemnity. The Companies shall defend the
claim and the Pass Through Trustee shall cooperate in the defense.
The Pass Through Trustee may have separate counsel with the consent of
the Companies, and the Companies will pay the reasonable fees and
expenses of such counsel. The Companies need not pay for any
settlement made without their consent; and
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(iv) to indemnify, or cause to be indemnified, the Pass
Through Trustee, solely in its individual capacity, for, and to hold
it harmless against, any tax (other than for or with respect to any
tax referred to in the next paragraph, provided that no
indemnification shall be available with respect to any tax
attributable to the Pass Through Trustee's compensation for serving as
such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Pass Through Trust, including any costs and
expenses reasonably incurred in contesting the imposition of any such
tax. The Pass Through Trustee, in its individual capacity, shall
notify the Companies promptly of any tax for which it may seek
indemnity. The Companies shall defend against the imposition of such
tax and the Pass Through Trustee, in its individual capacity, shall
cooperate in the defense. The Pass Through Trustee, in its individual
capacity, may have separate counsel with the consent of the Companies,
and the Companies will pay the reasonable fees and expenses of such
counsel. The Companies need not pay for any taxes paid, in settlement
or otherwise, without their consent.
In addition, the Pass Through Trustee shall be entitled to
reimbursement from, and shall have a lien prior to the Certificates upon, all
property and funds held or collected by the Pass Through Trustee in its
capacity as Pass Through Trustee for any tax incurred without negligence, bad
faith or willful misconduct, on its part, arising out of or in connection with
the acceptance or administration of this Pass Through Trust (other than any tax
attributable to the Pass Through Trustee's compensation for serving as such),
including any costs and expenses reasonably incurred in contesting the
imposition of any such tax. If the Pass Through Trustee reimburses itself for
any such tax, it will within 30 days mail a brief report setting forth the
circumstances thereof to all Certificateholders as their names and addresses
appear in the Register.
The Pass Through Trustee shall have a lien prior to the Certificates
upon all property and funds held or collected by the Pass Through Trustee in
its capacity as Pass Through Trustee.
SECTION 7.8. Corporate Trustee Required; Eligibility. This Agreement
shall at all times have a Pass Through Trustee which shall be eligible to act
as a trustee under Section 310(a) of the Trust Indenture Act and shall have a
combined capital and surplus of at least $100,000,000 and the obligations of
which, whether now in existence or hereafter incurred, are fully and
unconditionally guaranteed by a corporation organized and doing business under
the laws of the United States of America, any State or Territory thereof or of
the District of Columbia and having a combined capital and surplus of at least
$100,000,000. If such corporation publishes reports of condition at least
annually, pursuant to law or the requirements of Federal, State, Territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section 7.8, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
The Pass Through Trustee shall comply with Section 310(b) of the Trust
Indenture Act.
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In case at any time the Pass Through Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.8, the Pass
Through Trustee shall resign immediately in the manner and with the effect
specified in Section 7.9.
SECTION 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Pass Through Trustee and no
appointment of a successor Pass Through Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Pass
Through Trustee under Section 7.10.
(b) The Pass Through Trustee may resign at any time by giving written
notice thereof to the Companies, the Authorized Agents, the Owner Trustees, the
Equipment Trust Trustees and the Indenture Trustee. If an instrument of
acceptance by a successor Pass Through Trustee shall not have been delivered to
the Companies, the Owner Trustee, the Equipment Trust Trustees and the
Indenture Trustee within 30 days after the giving of such notice of
resignation, the resigning Pass Through Trustee may petition any court of
competent jurisdiction for the appointment of a successor Pass Through Trustee.
(c) The Pass Through Trustee may be removed at any time by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Pass Through
Trust delivered to the Pass Through Trustee and to the Companies, the Owner
Trustee, the Equipment Trustee Trustees and the Indenture Trustee.
(d) If at any time:
(i) the Pass Through Trustee shall fail to comply with
Section 310 of the Trust Indenture Act after written request therefor
by the Companies or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(ii) the Pass Through Trustee shall cease to be eligible
under Section 7.8 and shall fail to resign after written request
therefor by the Companies or by any such Certificateholder; or
(iii) the Pass Through Trustee shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a receiver of
the Pass Through Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Pass Through
Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (x) the Companies may remove the Pass Through Trustee or (y)
subject to Section 6.6, any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of himself and all
others similarly situated, petition any court of
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competent jurisdiction for the removal of the Pass Through Trustee and the
appointment of a successor Pass Through Trustee.
(e) If a Responsible Officer of the Pass Through Trustee shall obtain
actual knowledge of an Avoidable Tax (as hereinafter defined) which has been or
is likely to be asserted, the Pass Through Trustee shall promptly notify the
Companies and the Owner Trustee thereof and shall, within 30 days of such
notification, resign hereunder unless within such 30-day period the Pass
Through Trustee shall have received notice that the Companies or the Owner
Trustees have agreed to pay such tax. The Companies shall promptly appoint a
successor Pass Through Trustee in a jurisdiction where there are no Avoidable
Taxes. As used herein, an "Avoidable Tax" means a state or local tax: (i) upon
(w) the Pass Through Trust, (x) the Trust Property, (y) Certificateholders or
(z) the Pass Through Trustee for which the Pass Through Trustee is entitled to
seek reimbursement from the Trust Property, and (ii) which would be avoided if
the Pass Through Trustee were located in another state, or jurisdiction within
a state, within the United States. A tax shall not be an Avoidable Tax if the
Companies or the Owner Trustee shall agree to pay, and shall pay, such tax.
(f) If the Pass Through Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Pass
Through Trustee for any cause, Union shall promptly appoint a successor Pass
Through Trustee. If, within one year after such resignation, removal or
incapacity, or the occurrence of such vacancy, a successor Pass Through Trustee
shall be appointed by Act of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Pass Through Trust delivered to the Companies, the Owner
Trustee, the Indenture Trustee, the Equipment Trust Trustees and the retiring
Pass Through Trustee, the successor Pass Through Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Pass
Through Trustee and supersede the retiring Pass Through Trustee. If no
successor Pass Through Trustee shall have been so appointed as provided above
and accepted appointment in the manner hereinafter provided, any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Pass
Through Trustee.
(g) The successor Pass Through Trustee shall give notice of the
resignation and removal of the Pass Through Trustee and appointment of the
successor Pass Through Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Certificateholders as their names and
addresses appear in the Register. Each notice shall include the name of such
successor Pass Through Trustee and the address of its Corporate Trust Office.
SECTION 7.10. Acceptance of Appointment by Successor. Every
successor Pass Through Trustee appointed hereunder shall execute, acknowledge
and deliver to the Companies and the retiring Pass Through Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Pass Through Trustee shall become effective and such successor
Pass Through Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Pass
Through Trustee; but,
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on request of the Companies or the successor Pass Through Trustee, such
retiring Pass Through Trustee shall execute and deliver an instrument
transferring to such successor Pass Through Trustee all the rights, powers and
trusts of the retiring Pass Through Trustee and shall duly assign, transfer and
deliver to such successor Pass Through Trustee all property and money held by
such retiring Pass Through Trustee hereunder, subject nevertheless to its lien,
if any, provided for in Section 7.7. Upon request of any such successor Pass
Through Trustee, Union, the retiring Pass Through Trustee and such successor
Pass Through Trustee shall execute and deliver any and all instruments
containing such provisions as shall be necessary or desirable to transfer and
confirm to, and for more fully and certainly vesting in, such successor Pass
Through Trustee all such rights, powers and trusts.
No successor Pass Through Trustee shall accept its appointment unless
at the time of such acceptance such successor Pass Through Trustee shall be
qualified and eligible under this Article.
SECTION 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Pass Through Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Pass Through Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Pass Through Trustee, shall be the
successor of the Pass Through Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Certificates shall have been authenticated, but
not delivered, by the Pass Through Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Pass Through Trustee
may adopt such authentication and deliver the Certificates so authenticated
with the same effect as if such successor Pass Through Trustee had itself
authenticated such Certificates.
SECTION 7.12. Maintenance of Agencies.
(a) There shall at all times be maintained in the Borough of
Manhattan, The City of New York, an office or agency where Certificates may be
presented or surrendered for registration of transfer or for exchange, and for
payment thereof and where notices and demands to or upon the Pass Through
Trustee in respect of the Certificates or of this Pass Through Trust Agreement
may be served. Such office or agency shall be initially at
[__________________________, [Trustee address]. Written notice of the location
of each such other office or agency and of any change of location thereof shall
be given by the Pass Through Trustee to Union, the Owner Trustee, the Indenture
Trustee, the Equipment Trust Trustees and the Certificateholders. In the event
that no such office or agency shall be maintained or no such notice of location
or of change of location shall be given, presentations and demands may be made
and notices may be served at the Corporate Trust Office of the Pass Through
Trustee.
(b) There shall at all times be a Registrar and a Paying Agent
hereunder. Each such Authorized Agent shall be a bank or trust company, shall
be a corporation organized and doing
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business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, with a combined capital and
surplus of at least $75,000,000, or, if the Pass Through Trustee shall be
acting as the Registrar or Paying Agent hereunder, a corporation the
obligations of which are guaranteed by a corporation organized and doing
business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, with a combined capital and
surplus of at least $75,000,000, and shall be authorized under such laws to
exercise corporate trust powers, subject to supervision by Federal or state
authorities. The Pass Through Trustee shall initially be the Paying Agent and,
as provided in Section 3.4, Registrar hereunder. Each Registrar shall furnish
to the Pass Through Trustee, at stated intervals of not more than six months,
and at such other times as the Pass Through Trustee may request in writing, a
copy of the Register.
(c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authorized Agent, shall be the successor of such Authorized Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.
(d) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Pass Through Trustee, the Companies, the Owner
Trustee, the Equipment Trust Trustees and the Indenture Trustee. The Companies
may, and at the request of the Pass Through Trustee shall, at any time
terminate the agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Pass Through Trustee. Upon the
resignation or termination of an Authorized Agent or in case at any time any
such Authorized Agent shall cease to be eligible under this Section (when, in
either case, no other Authorized Agent performing the functions of such
Authorized Agent shall have been appointed), the Companies shall promptly
appoint one or more qualified successor Authorized Agents, reasonably
satisfactory to the Pass Through Trustee, to perform the functions of the
Authorized Agent which has resigned or whose agency has been terminated or who
shall have ceased to be eligible under this Section. Union shall give written
notice of any such appointment made by them to the Pass Through Trustee, the
Owner Trustee, the Equipment Trust Trustees and the Indenture Trustee; and in
each case the Pass Through Trustee shall mail notice of such appointment to all
Certificateholders as their names and addresses appear on the Register.
(e) The Companies agree, severally and not jointly, to pay, or cause
to be paid, pursuant to separate agreements from time to time to each
Authorized Agent reasonable compensation for its services and to reimburse it
for its reasonable expenses.
SECTION 7.13. Money for Certificate Payments to Be Held in Pass
Through Trust. All moneys deposited with any Paying Agent for the purpose of
any payment on Certificates shall be deposited and held in trust for the
benefit of the Certificateholders entitled to such payment, subject to the
provisions of this Section. Moneys so deposited and held in trust shall
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constitute a separate trust fund for the benefit of the Certificateholders with
respect to which such money was deposited.
The Pass Through Trustee will cause each Paying Agent other than the
Pass Through Trustee to execute and deliver to it an instrument in which such
Paying Agent shall agree with the Pass Through Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for payments on Certificates in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
(ii) give the Pass Through Trustee notice of any default by
any obligor upon the Certificates in the making of any such payment;
and
(iii) at any time during the continuance of any such default,
upon the written request of the Pass Through Trustee, forthwith pay to
the Pass Through Trustee all sums so held in trust by such Paying
Agent.
The Pass Through Trustee may at any time, for the purpose of
obtaining the satisfaction and discharge of this Pass Through Trust Agreement
or for any other purpose, direct any Paying Agent to pay to the Pass Through
Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Pass Through Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any Paying Agent to
the Pass Through Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
SECTION 7.14. Registration of Equipment Notes and ETCs in Pass
Through Trustee's Name. The Pass Through Trustee agrees that all Equipment
Notes, ETCs, Permitted Investments, if any, and Specified Investments, if any,
shall be issued in the name of the Pass Through Trustee or its nominee and held
by the Pass Through Trustee, or, if not so held, the Pass Through Trustee or
its nominee shall be reflected as the owner of such Equipment Notes, ETCs,
Permitted Investments, or Specified Investments, as the case may be, in the
register of the issuer of such Equipment Notes, ETCs, Permitted Investments or
Specified Investments. In no event shall the Pass Through Trustee invest in,
or hold, Equipment Notes, ETCs, Permitted Investments or Specified Investments
in a manner that would cause the Pass Through Trustee not to have the ownership
interest in such Equipment Notes, ETCs, Permitted Investments or Specified
Investments under the applicable provisions of the Uniform Commercial Code in
effect where the Pass Through Trustee holds such Equipment Notes, ETCs,
Permitted Investments or Specified Investments or other applicable law then in
effect.
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SECTION 7.15. Representations and Warranties of Pass Through Trustee.
The Pass Through Trustee hereby represents and warrants that:
(i) the Pass Through Trustee is a national banking
association, validly existing and holding a valid certificate to
conduct business as a national banking association with trust powers
under the laws of the United States of America;
(ii) the Pass Through Trustee has full power, authority and
legal right to execute, deliver, and perform this Pass Through Trust
Agreement and the Participation Agreement and has taken all necessary
action to authorize the execution, delivery, and performance by it of
this Pass Through Trust Agreement and the Participation Agreement;
(iii) the execution, delivery and performance by the Pass
Through Trustee of this Pass Through Trust Agreement and the
Participation Agreement (a) will not violate any provision of any
United States or Illinois law or regulation governing the banking and
trust powers of the Pass Through Trustee or any order, writ, judgment,
or decree of any court, arbitrator, or governmental authority
applicable to the Pass Through Trustee or any of its assets, (b) will
not violate any provision of the articles of association or by-laws of
the Pass Through Trustee, or (c) will not violate any provision of, or
constitute, with or without notice or lapse of time, a default under,
or result in the creation or imposition of any lien on any properties
included in the Trust Property pursuant to the provisions of any
mortgage, indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Pass Through Trustee's
performance or ability to perform its duties hereunder or thereunder
or on the transactions contemplated herein or therein;
(iv) the execution, delivery and performance by the Pass
Through Trustee of this Pass Through Trust Agreement and the
Participation Agreement will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration
with, or the taking of any other action in respect of, any United
States or Illinois governmental authority or agency regulating the
banking and corporate trust activities of the Pass Through Trustee,
other than any such authorization, consent or approval as has been
duly obtained or given and is in full force and effect; and
(v) this Pass Through Trust Agreement and the Participation
Agreement have been duly executed and delivered by the Pass Through
Trustee and constitute the legal, valid, and binding agreements of the
Pass Through Trustee, enforceable against it in accordance with their
respective terms, provided that enforceability may be limited by (x)
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and (y)
general principles of equity.
SECTION 7.16. Withholding Taxes; Information Reporting. The Pass
Through Trustee, as trustee of a grantor trust, shall exclude and withhold from
each distribution of principal, Make-Whole Amount, if any, and interest and
other amounts due hereunder or under the
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Certificates any and all withholding taxes applicable thereto as required by
law. The Pass Through Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or similar charges
are required to be withheld with respect to any amounts payable in respect of
the Certificates, to withhold such amounts and timely pay the same to the
appropriate authority in the name of and on behalf of the Certificateholders,
that it will file any necessary withholding tax returns or statements when due,
and that, as promptly as possible after the payment thereof, it will deliver to
each Certificateholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Certificateholders
may reasonably request from time to time. The Pass Through Trustee agrees to
file any other information reports as it may be required to file under United
States law. To the extent that the Pass Through Trustee fails, with respect to
any Certificateholder, to withhold and pay over any such taxes to the
appropriate taxing authority, the Pass Through Trustee shall, upon a claim
being made for such taxes by such authority, and before making any claim to
Union for indemnification under Section 7.1 of the Participation Agreement (if
such indemnification would otherwise be permissible thereunder), take all
reasonable steps to recover such taxes from such Certificateholder, including,
without limitation, withholding the amount of such taxes from subsequent
distributions, if any, to such Certificateholder. To the extent that the Pass
Through Trustee receives any amount from Union for indemnification of such
taxes which the Pass Through Trustee thereafter recovers from the appropriate
Certificateholder (including by withholding from subsequent distributions to
such Certificateholder), the Pass Through Trustee shall reimburse Union
therefor. The Pass Through Trustee shall be permitted to rely upon any
certificate presented by a Certificateholder claiming an exemption from
withholding absent bad faith on the part of the Pass Through Trustee.
SECTION 7.17. Trustee's Liens. The Pass Through Trustee in its
individual capacity agrees that it will at its own cost and expense promptly
take such actions as may be necessary to duly discharge and satisfy in full all
Trustee's Liens.
SECTION 7.18. Preferential Collection of Claims. The Pass Through
Trustee shall comply with Sections 311(a) and (b) of the Trust Indenture Act,
excluding any creditor relationship arising under Section 311(b) of the Trust
Indenture Act. A Pass Through Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act to the extent
indicated.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY PASS THROUGH TRUSTEE
SECTION 8.1. The Companies to Furnish Pass Through Trustee with Names
and Addresses of Certificateholders. The Companies will furnish to the Pass
Through Trustee within 15 days after each Record Date with respect to a
Scheduled Payment, and at such other times as the Pass Through Trustee may
request in writing, within 30 days after receipt by the Companies of any such
request, a list, in such form as the Pass Through Trustee may reasonably
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require, of all information in the possession or control of the Companies as to
the names and addresses of the Certificateholders, in each case as of a date
not more than 15 days prior to the time such list is furnished; provided,
however, that so long as the Pass Through Trustee is the sole Registrar, no
such list need be furnished; and provided further, however, that no such list
need be furnished for so long as a copy of the Register is being furnished to
the Pass Through Trustee pursuant to Section 7.12.
SECTION 8.2. Preservation of Information; Communications to
Certificateholders. The Pass Through Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of
Certificateholders contained in the most recent Register or list furnished to
the Pass Through Trustee as provided in Section 7.12 or Section 8.1, as the
case may be, and the names and addresses of Certificateholders received by the
Pass Through Trustee in its capacity as Registrar, if so acting. The Pass
Through Trustee may destroy any Register or list furnished to it as provided in
Section 7.12 or Section 8.1, as the case may be, upon receipt of a new Register
or list so furnished.
SECTION 8.3. Reports by Pass Through Trustee.
(a) Within 60 days after _________ of each year commencing with the
year 1996, the Pass Through Trustee shall transmit to the Certificateholders,
as provided in Section 313(c) of the Trust Indenture Act, a report dated as of
such _________, if required by Section 313(a) of the Trust Indenture Act. The
Pass Through Trustee shall also comply with Section 313(b) of the Trust
Indenture Act.
(b) A copy of each such report shall, at the time of transmission to
Certificateholders, be filed by the Pass Through Trustee with each stock
exchange (if any) upon which the Certificates are listed, and also with the
Commission. The Companies will notify the Pass Through Trustee when the
Certificates are listed on any stock exchange and any subsequent change with
respect thereto.
SECTION 8.4. Reports by the Company. Union shall and, if Procor
becomes subject to the periodic reporting requirements of Section 13 or 15(d)
of the Exchange Act, Procor shall:
(a) file with the Pass Through Trustee, within 30 days after it is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which it is required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended; or if it is not required to file information, documents or reports
pursuant to either of such sections, then to file with the Pass Through Trustee
and the Commission, in accordance with rules and regulations prescribed by the
Commission pursuant to Section 314(a)(1) of the Trust Indenture Act, such of
the supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended,
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in respect of a security listed and registered on a national securities
exchange as may be prescribed in such rules and regulations;
(b) file with the Pass Through Trustee and the Commission, in
accordance with the rules and regulations prescribed by the Commission, such
additional information, documents and reports with respect to compliance by it
with the conditions and covenants provided for in this Agreement, as may be
required by such rules and regulations, including, in the case of annual
reports, if required by such rules and regulations, certificates or opinions of
independent public accountants, conforming to the requirements of Section 1.2;
(c) transmit to all Certificateholders, in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act such summaries of
any information, documents and reports required to be filed by Union and Procor
pursuant to subsections (a) and (b) of this Section 8.4 as may be required by
rules and regulations prescribed by the Commission; and
(d) furnish to the Pass Through Trustee, not less often than
annually, a certificate from the principal executive officer, principal
financial officer or principal accounting officer thereof as to his or her
knowledge of Union's and Procor's compliance with all conditions and covenants
under this Agreement. For purposes of this subsection (d), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Agreement. Until such time as Procor becomes a
reporting company under the Exchange Act, such annual certificate may be
furnished as to both Union and Procor by a Responsible Officer of Union.
ARTICLE IX
SUPPLEMENTS TO PASS THROUGH TRUST AGREEMENT
SECTION 9.1. Supplements to Pass Through Trust Agreement Without
Consent of Certificateholders. Without the consent of the Certificateholders,
the Companies may, and the Pass Through Trustee (subject to Section 9.3) shall,
at any time and from time to time enter into one or more agreements
supplemental hereto, in form satisfactory to the Pass Through Trustee, for any
of the following purposes:
(i) to evidence the succession of another corporation to
Union or Procor and the assumption by any such successor of the
covenants of Union or Procor herein contained;
(ii) to add to the covenants of either of the Companies for
the benefit of the Certificateholders, or to surrender any right or
power herein conferred upon the Companies;
(iii) to cure any ambiguity, to correct any manifest error to
correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein or to make any other
provisions with respect to matters or questions arising under
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this Pass Through Trust Agreement, provided that any such action shall
not adversely affect the interests of the Certificateholders; or
(iv) to modify, eliminate or add to the provisions of this
Pass Through Trust Agreement to such extent as shall be necessary to
continue the qualification of this Pass Through Trust Agreement
(including any supplemental agreement) under the Trust Indenture Act,
or under any similar Federal statute hereafter enacted, and to add to
this Pass Through Trust Agreement such other provisions as may be
expressly permitted by the Trust Indenture Act, excluding, however,
the provisions referred to in Section 316(a)(2) of the Trust Indenture
Act as in effect at the date as of which this instrument was executed
or any corresponding provision in any similar Federal statute
hereafter enacted.
SECTION 9.2. Supplements to Pass Through Trust Agreement with Consent
of Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest, by Act of such Certificateholders delivered to the
Companies and the Pass Through Trustee, the Companies may (with the consent of
the Owner Trustee, if any, such consent not to be unreasonably withheld), and
the Pass Through Trustee (subject to Section 9.3) shall, enter into an
agreement or agreements supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Pass Through Trust Agreement or of modifying in any manner the rights and
obligations of the Certificateholders under this Pass Through Trust Agreement;
provided, however, that no such supplemental agreement shall, without the
consent of each Certificateholder of an Outstanding Certificate affected
thereby:
(i) reduce in any manner the amount of, or delay the timing
of, any receipt by the Pass Through Trustee of payments on the
Equipment Notes or the ETCs held in the Pass Through Trust or
distributions that are required to be made herein on any Certificate,
or change any date of payment on any Certificate, or change the place
of payment where, or the coin or currency in which, any Certificate is
payable, or impair the right to institute suit for the enforcement of
any such payment or distribution on or after the Regular Distribution
Date or Special Distribution Date applicable thereto;
(ii) permit the disposition of any Equipment Note or ETCs in
the Trust Property except as permitted by this Pass Through Trust
Agreement, or otherwise deprive any Certificateholder of the
beneficial ownership of the Equipment Notes or ETCs in the Pass
Through Trust;
(iii) reduce the percentage of the aggregate Fractional
Undivided Interests of the Pass Through Trust required for any such
supplemental agreement, or reduce such percentage required for any
waiver (of compliance with certain provisions of this Pass Through
Trust Agreement or certain defaults hereunder and their consequences)
provided or in this Pass Through Trust Agreement;
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(iv) modify Article XII or otherwise release Union from its
obligations under the Guarantee; or
(v) modify any of the provisions of this Section or Section
6.5, except to increase any such percentage or to provide that certain
other provisions of this Pass Through Trust Agreement cannot be
modified or waived without the consent of the Certificateholder of
each Certificate affected thereby.
It shall not be necessary for any Act of Certificateholders under this
Section to approve the particular form of any proposed supplemental agreement,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Documents Affecting Immunity or Indemnity. If in the
opinion of the Pass Through Trustee any document required to be executed by it
pursuant to the terms of Section 9.1 or 9.2 affects any interest, right, duty,
obligation, immunity or indemnity in favor of the Pass Through Trustee under
this Pass Through Trust Agreement, the Pass Through Trustee may in its
discretion decline to execute such document.
SECTION 9.4. Execution of Supplements to Pass Through Trust
Agreements. In executing, or accepting the additional trusts created by, any
supplemental agreement permitted by this Article or the modifications thereby
of the trusts created by this Pass Through Trust Agreement, the Pass Through
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
agreement is authorized or permitted by this Pass Through Trust Agreement.
SECTION 9.5. Effect of Supplements to Pass Through Trust Agreement.
Upon the execution of any supplemental agreement under this Article, this Pass
Through Trust Agreement shall be modified in accordance therewith, and such
supplemental agreement shall form a part of this Pass Through Trust Agreement
for all purposes; and every Certificateholder of Certificates theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.6. Conformity with Trust Indenture Act. Every supplemental
agreement executed pursuant to this Article shall conform to the requirements
of the Trust Indenture Act as then in effect.
SECTION 9.7. Reference in Certificates to Supplements to Pass Through
Trust Agreements. Certificates authenticated and delivered after the execution
of any supplemental agreement pursuant to this Article may bear a notation in
form approved by the Pass Through Trustee as to any matter provided for in such
supplemental agreement, and, in such case, suitable notation may be made upon
Outstanding Certificates after proper presentation and demand.
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ARTICLE X
AMENDMENTS TO INDENTURE, NOTE DOCUMENTS,
EQUIPMENT TRUST AGREEMENTS AND ETC DOCUMENTS
In the event that the Pass Through Trustee, as holder of any Equipment
Note or an ETC in trust for the benefit of the Certificateholders, receives a
request for a consent to any amendment, modification, waiver or supplement
under the Indenture, other Note Document, either Equipment Trust Agreement,
other ETC Document or the Participation Agreement, the Pass Through Trustee
shall forthwith send a notice of such proposed amendment modification, waiver
or supplement, to each Certificateholder registered on the Register as of such
date. The Pass Through Trustee shall request from the Certificateholders
Directions as to (a) whether or not to direct the Indenture Trustee or such
Equipment Trust Trustee, as the case may be, to take or refrain from taking any
action which a holder of such Equipment Note or ETC, as the case may be, has
the option to direct, (b) whether or not to give or execute any waivers,
consents, amendments, modifications or supplements as a holder of such
Equipment Note or ETC, as the case may be, and (c) how to vote any Equipment
Note or ETC, as the case may be, if a vote has been called for with respect
thereto. Provided such a request for Certificateholder Direction shall have
been made, in directing any action or casting any vote or giving any consent as
the holder of any Equipment Note or ETC, as the case may be, the Pass Through
Trustee shall vote or consent with respect to such Equipment Note or ETC, as
the case may be, in the same proportion as the Certificates were actually voted
by Acts of Certificateholders delivered to the Pass Through Trustee prior to
two Business Days before the Pass Through Trustee directs such action or casts
such vote or gives such consent. Notwithstanding the foregoing, but subject to
Section 6.4, in the case that an Event of Default hereunder shall have occurred
and be continuing, the Pass Through Trustee may, in its own discretion and at
its own direction, consent and notify the Indenture Trustee or Equipment Trust
Trustee of such consent to any amendment, modification, waiver or supplement
under the Indenture, and other Note Document, any Equipment Trust Agreement,
any other ETC Document or the Participation Agreement.
ARTICLE XI
TERMINATION OF PASS THROUGH TRUST
The respective obligations and responsibilities of the Companies and
the Pass Through Trustee created hereby and the Pass Through Trust created
hereby shall terminate upon the distribution to all Certificateholders and the
Pass Through Trustee of all amounts required to be distributed to them pursuant
to this Pass Through Trust Agreement and the disposition of all property held
as part of the Trust Property; provided, however, that in no event shall the
trust created hereby continue beyond the expiration of 21 years from the death
of the last survivor of the descendants of John D. Rockefeller, father of
Nelson Rockefeller, former Vice President of the United States, living on the
date of this Pass Through Trust Agreement.
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Notice of any termination, specifying the Regular Distribution Date
(or Special Distribution Date, as the case may be) upon which the
Certificateholders may surrender their Certificates to the Pass Through Trustee
for payment of the final distribution and cancellation, shall be mailed
promptly by the Pass Through Trustee to Certificateholders not earlier than the
60th day and not later than the 20th day next preceding such final
distribution, specifying (a) the Regular Distribution Date (or Special
Distribution Date, as the case may be) upon which the proposed final payment of
the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Pass Through Trustee therein specified, (b) the
amount of any such proposed final payment, and (c) that the Record Date
otherwise applicable to such Regular Distribution Date (or Special Distribution
Date, as the case may be) is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office or agency of the
Pass Through Trustee therein specified. The Pass Through Trustee shall give
such notice to the Registrar at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Pass Through Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Regular Distribution Date (or Special
Distribution Date, as the case may be) pursuant to Section 4.2.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Pass Through Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. In the event that any money held by the Pass Through Trustee for the
payment of distributions on the Certificates shall remain unclaimed for two
years and 11 months after the final distribution date with respect thereto, the
Pass Through Trustee shall pay to the Indenture Trustee or each Equipment Trust
Trustee the appropriate amount of money relating to the Indenture Trustee or
such Equipment Trust Trustee and shall give written notice thereof to the Owner
Trustee and Union.
ARTICLE XII
GUARANTEE OF UNION
SECTION 12.1. Guarantee. Subject to the provisions of this
Article XII, Union hereby irrevocably and unconditionally guarantees, as a
primary obligor and not a surety, to each Certificateholder of a Certificate
now or hereafter authenticated and delivered by the Pass Through Trustee and to
the Pass Through Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Pass Through Trust Agreement, the
Certificates hereunder, the Procor Equipment Trust Agreement or the Procor ETC
thereunder, the due and punctual distribution to Certificateholders of the
amounts of principal of, and interest (including post-petition interest in any
proceeding under any applicable bankruptcy law whether or not permitted
thereby), and interest on overdue principal and interest, if any, to the extent
lawful, payable with respect to the Procor ETC when and as the same shall
become due and payable, whether by acceleration thereof, or otherwise
(including amounts that would become due but for
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<PAGE> 59
the operation of the automatic stay under applicable bankruptcy law), in
accordance with the terms of the Procor ETC and of this Pass Through Trust
Agreement. Union also hereby guarantees for the benefit of the Persons
identified in the preceding sentence, the due and punctual performance by
Procor of its obligations under the Procor Equipment Trust Agreement. Union
hereby agrees that its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any failure to
enforce the provisions of the Procor ETC or this Pass Through Trust Agreement,
any waiver, modification or indulgence granted to Procor with respect thereto
by the Certificateholders, the Equipment Trust Trustee or the Pass Through
Trustee, or any other circumstances which may otherwise constitute a legal or
equitable discharge of a surety or guarantor. Union hereby waives diligence,
presentment, filing of claims with a court in the event of a merger or
bankruptcy of Procor, any right to require a proceeding first against Procor,
the benefit of discussion, protest or notice with respect to the Procor ETC or
the indebtedness evidenced thereby and all demands whatsoever, and covenants
that this Guarantee shall not be discharged as to the Procor ETC except by
payment in full of the principal thereof and all accrued interest thereon and
all other amounts due with respect thereto.
Union shall be subrogated to all rights of the
Certificateholders against Procor in respect of any amounts paid to the
Certificateholders by Union pursuant to the provisions of this Guarantee;
provided, however, that Union shall not be entitled to enforce, or to receive
any payments arising out of or based upon, such right of subrogation until all
amounts payable to the Pass Through Trustee hereunder with respect to the
Procor ETC shall have been paid in full.
The Guarantee set forth in this Section 12.1 shall not be
valid or become obligatory for any purpose with respect to a Certificate until
the certificate of authentication on such Certificate shall have been signed by
or on behalf of the Pass Through Trustee.
The parties hereto acknowledge that payments by Union
hereunder with respect to (i) principal attributable to the Procor ETC shall
have the effect of reducing on a dollar for dollar basis the outstanding
principal amount of the Procor ETC and (ii) accrued interest attributable to
the Procor ETC shall have the effect of reducing on a dollar for dollar basis
the outstanding accrued interest on the Procor ETC. For the purposes of this
paragraph only, payments by Union hereunder shall first be applied against
outstanding accrued interest then against outstanding principal.
SECTION 12.2. Execution and Delivery of Guarantee.
(a) To evidence the Guarantee set forth in this Article
XII, Union hereby agrees that a notation of the Guarantee shall be placed on
each Certificate authenticated and delivered by the Pass Through Trustee on or
after the date the Trust Property includes the Procor ETC.
(b) A Responsible Officer of Union shall sign the
notation of Guarantee on the Certificates by manual or facsimile signature. If
a Responsible Officer whose signature is on the notation of Guarantee no longer
holds that office at the time the Pass Through Trustee
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<PAGE> 60
authenticates the Certificate on which the Guarantee is endorsed, the Guarantee
shall be valid nevertheless. Union hereby agrees that the Guarantee set forth
in Section 12.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Certificate a notation of the Guarantee.
(c) The delivery of any Certificate by the Pass Through
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of the Guarantee set forth in this Pass Through Trust Agreement on
behalf of Union.
SECTION 12.3. Limitation of Union's Liability. Union hereby
confirms that it is its intention that the Guarantee not constitute a
fraudulent transfer or conveyance for purposes of any bankruptcy law,
fraudulent conveyance act, or any similar law. To effectuate the foregoing
intention, Union hereby irrevocably agrees that its obligations under the
Guarantee shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other (contingent or otherwise) liabilities of
Union that are relevant under such laws, and after giving effect to any rights
to contribution pursuant to any agreement providing for an equitable
contribution among Union and other Affiliates of Procor, such maximum amount
shall result in the obligations of Union in respect of such maximum amount not
constituting a fraudulent transfer or conveyance.
SECTION 12.4. Guarantee Unconditional. Upon failure of
payment when due of any amount so guaranteed for whatever reason, Union will be
obligated to pay the same immediately. Union hereby agrees that its
obligations hereunder shall be continuing, absolute and unconditional,
irrespective of: any delays in obtaining or realizing upon or failure to
obtain or realize upon Trust Property; the recovery of any judgment against
Procor or Union; any extension, renewal settlement, compromise, waiver or
release in respect of any obligation of Procor under this Pass Through Trust
Agreement or the Procor ETC, by operation of law or otherwise; any modification
or amendment of or supplement to this Pass Through Trust Agreement or the
Procor ETC; any change in the corporate existence, structure or ownership of
Procor, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting Procor or its assets or any resulting release or discharge
of any obligation of Procor contained in this Pass Through Trust Agreement or
the Procor ETC; the existence of any claim, set-off or other rights which Union
may have at any time against Procor, the Pass Through Trustee, any
Certificateholder or any other Person, whether in connection herewith or any
unrelated transactions; provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim; any
invalidity or unenforceability relating to or against Procor for any reason of
this Pass Through Trust Agreement or the Procor ETC, or any provision of
applicable law or regulation purporting to prohibit the payment by Procor of
the principal of or interest on the Procor ETC or any other amount payable by
Procor under this Pass Through Trust Agreement, or the Procor ETC; or any other
act or omission to act or delay of any kind by Procor, the Pass Through
Trustee, any Certificateholder, or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of Union's obligations hereunder. Union hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of
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<PAGE> 61
insolvency or bankruptcy of Procor, any right to require a proceeding first
against Procor, protest, notice and all demand whatsoever and covenants that
this Guarantee will not be discharged except by the complete performance of the
obligations contained in the Procor ETC, this Pass Through Trust Agreement and
in this Article XII. Union's obligations hereunder shall remain in full force
and effect until this Pass Through Trust Agreement shall have terminated and
the principal of and interest on the Procor ETC and all other obligations
payable by Procor relating thereto shall have been paid in full. If at any
time the distribution of any payment of the principal of or interest with
respect to the Procor ETC or any other amount payable by Procor under this Pass
Through Trust Agreement is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of Procor or otherwise,
Union's obligations hereunder with respect to such payment shall be reinstated
as though such payment had been due but not made at such time, and this Article
XII, to the extent theretofore discharged, shall be reinstated in full force
and effect. Union irrevocably waives any and all rights to which it may be
entitled, by operation of law or otherwise, upon making any payment hereunder
to be subrogated to the rights of the payee against Procor with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by Procor in
respect thereof until all obligations of Procor under the Procor ETC are
satisfied. Union further agrees that, as between Union, on the one hand, and
the Certificateholders and the Pass Through Trustee, on the other hand, (i) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article VI hereof for the purposes of this Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby and (ii) in the event of any declaration of
acceleration of such obligations as provided in Article VI hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by Union for the purpose of this Article XII.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this Pass
Through Trust Agreement or the Pass Through Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Pass Through Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
SECTION 13.2. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Pass
Through Trust, the Fractional Undivided Interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Pass
Through Trust or for any reason whatsoever, and Certificates upon
authentication thereof by the Pass Through Trustee pursuant to Section 3.2 are
and shall be deemed fully paid. No Certificateholder shall have any right
(except as expressly provided herein) to vote or in any manner otherwise
control the operation and management of the Trust Property, the Pass Through
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<PAGE> 62
Trust established hereunder, or the obligations of the parties hereto, nor
shall anything set forth herein, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association.
SECTION 13.3. Notices.
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all communications and notices provided for herein shall be in writing,
and any such notice shall become effective (i) upon personal delivery thereof,
including, without limitation by overnight mail and courier service, (ii) in
the case of notice by United States mail, certified or registered, postage
prepaid, return receipt requested, three days after being so deposited in the
United States mail, or (iii) in the case of notice by facsimile transmission,
upon transmission thereof, provided such transmission is promptly confirmed
(which conformation may be mechanical), in each case addressed to each party
here to at the addresses set forth below:
if to Union, to:
Union Tank Car Company
225 West Washington Street
Chicago, Illinois 60606
Attention: Robert W. Webb, Secretary
Facsimile: (312) 845-5305
Telephone: (312) 372-9500
if to Procor, to:
Procor Limited
2001 Speers Road
Oakville, Ontario
Canada L6J 5E1
Attention: Frank Lester, President
Facsimile: (905) 827-0800
Telephone: (905) 827-4111
with a copy to:
Neal, Gerber & Eisenberg
2 North LaSalle Street
Chicago, Illinois 60602
Attention: William M. Holzman, Esq.
Facsimile: (312) 269-1747
Telephone: (312) 269-8000
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<PAGE> 63
if to the Pass Through Trustee, to:
______________________________________________
______________________________________________
______________________________________________
______________________________________________
Attention: _____________________________________
Facsimile: _____________________________________
Telephone:____________________________________
(b) The Companies and the Pass Through Trustee, by notice to the
other parties, may designate additional or different addresses for subsequent
notices or communications.
(c) Any notice or communication to Certificateholders shall be mailed
by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar and to addresses filed with the Pass Through
Trustee for Certificate Owners. Failure so to mail a notice or communication
or any defect in such notice or communication shall not affect its sufficiency
with respect to other Certificateholders.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Companies mail a notice or communication to the
Certificateholders, it shall mail a copy to the Pass Through Trustee and to
each Paying Agent at the same time.
(f) Notwithstanding the foregoing, all communications or notices to
the Pass Through Trustee shall be deemed to be given only when received by a
Responsible Officer of the Pass Through Trustee.
(g) The Pass Through Trustee shall promptly furnish the Companies
with a copy of any demand, notice or written communication received by the Pass
Through Trustee hereunder from any Certificateholder, the Owner Trustee, any
Equipment Trust Trustee or the Indenture Trustee.
SECTION 13.4. Communication by Certificateholder with Other
Certificateholders. Certificateholders may communicate pursuant to Section
312(b) of the Trust Indenture Act with other Certificateholders with respect to
their rights under this Pass Through Trust Agreement or under the Certificates,
and the Pass Through Trustee shall comply with Section 312(b) of the Trust
Indenture Act. The Companies and the Pass Through Trustee shall have the
protection of Section 312(c) of the Trust Indenture Act.
SECTION 13.5. Governing Law. THIS PASS THROUGH TRUST AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
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<PAGE> 64
THE STATE OF ________ WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OF CONFLICT OF
LAW PROVISION OR RULE AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.6. Severability of Provisions. Whenever possible, each
provision of this Pass Through Trust Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Pass Through Trust 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 Pass Through Trust Agreement.
SECTION 13.7. Trust Indenture Act Controls. This Agreement is
subject to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions.
SECTION 13.8. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 13.9. Successors and Assigns. All covenants, agreements,
representations and warranties in this Pass Through Trust Agreement by the Pass
Through Trustee, the Companies shall bind and, to the extent permitted hereby,
shall inure to the benefit of and be enforceable by their respective successors
and assigns, whether so expressed or not.
SECTION 13.10. Benefits of Pass Through Trust Agreement. Nothing in
this Pass Through Trust Agreement or in the Certificates, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, and the Certificateholders, any benefit or any legal or equitable
right, remedy or claim under this Pass Through Trust Agreement.
SECTION 13.11. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate
shall not be a Business Day, then (notwithstanding any other provision of this
Pass Through Trust Agreement) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such Regular Distribution Date or Special Distribution Date, and no
interest shall accrue during the intervening period.
SECTION 13.12. Counterparts. For the purpose of facilitating the
execution of this Pass Through Trust Agreement and for other purposes, this
Pass Through Trust Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
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<PAGE> 65
IN WITNESS WHEREOF, Union, Procor and the Pass Through Trustee have
caused this Pass Through Trust Agreement to be duly executed by their
respective officers, duly attested, all on the day and year first above
written.
<TABLE>
<S> <C>
UNION TANK CAR COMPANY
Attest: By
-------------------------------------------------
Title:
- -----------------------------------
Title:
PROCOR LIMITED
Attest: By
-------------------------------------------------
Title:
- -----------------------------------
Title:
By
-------------------------------------------------
Title:
Attest:
- -----------------------------------
Title:
-------------------------------------------------,
as Pass Through Trustee
Attest: By
-------------------------------------------------
Title:
- -----------------------------------
Title:
</TABLE>
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<PAGE> 66
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to issuers or
their agent for registration of transfer, exchange or payment, and any
Certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
UNION TANK CAR COMPANY
PROCOR LIMITED
1996-A2 PASS THROUGH TRUST
Pass Through Certificate,
Series 1996-A2
Final Distribution Date: ________________
evidencing a fractional undivided interest in a trust, the
property of which includes certain equipment notes (the "Equipment
Notes") and Equipment Trust Certificates ("ETCs") each secured by
equipment leased to Union Tank Car Company or conditionally sold
to Procor Limited.
Certificate
No. ___ $ __________ Fractional Undivided Interest
representing 100% of the Trust
THIS CERTIFIES THAT Cede & Co., for value received, is the
registered owner of a $___________
(____________________________________________________________
___________________________________________________ dollars) Fractional
Undivided Interest in the Union Tank Car Company 1996-A2 Pass Through Trust
(the "Trust") created by _______________________________________, a national
banking association, as trustee (the "Pass Through Trustee"), pursuant to a
Pass Through Trust Agreement 1996-A2 dated May __, 1996 (the "Pass Through
Trust Agreement") among the Pass Through Trustee, Union Tank Car Company, a
Delaware corporation ("Union"), and Procor Limited, a Canadian corporation and
an indirect, wholly-owned subsidiary of Union ("Procor"), (Union and Procor are
referred to herein collectively as the "Companies"), a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Pass Through Trust Agreement. This
<PAGE> 67
Certificate is one of the duly authorized Certificates designated as "Pass
Through Certificates, Series 1996-A2" (herein called the "Certificates"). This
Certificate is issued under and is subject to the terms, provisions, and
conditions of the Pass Through Trust Agreement, to which Pass Through Trust
Agreement the Certificateholder of this Certificate by virtue of the acceptance
hereof assents and by which such Certificateholder is bound. The property of
the Pass Through Trust (the "Trust Property") includes certain Equipment Notes
and ETCs and rights under a Union guarantee of the due and punctual
distribution to Certificateholders of principal and interest payable with
respect to the Procor ETC. Each issue of Equipment Notes and ETCs is secured
by, among other things, a security interest in Equipment leased to Union or
conditionally sold to Procor, as the case may be.
Subject to and in accordance with the terms of the Pass Through Trust
Agreement, from funds then available to the Pass Through Trustee, there will be
distributed on _________ and _________ of each year (each a "Regular
Distribution Date"), commencing on _________, 1996, to the Person in whose name
this Certificate is registered at the close of business on the Business Day
preceding the Regular Distribution Date, an amount in respect of the Scheduled
Payments on the Equipment Notes and the ETCs due on such Regular Distribution
Date, the receipt of which has been confirmed by the Pass Through Trustee,
equal to the product of the percentage interest in the Pass Through Trust
evidenced by this Certificate and an amount equal to the sum of such Scheduled
Payments. Subject to and in accordance with the terms of the Pass Through
Trust Agreement, in the event that Special Payments on the Equipment Notes or
the ETCs are received by the Pass Through Trustee, from funds then available to
the Pass Through Trustee, there shall be distributed on the applicable Special
Distribution Date, to the Person in whose name this Certificate is registered
at the close of business on the Business Day preceding the Special Distribution
Date, an amount in respect of such Special Payments on the Equipment Notes or
the ETCs, the receipt of which has been confirmed by the Pass Through Trustee,
equal to the product of the percentage interest in the Pass Through Trust
evidenced by this Certificate and an amount equal to the sum of such Special
Payments so received. If a Regular Distribution Date or Special Distribution
Date is not a Business Day, distribution shall be made on the immediately
following Business Day with the same force and effect as if made on such
Regular Distribution Date or Special Distribution Date and no interest shall
accrue during the intervening period. The Special Distribution Date shall be
the second day of the month, or such other date, if any, determined as provided
in the Pass Through Trust Agreement. The Pass Through Trustee shall mail notice
of each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Pass Through
Trustee by wire transfer of funds to the Person entitled thereto, without the
presentation or surrender of this Certificate or the making of any notation
hereon, provided, however, that in the event Certificates are issued in the
form of Registered Certificates, distributions on this Certificate will be made
by check mailed to the Person entitled thereto. Except as otherwise provided
in the Pass Through Trust Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after notice mailed by the Pass
Through Trustee of the pendency of
A-2
<PAGE> 68
such distribution and only upon presentation and surrender of this Certificate
at the office or agency of the Pass Through Trustee specified in such notice.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF __________.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Pass Through Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pass Through Trust Agreement or be valid for
any purpose.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this
Certificate to be duly executed.
UNION TANK CAR COMPANY
1996-A2 PASS THROUGH TRUST
By: _______________________________________,
as Pass Through Trustee
By: _______________________________________
Title:
A-3
<PAGE> 69
[Reverse of Certificate]
The Certificates do not represent a direct obligation of, or an
obligation guaranteed by (except to the extent provided in the Pass Through
Trust Agreement), or an interest in Union, Procor, the Pass Through Trustee, in
its individual or trust capacities, any Owner Participant, any Owner Trustee in
its individual capacity, either Equipment Trust Trustee in its individual
capacity, or any affiliate of any thereof. The Certificates are limited in
right of payment, all as more specifically set forth on the face hereof and in
the Pass Through Trust Agreement. All payments or distributions made to
Certificateholders under the Pass Through Trust Agreement shall be made only
from the Trust Property and only to the extent that the Pass Through Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Pass Through Trust Agreement.
Each Certificateholder of this Certificate, by its acceptance hereof, agrees
that it will look solely to the income and proceeds from the Trust Property to
the extent available for distribution to such Certificateholder as provided in
the Pass Through Trust Agreement. This Certificate does not purport to
summarize the Pass Through Trust Agreement and reference is made to the Pass
Through Trust Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Pass Through Trust Agreement may be examined during normal business hours at
the principal office of the Pass Through Trustee, and at such other places, if
any, designated by the Pass Through Trustee, by any Certificateholder upon
request.
The Pass Through Trust Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification of the rights and
obligations of the Companies and the rights of the Certificateholders under the
Pass Through Trust Agreement at any time by the Companies and the Pass Through
Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Pass Through Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate
and of any Certificate issued upon the transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent is made upon this
Certificate. The Pass Through Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Pass Through Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Register upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Pass Through Trustee in its
capacity as Registrar, or by any successor Registrar, in the Borough of
Manhattan, the City of New York, duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Pass Through Trustee and the
Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing, and thereupon one or
more new Certificates of authorized denominations evidencing the same
A-4
<PAGE> 70
aggregate Fractional Undivided Interest in the Pass Through Trust will be
issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $1,000 and $1,000 integral multiples
thereof, except that one Certificate may be in a denomination of less than
$1,000. As provided in the Pass Through Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Pass Through Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee shall require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the Pass
Through Trustee or the Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Pass Through Trustee, the Registrar, nor any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Pass Through Trust
Agreement and the Pass Through Trust created thereby shall terminate upon the
distribution to Certificateholders of all amounts required to be distributed to
them pursuant to the Pass Through Trust Agreement and the disposition of all
property held as part of the Trust Property.
A-5
<PAGE> 71
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Certificates referred to in the
within-mentioned Pass Through Trust Agreement.
_______________________________________,
as Pass Through Trustee
By:
_________________________________________________________
Authorized Officer
A-6
<PAGE> 72
EXHIBIT B
GUARANTEE
Union Tank Car Company, a Delaware corporation ("Union"),
which term includes any successor or assign under the Pass Through Trust
Agreement 1996-A2, dated as of May __, 1996, among Union, Procor Limited, a
Canadian corporation ("Procor"), and _______________________________________,
as Pass Through Trustee, (the "Pass Through Trust Agreement"), has irrevocably
and unconditionally guaranteed the due and punctual distribution to
Certificateholders of principal and interest payable with respect to the Procor
ETC (as defined in the Pass Through Trust Agreement), whether at stated
maturity or otherwise, and certain other obligations of Procor as specified in
Article XII of the Pass Through Trust Agreement and has agreed to pay any and
all costs and expenses (including reasonable attorneys' fees) incurred by the
Pass Through Trustee or any Certificateholder in enforcing any rights under
this Guarantee.
The obligations of Union to the Certificateholders and to the
Pass Through Trustee pursuant to this Guarantee and the Pass Through Trust
Agreement are expressly set forth in Article XII of the Pass Through Trust
Agreement and reference is hereby made to such for the precise terms of this
Guarantee.
No stockholder, officer, director or incorporator, as such,
past, present or future of Union shall have any liability under this Guarantee
by reason of his or its status as such stockholder, officer, director or
incorporator.
This is a continuing Guarantee and shall remain in full force
and effect and shall be binding upon Union and its successors and assigns until
full and final payment of all of the guaranteed obligations under the Pass
Through Trust Agreement and shall inure to the benefit of the successors and
assigns of the Pass Through Trustee and the Certificateholders and, in the
event of any transfer or assignment of rights by any Certificateholder or the
Pass Through Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a Guarantee
of payment and not of collectibility.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Certificate upon which
this Guarantee is noted shall have been executed by the Pass Through Trustee
under the Pass Through Trust Agreement by the manual signature of one of its
authorized officers.
THE TERMS OF ARTICLE XII OF THE PASS THROUGH TRUST AGREEMENT
ARE INCORPORATED HEREIN BY REFERENCE.
<PAGE> 73
EXHIBIT C
FORM OF DTC
LETTER OF REPRESENTATIONS
<PAGE> 74
SCHEDULE I
<TABLE>
<S> <C> <C>
Equipment Notes
to be Issued under Principal
the Indenture: Amount Maturity
---------------------- ---------------- ---------------
On the Issuance Date $___________ _________
Subsequent to the ___________ _________
Issuance Date
Total $___________
</TABLE>
<PAGE> 75
SCHEDULE II
<TABLE>
<S> <C> <C>
ETCs
to be Issued under Principal
Equipment Trust Agreements Amount Maturity
-------------------------- ---------------- ---------------
Procor ETC, Series 26CAN ____________ _________
Union ETC, Series 26 ____________ _________
Total ____________
</TABLE>
<PAGE> 76
Reconciliation and tie between Pass Through Trust Agreement 1996-A2 dated May
__, 1996 and the Trust Indenture Act of 1939. This reconciliation does not
constitute part of the Pass Through Trust Agreement.
<TABLE>
<CAPTION>
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- ------------------- -------------------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2; 6.3 (a) & (b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.9; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9; 8.1; 8.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(d)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . 1.4(c)
(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(d)
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(a)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.13
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7
</TABLE>
<PAGE> 1
Exhibit 4(b)(1)
Participation Agreement
(UTC Trust No. 1995-A)
(L-14_)
Dated May __, 1996
among
Union Tank Car Company,
as Lessee
-------------------------------,
as Owner Trustee
-------------------------------,
as Owner Participant
--------------------------------,
as Indenture Trustee
and
--------------------------------,
as Pass Through Trustee
Covered Hoppers and Tank Cars
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
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................................................... 11
SECTION 3. REPRESENTATIONS AND WARRANTIES.............................................................. 13
Section 3.1. Representations and Warranties of the Owner Trustee............................. 13
Section 3.2. Representations and Warranties of the Lessee.................................... 15
Section 3.3. Representations and Warranties of the Indenture Trustee......................... 19
Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes ........................................ 20
Section 3.5. Representations and Warranties of the Pass Through Trustee ..................... 21
Section 3.6. Representations and Warranties of the Owner Participant......................... 22
Section 3.7. Opinion Acknowledgment.......................................................... 23
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................................................................. 28
Section 4.3. Additional Conditions Precedent to Investment by Owner
Participant..................................................................... 28
Section 4.4. Conditions Precedent to the Obligation of the Lessee............................ 29
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE................................................... 30
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES
AND THE LESSEE.............................................................................. 32
Section 6.1. Restrictions on Transfer of Beneficial Interest................................. 32
Section 6.2. Lessor's Liens Attributable to the Owner Participant............................ 34
Section 6.3. Lessor's Liens Attributable to the Owner Trustee................................ 35
Section 6.4. Liens Created by the Indenture Trustee and the Loan
Participant..................................................................... 35
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
Section 6.5. Covenants of the Owner Trustee, the Owner Participant and
the Indenture Trustee........................................................... 36
Section 6.6. Amendments to Operative Agreements.............................................. 36
Section 6.7. Covenant of the Lessee.......................................................... 36
Section 6.8. Merger Covenant................................................................. 37
Section 6.9. Lessee's Purchase in Certain Circumstances...................................... 37
Section 6.10. Owner Participant an Affiliate of Lessee........................................ 38
Section 6.11. Corporate Existence; Place of Business.......................................... 39
Section 6.12. No Impairment of Warranties..................................................... 39
SECTION 7. LESSEE'S INDEMNITIES........................................................................ 39
Section 7.1. General Tax Indemnity........................................................... 39
Section 7.2. General Indemnification and Waiver of Certain Claims............................ 46
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT........................................................... 50
SECTION 9. SUCCESSOR INDENTURE TRUSTEE................................................................. 50
SECTION 10. MISCELLANEOUS............................................................................... 51
Section 10.1. Consents........................................................................ 51
Section 10.2. Refinancing..................................................................... 51
Section 10.3. Amendments and Waivers.......................................................... 54
Section 10.4. Notices......................................................................... 54
Section 10.5. Survival........................................................................ 55
Section 10.6. No Guarantee of Debt............................................................ 55
Section 10.7. Successors and Assigns.......................................................... 55
Section 10.8. Business Day.................................................................... 56
Section 10.9. Governing Law................................................................... 56
Section 10.10. Severability.................................................................... 56
Section 10.11. Counterparts.................................................................... 56
Section 10.12. Headings and Table of Contents.................................................. 56
Section 10.13. Limitations of Liability........................................................ 56
Section 10.14. Maintenance of Non-Recourse Debt................................................ 57
Section 10.15. Ownership of and Rights in Units................................................ 57
</TABLE>
- ii -
<PAGE> 4
EXHIBITS
Exhibit A - Insurance
Exhibit B - Form of Guaranty
SCHEDULES
Schedule 1A - Description of Equipment and Equipment Cost (Initial Closing)
Schedule 1B - Description of Equipment and Equipment Cost (Subsequent Closing)
Schedule 2 - Payment Information for Participants
Schedule 3 - Schedule of Basic Rent Payments
Schedule 4 - Schedule of Stipulated Loss Value
Schedule 5 - Schedule of Termination Value
Schedule 6 - Terms of Equipment Notes
Schedule 7 - Early Purchase Information
Schedule 8 - Basic Term Purchase Information
Schedule 9 - Outside Date Purchase Information
- iii -
<PAGE> 5
PARTICIPATION AGREEMENT (UTC TRUST NO. 1996-A) (L-14_)
This Participation Agreement (UTC Trust No. 1996-A) (L-14_), dated May
__, 1996 (this "Agreement"), among (i) Union Tank Car Company, a Delaware
corporation (herein, together with its successors and assigns, called the
"Lessee"), (ii)___________________, a ______________________, not in its
individual capacity except as expressly stated herein, but solely as trustee
under the Trust Agreement (as hereinafter defined) (herein in such capacity,
together with its successors and assigns, called the "Owner Trustee"), (iii)
______________ , a (herein, together with its successors and assigns, called the
"Owner Participant"), (iv) _________________, a _____________________, as
trustee under the Indenture (as defined below) (herein in such capacity,
together with its successors and assigns, called the "Indenture Trustee"), and
(v) ___________________, a ___________________, not in its individual capacity
except as expressly provided herein 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, concurrently with the execution and delivery of this
Agreement, the Owner Participant has entered into the Trust Agreement (UTC Trust
No. 1996-A) (L-14_) pursuant to which the Owner Trustee agrees, 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 the Units of Equipment described in Schedules 1A and 1B
hereto from the Lessee and concurrently with such purchases to lease such Units
of Equipment to the Lessee;
WHEREAS, pursuant to the Pass Through Trust Agreement, on the Initial
Closing Date, a grantor trust will be created to facilitate the financing
contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee has entered into the Indenture with the Indenture
Trustee pursuant to which Indenture the Owner Trustee agrees, 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 Bill 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 set forth therein, the
Owner Trustee agrees to lease to the Lessee, and the Lessee agrees to lease
- 1 -
<PAGE> 6
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, concurrently with the execution and delivery of this
Agreement, the Lessee and the Owner Participant have entered 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 Schedule 1A as hereinafter provided, and (ii) on the Subsequent Closing Date,
the Units described in Schedule 1B as hereinafter provided, and in connection
therewith, the Owner Trustee agrees to pay to the Lessee the cost for each of
the various Units as specified in Schedules 1A and 1B; provided, however, that
(i) 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, and (ii) the aggregate Equipment Cost for all Units
of Equipment purchased on the Subsequent Closing Date shall not exceed
$____________. 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
- 2 -
<PAGE> 7
Initial Closing Date shall occur on or prior to [MAY 31, 1996] and the
Subsequent Closing Date shall occur on or prior to [JUNE 30, 1996]. 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 shall not exceed $__________. 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 such 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
$__________. The Equipment Notes shall bear interest at the rates set forth on
Schedule 6.
(c) Interim Interest Payment. On each of __________, 1996 and the Basic
Term Commencement 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
__________, 1996 and the Basic Term Commencement Date, as the case may be, 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
- 3 -
<PAGE> 8
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.
Section 2.3. Closing Dates; Procedure for Participation.
(a) Notice of Initial Closing Date. Not later than the Pricing 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 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, New York 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 ___________________, ABA No. _____________, Corporate Trust
Clearing Account No. __________, for credit to trust number ______________,
Attention: _________________ UTC Trust No. 1996-A (L-14_). 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 Neal, Gerber &
Eisenberg, Two North LaSalle Street, Chicago, Illinois 60602 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 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
- 4 -
<PAGE> 9
Owner Trustee of a Lease Supplement covering the Equipment so delivered as
described in Schedule 1A, (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(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 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 __, 1996 unless another date is specified in the Notice of Delivery) at the
offices of Neal, Gerber & Eisenberg, Two North LaSalle Street, Chicago, Illinois
60602 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 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 a Lease Supplement covering
- 5 -
<PAGE> 10
the Equipment so delivered as described in Schedule 1B, (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
Section 2.1 of 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.
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 preliminary prospectus, the final
prospectus 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 reasonable fees of __________, special counsel for the
Owner Participant, in the amount of (or if Section 2.5(c) applies, not
to exceed) $________, plus reasonable disbursements, for their services
rendered in connection with
- 6 -
<PAGE> 11
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
Mayer, Brown & Platt 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 reasonable fees and expenses of Mayer, Brown & Platt,
special counsel for the Underwriters, in an amount not to exceed
$_______, for their services rendered in connection with the
preparation of documentation, negotiation, execution and delivery of
the preliminary prospectus, the final prospectus, the Underwriting
Agreement, this Agreement and the Operative Agreements related hereto;
(vi) the reasonable fees and expenses of Hogan & Hartson,
special regulatory counsel, and Osler Hoskin & Harcourt, special
Canadian counsel, for the Owner Participant and the Indenture Trustee;
(vii) the reasonable fees and expenses of , 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;
(viii) the commissions payable to the Underwriters 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 reasonable fees and expenses of R.L. Banks &
Associates, Inc. for their services rendered in connection with
delivering the Appraisal required by Section 4.3(a); and
(xii) 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
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<PAGE> 12
(other than those expressly referred to above), such as travel expenses,
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 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 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 and the expenses of its counsel 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.
(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
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<PAGE> 13
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 May __, 1996 or the Subsequent Closing Date is other
than June __, 1996 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 1.2% of the Total Equipment Cost or (C) a refinancing contemplated or
required by Section 10.2 occurs, (D) the Equipment made subject to the Lease on
the Subsequent Closing Date is other than as described in Schedule 1B or (E)
subsequent to the Initial Closing Date but prior to the acceptance of the Units
to be delivered on the 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, 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 and Basic Term Purchase Price,
(i) to preserve the Net Economic Return that the Owner Participant would have
realized had the Initial Closing Date been May __, 1996 or the Subsequent
Closing Date been June __, 1996, had the Transaction Costs equaled 1.2% of the
Total Equipment Cost, had the Equipment made subject to the Lease on the
Subsequent Closing Date been as so described, or had such refinancing or Change
in Tax Law not occurred 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, and any such recalculation performed due to a
Change in Tax Law shall be made only in respect of Units delivered on the
Subsequent Closing Date. Any such recalculation performed due to the occurrence
of an event described in clause (A) or (B) 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 and Basic Term Purchase Price with respect to the Basic Term
initially set forth in Schedules 3, 4, 5, 7 and 8 to this Participation
Agreement (other than those assumptions changed as a result of any of the events
described in clauses (A) through (D) 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),
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<PAGE> 14
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 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 and Basic Term Purchase Price with respect to the Basic Term as
are then set forth in Schedules 3, 4, 5, 7 and 8 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 or
Basic Term 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 and Basic Term
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 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 and Basic Term 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 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
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<PAGE> 15
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 (except
for the prepayment of principal required to be made on the Mandatory Refinancing
Date) 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.
(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.
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 May 31, 1996 in
the case of the Initial Closing Date and June 30, 1996 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
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<PAGE> 16
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 funds are returned after 1:00 p.m. (New York City
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. (New York City 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. New York City 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 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. (New York City
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<PAGE> 17
time) on May 31, 1996 in respect of the Units to be delivered on the Initial
Closing Date or June 30, 1996 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 Owner Trustee. The
Owner Trustee, 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 by the Owner Trustee solely in its individual
capacity and (y) the representations and warranties in Sections 3.1(c) and
3.1(k) are made by the Owner Trustee solely in its capacity as such), represents
and warrants to the Owner Participant, each of the other Trustees and the
Lessee, notwithstanding the provisions of Section 10.13 or any similar provision
in any other Operative Agreement, that, as of the date hereof:
(a) the Owner Trustee (i) is a ___________________ duly organized and
validly existing in good standing under the laws of ________________, (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 Owner Trustee, 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, 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 Owner Trustee, 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 Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of the Owner
Trustee Agreements or the Equipment Notes, nor the consummation by the Owner
Trustee, in its individual capacity or as 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 as Owner Trustee, as the case
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<PAGE> 18
may be, with any of the terms and provisions hereof and thereof, (i) requires or
will require any approval of its stockholders, or approval or consent of any
trustees or holders of any indebtedness or obligations of it in its individual
capacity, or (ii) violates or will violate its 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 Owner Trustee 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, or contravenes or will contravene any law,
governmental rule or regulation of the United States of America or Massachusetts
governing the banking or trust powers of the Owner Trustee, or any judgment or
order applicable to or binding on it;
(e) there are no Taxes payable by the Owner Trustee, either in its
individual capacity or as Owner Trustee, imposed by Massachusetts or any
political subdivision thereof or by the United States of America in connection
with the execution and delivery by the Owner Trustee 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 Owner Trustee in its individual capacity is a
trust company with its principal place of business in Massachusetts and performs
certain of its duties as Owner Trustee in Massachusetts; and there are no Taxes
payable by the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, imposed by Massachusetts 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 Owner Trustee in its
individual capacity is a trust company with its principal place of business in
Massachusetts and performs certain of its duties as Owner Trustee in
Massachusetts;
(f) there are no pending or, to its knowledge, threatened actions or
proceedings against the Owner Trustee, 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 Owner Trustee, 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 Owner Trustee, 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 Owner Trustee, in its individual
capacity or as Owner Trustee, to perform its obligations under the Owner Trustee
Agreements;
(g) both its chief executive office and the place where its records
concerning the Equipment and all its interest in, to and under all documents
relating to the Trust Estate, are located at , and the Owner Trustee, in its
individual capacity, agrees to give the Owner Participant, the Indenture Trustee
and the Lessee
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<PAGE> 19
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
_________________ or local governmental authority or agency or any United States
federal governmental authority or agency regulating the banking or trust powers
of the Owner Trustee, in its individual capacity, is required for the execution
and delivery of, or the carrying out by, the Owner Trustee 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 any Liens attributable to the Owner Trustee
in its individual capacity except Liens created by 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 Article IV 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 Trustees 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,
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<PAGE> 20
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;
(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, 1995, 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. The unaudited consolidated balance sheets
and consolidated statements of income and retained earnings and cash flows of
the Lessee as of and for the three-month period ended March 31, 1996, fairly
present, in conformity with generally accepted accounting principles
consistently applied (except for the absence of footnotes in the March 31, 1996
financial statements), 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, subject to normal year-end adjustments. Since March 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
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<PAGE> 21
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 ___ U.S.C. Section _____
and deposited with the Registrar General of Canada pursuant to Section 90 of
the Railway Act of Canada and such filing with the STB pursuant to ____ U.S.C.
Section _____ and such deposit with 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 Documents, 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 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;
(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 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)
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<PAGE> 22
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 Bill 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 or any
written statement furnished by the Lessee or on behalf of the Lessee in
connection with the negotiation of the Lease or any other Operative Agreement,
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 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;
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<PAGE> 23
(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 Salomon
Brothers Inc and commissions payable to the Underwriters, 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.
Section 3.3. Representations and Warranties of the Indenture Trustee.
The Indenture Trustee represents and warrants to the Owner Participant, the
Owner Trustee and the Lessee that, as of the date hereof:
(a) the Indenture Trustee is a ____________________________ duly
organized and validly existing and in good standing under the laws of
_____________________________ and has the full corporate power, authority and
legal right under the laws of _________________ 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 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,
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<PAGE> 24
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.
Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes.
(a) The Owner Trustee represents and warrants to the Lessee, each of
the other Trustees 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 Trustees 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 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
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<PAGE> 25
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 other Trustees, and the Lessee that, as of the date hereof:
(a) the Pass Through Trustee is a ___________________________ duly
organized and validly existing in good standing under the laws of
___________________________, and has the full corporate power, authority and
legal right under the laws of __________________________ 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;
(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 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
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<PAGE> 26
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 Underwriters 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
(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 Trustees 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 ______________ 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
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<PAGE> 27
obtained of any trustee or holders of indebtedness or obligations of the Owner
Participant, have been 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;
(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
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<PAGE> 28
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. On or before the Initial Closing
Date, this Agreement, the Trust Agreement, the Lease, the Lease Supplements in
respect of the Units delivered on the Initial Closing Date, the Indenture, the
Indenture Supplements in respect of the Units delivered on the Initial Closing
Date, the Equipment Notes in respect of the Units delivered on the Initial
Closing Date and the Pass Through Trust Agreement, and on or before the
Subsequent Closing Date, the Lease Supplements, 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 Supplements in respect of the
Units delivered on the Initial Closing Date, the Indenture and the Indenture
Supplements 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
Supplements and the Indenture Supplements in respect of Units delivered on the
Subsequent Closing Date to be duly filed, recorded and deposited with the STB in
conformity with ___ U.S.C. Section ______ and with the Registrar General of
Canada pursuant to Section 90 of the Railway Act of Canada 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 90 within 21 days of such
Closing Date, 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 Supplements in respect of the Units delivered on the Initial
Closing Date, the Indenture and the Indenture Supplements 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 Supplements and the Indenture Supplements in respect of the Units
delivered on the Subsequent Closing Date, to be deposited
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<PAGE> 29
in the appropriate offices in the Canadian provinces of Ontario, Manitoba,
Saskatchewan, Alberta, British Columbia, Quebec and New Brunswick.
(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
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 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 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 Bill 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
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<PAGE> 30
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 Indenture Trustee and each Participant shall
have received (x) any certificate relating to insurance that is required
pursuant to Section 12 of 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 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
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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, 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
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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 Initial Closing Date,
the Registration Statement shall have become effective under the Securities Act;
if filing of the final prospectus, or any supplement thereto is required
pursuant to Rule 424(b) as promulgated pursuant to the Securities Act, the final
prospectus and any 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.
(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.
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 R.L. Banks & Associates, Inc., satisfactory in form
and substance to the Owner Participant, concluding that: (i) the fair market
value of the Equipment being delivered on the Initial Closing Date or the
Subsequent Closing Date, as the case may be, is equal to the Total Equipment
Cost with respect to such Equipment; (ii) the Basic Rents for the Basic Term are
fair market rents; (iii) at the expiration of the Basic Term, (A) the remaining
economic life of such Equipment will be at least equal to 20% of the economic
life of such Equipment 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, it is reasonable to expect that such Equipment will have a fair market
value of at least 20% of the
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Total Equipment Cost with respect to such Equipment; (iv) as of the Early
Purchase Date, the estimated fair market value of such Equipment, taking into
account 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; (v) as of the end of the Basic Term, the estimated fair market
value of such Equipment, taking into account 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; (vi) as of the Outside
Date, the estimated fair market value of such Equipment, taking into account
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, (vii) such Equipment is not Limited Use Property and (viii) Basic Rents
from the Early Purchase Date to the end of the Basic Term are fair market rents;
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 _____________ 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.
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.
(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
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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 nor shall a judicial opinion on a
tax issue have been rendered 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 Blended Weighted Average 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 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:
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(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;
(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.
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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 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 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;
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(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 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 7.2 or under the Tax Indemnity Agreement;
(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;
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(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 Interest in violation of this Section 6.1 shall be
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
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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
Owner Trustee, in its individual capacity, hereby unconditionally agrees with
and for the benefit of the other parties to this Agreement that the Owner
Trustee 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 Owner Trustee in its
individual capacity, and the Owner Trustee 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
Owner Trustee 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 Owner
Trustee 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 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 failure
of the Indenture Trustee to take any action it is expressly required to perform
by, 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.
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(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 Owner Trustee 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.
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
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Closing Date and the Subsequent Closing Date a Bill 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.
Section 6.9. Lessee's Purchase in Certain Circumstances. If an Owner
Participant, any subsequent transferee or any Affiliate thereof 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 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
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after receipt by the Lessee of written notice from the Owner Participant or any
subsequent 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 none of any Owner
Participant or any subsequent 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 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, 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 related
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 bill of sale transferring and assigning
to the Lessee all 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
9.05 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.
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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 Owner Trustee both
in its individual capacity and as 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, provided, however, that no such
additional amounts shall be paid by the Lessee and the Lessee assumes no
responsibility regarding any withholdings imposed by reason of any transfer of
the Equipment or any interest in the Operative Agreements by the Lessor or the
Owner Participant other than any Transfer which occurs during the continuance of
a Lease Default or Lease Event of Default. 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 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 the Lessee actually receives such payment. Subject to the exclusions
stated in subsection (c) below, 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
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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, return, 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; and
(v) the Operative Agreements or otherwise in connection with the
transactions contemplated thereby.
(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 (unless such Tax
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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) and other leasing transactions between the Lessee (or
its Affiliates) and the Owner Participant (or its Affiliates) or the
Lessee making payment from or performing other actions in such
jurisdiction)), provided, however, that for purposes of this clause
(B), the determination of (y) whether any Tax Indemnitee is treated as
being incorporated or having its principal place of business in any
state or local tax jurisdiction under this clause (B), or (z) 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 state or
local jurisdiction, respectively, with one or more Affiliates which are
also Tax Indemnitees, (C) 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 except to the
extent such Income Taxes would not have been imposed by such
jurisdiction but for the use, location, operation, presence or
registration of any Unit or part thereof in such jurisdiction or the
activities of the Lessee or any of its Affiliates in such jurisdiction
or the making of any payments from such jurisdiction by or on behalf of
the Lessee pursuant to the Operative Agreements or (D) any government
or jurisdiction described in (A), (B) or (C) 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, 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 a sale, assignment, transfer or other disposition (whether
voluntary or involuntary) 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 other
than as a result of the 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,
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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; and
(vii) Taxes imposed on the Owner Trustee based on the Owner
Trustee's fee for services under the Trust Agreement.
(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 to the Owner Participant, and Section 6.3,
with respect to the Owner Trustee, the Owner Participant and the Owner Trustee
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;
provided, however, that in no event shall the aggregate amount paid by
any Tax Indemnitee to the Lessee with respect to any realized Tax
benefit exceed the aggregate amount previously advanced by the Lessee
with respect to such Taxes but provided, further, that such excess
shall be carried forward to reduce or offset any future obligations of
the Lessee to such Tax Indemnitee under this Section 7.1.
(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.
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(iii) 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. 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 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 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 material 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 in
either the
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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
(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
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 tax counsel (which may, in the case of Taxes imposed by a taxing
authority located in the United States, include in-house counsel of the Lessee)
selected by the Lessee and satisfactory to the Tax Indemnitee 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 penalties or substantial 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; and
(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
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no after-tax cost to such Tax Indemnitee). 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.
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 (i) any failure
by the Lessee to consider any issue or dispute of the Tax Indemnitee not
directly related to the claim giving rise to the contest rights in issue or (ii)
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.
(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.
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(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 Owner Trustee (both in its
individual capacity and as Owner Trustee), the Indenture Trustee and the Pass
Through Trustee, and each of their respective directors, officers, employees,
successors and permitted assigns, agents and servants, the Trust Estate and the
Indenture Estate (the respective directors, officers, employees, successors and
permitted assigns, agents and servants of the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee, as applicable,
together with the Owner Participant, 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 Owner Trustee and the Pass Through Trustee,
respectively).
(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
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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
ownership, lease, operation, possession, modification, improvement,
abandonment, use, non-use, maintenance, sublease, substitution,
control, repair, storage, alteration, transfer 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 or delivery of any Equipment Notes or Pass
Through Certificates or any interest in the Trust Estate;
(v) any violation of law, rule, regulation or order by the
Lessee or any sublessee or their respective directors, officers,
employees, agents or servants; and
(vi) any transfer 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:
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<PAGE> 52
(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 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 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
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<PAGE> 53
(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 6.2, inspection or
restenciling under Section 6.3 or inspection under Section 13.2 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 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 or (5) such claim or liability involves the possibility of criminal
sanctions or liability to such Indemnified Person. In the circumstances
described in clauses (1) - (5), the Indemnified Person shall be entitled to
control and assume responsibility for the defense of such claim or liability at
the expense of the Lessee. In addition, any Indemnified Person may participate
in any proceeding controlled by the Lessee pursuant to this Section 7.2, 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
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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 with
respect to the transaction or event giving rise to such Claim. So long as 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 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.
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.
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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 be in existence, 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. To the extent that an optional prepayment of all of
the Equipment Notes has not theretofore been effected and that the Equipment
Notes remain subject to prepayment pursuant to Section 2.10(f) of the Indenture,
the Lessee shall arrange for prepayment of all then outstanding Equipment Notes
on the Mandatory Refinancing Date as part of a refinancing. In the event that
after exercising commercially reasonable efforts, the Lessee is unable to effect
the refinancing required to occur on the Mandatory Refinancing Date, the Lessee
may provide its own funds for such refinancing on substantially the same terms
and conditions provided in the Indenture (excluding the provisions of Section
2.10(f) thereof and with such modifications as are requested by the Owner
Participant to take into account the common identity of the Lessee and the
holder of the refinancing debt). 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
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portion of the next succeeding installment of Basic Rent as shall equal the
aggregate interest accrued on the Equipment Notes outstanding to the Refunding
Date, (ii) Basic Rent payable in respect of the period from and after the
Refunding Date shall be recalculated to preserve the Net Economic Return which
the Owner Participant would have realized had such refunding not occurred,
provided that the net present value of Basic Rent shall be minimized to the
extent consistent therewith, and (iii) 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
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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
(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 Neal, Gerber &
Eisenberg or other independent tax counsel reasonably acceptable to the Owner
Participant to the effect that the Owner Participant would have a reasonable
basis within the meaning of Section 6662(d)(2)(B)(ii) of the Code not to report
any adverse federal income tax consequences 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 reasonable basis 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 risk (including tax
risk) to which it is not exposed prior to such refunding or refinancing.
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Section 10.3. Amendments and Waivers. Except as otherwise provided in
the Indenture, no term, covenant, agreement or condition of this Agreement may
be terminated, amended or compliance therewith waived (either generally or in a
particular instance, retroactively or prospectively) except by an instrument or
instruments in writing executed by each party against which enforcement of the
termination, amendment or waiver is sought.
Section 10.4. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by facsimile, and any such notice shall become
effective (i) upon personal delivery thereof, including, without limitation, by
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
225 West Washington Street, 19th Floor
Chicago, Illinois 60606
Attention: Treasurer
(UTC Trust No. 1996-A)
Facsimile: (312) 845-5305
Confirmation No.: (312) 372-9500
If to the Owner Trustee:
___________________________________
___________________________________
___________________________________
Attention: _______________________
Facsimile: _______________________
Confirmation No.: _________________
with a copy to:
the Owner Participant at the
address set forth below
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<PAGE> 59
If to the Owner Participant:
___________________________________
___________________________________
___________________________________
Attention: _______________________
Facsimile: _______________________
Confirmation No.: ________________
If to the Indenture Trustee or the Pass Through Trustee:
___________________________________
___________________________________
___________________________________
Attention: _______________________
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, the Trust Indenture, the Trust Agreement, the Pass Through Trust
Agreement or the Tax Indemnity Agreement or in any certificate or other
statement delivered by the Lessee in connection with the transactions
contemplated hereby shall be deemed to be (i) a guarantee by the Lessee 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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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
____________ 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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<PAGE> 61
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 Owner Trustee shall not be liable in its individual
capacity for any breach thereof, except for its gross negligence or willful
misconduct, or for breach of its covenants, representations and warranties
contained herein, except to the extent covenanted or made in its individual
capacity; provided, however, that nothing in this Section 10.13(b) shall be
construed to limit in scope or substance those representations and warranties of
the Owner Trustee made expressly in its individual capacity set forth herein.
The term "Owner Trustee" as used in this Agreement shall include any successor
trustee under the Trust Agreement, or the Owner Participant if the trust created
thereby is revoked.
Section 10.14. Maintenance of Non-Recourse Debt. The parties hereto
agree that if the Owner Trustee becomes a debtor subject to the reorganization
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code") or any successor provision, the parties hereto will make an
election under 1111(b)(1)(A)(i) of the Bankruptcy Code. If (a) the Owner
Trustee becomes a debtor subject to the reorganization provisions of the
Bankruptcy Code or any successor provision, (b) pursuant to such reorganization
provisions the Owner Trustee is required, by reason of the Owner Trustee being
held to have recourse liability to the Pass Through Trustee or the Indenture
Trustee, directly or indirectly, to make payment on account of any amount
payable under the Equipment Notes or any of the other Operative 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 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 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 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.
* * * * *
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<PAGE> 62
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:________________________________________________________
Name:
Title:
Owner Trustee:
__________________________________________, not in
its individual capacity except as expressly provided herein
but solely as Owner Trustee
By:________________________________________________________
Name:
Title:
Owner Participant:
___________________________________________________________
By:________________________________________________________
Name:
Title:
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<PAGE> 63
Indenture Trustee:
_______________________________________, not in its
individual capacity except as expressly provided herein but
solely as Indenture Trustee
By:________________________________________________________
Name:
Title:
Pass Through Trustee:
________________________________________, not in its
individual capacity except as expressly provided herein but
solely as Pass Through Trustee
By:________________________________________________________
Name:
Title:
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<PAGE> 64
EXHIBIT A
CERTIFICATE OF INSURANCE BROKER CONFIRMING INSURANCE COVERAGE
_________________________________________,
individually and as Pass Through Trustee
_________________________________________,
individually and as Indenture Trustee
_________________________________________,
individually and as Owner Trustee
_________________________________________,
as Owner Participant
Re: Union Tank Car Company Equipment Lease Agreement (L-14_)
with _______________________________________
Gentlemen:
We hereby certify that the Lessee is insured under various policies, effective
January 1, 1996 to January 1, 1997, 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
Appendix "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
Appendix "B".
We hereby agree on each of the times specified in Section 12.4 of the Lease to
issue a certificate (1) describing in reasonable detail the insurance carried by
the Lessee relating to the Equipment and (2) confirming 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]
A-1
<PAGE> 65
APPENDIX "A"
UNION TANK CAR COMPANY
PRIMARY AND EXCESS LIABILITY PROGRAM
JANUARY 1, 1996 TO JANUARY 1, 1997
[TO BE UPDATED, AS NECESSARY]
COMMERCIAL GENERAL LIABILITY - OCCURRENCE BASIS
National Union Fire Insurance Company CGI
Policy #RMGL 3195289 $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
Pollution Liability Coverage
$5,000,000 per occurrence
and in the aggregate
EXCESS LIABILITY - REPORTED OCCURRENCE BASIS
American Excess Insurance Association $75,000,000 Each Loss and
Policy #HR000075694 Aggregate, Excess of
$25,000,000 Each Loss
<PAGE> 66
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, except the AEIA policy provides as follows:
Subject to a minimum $25 million self-insured
retention for each occurrence provided for in the
American Excess Insurance Association Policy, the
insurance maintained by Union Tank Car
<PAGE> 67
Company shall be primary without right of
contribution from any other insurance carried by or
on behalf of any Additional Insured or any Covered
Person,
The following extension has been requested from the underwriters, but unless
otherwise noted, has not as yet been granted:
(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).
<PAGE> 68
EXHIBIT B
FORM OF GUARANTY
[Name of Guarantor]
Dated as of ___________, 19____
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.
1996-A) (L-14_) dated May __, 1996 (as amended, modified or supplemented from
time to time, the "Participation Agreement"), among Union Tank Car Company, as
Lessee; ______________, as Owner Trustee; ______________, as Owner Participant;
and ________________, 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
B-1
<PAGE> 69
of the Guarantor pursuant to any requirement of law or contractual obligation of
the Guarantor 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 $75,000,000, 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
<PAGE> 70
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 New York.
(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
<PAGE> 71
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 $75,000,000 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
<PAGE> 72
SCHEDULE A
TO EXHIBIT B
Union Tank Car Company
___________________________________, in its individual
capacity and as Owner Trustee
__________________________________, as Indenture Trustee and as Pass Through
Trustee
B-5
<PAGE> 73
Schedule 1A
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (INITIAL CLOSING)
See attached.
B-6
<PAGE> 74
Schedule 1B
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (SUBSEQUENT CLOSING)
See attached.
B-7
<PAGE> 75
Schedule 2
Participation Agreement
PAYMENT INFORMATION FOR PARTICIPANTS
Participant's
Commitment
Percentage
B-8
<PAGE> 76
Schedule 3
Participation Agreement
SCHEDULE OF BASIC RENT PAYMENTS
B-9
<PAGE> 77
Schedule 4
Participation Agreement
SCHEDULE OF STIPULATED LOSS VALUE
The Stipulated Loss Value for a Unit of Equipment 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.
B-10
<PAGE> 78
Schedule 5
Participation Agreement
SCHEDULE OF TERMINATION VALUE
The Termination Value for a Unit of Equipment under Lease Supplement
No. 1 as of each Rent Payment Date and Determination Date from and after
_______________ shall be an amount equal to the percentage of the Equipment Cost
for such Unit set opposite such date in this schedule.
B-11
<PAGE> 79
Schedule 6
Participation Agreement
TERMS OF EQUIPMENT NOTES
Note Principal Amount Interest Rate Final Maturity
Amortization Schedule
B-12
<PAGE> 80
Schedule 7
Participation Agreement
EARLY PURCHASE INFORMATION
B-13
<PAGE> 81
Schedule 8
Participation Agreement
BASIC TERM PURCHASE INFORMATION
B-14
<PAGE> 82
Date of Termination
Termination Value (%)
B-15
<PAGE> 83
Schedule 9
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION
B-16
<PAGE> 84
Appendix A
Equipment Lease Agreement
Trust Indenture and Security Agreement
Participation Agreement
Trust Agreement
DEFINITIONS
General Provisions
The following terms shall have the following meanings for all purposes
of the Operative Agreements referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require and such
meanings shall be equally applicable to both the singular and the plural forms
of the terms herein defined. In the case of any conflict between the provisions
of this Appendix A and the provisions of the main body of any Operative
Agreement, the provisions of the main body of such Operative Agreement shall
control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as the same may be amended,
supplemented and otherwise modified from time to time, and (ii) references to
parties to agreements shall be deemed to include the permitted successors and
assigns of such parties.
Defined Terms
"AAR" shall mean the American Association of Railroads or any successor
thereto.
"Advance" shall have the meaning specified in Section 3.5 of the Lease.
"Affiliate" of any Person shall mean any other Person which directly or
indirectly controls, or is controlled by, or is under a common control with,
such Person. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"After-Tax Basis" shall mean, with respect to any payment received or
accrued by any Person, that the amount of such payment is supplemented by a
further payment or payments so that the sum of all such payments, after
reduction for all Taxes payable by such Person imposed by any taxing authority,
shall be equal to the payment due to such Person.
"Alternative Minimum Tax" shall mean the alternative minimum tax
imposed under Section 55 of the Code.
"Appraisal" shall have the meaning specified in Section 4.3(a) of the
Participation Agreement.
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<PAGE> 85
"Average Life Date" shall mean, with respect to an Equipment Note, the
date which follows the prepayment date or, in the case of an Equipment Note not
being prepaid, the date of such determination, by a period equal to the
Remaining Weighted Average Life of such Equipment Note.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act of
1978, as amended from time to time, 11 U.S.C. ss.101 et. seq.
"Basic Rent" shall mean, with respect to any Unit, all rent payable by
the Lessee to the Lessor pursuant to Section 3.2 of the Lease for the Basic Term
for such Unit, and all rent payable pursuant to Section 22.4 of the Lease for
any Renewal Term for such Unit.
"Basic Term" shall have the meaning specified in Section 3.1 of the
Lease.
"Basic Term Commencement Date" shall mean _________, 199_.
"Basic Term Expiration Date" shall mean _________, 20__.
"Basic Term Purchase Price" shall mean, with respect to any Unit, the
amount equal to the product of the percentage set forth in Schedule 8 to the
Participation Agreement and the Equipment Cost for such Unit.
"Beneficial Interest" shall mean the interest of the Owner Participant
under the Trust Agreement.
"Bill of Sale" shall mean the full warranty bill or bills of sale,
dated the Initial Closing Date or the Subsequent Closing Date, as the case may
be, or the date that any Replacement Unit is subjected to the Lease, from Lessee
to Owner Trustee covering the Units delivered on the Initial Closing Date or the
Subsequent Closing Date or such Replacement Unit, as the case may be.
"Blended Weighted Average Debt Rate" shall mean ____% per annum.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in New York, New York, Chicago,
Illinois, the city and state in which the principal corporate trust office of
the Owner Trustee is located, or, until the Lien of the Indenture has been
discharged, the city and state in which the principal corporate trust office of
the Indenture Trustee is located.
"Certificateholder" means the Person in whose name a Pass Through
Certificate is registered in the register for Pass Through Certificates of a
particular series.
"Change in Tax Law" shall mean an amendment, modification, addition or
change in or to any provision of the Code, any regulation thereunder (whether
proposed, temporary or final), or any Revenue Ruling, Revenue Procedure or other
published administrative determination, in each case, enacted, issued or
promulgated after the Initial Closing Date and on or prior to the Subsequent
Closing Date.
"Claims" shall have the meaning specified in Section 7.2 of the
Participation Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
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<PAGE> 86
"Commitment" with respect to the Owner Participant, shall have the
meaning specified in Section 2.2(a) to the Participation Agreement and with
respect to the Loan Participant, shall have the meaning specified in Section
2.2(b) to the Participation Agreement.
"Debt Rate" shall mean as of the date of determination, a rate equal to
the rate of interest per annum borne by the Equipment Notes then outstanding
(computed on the basis of a 360-day year of twelve 30-day months).
"Deferred Portion" shall mean that portion of the Early Purchase Price,
the payment of which may be deferred by the Lessee, as set forth in Schedule 7
to the Participation Agreement.
"Determination Date" shall mean the second day of any specified
calendar month.
"Early Purchase Date" shall mean the date specified on Schedule 7 to
the Participation Agreement.
"Early Purchase Price" shall mean, with respect to any Unit, the amount
equal to the product of the percentage set forth in Schedule 7 to the
Participation Agreement and the Equipment Cost for such Unit.
"Equipment" shall mean collectively those items of railroad rolling
stock described in the Lease Supplements and the Indenture Supplements, together
with any and all accessions, additions, improvements and replacements from time
to time incorporated or installed in any item thereof which are the property of
the Owner Trustee pursuant to the terms of a Bill of Sale or the Lease, and
"Unit" shall mean individually the various items thereof.
"Equipment Cost" shall mean, for each Unit, the purchase price therefor
paid by the Owner Trustee to the Lessee pursuant to Section 2 of the
Participation Agreement and as set forth in Schedule 1A or 1B to the
Participation Agreement with respect to such Unit.
"Equipment Group" shall mean each of the three groups of Equipment so
designated in Schedule 1A or 1B to the Participation Agreement.
"Equipment Notes" shall mean the Equipment Notes, each to be
substantially in the form therefor set forth in Section 2.01 of the Indenture,
issued by the Owner Trustee pursuant to Section 2.02 of the Indenture, and
authenticated by the Indenture Trustee, in principal amounts and bearing
interest at the rates and payable as provided in Section 2.02 of the Indenture
and secured as provided in the Granting Clause of the Indenture, and shall
include any Equipment Notes issued in exchange therefor or replacement thereof
pursuant to Section 2.07 or 2.08 of the Indenture.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor law.
"Event of Loss" shall have the meaning specified in Section 11.1 of the
Lease.
"Excepted Property" shall mean (i) all indemnity payments (including,
without limitation, payments pursuant to Section 7 of the Participation
Agreement and payments under the Tax Indemnity Agreement (including that portion
of any increase in any payment of Basic Rent, Stipulated Loss Value, Termination
Value or any fixed purchase price payable for any Unit, which increase is solely
attributable
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<PAGE> 87
to the upward adjustment to such payment price pursuant to Section 5(a)(3)(B) of
the Tax Indemnity Agreement)) to which the Owner Participant, the Owner Trustee,
as trustee or in its individual capacity, or any of their respective successors,
permitted assigns, directors, officers, employees, servants and agents is
entitled pursuant to the Operative Agreements, (ii) any right, title or interest
of the Owner Trustee, as trustee or in its individual capacity, or the Owner
Participant to any payment which by the terms of Section 17 of the Lease or any
corresponding payment under Section 3.3 of the Lease shall be payable to or on
behalf of the Owner Trustee, as trustee or in its individual capacity, or to the
Owner Participant, as the case may be, (iii) any insurance proceeds payable
under insurance maintained by the Owner Trustee, as trustee or in its individual
capacity, or the Owner Participant pursuant to Section 12.5 of the Lease, (iv)
any insurance proceeds payable to or on behalf of the Owner Trustee, as trustee
or in its individual capacity, or to the Owner Participant, under any public
liability insurance maintained by Lessee pursuant to Section 12 of the Lease or
by any other Person, (v) Transaction Costs or other amounts or expenses paid or
payable to, or for the benefit of Owner Trustee, as trustee or in its individual
capacity, or Owner Participant pursuant to the Participation Agreement or the
Trust Agreement, (vi) all right, title and interest of Owner Participant or
Owner Trustee, as trustee or in its individual capacity, in or relating to any
portion of the Units and any other property (tangible or intangible), rights,
titles or interests to the extent any of the foregoing has been released from
the Lien of the Indenture pursuant to the terms thereof, (vii) upon termination
of the Indenture pursuant to the terms thereof with respect to any Unit, all
remaining amounts which shall have been paid or are payable by Lessee and
calculated on the basis of Stipulated Loss Value, (viii) any rights of the Owner
Participant or the Owner Trustee, as trustee and in its individual capacity, to
demand, collect, sue for, or otherwise receive and enforce payment of the
foregoing amounts, (ix) any amount payable to the Owner Participant by any
Transferee as the purchase price of the Owner Participant's interest in the
Trust Estate in compliance with the terms of the Participation Agreement and the
Trust Agreement and (x) the respective rights of the Owner Trustee, as trustee
and in its individual capacity, or the Owner Participant to the proceeds of and
interest on the foregoing.
"Fair Market Renewal Term" shall have the meaning specified in Section
22.4 of the Lease.
"Fair Market Rental Value" or "Fair Market Sales Value" with respect to
any Unit of Equipment shall mean the cash rent or cash price obtainable for such
Unit in an arm's length lease or sale between an informed and willing lessee or
purchaser under no compulsion to lease or purchase, as the case may be, and an
informed and willing lessor or seller, under no compulsion to lease or sell, as
the case may be, as the same shall be specified by agreement between Lessor and
Lessee. If the parties are unable to agree upon a Fair Market Rental Value
and/or a Fair Market Sales Value within 30 days after delivery of notice by
Lessee pursuant to Section 22.2 of the Lease, or otherwise where such
determination is required, within a reasonable period of time, such value shall
be determined by appraisal. Lessee will within 15 days after such 30-day period
provide Lessor the name of an appraiser that would be satisfactory to Lessee,
and Lessor and Lessee will consult with the intent of selecting a mutually
acceptable appraiser. If a mutually acceptable appraiser is selected, the Fair
Market Rental Value or the Fair Market Sales Value, as the case may be, shall be
determined by such appraiser and Lessee shall bear the cost thereof. If Lessee
and Lessor are unable to agree upon a single appraiser within such 15-day
period, two independent qualified appraisers, one chosen by the Lessee and one
chosen by the Lessor shall jointly determine such value and Lessor shall bear
the cost of the appraiser selected by Lessor and Lessee shall bear the cost of
the appraiser selected by Lessee. If such appraisers cannot agree on the amount
of such value within 15 days of appointment, one independent qualified appraiser
shall be chosen by the American Arbitration Association. All three appraisers
shall make a determination within a period of 15 days following appointment, and
shall promptly communicate such determination in writing to the Lessor and
Lessee. If there shall be a panel of three appraisers, the three appraisals
shall be averaged
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<PAGE> 88
and such average shall be the Fair Market Rental Value or Fair Market Sales
Value, as the case may be. The determination made shall be conclusively binding
on both the Lessor and Lessee. If there shall be a panel of three appraisers,
Lessee and Lessor shall equally share the cost of the third appraiser. If such
appraisal is in connection with the exercise of remedies set forth in Section 15
of the Lease, Lessee shall pay the costs of such appraisal. Notwithstanding any
of the foregoing, for the purposes of Section 15 of the Lease, the Fair Market
Rental Value or the Fair Market Sales Value, as the case may be, shall be zero
with respect to any Unit if Lessor is unable to recover possession of such Unit
in accordance with the terms of paragraph (b) of Section 15.1 of the Lease. In
determining Fair Market Rental Value or Fair Market Sales Value by appraisal or
otherwise, it will be assumed that the relevant Unit is in the condition and
location in which it is required to be returned to Lessor pursuant to Section 6
of the Lease and unencumbered by the Lease, any sublease or any Liens, except
that with respect to Section 15 of the Lease or as otherwise specifically
provided therein, a determination of Fair Market Rental Value or Fair Market
Sales Value shall be based on "as is, where is" condition.
"Fixed Rate Renewal Term" shall have the meaning specified in Section
22.4 of the Lease.
"FRA" shall mean the Federal Railroad Administration or any successor
thereto.
"Hazardous Substances" shall mean any hazardous or toxic substances,
materials or wastes, including, but not limited to, those substances, materials,
and wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR part 302) and amendments thereto, or such
substances, materials and wastes which are or become regulated under any
applicable local, state or federal law or the equivalent under applicable
foreign laws including, without limitation, any materials, waste or substance
which is (a) petroleum, (b) asbestos, (c) polychlorinated biphenyls, (d) defined
as a "hazardous material," "hazardous substance" or "hazardous waste" under
applicable local, state or federal law or the equivalent under applicable
foreign laws, (e) designated as a "hazardous substance" pursuant to Section 311
of the Clean Water Act, (f) defined as "hazardous waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act, or (g) defined as "hazardous
substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act.
"Income Tax" shall have the meaning specified in Section 7.1(l) of the
Participation Agreement.
"Indemnified Person" shall have the meaning specified in Section 7.2(b)
of the Participation Agreement.
"Indenture" or "Trust Indenture" shall mean the Trust Indenture and
Security Agreement (UTC Trust No. 1996-A) (L-14_), dated May __, 1996 between
the Owner Trustee, in the capacities described therein, and the Indenture
Trustee. The term "Indenture" shall include each Indenture Supplement entered
into pursuant to the terms of the Indenture.
"Indenture Default" shall mean an Indenture Event of Default or an
event which with notice or the lapse of time or both would become an Indenture
Event of Default.
"Indenture Estate" shall have the meaning specified in the Granting
Clause of the Indenture.
"Indenture Event of Default" shall have the meaning specified in
Section 4.01 of the Indenture.
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<PAGE> 89
"Indenture Investment" shall mean any obligation issued or guaranteed
by the United States of America or any of its agencies for the payment of which
the full faith and credit of the United States of America is pledged.
"Indenture Supplement" shall mean an Indenture Supplement dated the
Initial Closing Date or the Subsequent Closing Date, as the case may be, or the
date that any Replacement Unit is subjected to the lien and security interest of
the Indenture, substantially in the form of Exhibit A to the Indenture, between
the Owner Trustee, in the capacities described therein, and the Indenture
Trustee, covering the Units delivered on the Initial Closing Date or the
Subsequent Closing Date or such Replacement Unit, as the case may be. A
"related" Indenture Supplement, when used with respect to any Unit or Units of
Equipment, shall mean the Indenture Supplement under which such Unit or Units of
Equipment is or are included in the Indenture Estate.
"Indenture Trustee" shall mean _____________________, a ______________,
as trustee under the Indenture and its successors thereunder.
"Indenture Trustee Agreements" shall mean the Operative Agreements to
which the Indenture Trustee is or will be a party.
"Initial Closing Date" shall have the meaning specified in Section 2.1
of the Participation Agreement.
"Interchange Rules" shall mean the interchange rules or supplements
thereto of the Mechanical Division of the Association of American Railroads, as
the same may be in effect from time to time.
"Interim Interest" shall have the meaning specified in Section 2.2(c)
of the Participation Agreement.
"Interim Term" shall have the meaning specified in Section 3.1 of the
Lease.
"Investment Banker" shall mean an independent investment banking
institution of national standing appointed by Lessee or, if the Indenture
Trustee does not receive notice of such appointment at least ten days prior to a
scheduled prepayment date or if a Lease Event of Default under the applicable
Lease shall have occurred and be continuing, appointed by the Indenture Trustee.
"Late Rate" shall mean the lesser of 2% over the Debt Rate and the
maximum interest rate from time to time permitted by law.
"Lease" or "Lease Agreement" or "Equipment Lease" shall mean the
Equipment Lease Agreement (UTC Trust No. 1996-A) (L-14_), relating to the
Equipment, dated May __, 1996, between the Owner Trustee, in the capacities
described therein, as Lessor, and the Lessee. The term "Lease" shall include
each Lease Supplement entered into pursuant to the terms of the Lease.
"Lease Default" shall mean a Lease Event of Default or an event which
with notice or lapse of time or both would become a Lease Event of Default.
"Lease Event of Default" shall mean a Lease Event of Default under the
Lease as specified in Section 14 thereof.
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<PAGE> 90
"Lease Supplement" shall mean a Lease Supplement (UTC Trust No. 1996-A)
(L-14_), dated the Initial Closing Date or the Subsequent Closing Date, as the
case may be, or the date that any Replacement Unit is subjected to the Lease,
substantially in the form of Exhibit A to the Lease, between the Lessor and the
Lessee, covering the Units delivered on the Initial Closing Date or the
Subsequent Closing Date or such Replacement Unit, as the case may be. A
"related" Lease Supplement, when used with respect to any Unit or Units of
Equipment, shall mean the Lease Supplement under which such Unit or Units of
Equipment is or are leased.
"Lease Term" shall mean, with respect to any Unit, the Interim Term
applicable to such Unit, the Basic Term applicable to such Unit and any Renewal
Term applicable to such Unit then in effect.
"Lessee" shall mean Union Tank Car Company, a Delaware corporation, and
its successors and permitted assigns.
"Lessee Agreements" shall mean the Operative Agreements to which Lessee
is a party.
"Lessor" shall have the meaning specified in the recitals to the Lease.
"Lessor's Liens" means any Lien affecting, on or in respect of the
Equipment, the Lease or the Trust Estate arising as a result of (i) claims
against Lessor (in its individual capacity or as Owner Trustee) or the Owner
Participant, not related to the transactions contemplated by the Operative
Agreements, or (ii) acts or omissions of the Lessor (in its individual capacity
or as Owner Trustee) or the Owner Participant not related to the transactions
contemplated by the Operative Agreements or in breach of any covenant or
agreement of such Person set forth in any of the Operative Agreements, or (iii)
taxes imposed against the Lessor (in its individual capacity or as Owner
Trustee) or the Owner Participant or the Trust Estate which are not indemnified
against by the Lessee pursuant to the Participation Agreement or under the Tax
Indemnity Agreement.
"Lien" shall mean any mortgage, pledge, security interest, lien,
encumbrance, lease, disposition of title or other charge of any kind on
property.
"Limited Use Property" shall have the meaning set forth in Rev. Proc.
76-30, 1976-2 C.B. 647.
"Loan Participant" shall mean and include each registered holder from
time to time of an Equipment Note issued under the Indenture, including, so long
as it holds any Equipment Notes issued thereunder, the Pass Through Trustee
under the Pass Through Trust Agreement.
"Majority In Interest" as of a particular date of determination shall
mean with respect to any action or decision of the holders of the Equipment
Notes, the holders of more than 50% in aggregate unpaid principal amount of the
Equipment Notes, if any, then outstanding which are affected by such decision or
action, excluding any Equipment Notes held by the Owner Participant or the
Lessee or an Affiliate of the Owner Participant or the Lessee unless all
Equipment Notes are so held.
"Make-Whole Amount" shall mean, with respect to the principal amount of
any Equipment Note to be prepaid on any prepayment date, the amount which the
Investment Banker determines as of the third Business Day prior to such
prepayment date to equal the product obtained by multiplying (a) the excess, if
any, of (i) the sum of the present values of all the remaining scheduled
payments of principal and interest from the prepayment date to maturity of such
Equipment Note, discounted semi-annually on each July 1 and January 1 at a rate
equal to the Treasury Rate, based on a 360-day year of twelve 30-day
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<PAGE> 91
months, over (ii) the aggregate unpaid principal amount of such Equipment Note
plus any accrued but unpaid interest thereon by (b) a fraction the numerator of
which shall be the principal amount of such Equipment Note to be prepaid on such
prepayment date and the denominator of which shall be the aggregate unpaid
principal amount of such Equipment Note; provided that the aggregate unpaid
principal amount of such Equipment Note for the purpose of clause (a)(ii) and
(b) of this definition shall be determined after deducting the principal
installment, if any, due on such prepayment date.
"Mandatory Refinancing Date" shall mean ____________, 200_.
"Modification" shall have the meaning specified in Section 9.2 of the
Lease.
"Multiple Loss Determination Date" shall have the meaning specified in
Section 11.2 of the Lease.
"Multiple Loss Payment Date" shall have the meaning specified in
Section 11.2 of the Lease.
"Net Economic Return" shall mean the net after-tax book yield and total
after-tax cash flow (but not the pattern of earnings) expected by the original
Owner Participant with respect to the Equipment, utilizing the multiple
investment sinking fund method of analysis and the same assumptions as used by
such Owner Participant in making the computations of Basic Rent, Stipulated Loss
Value and Termination Value initially set forth in Schedules 3, 4 and 5 to the
Participation Agreement.
"Non-Severable Modification" shall mean any Modification that is not
readily removable without impairing the value, utility or remaining useful life
of the Equipment or any Unit immediately prior to removal of such modification,
other than in a de minimis nature.
"Officer's Certificate" shall mean a certificate signed (i) in the case
of a corporation by the President, any Vice President, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of such
corporation, (ii) in the case of a partnership by the Chairman of the Board, the
President or any Vice President, the Treasurer or an Assistant Treasurer of a
corporate general partner, and (iii) in the case of a commercial bank or trust
company, the Chairman or Vice Chairman of the Executive Committee or the
Treasurer, any Trust Officer, any Vice President, any Executive or Senior or
Second or Assistant Vice President, or any other officer or assistant officer
customarily performing the functions similar to those performed by the persons
who at the time shall be such officers, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Operative Agreements" shall mean the Participation Agreement, the Bill
of Sale, the Trust Agreement, the Pass Through Trust Agreement, the Pass Through
Certificates, the Equipment Notes, the Lease, the Lease Supplements, the
Indenture, the Indenture Supplements, the Tax Indemnity Agreement and the
Underwriting Agreement.
"Outside Date" shall have the meaning specified in Section 22.3 of the
Lease.
"Outside Date Purchase Price" shall mean, with respect to any Unit, the
amount equal to the product of the percentage set forth in Schedule 9 to the
Participation Agreement and the Equipment Cost for such Unit.
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<PAGE> 92
"Owner Participant" shall mean ___________________________ and its
successors and permitted assigns.
"Owner Participant Agreements" shall mean the Operative Agreements to
which the Owner Participant is or will be a party.
"Owner Trustee" shall mean ____________________, a ___________________,
not in its individual capacity but solely as Owner Trustee under the Trust
Agreement and its successors thereunder.
"Owner Trustee Agreements" shall mean the Operative Agreements to which
the Owner Trustee, either in its individual or fiduciary capacity, is or will be
a party.
"Participants" shall mean the Loan Participant and the Owner
Participant.
"Participation Agreement" shall mean the Participation Agreement (UTC
Trust No. 1996-A) (L-14_) dated May __, 1996, among the Lessee, the Pass Through
Trustee, the Owner Participant, the Owner Trustee and the Indenture Trustee.
"Pass Through Certificates" shall mean the Pass Through Certificates
issued pursuant to a Pass Through Trust Agreement.
"Pass Through Trust Agreement" shall mean either or both, as the
context may require, of the Pass Through Trust Agreements, dated May __, 1996,
one of which is between the Lessee and the Pass Through Trustee and the other of
which is among the Lessee, Procor Limited and the Pass Through Trustee.
"Pass Through Trustee" shall mean _______________, a ________________,
in its capacity as trustee under each Pass Through Trust Agreement, and each
other person which may from time to time be acting as successor trustee under a
Pass Through Trust Agreement.
"Pass Through Trustee Agreements" shall mean the Operative Agreements
to which the Pass Through Trustee is or will be a party.
"Permitted Liens" with respect to the Equipment and each Unit thereof
shall mean: (i) the interests of the Lessee and the Owner Trustee under the
Lease and the Lease Supplements; (ii) the interest of the Lessee and any
sublessee as provided in any sublease permitted pursuant to Section 8.3 of the
Lease; (iii) any Liens thereon for taxes, assessments, levies, fees and other
governmental and similar charges not due and payable or the amount or validity
of which is being contested in good faith by appropriate proceedings so long as
there exists no material risk of sale, forfeiture, loss, or loss of or
interference with use or possession of any Unit or interference with the payment
of Rent; (iv) any Liens of mechanics, suppliers, materialmen, laborers,
employees, repairmen and other like Liens arising in the ordinary course of
Lessee's (or if a sublease is then in effect, any sublessee's) business securing
obligations which are not due and payable or the amount or validity of which is
being contested in good faith by appropriate proceedings so long as there exists
no material risk of sale, forfeiture, loss, or loss of or interference with use
or possession of any Unit or interference with the payment of Rent; (v) the Lien
and security interest granted to the Indenture Trustee under and pursuant to the
Indenture, and the respective rights of the Loan Participant, the Indenture
Trustee, the Owner Participant and the Owner
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<PAGE> 93
Trustee under the Operative Agreements; (vi) Liens arising out of any judgment
or award against the Lessee (or any sublessee permitted pursuant to Section 8.3
of the Lease) with respect to which an appeal or proceeding for review is being
presented in good faith and for the payment of which adequate reserves have been
provided as required by generally accepted accounting principles or other
appropriate provisions have been made and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for review
and there exists no material risk of sale, forfeiture, loss, or loss of or
interference with the use or possession of any Unit or any interest therein or
interference with the payment of Rent, and (vii) salvage rights of insurers
under insurance policies maintained pursuant to Section 12 of the Lease;
provided, however, that the Lessee shall give notice to the Owner Trustee and
the Indenture Trustee of any contest or appeal referred to in clauses (iii),
(iv) or (vi) of the foregoing definition where the amount in question exceeds
$1,000,000.
"Permitted Subleases" shall have the meaning specified in Section 8.3
of the Lease.
"Person" shall mean an individual, partnership, corporation, trust,
association or unincorporated organization, and a government or agency or
political subdivision thereof.
"Quarterly Date" shall mean April 15, June 15, September 15 and
December 15 following any Early Purchase Date, as applicable.
"Refunding Date" shall have the meaning specified in Section 10.2(a) of
the Participation Agreement.
"Registration Statement" shall mean the registration statement filed by
the Lessee (File Number 333-______), including incorporated documents, exhibits
and financial statements, as amended at the time of the Initial Closing Date,
including any post-effective amendment thereto which has become effective prior
to the Initial Closing Date.
"Related Indemnitee Group" shall have the meaning specified in Section
7.2(b) of the Participation Agreement.
"Remaining Weighted Average Life" shall mean, with respect to any date
of prepayment or any date of determination of any Equipment Note, the number of
days equal to the quotient obtained by dividing (a) the sum of the products
obtained by multiplying (i) the amount of each then remaining principal payment
on such Equipment Note by (ii) the number of days from and including the
prepayment date or date of determination to but excluding the scheduled payment
date of such principal payment by (b) the unpaid principal amount of such
Equipment Note.
"Renewal Term" shall mean, with respect to any Unit, any term in
respect of which the Lessee shall have exercised its option to renew the Lease
for such Unit pursuant to Section 22.4 thereof, including any Fixed Rate Renewal
Term or Fair Market Renewal Term.
"Rent" shall mean all Basic Rent and Supplemental Rent.
"Rent Payment Date" or "Payment Date" shall mean each ____________ and
_____________ of each year occurring during the Lease Term, commencing
__________, 199_ provided that if any such date shall not be a Business Day,
then "Rent Payment Date" or "Payment Date" shall mean the next succeeding
Business Day.
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<PAGE> 94
"Replacement Unit" shall mean a covered hopper car or a tank car, as
the case may be, which shall have been substituted for another such car and
leased under the Lease pursuant to Section 10.4 or 11.4 of the Lease.
"Required Modification" shall have the meaning specified in Section 9.1
of the Lease.
"Responsible Officer" shall mean, with respect to the subject matter of
any covenant, agreement or obligation of any party contained in any Operative
Agreement, the President, or any Vice President, Assistant Vice President,
Treasurer, Assistant Treasurer or other officer, who in the normal performance
of his operational responsibility would have knowledge of such matters and the
requirements with respect thereto.
"STB" shall mean the Surface Transportation Board of the Department of
Transportation.
"Scheduled Closing Date" shall have the meaning specified in Section
2.7 of the Participation Agreement.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Severable Modification" shall mean any Modification that is readily
removable without causing material damage to the Equipment or any Unit and
without diminishing the value, utility or useful life of such Unit below the
value, utility or useful life of such Unit immediately prior to such
Modification, assuming that such Unit was then in the condition required to be
maintained by the terms of the Lease, other than in a de minimis nature.
"Specified Investments" shall mean (i) direct obligations of the United
States of America and agencies thereof for which the full faith and credit of
the United States is pledged, (ii) obligations fully guaranteed by the United
States of America, (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $500,000,000 (including the Indenture
Trustee or Owner Trustee if such conditions are met), and (iv) repurchase
agreements with any financial institution having a combined capital and surplus
of at least $750,000,000 fully collateralized by obligations of the type
described in clauses (i) and (iii) above; provided that if all of the above
investments are unavailable, the entire amount to be invested may be used to
purchase Federal funds from an entity described in (iii) above; and provided
further that no investment shall be eligible as a "Specified Investment" unless
the final maturity or date of return of such investment is 91 days or less from
the date of purchase thereof.
"Stipulated Loss Value" for any Unit as of any date of determination
shall mean the amount determined by multiplying the Equipment Cost for such Unit
by the percentage set forth in Schedule 4 to the Participation Agreement
opposite the Rent Payment Date or the Determination Date, as applicable, on
which such Stipulated Loss Value is being determined; provided that during any
Renewal Term, "Stipulated Loss Value" shall be determined as provided in Section
22.6 of the Lease. Anything contained in the Lease or in the Participation
Agreement to the contrary notwithstanding, Stipulated Loss Value for such Unit
(both before and after any adjustment pursuant to Section 2.6 of the
Participation Agreement or any deduction pursuant to Section 3.5 of the Lease)
will, under any circumstances and in any event, be an amount which, together
with any other amounts required to be paid by Lessee under the
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<PAGE> 95
Lease in connection with an Event of Loss, will be at least sufficient to pay in
full as of the date of payment thereof the aggregate unpaid principal of the
Equipment Notes issued in respect of such Unit, together with all unpaid
interest and Make-Whole Amount, if any, thereon accrued to the date on which
such amount is paid in accordance with the terms hereof and all other amounts
then due to the holders of the Equipment Notes.
"Storage Period" shall have the meaning specified in Section 6.3 of the
Lease.
"Subsequent Closing Date" shall have the meaning specified in Section
2.1 of the Participation Agreement.
"Subsidiary" of any Person shall mean any corporation, association, or
other business entity of which more than 50% (by number of votes) of the voting
stock at the time outstanding shall at the time be owned, directly or
indirectly, by such Person or by any other corporation, association or trust
which is itself a Subsidiary within the meaning of this definition, or
collectively by such Person and any one or more such Subsidiaries.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay under the
Operative Agreements to or on behalf of any of the other parties thereto,
including, but not limited to, Termination Value and Stipulated Loss Value
payments.
"Taxes" shall have the meaning specified in Section 7.1(b) of the
Participation Agreement.
"Tax Indemnitee" shall have the meaning specified in Section 7.1 of the
Participation Agreement.
"Tax Indemnity Agreement" shall mean the Tax Indemnity Agreement dated
May __, 1996 between the Lessee and the Owner Participant.
"Terminated Units" shall have the meaning specified in Section 10.1 of
the Lease.
"Termination Date" shall have the meaning specified in Section 10.1 of
the Lease.
"Termination Value" for any Unit as of any date of determination shall
mean the amount determined by multiplying the Equipment Cost for such Unit by
the percentage set forth in Schedule 5 to the Participation Agreement opposite
the Rent Payment Date or the Determination Date, as applicable, on which such
Termination Value is being determined; provided that during any Renewal Term,
"Termination Value" shall be determined as provided in Section 22.6 of the
Lease. Anything contained in the Lease or in the Participation Agreement to the
contrary notwithstanding, Termination Value for such Unit (both before and after
any adjustment pursuant to Section 2.6 of the Participation Agreement or any
deduction pursuant to Section 3.5 of the Lease) will, under any circumstances
and in any event, be an amount which, together with any other amounts required
to be paid by Lessee under the Lease in connection with such termination, will
be at least sufficient to pay in full as of the date of payment thereof the
aggregate unpaid principal of the Equipment Notes issued in respect of such
Unit, together with all unpaid interest and Make-Whole Amount, if any, thereon
accrued to the date on which such amount is paid in accordance with the terms
thereof and all other amounts then due to the holders of the Equipment Notes.
"Total Equipment Cost" shall mean the sum of the Equipment Cost for
each Unit.
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<PAGE> 96
"Transaction Costs" shall have the meaning specified in Section 2.5(a)
of the Participation Agreement.
"Transferee" shall have the meaning specified in Section 6.1(a) of the
Participation Agreement.
"Treasury Rate" shall mean with respect to prepayment of each Equipment
Note, a per annum rate (expressed as a semiannual equivalent and as a decimal
and, in the case of United States Treasury bills, converted to a bond equivalent
yield), determined to be the per annum rate equal to the semiannual yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Equipment Note, as determined by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
securities, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) (or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported in the most recent H.15(519), as
published in H.15(519)). H.15(519) means "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System. The most recent H.15(519) means the
latest H.15(519) which is published prior to the close of business on the third
Business Day preceding the scheduled prepayment date.
"Trust" shall have the meaning specified in the Trust Agreement.
"Trust Agreement" shall mean that certain Trust Agreement (UTC Trust
No. 1996-A) (L-14_), dated May __, 1996, between the Owner Participant and the
Owner Trustee.
"Trust Estate" shall have the meaning set forth in Section 2.2 of the
Trust Agreement.
"Trustee" shall mean each of the Owner Trustee, the Indenture Trustee
or the Pass Through Trustee and "Trustees" shall mean the Owner Trustee,
Indenture Trustee and the Pass Through Trustee, collectively.
"Underwriters" shall mean Salomon Brothers Inc and Morgan Stanley & Co.
Incorporated.
"Underwriting Agreement" shall mean that certain Underwriting Agreement
between the Lessee and the Underwriters, pertaining to the sale of the Pass
Through Certificates.
"Unit" shall mean each unit or item of Equipment.
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<PAGE> 1
Exhibit 4(b)(2)
EQUIPMENT LEASE AGREEMENT
(UTC TRUST NO. 1996-A)
(L-14_)
Dated May __, 1996
Between
_____________________________________,
not in its individual capacity except
as expressly provided herein but
solely as Owner Trustee,
Lessor
And
UNION TANK CAR COMPANY,
Lessee
COVERED HOPPERS AND TANK CARS
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS
LEASE, THE EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE HEREUNDER
HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF, _____________________________, NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND SECURITY
AGREEMENT (UTC TRUST NO. 1996-A) (L-14_), DATED May __, 1996 BETWEEN SAID
INDENTURE TRUSTEE, AS SECURED PARTY, AND LESSOR, AS DEBTOR. INFORMATION
CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM THE INDENTURE TRUSTEE AT
ITS ADDRESS SET FORTH IN SECTION 20 OF THIS LEASE. SEE SECTION 25.2 FOR
INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND HOLDERS OF THE
VARIOUS COUNTERPARTS HEREOF.
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SECTION 1. DEFINITIONS................................................ 1
SECTION 2. ACCEPTANCE AND LEASING OF EQUIPMENT........................ 1
SECTION 3. TERM AND RENT.............................................. 1
Section 3.1 Lease Term....................................... 1
Section 3.2 Basic Rent....................................... 2
Section 3.3 Supplemental Rent................................ 2
Section 3.4 Adjustment of Rent............................... 3
Section 3.5 Advances......................................... 3
Section 3.6 Manner of Payments............................... 4
SECTION 4. OWNERSHIP AND MARKING OF EQUIPMENT......................... 4
Section 4.1 Retention of Title............................... 4
Section 4.2 Duty to Number Equipment......................... 4
Section 4.3 Prohibition Against Certain Designations......... 5
SECTION 5. DISCLAIMER OF WARRANTIES................................... 5
SECTION 6. RETURN OF EQUIPMENT; STORAGE............................... 6
Section 6.1 Return; Holdover Rent............................ 6
Section 6.2 Condition of Equipment........................... 10
SECTION 7. LIENS...................................................... 10
SECTION 8. MAINTENANCE; POSSESSION; COMPLIANCE WITH LAWS.............. 10
Section 8.1 Maintenance and Operation........................ 10
Section 8.2 Possession....................................... 11
Section 8.3 Sublease; Replacement of Units................... 12
SECTION 9. MODIFICATIONS.............................................. 13
Section 9.1 Required Modifications........................... 13
Section 9.2 Optional Modifications........................... 13
Section 9.3 Removal of Property; Replacements................ 14
SECTION 10. VOLUNTARY TERMINATION...................................... 14
Section 10.1 Right of Termination............................ 14
Section 10.2 Sale of Equipment............................... 15
Section 10.3 Retention of Equipment by Lessor................ 16
Section 10.4 Termination of Lease............................ 17
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TABLE OF CONTENTS (cont'd)
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SECTION 11. LOSS, DESTRUCTION OR REQUISITION........................................... 17
Section 11.1 Event of Loss................................................... 17
Section 11.2 Replacement or Payment upon Event of Loss....................... 18
Section 11.3 Rent Termination................................................ 20
Section 11.4 Disposition of Equipment; Replacement of Unit................... 20
Section 11.5 Eminent Domain.................................................. 22
SECTION 12. INSURANCE.................................................................. 22
Section 12.1 Physical Damage and Public Liability Insurance.................. 22
Section 12.2 Physical Damage Insurance....................................... 23
Section 12.3 Public Liability Insurance...................................... 24
Section 12.4 Certificate of Insurance........................................ 25
Section 12.5 Additional Insurance............................................ 25
Section 12.6 Pollution Coverage.............................................. 26
SECTION 13. REPORTS; INSPECTION........................................................ 26
Section 13.1 Duty of Lessee to Furnish....................................... 26
Section 13.2 Lessor's Inspection Rights...................................... 27
SECTION 14. LEASE EVENTS OF DEFAULT.................................................... 27
SECTION 15. REMEDIES................................................................... 29
Section 15.1 Remedies........................................................ 29
Section 15.2 Cumulative Remedies............................................. 32
Section 15.3 No Waiver....................................................... 32
Section 15.4 Notice of Lease Default......................................... 32
Section 15.5 Lessee's Duty to Furnish Information with Respect to Subleases.. 32
Section 15.6 Lessee's Duty to Return Equipment Upon Default.................. 33
Section 15.7 Specific Performance; Lessor Appointed Lessee's Agent........... 33
SECTION 16. FILINGS; FURTHER ASSURANCES................................................ 34
Section 16.1 Filings......................................................... 34
Section 16.2 Further Assurance............................................... 34
Section 16.3 Other Filings................................................... 35
Section 16.4 Expenses........................................................ 35
SECTION 17. LESSOR'S RIGHT TO PERFORM.................................................. 35
SECTION 18. ASSIGNMENT................................................................. 35
Section 18.1 Assignment by Lessor............................................ 35
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TABLE OF CONTENTS (cont'd)
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Section 18.2 Assignment by Lessee............................................. 36
Section 18.3 Sublessee's Performance and Rights............................... 36
SECTION 19. NET LEASE, ETC.............................................................. 37
SECTION 20. NOTICES..................................................................... 38
SECTION 21. CONCERNING THE INDENTURE TRUSTEE............................................ 39
Section 21.1 Limitation of the Indenture Trustee's Liabilities............... 39
Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease.. 39
SECTION 22. PURCHASE OPTIONS; RENEWAL OPTIONS........................................... 39
Section 22.1 Early Purchase Option........................................... 39
Section 22.2 Election to Retain or Return Equipment at End of Basic or
Renewal Term.................................................... 40
Section 22.3 Purchase Options................................................ 41
Section 22.4 Renewal Options................................................. 41
Section 22.5 Appraisal....................................................... 42
Section 22.6 Stipulated Loss Value and Termination Value During Renewal
Term............................................................ 43
SECTION 23. LIMITATION OF LESSOR'S LIABILITY............................................ 43
SECTION 24. INVESTMENT OF SECURITY FUNDS................................................ 43
SECTION 25. MISCELLANEOUS............................................................... 44
Section 25.1 Governing Law; Severability..................................... 44
Section 25.2 Execution in Counterparts....................................... 44
Section 25.3 Headings and Table of Contents; Section References.............. 44
Section 25.4 Successors and Assigns.......................................... 44
Section 25.5 True Lease...................................................... 44
Section 25.6 Amendments and Waivers.......................................... 44
Section 25.7 Survival........................................................ 45
Section 25.8 Business Days................................................... 45
Section 25.9 Directly or Indirectly.......................................... 45
Section 25.10 Incorporation by Reference...................................... 45
Section 25.11 Lessee's Right of Quiet Enjoyment............................... 45
Section 25.12 Entire Agreement................................................ 45
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Attachments to Equipment Lease Agreement:
Exhibit A -- Form of Lease Supplement A-1
Appendix A -- Definitions
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<PAGE> 6
EQUIPMENT LEASE AGREEMENT
(UTC TRUST NO. 1996-A)
(L-14_)
THIS EQUIPMENT LEASE AGREEMENT (UTC Trust No. 1996-A) (L-14_), dated
May __, 1996 (the "Lease"), between _________________, a______________, not in
its individual capacity except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement ("Lessor"), and UNION TANK CAR COMPANY, a
Delaware corporation ("Lessee").
W I T N E S S E T H:
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, all capitalized terms used
herein without definition shall have the respective meanings set forth in
Appendix A hereto for all purposes of this Lease.
SECTION 2. ACCEPTANCE AND LEASING OF EQUIPMENT.
Lessor hereby agrees (subject to satisfaction or waiver of the
conditions set forth in Sections 4.1 and 4.3 of the Participation Agreement) to
accept delivery of each Unit from Lessee and to lease such Unit to Lessee
hereunder, and Lessee hereby agrees (subject to satisfaction or waiver of the
conditions set forth in Section 4.4 of the Participation Agreement), immediately
following such acceptance by Lessor, to lease from Lessor hereunder such Unit.
Such acceptance by Lessor and lease by Lessee is to be evidenced by the
execution and delivery by Lessee and Lessor of a Lease Supplement covering such
Unit, all in accordance with Section 2.3(b) of the Participation Agreement.
Lessee hereby agrees that its execution and delivery of a Lease Supplement
covering any Unit shall, without further act, irrevocably constitute acceptance
by Lessee of such Unit for all purposes of this Lease.
SECTION 3. TERM AND RENT.
Section 3.1 Lease Term. The interim term of this Lease for each Unit
covered by a Lease Supplement executed and delivered on the Initial Closing Date
shall commence on the Initial Closing Date and shall terminate on the day before
the Basic Term Commencement Date. The interim term of this Lease for each Unit
covered by a Lease Supplement executed and delivered on the Subsequent Closing
Date shall commence on the Subsequent Closing Date and terminate on the day
before the Basic Term Commencement Date. The basic term of this
<PAGE> 7
Lease (the "Basic Term") shall commence on the Basic Term Commencement Date and,
subject to earlier termination pursuant to Sections 10, 11, 15 and 22 shall
expire at 11:59 P.M. (Chicago time) on the Basic Term Expiration Date. Subject
and pursuant to Section 22.4, Lessee may elect one or more Renewal Terms.
Section 3.2 Basic Rent. Lessee hereby agrees to pay Lessor as Basic
Rent for each Unit throughout the Basic Term applicable thereto Basic Rent in
consecutive semi-annual installments payable on each Rent Payment Date. Each
such semi-annual payment of Basic Rent shall be in an amount equal to the
product of the Equipment Cost for such Unit multiplied by the Basic Rent
percentage for such Unit set forth opposite such Rent Payment Date on Schedules
3A and 3B, as applicable, to the Participation Agreement (as such Schedules 3A
and 3B shall be adjusted pursuant to Section 2.6 of the Participation
Agreement). Basic Rent shall be payable in advance on certain Rent Payment Dates
and in arrears on certain Rent Payment Dates, as specified in Schedules 3A and
3B to the Participation Agreement, as so adjusted, such Schedules 3A and 3B as
so adjusted from time to time being incorporated herein by reference.
Anything contained herein or in the Participation Agreement to the
contrary notwithstanding, each installment of Basic Rent (both before and after
any adjustment pursuant to Section 2.6 of the Participation Agreement) shall be,
under any circumstances and in any event, in an amount at least sufficient for
Lessor to pay in full as of the due date of such installment, any payment of
principal of and interest on the Equipment Notes required to be paid by Lessor
pursuant to the Indenture on such due date (without taking into account any
principal amount required to be prepaid on the Mandatory Refinancing Date
pursuant to Section 2.10(f) of the Indenture).
Section 3.3 Supplemental Rent. Lessee also agrees to pay to Lessor, or
to whomsoever shall be entitled thereto, any and all Supplemental Rent, promptly
as the same shall become due and owing, or where no due date is specified,
promptly after demand by the Person entitled thereto, and in the event of any
failure on the part of Lessee to pay any Supplemental Rent, Lessor shall have
all rights, powers and remedies provided for herein or by law or equity or
otherwise as in the case of nonpayment of Basic Rent. Lessee will also pay, as
Supplemental Rent, (a) on demand, to the extent permitted by applicable law, an
amount equal to interest at the Late Rate on any part of any installment of
Basic Rent not paid when due for any period for which the same shall be overdue
and on any payment of Supplemental Rent not paid when due or demanded, as the
case may be, for the period from such due date or demand until the same shall be
paid, (b) in the case of the termination of this Lease with respect to any Unit
pursuant to Section 10, on the applicable Termination Date, an amount equal to
the Make-Whole Amount, if any, with respect to the principal amount of each
Equipment Note to be prepaid as a result of such termination, (c) in the case of
the purchase of any Unit pursuant to Section 22.1 hereof or Section 6.9 of the
Participation Agreement, on such date of purchase, an amount equal to the
Make-Whole Amount, if any, with respect to the principal amount of each
Equipment Note to be prepaid as a result of such purchase, (d) an amount equal
to any other amount payable by
2
<PAGE> 8
Lessor on the Equipment Notes in excess of the principal and interest payments
due thereunder, as and when such amount shall be due and payable, in accordance
with the terms of the Equipment Notes and the Indenture, and (e) in the case of
any refinancing of the Equipment Notes pursuant to Section 10.2 of the
Participation Agreement, on the Refunding Date, an amount equal to the
Make-Whole Amount, if any, with respect to the aggregate principal amount of the
Equipment Notes being prepaid. All Supplemental Rent to be paid pursuant to this
Section 3.3 shall be payable in the type of funds and in the manner set forth in
Section 3.6.
Section 3.4 Adjustment of Rent. Lessee and Lessor agree that the Basic
Rent, Stipulated Loss Value and Termination Value percentages and the Early
Purchase Price and Basic Term Purchase Price shall be adjusted to the extent
provided in Section 2.6 of the Participation Agreement, subject in all cases to
the limitation set forth in the second paragraph of Section 3.2.
Section 3.5 Advances. Lessor agrees to give notice to Lessee and the
Indenture Trustee at least five Business Days prior to ___________, 1996 or the
Basic Term Commencement Date, as the case may be, if the funds for the payment
of interest on the Equipment Notes contemplated to be made by Owner Trustee on
either such date pursuant to Section 2.2(c) of the Participation Agreement will
not be paid by Owner Trustee to the Indenture Trustee in an amount equal to the
amount contemplated to be paid pursuant to Section 2.2(c) of the Participation
Agreement. If and to the extent that the Indenture Trustee on ___________, 1996
or the Basic Term Commencement Date, as the case may be, shall not have received
funds from Owner Trustee sufficient for the payment in full of the interest then
due and owing on the Equipment Notes, Lessee shall pay as Supplemental Rent, in
one installment due on ___________, 1996 or the Basic Term Commencement Date, as
the case may be, an amount, if any, equal to such deficiency (either such
payment being referred to herein as an "Advance"). In the event Lessee makes any
Advance pursuant to this Section 3.5 and is not promptly reimbursed therefor by
Owner Participant after demand for such reimbursement in the manner set forth in
Section 20 and provided no Lease Default shall have occurred and be continuing,
Lessee shall be entitled to offset and deduct (without duplication) against that
portion of each succeeding payment of Basic Rent, Stipulated Loss Value or
Termination Value which becomes payable to or to the order of Owner Trustee
under the Indenture and distributable to Owner Participant under the Trust
Agreement, an amount equal to such Advance plus interest on such amount at the
Late Rate until Lessee has been fully reimbursed for such Advance plus such
interest and in each such case, such offset shall be deemed to constitute a
reduction in the amount of such Advance so payable. No such offset or aggregate
combined effect of separate offsets shall reduce the amount of any indemnity or
other claim payable by Lessee to any holder of an Equipment Note, the Indenture
Trustee or Owner Trustee in its individual capacity, nor reduce any installment
of Basic Rent, or any payment of Stipulated Loss Value or Termination Value, to
an amount that is insufficient to pay in full the payments then required to be
made on account of the principal and interest on the Equipment Notes then
outstanding.
3
<PAGE> 9
Section 3.6 Manner of Payments. All Rent (other than Supplemental Rent
payable to Persons other than Lessor, which shall be payable to such other
Persons in accordance with written instructions furnished to Lessee by such
Persons, as otherwise provided in any of the Operative Agreements or as required
by law) shall be paid by Lessee to Lessor at its office at _______, _______,
________ Attention: _______________. All Rent shall be paid by Lessee in funds
consisting of lawful currency of the United States of America, which shall be
immediately available to the recipient not later than 12:00 noon (New York City
time) on the date of such payment, provided, that so long as the Indenture shall
not have been discharged pursuant to the terms thereof, Lessor hereby directs,
and Lessee agrees, that all Rent (excluding Excepted Property) payable to Lessor
shall be paid directly to the Indenture Trustee at the times and in funds of the
type specified in this Section 3.6 at the office of the Indenture Trustee at ,
ABA No. ____________, Corporate Trust Clearing Account No. ___________, for
credit to trust number _____________, Attention: ____________________ UTC Trust
No. 1996-A (L-14_), or at such other location in the United States of America as
the Indenture Trustee may otherwise direct.
SECTION 4. OWNERSHIP AND MARKING OF EQUIPMENT.
Section 4.1 Retention of Title. Lessor shall and hereby does retain
full legal title to and beneficial ownership of the Equipment notwithstanding
the delivery to and possession and use of the Equipment by Lessee hereunder or
any sublessee under any sublease permitted hereby.
Section 4.2 Duty to Number Equipment. With respect to the Units to be
delivered on the Initial Closing Date, Lessee has caused, and as soon as
practicable after the date on which a Lease Supplement is executed and delivered
in respect of the Units to be delivered on the Subsequent Closing Date or
Replacement Units pursuant to Section 11.2, Lessee will cause, each Unit to be
numbered with its reporting mark shown on the Lease Supplement dated the date on
which such Unit was delivered and covering such Unit. Lessee will not change the
reporting mark of any Unit except in accordance with a statement of new
reporting marks to be substituted therefor, which statement shall be delivered
by Lessee to Lessor and, so long as the Indenture shall not have been discharged
pursuant to its terms, to the Indenture Trustee prior to or contemporaneously
with such change. A supplement to this Lease and, if not so discharged, the
Indenture, with respect to such new reporting marks, shall, prior to or
contemporaneously with the substitution of such reporting marks, be filed or
recorded in all public offices where this Lease and the Indenture shall have
been filed or recorded and in such other places, if any, where Lessor and, so
long as the Indenture shall not have been discharged pursuant to its terms, the
Indenture Trustee may reasonably request in order to protect, preserve and
maintain its right, title and interest in the Units. The costs and expenses of
all such supplements, filings and recordings shall be borne by Lessee.
4
<PAGE> 10
Section 4.3 Prohibition Against Certain Designations. Except
as above provided, Lessee will not allow the name of any Person to be placed on
any Unit as a designation that might reasonably be interpreted as a claim of
ownership; provided, however, that subject to the delivery of the new reporting
marks statement specified in the second sentence of Section 4.2, Lessee may
cause the Equipment to be lettered with the names or initials or other insignia
customarily used by Lessee or any permitted sublessees or any of their
respective Affiliates on railroad equipment used by it of the same or a similar
type for convenience of identification of the right of Lessee to use the
Equipment hereunder or any permitted sublessee to use the Equipment pursuant to
a sublease permitted hereby.
SECTION 5. DISCLAIMER OF WARRANTIES.
Without waiving any claim Lessee may have against any seller,
supplier or manufacturer, LESSEE ACKNOWLEDGES AND AGREES THAT, (i) EACH UNIT IS
OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO
LESSEE, (ii) LESSEE IS SATISFIED THAT EACH UNIT IS SUITABLE FOR ITS PURPOSES AND
LESSEE HAS ACCEPTED EACH UNIT, (iii) NEITHER LESSOR NOR OWNER PARTICIPANT IS A
MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND OR HAS INSPECTED THE UNITS
PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE, (iv) EACH UNIT IS LEASED
HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS NOW IN
EFFECT OR HEREAFTER ADOPTED, AND (v) LESSOR LEASES AND LESSEE TAKES EACH UNIT
"AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER CONDITION IT MAY BE, AND
LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS LESSOR OR IN ITS INDIVIDUAL
CAPACITY, NOR OWNER PARTICIPANT MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH
EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS
EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY
PARTICULAR PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE
TITLE, OF THE EQUIPMENT, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR
CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR
TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR
NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY
WHATSOEVER WITH RESPECT THERETO AND EACH OF LESSOR AND OWNER PARTICIPANT
EXPRESSLY DISCLAIMS SELECTION OF THE UNITS, except that Lessor, in its
individual capacity, represents and warrants that on the Initial Closing Date or
the Subsequent Closing Date, as the case may be, Lessor shall have received
whatever title to the Equipment as was conveyed to Lessor by Lessee on such date
and each Unit will be free of Lessor's Liens attributable to Lessor and provided
that the foregoing disclaimer in clause (v) shall not extend to Owner
Participant's representation and warranty contained in Section 3.6(e) of the
5
<PAGE> 11
Participation Agreement. Lessor hereby appoints and constitutes Lessee its agent
and attorney-in-fact during the Lease Term to assert and enforce, from time to
time, in the name and for the account of Lessor and Lessee, as their interests
may appear, but in all cases at the sole cost and expense of Lessee, whatever
claims and rights Lessor may have as owner of the Equipment against the
manufacturers or any prior owner thereof; provided, however, that if at any time
a Lease Event of Default shall have occurred and be continuing, at Lessor's
option, such power of attorney shall terminate, and Lessor may assert and
enforce, at Lessee's sole cost and expense, such claims and rights. Lessor shall
have no responsibility or liability to Lessee or any other Person with respect
to any of the following: (i) any liability, loss or damage caused or alleged to
be caused directly or indirectly by any Unit, or by any of the commodities,
items or materials from time to time contained therein, whether or not permitted
by the terms hereof, or by any inadequacy thereof or deficiency or defect
therein or by any other circumstances in connection therewith; (ii) the use,
operation or performance of any Unit or any risks relating thereto; (iii) any
interruption of service, loss of business or anticipated profits or
consequential damages; or (iv) the delivery, operation, servicing, maintenance,
repair, improvement or replacement of any Unit. Lessee's delivery of a Lease
Supplement shall be conclusive evidence as between Lessee and Lessor that all
Units described therein are in all the foregoing respects satisfactory to
Lessee, and Lessee will not assert any claim of any nature whatsoever against
Lessor based on any of the foregoing matters.
SECTION 6. RETURN OF EQUIPMENT; STORAGE.
Section 6.1 Return; Holdover Rent.
(a) Not less than 120 days prior to the end of the Basic Term, the
end of any Fixed Rate Renewal Term, or the end of any Fair Market Renewal Term,
in each case with respect to any Units which Lessee has elected to return under
Section 22.2, Lessee will provide Lessor with a list specifying 21 storage
locations used for the storage of rolling stock within the continental United
States (excluding Alaska), which locations, to the extent practicable, shall be
geographically diverse. Not less than 90 days prior to the end of the Lease Term
with respect to any Unit which has not been purchased by Lessee, Lessor will
give Lessee irrevocable notice of its decision either to take possession of or
store such Unit. If Lessor shall have decided to take possession of such Unit,
the terms of Section 6.1(b) will apply. If Lessor shall have decided to store
such Unit, the terms of Section 6.1(c) hereof will apply. Not less than 10 days
prior to the date on which any Unit is to be returned to the location specified
pursuant to Section 6.1(b) or delivered and stored for Lessor pursuant to
Section 6.1(c), Lessee shall give Lessor irrevocable written notice specifying
the number and type of Units which are to be returned or delivered and stored,
the location of such return or delivery and storage and the date on which the
Inspection Period is scheduled to commence with respect to each such Unit. Upon
the arrival of the Units at the return or delivery location(s) described in the
foregoing notice, Lessee will give Lessor prompt written confirmation of the
number and type of Units returned or delivered and the date on which the
Inspection Period commences with respect to the Inspectable
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<PAGE> 12
Group(s) (hereinafter defined) of which such Units are a part. In the event
that, subsequent to the date an Inspection Period commences for any Inspectable
Group, additional Units are delivered to such location, unless Lessor is at that
time still conducting its inspection at such location pursuant to Section
6.1(h), a new Inspection Period will commence upon receipt of notice that an
Inspectable Group made up of such subsequently delivered Units has been
assembled; provided, however, that if less than 25 additional Units are to be
subsequently returned or delivered to such location, such new Inspection Period
will commence upon receipt of notice that all of such subsequently delivered
Units have been assembled.
(b) If Lessor shall have decided to take possession of such Unit,
Lessee will, at its own cost and expense, deliver possession of such Unit at any
track location, f.o.b. such location, (i) as may be agreed upon by Lessor and
Lessee in writing, or (ii) in the absence of such agreement, as Lessor may
reasonably select by written notice to Lessee delivered on or before the 90th
day before the end of the Lease Term; provided, that (x) there shall be no more
than 21 such locations designated by Lessor (each of which shall be located
within the continental United States, exclusive of Alaska), (y) there shall be
no less than 25 Units (any group of 25 Units, an "Inspectable Group") returned
to each location, and (z) Lessor's notice shall specify the total number and
type of Units to be delivered to each location. Maintenance records with respect
to each Unit shall be delivered to Lessor or its designee upon the return of
such Unit.
(c) (i) If Lessor shall have elected to store any Unit upon the
expiration of the Lease Term with respect thereto, Lessee shall store such Unit,
free of charge for a period (the "Storage Period") beginning on the expiration
of the Lease Term and ending not more than 30 days after the later of (A) the
date of commencement of the Inspection Period for the Inspectable Group of which
such Unit is a part and (B) the date on which such Unit is in compliance with
the conditions set forth in Section 6.2. Any storage provided by Lessee during
the Storage Period shall be at the sole risk and expense of Lessee, and Lessee
shall maintain the insurance required by Section 12.1 with respect to all stored
Units. During the Storage Period, Lessee will permit Lessor or any person
designated by it, including the authorized representative or representatives of
any prospective purchaser or user of such Unit, to restencil the marks on such
Unit and to inspect the same during the storage location's normal business hours
upon at least three Business Days' prior telephonic notice; provided, however,
that such inspection and restenciling shall not unreasonably interfere with the
normal conduct of the storage location's business and shall be subject to the
storage location's standard security and safety rules and regulations; and
provided, further, that (x) such inspection and restenciling shall be at such
Person's own risk, (y) Lessee shall be protected against any loss or damage
incurred by it in connection with any such inspection or restenciling by such
Person through indemnification, insurance or other means reasonably satisfactory
to Lessee and (z) Lessee (except in the case of Lessee's gross negligence or
wilful misconduct) shall not be liable for any injury to, or the death of, any
Person exercising,
7
<PAGE> 13
either on behalf of Lessor or any prospective purchaser or user, the rights of
inspection and restenciling granted pursuant hereto. Lessee shall not be
required to store any Unit after the Storage Period. If Lessee does store any
Unit after the expiration of the Storage Period, such storage shall be at the
sole risk and expense of Lessor.
(ii) Upon the request and direction of Lessor (and at Lessor's sole
risk and expense), on not more than one occasion with respect to each
stored Unit and upon not less than 30 days' prior written notice from
Lessor to Lessee, Lessee will, on or before the expiration of the
Storage Period, transport such Units to any railroad interchange point
or points (not to exceed 21 in total), within the continental United
States (except Alaska), with a minimum of at least an Inspectable Group
delivered to each interchange point on any railroad lines or to any
connecting carrier for shipment, whereupon Lessee shall have no further
liability or obligation with respect to such Units.
(d) Provided no Lease Default referred to in Section 14(g) or (h) or
Lease Event of Default shall have occurred and be continuing, all amounts earned
in respect of a Unit subsequent to the expiration of the Lease Term with respect
to such Unit and prior to the return of the Unit hereunder shall belong to
Lessee and, if received by Lessor, shall be promptly turned over to Lessee.
(e) Subject to the other provisions of this Section 6.1 with respect
to additional Holdover Rent, Lessee shall pay Holdover Rent (hereinafter
defined) for each Unit for each day commencing on the date after the expiration
or termination of the Lease Term with respect to such Unit to the date such Unit
is (i) returned to the location specified pursuant to Section 6.1(b) or (ii)
delivered and stored for Lessor pursuant to Section 6.1(c). During such holdover
period, Lessee shall use its reasonable best efforts to secure the return of the
Equipment as required under this Section 6. Nothing herein shall be in
abrogation of Lessor's right to have such Unit returned to it for possession or
storage.
(f) In the event any Unit is not returned to Lessor in the condition
specified in Section 6.2, Lessee shall pay to Lessor the daily equivalent of the
rental rate in effect at the expiration or termination of the most recent Lease
Term with respect to such Unit (the "Holdover Rent") multiplied by the number of
days equal to the sum of (i) in the event that such Unit was delivered to the
location specified pursuant to Section 6.1(b) or 6.1(c), as appropriate, after
the date on which this Lease expires or terminates with respect to such Unit,
the number of days elapsed between the delivery of the Unit to the location so
specified and the commencement of the Inspection Period for the Inspectable
Group of which such Unit is a part, (ii) one-half of the number of days elapsed
between the commencement of the Inspection Period for the Inspectable Group of
which such Unit is a part and the date on which Lessee receives notice from
Lessor, which is given no later than the date specified in the second sentence
of Section 6.1(h), that such Unit is not in the condition specified in Section
6.2 (provided, however, that in no event shall the number determined pursuant to
this clause (ii) exceed 30), plus (iii) the
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number of days following receipt by Lessee of notice from Lessor, which is given
no later than the date specified in the second sentence of Section 6.1(h), that
such Unit is not in the condition specified by Section 6.2 that are required by
Lessee to restore such Unit to such condition. Notwithstanding the foregoing, if
the reasonable cost of repairs required to restore any Unit to the condition set
forth in Section 6.2 is less than $2,500, then (A) Lessor shall be responsible
for making such repairs, the cost of which shall be reimbursed by Lessee, and
(B) the Unit shall be deemed to comply with the conditions set forth in Section
6.2 and no additional Holdover Rent shall be payable under this Section 6.1(f)
with respect thereto solely as a result of the condition of such Unit.
(g) Holdover Rent shall be paid monthly in arrears, by payment from
Lessee to Lessor on or before the fifth day following the end of each calendar
month, in the manner specified in Section 3.6 hereof, such payment to be
accompanied by a statement setting forth in reasonable detail the calculation of
such payment on a per Unit basis.
(h) During the 30-day period commencing on the date on which a
minimum of at least an Inspectable Group is delivered, pursuant to Section 6.1
(b) or (c), to Lessor or to a storage location, as the case may be (the
"Inspection Period"), Lessor shall be entitled to inspect any Unit so delivered
to ensure that such Unit is in the condition required under Section 6.2. Lessor
shall promptly (but in no event later than 10 Business Days following receipt by
a Responsible Officer of the Owner Participant of a final report relating to the
foregoing inspection) notify Lessee if any Units are not in compliance with the
conditions specified in Section 6.2. Subject to Section 6.1(f), no Holdover Rent
shall be payable by Lessee during the Inspection Period. The inspection of all
redelivered Units shall be performed at Lessor's sole cost, expense and risk
(including, without limitation, the risk of personal injury or death), by its
authorized representatives. Lessee shall not be liable for any injury to, or the
death of, any Person exercising, on behalf of Lessor, the rights of inspection
granted under this Section 6.1 unless caused by Lessee's gross negligence or
wilful misconduct. If such Unit is not in compliance with the conditions set
forth in Section 6.2, then, subject to the last sentence of Section 6.1(f),
Lessee shall promptly take such steps as are necessary to bring such Unit into
such compliance and shall, subject to the last sentence of Section 6.1(f) pay,
in addition to Holdover Rent otherwise owing under this Section 6.1, the
reasonable cost and expense of any reinspection of such Unit conducted by Lessor
required because of such non-compliance with Section 6.2. No reinspection
pursuant to this Section 6.1(h) shall unreasonably interfere with the normal
conduct of business by Lessee, any sublessee or the location to which such Unit
is returned. Lessee shall provide (or cause any sublessee or owner of the return
location to provide) reasonable cooperation to Lessor and its representatives in
connection with such inspection, but Lessee shall not be required to undertake
or incur any additional liabilities in connection therewith. A Unit shall not be
deemed to have been returned to Lessor for purposes of this Lease unless and
until it is in compliance with the conditions set forth in Section 6.2.
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Section 6.2 Condition of Equipment. Each Unit, when returned to
Lessor pursuant to Section 6.1, shall be (a) capable of performing the functions
for which it was designed, with all loading and unloading components operating
in good working order with allowance for normal wear and tear, (b) suitable for
use in interchange in accordance with the Field Manual of the AAR and FRA rules
and regulations, (c) suitable for continued commercial use in the commodity last
carried immediately prior to such return, (d) in all material respects, in the
condition required by Section 8.1, (e) in conformance with any requirement
pertaining to warranties of the manufacturers of the Units during the warranty
period, (f) fit for loading and acceptable for interchange service generally in
the transportation industry after giving effect to a transfer or change in
ownership (in accordance with applicable interchange rules), (g) empty, (h)
steam cleaned or otherwise cleaned in a comparable commercially acceptable
manner, and (i) free and clear of all Liens except Lessor's Liens and Permitted
Liens of the type described in clause (iii) of the definition of Permitted Liens
to the extent arising as a result of a fleet wide action which includes such
Unit; provided, however, that in the event Lessor fails to inspect any Unit
during the Inspection Period and/or fails to notify Lessee by the date specified
in the second sentence of Section 6.1(h) that such Unit is not in the condition
specified by Section 6.2, Lessee's obligation to comply with the conditions set
forth in this Section 6.2 shall terminate.
SECTION 7. LIENS.
Lessee will not directly or indirectly create, incur, assume, permit
or suffer to exist any Lien on or with respect to any Units or Lessee's
leasehold interest therein under this Lease, except Permitted Liens, Lessor's
Liens and Liens described in Section 6.4(a) and 6.4(b) of the Participation
Agreement, and Lessee shall promptly, at its own expense, take such action or
cause such action to be taken as may be necessary to duly discharge (by bonding
or otherwise) any such Lien not excepted above if the same shall arise at any
time.
SECTION 8. MAINTENANCE; POSSESSION; COMPLIANCE WITH LAWS.
Section 8.1 Maintenance and Operation. (a) Lessee, at its own cost
and expense, shall maintain, repair and keep each Unit (i) according to prudent
industry practice, in good working order and in good physical condition for
railcars of a similar age and usage, normal wear and tear excepted, (ii) in a
manner consistent with maintenance practices used by Lessee in respect of
equipment owned or leased by Lessee similar in type to such Unit, (iii) in
accordance in all material respects with all manufacturers' warranties and in
accordance with all applicable provisions, if any, of insurance policies
required to be maintained pursuant to Section 12, and (iv) in compliance in all
material respects with any applicable laws and regulations, including, without
limitation, the Field Manual of the AAR, FRA rules and regulations and
Interchange Rules as they apply to the maintenance and operation of the
Equipment in interchange regardless of upon whom such applicable laws and
regulations are nominally imposed; provided, however, that Lessee may, in good
faith and by appropriate proceedings diligently conducted, contest the validity
or application of any such standard, rule or regulation
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in any reasonable manner which does not materially interfere with the use,
possession, operation or return of any of the Units or materially adversely
affect the rights or interests of Lessor and the Indenture Trustee in the
Equipment or hereunder or otherwise expose Lessor, the Indenture Trustee or any
Participant to criminal sanctions or release Lessee from the obligation to
return the Equipment in compliance with the provisions of Section 6.2. Lessee
shall provide Lessor and the Indenture Trustee with notice of any contest of the
type described in the preceding sentence in detail sufficient to enable Lessor
and the Indenture Trustee to ascertain whether such contest may have an effect
of the type described in the preceding sentence. In no event shall Lessee
discriminate as to the use or maintenance of any Unit (including the periodicity
of maintenance or record keeping in respect of such Unit) as compared to
equipment of a similar nature which Lessee owns or leases. Lessee will maintain
all records, logs and other materials required by relevant industry standards or
any governmental authority having jurisdiction over the Units required to be
maintained in respect of any Unit, all as if Lessee were the owner of such
Units, regardless of whether any such requirements, by their terms, are
nominally imposed on Lessee, Lessor or Owner Participant.
(b) Lessee shall not or expressly permit any sublessee to change a
DOT classification (as provided for in 49 C.F.R. Part 179 or any successor
thereto), or expressly permit any sublessee to operate any Unit under a
different DOT classification, from that classification in effect for such Unit
on the Initial Closing Date or the Subsequent Closing Date, as applicable,
except for any change in tank test pressure rating provided such change does not
increase the pressure rating of the Unit above the tank test pressure to which
the Unit was manufactured; provided however, that in the event Lessor shall not
have provided Lessee with a written waiver or consent to such a reclassification
or operation of any Unit within 10 Business Days of Lessee's written request
therefor (or Lessor expressly rejects such a request by Lessee), Lessee may
replace such Unit in accordance with and subject to the provisions of Section
11.2(i), 11.3 and 11.4.
Section 8.2 Possession. Lessee shall be entitled to the possession
and use of the Equipment by it or any Affiliate, in the United States, Canada
and Mexico, only in the manner for which it was designed and intended and so as
to subject it only to ordinary wear and tear. In no event shall Lessee make use
of any Equipment in any jurisdiction not included in the insurance coverage
required by Section 12. The Equipment shall be used primarily on domestic routes
in the United States, and in no event shall more than 20% of the Units be used
(as determined by mileage records) outside the continental United States
(exclusive of Alaska) during any taxable year in which the transaction generates
losses for federal or state income tax purposes. Nothing in this Section 8.2
shall be deemed to constitute permission by Lessor to any Person that acquires
possession of any Unit to take any action inconsistent with the terms and
provisions of this Lease or any of the other Operative Agreements. The rights of
any Person that acquires possession of any Unit pursuant to this Section 8.2
shall be subject and subordinate to the rights of Lessor hereunder.
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Section 8.3 Sublease; Replacement of Units. Provided Lessor shall not
have declared the Lease to be in default (or the Lease shall not be deemed to
have been declared in default) pursuant to Section 15.1 hereof, Lessee shall be
entitled, without the prior approval of Lessor, to enter into a sublease for any
Unit or Units (pursuant to a car service contract or otherwise) to, or to grant
permission for the use thereof under car contracts by, (a) a railroad company or
companies incorporated under the laws of the United States or any state thereof
or the District of Columbia, Canada or any province thereof, or Mexico or any
state thereof, upon lines of railroad owned or operated by such railroad company
or companies or over which such railroad company or companies have trackage
rights or rights for operation of their trains, and upon connecting and other
carriers in the usual interchange of traffic or (b) responsible companies other
than railroad companies for use in their business (leases to such sublessees
being herein referred to as "Permitted Subleases"); provided, however, that if
Lessee subleases any Unit to a sublessee which operates primarily in Mexico (or
any state thereof), Lessee shall first have made all registrations, filings and
deposits which are necessary or advisable under then-current prudent industry
practice (including any actions reasonably requested by Lessor or the Indenture
Trustee) to protect the right, title and interest of Lessor under this Lease and
the Indenture Trustee under the Indenture in and to the Units to be so
subleased. All subleases shall include appropriate provisions so that such
subleases, (i) shall in all events be subject and subordinate to this Lease and
the rights and interests of Lessor and its respective successors and assigns
hereunder and shall confirm such subordination by a provision substantially in
the form currently contained in Lessee's standard car service contract delivered
to Lessor and the Indenture Trustee prior to the Initial Closing Date, or
otherwise as satisfactory to Lessor and the Indenture Trustee, (ii) shall not be
for a term which extends beyond the Basic Term or any Renewal Term, and (iii)
shall not include any term or provision which could reasonably be expected to
result in material adverse consequences to Lessor, Owner Participant or the
Indenture Trustee. Notwithstanding the foregoing, in the event Lessee (A)
desires to sublease one or more Units for a term which extends beyond the Basic
Term or any Renewal Term, or (B) enters into a sublease with respect to one or
more Units, which sublease contains terms and conditions that are not consistent
with the requirements hereof (provided that in no event shall the existence of
such inconsistent term or condition relieve Lessee of any of its obligations
hereunder or constitute a waiver by Lessor of compliance by Lessee with such
obligations), Lessee may do so without violating this Lease and will have the
option to replace such Unit on or prior to the expiration of the Basic Term or
any Renewal Term with another Unit in accordance with and subject to the
provisions hereof and of Section 11.2(i), 11.3 and 11.4 (and in any event shall
effect such replacement prior to the time that such inconsistent term or
condition results in a breach of any provision of this Lease) by delivering to
Lessor, not less than 15 days prior to such replacement, a notice stating that
Lessee has exercised its option hereunder and advising Lessor of the date on
which the Unit to be replaced will be so replaced; provided that if replacement
is to be made pursuant to the foregoing clause (B), such notice shall be
accompanied by an Officer's Certificate (executed by Lessee's President or any
Vice President) stating that such replacement is required for valid business
reasons arising in the ordinary course of Lessee's business as an operating
lessor and briefly setting forth the reasons
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therefor. In the event Lessee exercises its option pursuant to the foregoing
clause (A) or (B), on the date specified for replacement in the notice delivered
by Lessee in connection therewith, Lessee shall transfer title of the
replacement Unit to Lessor, Lessor shall transfer title of the replaced Unit to
Lessee, and Lessee and Lessor shall deliver to each other such documents and
other instruments as are required by Section 11.4(b). Except in connection with
an assignment pursuant to a transaction permitted by Section 6.8 of the
Participation Agreement, no sublease entered into by Lessee hereunder shall
relieve Lessee of any liability or obligation hereunder, which shall be and
remain those of a principal and not a surety. Nothing in this Section 8.3 shall
be deemed to constitute permission to any Person in possession of any Unit
pursuant to any such sublease to take any action inconsistent with the terms and
provisions of this Lease or any of the other Operative Agreements.
SECTION 9. MODIFICATIONS.
Section 9.1 Required Modifications. In the event the AAR, the United
States Department of Transportation, or any other United States, state or local
governmental agency or any other applicable law requires that any Unit be
altered, replaced or modified (a "Required Modification"), Lessee agrees to make
such Required Modification at its own expense; provided, however, that Lessee
may, in good faith and by appropriate proceedings diligently conducted, contest
the validity or application of any such law, regulation, requirement or rule in
any reasonable manner which does not materially interfere with the use,
possession, operation or return of any Unit or materially adversely affect the
rights or interests of Lessor and the Indenture Trustee in the Equipment or
hereunder or otherwise expose Lessor, the Indenture Trustee or any Participant
to criminal sanctions or relieve Lessee of the obligation to return the
Equipment in compliance with the provisions of Section 6.2. Title to any
Required Modification shall immediately vest in Lessor. Notwithstanding anything
herein to the contrary, if Lessee determines in good faith that any Required
Modification to a Unit would be economically impractical, in lieu of making the
Required Modification as provided above, Lessee may provide written notice of
such determination to Lessor and either (i) treat such Unit as if an Event of
Loss had occurred as of the date of such written notice with respect to such
Unit; provided that upon such occurrence Lessee shall have only the right to
replace such Unit under the provisions of Section 11.2(i), 11.3 and 11.4, or
(ii) if such determination is made on or after the seventh anniversary of the
Basic Term Commencement Date, either treat such Unit as provided in clause (i)
above or treat such Unit as a Terminated Unit on the terms and conditions set
forth in Section 10.1; provided that Lessee shall not discriminate against such
Unit in making such determination of economic impracticality as compared with
other equipment of the same type as such Unit which is owned or leased by
Lessee.
Section 9.2 Optional Modifications. Lessee at any time may in its
discretion and at its own cost and expense modify, alter or improve any Unit in
a manner which is not required by Section 9.1 (a "Modification"); provided that
no Modification shall diminish the fair market value, utility, or remaining
useful life of such Unit below the value, utility, or remaining useful
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life thereof immediately prior to such Modification, other than in a de minimis
manner, assuming such Unit was then in the condition required to be maintained
by the terms of this Lease, or cause such Unit to become Limited Use Property.
Title to any Non-Severable Modification shall be immediately vested in Lessor.
Title to any Severable Modification shall remain with Lessee unless it is a
Required Modification, in which case title shall vest in Lessor pursuant to
Section 9.1. If Lessee, at its cost and expense, shall cause any Severable
Modifications (which are not Required Modifications) to be made to any Unit,
Lessor shall have the right, upon 90 days prior written notice in the case of a
return other than pursuant to Section 15.6, prior to the return of such Unit to
Lessor hereunder, to purchase such Severable Modifications (other than Severable
Modifications consisting of proprietary or communications equipment) at their
then Fair Market Sales Value (taking into account their actual condition). If
Lessor does not so elect to purchase such Severable Modifications, Lessee may
remove such Severable Modifications at Lessee's cost and expense and, if
requested (which request shall be made by not less than 90 days prior written
notice in the case of a return other than pursuant to Section 15.6) by Lessor
will, so remove such Severable Modifications at Lessee's cost and expense.
Section 9.3 Removal of Property; Replacements. Lessee may, in the
ordinary course of maintenance or repair of any Unit, remove any item of
property constituting a part of such Unit, and, unless the removal of such item
is required by Section 9.1 hereof, Lessee shall replace such item as promptly as
practicable with an item of property that is free and clear of all Liens (other
than Permitted Liens) and in as good operating condition as, and with a value,
utility and useful life at least equal to, the item of property being replaced,
assuming that such replaced item was in the condition required to be maintained
by the terms of this Lease. Any item of property removed from such Unit as
provided in the preceding sentence shall remain the property of Lessor free and
clear of all rights of Lessee until replaced in accordance with the terms of
such sentence, but shall then, without further act, become the property of
Lessee. Any such replacement property shall, without further act, become the
property of Lessor and be deemed part of such Unit for all purposes hereof.
SECTION 10. VOLUNTARY TERMINATION.
Section 10.1 Right of Termination. So long as no Lease Default or
Lease Event of Default shall have occurred and be continuing, Lessee shall have
the right, at its option at any time or from time to time during the Basic Term
on or after the seventh anniversary of the Basic Term Commencement Date, to
terminate the Lease Term with respect to any or all of the Units (provided that,
if such termination is for less than all Units in an Equipment Group, the
determination as to which Units are subject to termination shall be made by
Lessee on a random or other reasonable basis (including, without limitation, on
the basis of car type) without discrimination based on maintenance status or
operating condition of the Units in question) (the "Terminated Units") if Lessee
determines in good faith (as evidenced by a certified copy of a resolution
adopted by Lessee's Board of Directors and a certificate executed by the Chief
Financial Officer of Lessee) either (a) that such Units have become obsolete or
surplus to
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Lessee's requirements, or (b) in the circumstances described in clause (ii) of
the last sentence of Section 9.1, that a Required Modification to such Units
would be economically impractical. Lessee shall be entitled to exercise its
termination rights under this Section 10.1 by delivering at least 120 days'
prior notice to Lessor, the Indenture Trustee and the Pass Through Trustee (i)
specifying a proposed date of termination for such Units (the "Termination
Date"), which date shall, except as provided in the last sentence of Section
10.3, be a Rent Payment Date, any such termination to be effective on the
Termination Date, and (ii) if some but less than all of the Units in an
Equipment Group are designated as Terminated Units, describing the
nondiscriminatory manner (including, without limitation, on the basis of car
type) in which Lessee proposes to determine which Units in that Equipment Group
are to be Terminated Units. Except as expressly provided herein, there will be
no conditions to Lessee's right to terminate this Lease with respect to the
Terminated Units pursuant to this Section 10.1. So long as (A) Lessor shall not
have given Lessee a notice of election to retain the Terminated Units in
accordance with Section 10.3, or (B) notice of prepayment of the Equipment Notes
shall not have been given pursuant to Section 2.10 of the Indenture, Lessee may
withdraw the termination notice referred to above at any time prior to the
Termination Date, whereupon this Lease shall continue in full force and effect;
provided that Lessee (1) may not exercise its right to withdraw such a
termination notice more than once annually, and (2) may not withdraw any
termination notice with respect to any Terminated Units after receipt by Lessee
of a bid equal to or greater than the Termination Value with respect to such
Terminated Units or later than sixty (60) days prior to the scheduled
Termination Date. Lessee agrees that if it withdraws a termination notice it
will reimburse Lessor, Owner Participant and the Indenture Trustee for all
reasonable out-of-pocket costs and expenses (including reasonable legal fees and
expenses) incurred by any thereof in connection therewith.
Section 10.2 Sale of Equipment. During the period from the date of
such notice given pursuant to Section 10.1 to the Termination Date, Lessee, as
agent for Lessor and, except as provided in Section 10.3, at Lessee's sole cost
and expense, shall use its reasonable best efforts to obtain bids from Persons
other than Lessee or Affiliates thereof for the cash purchase of the Terminated
Units, and Lessee shall promptly, and in any event at least five Business Days
prior to the proposed date of sale, certify to Lessor in writing the amount and
terms of each such bid, the proposed date of such sale and the name and address
of the party submitting such bid. Unless Lessor shall have elected to retain the
Terminated Units in accordance with Section 10.3, on the Termination Date: (a)
Lessee shall, subject to the prior or concurrent receipt (x) by Lessor of all
amounts owing to Lessor pursuant to the next sentence, and (y) by the Persons
entitled thereto of all unpaid Supplemental Rent due on or before the
Termination Date, deliver the Terminated Units (excluding any optional Severable
Modifications removed by Lessee pursuant to Section 9.2) to the bidder (which
shall not be Lessee or any Affiliate thereof), if any, which shall have
submitted the highest cash bid prior to such date (or to such other bidder as
Lessee and Lessor shall agree), in the condition specified in Section 6.2 and
(b) Lessor shall, without recourse or warranty (except as to the absence of any
Lessor's Lien) simultaneously therewith transfer all of its right, title and
interest in and to the Terminated Units to such bidder.
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The net proceeds of sale realized at such sale shall be paid to Lessor and, in
addition, on the Termination Date, Lessee shall pay to Lessor, (i) all unpaid
Rent with respect to such Terminated Units due and payable on or prior to the
Termination Date (exclusive of any in advance Basic Rent due on such date), (ii)
the excess, if any, of (A) the Termination Value for the Terminated Units
computed as of the Termination Date, over (B) the net cash sales proceeds (after
the deduction of all reasonable costs and expenses of Lessor and Owner
Participant in connection with such sale) of the Terminated Units, and (iii) an
amount equal to the Make- Whole Amount, if any, in respect of the principal
amount of the Equipment Notes to be prepaid in accordance with Section 2.10(a)
of the Indenture. If no sale shall have occurred, whether as a result of
Lessee's failure to pay all of the amounts hereinabove required or otherwise,
this Lease shall continue in full force and effect with respect to such Units,
and Lessee agrees to reimburse Lessor, Owner Participant and the Indenture
Trustee for all reasonable costs and expenses (including reasonable legal fees
and expenses) incurred by any thereof in connection therewith; provided that if
such sale shall not have occurred solely because of Lessee's failure to pay the
amounts hereinabove required, Lessee shall have no further right to terminate
this Lease with respect to such Units. Lessee, in acting as agent for Lessor,
shall have no liability to Lessor for failure to obtain the best price, shall
act in its sole discretion and shall be under no duty to solicit bids publicly
or in any particular market. Lessee's sole interest in acting as agent shall be
to use its reasonable best efforts to sell the Units at the highest price then
obtainable consistent with the terms of this Lease.
Section 10.3 Retention of Equipment by Lessor. Notwithstanding the
provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect by written
notice to Lessee, no later than 60 days after receipt of Lessee's notice of
termination, not to sell the Terminated Units on the Termination Date, whereupon
Lessee shall (a) deliver the Terminated Units to Lessor in the same manner and
condition as if delivery were made to Lessor pursuant to Section 6, treating the
Termination Date as the termination date of the Lease Term with respect to the
Terminated Units, and (b) pay to Lessor, or to the Persons entitled thereto, all
Basic Rent and all Supplemental Rent due and owing on the Termination Date and
unpaid (exclusive of any in advance Basic Rent due on such date but inclusive of
any Supplemental Rent measured by the Make-Whole Amount). If Lessor elects not
to sell the Terminated Units as provided in this Section 10.3, then Lessor shall
pay, or cause to be paid, to the Indenture Trustee in funds of the type and in
an amount equal to the outstanding principal amount of the Equipment Notes
issued in respect of such Terminated Units and all accrued and unpaid interest
to the date of prepayment of such Equipment Notes on such Termination Date and
an amount equal to the Make-Whole Amount, if any, in respect of the principal
amount of the Equipment Notes to be prepaid without in any manner relieving
Lessee of its obligation to pay any such amount pursuant to the preceding
sentence; provided that unless Lessor shall have paid all such amounts to the
Indenture Trustee on the Termination Date, this Lease shall continue in full
force and effect with respect to such Terminated Units. If Lessor shall fail to
pay the amounts required pursuant to this Section 10.3 and as a result thereof
this Lease shall not be terminated with respect to the Terminated Units on the
proposed Termination Date, Lessor shall (x) thereafter
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no longer be entitled to exercise its election to retain such Terminated Units,
and (y) reimburse Lessee for any expenses (including reasonable legal fees and
expenses) incurred by it in attempting to sell the Terminated Units pursuant to
Section 10.2 immediately prior to Lessor's exercise of such preemptive election,
and Lessee may at its option at any time thereafter prior to the immediately
following Rent Payment Date submit a new termination notice pursuant to Section
10.1 with respect to such Terminated Units specifying a proposed Termination
Date occurring on a Determination Date that is not less than 25 days after the
date of such notice; provided that for purposes of determining the amount to be
paid by Lessee pursuant to Section 10.2, the Termination Date shall be deemed to
be the Termination Date on which Lessor failed to make the payments provided in
this Section 10.3.
Section 10.4 Termination of Lease. In the event of either (a) any
sale of Terminated Units and receipt by Lessor and the Indenture Trustee of all
of the amounts provided in Section 10.2 or (b) retention of the Equipment and
payment in full by Lessor of all amounts required to be paid pursuant to Section
10.3, and upon compliance by Lessee with the other provisions of this Section
10, the obligation of Lessee to pay Basic Rent hereunder for such Terminated
Units shall cease and the Lease Term for such Terminated Units shall end. Upon
the payment of all amounts required to be paid in respect of any Terminated Unit
or Units, Lessor will convey to Lessee or its designee all right, title and
interest of Lessor in and to such Terminated Unit or Units, "as is", "where is",
without recourse or warranty, except for a warranty against Lessor's Liens, and
shall execute and deliver to Lessee or its designee such bills of sale and other
documents and instruments as Lessee or its designee may reasonably request to
evidence such conveyance.
SECTION 11. LOSS, DESTRUCTION OR REQUISITION.
Section 11.1 Event of Loss. In the event that any Unit shall (a)
suffer damage or contamination which, in Lessee's reasonable judgment (as
evidenced by an Officer's Certificate to such effect), makes repair uneconomic
or renders such Unit unfit for commercial use, (b) suffer destruction, or shall
suffer theft or disappearance for a period exceeding 12 months, (c) be
permanently returned to the manufacturer pursuant to any patent indemnity
provisions, (d) have title thereto taken or appropriated by any governmental
authority, agency or instrumentality under the power of eminent domain or
otherwise, (e) suffer an actual or constructive total loss, (f) in the normal
course of interstate rail transportation, have been prohibited from being used
for a continuous period in excess of six months as a result of any rule,
regulation, order promulgated, or any other action taken, by the United States
government or any agency or instrumentality thereof, (g) be subject to a
sublease with any Person which operates primarily outside the United States and
shall not be returned to Lessee within 60 days of a demand by Lessee for return
of such Unit following the termination or other expiration of the term of such
sublease, or (h) be taken or requisitioned for use by any governmental authority
or any agency or instrumentality thereof under the power of eminent domain or
otherwise, and such taking or requisition is for a period that exceeds the
remaining Basic Term or any Renewal
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Term then in effect (unless such taking or requisition is by Mexico or any
governmental authority, agency or instrumentality thereof, in which case such
period shall be the lesser of the period as aforesaid or 365 days) (any such
occurrence being hereinafter called an "Event of Loss"), Lessee, in accordance
with the terms of Section 11.2, shall promptly and fully inform Lessor and the
Indenture Trustee of such Event of Loss; provided, however, that if any Unit
shall suffer a theft or disappearance as described in clause (b) above for a
period exceeding 6 months, Lessee shall use its reasonable best efforts to
inform Lessor and the Indenture Trustee of such theft or disappearance as an
Event of Loss once it has knowledge thereof, regardless of whether the 12-month
period referred to in said clause (b) has run.
Section 11.2 Replacement or Payment upon Event of Loss. Lessee shall
report, by written notice to Lessor given (a) on the date that is 60 days prior
to each Rent Payment Date, or (b) promptly, but in no event later than 30 days,
after the date on which a Responsible Officer of Lessee shall have obtained
actual knowledge that since the end of the last period for which a report was
delivered to Lessor under this Section 11.2 ten or more Units have suffered an
Event of Loss (a "Multiple Loss"), any and all occurrences of an Event of Loss
and shall notify Lessor of its election to perform one of the following options
with respect to each such Unit:
(i) on the Rent Payment Date immediately following delivery of the
foregoing notice (or, in the case of a Multiple Loss, on the first
Business Day succeeding the 60th day following the date on which Lessee
is required to report such Multiple Loss pursuant to this Section
11.2), Lessee shall comply with Section 11.4 and shall convey or cause
to be conveyed to Lessor a Replacement Unit to be leased to Lessee
hereunder, such Replacement Unit to be of the same car type, the same
or later year of manufacture of the Unit replaced and free and clear of
all Liens (other than Permitted Liens of the type described in clause
(ii) with respect to sublessees, and in clauses (iii), (iv), (vi) and
(vii) of the definition thereof) and to have a Fair Market Sales Value,
utility, remaining useful life, residual value and condition at least
equal to the Unit so replaced (assuming such Unit was in the condition
required to be maintained by the terms of this Lease); provided that if
at the time of such replacement, only railcars (x) of a later year of
manufacture or (y) with a greater Fair Market Sales Value than the
replaced Units are available as Replacement Units, Lessee shall convey
such Replacement Units to Lessor as set forth above but Lessee may, at
a later date, replace such Replacement Units with other Units that are
closer in Fair Market Sales Value to the original replaced Units;
provided further that if Lessee shall either fail to elect an option
under clause (i) or (ii) of this Section 11.2 by the applicable date,
or timely elects the option under this clause (i) but shall fail to
perform its obligation to effect such replacement under this paragraph
(i) on a timely basis, then (except in the case of a failure to perform
an election to replace pursuant to Section 8.1(b), Section 8.3 or
Section 9.1) Lessee shall immediately give Lessor, the Indenture
Trustee and the Pass Through Trustee notice of such failure and Lessee
shall pay to Lessor on such Rent Payment Date (or, in the case of a
Multiple Loss, on the first
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Business Day succeeding the 60th day following the date on which Lessee
is required to report such loss pursuant to this Section 11.2) or in
the case of Supplemental Rent, to the Person entitled thereto, the
amounts specified in clause (ii) below and provided further that Lessee
shall have no right to elect replacement under this clause (i) if at
the time Lessee delivers the notice described in the first sentence of
this Section 11.2, a Lease Event of Default or a Lease Default
described in Section 14(a), Section 14(g) or Section 14(h) shall have
occurred and be continuing and provided further that the Lessee may
substitute fewer or more Replacement Units than the number of Units
which have suffered an Event of Loss so long as (A) such Replacement
Unit(s) have in the aggregate a Fair Market Sales Value, utility,
remaining economic useful life, residual value and condition at least
equal to the aggregate Fair Market Sales Value, utility, remaining
economic useful life, residual value and condition of the Unit(s) so
replaced (assuming such Unit(s) were in at least the condition required
to be maintained by the terms of this Lease), (B) each such Replacement
Unit has a utility and condition not materially worse than that of each
of the Units so replaced, (C) each such Replacement Unit has an
estimated residual value as of the end of the Basic Term (determined at
the date of such replacement) of at least 20% (without giving effect to
inflation or deflation) of the Fair Market Sales Value of such
Replacement Unit as of the date of such replacement, and (D) such
Replacement Unit(s) otherwise meet the requirements of this paragraph
(i); or
(ii) on the Rent Payment Date immediately following the delivery of
the notice described in the first sentence of this Section 11.2, Lessee
shall pay or cause to be paid to Lessor (or in the case of Supplemental
Rent, to the Person entitled thereto) in funds of the type specified in
Section 3.6, an amount equal to (A) the Stipulated Loss Value of each
such Unit suffering an Event of Loss or deemed Event of Loss determined
as of such Rent Payment Date, (B) all Basic Rent payable on such date
in respect of such Unit (exclusive of any in advance Basic Rent due on
such date), and (C) all other Rent then due and payable hereunder with
respect to such Unit, it being understood that until such Stipulated
Loss Value and other sums are paid, there shall be no abatement or
reduction of Basic Rent; provided, however, that in the event of a
Multiple Loss, in lieu of the amounts otherwise required to be paid in
respect of each such Unit as provided above, Lessee shall pay or cause
to be paid on the first Business Day succeeding the 60th day following
the date on which Lessee is required to report such loss pursuant to
this Section 11.2 (the "Multiple Loss Payment Date"), (A) an amount
equal to the Stipulated Loss Value of each such Unit determined as of
(i) the second day of the month in which the Multiple Loss Payment Date
occurs or (ii) the second day of the immediately preceding month if the
Multiple Loss Payment Date is the first day of a month (the second day
of any such month a "Multiple Loss Determination Date"), (B) an amount
of accrued and unpaid Basic Rent, if any, in respect of each such Unit
equal to the product of (x) the daily equivalent of the amount of Basic
Rent scheduled to be paid with respect to each such Unit on the Rent
Payment Date next succeeding such Multiple Loss Determination Date and
(y) the number of days from and including such Multiple Loss
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Determination Date to but excluding the Multiple Loss Payment Date (but
in no event less than the amount of accrued and unpaid interest, if
any, in respect of the principal amount of Equipment Notes to be
prepaid as a result of such Multiple Loss) and (C) all other Rent then
due and payable hereunder, it being understood that until such
Stipulated Loss Value and other sums are paid, there shall be no
abatement or reduction of Basic Rent; provided, further, that if Lessee
elects the option under this clause (ii), it shall notify the Lessor,
the Indenture Trustee and the Pass Through Trustee thereof at least 20
days prior to the date such payment is to be made, which election shall
be irrevocable on the 15th day prior to the date payment is required
hereunder.
Section 11.3 Rent Termination. Upon the replacement of any Unit or
Units in compliance with Section 11.2(i) (but only as to replaced Units and not
any Replacement Unit) or upon the payment of all sums required to be paid
pursuant to Section 11.2 in respect of any Unit or Units, the Lease Term with
respect to such Unit or Units and the obligation to pay Basic Rent for such Unit
or Units accruing subsequent to the date of payment of Stipulated Loss Value or
date of conveyance of such Replacement Unit or Units shall terminate; provided
that Lessee shall be obligated to pay all Rent in respect of such Unit or Units
which is payable under Section 11.2 with respect to such payment of Stipulated
Loss Value or such replacement of such Unit or Units and in respect of all other
Units then continuing to remain subject to this Lease; provided further that it
is understood and agreed that, in the event of a replacement in compliance with
Section 11.2(i), the Rent paid with respect thereto on the Rent Payment Date
next following the conveyance of the Replacement Unit or Units shall be deemed
paid in respect of, and allocated between, both the Replacement Unit or Units
and the original Unit or Units it or they replaced.
Section 11.4 Disposition of Equipment; Replacement of Unit. (a) Upon
the payment of all sums required to be paid pursuant to Section 11.2 in respect
of any Unit or Units, Lessor will convey to Lessee or its designee all right,
title and interest of Lessor in and to such Unit or Units, "as is", "where is",
without recourse or warranty, except for a warranty against Lessor's Liens, and
shall execute and deliver to Lessee or its designee such bills of sale and other
documents and instruments as Lessee or its designee may reasonably request to
evidence such conveyance. As to each separate Unit so disposed of, so long as no
Lease Event of Default shall have occurred and be continuing, Lessee or its
designee shall be entitled to any amounts arising from such disposition, plus
any awards, insurance or other proceeds and damages received by Lessee, Lessor
or the Indenture Trustee by reason of such Event of Loss after having paid the
Stipulated Loss Value attributable thereto.
(b) At the time of or prior to any replacement of any Unit, Lessee,
at its own expense, will (i) furnish Lessor with a Bill of Sale with respect to
the Replacement Unit substantially in the form delivered pursuant to Section
4.1(g) of the Participation Agreement, (ii) cause a Lease Supplement
substantially in the form of Exhibit A hereto, subjecting such Replacement Unit
to this Lease, and duly executed by Lessee, to be delivered to Lessor for
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execution and, upon such execution, to be filed for recordation as required in
Section 16.1, (iii) so long as the Indenture shall not have been satisfied and
discharged, cause an Indenture Supplement substantially in the form of Exhibit A
to the Indenture for such Replacement Unit, to be delivered to Lessor and to the
Indenture Trustee for execution and, upon such execution, to be filed for
recordation as required in Section 16.1, (iv) furnish Lessor with an opinion of
Lessee's counsel (which may be Lessee's General Counsel or Assistant General
Counsel), to the effect that (A) the Bill of Sale referred to in clause (i)
above constitutes an effective instrument for the conveyance of title to the
Replacement Unit to Lessor, (B) legal and beneficial title to the Replacement
Unit has been delivered to Lessor, free and clear of all Liens (other than
Permitted Liens of the type described in clause (ii) with respect to sublessees,
and in clauses (iii), (iv), (v) and (vi) of the definition thereof), and (C) all
filings and recordings and other action necessary or appropriate to protect the
respective interests of Lessor and the Indenture Trustee in the Replacement
Units (to the extent required by the provisions of this Lease) have been
accomplished, (v) furnish Lessor with an engineer's certificate (which may be
from an employee of Lessee) certifying as to the value, utility, remaining
useful life and condition required under clause (i) of Section 11.2, (vi)
furnish to Lessor and the Indenture Trustee an Officer's Certificate certifying
that the Replacement Unit is free and clear of all Liens (other than Permitted
Liens of the type described in clause (ii) with respect to sublessees, and in
clauses (iii), (iv), (v) and (vi) of the definition thereof), (vii) furnish to
Owner Participant an agreement to indemnify Owner Participant against any
adverse tax consequences suffered as a result of such replacement, and (viii)
furnish such other documents and evidence as Owner Participant, Lessor or the
Indenture Trustee, or their respective counsel, may reasonably request in order
to establish the consummation of the transactions contemplated by this Section
11.4. In addition, if in connection with any substitution pursuant to this
Section 11.4, Owner Participant's internal tax counsel shall notify Lessee in
writing that such substitution may not qualify for like kind exchange treatment
under the Code (which notice shall indicate the basis for such counsel's
opinion), Lessee shall elect, in its sole discretion, to furnish (i) a tax
opinion from Neal, Gerber & Eisenberg or other independent tax counsel
reasonably acceptable to Owner Participant to the effect that Owner Participant
has a reasonable basis, within the meaning of Section 6662(d)(2)(B)(ii) of the
Code, for the opinion that Owner Participant will not be required to recognize
gain or loss for Federal income tax purposes with respect to such replacement or
(ii) in the event such reasonable basis tax opinion cannot be furnished and
Lessee wishes to make such replacement, Lessee will, at such time as Lessee
receives written notice from Owner Participant that Owner Participant has filed
its Federal income tax returns wherein such gain or loss is recognized, make an
indemnity payment to Owner Participant in the incremental amount of such adverse
tax consequence (on a net after-tax basis) attributable to the conveyance of
such Replacement Unit. For all purposes hereof, upon passage of title thereto to
Lessor, the Replacement Unit shall be deemed part of the property leased
hereunder and the Replacement Unit shall be deemed a "Unit" of Equipment as
defined herein. Upon such passage of title, Lessor will transfer to Lessee,
without recourse or warranty (except as to Lessor's Liens), all of Lessor's
right, title and interest in and to the replaced Unit (and shall execute and
deliver to Lessee or its designee such bills of sale and other documents and
instruments as
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Lessee may reasonably request to evidence such conveyance), and upon such
transfer, Lessor will request in writing that the Indenture Trustee execute and
deliver to Lessee an appropriate instrument releasing such replaced Unit from
the lien of the Indenture. Lessee shall pay all reasonable out-of-pocket costs
and expenses (including reasonable legal fees and expenses) incurred by Lessor,
Owner Participant and the Indenture Trustee in connection with any replacement
pursuant to this Section 11.4.
Section 11.5 Eminent Domain. In the event that during the Lease Term
the use of any Unit is requisitioned or taken by any governmental authority
under the power of eminent domain or otherwise for a period which does not
constitute an Event of Loss, all of Lessee's obligations under the Operative
Agreements, including without limitation, Lessee's obligation to pay all
installments of Basic Rent, shall continue for the duration of such
requisitioning or taking. Lessee shall be entitled to receive and retain for its
own account all sums payable for any such period by such governmental authority
as compensation for the requisitioning or taking of possession. Any amount
referred to in this Section 11.5, 11.4(a) or 12 which is payable to Lessee shall
not be paid to Lessee, or if it has been previously paid directly to Lessee,
shall not be retained by Lessee, if at the time of such payment a Lease Default
under Section 14(g) or Section 14(h) or a Lease Event of Default shall have
occurred and be continuing, but shall be paid to and held by Lessor pursuant to
Section 24, or if the Indenture shall not then have been discharged pursuant to
its terms, to the Indenture Trustee, as security for the obligations of Lessee
under this Lease, and at such time as there shall not be continuing any such
Lease Default or Lease Event of Default, such amount shall be paid to Lessee.
SECTION 12. INSURANCE.
Section 12.1 Physical Damage and Public Liability Insurance. Lessee
will at all times after delivery and acceptance of each Unit and until such Unit
is returned to Lessor, at its own expense, keep such Unit or cause such Unit to
be kept insured by a reputable insurance company or companies, in amounts and
against risks and with deductibles and terms and conditions not less than the
insurance, if any, maintained by Lessee with respect to similar equipment which
it owns or leases, but in no event shall such coverage be for amounts or against
risks less than the prudent industry standard for companies engaged in full
service leasing of tank and hopper railcars. Without limiting the foregoing,
Lessee will in any event:
(a) (i) for so long as a Lease Event of Default shall have occurred
and be continuing, or (ii) if required by the Letter Agreement dated as of the
Closing between Lessee and the Owner Participant (in the circumstances set forth
therein), keep each Unit insured against physical damage in an amount not less
than the Stipulated Loss Value attributable thereto as shown on Schedule 4 to
the Participation Agreement, subject to a limit of not less than $10 million per
occurrence (except for a $10 million annual aggregate for flood and earth
movement); provided that such coverage may provide for deductible amounts or
self-insured retention of not more than $1,000,000 per occurrence; and
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(b) maintain public liability insurance naming Owner Participant,
Lessor, as lessor of the Equipment and in its individual capacity, and the
Indenture Trustee as additional insureds (but only with respect to liability
arising out of or related to the Operative Agreements and the Equipment) against
bodily injury, death or property damage arising out of the use or operation of
the Equipment with general and excess liability limits of not less than
$100,000,000 per occurrence and annually in the aggregate; provided that such
coverage may provide for deductible amounts or self-insured retention not
exceeding $25,000,000.
It is understood and agreed that the insurance required hereunder
may be part of a group-wide insurance program, including risk-retention and
self-insurance. Any policy of insurance maintained in accordance with this
Section 12.1 and any policy purchased in substitution or replacement for any of
such policies shall provide that if any such insurance is cancelled or
terminated, for any reason whatever (other than upon normal policy expiration or
non-payment of premiums), Lessor, the Indenture Trustee and Owner Participant
shall receive 30 days' prior written notice of such cancellation or termination
and shall further provide that if any such insurance is cancelled or terminated
for non-payment of premiums, the Indenture Trustee and Owner Participant shall
receive 10 days' prior written notice of such cancellation or termination.
Section 12.2 Physical Damage Insurance. (a) The insurance maintained
pursuant to Section 12.1(a) shall provide that (i) so long as the Equipment
Notes remain outstanding, the proceeds up to the Stipulated Loss Value for any
loss or damage to any Unit shall be paid to the Indenture Trustee under a
standard mortgage loss payable clause, and thereafter to Lessor and (ii) so long
as no Lease Event of Default shall have occurred and be continuing, Lessee will
be entitled, at its own expense, to make all proofs of loss and take all other
steps necessary to collect the proceeds of such insurance.
(b) The entire proceeds of any property insurance or third party
payments for damage to any Unit received by Lessor or the Indenture Trustee
shall be held by such party until, with respect to such Unit, the repairs
referred to in clause (i) below are made as specified therein or payment of the
Stipulated Loss Value is made, and such entire proceeds will be paid, so long as
no Lease Event of Default shall have occurred and be continuing, either:
(i) to Lessee promptly following receipt by the Indenture Trustee
or Lessor, as the case may be, of a written application signed by
Lessee for payment to Lessee for repairing or restoring the Units which
have been damaged so long as (1) Lessee shall have complied with the
applicable provisions of the Lease, and (2) Lessee shall have certified
that any damage to such Units shall have been fully repaired or
restored; or
(ii) if this Lease is terminated with respect to such Unit because
of an Event of Loss and Lessee has paid the Stipulated Loss Value due
as a result thereof, such proceeds shall promptly paid over to, or
retained by, Lessee.
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Section 12.3 Public Liability Insurance. (a) The public liability
insurance referred to in paragraph 12.1(b) shall (i) provide that inasmuch as
such policies cover more than one insured, all terms, conditions, insuring
agreements and endorsements, with the exception of limits of liability and
liability for premiums, commissions, assessments or calls (which shall be solely
a liability of Lessee), shall operate in the same manner as if there were a
separate policy or policies covering each insured, (ii) provide that, as a
result of Lessee's waiver of subrogation contained in Section 12.3(d), the
insurers shall have no rights of subrogation against Owner Participant, Lessor,
as Lessor of the Equipment and in its individual capacity, and the Indenture
Trustee, (iii) provide that neither Owner Participant, Lessor, as lessor of the
Equipment and in its individual capacity, or the Indenture Trustee shall have
any responsibility for any insurance premiums, whether for coverage before or
after cancellation or termination of any such policies as to Lessee and (iv) be
primary without contribution from any similar insurance maintained by Owner
Participant, Lessor or the Indenture Trustee.
(b) Lessee shall use its reasonable best efforts to obtain public
liability insurance policies stipulating that coverage thereunder will not be
invalidated (as to Owner Participant, Lessor, as lessor of the Equipment and in
its individual capacity, and the Indenture Trustee) due to any action or
inaction of Lessee or any other Person (other than Owner Participant, Lessor or
the Indenture Trustee, but only in respect of their respective coverages), but
shall be under no obligation to obtain such policies containing such
stipulations if they are not available to Lessee at commercially reasonable
rates in the markets in which Lessee has then placed its insurance program.
(c) In the event any public liability insurance policy or coverage
thereunder which are required to be maintained under Section 12.1(b) shall not
be available to Lessee in the commercial insurance market on commercially
reasonable terms, Lessor shall not unreasonably withhold its agreement to waive
such requirement to the extent the maintenance thereof is not so available upon
application therefore as set forth herein. Lessee shall make written request for
any such waiver in writing, accompanied by written reports prepared, at Lessee's
option, either by (i) one independent insurance advisor chosen by Lessee and
Lessor or (ii) three independent insurance advisors, one chosen by Lessor, one
chosen by Lessee and one chosen by the other two advisors (one of which may be
the regular insurance broker or brokers of Lessee), in either case, such
independent insurance advisors being of recognized national standing. The fees
and expenses of all such advisors shall be paid by Lessee. The written reports
required hereunder shall (x) state that such insurance (or the required coverage
thereunder) is not reasonably available to Lessee at commercially reasonable
premiums in the commercial insurance markets within which Lessee normally
purchases its insurance from insurers, acceptable to Lessee, with a Best's
rating of A- or better for railcars of similar type and capacity and (y) explain
in detail the basis for such conclusions. Upon the granting of any such waiver,
Lessee shall within 15 days thereafter certify to Lessor in writing the cost (on
a fleet-wide basis) of liability insurance premiums for the coverage required by
Section 12.1(b) for the immediately preceding fiscal year; and in the event that
any such certificate is not
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received by Lessor within such 15 day period, any such waiver shall be deemed
revoked. At any time after the granting of such waiver, but not more often than
once a year, Lessor may make a written request for a supplemental report (in
form reasonably acceptable to Lessor) from such insurance advisor(s) updating
the prior report and reaffirming the conclusions set forth therein. Lessee shall
provide any such required supplemental report within 60 days after receipt of
the written request therefor. Any such waiver shall be effective for only as
long as such insurance is not reasonably available to Lessee in the commercial
markets in which Lessee normally purchases its insurance at commercially
reasonable rates, it being understood that the failure of Lessee to furnish
timely any such supplemental report shall be conclusive evidence that such
condition no longer exists. If such supplemental report shows that such coverage
is available, Lessee shall within 90 days of such report obtain such insurance
coverage. During any period with respect to which such waiver has been granted
and remains in effect under this Section 12.3(c), Lessee shall obtain public
liability insurance as set forth in Section 12.1(b) from such carriers, in such
amounts and with coverage limits and deductibles as is prudent under the
circumstances, but in any event in an amount that may be purchased for a premium
equal to 110% of Lessee's cost (on a fleet-wide basis) of public liability
insurance premiums for the coverage required by Section 12.1(b) for the fiscal
year immediately preceding the fiscal year in which such waiver first was
granted.
(d) Lessee hereby waives (on behalf of itself and its insurers) all
of Lessee's and Lessee's insurers' rights of subrogation against the Owner
Participant, Lessor, as lessor of the Equipment and in its individual capacity,
and the Indenture Trustee with respect to all matters relating to or arising out
of the Units, the Operative Documents or the transactions contemplated thereby.
Section 12.4 Certificate of Insurance. Lessee shall, prior to the
Initial Closing Date and the Subsequent Closing Date and when the renewal
certificate referred to below is sent (but in any event not less than annually),
furnish Lessor, the Indenture Trustee and the Owner Participant with a
certificate signed by the insurer or an independent insurance broker showing the
insurance then maintained by Lessee pursuant to Section 12.1 and, with respect
to any renewal policy or policies, furnish certificates or binders evidencing
such renewal as soon as practicable, but in no event later than 30 days after
the earlier of the date such renewal is effected or the expiration date of the
original policy or policies. Simultaneously, with the furnishing of such
certificate, Lessee will provide appropriate evidence, reasonably satisfactory
to Lessor and the Indenture Trustee, that all premiums due on such insurance
have been paid.
Section 12.5 Additional Insurance. In the event that Lessee shall
fail to maintain insurance as provided in Section 12.1 or, if applicable,
Section 12.3, Lessor may at its option, upon prior written notice to Lessee,
provide such insurance and, in such event, Lessee shall, upon demand from time
to time reimburse Lessor for the cost thereof together with interest from the
date of payment thereof at the Late Rate, on the amount of the cost to Lessor of
such insurance which Lessee shall have failed to maintain. If after Lessor has
provided such
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insurance, Lessee then obtains the coverage provided for in Section 12.1 which
was replaced by the insurance provided by Lessor, and Lessee provides Lessor
with evidence of such coverage reasonably satisfactory to Lessor, Lessor shall
cancel the insurance it has provided pursuant to the first sentence of this
Section 12.5. In such event, Lessee shall reimburse Lessor for all costs to
Lessor of cancellation, including without limitation any short rate penalty,
together with interest from the date of Lessor's payment thereof at the Late
Rate. In addition, at any time Lessor (either directly or in the name of Owner
Participant) may at its own expense carry insurance with respect to its interest
in the Units, provided that such insurance does not interfere with Lessee's
ability to insure the Equipment as required by this Section 12 or adversely
affect Lessee's insurance or the cost thereof, it being understood that all
salvage rights to each Unit shall remain with Lessee's insurers at all times.
Any insurance payments received from policies maintained by Lessor pursuant to
the previous sentence shall be retained by Lessor without reducing or otherwise
affecting Lessee's obligations hereunder, other than with respect to Unit(s)
with respect to which such payments have been made.
Section 12.6 Pollution Coverage. The public liability insurance
policy that is maintained pursuant to Section 12.1 on the date hereof includes
coverage for pollution incidents (other than as may occur on property owned,
leased, controlled or occupied by Lessee) of a sudden and accidental nature,
including, without limiting the generality of the foregoing, collision and
overturn of railcars arising out of the use or operation of the Units; provided
however, that such insurance shall cover third-party bodily injury and property
damage claims and shall not cover property owned, leased or occupied by Lessee.
Such insurance provides coverage for clean up should Lessee become legally
obligated to pay, subject to a limit of not less than $5,000,000 per occurrence
and annual aggregate. The coverage under such insurance shall be maintained as
long as it remains available at a reasonable cost under such public liability
insurance policy.
SECTION 13. REPORTS; INSPECTION.
Section 13.1 Duty of Lessee to Furnish. On or before May 31, 1997,
and on or before each May 31 thereafter, Lessee will furnish to Lessor, Owner
Participant and the Indenture Trustee an accurate statement, as of the preceding
December 31, (a) showing the amount, description and reporting marks of the
Units then leased hereunder, the amount, description and reporting marks of all
Units that may have suffered an Event of Loss during the 12 months ended on such
December 31 (or since the Initial Closing Date, in the case of the first such
statement), and such other information regarding the condition or repair of the
Equipment as Lessor may reasonably request, (b) stating that, in the case of all
Equipment repainted during the period covered by such statement, the reporting
mark required by Section 4.2 hereof shall have been preserved or replaced, and
(c) showing the percentage of use in both Canada and Mexico based on the total
mileage travelled by all railcars in Lessee's fleet for the prior calendar year
as reported to Lessee by railroads, and stating that Lessee is not aware of any
condition of any Unit which would cause such Unit not to comply in any material
respect with the rules and
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regulations of the FRA and the Interchange Rules as they apply to the
maintenance and operation of the Equipment in interchange.
Section 13.2 Lessor's Inspection Rights. Lessor, Owner Participant
and the Indenture Trustee each shall have the right, but not the obligation, at
their respective sole cost, expense and risk (including, without limitation, the
risk of bodily injury or death), by their respective authorized representatives,
to inspect (a) the Equipment and Lessee's records with respect thereto, and (b)
following the occurrence of a Lease Default and during the continuance thereof,
or following notice by Lessee that it will be returning any Unit to Lessor
pursuant to Section 10 or Section 22, any sublease of the Equipment and Lessee's
records with respect thereto. All inspections shall be conducted during Lessee's
normal business hours and upon reasonable prior notice to Lessee. Lessee shall
not be liable for any injury to, or the death of, any Person exercising, either
on behalf of Lessor, any Owner Participant, the Indenture Trustee or any
prospective user, the rights of inspection granted under this Section 13.2
unless caused by Lessee's gross negligence or wilful misconduct. No inspection
pursuant to this Section 13.2 shall interfere with the use, operation or
maintenance of the Equipment or the normal conduct of Lessee's business, and
Lessee shall not be required to undertake or incur any additional liabilities in
connection therewith. Upon request by Lessor, which request shall not be made
more than once in any calendar year, Lessee, upon three Business Days' prior
notice from Lessor, will provide Lessor with reasonable access at Lessee's
office where such information is located to information regarding the location
and Person in possession of any or all Units as specified in such request;
provided that, prior to providing Lessor with access to such information, Lessee
and Lessor shall have executed a confidentiality agreement in form and substance
reasonably satisfactory to Lessee with respect to such information.
SECTION 14. LEASE EVENTS OF DEFAULT.
The following events shall constitute Lease Events of Default
hereunder (whether any such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) and each such Lease Event of Default
shall be deemed to exist and continue so long as, but only as long as, it shall
not have been remedied:
(a) Lessee shall fail to make any payment of Basic Rent, Early
Purchase Price, Basic Term Purchase Price or any other purchase price to be paid
by Lessee for any Units pursuant to this Lease or the Participation Agreement,
Stipulated Loss Value or Termination Value within 10 Business Days after the
same shall have become due; or
(b) Lessee shall fail to make any payment of Supplemental Rent,
including indemnity or tax indemnity payments, but not including Stipulated Loss
Value, Early Purchase Price, Basic Term Purchase Price or any other purchase
price to be paid by Lessee for any Units
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pursuant to this Lease or the Participation Agreement, Stipulated Loss Value or
Termination Value, after the same shall have become due and such failure shall
continue unremedied for 10 Business Days after receipt by Lessee of demand
therefor from Lessor or the Indenture Trustee; or
(c) Lessee shall fail to maintain in effect the insurance required
by Section 12 and such failure shall not have been waived as provided for
therein; or
(d) Lessee shall make or permit any possession of the Equipment or
any portion thereof not permitted by this Lease; provided that such unauthorized
possession shall not constitute a Lease Event of Default for a period of 45 days
after the occurrence thereof, or Lessee shall make or permit any unauthorized
assignment or transfer of this Lease in violation of Section 18.2; or
(e) Lessee shall fail to observe or perform any of the covenants or
agreements to be observed or performed by Lessee in Section 6.8 of the
Participation Agreement, and such failure shall continue unremedied for 30 days;
or
(f) any representation or warranty made by Lessee in any Lessee
Agreement (other than the Tax Indemnity Agreement) is untrue or incorrect in any
material respect as of the date of making thereof and such untruth or
incorrectness shall continue to be material and unremedied for a period of 30
days after receipt by Lessee of written notice thereof from Lessor or the
Indenture Trustee; provided that, if such untruth or incorrectness is capable of
being remedied, no such untruth or incorrectness shall constitute a Lease Event
of Default hereunder for a period of 60 days after receipt of such notice so
long as Lessee is diligently proceeding to remedy such untruth or incorrectness
and shall in fact remedy such untruth or incorrectness within such period;
provided that such untrue or incorrect representation or warranty shall be
deemed to be remedied only after all adverse consequences thereof, if any, have
been remedied; or
(g) Lessee shall (i) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or (ii) consent to any such relief or to the appointment of or taking
possession by any such official in any voluntary case or other proceeding
commenced against it, or (iii) admit in writing its inability to pay its debts
generally as they come due, or (iv) make a general assignment for the benefit of
creditors, or (v) take any corporate action to authorize any of the foregoing;
or
(h) an involuntary case or other proceeding shall be commenced
against Lessee seeking liquidation, reorganization or other relief with respect
to it or its debts under any
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bankruptcy, insolvency or other similar law now or hereafter in effect, or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or
(i) Lessee shall fail to observe or perform any other of the
covenants or agreements to be observed or performed by Lessee under any Lessee
Agreement (other than the Tax Indemnity Agreement) and such failure shall
continue unremedied for 30 days after notice from Lessor or the Indenture
Trustee to Lessee, specifying the failure and demanding the same to be remedied;
provided that, if such failure is capable of being remedied, and the remedy
requires an action other than, or in addition to, the payment of money, no such
failure (other than one relating to the payment of such money) shall constitute
a Lease Event of Default hereunder for a period of 90 days after receipt of such
notice so long as Lessee is diligently proceeding to remedy such failure and
shall in fact remedy such failure within such period; or
(j) Lessee shall have given notice of its intention to retain any
Units at the end of the Basic Term or any Renewal Term and, prior to the last
day of the Basic Term or such Renewal Term, as the case may be, Lessee shall not
have notified Lessor of its election to purchase or continue leasing such Unit;
or
(k) The mandatory refinancing of the Equipment Notes required to be
effected on the Mandatory Refinancing Date pursuant to Section 10.2 of the
Participation Agreement shall not have occurred for any reason whatsoever;
provided that, notwithstanding anything to the contrary contained in this Lease,
any failure of Lessee to perform or observe any covenant or agreement herein
shall not constitute a Lease Event of Default if such failure is caused solely
by reason of an event referred to in the definition of "Event of Loss" so long
as Lessee is continuing to comply with the applicable terms of Section 11.
SECTION 15. REMEDIES.
Section 15.1 Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare this Lease to be in default by a written
notice to Lessee (except that this Lease shall, without any action on the part
of Lessor, be automatically deemed to have been declared in default upon the
occurrence of a Lease Event of Default described in Section 14(g) or (h)); and
at any time thereafter, unless Lessee shall have remedied all outstanding Lease
Events of Default prior to the commencement of the exercise by Lessor of any of
its remedies hereunder, Lessor may do one or more of the following as Lessor in
its sole discretion shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable law then in effect:
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(a) proceed by appropriate court action or actions, either at law or
in equity, to enforce performance by Lessee of the applicable covenants of this
Lease or to recover damages for the breach thereof;
(b) by notice in writing to Lessee, Lessor may demand that Lessee,
and Lessee shall, upon written demand of Lessor and at Lessee's expense,
forthwith return all or any part of the Equipment to Lessor or its order in the
manner and condition required by, and otherwise in accordance with all of the
provisions of Section 15.6; or Lessor with or without notice or judicial process
may by its agents enter upon the premises of Lessee or other premises where any
of the Equipment may be located and take possession of and remove all or any of
the Units, and Lessor may use and employ in connection with such removal any
services, aids, equipment, trackage and other facilities of Lessee as is
reasonably required to remove such Units and thenceforth hold, possess and enjoy
the same free from any right of Lessee, or its successor or assigns, to use such
Units for any purpose whatever, and in connection with the foregoing, Lessee
hereby agrees that it will, if requested by Lessor, give prompt notice of such
demand for return of the Equipment to the AAR and all railroads having
possession of any such Unit;
(c) sell any Unit at public or private sale by such advertisement or
publication, if any, as Lessor may determine, free and clear of any rights of
Lessee and without any duty to account to Lessee with respect to such sale or
for the proceeds thereof (except to the extent required by paragraph (f) below
if Lessor elects to exercise its rights under said paragraph), in which event
Lessee's obligation to pay Basic Rent with respect to such Unit hereunder due
for any periods subsequent to the date of such sale shall terminate (except to
the extent that Basic Rent is to be included in computations under paragraph (e)
or (f) below if Lessor elects to exercise its rights under either of said
paragraphs);
(d) hold, keep idle or lease to others any Unit as Lessor in its
sole discretion may determine, free and clear of any rights of Lessee and
without any duty to account to Lessee with respect to such action or inaction or
for any proceeds with respect thereto;
(e) whether or not Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights under paragraph (a), (b), (c) or (d)
above with respect to any Unit, Lessor, by written notice to Lessee specifying a
payment date (which date shall be a Determination Date for the purposes of
computing Stipulated Loss Value), which shall be not earlier than 30 days after
the date of such notice, may demand that Lessee pay to Lessor, and Lessee shall
pay to Lessor, on the payment date specified in such notice, as liquidated
damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent
for such Unit due after the payment date specified in such notice), all Rent due
and payable, or accrued, for such Unit as of the payment date specified in such
notice (exclusive of any in advance Basic Rent due on such date) plus whichever
of the following amounts Lessor, in its sole discretion, shall specify in such
notice: (i) an amount with respect to each such Unit which represents the excess
of the present value, at the time of such payment date, of all rentals for such
Unit which would otherwise have
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accrued hereunder from such payment date for the remainder of the Basic Term or
any Renewal Term then in effect over the then present value of the then Fair
Market Rental Value of such Unit (taking into account its actual condition) for
such period computed by discounting from the end of such Term to such payment
date rentals which Lessor reasonably estimates to be obtainable for the use of
such Unit during such period, such present value to be computed in each case on
a basis of a per annum discount at the Debt Rate, compounded semiannually from
the respective dates upon which rentals would have been payable hereunder had
this Lease not been terminated; or (ii) an amount equal to the excess, if any,
of the Stipulated Loss Value for such Unit computed as of the payment date
specified in such notice over the Fair Market Sales Value of such Unit (taking
into account its actual condition) as of the payment date specified in such
notice; or (iii) if Lessor shall not have sold such Unit pursuant to the
exercise of its rights under paragraph (c) above with respect to such Unit, an
amount equal to the higher of Stipulated Loss Value for such Unit computed as of
the payment date specified in such notice or the Fair Market Sales Value of such
Unit (assuming it is in the condition required by this Lease) as of the payment
date specified in such notice, and upon payment by Lessee pursuant to this
clause (iii) of such Stipulated Loss Value or Fair Market Sales Value, as the
case may be, and of all other amounts payable by Lessee under this Lease and
under the other Operative Agreements in respect of such Unit, Lessor shall
transfer without recourse or warranty all right, title and interest of Lessor in
and to such Unit to Lessee or as it may direct, Lessor shall execute and deliver
such documents evidencing such transfer as Lessee shall reasonably request, the
obligation of Lessee to pay Basic Rent hereunder for such Units shall cease and
the Lease Term for such Units shall end;
(f) if Lessor shall have sold any Unit pursuant to paragraph (c)
above, Lessor, in lieu of exercising its rights under paragraph (e) above with
respect to such Unit may, if it shall so elect, demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent for such Unit due
subsequent to the Rent Payment Date next preceding such sale), any accrued and
unpaid Rent for such Unit as of the date of such sale (Basic Rent for this
purpose accruing at a per diem rate equal to the semiannual amount due on the
next following Rent Payment Date divided by 180) and, if that date is a Rent
Payment Date, the Basic Rent due on that date (exclusive of any in advance Basic
Rent due on such date), plus the amount, if any, by which the Stipulated Loss
Value of such Unit computed as of the Rent Payment Date next preceding the date
of such sale or, if such sale occurs on a Rent Payment Date, then computed as of
such Rent Payment Date, exceeds the net proceeds of such sale, plus interest on
such amounts from the date of such sale to the date of payment at the Late Rate;
and
(g) Lessor may terminate the leasing of any or all Units under this
Lease or may exercise any other right or remedy that may be available to it
under applicable law.
In addition, Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Rent due hereunder before or during the exercise
of any of the foregoing
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remedies (exclusive of any in advance Basic Rent due on such date), and for
legal fees and other costs and expenses incurred by reason of the occurrence of
any Lease Event of Default or the exercise of Lessor's remedies with respect
thereto, including without limitation the repayment in full of any costs and
expenses necessary to be expended in repairing any Unit in order to cause it to
be in compliance with all maintenance and regulatory standards imposed by this
Lease.
Section 15.2 Cumulative Remedies. The remedies in this Lease
provided in favor of Lessor shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other remedies in its favor existing
at law or in equity. Lessee hereby waives any mandatory requirements of law, now
or hereafter in effect, which might limit or modify any of the remedies herein
provided, to the extent that such waiver is permitted by law. Lessee hereby
waives any and all existing or future claims of any right to assert any offset
or counterclaim against the Rent payments due hereunder, and agrees to make the
rent payments regardless of any offset or counterclaim or claim which may be
asserted by Lessee on its behalf in connection with the lease of the Equipment.
To the extent permitted by applicable law, Lessee hereby waives any rights now
or hereafter conferred by statute or otherwise that may require Lessor to sell,
lease or otherwise use the Equipment in mitigation of Lessor's damages as set
forth in Section 15.1 or that may otherwise limit or modify any of Lessor's
rights and remedies provided in this Section 15.
Section 15.3 No Waiver. No delay or omission to exercise any right,
power or remedy accruing to Lessor upon any breach or default by Lessee under
this Lease shall impair any such right, power or remedy of Lessor, nor shall any
such delay or omission be construed as a waiver of any breach or default, or of
any similar breach or default hereafter occurring; nor shall any waiver of a
single breach or default be deemed a waiver of any subsequent breach or default.
Section 15.4 Notice of Lease Default. Lessee agrees to furnish to
Lessor, Owner Participant and the Indenture Trustee, promptly upon any officer
acquiring actual knowledge of any condition which constituted or constitutes a
Lease Default under this Lease, written notice specifying such condition and the
nature and status thereof.
Section 15.5 Lessee's Duty to Furnish Information with Respect to
Subleases. Upon the occurrence of a Lease Event of Default pursuant to Section
14(a), (b), (g) or (h), Lessor may request that Lessee deliver to Lessor, and
upon such request Lessee agrees that it will promptly provide to Lessor, a
detailed list of all Units that are then being subleased by Lessee, the identity
of the sublessees with respect to such Units, the identity of an employee or
other agent of each such sublessee with whom Lessee regularly communicates
regarding such Units and the most recent known location of such Units.
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Section 15.6 Lessee's Duty to Return Equipment Upon Default. If
Lessor or any assignee of Lessor shall terminate the leasing of any or all Units
pursuant to this Section 15 and shall have provided to Lessee the written demand
specified in Section 15.1(b) with respect to such Units, Lessee shall forthwith
deliver possession of such Units to Lessor (except where Lessor has received all
amounts payable by Lessee pursuant to any notice provided by Lessor under
Section 15.1(e)(iii)). For the purpose of delivering possession of any Unit to
Lessor as above required, Lessee shall at its own cost, expense and risk (except
as hereinafter stated):
(a) Forthwith place such Equipment upon such storage tracks of
Lessee or any of its Affiliates or, at the expense of Lessee, on any other
storage tracks within the continental United States (excluding Alaska), as
Lessor may reasonably designate or, in the absence of such designation, as
Lessee may select;
(b) permit Lessor to store such Equipment on such tracks without
charge for insurance, rent or storage until such Equipment has been sold, leased
or otherwise disposed of by Lessor and during such period of storage Lessee
shall continue to maintain all insurance required by Section 12.1 hereof; and
(c) transport the Equipment to any place on any lines of railroad or
to any connection carrier for shipment within the continental United States
(excluding Alaska), all as Lessor may reasonably direct in writing.
All Equipment returned shall be in the condition required by Section 6.2 hereof.
All amounts earned in respect of the Equipment after the date of
termination of this Lease pursuant to this Section 15, but not exceeding amounts
actually received therefor, shall be paid to Lessor or, so long as the Indenture
shall not have been discharged pursuant to its terms, the Indenture Trustee,
and, if received by Lessee, shall be promptly turned over to Lessor or the
Indenture Trustee as aforesaid. In the event any Unit is not assembled,
delivered and stored as hereinabove provided within 15 days after the
termination of the leasing of such Unit pursuant to Section 15, Lessee shall, in
addition, pay to Lessor or the Indenture Trustee as aforesaid as liquidated
damages and not as a penalty, for each day thereafter an amount equal to the
amount, if any, by which the higher of (i) an amount equal to 110% of the daily
equivalent of the Basic Rent in effect immediately prior to the expiration of
the Lease for such Unit and (ii) 125% of the Fair Market Rental Value for such
Unit for each such day exceeds the amount, if any, received by Lessor or the
Indenture Trustee as aforesaid (either directly or from Lessee) for such day for
such Unit pursuant to the preceding sentence.
Section 15.7 Specific Performance; Lessor Appointed Lessee's Agent.
The assembling, delivery, storage and transporting of the Equipment as provided
in Section 15.6 are of the essence of this Lease and, upon application to any
court of equity having jurisdiction in the premises, Lessor shall be entitled to
a decree against Lessee requiring specific performance
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of the covenants of Lessee so to assemble, deliver, store and transport the
Equipment. Without in any way limiting the obligation of Lessee under the
provisions of Section 15.6, Lessee hereby irrevocably appoints Lessor as the
agent and attorney of Lessee, with full power and authority, at any time while
Lessee is obligated to deliver possession of any Units to Lessor pursuant to
this Section 15, to demand and take possession of such Unit in the name and on
behalf of Lessee from whosoever shall be at the time in possession of such Unit.
SECTION 16. FILINGS; FURTHER ASSURANCES.
Section 16.1 Filings. This Lease or a counterpart or copy hereof or
evidence hereof may be filed or recorded in any public office as may be
necessary or appropriate to protect the interest of Lessor, Owner Participant or
the Indenture Trustee herein or in the Units. On or prior to (a) the Initial
Closing Date and the Subsequent Closing Date, as the case may be, Lessee will
(a) cause this Lease, the Lease Supplements dated the Initial Closing Date or
the Subsequent Closing Date, as the case may be, the Indenture and the Indenture
Supplements dated the Initial Closing Date or the Subsequent Closing Date, as
the case may be, to be (i) duly filed and recorded with the STB in accordance
with ___ U.S.C. Section _____, and (ii) deposited with the Registrar General of
Canada pursuant to Section 90 of the Railway Act of Canada (and all necessary
actions shall have been taken for publication of such deposit in The Canada
Gazette in accordance with said Section 90), and (b) cause notice of the
security interests created in this Lease, the Lease Supplements dated the
Initial Closing Date or the Subsequent Closing Date, as the case may be, the
Indenture and the Indenture Supplements dated the Initial Closing Date or the
Subsequent Closing Date, as the case may be, to be filed in the appropriate
offices in the Canadian provinces of Ontario, Manitoba, Saskatchewan, Alberta,
British Columbia, Quebec and New Brunswick, and (c) furnish Lessor, the
Indenture Trustee and Owner Participant proof thereof.
Section 16.2 Further Assurances. Lessee will duly execute and
deliver to Lessor such further documents and assurances and take such further
action as Lessor may from time to time reasonably request or as may be required
by applicable law or regulation in order to effectively carry out the intent and
purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor, Owner Participant and the
Indenture Trustee hereunder, including, without limitation, the execution and
delivery of supplements or amendments hereto, in recordable form, subjecting to
this Lease any Replacement Unit and the recording or filing of counterparts
hereof or thereof in accordance with the laws of such jurisdiction as Lessor may
from time to time deem advisable; provided, however that Lessee shall not be
required to make any recording or filing in any province in Canada (or any
political subdivision thereof) or in Mexico (or any political subdivision
thereof) in respect of a Replacement Unit if (a) Lessee in good faith (as
evidenced by an Officer's Certificate to such effect) deems such action unduly
burdensome and (b) after giving effect to the failure to take such action,
Lessee has taken all action required by law so as to perfect and protect the
right, title and interests of Owner Trustee and Owner Participant in the Trust
Estate
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and of the Indenture Trustee in the Indenture Estate in respect of Units having
a Stipulated Loss Value of not less than 90% of the aggregate Stipulated Loss
Value of the Equipment.
Section 16.3 Other Filings. If, at any time during the Lease Term,
Mexico, or one or more states in Mexico, or the Canadian province of Nova Scotia
or the Canadian territory of the Northwest Territories, establishes a state or
provincial system for filing and perfecting the security and/or ownership
interests of entities such as Lessor and/or the Indenture Trustee, Lessee shall
cause any of the Operative Agreements required to be recorded under such system
to be so recorded and shall cause all other filings and recordings and all such
other action required under such system to be effected and taken, in order to
perfect and protect the respective right, title and interests of Lessor, Owner
Participant and the Indenture Trustee. Notwithstanding anything contained herein
to the contrary, Lessee's obligations in this Section 16.3 shall be subject in
all respects to the provisions of Section 16.2.
Section 16.4 Expenses. Except as provided in Section 2.5(a) of the
Participation Agreement, Lessee will pay all costs, charges and expenses
(including reasonable attorneys fees) incident to any such filing, refiling,
recording and rerecording or depositing and re-depositing of any such
instruments or incident to the taking of such action.
SECTION 17. LESSOR'S RIGHT TO PERFORM.
If Lessee fails to make any payment required to be made by it
hereunder or fails to perform or comply with any of its other agreements
contained herein, Lessor may itself make such payment or perform or comply with
such agreement, after giving not less than five Business Days' prior notice
thereof to Lessee (except in the event that an Indenture Default resulting from
a Lease Default or a Lease Event of Default shall have occurred and be
continuing, in which event Lessor may effect such payment, performance or
compliance to the extent necessary to cure such Indenture Default with notice
given concurrently with such payment, performance or compliance), but shall not
be obligated hereunder to do so, and the amount of such payment and of the
reasonable expenses of Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may be, together
with interest thereon at the Late Rate from such date of payment, to the extent
permitted by applicable law, shall be deemed to be Supplemental Rent, payable by
Lessee to Lessor on demand.
SECTION 18. ASSIGNMENT.
Section 18.1 Assignment by Lessor. Lessee and Lessor hereby confirm
that concurrently with the execution and delivery of this Lease, Lessor has
executed and delivered to the Indenture Trustee the Indenture, which assigns as
collateral security and grants a security interest in favor of the Indenture
Trustee in, to and under this Lease and certain of the Rent payable hereunder
(excluding Excepted Property), all as more explicitly set forth in the
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Indenture. Lessor agrees that it shall not otherwise assign or convey its right,
title and interest in and to this Lease, the Equipment or any Unit, except as
expressly permitted by and subject to the provisions of the Participation
Agreement, the Trust Agreement and the Indenture.
Section 18.2 Assignment by Lessee. Except as otherwise provided in
Section 8.3 or in the case of any requisition for use by any governmental
authority or any agency or instrumentality thereof referred to in Section 11.5,
Lessee will not, without the prior written consent of Lessor and the Indenture
Trustee, assign any of its rights hereunder, except as provided herein and in
the Participation Agreement; provided that Lessee may assign its rights and/or
obligations hereunder to any corporation in accordance with the provisions of
Section 6.8 of the Participation Agreement or to any corporation which is an
Affiliate of Lessee, provided that in the case of an assignment to an Affiliate,
(a) Lessor shall have received an instrument or instruments reasonably
satisfactory to it, Owner Participant and the Indenture Trustee under which such
Affiliate assumes the obligations of Lessee hereunder, and (b) Lessee
irrevocably and unconditionally guarantees, pursuant to an agreement in form and
substance reasonably satisfactory to Lessor, Owner Participant and the Indenture
Trustee, such assignee's performance of all of such obligations as primary
obligor and not as a surety.
Section 18.3 Sublessee's Performance and Rights. Any obligation
imposed on Lessee in this Lease shall require only that Lessee perform or cause
to be performed such obligation, even if stated herein as a direct obligation,
and the performance of any such obligation by any permitted assignee, sublessee
or transferee under an assignment, sublease or transfer agreement then in effect
and permitted by the terms of this Lease shall constitute performance by Lessee
and discharge such obligation by Lessee. Except as otherwise expressly provided
herein, any right granted to Lessee in this Lease shall grant Lessee the right
to (a) exercise such right or permit such right to be exercised by any such
assignee or transferee, or (b) in Lessee's capacity as sublessor pursuant to any
sublease permitted pursuant to Section 8.3 hereof, permit any sublessee to
exercise substantially equivalent rights under any such sublease as are granted
to Lessee under this Lease; provided, however, that Lessee's right to terminate
this Lease pursuant to Sections 10 and 11 and Lessee's purchase and renewal
options set forth in Section 22 may be exercised only by Lessee itself or by any
assignee or transferee of, or successor to, Lessee in a transaction permitted by
Section 6.8 of the Participation Agreement; provided, further, that nothing in
this Section 18.3 shall or shall be deemed to (i) create any privity of contract
between any such sublessee, on the one hand, and any of Lessor, Owner
Participant or any subsequent transferee or Affiliate of any such Person, on the
other hand, (ii) create any duty or other liability of any nature whatsoever on
the part of any of Lessor, Owner Participant or any subsequent transferee or
Affiliate of any such Person, to any such sublessee or any Affiliate thereof, or
(iii) modify or waive any term or provision of Section 8.3 hereof, which Section
8.3 shall control if any conflict arises between any of the provisions thereof
and this Section 18.3. The inclusion of specific references to obligations or
rights of any such assignee, sublessee or transferee in certain provisions of
this Lease shall not in any way prevent or diminish the application of the
provisions of the two sentences immediately preceding
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with respect to obligations or rights in respect of which specific reference to
any such assignee, sublessee or transferee has not been made in this Lease.
SECTION 19. NET LEASE, ETC.
This Lease is a net lease and Lessee's obligation to pay all Rent
payable hereunder shall, subject to Section 3.5, be absolute, unconditional and
irrevocable and shall not be affected by any circumstance of any character
including, without limitation, (a) any set-off, abatement, counterclaim,
suspension, recoupment, reduction, rescission, defense or other right that
Lessee may have (other than pursuant to Section 3.5 hereof) against Lessor,
Owner Participant, the Indenture Trustee or any holder of an Equipment Note or
Pass Through Certificate, any vendor or manufacturer of any Unit, or any other
Person for any reason whatsoever, (b) any defect in or failure of title,
merchantability, condition, design, compliance with specifications, operation or
fitness for use of all or any part of any Unit, (c) any damage to, or removal,
abandonment, requisition, taking, condemnation, loss, theft or destruction of
all or any part of any Unit or any interference, interruption, restriction,
curtailment or cessation in the use or possession of any Unit by Lessee or any
other Person for any reason whatsoever or of whatever duration, (d) any
insolvency, bankruptcy, reorganization or similar proceeding by or against
Lessee, Lessor, Owner Participant, the Indenture Trustee, any holder of an
Equipment Note or Pass Through Certificate or any other Person, (e) the
invalidity, illegality or unenforceability of this Lease, any other Operative
Agreement, or any other instrument referred to herein or therein or any other
infirmity herein or therein or any lack of right, power or authority of Lessee,
Lessor, Owner Participant, the Indenture Trustee, any holder of an Equipment
Note or Pass Through Certificate or any other Person to enter into this Lease or
any other Operative Agreement or to perform the obligations hereunder or
thereunder or consummate the transactions contemplated hereby or thereby or any
doctrine of force majeure, impossibility, frustration or failure of
consideration, (f) the breach or failure of any warranty or representation made
in this Lease or any other Operative Agreement by Lessee, Lessor, Owner
Participant, the Indenture Trustee, any holder of an Equipment Note or Pass
Through Certificate or any other Person, (g) the requisitioning, seizure or
other taking of title to or use of such Unit by any government or governmental
authority or otherwise, whether or not by reason of any act or omission of
Lessor, Lessee or the Indenture Trustee, or any other deprivation or limitation
of use of such Unit in any respect or for any length of time, whether or not
resulting from accident and whether or not without fault on the part of Lessee,
or (h) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, any present or future law to the contrary notwithstanding
to the extent permitted by applicable law. To the extent permitted by applicable
law, Lessee hereby waives any and all rights which it may now have or which at
any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Lease with respect to any Unit, except
in accordance with the express terms hereof. If for any reason whatsoever this
Lease shall be terminated in whole or in part by operation of law or otherwise,
except as specifically provided herein, Lessee nonetheless agrees, subject to
Section 3.5, to the maximum extent permitted by law, to pay to Lessor or to the
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<PAGE> 43
Indenture Trustee, as the case may be, an amount equal to each installment of
Basic Rent and all Supplemental Rent due and owing, at the time such payment
would have become due and payable in accordance with the terms hereof had this
Lease not been terminated in whole or in part. Each payment of Rent made by
Lessee hereunder shall be final and Lessee shall not seek or have any right to
recover all or any part of such payment from Lessor or any Person for any reason
whatsoever. Nothing contained herein shall be construed to waive any claim which
Lessee might have under any of the Operative Agreements or otherwise or to limit
the right of Lessee to make any claim it might have against Lessor or any other
Person or to pursue such claim in such manner as Lessee shall deem appropriate,
except in the manners precluded by this Section 19.
SECTION 20. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all communications and notices provided for herein shall be in writing
or by facsimile capable of creating a written record, and any such notice shall
become effective (a) upon personal delivery thereof, including, without
limitation, by overnight mail or courier service, (b) in the case of notice by
United States mail, certified or registered, postage prepaid, return receipt
requested, upon receipt thereof, or (c) in the case of notice by such facsimile,
upon confirmation of receipt thereof, provided such transmission is promptly
further confirmed in writing by either of the methods set forth in clause (a) or
(b), in each case addressed to the following Person at its respective address
set forth below or at such other address as such Person may from time to time
designate by written notice to the other Persons listed below:
If to Lessor: ________________________________
________________________________
________________________________
Attention: _____________________
Fax No.: ______________________
Confirmation No.: ______________
With copies to Owner Participant.
If to Owner Participant: ________________________________
________________________________
________________________________
Attention: ____________________
Fax No.: ______________________
Confirmation No.: _____________
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<PAGE> 44
If to the Indenture Trustee: ________________________________
________________________________
________________________________
Attention: ____________________
Fax No.: ______________________
Confirmation No.: _____________
If to Lessee: Union Tank Car Company
225 West Washington Street, 19th Floor
Chicago, Illinois 60606
Attention: General Counsel and Secretary
(UTC Trust No. 1996-A) (L-14_)
Fax No.: (312) 845-5305
Confirmation No.: (312) 372-9500
SECTION 21. CONCERNING THE INDENTURE TRUSTEE.
Section 21.1 Limitation of the Indenture Trustee's Liabilities.
Notwithstanding any provision herein or in any of the Operative Agreements to
the contrary, the Indenture Trustee's obligation to take or refrain from taking
any actions, or to use its discretion (including, but not limited to, the giving
or withholding of consent or approval and the exercise of any rights or remedies
under such Operative Agreements), and any liability therefor, shall, in addition
to any other limitations provided herein or in the other Operative Agreements,
be limited by the provisions of the Indenture, including, but not limited to,
Article VI thereof.
Section 21.2 Right, Title and Interest of the Indenture Trustee
Under Lease. It is understood and agreed that the right, title and interest of
the Indenture Trustee in, to and under this Lease and the Rent due and to become
due hereunder shall by the express terms granting and conveying the same be
subject to the interest of Lessee in and to the Equipment.
SECTION 22. PURCHASE OPTIONS; RENEWAL OPTIONS.
Section 22.1 Early Purchase Option. (a) Provided that no Lease Event
of Default shall have occurred and be continuing either at the time of the
notice described below or on the Early Purchase Date (unless Lessor shall have
waived such Lease Event of Default solely for the purpose of this Section 22.1)
and Lessee shall have duly given the notice required by the next succeeding
sentence, Lessee shall have the right and, upon the giving of such notice, the
obligation to purchase any or all of the Units then leased hereunder (as
specified in such notice) on the Early Purchase Date; provided that if Lessee
elects to purchase some but less than all of the Units in any Equipment Group
the determination as to which Units are to be purchased
39
<PAGE> 45
shall be made on a random or other reasonable basis (including, without
limitation, on the basis of car type) without discrimination based on
maintenance status or operating condition of the Units in question and such
notice shall describe such manner in which Lessee proposes to determine the
Units in such Equipment Group which will be purchased. Lessee shall give Lessor,
the Indenture Trustee and the Pass Through Trustee written notice not less than
90 days prior to the Early Purchase Date of its election to exercise the
purchase option provided for in this Section 22.1, which notice shall be
irrevocable.
(b) If Lessee elects to exercise the purchase option provided for in
this Section 22.1 with respect to any Units, Lessee shall, as the purchase price
therefor, pay the Early Purchase Price of such Units, together with all other
amounts due and owing by Lessee under the Operative Agreements with respect to
such Units, including, without limitation, all unpaid Basic Rent therefor due
and payable on or prior to the Early Purchase Date (exclusive of any in advance
Basic Rent due on such date) and any Make-Whole Amount with respect to the
Equipment Notes then being prepaid, payable at the place of payment specified in
Section 3.6 hereof in immediately available funds. Lessee will make such
required payments on the Early Purchase Date in the manner specified in Section
3.6 hereof against delivery of a Bill of Sale transferring and assigning to
Lessee all right, title and interest of Lessor in and to such Units on an
"as-is" "where-is" basis and containing a warranty against Lessor's Liens;
provided, however, that Lessee shall have the option of specifying in such
notice under this Section 22.1 its election to defer payment of the Deferred
Portion of the Early Purchase Price, which shall be paid in four (4)
installments on the Quarterly Dates occurring in the 12 months immediately
following the Early Purchase Date, which Deferred Portion (A) may be prepaid by
Lessee at any time in whole and (B) will be secured, at the option of Lessee, by
(1) a first lien on the purchased Units (but only if no other indebtedness
secured by such Units is then outstanding), (2) a letter of credit in favor of
Lessor in a form, and issued by a financial institution, reasonably acceptable
to Lessor, or (3) such other collateral as may be mutually acceptable to Lessee
and Lessor; and provided, further, that the portion of the Early Purchase Price
payable by Lessee on the Early Purchase Date, together with other amounts of
Supplemental Rent paid by Lessee on such date will be under any circumstances
and in any event, at least sufficient to pay in full, as of the date of payment
thereof, the aggregate unpaid principal of, the Make Whole Amount, if any, and
all unpaid interest on the Equipment Notes issued in respect of such Units and
all other amounts owed by Lessee under the Operative Agreements with respect to
such Units. Lessor shall not be required to make any other representation or
warranty as to the condition of such Units or any other matters, and may
specifically disclaim any such representations or warranties. In the event of
any such purchase and receipt by Lessor and the Indenture Trustee of all of the
amounts provided in this Section 22.1, the obligation of Lessee to pay Basic
Rent hereunder for such Units shall cease and the Lease Term for such Units
shall end.
Section 22.2 Election to Retain or Return Equipment at End of Basic
or Renewal Term. Not less than 120 days prior to the end of the Basic Term, the
end of any Fixed Rate
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<PAGE> 46
Renewal Term or the end of any Fair Market Renewal Term (as the latter two terms
are defined in Section 22.4), Lessee shall give Lessor irrevocable written
notice of its decision to return or retain any or all of the Units at the end of
the Basic Term or such Renewal Term; provided that if Lessee elects to retain
less than all of the Units in an Equipment Group, the determination as to which
Units are to be retained shall be made on a random or other reasonable basis
(including, without limitation, on the basis of car type) without discrimination
based on maintenance status or operating condition of the Units in question, and
Lessee shall describe in such notice such manner in which it proposes to
determine the Units in such Equipment Group which will be retained. If Lessee
elects to retain some or all of the Units, Lessee shall comply with Section 22.3
and/or 22.4 hereof, as it may elect in accordance with the provisions thereof
including the notice requirements stated therein. If Lessee fails to give the
120 days' notice required by this Section 22.2, Lessee shall be deemed to have
irrevocably elected to return the Units at the end of the Basic Term or the
applicable Renewal Term, as the case may be, in accordance with Section 6.
Section 22.3 Purchase Options. Provided that no Lease Event of
Default shall have occurred and be continuing either at the time of notice or
the expiration of the Lease Term (unless Lessor shall have waived such Lease
Event of Default solely for the purpose of this Section 22.3) and Lessee shall
have duly given the notice required by Section 22.2 and by the next succeeding
sentence of this Section 22.3, Lessee shall have the right and, upon the giving
of such notice under this Section 22.3, the obligation to purchase any or all of
the Units (as specified in such notice) (a) at the expiration of the Basic Term
at a price equal to the Basic Term Purchase Price of such Units; (b) on
____________, ____ (the "Outside Date") at a price equal to the Outside Date
Purchase Price of such Units; provided that with respect to such Units Lessee
shall have renewed this Lease through the Outside Date on one or more occasions
pursuant to Section 22.4(a) or (b); or (c) at the expiration of the Basic Term
or any Renewal Term at a price equal to the Fair Market Sales Value of such
Units. Lessee shall give Lessor written notice not less than 90 days prior to
the end of the Basic Term, the Outside Date, the Fixed Rate Renewal Term or the
Fair Market Renewal Term, as the case may be, of its election to exercise the
purchase option provided for in this Section 22.3, which notice shall be
irrevocable. Payment of the purchase price, together with all other amounts due
and owing by Lessee under the Operative Agreements, shall be made at the place
of payment specified in Section 3.6 hereof in immediately available funds
against delivery of a Bill of Sale transferring and assigning to Lessee all
right, title and interest of Lessor in and to such Units on an "as-is"
"where-is" basis and containing a warranty against Lessor's Liens. Lessor shall
not be required to make any other representation or warranty as to the condition
of such Units or any other matters, and may specifically disclaim any such
representations or warranties.
Section 22.4 Renewal Options. Provided that no Lease Event of
Default shall have occurred and be continuing either at the time of notice or
the expiration of the Lease Term (unless Lessor shall have waived such Lease
Event of Default solely for the purpose of this Section 22.4) and Lessee shall
have duly given the notice required by Section 22.2, Lessee shall
41
<PAGE> 47
have the right and, upon the giving of a notice under this Section 22.4 as below
provided, the obligation to lease pursuant to this Lease any or all of the Units
at the expiration of the Basic Term or any applicable Renewal Term which Lessee
has not elected to purchase pursuant to Section 22.3, which obligation may be
fulfilled by Lessee electing to renew this Lease under either of the following
Section 22.4(a) or (b):
(a) Fixed Rate. Lessee may give Lessor written notice not less than
90 days prior to the end of the Basic Term (or, in the circumstances described
in the third sentence of this Section 22.4(a), the then Fixed Rate Renewal Term)
that Lessee elects to renew this Lease under this Section 22.4(a) with respect
to any or all of the Units then leased hereunder, which notice shall be
irrevocable. The foregoing notice from Lessee shall specify the term (the "Fixed
Rate Renewal Term") that Lessee selects for its initial renewal under this
Section 22.4(a), which shall be for one or more years as Lessee shall select;
provided that such Fixed Rate Renewal Term in no event shall extend beyond the
Outside Date. If Lessee selects a Fixed Rate Renewal Term such that the period
following such term until the Outside Date is at least one year, then Lessee may
elect one or more further renewals of one or more years pursuant to this Section
22.4(a) so long as no such term extends beyond the Outside Date. The Basic Rent
for each Unit during any Fixed Rate Renewal Term shall be 50% of the average of
the semiannual Basic Rent installments payable hereunder for such Unit during
the Basic Term, payable semiannually in arrears. Each Fixed Rate Renewal Term
shall commence immediately upon the expiration of the Basic Term or the
preceding Fixed Rate Renewal Term, as the case may be.
(b) Fair Market. Lessee may give Lessor written notice not less than
90 days prior to the end of the Basic Term, a Fixed Rate Renewal Term or a Fair
Market Renewal Term (subject to the limitations otherwise provided in this
Section 22.4(b)), regardless of whether Lessee is then entitled to renew this
Lease for a Fixed Rate Renewal Term, that Lessee elects to renew this Lease
under this Section 22.4(b) with respect to any or all of the Units then leased
hereunder for a term of one or more years as Lessee shall specify in such notice
(the "Fair Market Renewal Term"), which notice shall be irrevocable. The Basic
Rent for the Units leased during the Fair Market Renewal Term shall be the Fair
Market Rental Value thereof, payable semiannually in arrears. The Fair Market
Renewal Term shall commence immediately upon the expiration of the Base Term or
the preceding Fixed Rate Renewal Term or Fair Market Renewal Term, as the case
may be.
Section 22.5 Appraisal. Promptly following Lessee's written notice
pursuant to Section 22.2 of its election to retain any Units at the end of the
Basic Term or a Renewal Term, as the case may be, Lessor and Lessee shall
determine the useful life (based on the actual condition of a reasonable
sampling of such Units), Fair Market Sales Value and Fair Market Rental Value of
the Units to be retained, in each case assuming the Units are in the condition
required by this Lease.
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<PAGE> 48
Section 22.6 Stipulated Loss Value and Termination Value During
Renewal Term. All of the provisions of this Lease, other than Section 10, shall
be applicable during any renewal term for such Units, except as specified in the
next sentence. During any Renewal Term, the Stipulated Loss Value and
Termination Value of any Unit shall be determined on the basis of the Fair
Market Sales Value of such Unit as of the first day of such Renewal Term,
reduced in equal monthly increments to the Fair Market Sales Value of such Unit
as of the last day of such Renewal Term; provided that in no event during any
Fixed Rate Renewal Term shall the Stipulated Loss Value and Termination Value of
any Unit be less than 20% of the Equipment Cost of such Unit.
SECTION 23. LIMITATION OF LESSOR'S LIABILITY.
It is expressly agreed and understood that all representations,
warranties and undertakings of Lessor hereunder (except as expressly provided
herein) shall be binding upon Lessor only in its capacity as Owner Trustee under
the Trust Agreement and in no case shall State Street Bank and Trust Company be
personally liable for or on account of any statements, representations,
warranties, covenants or obligations stated to be those of Lessor hereunder,
except that Lessor (or any successor Owner Trustee) shall be personally liable
for its gross negligence or wilful misconduct and for its breach of its
covenants, representations and warranties contained herein to the extent
covenanted or made in its individual capacity.
SECTION 24. INVESTMENT OF SECURITY FUNDS.
Any moneys received by Lessor or the Indenture Trustee pursuant to
Section 12.2 which are required to be paid to Lessee after completion of repairs
to be made pursuant to Section 12.2 or pursuant to Section 11.2, as the case may
be, until paid to Lessee as provided in Section 11.4(a), 11.5 or 12.2 or the
curing of Lease Default or a Lease Event of Default or otherwise applied as
provided herein or in the Trust Agreement and Indenture, shall be invested at
the risk and expense of Lessee in Specified Investments by Lessor (unless the
Indenture shall not have been discharged, in which case, by the Indenture
Trustee as provided in Section 6.04(b) of the Indenture) from time to time as
directed by telephone (and confirmed promptly thereafter in writing) by Lessee
if such investments are reasonably available for purchase. There shall be
promptly remitted to Lessee, so long as no Lease Default relating to Section
14(a), (b), (g) or (h) or Lease Event of Default shall have occurred and be
continuing, any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) and Lessee will promptly pay to
Lessor or the Indenture Trustee, as the case may be, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other expenses, if any, incurred in connection with such
investment), such amount to be disposed of in accordance with the terms of the
Trust Agreement and the Indenture. If a Lease Event of Default shall have
occurred and be continuing, any moneys held pursuant to this Section 24, and any
gain from the investment thereof, may be applied to Lessee's obligations
hereunder.
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<PAGE> 49
SECTION 25. MISCELLANEOUS.
Section 25.1 Governing Law; Severability. This Lease, and any
extensions, amendments, modifications, renewals or supplements hereto shall be
governed by and construed in accordance with the internal laws and decisions of
the State of ___________; provided, however, that the parties shall be entitled
to all rights conferred by any applicable Federal statute, rule or regulation.
Whenever possible, each provision of this Lease shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Lease shall be prohibited by or invalid under the laws of any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Lease in any other
jurisdiction.
Section 25.2 Execution in Counterparts. This Lease may be executed
in any number of counterparts, each executed counterpart constituting an
original and in each case such counterparts shall constitute but one and the
same instrument; provided, however, that to the extent that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code) no security interest in this Lease may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page hereof,
which counterpart shall constitute the only "original" hereof for purposes of
the Uniform Commercial Code.
Section 25.3 Headings and Table of Contents; Section References. The
headings of the sections of this Lease and the Table of Contents are inserted
for purposes of convenience only and shall not be construed to affect the
meaning or construction of any of the provisions hereof. All references herein
to numbered sections, unless otherwise indicated, are to sections of this Lease.
Section 25.4 Successors and Assigns. This Lease shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective permitted successors and assigns.
Section 25.5 True Lease. It is the intent of the parties to this
Lease that it will be a true lease and not a "conditional sale," and that Lessor
shall at all times be considered to be the owner of each Unit which is the
subject of this Lease for the purposes of all Federal, state, city and local
income taxes or for franchise taxes measured by income, and that this Lease
conveys to Lessee no right, title or interest in any Unit except as lessee.
Nothing contained in this Section 25.5 shall be construed to limit Lessee's use
or operation of any Unit or constitute a representation, warranty or covenant by
Lessee as to tax consequences.
Section 25.6 Amendments and Waivers. No term, covenant, agreement or
condition of this Lease may be terminated, amended or compliance therewith
waived (either
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<PAGE> 50
generally or in a particular instance, retroactively or prospectively) except by
an instrument or instruments in writing executed by each party hereto and except
as may be permitted by the terms of the Indenture.
Section 25.7 Survival. All warranties, representations, indemnities
and covenants made by either party hereto, herein or in any certificate or other
instrument delivered by such party or on the behalf of any such party under this
Lease, shall be considered to have been relied upon by the other party hereto
and shall survive the consummation of the transactions contemplated hereby on
the Initial Closing Date and the Subsequent Closing Date regardless of any
investigation made by either such party or on behalf of either such party, and
to the extent having accrued and not been paid or relating to or otherwise
arising in connection with the transactions contemplated by the Operative
Agreements during the Lease Term, shall survive the expiration or other
termination of this Lease or any other Operative Agreement.
Section 25.8 Business Days. If any payment is to be made hereunder
or any action is to be taken hereunder on any date that is not a Business Day,
such payment or action otherwise required to be made or taken on such date shall
be made or taken on the immediately succeeding Business Day with the same force
and effect as if made or taken on such scheduled date and as to any payment
(provided any such payment is made on such succeeding Business Day) no interest
shall accrue on the amount of such payment from and after such scheduled date to
the time of such payment on such next succeeding Business Day.
Section 25.9 Directly or Indirectly. Where any provision in this
Lease refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.
Section 25.10 Incorporation by Reference. The payment obligations
set forth in Sections 7.1 and 7.2 of the Participation Agreement are hereby
incorporated by reference.
Section 25.11 Lessee's Right of Quiet Enjoyment. So long as no Lease
Event of Default has occurred and is continuing, Lessor shall not take, or cause
to be taken, any action contrary to Lessee's rights under this Lease, including,
without limitation, the right to possession and use by Lessee or any permitted
sublessee of the Equipment.
Section 25.12 Entire Agreement. This Lease, together with the
schedules, exhibits and documents delivered hereunder, and the other Operative
Agreements contain the entire agreement between the parties with respect to the
subject matter covered herein and therein, and supersede all prior agreements
(oral or written), negotiations and discussions between the parties relating
thereto.
45
<PAGE> 51
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be
duly executed and delivered on the day and year first above written.
Lessor:
________________________________________,
not in its individual capacity except as
otherwise expressly provided but solely as Owner
Trustee
By:_____________________________________________
Name:
Title:
Lessee:
UNION TANK CAR COMPANY
By:_____________________________________________
Name:
Title:
46
<PAGE> 52
State of )
) SS
County of )
On this ____ day of May, 1996, before me personally appeared
______________________, to me personally known, who being by me duly sworn, say
that he is __________________________ of , that said instrument was signed on
such date on behalf of said corporation by authority of its Board of Directors,
and he acknowledged that the execution of the foregoing instrument was the free
act and deed of said corporation.
___________________________
Notary Public
[Notarial Seal]
My commission expires:
State of Illinois )
) SS
County of Cook )
On this ___ day of May, 1996, before me personally appeared
_______________________, to me personally known, who being by me duly sworn, say
that he is the _________________ of Union Tank Car Company, that said instrument
was signed on such date on behalf of said corporation by authority of its Board
of Directors, and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation.
___________________________
Notary Public
[Notarial Seal]
My commission expires:
47
<PAGE> 53
EXHIBIT A
LEASE SUPPLEMENT NO. ___
(UTC TRUST NO. 1996-A) (L-14_)
This Lease Supplement No. , dated , 1996 between_________________, a
__________________, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement ("Lessor"), and Union Tank Car Company, a Delaware
corporation ("Lessee");
Witnesseth:
Lessor and Lessee have heretofore entered into that certain
Equipment Lease Agreement (UTC Trust No. 1996-A) (L-14_) dated May __, 1996 (the
"Lease"). The terms used herein are used with the meanings specified in the
Lease.
The Lease provides for the execution and delivery of one or more
Lease Supplements substantially in the form hereof for, among other things, the
purpose of particularly describing all or a portion of the Units of Equipment to
be leased to Lessee under the Lease.
Now, Therefore, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 2 of the Lease, Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby
accepts and leases from Lessor, under the Lease as herein supplemented, the
Units described in Schedule 1 hereto.
2. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
3. To the extent that this Lease Supplement constitutes chattel
paper (as such term is defined in the Uniform Commercial Code) no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page hereof,
which counterpart shall constitute the only "original" hereof for purposes of
the Uniform Commercial Code.
4. This Lease Supplement shall be governed by and construed in
accordance with the internal laws and decisions of the State of ______________;
provided, however, that the parties shall be entitled to all rights conferred by
any applicable Federal statute, rule or regulation.
5. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
A-1
<PAGE> 54
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written and to be
delivered on the date first above written.
_______________________________________,
not in its individual capacity but solely
as Owner Trustee
By:______________________________________
Name:
Title:
UNION TANK CAR COMPANY
By:______________________________________
Name:
Title:
A-2
<PAGE> 55
State of )
) SS
County of )
On this ____ day of May, 1996, before me personally appeared
__________________, to me personally known, who being by me duly sworn, say that
he is ________________________ of , that said instrument was signed on such date
on behalf of said corporation by authority of its Board of Directors, and he
acknowledged that the execution of the foregoing instrument was the free act and
deed of said corporation.
___________________________
Notary Public
[Notarial Seal]
My commission expires:
State of Illinois )
) SS
County of Cook )
On this ____ day of May, 1996, before me personally appeared
______________________, to me personally known, who being by me duly sworn, say
that he is ______________________ of Union Tank Car Company, that said
instrument was signed on such date on behalf of said corporation by authority of
its Board of Directors, and he acknowledged that the execution of the foregoing
instrument was the free act and deed of said corporation.
___________________________
Notary Public
[Notarial Seal]
My commission expires:
A-3
<PAGE> 1
Exhibit 4(b)(3)
TRUST INDENTURE AND SECURITY AGREEMENT
(UTC Trust No. 1996-A)
(L-14_)
Dated May ___, 1996
Between
_________________,
as Owner Trustee
And
_______________,
as Indenture Trustee
COVERED HOPPERS AND TANK CARS
____________________
Filed with the Surface Transportation Board of the Department
of Transportation pursuant to __ U.S.C. Section ______ on May __,
1996 at ___ [a.m./p.m.], Recordation Number ___, and deposited
in the Office of the Registrar General of Canada pursuant to Section
90 of the Railway Act (Canada) on May __, 1996.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
HABENDUM CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Article I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Article II. THE EQUIPMENT NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.01. Form of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.02. Terms of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.03. Payment from Indenture Estate Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.04. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.05. Application of Payments to Principal Amount and Interest . . . . . . . . . . . . . . . . . 9
Section 2.06. Termination of Interest in Indenture Estate. . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.07. Transfer of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes . . . . . . . . . . . . . . . . . . . 10
Section 2.09. Payment of Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.10. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.11. Equally and Ratably Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Article III. RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE INDENTURE ESTATE . . . . . . . . . . . . . 13
Section 3.01. Basic Rent Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.02. Payments in the Event of Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.03. Payments after Indenture Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.04. Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.05. Distribution of Excepted Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Article IV. ASSUMPTION OF OBLIGATIONS OF OWNER TRUSTEE BY LESSEE . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.01. Assumption of Obligations of Owner Trustee by Lessee . . . . . . . . . . . . . . . . . . . 15
Article V. REMEDIES OF THE INDENTURE TRUSTEE UPON AN INDENTURE EVENT OF DEFAULT . . . . . . . . . . . . . . . . 16
Section 5.01. Indenture Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.02. Acceleration; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.03. Remedies with Respect to Indenture Estate . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.04. Right to Cure; Option to Purchase; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.05. Rights of Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.06. Waiver of Existing Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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Article VI. DUTIES OF THE INDENTURE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.01. Action upon Indenture Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.02. Action upon Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.03. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.04. No Duties Except as Specified in Indenture or Instructions . . . . . . . . . . . . . . . . 25
Section 6.05. No Action Except under Lease, Indenture or Instructions . . . . . . . . . . . . . . . . . . 25
Section 6.06. Disposition of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.07. Indenture Supplements for Replacements . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.08. Effect of Replacements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.09. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.10. Lessee's Right of Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.11. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Article VII.
The Owner Trustee and the Indenture Trustee . . . . . . . . . . . . . . . . . 26
Section 7.01. Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.02. Absence of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.03. No Representations or Warranties as to the Equipment or Documents . . . . . . . . . . . . . 27
Section 7.04. No Segregation of Moneys; No Interest; Investments . . . . . . . . . . . . . . . . . . . . 27
Section 7.05. Reliance; Agents; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.06. Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Article VIII. CERTAIN LIMITATIONS ON OWNER TRUSTEE'S AND INDENTURE TRUSTEE'S RIGHTS . . . . . . . . . . . . . . . 29
Section 8.01. Certain Limitations on Owner Trustee's and Indenture Trustee's Rights . . . . . . . . . . . 29
Article IX. SUCCESSOR TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.01. Notice of Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.02. Resignation of Indenture Trustee; Appointment of Successor . . . . . . . . . . . . . . . . 29
Article X. SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS . . . . . . . . . . . . . . . . . . 30
Section 10.01. Supplemental Indentures without Consent of Holders . . . . . . . . . . . . . . . . . . . . 30
Section 10.02. Indenture Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 10.03. Request of Substance, Not Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 10.04. Documents Mailed to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 10.05. Amendments, Waivers, Etc. of Other Documents . . . . . . . . . . . . . . . . . . . . . . . 32
Article XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 11.01. Termination of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 11.02. No Legal Title to Indenture Estate in Holders . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.03. Sale of Equipment by Indenture Trustee is Binding . . . . . . . . . . . . . . . . . . . . . 35
Section 11.04. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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Section 11.05. Discontinuance of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.06. Indenture and Equipment Notes for Benefit of Owner Trustee, Indenture Trustee, Owner
Participant and Holders Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.08. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.09. Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.13. Normal Commercial Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 11.14. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
EXHIBIT A - Form of Trust Indenture Supplement
EXHIBIT B - Terms of Equipment Notes
EXHIBIT C - Loan Participant
APPENDIX A - Definitions
ANNEX A1 - Amortization Schedule (A-1)
ANNEX A2 - Amortization Schedule (A-2)
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<PAGE> 5
TRUST INDENTURE AND SECURITY AGREEMENT
(UTC TRUST NO. 1996-A)(L-14_)
This TRUST INDENTURE AND SECURITY AGREEMENT (UTC Trust No. 1996-A)
(L-14_) dated May ___, 1996 (this "Indenture"), between _________________, a
_____________ trust company, not in its individual capacity, except as
otherwise expressly set forth in Section 7.03 hereof, but solely as trustee
under the Trust Agreement referred to below and any successor appointed in
accordance with the terms hereof and of the Trust Agreement (herein in such
trustee capacity called the "Owner Trustee"), and _______________, a national
banking association, as Indenture Trustee hereunder and any successor appointed
in accordance with the terms hereof (herein called the "Indenture Trustee");
WITNESSETH:
WHEREAS, the Owner Participant and the Owner Trustee in its individual
capacity have entered into the Trust Agreement whereby, among other things, (i)
the Owner Trustee establishes a certain trust for the use and benefit of the
Owner Participant, subject, however, to the Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of the Equipment Notes, and (ii) the Owner Trustee is authorized and
directed to execute and deliver this Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee desire by this
Indenture, among other things, (i) to provide in accordance with this Indenture
for the issuance by the Owner Trustee of the Equipment Notes in [two] series on
the Initial Closing Date and the issuance of Equipment Notes in [two] series on
the Subsequent Closing Date and (ii) to provide for the assignment, mortgage
and pledge by the Owner Trustee to the Indenture Trustee, as part of the
Indenture Estate hereunder, among other things, of, and the grant of a security
interest in, certain of the Owner Trustee's right, title and interest in and to
the Equipment and the Lease and certain payments and other amounts received
hereunder or thereunder, in accordance with the terms hereof, in trust, as
security for, among other things, the Owner Trustee's obligations for the equal
and ratable benefit of the holders of the Equipment Notes; and
WHEREAS, all things necessary to make this Indenture the legal, valid
and binding obligation of the Owner Trustee and the Indenture Trustee, for the
uses and purposes herein set forth, in accordance with its terms, have been
done and performed and have happened.
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT
WITNESSETH, that, to secure the prompt payment of the principal of and interest
and Make-Whole Amount, if any, on and all other amounts due with respect to,
each series of the Equipment Notes, as provided in the Indenture Supplement
under which such series of Equipment Notes is issued, from time to time
outstanding hereunder and the performance and observance by the Owner Trustee
of all the agreements, covenants and provisions herein and in each series of
the Equipment Notes all for the benefit of the holders of the Equipment Notes
of such series, and for the uses and purposes and subject to the terms and
provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Equipment Notes of such series
by the Loan Participant, the Owner Trustee does hereby sell, assign, transfer,
convey, mortgage, pledge, and confirm unto the Indenture Trustee, its
<PAGE> 6
successors and assigns, for the security and benefit of the holders of the
Equipment Notes of each series from time to time, a security interest in and
mortgage lien on all right, title and interest of the Owner
Trustee in and to the following described property, rights, interests and
privileges insofar as it does not constitute Excepted Property (which
collectively, including all property hereafter required to be subjected to the
Lien of this Indenture by any instrument supplemental hereto, but excluding
Excepted Property, being herein called the "Indenture Estate"), to wit:
(1) the Lease, including, without limitation, all amounts
of Basic Rent, Supplemental Rent, insurance proceeds and other
payments of any kind for or with respect to the Equipment, subject to
Lessee's rights under the Lease, including, without limitation,
Lessee's right of quiet enjoyment;
(2) the Equipment, the Replacement Units and all
substitutions therefor in which the Owner Trustee shall from time to
time acquire an interest under the Lease, all as more particularly
described in the Indenture Supplements and Lease Supplements executed
and delivered with respect to the Equipment or any such Replacement
Units or any substitutions therefor, as provided in this Indenture and
the Lease;
(3) all requisition proceeds with respect to the
Equipment or any Unit thereof (to the extent of the Owner Trustee's
interest therein pursuant to the terms of the Lease);
(4) all monies and securities now or hereafter paid or
deposited or required to be paid or deposited with the Indenture
Trustee pursuant to any term of this Indenture, the Lease or the
Participation Agreement or required to be held by the Indenture
Trustee hereunder or thereunder; and
(5) all proceeds of the foregoing.
Notwithstanding the foregoing provisions:
(a) there shall be excluded from the foregoing sale,
assignment, transfer, conveyance, mortgage, pledge or security
interest granted by this Indenture and from the Indenture Estate all
Excepted Property;
(b) (i) the Owner Trustee and the Owner Participant
shall at all times retain the right, to the exclusion of the Indenture
Trustee (A) to Excepted Property and to commence an action at law to
obtain such Excepted Property and (B) to adjust Basic Rent and the
percentages relating to Stipulated Loss Value and Termination Value as
provided in Section 3.4 of the Lease and Section 2.6 of the
Participation Agreement;
(ii) the Owner Trustee and the Indenture Trustee
shall each retain the right to receive from the Lessee all notices,
certificates, reports, filings, opinions of Counsel, copies of all
documents and all information which the Lessee is permitted or
required to give or furnish to the Lessor pursuant to the Lease or to
the Owner Trustee pursuant to any other Operative Agreement and to
exercise the inspection rights provided for in Section 13.2 of the
Lease, to give any notice of default under Section 15 of the Lease and
to retain the right to cause the Lessee to
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take any action and execute and deliver such documents and
assurances as the Lessor may from time to time reasonably request
pursuant to Section 16.2 of the Lease;
(iii) so long as no Indenture Event of Default
shall have occurred and be continuing (but subject to the provisions
of Section 10.05), the Owner Trustee shall retain the right, to the
exclusion of the Indenture Trustee, to exercise all rights of the
Lessor under the Lease (other than the right to receive any funds to
be delivered to the Lessor under the Lease (except funds which
constitute or are delivered with respect to Excepted Property)); and
(c) the leasehold interest granted to the Lessee under
the Lease shall not be subject to the security interest granted by
this Indenture, and nothing in this Indenture shall affect the rights
of the Lessee under the Lease so long as no Lease Event of Default has
occurred and is continuing; and
(d) as between the Owner Trustee and the Indenture
Trustee, nothing contained in this Granting Clause shall prevent the
Owner Trustee, as the Lessor under the Lease, from seeking specific
performance of the covenants of the Lessee under the Lease relating to
the insurance, maintenance, possession and use of the Units and from
maintaining separate insurance with respect to the Units to the extent
permitted by Section 12.5 of the Lease.
HABENDUM CLAUSE
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the benefit and
security of the holders of each series of the Equipment Notes from time to
time, without any priority of any one Equipment Note of a particular series
over any other Equipment Note of the same series or any one series of the
Equipment Notes over any other, and for the uses and purposes, and subject to
the terms and provisions, set forth in this Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under each of the
Operative Agreements to which it is a party to perform all of the obligations,
if any, assumed by it thereunder, all in accordance with and pursuant to the
terms and provisions thereof, and the Indenture Trustee and the holders of the
Equipment Notes shall have no obligation or liability under any of the
Operative Agreements to which the Owner Trustee is a party by reason of or
arising out of this assignment, nor shall the Indenture Trustee (unless the
Indenture Trustee shall have become the "Lessor" under the Lease) or the
holders of the Equipment Notes be required or obligated in any manner to
perform or fulfill any obligations of the Owner Trustee under or pursuant to
any of the Operative Agreements to which the Owner Trustee is a party or,
except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim, or take any action to collect or enforce the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
Subject to the terms and conditions hereof, the Owner Trustee does
hereby constitute the Indenture Trustee the true and lawful attorney of the
Owner Trustee, irrevocably, with full power (in the name of the Owner Trustee
or otherwise), upon the occurrence and during the continuation of an Indenture
Event of Default, to ask, require, demand, receive, compound and give
acquittance for any and
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<PAGE> 8
all moneys and claims for moneys due and to become due to the Owner Trustee
(other than Excepted Property), under or arising out of the Lease, or to
endorse any checks or other instruments or orders in connection therewith and
to file any claims or take any action or institute any proceedings which the
Indenture Trustee may deem to be necessary or advisable in the premises. The
Owner Trustee has directed the Lessee to make all payments of Rent (other than
Excepted Property) payable to the Owner Trustee by the Lessee and all other
amounts which are required to be paid to or deposited with the Owner Trustee
pursuant to the Lease directly to the Indenture Trustee at such address as the
Indenture Trustee shall specify, for application as provided in this Indenture.
The Owner Trustee agrees that promptly on receipt thereof, it will transfer to
the Indenture Trustee any and all moneys from time to time received by it
constituting part of the Indenture Estate, for distribution by the Indenture
Trustee pursuant to this Indenture, except that the Owner Trustee shall accept
for distribution pursuant to the Trust Agreement any amounts distributed to it
by the Indenture Trustee as expressly provided in this Indenture and any
Excepted Property.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be executed and delivered any and all
such further instruments and documents as the Indenture Trustee may reasonably
deem to be necessary in order to obtain the full benefits of this assignment
and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge, so
long as the assignment hereunder shall remain in effect, any of its right,
title or interest hereby assigned, to anyone other than the Indenture Trustee,
and that it will not (other than in respect of Excepted Property), except as
provided in or permitted by this Indenture, accept any payment from the Lessee,
enter into an agreement amending or supplementing any of the Operative
Agreements, execute any waiver or modification of, or consent under the terms
of any of the Operative Agreements (other than the Tax Indemnity Agreement),
settle or compromise any claim (other than claims in respect of Excepted
Property) against the Lessee arising under any of the Operative Agreements, or
submit or consent to the submission of any dispute, difference or other matter
arising under or in respect of any of the Operative Agreements, to arbitration
thereunder.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Certain Definitions. Unless the context otherwise
requires, all capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Appendix A hereto for all purposes of this
Indenture, and include the plural as well as the singular. All references to
articles, sections, clauses, schedules and appendices in this Indenture are to
articles, sections, clauses, schedules and appendices in and to this Indenture
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 Indenture as a whole
and not to any particular Article, Section or other subdivision.
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ARTICLE II.
THE EQUIPMENT NOTES
Section 2.01. Form of Equipment Notes. The Equipment Notes shall
be substantially in the form set forth below:
1996-A ____% EQUIPMENT NOTE, SERIES ___
(Secured by, among others, Lease Obligations of
Union Tank Car Company)
Issued in Connection with Certain Railroad Rolling Stock
No.______
Chicago, Illinois
____________ __, 1996
$________________
_________________, not in its individual capacity, but solely as owner
trustee (herein in such capacity called the "Owner Trustee") under that certain
Trust Agreement (UTC Trust No. 1996-A) (L-14_), dated May ___, 1996, as from
time to time supplemented and amended (herein called the "Trust Agreement"),
between the Owner Trustee in its individual capacity and the institution
referred to therein as the "Owner Participant", hereby promises to pay to
_______________________________, or registered assigns, the principal sum of
$____________ in lawful currency of the United States of America, in
installments payable on the dates set forth in Exhibit A hereto, commencing
_____________, 199_, and thereafter to and including _________, 200_, each such
installment to be in an amount equal to the corresponding percentage (if any)
of the remaining principal amount hereof set forth in Exhibit A hereto,
together with interest thereon on the amount of such principal amount remaining
unpaid from time to time from and including the date hereof until such
principal amount shall be due and payable, payable on __________, 199_ and on
each _____________ and _____________ thereafter to the maturity date hereof at
the rate of ___% per annum (computed on the basis of a 360-day year of twelve
30-day months). Interest on any overdue principal and (to the extent legally
enforceable) on overdue interest shall be paid from the due date thereof at the
rate of ___% per annum (computed on the basis of a 360-day year of twelve
30-day months), payable on demand.
All payments of principal and interest and Make-Whole Amount, if any,
to be made hereunder and under the Trust Indenture and Security Agreement (UTC
Trust No. 1996-A) (L-14_), dated May ___, 1996, as from time to time amended
and supplemented (herein called the "Indenture", the defined terms therein not
otherwise defined herein being used herein with the same meanings), between the
Owner Trustee and _______________, as Indenture Trustee thereunder for the
holder of this Equipment Note and the holders of other Equipment Notes
outstanding thereunder (herein in such capacity called the "Indenture Trustee")
shall be made only from the income and proceeds from the Indenture Estate and
only to the extent that the Indenture Trustee shall have sufficient income or
proceeds from the Indenture Estate to make such payments in accordance with the
terms of Article III of the Indenture. Each holder hereof, by its acceptance
of this Equipment Note, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for distribution to
the holder hereof as provided in the Indenture and that none of the Owner
Trustee, the Owner Participant, the Indenture Trustee or their permitted
successors and assigns is or shall be personally liable to the holder hereof
for any amount
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<PAGE> 10
payable under this Equipment Note or the Indenture or, except as expressly
provided in the Participation Agreement or the Indenture, for any liability
under the Participation Agreement or (in the case of the Owner Trustee or the
Indenture Trustee) the Indenture.
Payments with respect to the principal amount hereof, Make-Whole
Amount, if any, and interest thereon shall be payable in U.S. dollars in
immediately available funds at the principal bond and trustee administration
office of the Indenture Trustee, or as otherwise provided in the Indenture.
Each such payment shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note. Whenever the date scheduled
for any payment to be made hereunder or under the Indenture shall not be a
Business Day, then such payment need not be made on such scheduled date but may
be made on the next succeeding Business Day with the same force and effect as
if made on such scheduled date and (provided such payment is made on such next
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.
Each holder hereof, by its acceptance of this Equipment Note, agrees
that each payment received by it hereunder shall be applied, first, to the
payment of accrued but unpaid interest on this Equipment Note then due, second,
to the payment of the unpaid principal amount of this Equipment Note then due,
third, to the payment of any Make-Whole Amount then due, and fourth, to the
payment of the remaining outstanding principal amount of this Equipment Note;
provided, that the Owner Trustee may only prepay this Equipment Note as
provided in Sections 2.10, 3.02 and 3.03 of the Indenture.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by the Owner Trustee pursuant to
the terms of the Indenture and relates to the Units described in Lease
Supplement No. ___. The Indenture Estate is held by the Indenture Trustee as
security for the Equipment Notes. Reference is hereby made to the Indenture
for a statement of the rights of the holder of, and the nature and extent of
the security for, this Equipment Note, as well as for a statement of the terms
and conditions of the trusts created by the Indenture, to all of which terms
and conditions in the Indenture each holder hereof agrees by its acceptance of
this Equipment Note.
This Equipment Note is not subject to redemption or prepayment except
as provided in Sections 2.10, 3.02 and 3.03 of the Indenture. This Equipment
Note is subject to purchase by the Owner Trustee without a Make-Whole Amount as
provided in Section 5.04(b) of the Indenture. The holder hereof, by its
acceptance of this Equipment Note, agrees to be bound by said provisions.
This Equipment Note is a registered Equipment Note and is
transferable, as provided in the Indenture, only upon surrender of this
Equipment Note for registration of transfer duly endorsed by, or accompanied by
a written statement of transfer duly executed by, the registered holder hereof
or his attorney duly authorized in writing. Prior to the due presentation for
registration of transfer of this Equipment Note, the Owner Trustee and the
Indenture Trustee may deem and treat the registered holder of this Equipment
Note as the absolute owner and holder hereof for the purpose of receiving
payment of all amounts payable with respect hereto and for all other purposes
and shall not be affected by any notice to the contrary.
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT. THIS
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<PAGE> 11
EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Equipment Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
In Witness Whereof, the Owner Trustee has caused this Equipment Note
to be executed by one of its authorized officers as of the date hereof.
_________________, not in its
individual capacity, but solely as Owner
Trustee
By: ___________________________________
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<PAGE> 12
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
____________________,
as Indenture Trustee
By:_____________________________
Authorized Officer
[Insert from Annex A, the related Amortization Schedule]
Section 2.02. Terms of Equipment Notes. There shall be issued and
delivered to the Loan Participant an Equipment Note under each of the [two]
series of the Equipment Notes related to each Lease Supplement executed and
delivered in respect of the Units delivered on the Initial Closing Date and the
Subsequent Closing Date in the maturity and bearing the interest rate as set
forth in Exhibit B hereto, in an aggregate principal amount equal to that
portion of the loan made by the Loan Participant to the Owner Trustee pursuant
to Section 2 of the Participation Agreement relating to the Units under such
Lease Supplement. Such Equipment Note, shall evidence the loan made by the
Loan Participant in connection with the purchase of the Equipment by the Owner
Trustee from the Lessee, each such Equipment Note to be substantially in the
form set forth in Section 2.01, with deletions and insertions as appropriate,
duly authenticated by the Indenture Trustee and dated the Initial Closing Date
of the Equipment or the Subsequent Closing Date of the Equipment, as
applicable, and as having been issued in connection with the Equipment under a
related Lease Supplement.
The principal amount of and interest on each Equipment Note issued
pursuant to the provisions of this Indenture shall be payable as set forth in
the form thereof contained in Section 2.01 and Annex A. Interest accrued on
the Equipment Notes shall be computed on the basis of a 360-day year of twelve
30-day months on the principal amount thereof remaining unpaid from time to
time from and including the date thereof to but excluding the date of payment.
The Owner Trustee shall furnish to the Indenture Trustee a copy of each
Equipment Note issued pursuant to the provisions of this Indenture. The
aggregate principal amount of Equipment Notes which may be outstanding at any
one time shall be limited to the aggregate amount set forth in Exhibit B
hereto.
No Equipment Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless it shall have been
authenticated by or on behalf of the Indenture Trustee by manual signature.
Section 2.03. Payment from Indenture Estate Only. Notwithstanding
any other provision herein or in the Equipment Notes to the contrary, all
payments to be made under the Equipment Notes and this Indenture and the
relevant Indenture Supplement shall be made only from the income and the
proceeds from the Indenture Estate and only to the extent that the Indenture
Trustee shall have received sufficient income or proceeds from the Indenture
Estate to make such payments in accordance with the terms of Article III
hereof. Each holder of an Equipment Note, by its acceptance of such Equipment
Note, agrees that it will look solely to the income and proceeds from the
Indenture Estate to the extent available for distribution to such holder as
herein provided and that none of the Owner Trustee, the Owner Participant, the
Indenture Trustee or their permitted successors and assigns is or shall be
personally liable to the
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<PAGE> 13
holder of any Equipment Note for any amount payable under such Equipment Note
or the Indenture or, except as expressly provided in the Participation
Agreement or the Indenture, for any liability under the Participation Agreement
or (in the case of the Owner Trustee or the Indenture Trustee) the Indenture.
Section 2.04. Method of Payment. (a) The principal of and
Make-Whole Amount, if any, and interest on each Equipment Note will be payable
in U.S. dollars in immediately available funds at the principal corporate trust
administration office of the Indenture Trustee or as otherwise directed in the
manner provided herein. Notwithstanding the foregoing or any provision in any
Equipment Note to the contrary, the Indenture Trustee will pay, or cause to be
paid, if so requested by any holder of an Equipment Note by written notice to
the Owner Trustee and the Indenture Trustee, all amounts payable by the Owner
Trustee hereunder to such holder or a nominee therefor either (i) by
transferring by wire in immediately available funds to an account maintained by
such holder with a bank in the United States the amount to be distributed to
such holder or (ii) by mailing a check denominated in U.S. dollars to such
holder at such address as such holder shall have specified in such notice, in
any case without any presentment or surrender of any Equipment Note, except
that the holder of an Equipment Note shall surrender such Equipment Note to the
Indenture Trustee upon payment in full of the principal amount of and interest
on such Equipment Note and such other sums payable to such holder hereunder or
under the Equipment Note.
(b) Whenever the date scheduled for any payment to be made
hereunder or under any Equipment Note shall not be a Business Day, then such
payment need not be made on such scheduled date but may be made on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such next 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 2.05. Application of Payments to Principal Amount and
Interest. In the case of each Equipment Note, each payment of principal
thereof and Make-Whole Amount, if any, and interest thereon shall be applied,
first, to the payment of accrued but unpaid interest on such Equipment Note
then due thereunder, second, to the payment of the unpaid principal amount of
such Equipment Note then due thereunder, third, to the payment of any
Make-Whole Amount then due thereon and fourth, to the payment of the remaining
outstanding principal amount of such Equipment Note; provided, that the Owner
Trustee may only prepay such Equipment Note in accordance with the provisions
of Section 2.10, 3.02 and 3.03 hereof.
Section 2.06. Termination of Interest in Indenture Estate. A
holder shall have no further interest in, or other right with respect to, the
Indenture Estate when and if the principal amount of and interest on all
Equipment Notes held by such holder and all other sums payable to such holder
hereunder and under such Equipment Notes and under the Participation Agreement
shall have been paid in full.
Section 2.07. Transfer of Equipment Notes. The Indenture Trustee
shall maintain at its corporate trust administration office in Chicago,
Illinois or in the city in which the corporate trust office of a successor
Indenture Trustee is located, a register for the purpose of registering
transfers and exchanges of Equipment Notes. A holder of an Equipment Note
intending to transfer such Equipment Note to a new payee, or to exchange any
Equipment Note or Equipment Notes held by it for an Equipment Note or Equipment
Notes of a different denomination or denominations, may surrender such
Equipment Note or Equipment Notes to the Indenture Trustee at such principal
corporate trust
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<PAGE> 14
administration office of the Indenture Trustee, together with a written request
from such holder for the issuance of a new Equipment Note or Equipment Notes,
specifying the denomination or denominations (each of which shall be not less
than $1,000,000 or a whole multiple thereof or such smaller denomination as may
be necessary due to the original issuance of Equipment Notes of the applicable
maturity in an aggregate principal amount not evenly divisible by $1,000,000)
of the same, and, in the case of a surrender for registration of transfer, the
name and address of the transferee or transferees. Promptly upon receipt of
such documents, the Owner Trustee will issue, and the Indenture Trustee will
authenticate, a new Equipment Note or Equipment Notes of the same series, in
the same aggregate principal amount and dated the same date or dates as, with
the same payment schedule, in the form set forth in Section 2.01 in the same
maturity and bearing the same interest rate as the Equipment Note or Equipment
Notes surrendered, in such denomination or denominations and payable to such
payee or payees as shall be specified in the written request from such holder.
All Equipment Notes issued upon any registration of transfer or exchange of
Equipment Notes shall be the valid obligations of the Owner Trustee evidencing
the same respective obligations, and entitled to the same security and benefits
under this Indenture, as the Equipment Notes surrendered upon such registration
of transfer or exchange. The Indenture Trustee shall make a notation on each
new Equipment Note or Equipment Notes of the amount of all payments or
prepayments of principal and interest previously made on the old Equipment Note
or Equipment Notes with respect to which such new Equipment Note or Equipment
Notes is or are issued. From time to time, the Indenture Trustee will provide
the Owner Trustee and the Lessee with such information as it may request as to
the registered holders of Equipment Notes. The Owner Trustee shall not be
required to exchange any surrendered Equipment Notes as above provided during
the 10-day period preceding the due date of any payment on such Equipment
Notes.
Prior to the due presentment for registration of transfer of an
Equipment Note, the Owner Trustee and the Indenture Trustee may deem and treat
the registered holder of such Equipment Note as the absolute owner and holder
of such Equipment Note for the purpose of receiving payment of all amounts
payable with respect to such Equipment Note and for all other purposes and
shall not be affected by any notice to the contrary.
The Indenture Trustee will promptly notify the Owner Trustee and the
Lessee of each request for a registration of transfer of an Equipment Note.
The Indenture Trustee will promptly cancel and destroy all Equipment Notes
surrendered for transfer or exchange pursuant to this Section.
Section 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes.
If any Equipment Note shall become mutilated, destroyed, lost or stolen, the
Owner Trustee shall, upon the written request of the holder of such Equipment
Note, issue, and the Indenture Trustee shall authenticate and deliver in
replacement thereof, a new Equipment Note of the same series in the form set
forth in Section 2.01, payable to the same holder in the same principal amount,
of the same maturity, with the same payment schedule, bearing the same interest
rate and dated the same date as the Equipment Note so mutilated, destroyed,
lost or stolen. The Indenture Trustee shall make a notation on each new
Equipment Note of the amount of all payments or prepayments of principal and
interest theretofore made on the Equipment Note so mutilated, destroyed, lost
or stolen and the date to which interest on such old Equipment Note has been
paid. If the Equipment Note being replaced has become mutilated, such
Equipment Note shall be surrendered to the Indenture Trustee and forwarded to
the Owner Trustee by the Indenture Trustee. If the Equipment Note being
replaced has been destroyed, lost or stolen, the holder of such Equipment Note
shall furnish to the Owner Trustee and the Indenture Trustee such security or
indemnity as may be required by them to save the Owner Trustee and the
Indenture Trustee harmless and evidence satisfactory
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<PAGE> 15
to the Owner Trustee and the Indenture Trustee of the destruction, loss or
theft of such Equipment Note and of the ownership thereof.
Section 2.09. Payment of Transfer Taxes. Upon the transfer of any
Equipment Note or Equipment Notes pursuant to Section 2.07, the Owner Trustee
or the Indenture Trustee may require from the party requesting such new
Equipment Note or Equipment Notes payment of a sum to reimburse the Owner
Trustee or the Indenture Trustee for, or to provide funds for the payment of,
any tax or other governmental charge in connection therewith.
Section 2.10. Prepayments. (a) Each Equipment Note shall be
prepaid in whole or in part by the Owner Trustee on a Rent Payment Date (or, in
the circumstance provided in the last sentence of Section 10.3 of the Lease, on
the Termination Date) upon at least 25 days' prior notice from the Owner
Trustee (or the Lessee on its behalf) to the Indenture Trustee in the event
that the Lease as applicable to any Unit or Units related to such Equipment
Note is terminated pursuant to Section 10 thereof, at a price equal to the sum
of (i) as to principal thereof, an amount equal to the product obtained by
multiplying the unpaid principal amount of such Equipment Note as at the date
of such prepayment (after deducting therefrom the principal installment, if
any, due on or prior to the date of such prepayment) by a fraction, the
numerator of which shall be the Equipment Cost of such Unit or Units and the
denominator of which shall be the aggregate Equipment Cost of all Units
included in the Indenture Estate under the related Indenture Supplement
immediately prior to the date of such prepayment, (ii) as to interest, the
aggregate amount of interest accrued and unpaid in respect of the principal
amount to be prepaid pursuant to clause (i) above on the date of such payment
(after giving effect to the application of any Basic Rent paid on or prior to
the date of such prepayment) and (iii) if prepaid prior to the Make-Whole
Termination Date, the Make-Whole Amount, if any, applicable in respect of the
principal amount to be prepaid pursuant to clause (i) above on the date of such
prepayment.
(b) Each Equipment Note shall be prepaid in whole or in part by
the Owner Trustee on a Rent Payment Date upon at least 15 days' prior notice
from the Owner Trustee (or the Lessee on its behalf) to the Indenture Trustee
in connection with the occurrence of an Event of Loss with respect to any Unit
or Units related to such Equipment Note if such Unit or Units are not replaced
pursuant to Section 11.2(i) of the Lease, or in the event Lessee shall be
required to settle for 10 or more Units on the date of payment therefor
determined pursuant to Section 11.2 of the Lease, such prepayment shall be made
on such date, at a price equal to the sum of (i) as to principal thereof, an
amount equal to the product obtained by multiplying the aggregate unpaid
principal amount of such Equipment Note as at such prepayment date (after
deducting therefrom the principal installment, if any, due on such date) by a
fraction, the numerator of which shall be the Equipment Cost of such Unit or
Units and the denominator of which shall be the aggregate Equipment Cost of all
Units included in the Indenture Estate under the related Indenture Supplement
immediately prior to such date, and (ii) as to interest, the aggregate amount
of interest accrued and unpaid in respect of the principal amount to be prepaid
pursuant to clause (i) above to but not including the date of prepayment after
giving effect to the application of any Basic Rent paid on or prior to the date
of such prepayment, but without the payment of any Make-Whole Amount.
(c) Unless Lessee shall have elected to assume all of the rights
and obligations of the Owner Trustee under this Indenture in respect of the
Equipment Notes, each Equipment Note shall be prepaid in whole by the Owner
Trustee on the Business Day specified by Lessee to Owner Trustee and Indenture
Trustee in accordance with Section 6.9 of the Participation Agreement, in the
event that Lessee exercises the purchase option under Section 6.9 of the
Participation Agreement with respect to the Equipment, at
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<PAGE> 16
a price equal to the sum of (i) as to principal thereof, an amount equal to the
unpaid principal amount of such Equipment Note as at the date of any prepayment
under Section 6.9 of the Participation Agreement (after deducting therefrom the
principal installment, if any, due on the prepayment date), (ii) as to
interest, the aggregate amount of interest accrued and unpaid in respect of the
principal amount to be prepaid pursuant to clause (i) above on the date of such
prepayment after giving effect to the application of any Basic Rent paid on or
prior to the date of such prepayment, and (iii) if prepaid prior to the
Make-Whole Termination Date applicable to such Equipment Notes, the Make- Whole
Amount, if any, applicable in respect of the principal amount to be prepaid
pursuant to clause (i) above on the date of such payment.
(d) Each Equipment Note shall be prepaid in whole or in part by
the Owner Trustee on the Early Purchase Date in the event that Lessee exercises
the purchase option under Section 22.1 of the Lease with respect to the
Equipment, at a price equal to the sum of (i) as to principal thereof, an
amount equal to the product obtained by multiplying the aggregate unpaid
principal amount of such Equipment Note as at the Early Purchase Date (after
deducting therefrom the principal installment, if any, due on the prepayment
date) by a fraction, the numerator of which shall be the Equipment Cost of such
Unit or Units to be purchased and the denominator of which shall be the
aggregate Equipment Cost of all Units included in the Indenture Estate
immediately prior to the date of such prepayment and (ii) as to interest, the
aggregate amount of interest accrued and unpaid in respect of the principal
amount to be prepaid pursuant to clause (i) above on the date of such
prepayment after giving effect to the application of any Basic Rent paid on or
prior to the date of such prepayment.
(e) On the Refunding Date specified by the Lessee to the Owner
Trustee and to the Indenture Trustee in accordance with Section 10.2(f) of the
Participation Agreement, all Equipment Notes shall be prepaid in whole but not
in part on such Refunding Date, in the event of a refunding or refinancing
pursuant to Section 10.2 of the Participation Agreement, at a price in addition
to any other amounts due to the holders of the Equipment Notes under this
Indenture equal to the unpaid principal amount thereof together with accrued
but unpaid interest thereon, plus, if prepaid prior to the Make-Whole
Termination Date, the Make-Whole Amount, if any.
(f) Each Equipment Note shall be prepaid in whole but not in part
on the Mandatory Refinancing Date, at a price in addition to any other amounts
due to the holders of the Equipment Notes under this Indenture equal to the
unpaid principal amount thereof together with accrued but unpaid interest
thereon, but without the payment of any Make- Whole Amount.
(g) The Indenture Trustee shall give prompt notice of any
prepayment of any of the Equipment Notes to all holders of such series of the
Equipment Notes as soon as the Indenture Trustee shall have knowledge that such
prepayment is to occur, which notice shall specify the Equipment Note or Notes
to be prepaid, the principal amount of such Equipment Note or Notes to be
prepaid and the date of prepayment, which date shall be not less than 25 days
after the date of such notice.
Section 2.11. Equally and Ratably Secured. All Equipment Notes at
any time outstanding under this Indenture shall be equally and ratably secured
hereby without preference, priority or distinction on account of the date or
dates or the actual time or times of the issue or maturity of such Equipment
Notes so that all Equipment Notes of any series at any time issued and
outstanding hereunder shall have the same rights, Liens and preferences under
and by virtue of this Indenture.
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ARTICLE III.
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE INDENTURE ESTATE
Section 3.01. Basic Rent Distribution. Except as otherwise
provided in Section 3.03, each installment of Interim Interest and Basic Rent
as well as any installment of interest on overdue installments of Basic Rent,
and any other moneys paid over by the Lessee or the Owner Trustee to the
Indenture Trustee for such purpose, shall be distributed by the Indenture
Trustee as promptly as possible (it being understood that any payments of
Interim Interest and Basic Rent received by the Indenture Trustee on a timely
basis and in accordance with the provisions of Section 3.6 of the Lease shall
be distributed on the date received in the funds so received) in the following
order of priority: first, so much of such installment as shall be required for
the purpose shall be distributed and paid to the holders of the Equipment Notes
of such series to pay in full the aggregate amount of the payment or payments
of principal, Make- Whole Amount, if any, and interest (as well as any interest
on overdue principal or interest) then due, such distribution to be made
ratably, without priority of one over the other, in the proportion that the
amount of such payment or payments then due with respect to each such Equipment
Note bears to the aggregate amount of payments then due under all such
Equipment Notes; and second, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee for distribution in
accordance with the terms of the Trust Agreement. The portion of each such
installment distributed to a holder of an Equipment Note shall be applied by
such holder in payment of such Equipment Note in accordance with the terms of
Section 2.05.
Section 3.02. Payments in the Event of Prepayment. (a) Except as
otherwise provided in Section 3.03 or 3.05, in the event of any prepayment of
an Equipment Note or Notes, in whole or in part, in accordance with the
provisions of Section 2.10 any amount received shall in each case be
distributed and paid in the following order of priority: first, so much of such
amount as shall be required for the purpose of prepayment shall be distributed
and paid to the holders of such Equipment Note or Notes to pay the aggregate
amount of the payment of principal, Make-Whole Amount, if any, and interest to
be prepaid on such Equipment Note or Notes pursuant to Section 2.10, such
prepayment to be made ratably to such Equipment Note or Notes to which such
prepayment relates, without priority of one over any other, in the proportion
that the amount to be prepaid on each such Equipment Note bears to the
aggregate amount to be paid on all such Equipment Notes; and second, the
balance, if any, of such amount remaining thereafter shall be distributed to
the Owner Trustee for distribution in accordance with the terms of the Trust
Agreement.
(b) Except as otherwise provided in Section 3.03 or 3.05 hereof,
any amounts received directly or through the Lessee from any governmental
authority or other party pursuant to Section 11 of the Lease with respect to
any Unit as the result of an Event of Loss, to the extent that such amounts are
not at the time required to be paid to the Lessee pursuant to said Section 11,
and any amounts of insurance proceeds for damage to the Indenture Estate
received directly or though the Lessee from any insurer pursuant to Section 12
of the Lease with respect thereto as the result of an Event of Loss, to the
extent such amounts are not at the time required to be paid to the Lessee
pursuant to said Section 12, shall be applied as provided in clause (a) of this
Section 3.02.
Section 3.03. Payments after Indenture Event of Default. (a)
Except as provided in Section 3.05, all payments received and amounts realized
by the Indenture Trustee after an Indenture Event of Default shall have
occurred and be continuing and after the Indenture Trustee has declared (as
assignee
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<PAGE> 18
from the Owner Trustee of the Lease) the Lease to be in default pursuant to
Section 15 thereof or has declared the Equipment Notes to be accelerated
pursuant to Section 5.02, as the case may be, or has elected to foreclose or
otherwise exercise any remedies under this Indenture (including any amounts
realized by the Indenture Trustee from the exercise of any remedies pursuant to
Section 15 of the Lease, or Article V), as well as all payments or amounts then
held or thereafter received by the Indenture Trustee as part of the Indenture
Estate while such Indenture Event of Default shall be continuing, shall be
distributed forthwith by the Indenture Trustee in the following order of
priority:
First, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for any fees which are due
and payable for its services under this Indenture and any tax, expense
(including reasonable attorney's fees) or other loss incurred by the
Indenture Trustee (to the extent reimbursable and not previously
reimbursed and to the extent incurred in connection with its duties as
Indenture Trustee) shall be distributed to the Indenture Trustee;
Second, so much of such payments or amounts as shall be
required to reimburse the holders of the Equipment Notes for payments
made by them to the Indenture Trustee pursuant to Section 6.03 (to the
extent not previously reimbursed), and to pay such holders of the
Equipment Notes the amounts payable to them pursuant to the provisions
of the Participation Agreement, shall be distributed to such holders
of the Equipment Notes, without priority of one over the other, in
accordance with the amount of the payment or payments made by, or
payable to, each such holder;
Third, so much of such payments or amounts remaining as shall
be required to pay the principal of, and Make-Whole Amount, if any, to
the extent received from the Lessee as Supplemental Rent, and accrued
interest (to the date of distribution) on all Equipment Notes, payable
to the Loan Participant, then due and payable, whether by declaration
of acceleration pursuant to Section 5.02 or otherwise, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full the aforesaid amounts, then, ratably, without priority of one
over the other, in the proportion that the aggregate unpaid principal
amount of all Equipment Notes held by each such holder, plus the
accrued but unpaid interest thereon to the date of distribution, bears
to the aggregate unpaid principal amount of all Equipment Notes, plus
the accrued but unpaid interest thereon to the date of distribution;
and
Fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the Owner Trustee for
distribution in accordance with the terms of the Trust Agreement.
(b) Except as provided in Sections 3.03(a) and 3.05, if an
Indenture Default or Indenture Event of Default shall have occurred and be
continuing, the Indenture Trustee shall not make any distribution to the Owner
Trustee but shall hold amounts otherwise distributable to the Owner Trustee as
collateral security for the obligations secured hereby and invested as provided
in Section 7.04(b) until the earliest to occur of (a) the date on which such
Indenture Default or Indenture Event of Default shall have been cured or waived
and (b) such acceleration occurs and such amounts are applied pursuant to
Section 3.03(a); provided, that if any amounts are held pursuant to this
Section 3.03(b) for a period of 180 days during which time the Equipment Notes
could, but shall not have been, accelerated, then (x) all amounts then held by
the Indenture Trustee under this Section 3.03(b) with respect to such Indenture
Default or Indenture Event of Default which have been so held for at least 90
days shall on the 181st day
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<PAGE> 19
be distributed to the Owner Trustee for distribution in accordance with the
terms of the Trust Agreement and (y) any such amounts which are being held
pursuant to this Section 3.03(b) with respect to such Indenture Default or
Indenture Event of Default but which have not been held for at least 90 days
shall, on the 91st day following the date on which such amount was initially
received by the Indenture Trustee, thereafter be distributed to the Owner
Trustee for distribution in accordance with the terms of the Trust Agreement.
Section 3.04. Other Payments. Except as otherwise provided in
Section 3.03 or 3.05, (a) any payments received by the Indenture Trustee for
which no provision as to the application thereof is made in the Lease or the
Participation Agreement or elsewhere in this Article III, and (b) all payments
received and amounts realized by the Indenture Trustee under the Lease or
otherwise with respect to the Equipment to the extent received or realized at
any time after payment in full of the principal of and interest and Make-Whole
Amount, if any, on all Equipment Notes, as well as any other amounts remaining
as part of the Indenture Estate after payment in full of the principal of and
interest and Make-Whole Amount, if any, shall be distributed forthwith by the
Indenture Trustee in the order of priority set forth in Section 3.03(a), except
that in the case of any payment described in clause (b) above, such payment
shall be distributed omitting clause "third" of such Section 3.03(a) on all
Equipment Notes issued hereunder.
Any payments received by the Indenture Trustee for which provision as
to the application thereof is made in the Lease or the Participation Agreement
but not elsewhere in this Indenture shall be applied to the purposes for which
such payments were made in accordance with the provisions of the Lease or the
Participation Agreement, as the case may be.
Section 3.05. Distribution of Excepted Property. All amounts
constituting Excepted Property received by the Indenture Trustee shall be paid
promptly by the Indenture Trustee to the Person or Persons entitled thereto.
ARTICLE IV.
ASSUMPTION OF OBLIGATIONS OF OWNER TRUSTEE BY LESSEE
Section 4.01. Assumption of Obligations of Owner Trustee by Lessee.
In the event that the Lessee shall have elected to assume all of the rights and
obligations of the Owner Trustee under this Indenture in respect of the
Equipment Notes in connection with the purchase by Lessee of Equipment pursuant
to Section 6.9 of the Participation Agreement and, if on or prior to the
purchase date:
(a) Lessee shall have delivered to the Indenture Trustee a
certificate, dated the date of such purchase, of a Responsible Officer stating
that Lessee has paid to the Owner Trustee all amounts required to be paid to
the Owner Trustee pursuant to Section 3.3 of the Lease in connection with such
purchase and assumption;
(b) no event which constitutes or, with the lapse of time or
notice, or both, would become, an Event of Default under this Agreement after
giving effect to the indenture supplement referred to below shall have occurred
and be continuing immediately subsequent to such purchase or assumption and the
Indenture Trustee shall have received a certificate, dated the date of such
purchase, of a Responsible Officer to such effect;
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<PAGE> 20
(c) the Indenture Trustee shall have received, on or prior to the
date of such purchase, evidence of all filings, recordings and other action
referred to in the Opinion or Opinions of Counsel referred to below;
(d) the Indenture Trustee shall have received an Opinion or
Opinions of Counsel for Lessee, dated the date of such purchase which without
unusual qualification shall be to the effect that, after giving effect to the
indenture supplement referred to below:
(i) this Indenture constitutes the legal, valid and
binding obligation of Lessee, enforceable against Lessee in accordance
with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, and except as limited by applicable laws which may affect
the remedies provided for in this Indenture, which laws, however, do
not in the opinion of such counsel make the remedies provided for in
this Agreement inadequate for the practical realization of the rights
and benefits provided for in this Indenture; and
(ii) the Lien on the Equipment constitutes a
fully-perfected Lien and all filing, recording or other action
(specifying the same) necessary to perfect and protect the Lien of
this Agreement has been accomplished.
(e) upon delivery of an indenture supplement giving effect to such
assumption reasonably satisfactory to the Indenture Trustee, dated the date of
such purchase;
then, automatically and without the requirement of further action by any
person, effective as of the date of such purchase, the Owner Trustee shall be
released from all of its obligations under the Equipment Notes and under this
Indenture in respect of the Equipment Notes or otherwise (other than any
obligations or liabilities of the Owner Trustee in its individual capacity
incurred on or prior to the date of such purchase or arising out of or based
upon events occurring on or prior to the date of such purchase, which
obligations and liabilities shall remain the sole responsibility of the Owner
Trustee) and the Lien of this Indenture upon the sale proceeds paid or payable
to the Owner Trustee shall be discharged. If requested by the Owner Trustee,
the Indenture Trustee shall execute and deliver an instrument, in form and
substance satisfactory to the Owner Trustee, confirming such release and
discharge.
ARTICLE V.
REMEDIES OF THE INDENTURE TRUSTEE UPON AN INDENTURE
EVENT OF DEFAULT
Section 5.01. Indenture Events of Default. The following events
shall constitute "Indenture Events of Default" and each such Indenture Event of
Default shall be deemed to exist and continue so long as, but only so long as,
it shall not have been remedied:
(a) subject to Section 5.04(a), a Lease Event of Default (other
than a Lease Event of Default by reason of a default by the Lessee to pay any
amounts which are part of the Excepted Property); or
(b) default by the Owner Trustee in making any payment when due of
principal of, Make-Whole Amount, if any, or interest on, any series of the
Equipment Notes or any Equipment Note or
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Equipment Notes, and the continuance of such default unremedied for 10 Business
Days after the same shall have become due and payable; or
(c) any failure by the Owner Trustee or the Owner Participant to
observe or perform in any material respect any covenant or obligation of them
or any of them, in this Indenture or the Equipment Notes or any series thereof
(other than as set forth in clause (b) above) or in the Participation
Agreement, if such failure is not remedied within a period of 30 days after
there has been given to the Owner Trustee, the Owner Participant and the Lessee
by the Indenture Trustee or by any holder of an Equipment Note a written notice
specifying such failure and requiring it to be remedied; or
(d) any representation or warranty made by the Owner Trustee
(except to the extent made with respect to _________________, in its individual
capacity) or the Owner Participant under the Participation Agreement, or by the
Owner Trustee hereunder, or by any representative of the Owner Trustee or the
Owner Participant in any document or certificate furnished to the Indenture
Trustee or the Loan Participant in connection herewith or therewith or pursuant
hereto or thereto, shall prove at any time to have been incorrect in any
material respect as of the date made and such incorrectness shall remain
material and continue unremedied for a period of 30 days after there has been
given to the Owner Trustee and the Owner Participant a written notice
specifying such incorrectness, stating that such incorrectness is a default
hereunder and requiring it to be remedied by the Indenture Trustee or by any
holder of an Equipment Note; or
(e) the Owner Trustee (as Owner Trustee and not in its individual
capacity) or the Owner Participant shall consent to the appointment of a
custodian, receiver, trustee or liquidator of itself or of a substantial part
of its property or shall make a general assignment for the benefit of
creditors; or
(f) the Owner Trustee (as Owner Trustee and not in its individual
capacity) or the Owner Participant shall file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction; or
(g) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Owner Trustee (as
Owner Trustee and not in its individual capacity) or the Owner Participant, a
receiver, trustee or liquidator of the Indenture Estate, the Owner Trustee (as
Owner Trustee and not in its individual capacity) or the Owner Participant, or
of any substantial part of its property, or granting any order for relief in
respect of the Owner Trustee (as Owner Trustee and not in its individual
capacity) or the Owner Participant under the Federal bankruptcy laws, and any
such order, judgment or decree of appointment shall remain in force
undismissed, unstayed or unvacated for a period of 60 days after the date of
entry thereof; or
(h) a petition against the Owner Trustee (as Owner Trustee and not
in its individual capacity) or the Owner Participant, in a proceeding under the
Federal bankruptcy laws or other insolvency law, as now or hereafter in effect,
shall be filed and shall not be withdrawn or dismissed within 60 days
thereafter, or if, under the provisions of any law providing for reorganization
or winding-up of corporations which may apply to the Owner Trustee (as Owner
Trustee and not in its individual capacity) or the Owner Participant, any court
of competent jurisdiction shall assume jurisdiction, custody or control of the
Indenture Estate, the Owner Trustee (as Owner Trustee and not in its individual
capacity) or the
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Owner Participant or of any substantial part of its property and such
jurisdiction, custody or control shall remain in force unrelinquished, unstayed
or unterminated for a period of 60 days.
Notwithstanding any provision herein to the contrary, if an Indenture Event of
Default described in clause (e), (f), (g) or (h) of this Section 5.01 results
solely from the bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation of Owner Trustee
solely in its individual capacity, and can be cured by the appointment of a
substitute Owner Trustee without adversely affecting the rights of the
Indenture Trustee hereunder, then Indenture Trustee shall refrain from the
exercise of any of the rights, powers or remedies pursuant to this Article V
for a period of 45 days, provided Owner Participant is diligently seeking to,
and does, replace the bank or trust company then serving as Owner Trustee which
replacement shall be deemed to cure such Indenture Event of Default.
Section 5.02. Acceleration; Rescission and Annulment. If an
Indenture Event of Default occurs and is continuing, the Indenture Trustee may,
and upon the directions of a Majority in Interest shall, subject to Section
5.04, declare the unpaid principal amount of all Equipment Notes then
outstanding and accrued interest thereon to be due and payable. At any time
after the Indenture Trustee has declared the unpaid principal amount of all
Equipment Notes then outstanding to be due and payable and prior to the sale of
any of the Indenture Estate pursuant to this Article V, a Majority in Interest,
by written notice to the Owner Trustee, the Lessee and the Indenture Trustee,
may rescind and annul such declaration and thereby annul its consequences if:
(i) there has been paid to or deposited with the Indenture Trustee an amount
sufficient to pay all overdue installments of interest on all of the Equipment
Notes, and the principal of and Make-Whole Amount, if any, on any Equipment
Notes that have become due otherwise than by such declaration of acceleration,
(ii) the rescission would not conflict with any judgment or decree, and (iii)
all other Indenture Defaults and Indenture Events of Default, other than
nonpayment of principal or interest on any of the Equipment Notes that have
become due solely because of such acceleration, have been cured or waived.
Section 5.03. Remedies with Respect to Indenture Estate. (a)
After an Indenture Event of Default shall have occurred and so long as such
Indenture Event of Default shall be continuing, then and in every such case the
Indenture Trustee, as assignee hereunder of the Lease or as mortgagee hereunder
of the Equipment or otherwise, may, and when required pursuant to the
provisions of Article VI hereof shall, subject to Sections 5.04 and 5.05,
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to Section 15 of the Lease and this Article V and may recover
judgment in its own name as Indenture Trustee against the Indenture Estate and
may take possession of all or any part of the Indenture Estate, and may exclude
the Owner Trustee and the Owner Participant and all persons claiming under any
of them wholly or partly therefrom; provided, however, that nothing in this
Indenture shall permit or require the Indenture Trustee to take any action
contrary to, or to disturb, the Lessee's rights under the Lease, except in
accordance with the provisions of the Lease. The Indenture Trustee, after the
occurrence of any Indenture Event of Default, shall give the Owner Participant
and the Owner Trustee 10 Business Days' (or such shorter period as practical)
prior notice of the date before which the Indenture Trustee shall not exercise
any remedy which would result in the exclusion of the Owner Trustee from the
Indenture Estate or any part thereof; provided, however, such notice period
shall not be in addition to any other notice period provided herein and;
provided, further, that the failure to give such notice shall have no effect on
any action taken by the Indenture Trustee.
(b) Subject to Section 5.04 and Section 5.05, the Indenture
Trustee may, if at the time such action may be lawful and always subject to
compliance with any mandatory legal requirements, either
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with or without taking possession, and either before or after taking
possession, and without instituting any legal proceedings whatsoever, and
having first given notice of such sale by registered mail to the Owner Trustee,
the Owner Participant and the Lessee once at least 20 days prior to the date of
such sale or the date on which the Indenture Trustee enters into a binding
contract for a private sale, and any other notice which may be required by law,
sell and dispose of the Indenture Estate, or any part thereof, or interest
therein, at public auction to the highest bidder or at private sale in one lot
as an entirety or in separate lots, and either for cash or on credit and on
such terms as the Indenture Trustee may determine, and at any place (whether or
not it be the location of the Indenture Estate or any part thereof) and time
designated in the notice above referred to; provided, however, that,
notwithstanding any provision herein to the contrary, the Indenture Trustee
shall not sell any of the Indenture Estate or exercise any other remedies which
would result in the exclusion of the Owner Trustee from the Indenture Estate or
any part thereof unless a declaration of acceleration has been made pursuant to
Section 5.02; provided, further, that, in the event the circumstances
contemplated by Section 5.04(c) exist, the Indenture Trustee shall not be
allowed to deliver the notice required by this Section 5.03(b) until the
earlier of (x) such time as such circumstances no longer exist or (y) the
expiration of the 90 day period set forth in Section 5.04(c). Any such public
sale or sales may be adjourned from time to time by announcement at the time
and place appointed for such sale or sales, or for any such adjourned sale or
sales, without further notice, and the Indenture Trustee or the holder or
holders of any Equipment Notes, or any interest therein, may bid and become the
purchaser at any such public sale. The Indenture Trustee may exercise such
right without possession or production of the Equipment Notes or proof of
ownership thereof, and as representative of the holders of each series may
exercise such right without including the holders as parties to any suit or
proceeding relating to foreclosure of any property in the Indenture Estate.
The Owner Trustee hereby irrevocably constitutes the Indenture Trustee the true
and lawful attorney-in-fact of the Owner Trustee (in the name of the Owner
Trustee or otherwise) for the purpose of effectuating any sale, assignment,
transfer or delivery for enforcement of the Lien of this Indenture, whether
pursuant to foreclosure or power of sale or otherwise, to execute and deliver
all such bills of sale, assignments and other instruments as the Indenture
Trustee may consider necessary or appropriate, with full power of substitution,
the Owner Trustee hereby ratifying and confirming all that such attorney or any
substitute shall lawfully do by virtue hereof. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
(c) Subject to Section 5.04 and Section 5.05, the Owner Trustee
agrees, to the fullest extent that it lawfully may, that, in case one or more
of the Indenture Events of Default shall have occurred and be continuing, then,
in every such case, the Indenture Trustee may take possession of all or any
part of the Indenture Estate and may exclude the Owner Trustee and the Owner
Participant and all persons claiming under any of them wholly or partly
therefrom. At the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such instruments of title
and other documents as the Indenture Trustee may deem necessary or advisable to
enable the Indenture Trustee or an agent or representative designated by the
Indenture Trustee, at such time or times and place or places as the Indenture
Trustee may specify, to obtain possession of all or any part of the Indenture
Estate. If the Owner Trustee shall fail for any reason to execute and deliver
such instruments and documents to the Indenture Trustee, the Indenture Trustee
may pursue all or part of the Indenture Estate wherever it may be found and may
enter any of the premises of the Lessee wherever the Indenture Estate may be or
be supposed to be and search for the Indenture Estate and, subject to Section
5.05, take possession of and remove the Indenture Estate. Upon every such
taking of possession, the Indenture
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Trustee may, from time to time, at the expense of the Indenture Estate, make
all such expenditures for maintenance, insurance, repairs, replacements,
alterations, additions and improvements to any of the Indenture Estate, as it
may deem proper. In each such case, the Indenture Trustee shall have the right
to use, operate, store, control or manage the Indenture Estate, and to carry on
the business and to exercise all rights and powers of the Owner Trustee
relating to the Indenture Estate, as the Indenture Trustee shall deem best,
including the right to enter into any and all such agreements with respect to
the maintenance, operation, leasing or storage of the Indenture Estate or any
part thereof as the Indenture Trustee may determine; and the Indenture Trustee
shall be entitled to collect and receive all tolls, rents, revenues, issues,
income, products and profits of the Indenture Estate and every part thereof,
without prejudice, however, to the right of the Indenture Trustee under any
provision of this Indenture to collect and receive all cash held by, or
required to be deposited with, the Indenture Trustee hereunder. Such tolls,
rents, revenues, issues, income, products and profits shall be applied to pay
the expenses of holding and operating the Indenture Estate and of conducting
the business thereof, and of all maintenance, repairs, replacements,
alterations, additions and improvements, and to make all payments which the
Indenture Trustee may be required or may elect to make, if any, for taxes,
assessments, insurance or other proper charges upon the Indenture Estate or any
part thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the
Indenture Estate), and all other payments which the Indenture Trustee may be
required or authorized to make under any provision of this Indenture, as well
as just and reasonable compensation for the services of the Indenture Trustee,
and of all persons properly engaged and employed by the Indenture Trustee,
including the reasonable expenses of the Indenture Trustee.
(d) If an Indenture Event of Default occurs and is continuing and
the Indenture Trustee shall have obtained possession of a Unit, the Indenture
Trustee shall not be obligated to use or operate such Unit or cause such Unit
to be used or operated directly or indirectly by itself or through agents or
other representatives or to lease, license or otherwise permit or provide for
the use or operation of such Unit or Equipment by any other Person unless (i)
the Indenture Trustee shall have been able to obtain insurance in kinds, at
rates and in amounts satisfactory to it in its reasonable discretion to protect
the Indenture Estate and the Indenture Trustee, as trustee and individually,
against any and all liability for loss or damage to such Unit and for public
liability and property damage resulting from use or operation of such Unit and
(ii) funds are available in the Indenture Estate to pay for all such insurance
or, in lieu of such insurance, the Indenture Trustee is furnished with
indemnification from the holders of the Equipment Notes or any other Person
upon terms and in amounts satisfactory to the Indenture Trustee in its
reasonable discretion to protect the Indenture Estate and the Indenture
Trustee, as trustee and individually, against any and all such liabilities.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement is the registered holder
of any Equipment Note issued hereunder, the Indenture Trustee is not authorized
or empowered to acquire title to any Indenture Estate or take any action with
respect to any Indenture Estate so acquired by it if such acquisition or action
would cause the trust created by the Trust Agreement or the Pass Through Trust
Agreement to fail to qualify as a "grantor trust" for federal income tax
purposes.
Section 5.04. Right to Cure; Option to Purchase; Etc.
(a) Right to Cure. (A) If there shall occur a Lease Event of
Default in respect of the payment of Basic Rent pursuant to Section 14(a) of
the Lease, then as long as no other Indenture Event
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of Default (other than arising from such failure to pay Basic Rent or which is
concurrently being cured pursuant to this Section 5.04(a)) shall have occurred
and be continuing the Owner Participant or the Owner Trustee may (but need not)
pay to the Indenture Trustee, at any time prior to the expiration of a period
of 10 Business Days (a "10-Day Period") after receiving written notice of such
default from the Indenture Trustee (prior to the expiration of which 10-Day
Period the Indenture Trustee shall not declare the Lease in default pursuant to
Section 15 thereof or exercise any of the rights, powers or remedies pursuant
to such Section 15 or this Article V), an amount equal to the full amount of
such payment of Basic Rent, together with any interest due thereon on account
of the delayed payment thereof, and such payment by the Owner Participant or
the Owner Trustee shall be deemed to cure any Indenture Event of Default which
arose from such failure of the Lessee (but such cure shall not relieve the
Lessee of any of its obligations and shall not cure any other Indenture Event
of Default) or (B) if there shall occur a Lease Event of Default in respect of
any other payment of Rent (other than Basic Rent) or a Lease Event of Default
shall have occurred and be continuing, which Lease Event of Default is curable
by the payment of money (it being understood that actions such as the obtaining
of insurance or the procuring of maintenance services can be so effected), then
as long as no other Indenture Event of Default (other than arising from such
Lease Event of Default or which is concurrently being cured pursuant to this
Section 5.04(a)) shall have occurred and be continuing the Owner Participant or
the Owner Trustee may (but need not) pay to the Indenture Trustee, at any time
prior to the expiration of a period of 30 days (a "30-Day Period") after
receiving written notice of such Lease Event of Default from the Indenture
Trustee (prior to the expiration of which 30-Day Period the Indenture Trustee
shall not declare the Lease in default pursuant to Section 15 thereof or
exercise any of the rights, powers or remedies pursuant to such Section 15 or
this Article V), an amount equal to the full amount of such payment of Rent,
together with any interest due thereon on account of the delayed payment
thereof or otherwise make such payment as shall effect such cure, and such
payment by the Owner Participant or the Owner Trustee shall be deemed to cure
any Indenture Event of Default which arose from such Lease Event of Default
(but such cure shall not relieve the Lessee of any of its obligations);
provided however, Owner Participant and Owner Trustee, collectively, shall not
be entitled to (x) cure more than three consecutive or six total defaults in
the payment of Basic Rent, or (y) cure other Lease Events of Default if the
outstanding amount which has been paid by the Owner Participant or the Owner
Trustee and not reimbursed to such parties by the Lessee pursuant to this
clause (y) exceeds in the aggregate $5,000,000, as adjusted annually for
inflation as of January 1 of each calendar year, by the percentage change in
the Consumer Price Index, All Urban Consumers, All Cities, as compared to the
prior calendar year as published by the Bureau of Labor Statistics of the
United States Department of Labor. Upon any cure by the Owner Participant or
the Owner Trustee in accordance with the first sentence of this Section
5.04(a), the Owner Participant or the Owner Trustee shall, to the extent of
their respective payments, be subrogated to the rights of the Indenture
Trustee, as assignee hereunder of the Owner Trustee to receive such payment of
Rent (and any interest due thereon on account of the delayed payment thereof)
or right of reimbursement, and shall be entitled to receive such payment upon
its receipt by the Indenture Trustee as aforesaid (but in each case only if all
amounts of principal and interest at the time due and payable on the Equipment
Notes shall have been paid in full); provided that neither the Owner
Participant nor the Owner Trustee shall attempt to recover any such amount paid
by it on behalf of the Lessee pursuant to this Section 5.04(a) except by
demanding of the Lessee payment of such amount or by commencing an action
against the Lessee to require the payment of such amount.
(b) Option to Purchase Equipment Notes. In the event that (i) at
any time one or more Lease Events of Default shall have occurred and any such
Lease Event of Default shall have continued for a period of 180 days or more
during which time the Equipment Notes could, but shall not, have been
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accelerated pursuant to Section 5.02, (ii) the Equipment Notes shall have been
accelerated pursuant to Section 5.02, (iii) the Indenture Trustee, as assignee
hereunder of the Lease, shall have exercised (or given notice of its intention
to exercise) any remedy in respect of the Units under the Lease, or (iv) the
Indenture Trustee shall commence foreclosure of the Lien of this Indenture or
otherwise exercise remedies which would result in the exclusion of the Owner
Trustee from the Indenture Estate or any part thereof (or give notice of its
intention to foreclose or exercise remedies), then and in any such case, so
long as the Lessee and its Affiliates do not individually or in the aggregate
own more than 20% of the Beneficial Interest, upon 30 days' notice from the
Owner Trustee to the Indenture Trustee designating a date of purchase (the
"Purchase Date") which shall be the second day of any month, each holder of an
Equipment Note agrees that it will, upon and subject to receipt by the
Indenture Trustee from the Owner Trustee or its nominee of an amount equal to
the aggregate unpaid principal amount of all Equipment Notes, together with
accrued interest thereon to the Purchase Date, plus all other sums then due and
payable to such holder of an Equipment Note hereunder, but, except in the case
of purchase of the Equipment Notes pursuant to clause (iv) above if the right
to exercise any remedies arises because of an Indenture Event of Default
arising from action attributable to the Owner Trustee or the Owner Participant,
without any Make-Whole Amount, forthwith sell, assign, transfer and convey to
the Owner Trustee or its nominee on the Purchase Date all of the right, title
and interest of such holder in and to the Equipment Notes then held by such
holder, and the Owner Trustee or its nominee shall assume all of such holder's
obligations under the Participation Agreement; provided that the Owner Trustee
or its nominee must purchase all and not less than all of the Equipment Notes
then outstanding.
(c) Restrictions on Certain Actions. Notwithstanding any
provision of this Indenture to the contrary, the Indenture Trustee shall not
foreclose the Lien of this Indenture or otherwise exercise remedies hereunder
which would result in the exclusion of the Owner Trustee from the Indenture
Estate or any part thereof as a result of an Indenture Event of Default that
constitutes or occurs solely by virtue of one or more Lease Events of Default
(at a time when no other Indenture Event of Default unrelated to any Lease
Event of Default shall have occurred and be continuing) (it being acknowledged
that an Indenture Event of Default arising under Section 2.10(f) shall be
deemed to occur solely as a result of an Event of Default under Section 14(k)
of the Lease) unless the Indenture Trustee as security assignee of the Owner
Trustee has proceeded or is then currently proceeding, to the extent it is then
entitled to do so hereunder and under the Lease and is not then stayed or
otherwise prevented from doing so by operation of law, to exercise one (or
more, as it shall in its good faith discretion determine) of the comparable
remedies provided for in Section 15 of the Lease with respect to the Equipment,
provided that in the event the Indenture Trustee shall be so stayed or
otherwise prevented from exercising such remedies under the Lease, it shall in
any event refrain from so foreclosing or exercising such other remedies
hereunder for a period of not less than 90 days, and further provided that in
the event the Lessee as debtor in a proceeding under Chapter 11 of the
Bankruptcy Code (or any trustee appointed for the Lessee as debtor in any such
bankruptcy case) shall have affirmed the Lease and no Lease Event of Default
other than as specified in Section 14(g) or Section 14(h) of the Lease has
occurred and is continuing, with the approval of the bankruptcy court having
jurisdiction over such case, under Section 365 of the Bankruptcy Code or any
amended or successor version thereof, the Indenture Trustee shall refrain from
so foreclosing or exercising such other remedies hereunder.
Section 5.05. Rights of Lessee. Notwithstanding the provisions of
this Indenture, including, without limitation, Section 5.03, so long as no
Lease Event of Default shall have occurred and be continuing, neither the
Indenture Trustee nor the Owner Trustee shall take any action contrary to, or
disturb, the Lessee's rights under the Lease, except in accordance with the
provisions of the Lease,
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including, without limitation, (i) the right to receive all monies due and
payable to it in accordance with the provisions of the Lease and (ii) the
Lessee's rights to possession and use of, and of quiet enjoyment of, the
Equipment.
Section 5.06. Waiver of Existing Defaults. A Majority in Interest
by notice to the Indenture Trustee on behalf of all holders of the Equipment
Notes may waive any past default hereunder and its consequences, except a
default: (i) in the payment of the principal of, Make-Whole Amount, if any, or
interest on any Equipment Note, or (ii) in respect of a covenant or provision
hereof which under Article X hereof cannot be modified or amended without the
consent of the holder of each Equipment Note affected. Upon any such waiver,
such default shall cease to exist, and any Indenture Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
ARTICLE VI.
DUTIES OF THE INDENTURE TRUSTEE
Section 6.01. Action upon Indenture Event of Default. If any
payments of Interim Interest or Basic Rent or payments of the principal or
interest or Make-Whole Amount, if any, on the Equipment Notes due and payable
on any Rent Payment Date shall not have been paid in full on such Rent Payment
Date, the Indenture Trustee shall give telephonic notice within one Business
Day (followed by prompt written notice) to the Owner Trustee, the Owner
Participant, the Loan Participant and the Lessee specifying the amount and
nature of such deficiency in payment. In the event the Indenture Trustee shall
have knowledge of an Indenture Event of Default or an Indenture Default, the
Indenture Trustee shall give prompt notice of such Indenture Event of Default
or Indenture Default to the Lessee, the Owner Trustee, the Owner Participant
and the Loan Participant by telegram, telex, or telephone (to be promptly
confirmed in writing). In the event the Owner Trustee shall have knowledge of
an Indenture Event of Default or an Indenture Default, the Owner Trustee shall
give notice of such Indenture Event of Default or Indenture Default in the same
manner to the Lessee, the Indenture Trustee, the Owner Participant and the Loan
Participant. Subject to the terms of Section 6.03, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such
Indenture Event of Default or Indenture Default as the Indenture Trustee shall
be instructed in writing by a Majority in Interest. If the Indenture Trustee
shall not have received instructions as above provided within 20 days after the
mailing of notice of such Indenture Event of Default or such Indenture Default
to the Loan Participant by the Indenture Trustee, the Indenture Trustee may,
but shall not be obligated to, take such action, or refrain from taking such
action, with respect to such Indenture Event of Default or Indenture Default as
it shall determine to be advisable in the best interests of the Loan
Participant. Any provision of this Section 6.01 to the contrary
notwithstanding, the Indenture Trustee shall not declare the Lease to be in
default solely in respect of the Lessee's failure to make any payment of Basic
Rent within 5 Business Days after the same shall have become due, unless the
10-Day Period within which, pursuant to Section 5.04(a), the Owner Participant
or the Owner Trustee are entitled to cure such failure shall have expired. For
all purposes of this Indenture, in the absence of actual knowledge, neither the
Owner Trustee nor the Indenture Trustee shall be deemed to have knowledge of an
Indenture Event of Default (except, in the case of the Indenture Trustee, the
failure of the Lessee to pay any installment of Basic Rent that is required to
be paid directly to the Indenture Trustee within the 5 Business Days after the
same shall become due or the failure of the Lessee to maintain insurance as
required under Section 12 of the Lease if the Indenture Trustee shall receive
notice thereof from an insurer or insurance broker) unless notified in writing
by the Lessee, the
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Owner Trustee, one or more Loan Participants or the Owner Participant; and
"actual knowledge" (as used in the foregoing clause) of the Owner Trustee or
the Indenture Trustee shall mean actual knowledge of an officer in the
Corporate Trust Administration of the Owner Trustee or the Corporate Trust
Department of the Indenture Trustee, as the case may be.
Section 6.02. Action upon Instructions. Subject to the terms of
Sections 6.01 and 6.03, upon the written instructions at any time and from time
to time of a Majority in Interest, the Indenture Trustee shall take such of the
following actions as may be specified in such instructions (subject to the
rights of the other parties thereto, except to the extent assigned hereunder):
(i) subject to and solely to the extent permitted by the terms hereof and of
the Lease, give such notice, direction or consent, or exercise such right,
remedy or power hereunder or under the Lease or in respect of any part or all
of the Indenture Estate or take such other action as shall be specified in such
instructions; and (ii) after an Indenture Event of Default shall have occurred
and so long as such Indenture Event of Default shall be continuing, approve as
satisfactory to it all matters required by the terms of the Lease to be
satisfactory to the Owner Trustee, it being understood that without the written
instructions of a Majority in Interest the Indenture Trustee shall not take any
action described in clauses (i) and (ii) above.
Upon the expiration or earlier termination of the Lease Term with
respect to any Unit under the Lease and after payment of the portion of the
principal of, together with interest and Make-Whole Amount, if any, on the
Equipment Notes in accordance with the terms of this Indenture, or, if and so
long as no Indenture Event of Default shall have occurred and be continuing,
upon the transfer by the Owner Trustee to the Lessee or its designee of any
Unit pursuant to Section 10 or 11 of the Lease or the retention by the Owner
Trustee of any Unit pursuant to Section 10. 3 of the Lease, then the Indenture
Trustee shall in either such case, upon the written request of the Owner
Trustee, and receipt by the Indenture Trustee of funds necessary to prepay the
Equipment Notes required to be prepaid in connection with such purchase,
termination, retention or Event of Loss, execute and deliver to, or as directed
in writing by, the Owner Trustee an appropriate instrument (in due form for
recording) furnished by the Owner Trustee or the Lessee releasing such property
from the Lien of this Indenture.
Section 6.03. Indemnification. (a) The Indenture Trustee shall
not be required to take any action or refrain from taking any action under
Section 6.01 (other than the first two sentences thereof) or 6.02 or Article V
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk is not reasonably assured to it.
The Indenture Trustee shall not be required to take any action under Section
6.01 or 6.02 or Article V, nor shall any other provision of this Indenture be
deemed to impose a duty on the Indenture Trustee to take any action, if the
Indenture Trustee shall have been advised in writing by independent counsel
that such action is contrary to the terms hereof or of the Lease or the
Participation Agreement, or is otherwise contrary to law.
(b) Each Loan Participant may, but shall not be required to,
participate in any indemnification of the Indenture Trustee given pursuant to
paragraph (a) of this Section 6.03. Each Loan Participant so participating
shall be entitled to reimbursement for such participation in accordance with
Article III.
Section 6.04. No Duties Except as Specified in Indenture or
Instructions. The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Equipment or
any other part of the Indenture Estate, or to otherwise take or refrain from
taking any action under, or in connection with, this Indenture, the Lease, or
the Participation Agreement, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions
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received pursuant to the terms of Section 6.01 or 6.02; and no implied duties
or obligations shall be read into this Indenture against the Indenture Trustee.
Each of the Owner Trustee (only in its individual capacity) and the Indenture
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take such action as may be necessary duly to discharge any liens or
encumbrances on any part of the Indenture Estate, or on any properties of the
Owner Trustee assigned, pledged or mortgaged as part of the Indenture Estate,
which result from claims against it in its individual capacity not related to
the ownership of the Equipment (in the case of the Owner Trustee),
administration of the Indenture Estate (in the case of the Indenture Trustee)
or any other transaction under this Indenture or the Trust Agreement or any
document included in the Indenture Estate.
Section 6.05. No Action Except under Lease, Indenture or
Instructions. The Indenture Trustee agrees that it will not manage, control,
use, sell, dispose of or otherwise deal with the Equipment or other property
constituting part of the Indenture Estate except (i) as required by the terms
of the Lease and the Participation Agreement, (ii) in accordance with the
powers granted to, or the authority conferred upon, the Indenture Trustee
pursuant to this Indenture, or (iii) in accordance with the express terms
hereof or with written instructions pursuant to Section 6.01 or 6.02.
Section 6.06. Disposition of Units. At any time and from time to
time prior to the expiration of the Lease Term, any Unit for which the
provisions of Section 11.4(a) of the Lease has been satisfied may be disposed
of in accordance with the provisions of Section 11.4(a) of the Lease, and the
Owner Trustee shall, from time to time, direct the Indenture Trustee to,
provided no Lease Event of Default shall have occurred and be continuing,
execute and deliver to it, or as directed in writing by the Owner Trustee, an
appropriate instrument furnished by the Owner Trustee or the Lessee releasing
such Unit from the Lien of the Indenture, but only in respect of such Unit.
Section 6.07. Indenture Supplements for Replacements. In the event
of a Replacement Unit being substituted as contemplated by Section 11.2 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the
holders of the Equipment Notes and the Lessee, subject to compliance by the
Lessee with its obligations set forth in Section 11 of the Lease, to execute
and deliver an Indenture Supplement substantially in the form of Exhibit A
hereto and, provided no Lease Event of Default or Lease Default shall have
occurred and be continuing, execute and deliver to the Lessee an appropriate
instrument releasing the Unit being replaced from the Lien of the Indenture.
Section 6.08. Effect of Replacements. In the event of the
substitution of a Replacement Unit, all provisions of this Indenture relating
to the Unit or Units being replaced shall be applicable to such Replacement
Unit with the same force and effect as if such Replacement Unit was the same
Unit being replaced.
Section 6.09. Withholding Taxes. The Indenture Trustee, as agent
for the Owner Trustee, shall exclude and withhold from each payment of
principal, Make-Whole Amount, if any, and interest and other amounts due
hereunder or under the Equipment Notes any and all withholding taxes applicable
thereto as required by law. The Indenture Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any
amounts payable in respect of any of the Equipment Notes, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the holders of such Equipment Notes, that it will file any
necessary withholding tax returns or statements when due, and that, as promptly
as possible after the payment thereof, it will deliver to each holder of an
Equipment Note
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appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such holders may reasonably request from
time to time.
Section 6.10. Lessee's Right of Quiet Enjoyment. Notwithstanding
any of the provisions of this Indenture to the contrary, so long as Lessee is
in compliance with its obligations under the Lease (including applicable grace
periods) and no Lease Event of Default has occurred and is continuing
unremedied, the Indenture Trustee will comply with Section 8 of the
Participation Agreement to the same extent as if it were the Lessor under the
Lease. Each holder of an Equipment Note, by its acceptance thereof, consents
in all respects to the terms of the Lease and the Participation Agreement and
agrees to the provisions of this Section 6.10.
Section 6.11. Compensation and Indemnity. (a) The Owner Trustee
shall pay to the Indenture Trustee, from time to time, on demand, all funds
received for such purposes from the Lessee for (i) reasonable compensation for
the Indenture Trustee's services, which compensation shall not be limited by
any law on compensation of a trustee of an express trust, (ii) reimbursement
for all reasonable out-of-pocket expenses incurred by the Indenture Trustee in
connection with the performance of its duties under this Indenture (including
the reasonable compensation and expenses of the Indenture Trustee's counsel and
any agent appointed in accordance with Section 7.05 and (iii) in respect of any
loss or liability incurred by it arising out of or in connection with its
acceptance or administration of the trust or trusts hereunder except (A) as
such expenses or loss or liability might result from the gross negligence or
wilful misconduct of the Indenture Trustee or the inaccuracy of any
representation or warranty of the Indenture Trustee in Section 3.3 of the
Participation Agreement, and (B) as otherwise excluded by the terms of Sections
7.1 and 7.2 of the Participation Agreement from the Lessee's indemnities under
said sections; provided that, so long as the Lease is in effect, the Indenture
Trustee shall not make any claim under this Section 6. 11 for any claim or
expense indemnified against by the Lessee under the Participation Agreement
without first making demand on the Lessee for payment of such claim or expense.
The Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of
any claim for which it may seek indemnity. The Owner Trustee shall have the
right to defend the claim and the Indenture Trustee shall cooperate in the
defense. The Indenture Trustee may have separate counsel and the Owner
Trustee, subject to limitations set forth in the preceding sentence, shall pay
the reasonable fees and expenses of such counsel. The Owner Trustee need not
pay for any settlement made without its and the Lessee's consent.
ARTICLE VII.
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Indenture
Trustee accepts the trusts hereby created and applicable to it and agrees to
perform the same but only upon the terms of this Indenture and agrees to
receive and disburse all moneys received by it constituting part of the
Indenture Estate in accordance with the terms hereof. The Indenture Trustee
shall not be answerable or accountable under any circumstances, except for its
own willful misconduct or gross negligence (or negligence or willful misconduct
in the case of application or investment of moneys constituting the Indenture
Estate) or breach of any of its representations or warranties or covenants set
forth herein or in the Participation Agreement, or the performance of its
obligations under the last sentence of Section 6.04; and the Owner Trustee
shall not be liable for any action or inaction of the Indenture Trustee and the
Indenture Trustee shall not be
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liable for any action or inaction of the Owner Trustee. The Owner Trustee
shall not be deemed a trustee for, or agent of, the holders of the Equipment
Notes for any purpose.
Section 7.02. Absence of Duties. Except in accordance with written
instructions or requests furnished pursuant to Section 6.01 or Section 6.02 and
except as provided in, and without limiting the generality of, Section 6.04,
the Indenture Trustee shall have no duty (i) to see to any registration of the
Equipment or any recording or filing of the Lease, or of this Indenture or any
other document, or to see to the maintenance of any such registration,
recording or filing, (ii) to see to any insurance on the Equipment or to effect
or maintain any such insurance, whether or not the Lessee shall be in default
with respect thereto, (iii) to confirm, verify or inquire into the failure to
receive any financial statements of the Lessee or (iv) to inspect the Equipment
at any time or ascertain or inquire as to the performance or observance of any
of the Lessee's covenants under the Lease with respect to the Equipment.
Notwithstanding the foregoing, the Indenture Trustee will furnish to any Loan
Participant, so long as such Loan Participant or its nominees shall hold any of
the Equipment Notes, promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Indenture Trustee under this Indenture, to
the extent that the same shall not have been furnished to the Indenture Trustee
and the Loan Participants pursuant to the Lease.
Section 7.03. No Representations or Warranties as to the Equipment
or Documents. Neither the Owner Trustee nor the Owner Trustee in its
individual capacity nor the Indenture Trustee makes or shall be deemed to have
made (i) any representation or warranty, express or implied, as to the value,
condition, design, operation, merchantability or fitness for use of the
Equipment or as to their title thereto, or any other representation or warranty
with respect to the Equipment whatsoever, or (ii) any representation or
warranty as to the validity, legality or enforceability of this Indenture, the
Trust Agreement, the Participation Agreement, the Equipment Notes, the Lease,
any Lease Supplement, any Indenture Supplement or any other document or
instrument or as to the correctness of any statement contained in any thereof
(except as to the representations and warranties made by the Owner Trustee in
its individual capacity as set forth in Section 3.1 of the Participation
Agreement), except that the Owner Trustee and the Indenture Trustee each in its
individual capacity hereby confirms the representations and warranties made by
it in its individual capacity in Sections 3. 1 and 3.3, respectively, of the
Participation Agreement.
Section 7.04. No Segregation of Moneys; No Interest; Investments.
(a) Subject to Section 7.04(b), no moneys received by the Indenture Trustee
hereunder need be segregated in any manner except to the extent required by
law, and any such moneys may be deposited under such general conditions for the
holding of trust funds as may be prescribed by law applicable to the Indenture
Trustee, and, except as otherwise agreed by the Owner Trustee or the Indenture
Trustee, as the case may be, neither the Owner Trustee nor the Indenture
Trustee shall be liable for any interest thereon.
(b) Any amounts held by the Indenture Trustee pursuant to the
express terms of this Indenture or the Lease and not required to be distributed
as herein provided shall be invested and reinvested by the Indenture Trustee
from time to time in Specified Investments at the written direction and at the
risk and expense of the Lessee, except that in the absence of any such
direction, such amounts need not be invested and reinvested and except that
after a Lease Event of Default shall have occurred and be continuing, such
amounts shall be so invested and reinvested by the Indenture Trustee in
Indenture Investments. Any net income or gain realized as a result of any such
investments or reinvestment shall be held as part of the Indenture Estate and
shall be applied by the Indenture Trustee at the same times,
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on the same conditions and in the same manner as the amounts in respect of
which such income or gain was realized are required to be distributed in
accordance with the provisions hereof or of the Lease pursuant to which such
amounts were required to be held and if no Lease Event of Default shall have
occurred and be continuing any excess shall be paid to the Lessee. Any such
Specified Investments or Indenture Investments may be sold or otherwise reduced
to cash (without regard to maturity date) by the Indenture Trustee whenever
necessary to make any application as required by such provisions. The
Indenture Trustee shall have no liability for any loss resulting from any such
investment or reinvestment other than by reason of the willful misconduct or
gross negligence of the Indenture Trustee.
Section 7.05. Reliance; Agents; Advice of Counsel. The Indenture
Trustee shall incur no liability to anyone acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Indenture
Trustee may accept a copy of a resolution of the Board of Directors of any
party to the Participation Agreement, certified by the Secretary or an
Assistant Secretary of such party as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted by said Board
and that the same is in full force and effect. As to any fact or matter the
manner of ascertainment of which is not specifically described herein, the
Indenture Trustee may for all purposes hereof rely on a certificate, signed by
an officer of the Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Indenture Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon. The Indenture
Trustee shall furnish to the Owner Trustee upon request such information and
copies of such documents as the Indenture Trustee may have and as are necessary
for the Owner Trustee to perform its duties under Article II hereof. The
Indenture Trustee shall assume, and shall be fully protected in assuming, that
the Owner Trustee is authorized by the Trust Agreement to enter into this
Indenture and to take all action permitted to be taken by it pursuant to the
provisions hereof, and need not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder,
the Indenture Trustee may execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through agents or attorneys
and may, at the reasonable expense of the Indenture Estate, consult with
independent counsel, accountants and other skilled persons to be selected and
employed by it, and the Indenture Trustee shall not be liable for anything
done, suffered, or omitted in good faith by it in accordance with the written
advice or opinion of any such independent counsel, accountants or other skilled
persons acting within such persons' area of competence (so long as the
Indenture Trustee shall have exercised reasonable care in selecting such
persons).
Section 7.06. Not Acting in Individual Capacity. The Owner Trustee
and the Indenture Trustee each acts hereunder solely as trustee hereunder and,
in the case of the Owner Trustee, under the Trust Agreement and not in its
individual capacity unless otherwise expressly provided; and all Persons, other
than the holders of Equipment Notes to the extent expressly provided in this
Indenture, having any claim against the Owner Trustee or the Indenture Trustee
by reason of the transactions contemplated hereby shall, subject to the Lien
and priorities of payment as herein provided, look only to the Indenture Estate
for payment or satisfaction thereof.
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ARTICLE VIII.
CERTAIN LIMITATIONS ON OWNER TRUSTEE'S
AND INDENTURE TRUSTEE'S RIGHTS
Section 8.01. Certain Limitations on Owner Trustee's and Indenture
Trustee's Rights. Each of the Owner Trustee and the Indenture Trustee agree
that it shall have no right against the holders of the Equipment Notes or the
Indenture Estate (except in the case of the Indenture Trustee as expressly
provided in Section 5.03 hereof) for any fee as compensation for its services
hereunder or any expenses or disbursements incurred in connection with the
exercise and performance of its powers and duties hereunder or any
indemnification against liability which it may incur in the exercise and
performance of such powers and duties but, on the contrary, shall look solely
to the Lessee for such payment and indemnification and that neither the Owner
Trustee nor the Indenture Trustee shall have any lien on nor security interest
in the Indenture Estate as security for such compensation, expenses, reasonable
counsel fees, if any, disbursements and indemnification.
ARTICLE IX.
SUCCESSOR TRUSTEES
Section 9.01. Notice of Successor Owner Trustee. In the case of
any appointment of a successor Owner Trustee pursuant to the Trust Agreement or
any merger, conversion, consolidation or sale of substantially all the business
involving the Owner Trustee pursuant to the Trust Agreement, the successor
Owner Trustee shall give prompt written notice thereof to the Indenture
Trustee, the Lessee and the holders of all Equipment Notes at the time
outstanding.
Section 9.02. Resignation of Indenture Trustee; Appointment of
Successor. The resignation or removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee shall become effective only upon
the successor Indenture Trustee's acceptance of appointment as provided in this
Section 9.02. The Indenture Trustee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to the
Owner Trustee, the Owner Participant, the Lessee and the holders of the
Equipment Notes. A Majority in Interest may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, the Owner Participant, the Lessee and the Indenture Trustee. The
Owner Trustee may remove the Indenture Trustee if: (1) the Indenture Trustee
fails to comply with Section 9.02(c); (2) the Indenture Trustee is adjudged a
bankrupt or an insolvent; (3) a receiver or public officer takes charge of the
Indenture Trustee or its property; or (4) the Indenture Trustee becomes
incapable of performing its duties hereunder.
(a) In the case of the resignation or removal of the Indenture
Trustee, the Owner Trustee shall, unless otherwise directed by a Majority in
Interest, promptly appoint a successor Indenture Trustee, provided that a
Majority in Interest may appoint, within one year after such resignation or
removal, a successor Indenture Trustee which may be other than the successor
Indenture Trustee appointed as provided above, and such successor Indenture
Trustee appointed as provided above shall be superseded by the successor
Indenture Trustee so appointed by a Majority in Interest. If a successor
Indenture Trustee shall not have been appointed and accepted its appointment
hereunder within 60 days after the Indenture Trustee gives notice of
resignation or is removed as provided above, the retiring Indenture Trustee,
the Lessee, the Owner Trustee or a Majority in Interest may petition any court
of competent jurisdiction for the appointment of a successor Indenture Trustee.
Any successor Indenture Trustee so
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appointed by such court shall immediately and without further act be superseded
by any successor Indenture Trustee appointed as provided in the proviso to the
first sentence of this paragraph (a) within one year from the date of the
appointment by such court.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee and the Lessee and to the predecessor
Indenture Trustee an instrument accepting such appointment, and thereupon such
successor Indenture Trustee, without further act, shall become vested with all
the estates, properties, rights, powers, duties and trusts of the predecessor
Indenture Trustee hereunder in the trusts hereunder applicable to it with like
effect as if originally named the Indenture Trustee herein; but nevertheless,
upon the written request of such successor Indenture Trustee, such predecessor
Indenture Trustee shall execute and deliver an instrument transferring to such
Indenture Trustee, upon the trusts herein expressed applicable to it, all the
estates, properties, rights, powers and trusts of such predecessor Indenture
Trustee, and such Indenture Trustee shall duly assign, transfer, deliver and
pay over to such successor Indenture Trustee all moneys or other property then
held by such predecessor Indenture Trustee hereunder.
(c) The Indenture Trustee shall be a bank or trust company
organized under the laws of the United States or any State thereof having a
combined capital and surplus of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section, be the Indenture Trustee under this
Indenture without further act.
ARTICLE X.
SUPPLEMENTS AND AMENDMENTS
TO THIS INDENTURE AND OTHER DOCUMENTS
Section 10.01. Supplemental Indentures without Consent of Holders.
(a) The Owner Trustee and the Indenture Trustee, at any time and from time to
time, without notice to or the consent of any holders of any Equipment Notes,
may enter into one or more indentures supplemental hereto for any of the
following purposes:
(i) to correct or amplify the description of any property
at any time subject to the Lien of this Indenture or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Indenture or to subject to
the Lien of this Indenture any Unit or Units substituted for any Unit
or Units in accordance with the Lease; provided, however, that
indenture supplements entered into for the purpose of subjecting to
the Lien of this Indenture any Unit or Units substituted for any in
accordance with the Lease need only be executed by the Owner Trustee;
or
(ii) to evidence the succession of another trustee to the
Owner Trustee and the assumption by any such successor of the
covenants of the Owner Trustee herein and in the
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Equipment Notes contained, or to evidence (in accordance with Article
IX) the succession of a new Indenture Trustee hereunder; or
(iii) to add to the covenants of the Owner Trustee, for the
benefit of the holders of any of the Equipment Notes, or to surrender
any right or power herein conferred upon the Owner Trustee; or
(iv) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising hereunder so long as any such action does
not adversely affect the interests of the holders of any of the
Equipment Notes;
provided that no such supplement to this Indenture or waiver or modification of
the terms hereof shall adversely affect in a substantive manner the interests
of the Lessee without the Lessee's prior written consent, and in no event shall
the terms of the proviso to Section 5.03(a) or Section 5.05 be so altered or
modified without such Lessee consent.
(b) Supplemental Indentures with Consent of Majority In Interest.
With the written consent of a Majority in Interest, the Owner Trustee (but only
on the written request of the Owner Participant) may, and the Indenture
Trustee, subject to Section 10.02 hereof, shall, at any time and from time to
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights and
obligations of holders of any of the Equipment Notes and of the Owner Trustee
under this Indenture; provided, however, without the consent of each holder of
an Equipment Note affected thereby, no such supplemental indenture shall:
(1) except as expressly provided by Section 10.01(c),
change the final maturity of the principal of any Equipment Note, or
change the dates or amounts of payment of any installment of the
principal of, Make- Whole Amount, if any, or interest on any Equipment
Note, or reduce the principal amount thereof or the Make- Whole
Amount, if any, or interest thereon, or change to a location outside
the United States the place of payment where, or the coin or currency
in which, any Equipment Note or the Make-Whole Amount, if any, or
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment of principal or Make-Whole Amount,
if any, or interest on or after the date such principal or Make-Whole
Amount, if any, or interest becomes due and payable; or
(2) create any Lien with respect to the Indenture Estate
ranking prior to, or on a parity with, the security interest created
by this Indenture except such as are permitted by this Indenture, or
deprive any holder of an Equipment Note of the benefit of the Lien on
the Indenture Estate created by this Indenture; or
(3) reduce the percentage in principal amount of any of
the Equipment Notes, the consent of whose holders is required for any
such supplemental indenture, or the consent of whose holders is
required for any waiver (of compliance with certain provisions of this
Indenture, or of certain defaults hereunder and their consequences)
provided for in this Indenture; or
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(4) modify any provisions of this Section 10.01(b),
except to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the holder of each
Equipment Note affected thereby;
provided that no such supplement to this Indenture or waiver or modification of
the terms hereof shall adversely affect in a substantive manner the interests
of the Lessee without the Lessee's prior written consent, and in no event shall
the terms of the proviso to Section 5.03(a) or Section 5.05 be so altered or
modified without such Lessee consent.
Section 10.02. Indenture Trustee Protected. If in the opinion of
the Indenture Trustee any document required to be executed pursuant to the
terms of Section 10.01 adversely affects any right, duty, immunity or indemnity
in favor of the Indenture Trustee under this Indenture, the Participation
Agreement or the Lease, the Indenture Trustee may in its discretion decline to
execute such document.
Section 10.03. Request of Substance, Not Form. It shall not be
necessary for the consent of the holders of Equipment Notes under Section
10.01(b) to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Section 10.04. Documents Mailed to Holders. Promptly after the
execution by the Indenture Trustee of any document entered into pursuant to
Section 10.01(b), the Indenture Trustee shall mail, by first-class mail,
postage prepaid, a conformed copy thereof to each holder of an Equipment Note
at its address last known to the Indenture Trustee, but the failure of the
Indenture Trustee to mail such conformed copies shall not impair or affect the
validity of such document.
Section 10.05. Amendments, Waivers, Etc. of Other Documents. (a)
Without the consent of a Majority in Interest, the respective parties to the
Lease, the Participation Agreement and the Trust Agreement may not modify,
amend or supplement any of such agreements, or give any consent, waiver,
authorization or approval thereunder, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder;
provided, however, that the actions specified in subsection (b) of this Section
10.05 may be taken, except as otherwise expressly provided therein, without the
consent of the Indenture Trustee or of a Majority in Interest or any holder of
an Equipment Note.
(b) Subject to the provisions of subsection (c) of this Section
10.05, the respective parties to the Lease, the Trust Agreement and the
Participation Agreement, at any time and from time to time without the consent
of the Indenture Trustee or of a Majority in Interest or any holder of an
Equipment Note, may:
(1) so long as no Indenture Event of Default shall have
occurred and be continuing, modify, amend or supplement the Lease, or
give any consent, waiver, authorization or approval with respect
thereto, except that without the consent of a Majority in Interest,
the parties to the Lease shall not modify, amend or supplement, or
give any consent, waiver, authorization or approval for the purpose of
adding any provisions to or changing in any manner or eliminating any
of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following
provisions of the Lease: Sections 2, 3.1 (if the result thereof would
be to shorten the Basic Term to a period shorter than the period
ending with the final maturity of the Equipment Notes), 3.2, 3.3, 3.4,
3.5, 3.6 (except insofar as it relates to the
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address or account information of the Owner Trustee or Indenture
Trustee) (other than as such Sections 3.1 through 3.6 may be amended
pursuant to Section 3.4 of the Lease as originally executed), 4, 6
(but only to the extent such Section is made operative by Section 15),
7, 8, 9, 10 (except that additional requirements may be imposed on the
Lessee's ability to terminate the Lease with respect to a Unit), 11
(except that additional requirements may be imposed on the Lessee's
ability to replace a Unit subject to an Event of Loss), 12 (including
the Letter Agreement referred to therein) (except that additional
insurance requirements may be imposed on the Lessee), 13, 14, 15, 16,
17, 18, 19, 20, 21, 22 (if the result thereof would be to provide any
renewal or purchase option contained in such Section prior to the
final maturity of the Equipment Notes), 24, 25.1, 25.4, 25.6, 25. 10,
and any definition of terms used in the Lease, to the extent that any
modification of such definition would result in a modification of the
Lease not permitted as aforesaid in this clause (1) of subsection (b);
provided that, in the event an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee shall have all
rights of the Owner Trustee as "Lessor" under the Lease to modify,
amend or supplement the Lease or give any consent, waiver,
authorization or approval thereunder, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
"Lessor" thereunder;
(2) modify, amend or supplement the Trust Agreement, or
give any consent, waiver, authorization or approval with respect
thereto, except that without the consent of a Majority of Interest,
the parties to the Trust Agreement shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect
to Sections 2.1, 2.2, 3.1, 4.4, 7.1, 7.2, 9.1, 10.1, 10.2, 10.7, 10.11
or any other Section of the Trust Agreement if such action would
materially adversely affect the interest of the Loan Participants, and
any definition of terms used in the Trust Agreement, to the extent
that any modification of such definition would result in a
modification of the Trust Agreement not permitted pursuant to this
subsection (b);
(3) modify, amend or supplement the Participation
Agreement, or give any consent, waiver, authorization or approval with
respect thereto, except that without the consent of a Majority of
Interest, the parties to the Participation Agreement shall not modify,
amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties
thereunder, with respect to the following provisions of the
Participation Agreement: Sections 1, 2, 3, 4, 5, 6, 7, 10.2, 10.5,
10.7, 10.9 and 10.13 (a), each provision of the Participation
Agreement which specifically refers to the Indenture Trustee or Loan
Participants and any definition of terms used in the Participation
Agreement, to the extent that any modification of such definition
would result in a modification of the Participation Agreement not
permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in
order to cure any ambiguity, to correct or supplement any provision
thereof which may be defective or inconsistent with any other
provision thereof or any provision of this Indenture, or to make any
other provision with respect to matters or questions arising
thereunder or under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided any such action shall
not adversely affect the interests of the holders of any of the
Equipment Notes.
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<PAGE> 38
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to
subsection (b) of this Section 10.05, and anything in such subsections or
elsewhere in this Indenture to the contrary notwithstanding, shall, without the
consent of the holder of each Equipment Note affected thereby:
(1) modify, amend or supplement the Lease in such a way
as to extend the time of payment of Basic Rent or Stipulated Loss
Value and any other amounts payable under, or as provided in, the
Lease upon the occurrence of an Event of Loss or Termination Value and
any other amounts payable under, or as provided in, the Lease upon
termination thereof or reduce the amount of any installment of Basic
Rent so that the same is less than the payment of interest and
principal on such Equipment Notes, as the case may be, to be made from
such installment of Basic Rent or reduce the aggregate amount of
Stipulated Loss Value and any other amounts payable under, or as
provided in, the Lease upon the occurrence of an Event of Loss so that
the same is less than the accrued interest on and principal of the
Equipment Notes required to be paid at the time of such payments, or
reduce the amount of Termination Value and any other amounts payable
under, or as provided in, the Lease upon termination thereof so that
the same is less than the accrued interest on and principal of such
Equipment Notes required to be paid at the time of such payments; or
(2) modify, amend or supplement the Lease in such a way
as to, or consent to any assignment of the Lease or give any consent,
waiver, authorization or approval which would, release the Lessee from
its obligation in respect of payment of Basic Rent or Stipulated Loss
Value and any other amounts payable under, or as provided in, the
Lease upon the occurrence of an Event of Loss, or Termination Value
and any other amounts payable under, or as provided in, the Lease upon
termination thereof, except for any such assignment pursuant to
Section 6.8 of the Participation Agreement, and except as provided in
the Lease.
(d) Anything contained in this Section 10.05 or otherwise in this
Indenture to the contrary notwithstanding, whether or not an Indenture Event of
Default shall have occurred and be continuing, the Indenture Trustee shall not
modify, amend or supplement the Lease or any other Operative Agreement with
respect to which rights have been assigned to the Indenture Trustee as part of
the Indenture Estate, or give any consent, waiver, authorization or approval
thereunder, in any manner that would materially adversely affect the interest
of the Owner Trustee or the Owner Participant.
ARTICLE XI.
MISCELLANEOUS
Section 11.01. Termination of Indenture. With respect to each Unit,
this Indenture and the trusts created hereby shall terminate and this Indenture
shall be of no further force or effect upon the earliest to occur of (i) the
termination of the Lease Term with respect to such Unit by Lessee pursuant to
Section 10 or Section 22.1 thereof and upon payment in full to the Indenture
Trustee of the amounts required to be paid pursuant to Section 2.10(a) in
respect of such Unit, (ii) the termination of the Lease with respect to such
Unit pursuant to Section 11 thereof and upon payment in full to the Indenture
Trustee of the amounts required to be paid pursuant to Section 2. 10(b) in
respect of such Unit, (iii) the termination of the Lease with respect to all
Units pursuant to Section 6.9 of the Participation Agreement and upon
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<PAGE> 39
payment in full to the Indenture Trustee of the amounts required to be paid
pursuant to Section 2.10(c) in respect of such Units and (iv) the payment in
full of the principal amount of and interest on all Equipment Notes outstanding
hereunder and all other sums payable to the Indenture Trustee and the holders
of all of the Equipment Notes hereunder and under such Equipment Notes and
under the Participation Agreement.
Section 11.02. No Legal Title to Indenture Estate in Holders. No
holder of an Equipment Note shall have legal title to any part of the Indenture
Estate. No transfer, by operation of law or otherwise, of any Equipment Note
or other right, title and interest of any holder of an Equipment Note in and to
the Indenture Estate or hereunder shall operate to terminate this Indenture or
the trusts hereunder or entitle any successor or transferee of such holder to
an accounting or to the transfer to it of legal title to any part of the
Indenture Estate.
Section 11.03. Sale of Equipment by Indenture Trustee is Binding.
Any sale or other conveyance of the Equipment by the Indenture Trustee made
pursuant to the terms of this Indenture or the Lease shall bind the holders of
any Equipment Notes, the Owner Trustee and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trustee, the Owner Participant and such holders of the
Equipment Notes in and to the Equipment. No purchaser or other grantee shall
be required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by the Indenture Trustee.
Section 11.04. Remedies Cumulative. Each and every right, power and
remedy herein specifically given to the Indenture Trustee or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
time or thereafter any other right, power or remedy. No delay or omission by
the Indenture Trustee in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
Section 11.05. Discontinuance of Proceedings. In case the Indenture
Trustee shall have proceeded to enforce any right, power or remedy under this
Indenture by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Indenture Trustee, then and in every such case the Owner
Trustee, the Owner Participant, the Indenture Trustee and the Lessee shall be
restored to their former positions and rights hereunder with respect to the
Indenture Estate, and all rights, remedies and powers of the Indenture Trustee
shall continue as if no such proceedings had been undertaken (but otherwise
without prejudice).
Section 11.06. Indenture and Equipment Notes for Benefit of Owner
Trustee, Indenture Trustee, Owner Participant and Holders Only. Nothing in
this Indenture, whether express or implied, shall be construed to give to any
Person other than the Owner Trustee (individually and as trustee), the
Indenture Trustee, the Owner Participant (as set forth herein) and the holders
of any Equipment Notes any legal or equitable right, remedy or claim under or
in respect of this Indenture or any such Equipment Note.
-35-
<PAGE> 40
Section 11.07. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices required or permitted under the
terms and provisions hereof shall be in writing, and shall become effective
when deposited in the United States mail, with proper postage for first class
registered or certified mail prepaid, when delivered personally, or, if
promptly confirmed by mail as provided above, when dispatched by telegram,
telex or other written telecommunication addressed (i) if to the Owner Trustee,
at its office at ________________, Attention: _______________, (ii) if to the
Indenture Trustee, at its office at ________________, Attention:
_______________, (iii) if to the Loan Participant, at such address as is set
forth on Schedule 2 of the Participation Agreement or, if not so specified, at
the address set forth in the register maintained pursuant to Section 2.07
hereof, or at such address as such Loan Participant shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, (iv) if to the Lessee,
at ________________, Attention: _____________, (v) if to the Owner Participant,
________________, Attention: _____________, and (vi) if to any of the foregoing
Persons, at such other address as such Person shall from time to time designate
by written notice to the other parties hereto in accordance with this Section
11.07.
Notwithstanding the foregoing provisions, for purposes of Sections
5.01, 5.02, 5.04, 6.01 and 6.02, written notice shall be deemed given when it
is in fact received (by mail or otherwise) by any addressee at the respective
addresses specified above.
Section 11.08. Severability. Any provision of this Indenture which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. In the event
of any inconsistency or conflict between any provision of this Indenture and
any provision of the Trust Agreement, such provision in this Indenture shall
govern and control.
Section 11.09. Separate Counterparts. This Indenture may be
executed in any number of counterparts (and each of the parties hereto shall
not be required to execute the same counterpart). Each counterpart of this
Indenture including a signature page executed by each of the parties hereto
shall be an original counterpart of this Indenture, but all of such
counterparts together shall constitute one instrument.
Section 11.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and permitted assigns, the Owner Participant and its
successors and permitted assigns, and the Indenture Trustee and its successors
and permitted assigns, and each holder of an Equipment Note, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by any holder of an Equipment Note shall bind the successors and
assigns of such holder.
Section 11.11. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12. Governing Law. This Indenture shall in all respects
be governed by, and construed in accordance with, the laws of the State of New
York, including all matters of construction, validity and performance.
-36-
<PAGE> 41
Section 11.13. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Owner Participant, the
Owner Trustee or the Indenture Trustee or any affiliate of the Owner
Participant, the Owner Trustee or the Indenture Trustee may enter into
commercial banking or other financial transactions, and conduct banking or
other commercial relationships, with the Lessee, any holder of an Equipment
Note or the Indenture Trustee (in its individual capacity or otherwise) fully
to the same extent as if this Indenture were not in effect, including, without
limitation, the making of loans or other extensions of credit for any purpose
whatsoever.
Section 11.14. No Recourse Against Others. No director, officer,
employee or stockholder, as such, of Lessee, Owner Trustee, Owner Participant
or Indenture Trustee shall have any liability for any obligations of Lessee,
Owner Participant, Owner Trustee or Indenture Trustee or under the Equipment
Notes or the Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation. Each holder of an Equipment Note by
accepting an Equipment Note waives and releases all such liability. The waiver
and release are part of the consideration of such Equipment Note.
-37-
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers or attorneys-in-fact, as the case
may be, thereunto duly authorized, on the day and year first above written.
__________, not in its individual capacity except
as set forth in Section 7.03 hereof, but solely
as Owner Trustee
By: _____________________________________________
Name:
Title:
_______________, as Indenture Trustee
By: _____________________________________________
Name:
Title:
-38-
<PAGE> 43
State of )
) SS
County of )
On this ____ day of May 1996, before me personally appeared
___________________, to me personally known, who being by me duly sworn, say
that he is ____________________ of ______________, that said instrument was
signed on such date on behalf of said corporation by authority of its Board of
Directors, and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation.
__________________________________
Notary Public
[Notarial Seal]
My commission expires:
State of Illinois )
) SS
County of Cook )
On this ____ day of May 1996, before me personally appeared
____________________, to me personally known, who being by me duly sworn, say
that he is the ___________________ of ____________, that said instrument was
signed on such date on behalf of said corporation by authority of its Board of
Directors, and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation.
___________________________________
Notary Public
[Notarial Seal]
My commission expires:
-39-
<PAGE> 44
EXHIBIT A
TRUST INDENTURE SUPPLEMENT NO.__
(UTC TRUST NO. 1996-A)
(L-14_)
This Indenture Supplement No. _ (UTC Trust No. 1996-A) (L-14_), dated
May ___, 1996 (this "Indenture Supplement"), of _________________, a
_____________ trust company, not in its individual capacity but solely as
trustee (the "Owner Trustee") under the Trust Agreement (UTC Trust No. 1996-A)
(L-14_), dated May ___, 1996 (the "Trust Agreement"), between the Owner Trustee
in its individual capacity and ____________________, a ________ corporation, as
Owner Participant:
WITNESSETH:
WHEREAS, the Trust Indenture and Security Agreement (UTC Trust No.
1996-A) (L-14_) dated May ___, 1996 (the "Indenture"), between the Owner
Trustee and _______________, as Indenture Trustee (the "Indenture Trustee"),
provides for the execution and delivery of Indenture Supplements thereto
substantially in the form hereof each of which shall particularly describe the
Units covered by a related Lease Supplement under the Lease, by having attached
thereto a copy of such related Lease Supplement, and shall specifically
mortgage such Units to the Indenture Trustee;
WHEREAS, the Indenture includes the Units described in the copy of
Lease Supplement No. __ attached hereto and made a part hereof; and
WHEREAS, an executed counterpart of the Indenture is attached to this
Indenture Supplement;
NOW, THEREFORE, in order to secure the prompt payment of the principal
of, and Make-Whole Amount, if any, and interest on all of the Equipment Notes
from time to time outstanding under the Indenture and the performance and
observance by the Owner Trustee of all the agreements, covenants and provisions
in the Indenture for the benefit of the holders of the Equipment Notes and in
the Equipment Notes, subject to the terms and conditions of the Indenture, and
in consideration of the premises and of the covenants contained in the
Indenture and of the acceptance of the Equipment Notes by the holders thereof,
and of the sum of $1.00 paid to the Owner Trustee by the Indenture Trustee at
or before the delivery hereof, the receipt whereof is hereby acknowledged, the
Owner Trustee (i) has sold, assigned, transferred, pledged and confirmed, and
does hereby sell, assign, transfer, pledge and confirm, a security interest in
and mortgage lien on all right, title and interest of the Owner Trustee in and
to the property comprising the Equipment described in the copy of Lease
Supplement No. __ attached hereto, and (ii) has sold, assigned, transferred and
set over, a security interest in and mortgage lien on all of the right, title
and interest of the Owner Trustee under, in and to such Lease Supplement
(excluding, however, any rights to Excepted Property thereunder), referred to
above, to the Indenture Trustee, its successors and assigns, in the trust
created by the Indenture for the benefit of the holders from time to time of
the Equipment Notes.
To have and to hold all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the benefit and
security of the holders from time to time of the Equipment Notes and for the
uses and purposes and subject to the terms and provisions set forth in the
Indenture.
A-1
<PAGE> 45
It is the intention of the parties hereto that all Equipment Notes
issued and outstanding under this Indenture Supplement rank on a parity with
each other Equipment Note and with each other series of the Equipment Notes and
that, as to each other Equipment Note of and each other series of the Equipment
Notes, they be secured equally and ratably by the collateral described herein,
without preference, priority or distinction of any one thereof over any other
by reason of difference in time of issuance or otherwise, and that each such
Equipment Note be entitled to the same benefits and security in the Indenture
and this Indenture Supplement as each other.
The Equipment Notes issued under this Indenture Supplement shall be
designated as Equipment Notes 1996-A, Series A or Series B. The Equipment
Notes shall be substantially in the form set forth in Section 2.01 of the
Indenture. The Equipment Notes issued under this Indenture Supplement shall be
dated the date of issuance thereof, shall be issued in the maturities and
principal amounts and shall bear interest as specified in Exhibits B and B-1
hereto. The principal of each Equipment Note shall be payable in installments,
on each Installment Payment Date and the Maturity Date, in amounts equal to the
Installment Payment Amount for each such Installment Payment Date and Maturity
Date as set forth for such Equipment Notes.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part of it, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement may be executed by the Owner Trustee in separate
counterparts, each of which when so executed and delivered is an original, but
all such counterparts shall together constitute but one and the same
Supplement.
AND FURTHER, the Owner Trustee hereby acknowledges that the Equipment
referred to in the aforesaid Lease Supplement attached hereto and made a part
hereof has been delivered to the Owner Trustee and is included in the property
of the Owner Trustee covered by all the terms and conditions of the Trust
Agreement, subject to the pledge or mortgage thereof under the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture
Supplement to be duly executed by one of its duly authorized officers, on the
day and year first above written.
____________, not in its individual capacity, but
solely as Owner Trustee
By: _____________________________________________
Name:
Title:
A-2
<PAGE> 46
State of )
) SS
County of )
On this ____ day of May 1996, before me personally appeared
_______________, to me personally known, who being by me duly sworn, say that
he is _____________ of _____________, that said instrument was signed on such
date on behalf of said corporation by authority of its Board of Directors, and
he acknowledged that the execution of the foregoing instrument was the free act
and deed of said corporation.
___________________________________________
Notary Public
[Notarial Seal]
My commission expires:
A-3
<PAGE> 47
EXHIBIT B
TERMS OF EQUIPMENT NOTES (INITIAL CLOSING)
<TABLE>
<CAPTION>
Principal Amount Interest Rate Final Maturity
---------------- ------------- --------------
<S> <C> <C>
Series A1: $ %
Series A2: $ %
</TABLE>
TERMS OF EQUIPMENT NOTES (SUBSEQUENT CLOSING)
<TABLE>
<CAPTION>
Principal Amount Interest Rate Final Maturity
---------------- ------------- --------------
<S> <C> <C>
Series B1: $ %
Series B2: $ %
</TABLE>
B-1
<PAGE> 48
EXHIBIT C
LOAN PARTICIPANT (INITIAL CLOSING)
<TABLE>
<CAPTION>
PERCENTAGE OF
EQUIPMENT NOTES LOAN PARTICIPANT PRINCIPAL AMOUNT
--------------- ---------------- ----------------
<S> <C> <C>
Series A1 _______________, %
as trustee under the Pass Through Trust
Agreement, dated May ___, 1996,
between _______________
and Union Tank Car Company
Series A2 _______________, %
as trustee under the Pass Through Trust
Agreement, dated May ___, 1996,
among _______________,
Union Tank Car Company and Procor Limited
</TABLE>
LOAN PARTICIPANT (SUBSEQUENT CLOSING)
<TABLE>
<CAPTION>
PERCENTAGE OF
EQUIPMENT NOTES LOAN PARTICIPANT PRINCIPAL AMOUNT
--------------- ---------------- ----------------
<S> <C> <C>
Series B1 _______________, %
as trustee under the Pass Through Trust
Agreement, dated May ___, 1996,
between _______________
and Union Tank Car Company
Series B2 _______________, %
as trustee under the Pass Through Trust
Agreement, dated May ___, 1996,
among _______________,
Union Tank Car Company and Procor Limited
</TABLE>
C-1
<PAGE> 49
ANNEX A1
AMORTIZATION SCHEDULES
1996 % EQUIPMENT NOTE, SERIES A
Amortization Schedule for Equipment Note No. 1, Series A attached hereto.
Annex A1-1
<PAGE> 50
EQUIPMENT NOTE A-1
<TABLE>
<CAPTION>
INSTALLMENT
PAYMENT INSTALLMENT
DATE PERCENTAGE
---------- ----------
<S> <C>
</TABLE>
Annex A1-2
<PAGE> 51
ANNEX A2
AMORTIZATION SCHEDULES
1996 % EQUIPMENT NOTE, SERIES A
Amortization Schedule for Equipment Note No. 2, Series A attached hereto.
Annex A2-1
<PAGE> 52
EQUIPMENT NOTE A-2
<TABLE>
<CAPTION>
INSTALLMENT
PAYMENT INSTALLMENT
DATE PERCENTAGE
---------- ----------
<S> <C>
</TABLE>
Annex A2-2
<PAGE> 1
Exhibit 4(c)(1)
================================================================================
UNION TANK CAR COMPANY
EQUIPMENT TRUST
SERIES 26
-----------------------
EQUIPMENT TRUST AGREEMENT
Dated May __, 1996
Between
____________________________________,
Trustee,
and
UNION TANK CAR COMPANY
-----------------------
================================================================================
Filed with the Surface Transportation Board of the Department of
Transportation pursuant to ___ U.S.C. Section _____ on May __, 1996, at
[________ a.m./p.m.], recordation number _________, and deposited in the Office
of the Registrar General of Canada pursuant to Section 90 of the Railway Act
(Canada) on May __, 1996, at [________ a.m./p.m.]
<PAGE> 2
TABLE OF CONTENTS*
ARTICLE ONE Definitions . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . 6
ARTICLE TWO Trust Certificates and Issuance;
Interests Represented and Maturity . . . . . . . . . . . 9
SECTION 2.01. Issuance of Trust Certificates . . . . . . . . . 9
SECTION 2.02. Interests Represented by Trust
Certificates; Interest Payments;
Maturity . . . . . . . . . . . . . . . . . . . 10
SECTION 2.03. Form, Execution and Characteristics
of Trust Certificates . . . . . . . . . . . . . 10
SECTION 2.04. Replacement of Lost Trust Certificates . . . . . 11
ARTICLE THREE Acquisition of Trust Equipment by
Trustee: Deposited Cash . . . . . . . . . . . . . . . . 12
SECTION 3.01. Acquisition of Equipment by Trustee . . . . . . . 12
SECTION 3.02. Payment of Deposited Cash . . . . . . . . . . . . 13
SECTION 3.03. Payment of Deficiency . . . . . . . . . . . . . . 13
SECTION 3.04. Supporting Papers . . . . . . . . . . . . . . . . 13
ARTICLE FOUR Lease of Trust Equipment to the Company . . . . . . . . . 14
SECTION 4.01. Lease of Trust Equipment to the Company . . . . . 14
SECTION 4.02. Equipment Automatically Subjected . . . . . . . . 14
SECTION 4.03. Additional and Substituted Equipment
Subject Hereto . . . . . . . . . . . . . . . . 14
SECTION 4.04. Rental Payments . . . . . . . . . . . . . . . . . 15
SECTION 4.05. Termination of Trust . . . . . . . . . . . . . . 16
SECTION 4.06. Indemnity . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.07. Substitution and Replacement of
Trust Equipment . . . . . . . . . . . . . . . . 17
SECTION 4.08. Maintenance of Trust Equipment;
Casualty Occurrences . . . . . . . . . . . . . 19
__________________________________
* This Table of Contents has been included in the document for
convenience only and does not form a part of, or affect any
construction or interpretation of, this document.
-i-
<PAGE> 3
SECTION 4.09. Possession of Trust Equipment . . . . . . . . . . 20
SECTION 4.10. Marking of Trust Equipment . . . . . . . . . . . 21
ARTICLE FIVE Events of Default and Remedies . . . . . . . . . . . . . . 21
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . 21
SECTION 5.02. Remedies . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.03. Application of Proceeds . . . . . . . . . . . . . 25
SECTION 5.04. Waivers of Default . . . . . . . . . . . . . . . 25
SECTION 5.05. Obligations of Company Not Affected
by Remedies . . . . . . . . . . . . . . . . . . 26
SECTION 5.06. Company To Deliver Trust Equipment
to Trustee . . . . . . . . . . . . . . . . . . 26
SECTION 5.07. Trustee To Give Notice of Default . . . . . . . . 26
SECTION 5.08. Control by Holders of Trust
Certificates . . . . . . . . . . . . . . . . . 27
SECTION 5.09. Limitations on Suits by Holders of
Trust Certificates . . . . . . . . . . . . . . 27
SECTION 5.10. Unconditional Right of Holders of
Trust Certificates To Sue for
Principal and Interest . . . . . . . . . . . . 27
SECTION 5.11. Remedies Cumulative; Subject to
Mandatory Requirements of Law . . . . . . . . . 27
ARTICLE SIX Additional Agreements by the Company . . . . . . . . . . . 28
SECTION 6.01. Guarantee of the Company . . . . . . . . . . . . 28
SECTION 6.02. Discharge of Liens . . . . . . . . . . . . . . . 28
SECTION 6.03. Further Assurances . . . . . . . . . . . . . . . 29
SECTION 6.04. Payment of Expenses; Recording . . . . . . . . . 29
ARTICLE SEVEN Concerning the Holders of Trust Certificates . . . . . . . 30
SECTION 7.01. Evidence of Action Taken by Holders
of Trust Certificates . . . . . . . . . . . . . 30
SECTION 7.02. Proof of Execution of Instruments and
of Holding of Trust Certificates . . . . . . . 30
SECTION 7.03. Trust Certificates Owned by Company . . . . . . . 30
SECTION 7.04. Right of Revocation of Action Taken . . . . . . . 30
SECTION 7.05. Amendment or Waiver . . . . . . . . . . . . . . . 31
-ii-
<PAGE> 4
ARTICLE EIGHT The Trustee . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 8.01. Acceptance of Trust . . . . . . . . . . . . . . .31
SECTION 8.02. Duties and Responsibilities of the
Trustee . . . . . . . . . . . . . . . . . . . .31
SECTION 8.03. Application of Rentals . . . . . . . . . . . . .32
SECTION 8.04. Funds May be Held by Trustee;
Investments . . . . . . . . . . . . . . . . . .33
SECTION 8.05. Trustee Not Liable for Delivery Delays
or Defects in Equipment or Title . . . . . . .34
SECTION 8.06. Resignation and Removal; Appointment
of Successor Trustee . . . . . . . . . . . . .34
SECTION 8.07. Acceptance of Appointment by Successor
Trustee . . . . . . . . . . . . . . . . . . . .35
SECTION 8.08. Merger or Consolidation of Trustee . . . . . . .35
SECTION 8.09. Return of Certain Moneys to Company . . . . . . .35
ARTICLE NINE Miscellaneous . . . . . . . . . . . . . . . . . . . . . .36
SECTION 9.01. Rights Confined to Parties and Holders . . . . .36
SECTION 9.02. No Recourse . . . . . . . . . . . . . . . . . . .36
SECTION 9.03. Binding Upon Assigns . . . . . . . . . . . . . .36
SECTION 9.04. Notices . . . . . . . . . . . . . . . . . . . . .36
SECTION 9.05. Effect of Headings: Date Executed;
and Governing Law . . . . . . . . . . . . . . .37
SECTION 9.06. Legal Holidays . . . . . . . . . . . . . . . . .37
SECTION 9.07. Counterparts . . . . . . . . . . . . . . . . . .37
SCHEDULE I - List of Equipment (initial closing)
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<PAGE> 5
EQUIPMENT TRUST AGREEMENT dated May __, 1996, between
______________________________________________, solely in its capacity as
Trustee, a national banking association organized and existing under the laws
of the United States of America (the "Trustee"), and UNION TANK CAR COMPANY, a
Delaware corporation (the "Company");
WHEREAS Union Tank Car Company Equipment Trust Certificates, Series 26
(the "Trust Certificates"), are to be issued and sold from time to time, at a
price not less than their principal amount, in an aggregate principal amount
not exceeding $__________; and
WHEREAS the proceeds of the sale of the Trust Certificates together
with such other cash, if any, as may be required to be deposited by the Company
as hereinafter provided are to constitute a fund, to be known as Union Tank Car
Company Equipment Trust, Series 26, to be applied by the Trustee from time to
time in part payment of the Cost (as hereinafter defined) of the Trust
Equipment (as hereinafter defined), the remainder of the Cost thereof to be
paid out of advance rentals to be paid by the Company as provided herein; and
WHEREAS title to such Trust Equipment is to be vested in and is to be
retained by the Trustee, and such Trust Equipment is to be leased to the
Company hereunder until title is transferred under the provisions hereof; and
WHEREAS the texts of the Trust Certificates and the guaranty to be
endorsed on the Trust Certificates by the Company are to be substantially in
the following form:
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<PAGE> 6
[Form of Trust Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
No. R-__________ $___________
UNION TANK CAR COMPANY
Equipment Trust Certificate, Series 26
Total Authorized Issue $
--------------------------------
Trustee
_______________________________, as Trustee under an Equipment Trust
Agreement (the "Agreement") dated May __, 1996, between
____________________________________, as Trustee (the "Trustee"), and Union
Tank Car Company, a Delaware corporation (the "Company"), hereby certifies that
or registered assigns is entitled to an interest in the principal amount of
Dollars ($ ) in Union Tank Car Company Equipment Trust, Series 26,
due and payable on or before _____________, 200_, and to interest on the amount
of unpaid principal from time to time due and owing pursuant to this Trust
Certificate from the date hereof at the rate of _____% per annum (and, if
applicable, the additional amounts that may become payable under Section 4.04
of the Agreement). Interest on this Trust Certificate shall be calculated on
the basis of a 360-day year of twelve 30-day months.
This Trust Certificate shall be payable as follows (unless payment is
hereof accelerated pursuant to Article Five of the Agreement): the outstanding
principal amount hereof shall be paid on ___________, 200_ and interest
payments on the outstanding principal shall be made in ___ consecutive
semiannual installments on ___________ and ____________ in each year commencing
_________, 199[6]. Interest on any overdue installment of interest and on any
overdue payment of principal, to the extent legally enforceable, shall be
payable at the rate per annum of 1% over the rate specified above. Payments of
principal and interest shall be made by the Trustee to the registered holder
hereof at the corporate trust office of the Trustee in ___________,
___________, in such coin or currency of the United States of America as, at
the time of payment, shall be legal tender for the payment of public and
private debts. Each of such payments shall be made only from and solely out of
rentals or other moneys received by the Trustee and applicable to such payment
under the provisions of the Agreement.
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<PAGE> 7
This Trust Certificate is one of an authorized issue of Trust
Certificates in an aggregate principal amount not exceeding the Total
Authorized Issue set forth above, issued under the Agreement, pursuant to which
certain railroad equipment leased to the Company (or cash or obligations
defined in the Agreement as "Investments" in lieu thereof, as provided in the
Agreement) is held by the Trustee in trust for the equal and ratable benefit of
the registered holders of the Trust Certificates issued thereunder. Reference
is made to the Agreement (a copy of which is on file with the Trustee at its
corporate trust office) for a more complete statement of the terms and
provisions thereof, to all of which the registered holder hereof, by accepting
this Trust Certificate, assents.
This Trust Certificate is transferable in whole or in part by the
registered holder hereof in person or by its duly authorized attorney upon
presentment hereof for registration of transfer to the Trustee at its said
office accompanied by an appropriate instrument of assignment and transfer,
duly executed by the registered holder in person or by such attorney, in form
satisfactory to the Trustee, and thereupon a new fully registered Trust
Certificate or Certificates of the same maturity in authorized denominations
for the then aggregate unpaid principal amount hereof will be issued in the
name of such person or persons as may be designated by such holder. Prior to
due presentment for registration of transfer, the Trustee and the Company may
deem and treat the person in whose name this Trust Certificate is registered as
the absolute owner hereof for the purpose of receiving payment of principal and
interest and for all other purposes and shall not be affected by any notice to
the contrary.
In case of the happening of an Event of Default (as defined in the
Agreement) the principal amount represented by this Trust Certificate may
become or be declared due and payable in the manner and with the effect
provided in the Agreement.
This Trust Certificate shall not be deemed a promise to pay of
________________________________________________ in its individual capacity and
payment by __________________________________________________________ shall be
made as Trustee only from and solely out of rentals or other moneys received by
the Trustee and applicable to such payment and the provisions of this
Agreement.
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<PAGE> 8
IN WITNESS WHEREOF, the Trustee has caused this Trust Certificate to
be signed by one of its duly authorized officers, by his/her signature or a
facsimile thereof, and its corporate seal or a facsimile thereof to be hereunto
affixed or imprinted hereon and to be attested by one of its duly authorized
officers, by his/her signature. Neither this Trust Certificate nor the
guaranty endorsed hereon shall be valid or enforceable for any purpose until
this Trust Certificate shall have been so signed by a duly authorized officer
and the corporate seal so attested by such duly authorized officer.
Dated , 1996
as
----------------------------------,
Trustee
By
------------------------------------
Authorized Officer
[Corporate Seal]
Attest:
- ----------------------------------------------
Authorized Officer
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<PAGE> 9
UNION TANK CAR COMPANY, for valuable consideration, hereby
unconditionally and irrevocably guarantees to the registered holder of the
within Trust Certificate the prompt payment when due of the principal of said
Trust Certificate and of the interest thereon specified in said Trust
Certificate, with interest on any overdue principal and on any overdue
interest, to the extent legally enforceable, at the rate specified in such
Trust Certificate, all in accordance with the terms of said Trust Certificate
and the Equipment Trust Agreement referred to therein.
UNION TANK CAR COMPANY
By
------------------------------------
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<PAGE> 10
WHEREAS it is desired to secure to the holders of the Trust
Certificates the payment of the principal thereof when due, whether by
declaration or otherwise, and interest thereon as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties hereto hereby agree as follows:
ARTICLE ONE
Definitions
-----------
SECTION 1.01. Definitions. The following terms (except as
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Agreement shall have the respective meanings hereinafter
specified:
Affiliate of any corporation shall mean any corporation which,
directly or indirectly, controls or is controlled by, or is under
common control with, such corporation. For the purposes of this
definition, control (including controlled by and under common control
with), as used with respect to any corporation, shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such corporation,
whether through the ownership of voting securities or by contract or
otherwise.
Business Day shall mean any day, other than a Saturday or
Sunday or a day on which commercial banking institutions or trust
companies are authorized or required by law, regulation or executive
order to be closed in New York, New York or Chicago, Illinois or, so
long as any Trust Certificate is outstanding, a city and state in
which the Corporate Trust Office of the Trustee is located.
Company shall mean Union Tank Car Company, a Delaware
corporation (whose chief place of business and chief executive office
is currently located at 225 West Washington Street, Chicago, Illinois
60606), and any successor or successors to it complying with the
provisions of Section 4.09.
Corporate Trust Office shall mean the principal office of the
Trustee, at which the corporate trust business of the Trustee shall,
at the time in question, be administered, which office is, on the date
of execution of this Agreement, located at ___________________________
______________________________________, Attention:____________________
__________________.
Cost, when used in respect of Equipment not built by the
Company or any Affiliate of the Company, shall mean the actual cost
thereof to the Company and, in respect of Equipment built by the
Company or any such Affiliate, shall mean an amount
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<PAGE> 11
not in excess of "car builder's cost", including direct cost of labor,
material and overhead but excluding any manufacturing profit.
Default shall mean
(1) any Event of Default; and
(2) any event which, with the giving of notice or the
passage of time or both, could constitute an Event of Default.
The Company shall be considered to "be in Default" if a Default shall
have occurred and be continuing.
Deposited Cash shall mean the aggregate of (a) the proceeds
from the sale of the Trust Certificates deposited with the Trustee
pursuant to Section 2.01 and, when required or indicated by the
context, any Investments purchased by the use of such proceeds
pursuant to the provisions of Section 8.04, and (b) any sums restored
to Deposited Cash from rentals pursuant to Section 4.04(B)(l)(b) and
on deposit with the Trustee.
Engineer's Certificate shall mean a certificate signed by a
person appointed by the Company who shall be an engineer, appraiser or
other expert, as the case may require. Such person may be an officer
or employee of the Company except where this Agreement specifically
requires the signature of an independent engineer, appraiser or other
expert.
Equipment shall mean standard-gauge railroad tank cars and
covered hopper cars, which tank cars and covered hopper cars are
rolling stock used or intended for use in connection with interstate
commerce and which were first put into use on or after __________,
199_; provided, however, in the case of Equipment sold to the Trustee
pursuant to Section 4.07, it shall not include any railroad equipment
first put into use prior to __________, 199_.
Event of Default shall mean any event specified in Section
5.01 to be an Event of Default.
The word "holder", when used with respect to Trust
Certificates, shall include the plural as well as the singular number.
Independent Engineer shall mean an engineer, appraiser or
other expert appointed by the Company and approved by the Trustee in
the exercise of reasonable care, who (a) is in fact independent, (b)
does not have any substantial interest, direct or indirect, in the
Company or in any other obligor on the Trust Certificates or in any
Affiliate of the Company or any such other obligor and (c) is not
connected with the Company or any other obligor on the Trust
Certificates or any Affiliate of the Company or any such other
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<PAGE> 12
obligor as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Investments shall mean (a) bonds, notes or other direct
obligations of the United States of America or obligations for which
the full faith and credit of the United States is pledged to provide
for the payment of the interest and principal and which mature within
one year of the date of purchase, (b) open market commercial paper of
any company incorporated and doing business under the laws of the
United States of America or one of the States thereof given a rating
of "A-1" by Standard & Poor's Corporation or "prime-1" or better by
NCO/Moody's Commercial Paper Division of Moody's Investors Service,
Inc. or an equivalent rating by a successor thereto or a similar
nationally recognized rating service substituted therefor, (c)
certificates of deposit or time deposits in banks or trust companies,
including the Trustee, incorporated and doing business under the laws
of the United States of America or one of the States thereof having a
capital and surplus aggregating at least $250,000,000 and (d) The
First National Bank of Chicago Corporate Trust Short Term Investment
Fund, so long as the shares of such fund are rated by Standard &
Poor's Ratings Group and Moody's Investors Service, Inc. in one of the
two highest rating categories (without regard to any refinement or
gradation of rating category by numerical modifier or otherwise)
assigned by Standard & Poor's Ratings Group and Moody's Investors
Service, Inc. for obligations of that nature.
Officers' Certificate shall mean a certificate signed by the
Chairman of the Board, or the President or any Vice President and by
the Treasurer or any Assistant Treasurer or the Secretary or any
Assistant Secretary of the Company, which officer is in a position to
know the truth and accuracy thereof.
Opinion of Counsel shall mean an opinion in writing signed by
legal counsel who shall be acceptable to the Trustee and who may,
unless in a particular instance the Trustee shall otherwise require,
be an employee of or counsel to the Company. The acceptance by the
Trustee of, and its action on, an Opinion of Counsel shall be
sufficient evidence that such counsel is satisfactory to the Trustee.
Owner shall mean the manufacturer or other person transferring
title to any of the Equipment to the Trustee.
Penalty Rate shall mean 1% per annum over the rate specified
in the Trust Certificates.
Request shall mean a written request for the action therein
specified, delivered to the Trustee, dated not more than 10 days prior
to the date of delivery to the Trustee and signed on behalf of the
Company by the Chairman of the Board, the President, a Vice President
or the Treasurer of the Company.
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<PAGE> 13
Trust Certificates shall mean the Equipment Trust Certificates
issued hereunder.
Trust Equipment shall mean all Equipment at the time subject
to the terms of this Agreement.
Trustee shall mean __________________________________, solely
in its capacity as Trustee, and, subject to the provisions of Article
Eight, any successor as trustee hereunder.
Value, as used herein, shall mean an amount determined as
follows:
(1) the Value of any unit of Trust Equipment
assigned or transferred by the Trustee as provided in Section
4.07, and as used in Sections 5.01 and 6.05 in respect of
Trust Equipment, shall be deemed to be the greater of (a) the
fair market value thereof and (b) the Cost thereof (as
theretofore certified to the Trustee) less 1/20 of such Cost
for each full year elapsed between the date such unit was
first put into use (as theretofore so certified) and the date
as of which Value is to be determined;
(2) the Value of any unit of Equipment conveyed
to the Trustee as provided in Article Three and in Section
4.07 shall be deemed to be the lesser of (a) the fair market
value thereof and (b) the Cost of such unit or, in the case of
any unit of Equipment not new, the Cost thereof less 1/20 of
such Cost for each full year elapsed between the date such
unit was first put into use and the date of the transfer
thereof to the Trustee; and
(3) the Value of any Unit of Equipment as used in
Section 4.08 shall be deemed to be the cost thereof less
1/20th of such Cost for each full year elapsed between the
date such Unit was first put into use and the date as of which
Value is to be determined.
The words herein, hereof, hereby, hereto, hereunder and words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, paragraph or subdivision hereof.
ARTICLE TWO
Trust Certificates and Issuance;
--------------------------------
Interests Represented and Maturity
----------------------------------
SECTION 2.01. Issuance of Trust Certificates. Upon the sale from
time to time of any of the Trust Certificates, an amount equal to the principal
amount of the Trust Certificates so sold shall, forthwith upon the issuance
thereof, be deposited in cash with the Trustee.
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<PAGE> 14
Thereupon the Trustee shall issue and deliver, as the Company shall
direct by Request, Trust Certificates in the aggregate principal amount so
sold.
The aggregate principal amount of Trust Certificates which shall be
executed and delivered by the Trustee under this Section shall not exceed the
Total Authorized Issue specified in the form of Trust Certificate, and the
aggregate principal amount represented by all the Trust Certificates shall be
payable as hereinafter set forth.
SECTION 2.02. Interests Represented by Trust Certificates; Interest
Payments; Maturity; No Redemption. Each of the Trust Certificates shall
represent an interest in the principal amount therein specified in the trust
created hereunder. The Trust Certificates shall bear interest at _____% per
annum and shall be payable as follows (unless payment thereof is accelerated
pursuant to Article Five of this Agreement): the outstanding principal amount
thereof shall be paid on _________, 200_, and interest payments on the
outstanding principal shall be paid in 20 consecutive semiannual installments
on _________ and __________ in each year commencing _________, 199[6]. The
Trust Certificates are not redeemable prior to maturity. Interest on the Trust
Certificates shall accrue from the date of original issue and shall be
calculated on the basis of a 360-day year of twelve 30-day months. Interest
shall be payable on overdue installments of interest and on any overdue payment
of principal, to the extent legally enforceable, interest at the Penalty Rate.
Payment of the principal of and interest on the Trust Certificates
shall be made by the Trustee at the Corporate Trust Office in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, but only from and
solely out of rentals or other moneys received by the Trustee and applicable to
such payment under the provisions of this Agreement.
SECTION 2.03. Form, Execution and Characteristics of Trust
Certificates. (a) The Trust Certificates and the guaranty to be endorsed on
the Trust Certificates by the Company as provided in Section 6.01 shall be in
substantially the forms hereinbefore set forth.
(b) The Trust Certificates shall be signed in the name and on
behalf of the Trustee by the manual or facsimile signature of one of its duly
authorized officers and its corporate seal or a facsimile thereof shall be
affixed or imprinted thereon and attested by the manual signature of one of its
duly authorized officers. In case any officer of the Company or the Trustee
whose signature, whether facsimile or not, shall appear on any of the Trust
Certificates shall cease to be such officer of the Company or the Trustee
before the Trust Certificates shall have been issued and delivered by the
Trustee or shall not have been acting in such capacity on the date of the Trust
Certificates, such Trust Certificates may be adopted by the Company, Union or
the Trustee and be issued and delivered as though such person had not ceased to
be or had then been such officer of the Company, Union or the Trustee.
(c) The Trust Certificates (i) shall be issuable in denominations
of U.S. $1,000 or any multiple thereof; (ii) shall be registered, as to both
principal and interest, in the name of the
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<PAGE> 15
holders; (iii) shall be transferable in whole or in part upon presentation and
surrender thereof for transfer at the Corporate Trust Office, accompanied by
appropriate instruments of assignment and transfer, duly executed by the
registered holder of the surrendered Trust Certificate or Certificates or by
duly authorized attorney, in form satisfactory to the Trustee; (iv) shall be
dated as of the date of issue unless issued in exchange for another Trust
Certificate or Certificates bearing unpaid interest from an earlier date, in
which case they shall be dated as of such earlier date; (v) shall entitle the
registered holder to interest from the date thereof; and (vi) shall be
exchangeable for an aggregate principal amount of Trust Certificates of
authorized denominations of like tenor and maturity equal to the then unpaid
principal amount of Trust Certificates being exchanged.
(d) Anything contained herein to the contrary notwithstanding,
prior to due presentment for registration of transfer, the parties hereto may
deem and treat the registered holder of any Trust Certificates as the absolute
owner of such Trust Certificates for all purposes and shall not be affected by
any notice to the contrary.
(e) The Trustee shall cause to be kept at the Corporate Trust
Office books for the registration of transfer of the Trust Certificates and,
upon presentation of the Trust Certificates for such purpose, the Trustee shall
register any transfer as hereinabove provided, and under such reasonable
regulations as it may prescribe.
(f) For any registration, transfer or exchange, the Trustee shall
require the payment of a sum sufficient to reimburse it for any governmental
charge connected therewith.
(g) Each Trust Certificate delivered pursuant to any provision of
this Agreement in exchange or substitution for, or upon the transfer of the
whole or any part, as the case may be, of one or more other Trust Certificates
shall carry all the rights to principal and to interest accrued and unpaid and
to accrue, which were carried by the whole or such part, as the case may be, of
such one or more other Trust Certificates, and, notwithstanding anything
contained in this Agreement, such Trust Certificate shall be so dated that
neither gain nor loss in interest or principal shall result from such exchange,
substitution or transfer and a notation of all previous principal payments
shall be endorsed on the reverse side thereof.
(h) The Trustee shall not be required to issue, transfer or
exchange Trust Certificates for a period of 10 days next preceding any interest
payment date.
SECTION 2.04. Replacement of Lost Trust Certificates. In case any
Trust Certificate shall become mutilated or defaced or be lost, destroyed or
stolen, then on the terms herein set forth, and not otherwise, the Trustee
shall execute and deliver a new Trust Certificate in the then unpaid principal
amount of the predecessor Trust Certificate and bearing such identifying number
or designation as the Trustee may determine, in exchange and substitution for,
and upon cancellation of, the mutilated or defaced Trust Certificate, or in
lieu of and in substitution for the same if lost, destroyed or stolen. The
Company shall execute its guaranty on any Trust Certificates to be so
delivered. The applicant for a new Trust Certificate pursuant
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<PAGE> 16
to this Section shall furnish to the Trustee and to the Company evidence to
their satisfaction of the loss, destruction or theft of such Trust Certificate
alleged to have been lost, destroyed or stolen and of the ownership and
authenticity of such mutilated, defaced, lost, destroyed or stolen Trust
Certificate, and also shall furnish such security or indemnity as may be
required by the Trustee and the Company in their discretion, and shall pay all
expenses and charges of such substitution or exchange. In the case of each of
the original purchasers of Trust Certificates or any institutional investor
transferee, a letter of indemnity in form reasonably satisfactory to the
Company and the Trustee from such purchaser shall be sufficient security and
indemnity. All Trust Certificates are held and owned upon the express
condition that the foregoing provisions are exclusive in respect of the
replacement of mutilated, defaced, lost, destroyed or stolen Trust Certificates
and shall preclude any and all other rights and remedies, any law or statute
now existing or hereafter enacted to the contrary notwithstanding.
ARTICLE THREE
Acquisition of Trust Equipment by
---------------------------------
Trustee: Deposited Cash
-----------------------
SECTION 3.01. Acquisition of Equipment by Trustee. The Company
shall cause to be sold to the Trustee, as trustee for the holders of the Trust
Certificates, (i) as soon as practicable, all of the Equipment described in
Schedule I hereto and (ii) on or before June __, 1996, all of the Equipment to
be described on a schedule to be prepared and attached to a supplement to this
Agreement to be executed and delivered on or before June __, 1996; provided,
however, that if the aggregate Cost of the Trust Equipment delivered to the
Trustee or its agent or agents pursuant to this Article Three, as specified in
the Officers' Certificate theretofore delivered to the Trustee pursuant to
Section 3.04, shall exceed 133-1/3% of the aggregate principal amount of Trust
Certificates issued under Section 2.01, upon Request the Trustee shall execute
and deliver to the Company a supplement hereto excluding from this Agreement
Equipment having a Cost in excess of such amount so that the aggregate Cost of
the Trust Equipment shall not exceed 133-1/3% of the aggregate principal amount
of the Trust Certificates issued pursuant to Section 2.01. The Trust Equipment
sold to the Trustee shall be delivered to the person or persons designated by
the Trustee as its agent or agents to accept such delivery (who may be one or
more of the officers or agents of the Company) and the certificate of any such
agent or agents as to such delivery and acceptance shall be conclusive evidence
of such delivery.
In the event that the Company shall deem it necessary or desirable to
procure for the use of the Company, and to include in the trust hereby created,
other Equipment in lieu of any units of the Equipment specifically described in
Schedule I or II hereto prior to the acceptance of such Equipment by the
Trustee or its agent or agents, or in the event that any unit of the Equipment
described in Schedule I or II hereto shall suffer a Casualty Occurrence as
defined in Section 4.08, prior to such acceptance, the Company may cause to be
sold to the Trustee other Equipment, to be substituted under the trust.
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<PAGE> 17
If the aggregate Cost, as specified in the Officers' Certificate
theretofore delivered to the Trustee pursuant to Section 3.04, of the Trust
Equipment delivered to the Trustee or its agent or agents pursuant to this
Article Three shall be less than 133-1/3% of the principal amount of the Trust
Certificates issued pursuant to Section 2.01, the Company will cause to be sold
to the Trustee additional Equipment in such amount and of such Cost that such
aggregate final Cost of the Trust Equipment will be at least 133-1/3% of the
principal amount of the Trust Certificates issued pursuant to Section 2.01.
SECTION 3.02. Payment of Deposited Cash. From time to time, when
and as any Equipment shall have been accepted by the Trustee or its agent or
agents pursuant to Section 3.01, the Trustee shall (subject to the provisions
of Sections 3.03 and 3.04) pay, upon Request, to the Owner of the accepted
Equipment out of Deposited Cash an amount not exceeding 75% of the aggregate
Cost of such Trust Equipment, as specified in the Officers' Certificate
furnished to the Trustee pursuant to Section 3.04(b).
SECTION 3.03. Payment of Deficiency. The Company covenants that,
contemporaneously with any payment by the Trustee pursuant to Section 3.02, it
will either (a) pay to the Trustee the advance rental provided in Section
4.04(A), and thereupon the Trustee shall, upon Request, pay to the Owner of the
delivered Trust Equipment, by the use of such advance rental, the portion of
the Cost of the delivered Trust Equipment not paid out of Deposited Cash as
provided for in Section 3.02 or (b) deliver to the Trustee an executed
counterpart of a receipt from such Owner evidencing the direct payment by the
Company to such Owner of that portion of the Cost of such Trust Equipment equal
to the amount of advance rental required to be paid to the Trustee pursuant to
clause (a) of this sentence in respect of such Trust Equipment or, if the
Company is the Owner of the delivered Trust Equipment, a statement to such
effect; the intention being that the Company shall ultimately pay not less than
25% of the Cost of all the Trust Equipment delivered to the Trustee pursuant to
this Article Three, and the Trustee and the Company shall at any time, if
occasion arises, adjust their accounts and payments to the end that the Trustee
shall pay with Deposited Cash not more than 75% of the Cost, and the Company
shall pay as advance rental the remainder, to be not less than 25% of such
Cost.
SECTION 3.04. Supporting Papers. The Trustee shall not pay out any
Deposited Cash against the delivery of any of the Trust Equipment unless and
until it shall have received:
(a) a certificate of the agent or agents designated by
the Trustee to receive delivery of the Trust Equipment, stating that
the Trust Equipment described and specified therein by number or
numbers has been delivered to such agent or agents (the date of such
certificate to be presumed conclusively as the date of such delivery);
(b) an Officers' Certificate which shall state (i) that
such Trust Equipment is Equipment as herein defined, (ii) the date
each unit of such Trust Equipment was first put into use or that such
Trust Equipment was first put into use not earlier than a specified
date, (iii) that the Cost of such Trust Equipment is the amount
therein specified
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<PAGE> 18
or is not less than the amount therein specified, (iv) the Value to
the Company, in the opinion of the signers, of such Trust Equipment as
of the date of the Section 3.02 Request and (v) that, in the opinion
of the signers, all conditions precedent provided in this Agreement
relating to the payment in question have been complied with;
(c) (i) an invoice or invoices from the Owner of such
Trust Equipment, if other than the Company, and (ii) a bill or bills
of sale of such Trust Equipment from the Owner thereof to the Trustee,
which bill or bills of sale shall contain a warranty or guaranty to
the Trustee that the title to the Trust Equipment described therein is
free from all liens and encumbrances (except as permitted herein)
other than the rights of the Company hereunder; and
(d) an Opinion of Counsel to the effect (i) that such
bill or bills of sale are valid and effective, either alone or in
connection with any other instrument referred to in and accompanying
such opinion, to vest in the Trustee title to such Trust Equipment
free from all liens, security interests and other encumbrances (except
as permitted herein) other than the rights of the Company hereunder,
(ii) that in the case of any Trust Equipment not specifically
described herein, a proper supplement hereto in respect of such Trust
Equipment has been duly executed by the Trustee and the Company and
filed and recorded in accordance with Section 6.05 and (iii) that, in
the opinion of such counsel, all conditions precedent provided for in
this Agreement relating to the payment in question have been complied
with.
Any Officers' Certificate delivered pursuant to this Section may state
that the Cost of the Trust Equipment therein referred to is tentatively
determined, subject to final adjustment to be evidenced in a final Officers'
Certificate to be delivered to the Trustee.
ARTICLE FOUR
Lease of Trust Equipment to the Company
---------------------------------------
SECTION 4.01. Lease of Trust Equipment to the Company. The Trustee
does hereby let and lease to the Company all the Trust Equipment from and after
the respective dates such Trust Equipment is acquired by the Trustee hereunder
to the date on which the final payment of principal and interest on any Trust
Certificate is due.
SECTION 4.02. Equipment Automatically Subjected. As and when any
Equipment shall from time to time be transferred to the Trustee hereunder, the
same shall, ipso facto and without further instrument of lease or transfer,
become subject to all the terms and provisions hereof.
SECTION 4.03. Additional and Substituted Equipment Subject Hereto.
In the event that the Company shall, as provided in Section 3.01 or 4.07, cause
to be transferred to the
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Trustee other Equipment in addition to or in substitution for any of the
Equipment herein specifically described or subjected hereto, such other
Equipment shall be included as part of the Trust Equipment by supplement hereto
to be executed by the Trustee and the Company and shall be subject to all the
terms and conditions hereof in all respects as though it had been part of the
Equipment herein specifically described.
SECTION 4.04. Rental Payments. The Company hereby accepts the
lease of all the Trust Equipment, and covenants and agrees to accept delivery
and possession hereunder of the Trust Equipment; and the Company covenants and
agrees to pay to the Trustee at the Corporate Trust Office (or, in the case of
taxes, to the proper taxing authority), in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, rental hereunder which shall be sufficient
to pay and discharge the following items, when and as the same shall become due
and payable (whether or not any of such items shall become due and payable
prior to the acceptance of delivery of any unit of the Trust Equipment).
(A) The Company shall pay to the Trustee, as hereinafter
provided, as advance rental hereunder, sums which in the aggregate
shall be equal to the difference between the aggregate Cost of the
Trust Equipment (other than Trust Equipment subjected hereto pursuant
to Section 4.07) and the portion of such Cost to be provided out of
the proceeds (excluding accrued interest, if any) of the sale of the
Trust Certificates, the intention being that, when all such Trust
Equipment shall have been transferred to the Trustee, the Company
shall have paid or shall pay to the Trustee, as advance rental
hereunder, a sum equal to the amount by which the aggregate Cost of
such Trust Equipment exceeds such proceeds of the sale of the Trust
Certificates. The Company agrees to pay such advance rental as
follows:
(1) at the time of issue of any Trust Certificate
pursuant to Section 2.01 a sum which, when added to the
proceeds of the sale of such Trust Certificate deposited with
or to the credit of the Trustee, will make the total sum
deposited equal to the principal amount of such Trust
Certificate; and
(2) upon delivery of any such Trust Equipment, a
sum equal to the portion of the Cost of such delivered Trust
Equipment not paid out of Deposited Cash as provided for in
Section 3.02, but not less than 25% of such Cost.
(B) In addition to such advance rental the Company shall
pay to the Trustee, as rental for the Trust Equipment (notwithstanding
that any of the Trust Certificates shall have been acquired by the
Company or shall not have been presented for payment), the following:
(1) from time to time upon demand of the Trustee,
(a) the reasonable expenses of the trust hereby created,
including, without limitation, reasonable compensation to the
Trustee and all expenses provided for herein, and (b) an
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amount equal to any expenses incurred or loss of principal
(including interest accrued thereupon at time of purchase) in
connection with any purchase, sale or redemption by the
Trustee of Investments;
(2) from time to time upon demand of the Trustee,
any and all taxes, assessments, and governmental charges which
the Trustee as such may be required to pay, including, without
limitation, all taxes, assessments and governmental charges
upon or on account of the income or property of the Trust, or
upon or on account of this Agreement;
(3) (a) the amounts of interest payable on the
Trust Certificates, when and as the same shall become payable,
and (b) interest at the Penalty Rate from the due date, upon
the amount of any installments of rental payable in respect of
the principal of and interest on the Trust Certificates which
shall not be paid when due, to the extent legally enforceable;
and
(4) the principal of the Trust Certificates, when
and as the same shall become payable, whether upon the date of
maturity thereof or by declaration or otherwise.
Nothing contained herein or in the Trust Certificates shall be deemed
to impose on the Trustee or on the Company any obligation to pay to the
registered holder of any Trust Certificate any tax, assessment or governmental
charge required by any present or future law of the United States of America,
or of any state, county, municipality or other taxing authority thereof, to be
paid on behalf of, or withheld from the amount payable to, the holder of any
Trust Certificate.
The Company shall not be required to pay any tax, assessment or
governmental charge so long as it shall in good faith and by appropriate legal
proceedings contest the validity thereof; provided, however, that in the
judgment of the Trustee and as set forth in an Opinion of Counsel which shall
have been furnished to the Trustee by the Company, the rights or interests of
the Trustee or of the holders of the Trust Certificates will not be endangered
thereby.
SECTION 4.05. Termination of Trust. After all payments which are
required to be made pursuant to this Agreement have been completed and fully
made to the Trustee (1) such payments shall be applied and treated as purchase
money as the full purchase price of the Trust Equipment from the Trustee, (2)
any moneys remaining in the hands of the Trustee after providing for all
outstanding Trust Certificates and after paying the expenses of the Trustee,
including its reasonable compensation, shall be paid to the Company, (3) title
to all the Trust Equipment shall vest in the Company and (4) the Trustee shall
execute for record in public offices, at the expense of the Company, such
instrument or instruments in writing as reasonably shall be requested by the
Company in order to make clear upon public records the Company's title to all
the Trust Equipment under the laws of any jurisdiction; provided, however, that
(except as otherwise provided herein) until that time title to the Trust
Equipment shall not pass
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<PAGE> 21
to or vest in the Company, but title to and ownership of all the Trust
Equipment shall be and remain with the Trustee, notwithstanding the delivery
thereof to and the possession and use thereof by the Company pursuant to this
Agreement.
SECTION 4.06. Indemnity. The Company covenants and agrees to
indemnify the Trustee against any and all claims arising out of or connected
with the ownership or use of any of the Trust Equipment, and particularly
against any and all claims arising out of the use of any patented inventions in
and about the Trust Equipment, and to comply in all respects with the laws of
the United States of America and of all the states and other jurisdictions in
which the Trust Equipment, or any unit thereof, may be operated, and with all
lawful acts, rules, regulations and orders of any commissions, boards and other
legislative, executive, administrative or judicial bodies or officers having
power to regulate or supervise any of the Trust Equipment, including without
limitation all lawful acts, rules, regulations and orders of any body having
competent jurisdiction relating to automatic coupler devices or attachments,
air brakes or other appliances; provided, however, that the Company may in good
faith contest the validity of any such law, act, rule, regulation or order, or
the application thereof to the Trust Equipment or any part thereof, in any
manner which will not in the judgment of the Trustee endanger the rights or
interests of the Trustee or of the holders of the Trust Certificates. The
Company shall not be relieved from any of its obligations hereunder by reason
of the assertion or enforcement of any such claims or the commencement or
prosecution of any litigation in respect thereof. The Company's obligation to
indemnify the Trustee under this Section 4.06 shall survive the termination of
this Agreement.
SECTION 4.07. Substitution and Replacement of Trust Equipment.
Upon Request, the Trustee shall, at any time and from time to time, execute and
deliver a bill of sale assigning and transferring to the transferee named by
the Company all the right, title and interest of the Trustee in and to any of
the units of Trust Equipment as provided herein; provided, however, that, at
the option of the Company, (a) there shall be paid to the Trustee cash in an
amount not less than the Value, as of the date of such Request, of the units of
Trust Equipment to be assigned or transferred by the Trustee or (b) there shall
be conveyed to the Trustee, at the time of assignment or transfer of any units
of Trust Equipment, other units of Equipment and of a Value not less than the
Value, as of the date of such Request, of the units of Trust Equipment to be
assigned or transferred.
At the time of delivery of any Request pursuant to the first paragraph
of this Section, the Company shall, if other Equipment is to be conveyed to the
Trustee in substitution for the Trust Equipment to be assigned or transferred
by the Trustee, deliver to the Trustee the following papers:
(1) an Officers' Certificate stating (i) the Value, as of
the date of said Request, of the Trust Equipment so to be assigned or
transferred by the Trustee and the date such Trust Equipment was first
put into use (or that such Trust Equipment was first put into use not
later than a specified date), (ii) that the requested assignment or
transfer by the Trustee will not impair the security under this
Agreement in contravention of the
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provisions hereof, (iii) the Value of such substituted Equipment as of such
date and the date such substituted Equipment was first put into use (or that
such substituted Equipment was first put into use not earlier than a specified
date), (iv) that each unit of Equipment so to be substituted has been marked as
provided in Section 4.10, (v) that each such unit so to be substituted is
Equipment as herein defined and (vi) that the Company is not in Default;
(2) a certificate and a bill or bills of sale in respect
of such substituted Equipment as provided for in subparagraphs (a) and
(c) of the first paragraph of Section 3.04;
(3) an Opinion of Counsel to the effect that (i) such
bill or bills of sale are valid and effective, either alone or
together with any other instruments referred to in and accompanying
such opinion, to vest in the Trustee title to such substituted
Equipment free from all claims, liens, security interests and other
encumbrances (except as permitted herein) other than the rights of the
Company hereunder and (ii) a proper supplement hereto in respect of
each substituted unit of Equipment has been duly executed by the
Trustee and the Company and has been filed with the Surface
Transportation Board of the Department of Transportation pursuant to
the requirements of ___ U.S.C. Section ______ and as otherwise
required by Section 6.05 and has been deposited with the Registrar
General of Canada pursuant to Section 90 of the Railway Act (Canada)
and publication of notice of such deposit in The Canada Gazette in
accordance with said Section 90 has been provided for; and
(4) if the Cost of the Trust Equipment to be assigned or
transferred by the Trustee, less 1/20th of such Cost for each full
year elapsed between the date such Trust Equipment was first put into
use (as previously so certified) and the date as of which the Value
thereof is to be determined hereunder, plus the Cost of all other
Trust Equipment so assigned or transferred within the prior twelve
months, less 1/20th of such Cost for each full year elapsed between
the date such other Trust Equipment was first put into use (as
previously so certified) and the date as of which the Value thereof
was determined, as set forth in the certificate or certificates
required by this Section 4.07, is more than 10% of the principal
amount of Trust Certificates then outstanding, a certificate by an
Independent Engineer stating, as of the date of said Request, both the
Value of the Trust Equipment so to be assigned or transferred by the
Trustee and the Value of such substituted Equipment.
At the time of delivery of any Request pursuant to the first paragraph
of this Section, the Company shall, if cash is to be paid to the Trustee in
respect of the Trust Equipment to be assigned or transferred by the Trustee,
deliver to the Trustee an Officers' Certificate stating to the effect set forth
in clauses (i), (ii) and (vi) of subparagraph (1) of the second paragraph of
this Section.
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Cash deposited with the Trustee pursuant to this Section or Section
4.08 shall, from time to time, be paid over by the Trustee to the Company upon
Request, against conveyance to the Trustee of units of Equipment having a
Value, as of the date of said Request, not less than the amount of cash so
paid, and upon delivery to the Trustee of papers corresponding to those set
forth in the second paragraph of this Section, with such appropriate
modifications as may be approved by the Trustee.
SECTION 4.08. Maintenance of Trust Equipment; Casualty Occurrences.
The Company agrees that it will maintain and keep all the Trust Equipment in
good order and proper repair at its own cost and expense, unless and until it
becomes worn out, unsuitable for use or lost or destroyed (such occurrences
being hereinafter called Casualty Occurrences). Whenever any of the Trust
Equipment shall suffer a Casualty Occurrence, the Company shall on or before
the next following May 15, deliver to the Trustee an Engineer's Certificate
describing such Trust Equipment and stating the Value thereof as of the date
such Trust Equipment suffered such Casualty Occurrence. When the total Value
of all units of the Trust Equipment having suffered a Casualty Occurrence
(exclusive of units having suffered a Casualty Occurrence in respect of which a
payment shall have been made to the Trustee pursuant to this Section) shall
exceed $250,000, the Company, within 30 days after it shall have been informed
of such event, shall deliver to the Trustee an Engineer's Certificate
describing such Trust Equipment and stating the Value thereof as of the date
such Trust Equipment suffered such Casualty Occurrence and either (i) deposit
with the Trustee an amount in cash equal to the Value of such units as of the
date of the Casualty Occurrence in respect of each thereof or (ii) convey to
the Trustee, in accordance with the procedures and requirements of Section
4.07, units of Equipment with a Value, as of the date of such conveyance, not
less than the Value of the units suffering such Casualty Occurrence(s), as of
the date of the Casualty Occurrence in respect of each thereof. The rights and
remedies of the Trustee to enforce or to recover any of the rental payments
shall not be affected by reason of any Casualty Occurrence. Cash deposited
with the Trustee pursuant to this Section shall be held and applied as provided
in the fourth paragraph of Section 4.07.
Upon the deposit of cash with the Trustee pursuant to this Section
4.08, the Trustee shall execute and deliver a bill of sale in the form
reasonably requested by the Company assigning and transferring to the
transferee named by the Company all the right, title and interest of the
Trustee in and to the Trust Equipment which has suffered a Casualty Occurrence
and in respect of which such deposit is made.
The Company agrees to furnish to the Trustee on or before May 15 in
every calendar year commencing May 15, 1997, and during the continuance of the
lease provided for herein, an Officers' Certificate, dated as of the preceding
February 14, (1) stating the description and numbers of all units of Trust
Equipment that may have suffered a Casualty Occurrence or which have been
withdrawn from use pending major repairs (other than running repairs) since the
date of the last preceding statement (or the date of this Agreement in the case
of the first such statement), (2) that in the case of all the Trust Equipment
repainted or repaired since the date f the last preceding statement (or the
date of this Agreement in the case of the first statement) the plates or
markers required by Section 4.10 have been preserved, or that such Trust
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Equipment when repainted or repaired has been again plated or marked as
required thereby, (3) that no Event of Default has occurred and is continuing,
(4) that, in the opinion of the signers, the Company is in compliance with all
of the terms of this Agreement and (5) covering such other matters as the
Trustee may reasonably request.
The Trustee, by its agents, shall have the right at any reasonable
time (which may be more frequent than once in each calendar year), but shall be
under no duty, to inspect the Trust Equipment at the then existing locations
thereof.
SECTION 4.09. Possession of Trust Equipment. Except as provided in
this Section 4.09, without first obtaining the written consent of the Trustee,
the Company will not (a) assign or transfer its rights hereunder, (b) transfer
the Trust Equipment or any part thereof or (c) part with the possession of, or
suffer or allow to pass out of its possession and control, any of the Trust
Equipment. An assignment or transfer to any corporation which shall acquire
all or substantially all the property of the Company (by merger, consolidation
or otherwise) and which, by execution of an appropriate instrument satisfactory
to the Trustee, shall assume and agree to perform each and all the obligations
and covenants of the Company hereunder and under the guarantee endorsed on the
Trust Certificates shall not be deemed a breach of this covenant and such
assignment, transfer or assumption shall have the effect of releasing the
Company from its obligations hereunder and from its obligations as guarantor of
the Trust Certificates. The appointment of a receiver or receivers in equity
or reorganization or a trustee or trustees in bankruptcy or reorganization for
the Company or for its property shall not be deemed an unauthorized assignment
if, prior to any action by the Trustee to exercise the remedies herein
provided, such receiver or receivers or trustee or trustees shall, pursuant to
court order or decree, in writing duly assume and agree to pay or perform each
and all of the obligations and covenants of the Company hereunder and under the
guaranty endorsed on the Trust Certificates, in such manner that such
obligations shall have the same status as obligations incurred by such receiver
or receivers or trustee or trustees.
Notwithstanding the foregoing, so long as the Company shall not be in
Default, the Company and any of its Affiliates shall be entitled to the
possession and use of the Trust Equipment in accordance with the terms hereof,
and the Company or such Affiliates may also (a) furnish the Trust Equipment or
any part thereof to railroad companies for use upon the lines of railroad owned
or operated by them or over which they have trackage rights and upon connecting
and other railroads in the usual interchange of traffic, or to other than
railroad companies for use in their business, and (b) sublet or contract to
others located in the United States[, Mexico] and Canada all or any part of the
Trust Equipment, but only, in either case, upon and subject to all the terms
and conditions of this Agreement.
Any such sublease or contract may provide that the party acquiring the
use of units of the Trust Equipment, so long as it shall not be in default
under such sublease or contract, shall be entitled, subject to the rights of
the Trustee hereunder, to the possession of such units and the use thereof and,
subject to the provisions of Section 4.10 hereof, may provide for lettering or
marking upon such Equipment for convenience of identification of the leasehold
interest of
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such sublessee therein. Every such lease or contract shall contain provisions
which have the effect of subjecting the rights of the party acquiring the use
of units of the Trust Equipment under such lease or contract to the rights and
remedies of the Trustee in respect of such units.
The Trustee shall have the right to declare the lease provided for
herein terminated in case of any unauthorized assignment or transfer of the
Company's rights hereunder or in case of any unauthorized transfer or sublease
of any of the Trust Equipment. The election of the Trustee to terminate the
lease provided for herein shall have the same effect as the retaking of the
Trust Equipment by the Trustee as hereinafter provided.
SECTION 4.10. Marking of Trust Equipment. The Company shall not
change, or permit to be changed, the numbers of any of the Trust Equipment at
any time covered hereby (or any numbers which may have been substituted as
herein provided) except in accordance with a statement of new numbers to be
substituted therefor which previously shall have been filed with the Trustee by
the Company and which shall be filed and recorded in like manner as this
Agreement.
The Trust Equipment may be lettered, "Union Tank Car Company", "UTLX",
or in some other appropriate manner for convenience of identification of the
leasehold interest of the Company therein, and may also be lettered, in case of
a sublease of any equipment made pursuant to Section 4.09 hereof, in such
manner as may be appropriate for convenience of identification of the
subleasehold interest therein; but the Company, during the continuance of the
lease provided for herein, will not allow any lettering or designation to be
placed on any of the Trust Equipment claiming ownership thereof by the Company
or by any person, firm, association or corporation other than the Trustee.
ARTICLE FIVE
Events of Default and Remedies
SECTION 5.01. Events of Default. The Company covenants and agrees
that in case:
(a) the Company shall default in the payment of any part
of the rental payable hereunder for more than 10 Business Days after
the same shall have become due and payable, or
(b) the Company shall make or suffer any unauthorized
assignment or transfer of its rights hereunder or shall make any
unauthorized transfer or sublease (including, for the purpose of this
clause, contracts for the use thereof) of any of the Trust Equipment,
or, except as herein authorized, shall part with the possession of any
of the Trust Equipment, and shall fail or refuse either to cause such
assignment or transfer or sublease to be canceled by agreement of all
parties having any interest therein and recover possession of such
Trust Equipment within 30 days after the Trustee shall have
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demanded in writing such cancellation and recovery of possession, or
within said 30 days to deposit with the Trustee a sum in cash equal to
the Value, as of the date of such unauthorized action, of such Trust
Equipment (any sum so deposited to be returned to the Company upon the
cancellation of such assignment, transfer or sublease and the recovery
of possession by the Company of such Trust Equipment), or
(c) the Company shall fail or refuse to comply with any
other of the terms and covenants hereof on its part to be kept and
performed, or to make provision satisfactory to the Trustee for such
compliance, for a period which is the shorter of (i) 60 days after the
Trustee shall have demanded in writing performance thereof and (ii) 30
days after the Company has knowledge of any failure on its part to so
comply, or
(d) the lease provided for herein shall be terminated by
operation of law or pursuant to the last paragraph of Section 4.09, or
(e) any order, judgment or decree is entered under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction (herein called the "Bankruptcy Law") adjudicating the
Company bankrupt or insolvent, or the Company petitions or applies to
any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official, of the Company or of substantially all the assets of the
Company or commences a voluntary case under the Bankruptcy Law or any
proceedings relating to the Company under the Bankruptcy Law, whether
now or hereafter in effect; or any such petition or application is
filed, or any such proceedings are commenced, against the Company and
the Company by any act or failure to act indicates its approval
thereof, consent thereto or acquiescence therein, or an order for
relief is entered in an involuntary case against the Company under the
Bankruptcy Law, as now or hereafter constituted, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and
in effect for more than 60 days, or
(f) the Company shall fail to perform under its guarantee
of certain obligations of Procor Limited ("Procor") contained in
Section 12.1 of the Pass Through Trust Agreement 1996-A2, dated May
__, 1996, among the Company, Procor and _________________________
_________________________, as Pass Through Trustee, and endorsed
on the certificates issued thereunder.
then, in any such case (herein sometimes called an "Event of Default"), the
Trustee in its discretion may, and upon the written request of the holders of
more than 50% in principal amount of the then outstanding Trust Certificates
shall, by notice in writing delivered to the Company, declare to be due and
payable forthwith the unpaid principal amount of all Trust Certificates then
outstanding and the entire amount of the rentals thereafter (including any
unpaid advance rental, but not including rentals required for the payment of
interest accruing after the
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date of such declaration) payable by the Company as set forth in Section 4.04
and not theretofore paid. Thereupon the entire amount of such principal and
rentals shall forthwith become and shall be due and payable immediately without
further demand, together with interest at the Penalty Rate, to the extent
legally enforceable, on any portion thereof overdue.
In case the Company shall fail to pay any installment of rental
payable pursuant to Section 4.04 in respect of the principal of, or interest
on, the Trust Certificates when and as the same shall have become due and
payable hereunder, and such Default shall have continued for a period of more
than ten Business Days, the Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the rentals so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Company
or other obligor upon the Trust Certificates and collect in the manner provided
by law out of the property of the Company or other obligor upon the Trust
Certificates wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor upon the Trust
Certificates under the Bankruptcy Law or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or such other obligor, or in case of any other judicial proceedings relative to
the Company or such other obligor, or to the creditors or property of the
Company or such other obligor, the Trustee, irrespective of whether the rental
payments hereunder or the principal amount of the Trust Certificates shall then
be due and payable as herein or therein expressed whether by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand or
declaration pursuant to the provisions of this Section, shall be entitled and
empowered by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the entire amount of the rentals then or thereafter payable
(including any unpaid advance rental, but not including rentals required for
the payment of interest accruing after the date of such declaration) and to
file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee, its agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee except as a result of its negligence or willful misconduct) and
of the holders of the Trust Certificates allowed in such proceedings and to
collect and receive any moneys or other property payable or deliverable on any
such claims, and to distribute all amounts received with respect to the claims
of the holders of the Trust Certificates and of the Trustee on their behalf;
and any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the holders of the Trust Certificates to make payments to
the Trustee, and, in the event that the Trustee shall consent to the making of
payments directly to the holders of the Trust Certificates, to pay to the
Trustee such amount as shall be sufficient to cover reasonable compensation to
the Trustee, its agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee except as a result
of its negligence or willful misconduct.
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All rights of action and to assert claims under this Agreement, or
under any of the Trust Certificates, may be enforced by the Trustee without the
possession of any of the Trust Certificates or the production thereof on any
trial or other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Trust Certificates. In any proceedings brought by the
Trustee (and also any proceedings involving the interpretation of any provision
of this Agreement to which the Trustee shall be a party) the Trustee shall be
held to represent all the holders of the Trust Certificates, and it shall not
be necessary to make any holders of the Trust Certificates parties to such
proceedings.
SECTION 5.02. Remedies. In case of the happening and continuance
of any Event of Default, the Trustee may by its agents enter upon the premises
of the Company and any of its Affiliates or sublessees (or other person having
acquired the use of the Trust Equipment) where any of the Trust Equipment may
be and take possession of all or any part of the Trust Equipment and withdraw
the same from said premises, retaining all payments which up to that time may
have been made on account of rental for the Trust Equipment and otherwise, and
shall be entitled to collect, receive and retain all unpaid mileage, hourly or
other charges of any kind earned by the Trust Equipment or any part thereof,
and may lease or otherwise contract for the use of the Trust Equipment or any
part thereof, or with or without retaking possession thereof (but only after
declaring due and payable the entire amount of rentals payable by the Company
and the principal of all the then outstanding Trust Certificates, as provided
in Section 5.01) may sell the same or any part thereof, free from any and all
claims of the Company at law or in equity in one lot and as an entirety or in
separate lots, at public or private sale, for cash or upon credit, in its
discretion, and may proceed otherwise to enforce its rights and the rights of
the holders of then outstanding Trust Certificates, all subject to any
mandatory requirements of law applicable thereto. Upon any such sale, the
Trustee itself may bid for the property offered for sale or any part thereof.
Any such sale may be held or conducted at such place and at such time as the
Trustee may specify, or as may be required by law, and without gathering at the
place of sale the Trust Equipment to be sold, and in general in such manner as
the Trustee may determine, but so that the Company may and shall have a
reasonable opportunity to bid at any such sale. Upon such taking possession or
withdrawal or lease or sale of the Trust Equipment, the Company shall cease to
have any rights or remedies ln respect of the Trust Equipment hereunder, but
all such rights and remedies shall be deemed thenceforth to have been waived
and surrendered by the Company, and no payments theretofore made by the Company
for the rent or use of the Trust Equipment or any of it shall give to the
Company any legal or equitable interest or title in or to the Trust Equipment
or any of it or any cause or right of action at law or in equity in respect of
the Trust Equipment against the Trustee or the holders of interests hereunder.
No such taking possession, withdrawal, lease or sale of the Trust Equipment by
the Trustee shall be a bar to the recovery by the Trustee from the Company of
rentals then or thereafter due and payable, or of principal and interest in
respect of the Trust Certificates, and the Company shall be and remain liable
for the same until such sums have been realized as, with the proceeds of the
lease or sale of the Trust Equipment, shall be sufficient for the discharge and
payment in full of all the obligations of the Company under this Agreement.
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SECTION 5.03. Application of Proceeds. If the Trustee shall
exercise any of the powers conferred upon it by Sections 5.01 and 5.02, all
payments made by the Company to the Trustee, and the proceeds of any judgment
collected from the Company by the Trustee, and the proceeds of every sale or
lease by the Trustee of any of the Trust Equipment, together with any other
sums which may then be held by the Trustee under any of the provisions hereof
(other than sums held in trust for the payment of specific Trust Certificates
or a part thereof, or interest thereon), shall be applied by the Trustee to the
payment, in the following order of priority, (a) of all proper charges,
expenses or advances made or incurred by the Trustee in accordance with the
provisions of this Agreement and (b) of the interest then due, with interest on
overdue interest at the Penalty Rate, to the extent legally enforceable, and of
the principal of all the outstanding Trust Certificates, with interest thereon
at the Penalty Rate, to the extent legally enforceable, from the last preceding
interest payment date, whether such Trust Certificates shall have then matured
by their terms or not, all such payments to be pro rata and in full if such
proceeds shall be sufficient, and if not sufficient, then first to interest and
then to principal.
After all such payments shall have been made in full, the title to any
of the Trust Equipment remaining unsold shall be conveyed by the Trustee to the
Company free from any further liabilities or obligations to the Trustee
hereunder. If after applying all such sums of money realized by the Trustee as
aforesaid there shall remain any amount due to the Trustee under the provisions
hereof, the Company agrees to pay the amount of such deficit to the Trustee.
If after applying as aforesaid the sums of money realized by the Trustee there
shall remain a surplus in the possession of the Trustee, such surplus shall be
paid to the Company.
SECTION 5.04. Waivers of Default. Prior to the declaration of the
acceleration of the maturity of the rentals due hereunder and of the maturity
of all the Trust Certificates as provided in Section 5.01, the holders of more
than 50% in aggregate unpaid principal amount of the Trust Certificates at the
time outstanding may on behalf of the holders of all the Trust Certificates
waive any past Default and its consequences, except a Default in the payment of
any installment of rental then due and payable pursuant to Section 4.04 in
respect of the principal of, or interest on, the Trust Certificates, but no
such waiver shall extend to or affect any subsequent Default or impair any
right consequent thereon.
If at any time after the principal of all the Trust Certificates shall
have been declared and become due and payable or if at any time after the
entire amount of rentals shall have been declared and become due and payable,
all as provided in Section 5.01, all arrears of rent (with interest at the
Penalty Rate upon any overdue installments, to the extent legally
enforceable), the expenses and reasonable compensation of the Trustee, together
with all expenses of the trust occasioned by the Company's Default, and all
other sums which shall have become due and payable hereunder shall be paid by
the Company before any sale or lease by the Trustee of any of the Trust
Equipment, and every other Default shall be made good or secured to the
satisfaction of the Trustee and the holders of the Trust Certificates, or
provision deemed by the Trustee to be adequate shall be made therefor, then,
and in every such case, the Trustee, if so requested by the holders of more
than 50% in aggregate unpaid principal amount of the Trust Certificates then
outstanding according to their terms, shall by written notice to the Company
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waive the Default by reason of which there shall have been such declaration or
declarations and the consequences of such Default, but no such waiver shall
extend to or affect any subsequent Default or impair any right consequent
thereon.
SECTION 5.05. Obligations of Company Not Affected by Remedies. No
retaking of possession of the Trust Equipment by the Trustee, or any
withdrawal, lease or sale thereof, nor any action or failure or omission to act
against the Company or in respect of the Trust Equipment, on the part of the
Trustee or on the part of the holder of any Trust Certificate, nor any delay or
indulgence granted to the Company by the Trustee or by any such holder, shall
affect the obligations of the Company hereunder or the obligations of the
Company under its guarantee endorsed on the Trust Certificates. The Company
hereby waives presentation and demand in respect of any of the Trust
Certificates and waive notice of presentation, of demand and of any Default in
the payment of the principal of and interest on the Trust Certificates.
SECTION 5.06. Company To Deliver Trust Equipment to Trustee. In
case the Trustee shall rightfully demand possession of any of the Trust
Equipment in pursuance of this Agreement, the Company will, at its own expense,
forthwith and in the usual manner and at usual speed, cause such Trust
Equipment to be drawn to such point or points as shall reasonably be designated
by the Trustee and will there deliver or cause to be delivered the same to the
Trustee; or, at the option of the Trustee, the Trustee may keep such Trust
Equipment, at the expense of the Company, on any lines of railroad or premises
approved by the Trustee until the Trustee shall have leased, sold or otherwise
disposed of the same. The performance of the foregoing covenant is of the
essence of this Agreement and upon application to any court having jurisdiction
in the premises, the Trustee shall be entitled to a decree against the Company
requiring the specific performance thereof.
SECTION 5.07. Trustee To Give Notice of Default. Promptly after
the occurrence thereof, the Trustee shall give to the registered holders of the
Trust Certificates notice of each Default hereunder known to any officer of the
Trustee assigned by it to perform corporate trust administration functions with
respect to this Agreement.
SECTION 5.08. Control by Holders of Trust Certificates. The
holders of more than 50% in aggregate unpaid principal amount of the
outstanding Trust Certificates, by an instrument or instruments in writing
executed and delivered to the Trustee, shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that the Trustee shall have the right to decline to follow any such
direction if the Trustee shall be advised by counsel that the action so
directed may not lawfully be taken.
SECTION 5.09. Limitations on Suits by Holders of Trust
Certificates. No holder of any Trust Certificate shall have any right by
virtue or by availing of any provision of this Agreement to institute any
action or proceeding at law or in equity or in bankruptcy or otherwise, upon or
under or with respect to this Agreement, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless such holder previously
shall have given
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to the Trustee written notice of a Default and of the continuance thereof, as
herein provided, and unless also the holders of more than 50% in aggregate
principal amount of the Trust Certificates then outstanding shall have made
written request to the Trustee to institute such action or proceeding in its
own name as trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 30 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action or proceeding and no direction inconsistent
with such written request shall have been given to the Trustee pursuant to
Section 5.08; and no one or more holders of Trust Certificates shall have any
right in any manner whatever to affect or prejudice the rights of any other
holder of Trust Certificates, or to obtain or seek to obtain priority over any
other such holder or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Trust Certificates. For the protection and enforcement of the
provisions of this Section, each and every holder of a Trust Certificate and
the Trustee shall be entitled to such relief as can be given either at law or
in equity.
SECTION 5.10. Unconditional Right of Holders of Trust Certificates
To Sue for Principal and Interest. Notwithstanding any other provision in this
Agreement, the right of any holder of any Trust Certificate to receive payment
of the principal of and interest on such Trust Certificate, on or after the due
date expressed in such Trust Certificate, or to institute suit for the
enforcement of any such payment on or after such date, shall not be impaired or
affected without the consent of such holder, except no such suit shall be
instituted if and to the extent that the institution or prosecution thereof or
the entry of judgment therein would, under applicable law, result in the
surrender, impairment, waiver or loss of the title reserved under this
Agreement upon any property subject hereto.
SECTION 5.11. Remedies Cumulative; Subject to Mandatory
Requirements of Law. The remedies in this Agreement provided in favor of the
Trustee and the holders of the Trust Certificates shall not be deemed
exclusive, but shall be cumulative, and shall be in addition to all other
remedies in their favor existing at law or in equity; and such remedies shall
be subject in all respects to any mandatory requirements of law at the time
applicable thereto, to the extent such requirements may not be waived on the
part of the Company.
ARTICLE SIX
Additional Agreements by the Company
SECTION 6.01. Guarantee of the Company. The Company guarantees
that the holder of each of the Trust Certificates shall receive the principal
amount thereof, in such coin or currency of the United States of America as, at
the time of payment, shall be legal tender for the payment of public and
private debts, when and as the same shall become due and payable in accordance
with the provisions thereof or of this Agreement (and, if not so paid, with
interest thereon until paid at the Penalty Rate, to the extent legally
enforceable), and shall receive
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interest thereon in like money at the rate specified therein, at the times and
place and otherwise as expressed in the Trust Certificates and this Agreement
(and, if not so paid, with interest thereon until paid at the Penalty Rate, to
the extent legally enforceable); and the Company agrees to endorse upon each of
the Trust Certificates, at or before the issuance and delivery thereof by the
Trustee, its guarantee of the prompt payment of the principal thereof and of
the interest thereon, in substantially the form herein set forth. Said
guarantee so endorsed shall be signed in the name and on behalf of the Company
by the manual or facsimile signature of its President, a Vice President or
Treasurer. In case any officer of the Company whose signature shall appear on
said guaranty shall cease to be such officer before the Trust Certificates
shall have been issued and delivered by the Trustee, or shall not have been
acting in such capacity on the date of the Trust Certificates, such guarantee
shall nevertheless be as effective and binding upon the Company as though the
person who signed said guarantee had not ceased to be or had then been such
officer.
SECTION 6.02. Discharge of Liens. The Company agrees that it will
pay and discharge, or make adequate provision for the payment or discharge of,
any debt, tax, charge, assessment, obligation or claim which if unpaid might
become a lien or charge upon or against any of the Trust Equipment; but this
provision shall not require the payment of any such debt, tax, charge,
assessment, obligation or claim so long as the validity thereof shall be
contested in good faith and by appropriate legal proceedings that do not
materially endanger the rights or interests of the Trustee or of the holders of
the Trust Certificates and the Company shall have furnished the Trustee with an
Opinion of Counsel to such effect.
If the Company does not forthwith pay and discharge, or cause to be
paid and discharged, or make adequate provision for the satisfaction or
discharge of, any such debt, tax, charge, assessment, obligation or claim as
required by this Section, the Trustee may, but shall not be obligated to, pay
and discharge the same and any amounts so paid shall be secured by and under
this Agreement until reimbursed by the Company.
SECTION 6.03. Further Assurances. The Company agrees to do all
such acts and execute all such instruments of further assurance as it shall be
reasonably requested by the Trustee to do or execute for the purpose of fully
carrying out and effectuating this Agreement and the intent hereof.
SECTION 6.04. Payment of Expenses; Recording. The Company agrees
to pay the expenses incident to the preparation and execution of the Trust
Certificates to be issued hereunder, or connected with the preparation,
execution, recording and filing of this Agreement and of any instruments
executed under the provisions hereof. The Company shall, promptly after the
execution and delivery of this Agreement (and prior to the delivery of any of
the Trust Equipment hereunder pursuant to Section 3.01 hereof) and each
supplement hereto, respectively, cause this Agreement and such supplement, as
the case may be, to be duly filed with the Surface Transportation Board of the
Department of Transportation in accordance with ___ U.S.C. Section _____ and to
be duly deposited with the Registrar General of Canada pursuant to Section 90
of the Railway Act (Canada) and shall provide for publication of notice of such
deposit in The
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Canada Gazette in accordance with said Section 90. The Company will from time
to time reregister, refile and rerecord this Agreement and each supplement
hereto and do and perform any other act and will execute, acknowledge, deliver,
file, register and record any and all further instruments required by the law
of any jurisdiction in which use of the Equipment is permitted by Section 4.09
hereof or reasonably requested by the Trustee for the purpose of proper
protection of the title of the Trustee and the rights of the holders of the
Trust Certificates and of fully carrying out and effectuating this Agreement
and the intent hereof; provided, however, that the Company shall not be
required to take any such action if (1) such action is unduly burdensome and
(2) after giving effect to the failure to take such action, the Company has
taken all action required by law so as to protect the title of the Trustee to
units of Trust Equipment having a Value of not less than 908 of the aggregate
Value of all the Trust Equipment.
Promptly after the execution and delivery of this Agreement and each
supplement hereto, the Company shall furnish to the Trustee an Opinion of
Counsel stating that, in the opinion of such counsel, this Agreement or such
supplement, as the case may be, has been properly recorded, filed and deposited
in compliance with the preceding paragraph of this Section and reciting the
details of such action and no other filing or recordation or refiling or
rerecordation or depositing or redepositing is necessary for the protection of
the rights of the Trustee in the United States of America, any State thereof or
the District of Columbia or Canada or any subdivision thereof. The Company
shall furnish to the Trustee, not later than August 1 in each year, commencing
with the year 1997, an Opinion of Counsel stating that, in the opinion of such
counsel, either (i) such action has been taken with respect to the recording,
filing, registering and depositing and rerecording, refiling, reregistering and
redepositing of this Agreement and each supplement hereto as is necessary to
comply with the preceding paragraph of this Section and reciting the details of
such action or (ii) no such action is necessary for such purpose. In rendering
any such opinion, such counsel may conclusively rely upon an Officers'
Certificate as to the location of the Trust Equipment.
ARTICLE SEVEN
Concerning the Holders of Trust Certificates
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SECTION 7.01. Evidence of Action Taken by Holders of Trust
Certificates. Whenever in this Agreement it is provided that the holders of a
specified percentage in aggregate unpaid principal amount of the Trust
Certificates may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action the holders of
such specified percentage have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by holders of
Trust Certificates in person or by agent or proxy appointed in writing.
SECTION 7.02. Proof of Execution of Instruments and of Holding of
Trust Certificates. The execution of any instrument by a holder of Trust
Certificates or his agent or
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proxy may be proved by the certificate of any notary public or other officer of
any jurisdiction within the United States of America or Canada authorized to
take acknowledgments of deeds to be recorded in such jurisdiction that the
person executing such instrument acknowledged to him the execution thereof, or
by an affidavit of a witness to such execution sworn to before any such notary
or other such officer.
The ownership of Trust Certificates may be proved by the register of
such Trust Certificates or by a certificate of the registrar thereof.
SECTION 7.03. Trust Certificates Owned by Company. In determining
whether the holders of the requisite principal amount of the Trust Certificates
have concurred in any direction, request, consent, amendment or waiver under
this Agreement, Trust Certificates which are owned by the Company or by any
other obligor on the Trust Certificates or by an Affiliate of the Company or
any such other obligor shall be disregarded, except that for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, request or consent, only Trust Certificates which the Trustee
actually knows are so owned shall be disregarded.
SECTION 7.04. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.01, of the taking of any action by the holders of the required percentage in
aggregate unpaid principal amount of the Trust Certificates specified in this
Agreement, any holder of a Trust Certificate may, by filing written notice with
the Trustee at the Corporate Trust Office and upon proof of holding as provided
in Section 7.02, revoke such action insofar as concerns such Trust Certificate.
Except as aforesaid, any such action taken by the holder of any Trust
Certificate shall be conclusive and binding upon such holder and upon all
future holders and owners of such Trust Certificate and of any Trust
Certificate issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon such Trust
Certificate. Any action taken by the holders of the required percentage in
aggregate unpaid principal amount of the Trust Certificates specified in this
Agreement shall be conclusive and binding upon the Company, the Trustee and the
holders of all the Trust Certificates.
SECTION 7.05. Amendment or Waiver. Any provision of this Agreement
may be amended or waived with the written consent of the holders of not less
than 66-2/3% of the aggregate unpaid principal amount of the Trust Certificates
then outstanding; provided, however, that without the consent of the holders of
100% of the aggregate unpaid principal amount of Trust Certificates then
outstanding, no such amendment or waiver shall (1) change the amount of
principal, change the amount or dates of payment of installments of principal
or reduce the rate or extend the time of payment of interest with respect to
the Trust Certificates without the consent of the holders of each Trust
Certificate so affected, (2) reduce the amount of or extend the time of payment
of any rentals payable under this Agreement or release or provide for the
release of any of the Trust Equipment or any other property or cash held by the
Trustee in trust, otherwise than as expressly permitted by the present terms of
this Agreement, or (3) reduce the
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percentage of the aggregate unpaid principal amount of Trust Certificates then
outstanding, theholders of which are required to approve any amendment or to
effect any waiver.
ARTICLE EIGHT
The Trustee
-----------
SECTION 8.01. Acceptance of Trust. The Trustee hereby accepts the
trust imposed upon it by this Agreement and agrees to perform the same as
herein expressed.
SECTION 8.02. Duties and Responsibilities of the Trustee. In case
an Event of Default has occurred (which has not been cured), the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(a) prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Agreement, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the
Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this
Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Agreement;
(b) the Trustee shall not be liable for any error of
judgment made in good faith, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts or that its
action or inaction was contrary to the express provisions of this
Agreement;
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(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the holders of more than 50% in aggregate unpaid
principal amount of the then outstanding Trust Certificates relating
to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement;
(d) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, Trust
Certificate, guarantee or other paper or.document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(e) the Trustee may consult with counsel, and any Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder in good faith
and in accordance with such Opinion of Counsel and not contrary to any
express provisions of this Agreement;
(f) the Trustee shall be under no obligation to exercise
any of its rights or powers vested in it by this Agreement at the
request, order or direction of any of the holders of the Trust
Certificates, pursuant to the provisions of this Agreement, unless
such holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby; and
(g) the Trustee shall not be liable for any action taken
by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement.
SECTION 8.03. Application of Rentals. The Trustee agrees to apply
the rentals received by it under Section 4.04(B) when and as the same shall be
received, and to the extent that such rentals shall be sufficient therefor, for
the purposes specified in Section 4.04(B). In the event that rentals received
by the Trustee under Sections 4.04(B)(3) or 4.04(B)(4) are not sufficient to
pay in full the interest or principal then due and owing on the Trust
Certificates, such rentals shall be applied by the Trustee pro rata to each of
the Trust Certificates first to interest and then to principal then due and
payable.
The Trustee shall not be required to undertake any act or duty in the
way of insuring, taking care of or taking possession of the Trust Equipment or
to undertake any other act or duty under this Agreement until fully indemnified
by the Company or by one or more of the holders of the Trust Certificates
against all liability and expenses; and the Trustee shall not be responsible
for the filing or recording or refiling or rerecording of this Agreement or of
any supplement hereto or statement of new numbers.
SECTION 8.04. Funds May be Held by Trustee; Investments. Any funds
at any time paid to or held by the Trustee hereunder until paid out by the
Trustee as herein provided
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may be carried by the Trustee on deposit with itself, and the Trustee will not
be obligated to pay interest on such funds.
At any time, and from time to time, if at the time no Event of Default
shall have occurred and be continuing, the Trustee, on Request, shall invest
and reinvest Deposited Cash held by it or cash deposited with it pursuant to
Section 4.07 or Section 4.08 (hereinafter in this Section called "Replacement
Funds") in Investments, at such prices, not in excess of fair market value at
the time of investment, including any premium and accrued interest, as are set
forth in such Request, such Investments to be held by the Trustee in trust for
the benefit of the holders of the Trust Certificates.
The Trustee shall, on Request, or the Trustee may, in the event funds
are required for payment against delivery of Trust Equipment or for payment of
the principal of or interest on any Trust Certificate, or in the event of a
Default, sell such Investments, or any portion thereof, and restore to
Deposited Cash or Replacement Funds, as the case may be, the proceeds of any
such sale up to the amount paid for such Investments, including accrued
interest, or apply such proceeds to the payment of said principal and interest
if and to the extent such proceeds are needed therefor. The Trustee shall not
be deemed responsible for any loss resulting from the purchase and sale of such
Investments on Request unless such loss results from the misconduct or
negligence of the Trustee, and upon demand of the Trustee the Company will
reimburse the Trustee for any such loss for which the Trustee is not
responsible.
The Trustee shall restore to Deposited Cash or Replacement Funds, as
the case may be, out of rent received by it for that purpose under the
provisions of Section 4.04(B)(1), an amount equal to any expenses reasonably
incurred in connection with any purchase or sale of Investments and also an
amount equal to any loss of principal incident to the sale or redemption of any
Investments for a sum less than the amount paid therefor, including accrued
interest.
The Company, if not to the knowledge of the Trustee in Default, shall
be entitled to receive any interest allowed as provided in the first paragraph
of this Section and any interest (in excess of accrued interest paid from
Deposited Cash at the time of purchase) or other profit which may be realized
from any sale or redemption of Investments.
SECTION 8.05. Trustee Not Liable for Delivery Delays or Defects in
Equipment or Title. The Trustee shall not be liable to anyone for any delay in
the delivery of any of the Trust Equipment, or for any default on the part of
the manufacturers thereof or of the Company, or for any defect in any of the
Trust Equipment or in the title thereto, nor shall anything herein be construed
as a warranty on the part of the Trustee in respect thereof or as a
representation on the part of the Trustee in respect of the value thereof or in
respect of the title thereto or otherwise.
The Trustee may perform its powers and duties with respect to the
delivery and acceptance of the Trust Equipment by or through such attorneys,
agents and servants as it shall appoint, and shall be answerable only for its
own acts, negligence and willful defaults and not
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for the default or misconduct of any attorney, agent or servant appointed by it
in respect thereof with reasonable care.
The Trustee shall be entitled to receive payment of all of its
reasonable expenses and disbursements hereunder, including reasonable counsel
fees, and to receive reasonable compensation for all services rendered by it in
the execution of the trust hereby created, all of which shall be paid by the
Company.
The Trustee in its individual capacity may own, hold and dispose of
Trust Certificates.
Any moneys at any time held by the Trustee or any paying agent
hereunder shall until paid out or invested by the Trustee or any paying agent
as herein provided, be held by it in trust as herein provided for the benefit
of the holders of the Trust Certificates.
SECTION 8.06. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee may resign and be discharged of the trust created by
this Agreement by giving 30 days' written notice to the Company and such
resignation shall take effect upon the earlier of 30 days after the delivery
thereof to the Company or receipt by the Trustee of an instrument of acceptance
executed by a successor trustee as hereinafter provided in Section 8.07.
(b) The Trustee may be removed at any time by an instrument in
writing signed by the holders of more than 50% in principal amount of the Trust
Certificates then outstanding, delivered to the Trustee and to the Company.
(c) If at any time the Trustee shall resign or be removed or
otherwise become incapable of acting or, if at any time a vacancy shall occur
in the office of the Trustee for any other cause, a successor trustee may be
appointed by the holders of more than 50% of the aggregate principal amount of
the then outstanding Trust Certificates by an instrument in writing delivered
to the Company and the Trustee. Until a successor trustee shall be appointed
by the holders of Trust Certificates as herein authorized, the Company by an
instrument in writing executed by order of its Board of Directors shall appoint
a trustee to fill such vacancy. A successor trustee so appointed by the
Company shall immediately and without further act be superseded by a successor
trustee appointed by the holders of Trust Certificates in the manner provided
above. Every successor trustee appointed pursuant to this Section shall be a
national bank, or a bank or trust company organized and doing business under
the laws of the United States of America, any State or Territory thereof or of
the District of Columbia, and having capital and surplus of not less than
$250,000,000, if there be such an institution willing, qualified and able to
accept the trust upon reasonable or customary terms.
(d) The Company shall give notice of each resignation, removal or
incapacity of the then Trustee or of a vacancy occurring in the office of the
Trustee for any other cause and of each appointment by the Company of a
successor trustee pursuant to paragraph (c) of this Section by mailing written
notice of such event by first-class mail, postage prepaid, to the holders of
all outstanding Trust Certificates.
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SECTION 8.07. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 8.06 shall execute,
acknowledge and deliver to the Company and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless,
on the written request of the Company or of the successor trustee, upon payment
of its charges then unpaid, the trustee ceasing to act shall execute and
deliver an instrument transferring to such successor trustee all the rights and
powers of the trustee so ceasing to act. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all
such rights and powers. Any trustee ceasing to act shall, nevertheless, retain
a lien upon all property or funds held or collected by such trustee to secure
any amounts then due it pursuant to the provisions of Section 8.05.
SECTION 8.08. Merger or Consolidation of Trustee. Any corporation
qualified under the provisions of Section 8.06 into which the Trustee may be
merged or with which it may be consolidated or any such corporation resulting
from any merger or consolidation to which the Trustee shall be a party or to
which all or substantially all the corporate trust business of the Trustee
shall be transferred shall be the successor of the Trustee hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.
SECTION 8.09. Return of Certain Moneys to Company. Notwithstanding
any provision of this Agreement, any moneys paid to the Trustee which are
applicable to the payment of the principal of or interest on any Trust
Certificates which remain unclaimed for two years after the day when such
moneys were due and payable shall then be repaid to the Company upon Request,
and the holders of such Trust Certificates shall thereafter be entitled to look
only to the Company for payment thereof and all liability of the Trustee with
respect to such moneys shall thereupon cease.
ARTICLE NINE
Miscellaneous
-------------
SECTION 9.01. Rights Confined to Parties and Holders. Nothing
expressed or implied herein shall be construed to confer upon any person, firm
or corporation, other than the parties hereto and the holders of the Trust
Certificates, any right, remedy or claim under or by reason of this Agreement
or of any term, agreement or condition herein, and all the terms, covenants and
conditions herein shall be for the sole and exclusive benefit of the parties
hereto and their successors and of the holders of the Trust Certificates.
-35-
<PAGE> 40
SECTION 9.02. No Recourse. No recourse under this Agreement, or
under the guaranty endorsed on any Trust Certificate, shall be had against any
person, solely by reason of the fact that he is a stockholder, officer or
director of the Company, as such, by the enforcement of any assessment or by
any legal or equitable proceeding, by virtue of any statute or otherwise; it
being expressly agreed that this Agreement and said guaranty are solely
corporate obligations, and that no personal liability whatever shall attach to
or be incurred by any person, solely by reason of the fact that he is a
stockholder, officer or director of the Company, under or by reason of any of
the terms, agreements or conditions contained in this Agreement or in said
guarantee, or implied therefrom, and that any and all such personal liability,
either at common law or in equity, or by statute or constitution, is hereby
expressly waived as a condition of and consideration for the execution of this
Agreement and said guarantee.
SECTION 9.03. Binding Upon Assigns. Except as otherwise provided
herein, the provisions of this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 9.04. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been received by the
addressee on the date of actual receipt (if such date is a Business Day,
otherwise on the next Business Day), if transmitted by mail, telex, telecopy
(confirmed by hard copy) or similar transmission, or by hand, addressed as
follows: (a) in the case of the Company, 225 West Washington Street, Chicago,
Illinois 60606, facsimile: (312) 845-5305 marked to the attention of its
Treasurer, or such other address as may hereafter be furnished to the Trustee
in writing by the Company, (b) in the case of the Trustee, the address set
forth in the definition of Corporate Trust Office in Section 1.01 or such other
address as may hereafter be furnished to the Company in writing by the Trustee,
facsimile: ______________, and (c) in the case of any holder of Trust
Certificates, at its address shown on the registry books maintained by the
Trustee or at such other address as such holder may from time to time furnish
to the Trustee for such purpose. An affidavit by any person representing or
acting on behalf of the Company or the Trustee, as to such mailing, having the
registry receipt attached, shall be conclusive evidence of the giving of such
demand, notice or communication.
SECTION 9.05. Effect of Headings: Date Executed; and Governing Law.
(a) The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
(b) This Agreement shall be deemed to have been executed on the
date of the acknowledgment thereof by the officer of the Trustee who signed it
on behalf of the Trustee.
(c) This Agreement shall be governed by the laws of the State of
___________.
SECTION 9.06. Legal Holidays. In any case where any date for
payment of interest, date for payment of rental or date of maturity of any
installment of principal on the
-36-
<PAGE> 41
Trust Certificates shall not be a Business Day, then, notwithstanding any other
provision of this Agreement or the Trust Certificates, payment need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date for payment of interest, date for
payment of rental or date of maturity of any installment of principal on the
Trust Certificates, and if payment is made on such next succeeding Business Day
no interest shall accrue on the amount of such payment for the period from and
after such date for payment of interest, or for payment of rental or date of
maturity of any installment of principal on the Trust Certificates, as the case
may be, to and including such next succeeding Business Day.
SECTION 9.07. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
-37-
<PAGE> 42
IN WITNESS WHEREOF, the Company and the Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized and their respective corporate seals, duly attested, to be hereunto
affixed on the day and year first above written.
_______________________________________
Trustee
By________________________________________
Title:
Attest:
____________________________________
Authorized Officer
UNION TANK CAR COMPANY
By_________________________________________
Title:
Attest:
__________________________________
Secretary
-38-
<PAGE> 43
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this, _____ day of May, 1996, before me personally appeared
________________, to me personally known, who, being by me duly sworn, says
that such person is ____________________ of _________________________, and that
said instrument was signed on behalf of said bank by authority of its Board of
Directors and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said bank.
_________________________________________
Notary Public
[Notarial Seal]
My Commission expires ________
-39-
<PAGE> 44
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this _____ day of May, 1996, before me personally appeared
_______________, to me personally known, who, being by me duly sworn, says that
he is __________________ of UNION TANK CAR COMPANY, and that said instrument
was signed on behalf of said corporation by authority of its Board of Directors
and he acknowledged that the execution of the foregoing instrument was the free
act and deed of said corporation.
_____________________________________
Notary Public
[Notarial Seal]
My Commission expires ________________
-40-
<PAGE> 1
Exhibit 4(c)(3)
================================================================================
PROCOR LIMITED
EQUIPMENT TRUST
SERIES 26-CAN
______________________________
EQUIPMENT TRUST AGREEMENT
Dated May __, 1996
Between
__________________________________,
Trustee,
and
PROCOR LIMITED
______________________________
================================================================================
Filed with the Surface Transportation Board of the Department of
Transportation pursuant to __ U.S.C. Section _____ on May __, 1996, at [_______
A.M./P.M.], recordation number __________, and deposited in the Office of the
Registrar General of Canada pursuant to Section 90 of the Railway Act (Canada)
on May __, 1996, at [_______ A.M./P.M.].
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE TWO Trust Certificates and Issuance;
Interests Represented and Maturity . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.01. Issuance of Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.02. Interests Represented by Trust
Certificates; Interest
Payments; Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.03. Form, Execution and Characteristics of
Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.04. Replacement of Lost Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE THREE Acquisition of Trust Equipment by Trustee;
Deposited Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.01. Acquisition of Equipment by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.02. Payment of Deposited Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.03. Payment of Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.04. Supporting Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE FOUR Conditional Sale of Trust Equipment to the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.01. Conditional Sale of Trust Equipment to
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.02. Equipment Automatically Subjected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.03. Additional and Substituted Equipment
Subject Hereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.04. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.05. Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.06. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.07. Substitution and Replacement of Trust
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.08. Maintenance of Trust Equipment; Casualty
Occurrences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.09. Possession of Trust Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.10. Marking of Trust Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
__________________________________
* This Table of Contents has been included in the document for
convenience only and does not form a part of, or affect any construction or
interpretation of, this document.
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE FIVE Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.03. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.04. Waivers of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.05. Obligations of Company Not Affected by
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.06. Company To Deliver Trust Equipment to
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.07. Trustee To Give Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.08. Control by Holders of Trust
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.09. Limitations on Suits by Holders of Trust
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.10. Unconditional Right of Holders of Trust
Certificates To Sue for Principal and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.11. Remedies Cumulative; Subject to Mandatory
Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE SIX Additional Agreements by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.01. Guarantee of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.02. Discharge of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.03. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.04. Payment of Expenses; Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE SEVEN Concerning the Holders of Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.01. Evidence of Action Taken by Holders of
Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.02. Proof of Execution of Instruments and of
Holding of Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.03. Trust Certificates Owned by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.04. Right of Revocation of Action Taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.05. Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE EIGHT The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.01. Acceptance of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.02. Duties and Responsibilities of the
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.03. Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.04. Funds May be Held by Trustee;
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.05. Trustee Not Liable for Delivery Delays or
Defects in Equipment or Title . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
SECTION 8.06. Resignation and Removal; Appointment of
Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.07. Acceptance of Appointment by Successor
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.08. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.09. Return of Certain Moneys to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE NINE Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.01. Rights Confined to Parties and Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.02. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.03. Binding Upon Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.05. Effect of Headings; Date Executed; and
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.06. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.07. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SCHEDULE I - List of Equipment
</TABLE>
<PAGE> 5
EQUIPMENT TRUST AGREEMENT dated May __, 1996, between
___________________________________________________, solely in its capacity as
Trustee, a national banking association organized and existing under the laws
of the United States of America (the "Trustee"), and PROCOR LIMITED, a Canadian
corporation (the "Company").
WHEREAS Procor Limited Equipment Trust Certificates, Series 26-Can
(the "Trust Certificates"), are to be issued and sold at a price not less than
their principal amount, in an aggregate principal amount not exceeding U.S.
$__________; and
WHEREAS the proceeds of the sale of the Trust Certificates together
with such other cash, if any, as may be required to be deposited by the Company
as hereinafter provided are to constitute a fund, to be known as Procor Limited
Equipment Trust, Series 26-Can, to be applied by the Trustee from time to time
in part payment of the Cost (as hereinafter defined) of the Trust Equipment (as
hereinafter defined), the remainder of the Cost thereof to be paid out of
moneys to be deposited by the Company as provided herein; and
WHEREAS such Trust Equipment will be resold, retransferred and
redelivered to the Company with title to, and a security interest in, such
Trust Equipment to be retained by the Trustee; and
WHEREAS the Company's due and punctual performance of its obligations
hereunder has been unconditionally guaranteed by Union Tank Car Company, a
Delaware corporation and indirect parent of the Company ("Union"), pursuant to
Section 12.1 of that certain Pass Through Trust Agreement 1996-A2, dated the
date hereof, among Union, the Company and _________________________________,
as Pass Through Trustee; and
WHEREAS the texts of the Trust Certificates (including the grid for
endorsement of principal payments thereon) and the guarantee to be endorsed on
the Trust Certificates by the Company is to be substantially in the following
form:
- 1 -
<PAGE> 6
[Form of Trust Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
OF THE UNITED STATES OF AMERICA
No. R-______________ $_____________
PROCOR LIMITED
Equipment Trust Certificate, Series 26-Can
Total Authorized Issue U.S. $
___________________________________
Trustee
____________________________________, as Trustee under an Equipment
Trust Agreement (the "Agreement") dated May __, 1996, between
____________________________________________________, as Trustee (the
"Trustee"), and Procor Limited, a Canadian corporation (the "Company"), hereby
certifies that
or registered assigns is entitled to an interest in the principal amount of
United States of America Dollars (U.S.$ ) in Procor Limited
Equipment Trust, Series 26-Can, due and payable on or before _________, 200_,
and to interest on the amount of unpaid principal from time to time due and
owing pursuant to this Trust Certificate from the date hereof at the rate of
____% per annum (and, if applicable, the additional amounts that may become
payable under Section 4.04 of the Agreement). Interest on this Trust
Certificate shall be calculated on the basis of a 360-day year of twelve 30-day
months.
This Trust Certificate shall be payable as follows (unless payment
hereof is accelerated pursuant to Article Five of the Agreement): the
outstanding principal amount hereof shall be paid on _________, 200_ and
interest payments on the outstanding principal shall be made in __ consecutive
semiannual installments on _________ and _________ in each year commencing
_________, 199[6]. Interest on any overdue installment of interest and on any
overdue payment of principal, to the extent legally enforceable, shall be
payable at the rate per annum of 1% over the rate specified above. Payments of
principal and interest shall be made by the Trustee to the registered holder
hereof at the corporate trust office of the Trustee in _______, ________, in
such coin or currency of the United States of America as, at the time of
payment, shall be legal tender for the payment of public and private debts.
Each of such payments shall be made only from and solely out of moneys received
by the Trustee and applicable to such payment under the provisions of the
Agreement.
This Trust Certificate is one of an authorized issue of Trust
Certificates in an aggregate principal amount not exceeding the Total
Authorized Issue set forth above, issued under the
- 2 -
<PAGE> 7
Agreement, pursuant to which title to, and a security interest in, certain
railroad equipment (or cash or obligations defined in the Agreement as
"Investments" in lieu thereof, as provided in the Agreement) is held by the
Trustee in trust for the equal and ratable benefit of the registered holders of
the Trust Certificates issued thereunder. Reference is made to the Agreement
(a copy of which is on file with the Trustee at its corporate trust office) for
a more complete statement of the terms and provisions thereof, to all of which
the registered holder hereof, by accepting this Trust Certificate, assents.
This Trust Certificate is transferable in whole or in part by the
registered holder hereof in person or by its duly authorized attorney upon
presentment hereof for registration of transfer to the Trustee at its said
office accompanied by an appropriate instrument of assignment and transfer,
duly executed by the registered holder in person or by such attorney, in form
satisfactory to the Trustee, and thereupon a new fully registered Trust
Certificate or Certificates of the same maturity in authorized denominations
for the then aggregate unpaid principal amount hereof will be issued in the
name of such person or persons as may be designated by such holder. Prior to
due presentment for registration of transfer, the Trustee and the Company may
deem and treat the person in whose name this Trust Certificate is registered as
the absolute owner hereof for the purpose of receiving payment of principal and
interest and for all other purposes and shall not be affected by any notice to
the contrary.
In case of the happening of an Event of Default (as defined in the
Agreement) the principal amount represented by this Trust Certificate may
become or be declared due and payable in the manner and with the effect
provided in the Agreement.
The due and punctual performance of the Company's obligations under
the Agreement has been guaranteed by Union Tank Car Company, a Delaware
corporation and parent of the Company.
This Trust Certificate shall not be deemed a promise to pay of
________________________________________________ __ in its individual capacity
and payment by ___________________________________________________________
shall be made as Trustee only from and solely out of moneys received by Trustee
and applicable to such payment under the provisions of the Agreement.
- 3 -
<PAGE> 8
IN WITNESS WHEREOF, the Trustee has caused this Trust Certificate to
be signed by one of its duly authorized officers, by his/her signature or a
facsimile thereof, and its corporate seal or a facsimile thereof to be hereunto
affixed or imprinted hereon and to be attested by one of its duly authorized
officers, by his/her signature. Neither this Trust Certificate nor the
guarantee endorsed hereon shall be valid or enforceable for any purpose until
this Trust Certificate shall have been so signed by a duly authorized officer
and the corporate seal so attested by such duly authorized officer.
Dated May __, 1996
_______________________________________,
as Trustee
By______________________________________
Authorized Officer
[Corporate Seal]
Attest:
__________________________________________
Authorized Officer
- 4 -
<PAGE> 9
PROCOR LIMITED, for valuable consideration, hereby unconditionally and
irrevocably guarantees to the registered holder of the within Trust Certificate
the prompt payment when due of the principal of said Trust Certificate and the
interest thereon specified in said Trust Certificate, with interest on any
overdue principal and on any overdue interest, to the extent legally
enforceable, at the rate specified in said Trust Certificate, all in accordance
with the terms of said Trust Certificate and the Equipment Trust Agreement
referred to therein.
PROCOR LIMITED
By______________________________________
Title:
By______________________________________
Title:
- 5 -
<PAGE> 10
WHEREAS it is desired to secure to the holders of the Trust
Certificates the payment of the principal thereof when due, whether by
declaration or otherwise, and interest thereon as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties hereto hereby agree as follows:
ARTICLE ONE
Definitions
SECTION 1.01. Definitions. The following terms (except as
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Agreement shall have the respective meanings hereinafter
specified:
Affiliate of any corporation shall mean any corporation which,
directly or indirectly, controls or is controlled by, or is under
common control with, such corporation. For the purposes of this
definition, control (including controlled by and under common control
with), as used with respect to any corporation, shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such corporation,
whether through the ownership of voting securities or by contract or
otherwise.
Business Day shall mean any day, other than a Saturday or
Sunday or a day on which commercial banking institutions or trust
companies are authorized or required by law, regulation or executive
order to be closed in New York, New York or Chicago, Illinois or
Toronto, Ontario, Canada or, so long as any Trust Certificate is
outstanding, a city and state in which the Corporate Trust Office of
the Trustee is located.
Company shall mean Procor Limited, a Canadian corporation
(whose chief place of business and chief executive office is currently
located at 2001 Speers Road, Oakville, Ontario, Canada L6J 5E1), and
any successor or successors to it complying with the provisions of
Section 4.09.
Corporate Trust Office shall mean the office of the Trustee,
at which the corporate trust business of the Trustee relating to this
transaction shall, at the time in question, be administered, which
office is, on the date of execution of this Agreement, located at
__________________________________________________________________,
Attention: ____________________________________________.
Cost, when used in respect of Equipment not built by the
Company or any Affiliate of the Company, shall mean the actual cost
thereof to the Company and, in respect of Equipment built by the
Company or any such Affiliate, shall mean an amount
- 6 -
<PAGE> 11
not in excess of "car builder's cost", including direct cost of labor,
material and overhead but excluding any manufacturing profit.
Default shall mean
(1) any Event of Default; and
(2) any event which, with the giving of notice or the
passage of time or both, could constitute an Event of Default.
The Company shall be considered to "be in Default" if a Default
shall have occurred and be continuing.
Deposited Cash shall mean the aggregate of (a) the proceeds
from the sale of the Trust Certificates deposited with the Trustee
pursuant to Section 2.01 and, when required or indicated by the
context, any Investments purchased by the use of such proceeds
pursuant to the provisions of Section 8.04, and (b) any sums restored
to Deposited Cash from payments made by the Company pursuant to
Section 4.04(B)(l)(b) and on deposit with the Trustee.
Engineer's Certificate shall mean a certificate signed by a
person appointed by the Company who shall be an engineer, appraiser or
other expert, as the case may require. Such person may be an officer
or employee of the Company except where this Agreement specifically
requires the signature of an independent engineer, appraiser or other
expert.
Equipment shall mean standard-gauge railroad tank cars and
hopper cars, which tank cars and hopper cars are rolling stock used or
intended for use in connection with interstate commerce and which were
first put into use on or after __________, 199_; provided, however,
that in the case of Equipment sold to the Trustee pursuant to Section
4.07, it shall not include any railroad equipment first put into use
prior to ___________, 199_.
Event of Default shall mean any event specified in Section 5.01
to be an Event of Default.
The word "holder", when used with respect to Trust
Certificates, shall include the plural as well as the singular number.
Independent Engineer shall mean an engineer, appraiser or
other expert appointed by the Company and approved by the Trustee in
the exercise of reasonable care, who (a) is in fact independent, (b)
does not have any substantial interest, direct or indirect, in the
Company or in any other obligor on the Trust Certificates or in any
Affiliate of the Company or any such other obligor and (c) is not
connected with the Company or any
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<PAGE> 12
other obligor on the Trust Certificates or any Affiliate of the
Company or any such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
Investments shall mean (a) bonds, notes or other direct
obligations of the United States of America or obligations for which
the full faith and credit of the United States is pledged to provide
for the payment of the interest and principal and which mature within
one year of the date of purchase, (b) open market commercial paper of
any company incorporated and doing business under the laws of the
United States of America or one of the States thereof which mature
within one year of the date of purchase and which have a rating of
"A-1" by Standard & Poor's Corporation or "prime-1" or better by
NCO/Moody's Commercial Paper Division of Moody's Investors Service,
Inc. or an equivalent rating by a successor thereto or a similar
nationally recognized rating service substituted therefor, (c)
certificates of deposit or time deposits in banks or trust companies,
including the Trustee, incorporated and doing business under the laws
of the United States of America or one of the States thereof having
capital and surplus aggregating at least $250,000,000 and (d) The
First National Bank of Chicago Corporate Trust Short Term Investment
Fund, so long as the shares of such fund are rated by Standard &
Poor's Ratings Group and Moody's Investors Service, Inc. in one of the
two highest rating categories (without regard to any refinement or
gradation of rating category by numerical modifier or otherwise)
assigned by Standard & Poor's Ratings Group and Moody's Investors
Service, Inc. for obligations of that nature.
Officers' Certificate shall mean a certificate signed by the
Chairman of the Board, or the President or any Vice President and by
the Treasurer or any Assistant Treasurer or the Secretary or any
Assistant Secretary of the Company, which officer is in a position to
know the truth and accuracy thereof.
Opinion of Counsel shall mean an opinion in writing signed by
legal counsel who shall be acceptable to the Trustee and who may,
unless in a particular instance the Trustee shall otherwise require,
be an employee of or counsel to the Company. The acceptance by the
Trustee of, and its action on, an Opinion of Counsel shall be
sufficient evidence that such counsel is satisfactory to the Trustee.
Owner shall mean the manufacturer or other person transferring
title to any of the Equipment to the Trustee.
Pass Through Trust Agreement shall mean the Pass Through Trust
Agreement 1996-A2, dated May __, 1996, among Union, the Company and
_________________________________________________, as Pass Through
Trustee.
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<PAGE> 13
Pass Through Trustee shall mean________________________, as
Pass Through Trustee under the Pass Through Trust Agreement or the
successor thereto pursuant to the terms of the Pass Through Trust
Agreement.
Penalty Rate shall mean 1% per annum over the rate specified in
the Trust Certificates.
Request shall mean a written request for the action therein
specified, delivered to the Trustee, dated not more than 10 days prior
to the date of delivery to the Trustee and signed on behalf of the
Company by the Chairman of the Board, the President, a Vice President
or the Treasurer of the Company.
Trust Certificates shall mean the Equipment Trust Certificates
issued hereunder.
Trust Equipment shall mean all Equipment at the time subject to
the terms of this Agreement.
Trustee shall mean ________________________________________,
solely in its capacity as Trustee and, subject to the provisions of
Article Eight, any successor as trustee hereunder.
Union shall mean Union Tank Car Company, a Delaware
corporation (whose chief place of business and chief executive office
currently is located at 225 West Washington Street, Chicago, Illinois
60606), and any successor or successors to it complying with the
provisions of Section 6.01.
Value, as used herein, shall mean an amount determined as
follows:
(1) the Value of any unit of Trust Equipment
assigned or transferred by the Trustee as provided in Section
4.07, and as used in Sections 5.01 and 6.05 in respect of
Trust Equipment, shall be deemed to be the greater of (a) the
fair market value thereof and (b) the Cost thereof (as
theretofore certified to the Trustee) less 1/20 of such Cost
for each full year elapsed between the date such unit was
first put into use (as theretofore so certified) and the date
as of which Value is to be determined;
(2) the Value of any unit of Equipment conveyed
to the Trustee as provided in Article Three and in Section
4.07 shall be deemed to be the lesser of (a) the fair market
value thereof and (b) the Cost of such unit or, in the case of
any unit of Equipment not new, the Cost thereof, less 1/20 of
such Cost for each full year elapsed between the date such
unit was first put into use and the date of the transfer
thereof to the Trustee;
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<PAGE> 14
(3) the Value of any Unit of Equipment as used in
Section 4.08 shall be deemed to be the cost thereof less
1/20th of such Cost for each full year elapsed between the
date such Unit was first put into use and the date as of which
Value is to be determined; and
(4) for the purpose of determining Value, if the
Cost of any such Unit was originally denominated in Canadian
Dollars, such Cost shall be converted into U.S. Dollars at the
official exchange rate in effect On the date of any such
assignment, transfer or conveyance.
The words herein, hereof, hereby, hereto, hereunder and words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, paragraph or subdivision hereof.
ARTICLE TWO
Trust Certificates and Issuance;
Interests Represented and Maturity
SECTION 2.01. Issuance of Trust Certificates. Upon the sale from
time to time of any of the Trust Certificates, an amount equal to the principal
amount of the Trust Certificates so sold shall, forthwith upon the issuance
thereof, be deposited in cash with the Trustee.
Thereupon without waiting for the recording or filing of this
Agreement or of any other instrument respecting the Trust Equipment, the
Trustee shall issue and deliver, as the Company shall direct by Request, Trust
Certificates in the aggregate principal amount so sold.
The aggregate principal amount of Trust Certificates which shall be
executed and delivered by the Trustee under this Section shall not exceed the
Total Authorized Issue specified in the form of Trust Certificate, and the
aggregate principal amount represented by all the Trust Certificates shall be
payable as hereinafter set forth.
SECTION 2.02. Interests Represented by Trust Certificates; Interest
Payments; Maturity; No Redemption. Each of the Trust Certificates shall
represent an interest in the principal amount therein specified in the trust
created hereunder. The Trust Certificates shall bear interest at ____% per
annum and shall be payable as follows (unless payment thereof is accelerated
pursuant to Article Five of this Agreement): the outstanding principal amount
thereof shall be paid on _________, 200_, and interest payments on the
outstanding principal shall be paid in 20 consecutive semiannual installments
on _________ and __________ in each year commencing _________, 199[6]. The
Trust Certificates are not redeemable prior to maturity. Interest on the Trust
Certificates shall accrue from the date of original issue and shall be
calculated on the basis of a 360-day year of twelve 30-day months. Interest
shall be payable on overdue installments of interest and on any overdue payment
of principal, to the extent legally enforceable, at the Penalty Rate.
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<PAGE> 15
Payment of the principal of and interest on the Trust Certificates
shall be made by the Trustee at the Corporate Trust Office in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, but only from and
solely out of moneys received by the Trustee and applicable to such payment
under the provisions of this Agreement.
In the event Union makes any payment attributable to the principal of
or accrued interest on the Trust Certificates to the person entitled thereto
pursuant to the Union guarantee contained in Article XII of the Pass Through
Trust Agreement (and endorsed on the Pass Through Trust Certificates issued
thereunder), each such payment shall have the same effect as if such payment
was made by the Company on the Trust Certificates, thereby reducing on a dollar
for dollar basis the outstanding principal amount of or accrued interest on the
Trust Certificates to the same extent as payment of principal of or accrued
interest on was made under said guarantee. Solely for the purposes of this
paragraph, payments under said guarantee shall be applied, first, against
accrued and unpaid interest and, second, to outstanding principal.
SECTION 2.03. Form, Execution and Characteristics of Trust
Certificates. (a) The Trust Certificates and the guarantee to be endorsed on
the Trust Certificates by the Company as provided in Section 6.01 shall be in
substantially the forms hereinbefore set forth.
(b) The Trust Certificates shall be signed in the name and on
behalf of the Trustee by the manual or facsimile signature of one of its duly
authorized officers and its corporate seal or a facsimile thereof shall be
affixed or imprinted thereon and attested by the manual signature of one of its
duly authorized officers. In case any officer of the Company or the Trustee
whose signature, whether facsimile or not, shall appear on any of the Trust
Certificates shall cease to be such officer of the Company or the Trustee
before the Trust Certificates shall have been issued and delivered by the
Trustee or shall not have been acting in such capacity on the date of the Trust
Certificates, such Trust Certificates may be adopted by the Company or the
Trustee and be issued and delivered as though such person had not ceased to be
or had then been such officer of the Company or the Trustee.
(c) The Trust Certificates (i) shall be issuable in denominations
of U.S. $1,000 or any multiple thereof; (ii) shall be registered, as to both
principal and interest, in the name of the holders; (iii) shall be transferable
in whole or in part upon presentation and surrender thereof for transfer at the
Corporate Trust Office, accompanied by appropriate instruments of assignment
and transfer, duly executed by the registered holder of the surrendered Trust
Certificate or Certificates or by duly authorized attorney, in form
satisfactory to the Trustee; (iv) shall be dated as of the date of issue unless
issued in exchange for another Trust Certificate or Certificates bearing unpaid
interest from an earlier date, in which case they shall be dated as of such
earlier date; (v) shall entitle the registered holder to interest from the date
thereof; and (vi) shall be exchangeable for an equal aggregate principal amount
of Trust Certificates of authorized denominations of like tenor and maturity
equal to the then unpaid principal amount of Trust Certificates being
exchanged.
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<PAGE> 16
(d) Anything contained herein to the contrary notwithstanding,
prior to due presentment for registration of transfer, the parties hereto may
deem and treat the registered holder of any Trust Certificates as the absolute
owner of such Trust Certificates for all purposes and shall not be affected by
any notice to the contrary.
(e) The Trustee shall cause to be kept at the Corporate Trust
Office books for the registration of transfer of the Trust Certificates and,
upon presentation of the Trust Certificates for such purpose, the Trustee shall
register any transfer as hereinabove provided, and under such reasonable
regulations as it may prescribe.
(f) For any registration, transfer or exchange, the Trustee shall
require the payment of a sum sufficient to reimburse it for any governmental
charge connected therewith.
(g) Each Trust Certificate delivered pursuant to any provision of
this Agreement in exchange or substitution for, or upon the transfer of the
whole or any part, as the case may be, of one or more other Trust Certificates
shall carry all the rights to principal and to interest accrued and unpaid and
to accrue, which were carried by the whole or such part, as the case may be, of
such one or more other Trust Certificates, and, notwithstanding anything
contained in this Agreement, such Trust Certificate shall be so dated that
neither gain nor loss in interest or principal shall result from such exchange,
substitution or transfer and a notation of all previous principal payments
shall be endorsed on the reverse side thereof.
(h) The Trustee shall not be required to issue, transfer or
exchange Trust Certificates for a period of 10 days next preceding any interest
payment date.
SECTION 2.04. Replacement of Lost Trust Certificates. In case any
Trust Certificate shall become mutilated or defaced or be lost, destroyed or
stolen, then on the terms herein set forth, and not otherwise, the Trustee
shall execute and deliver a new Trust Certificate in the then unpaid principal
amount of the predecessor Trust Certificate and bearing such identifying number
or designation as the Trustee may determine, in exchange and substitution for,
and upon cancellation of, the mutilated or defaced Trust Certificate, or in
lieu of and in substitution for the same if lost, destroyed or stolen. The
Company shall execute its guarantee on any Trust Certificates to be so
delivered. The applicant for a new Trust Certificate pursuant to this Section
shall furnish to the Trustee and the Company evidence to their satisfaction of
the loss, destruction or theft of such Trust Certificate alleged to have been
lost, destroyed or stolen and of the ownership and authenticity of such
mutilated, defaced, lost, destroyed or stolen Trust Certificate, and also shall
furnish such security or indemnity as may be required by the Trustee and the
Company in their discretion, and shall pay all expenses and charges of such
substitution or exchange. In the case of each of the original purchasers of
Trust Certificates or any institutional investor transferee, a letter of
indemnity in form reasonably satisfactory to the Trustee and the Company from
such purchaser shall be sufficient security and indemnity. All Trust
Certificates are held and owned upon the express condition that the foregoing
provisions are exclusive in respect of the replacement of mutilated, defaced,
lost, destroyed or stolen Trust
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<PAGE> 17
Certificates and shall preclude any and all other rights and remedies, any law
or statute now existing or hereafter enacted to the contrary notwithstanding.
ARTICLE THREE
Acquisition of Trust Equipment by Trustee;
Deposited Cash
SECTION 3.01. Acquisition of Equipment by Trustee. The Company
shall cause to be sold to the Trustee, as trustee for the holders of the Trust
Certificates, all of the Equipment described in Schedule I hereto; provided,
however, that if the aggregate Cost of the Trust Equipment delivered to the
Trustee or its agent or agents pursuant to this Article Three, as specified in
the Officers' Certificate theretofore delivered to the Trustee pursuant to
Section 3.04, shall exceed 133-1/3% of the aggregate principal amount of Trust
Certificates issued under Section 2.01, upon Request the Trustee shall execute
and deliver to the Company a supplement hereto excluding from this Agreement
Equipment having a Cost in excess of such amount so that the aggregate Cost of
the Trust Equipment shall not exceed 133-1/3% of the aggregate principal amount
of the Trust Certificates issued pursuant to Section 2.01. The Trust Equipment
sold to the Trustee shall be delivered to the person or persons designated by
the Trustee as its agent or agents to accept such delivery (who may be one or
more of the officers or agents of the Company) and the certificate of any such
agent or agents as to such delivery and acceptance shall be conclusive evidence
of such delivery.
In the event that the Company shall deem it necessary or desirable to
procure for the use of the Company, and to include in the trust hereby created,
other Equipment in lieu of any units of the Equipment specifically described in
Schedule I hereto prior to the acceptance of such Equipment by the Trustee or
its agent or agents, or in the event that any unit of the Equipment described
in Schedule I hereto shall suffer a Casualty Occurrence as defined in Section
4.08, prior to such acceptance, the Company may cause to be sold to the Trustee
other Equipment, to be substituted under the trust.
If the aggregate Cost, as specified in the Officers' Certificate
theretofore delivered to the Trustee pursuant to Section 3.04, of the Trust
Equipment delivered to the Trustee or its agent or agents pursuant to this
Article Three shall be less than 133-1/3% of the principal amount of the Trust
Certificates issued pursuant to Section 2.01, the Company will cause to be sold
to the Trustee additional Equipment in such amount and of such Cost that such
aggregate final Cost of the Trust Equipment will be at least 133-1/3% of the
principal amount of the Trust Certificates issued pursuant to Section 2.01.
SECTION 3.02. Payment of Deposited Cash. From time to time, when
and as any Equipment shall have been accepted by the Trustee or its agent or
agents pursuant to Section 3.01, the Trustee shall (subject to the provisions
of Sections 3.03 and 3.04) pay, upon Request, to the Owner of the accepted
Equipment out of Deposited Cash an amount not exceeding 75%
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<PAGE> 18
of the aggregate Cost of such Trust Equipment, as specified in the Officers'
Certificate furnished to the Trustee pursuant to Section 3.04(b).
SECTION 3.03. Payment of Deficiency. The Company covenants that,
contemporaneously with any payment by the Trustee pursuant to Section 3.02, it
will either (a) pay to the Trustee the amounts provided in Section 4.04(A), and
thereupon the Trustee shall, upon Request, pay to the Owner of the delivered
Trust Equipment, by the use of such amounts, the portion of the Cost of the
delivered Trust Equipment not paid out of Deposited Cash as provided for in
Section 3.02 or (b) deliver to the Trustee an executed counterpart of a receipt
from such Owner evidencing the direct payment by the Company to such Owner of
that portion of the Cost of such Trust Equipment equal to the amounts required
to be paid to the Trustee pursuant to clause (a) of this sentence in respect of
such Trust Equipment or, if the Company is the Owner of the delivered Trust
Equipment, a statement to such effect; the intention being that the Company
shall ultimately pay not less than 25% of the Cost of all the Trust Equipment
delivered to the Trustee pursuant to this Article Three, and the Trustee and
the Company shall at any time, if occasion arises, adjust their accounts and
payments to the end that the Trustee shall pay with Deposited Cash not more
than 75% of the Cost, and the Company shall pay the remainder, to be not less
than 25% of such Cost.
SECTION 3.04. Supporting Papers. The Trustee shall not pay out any
Deposited Cash against the delivery of any of the Trust Equipment unless and
until it shall have received:
(a) a certificate of the agent or agents designated by
the Trustee to receive delivery of the Trust Equipment, stating that
the Trust Equipment described and specified therein by number or
numbers has been delivered to such agent or agents (the date of such
certificate to be presumed conclusively as the date of such delivery);
(b) an Officers' Certificate which shall state (i) that
such Trust Equipment is Equipment as herein defined, (ii) the date
each unit of such Trust Equipment was first put into use or that such
Trust Equipment was first put into use not earlier than a specified
date, (iii) that the Cost of such Trust Equipment is the amount
therein specified or is not less than the amount therein specified and
(iv) the Value to the Company, in the opinion of the signer, of such
Trust Equipment as of the date of the Section 3.02 Request and (v)
that in the opinion of the signers all conditions precedent provided
in this Agreement, relating to the payment in question, have been
complied with;
(c) (i) an invoice or invoices from the Owner of such
Trust Equipment, if other than the Company, and (ii) a bill or bills
of sale of such Trust Equipment from the Owner thereof to the Trustee,
which bill or bills of sale shall contain a warranty or guarantee to
the Trustee that the title to the Trust Equipment described therein is
free from all liens and encumbrances (except as permitted herein)
other than the rights of the Company hereunder; and
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<PAGE> 19
(d) an Opinion of Counsel to the effect (i) that such
bill or bills of sale are valid and effective, either alone or in
connection with any other instrument referred to in and accompanying
such opinion, to vest in the Trustee title to such Trust Equipment
free from all liens and encumbrances (except as permitted herein)
other than the rights of the Company hereunder, (ii) that in the case
of any Trust Equipment not specifically described herein, a proper
supplement hereto in respect of such Trust Equipment has been duly
executed by the Trustee and the Company and filed and recorded in
accordance with Section 6.05 and (iii) that, the opinion of such
counsel, all conditions precedent provided for in this Agreement
relating to the payment in question have been complied with.
Any Officers' Certificate delivered pursuant to this Section may state
that the Cost of the Trust Equipment therein referred to is tentatively
determined, subject to final adjustment to be evidenced in a final Officers'
Certificate to be delivered to the Trustee.
ARTICLE FOUR
Conditional Sale of Trust Equipment to the Company
SECTION 4.01. Conditional Sale of Trust Equipment to the Company.
The Trustee does hereby conditionally sell to the Company all the Trust
Equipment from and after the date such Trust Equipment is acquired by the
Trustee hereunder.
SECTION 4.02. Equipment Automatically Subjected. As and when any
Equipment shall from time to time be transferred to the Trustee hereunder, the
same shall, ipso facto and without further instrument of transfer, become
subject to all the terms and provisions hereof.
SECTION 4.03. Additional and Substituted Equipment Subject Hereto.
In the event that the Company shall, as provided in Section 3.01 or 4.07, cause
to be transferred to the Trustee other Equipment in addition to or in
substitution for any of the Equipment herein specifically described or
subjected hereto, such other Equipment shall be included as part of the Trust
Equipment by supplement hereto to be executed by the Trustee and the Company
and shall be subject to all the terms and conditions hereof in all respects as
though it had been part of the Equipment herein specifically described.
SECTION 4.04. Payments. The Company hereby covenants and agrees to
accept delivery and possession hereunder of the Trust Equipment; and the
Company covenants and agrees to pay to the Trustee at the Corporate Trust
Office (or, in the case of taxes, to the proper taxing authority), in such coin
or currency of the United States as at the time of payment shall be legal
tender for the payment of public and private debts, such amounts in respect of
the purchase of such Trust Equipment as shall be sufficient to pay and
discharge the following items, when and as the same shall become due and
payable (whether or not any of such items shall become due and payable prior to
the acceptance of delivery of any unit of the Trust Equipment).
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<PAGE> 20
(A) The Company shall pay to the Trustee, as hereinafter
provided, as advance conditional sale payments hereunder, sums which
in the aggregate shall be equal to the difference between the
aggregate Cost of the Trust Equipment (other than Trust Equipment
subjected hereto pursuant to Section 4.07) and the portion of such
Cost to be provided out of the proceeds (excluding accrued interest,
if any) of the sale of the Trust Certificates, the intention being
that, when all such Trust Equipment shall have been transferred to the
Trustee, the Company shall have paid or shall pay to the Trustee, as
advance conditional sale payments hereunder, a sum equal to the amount
by which the aggregate Cost of such Trust Equipment exceeds such
proceeds of the sale of the Trust Certificates. The Company agrees to
make such advance conditional sale payments as follows:
(1) at the time of issue of a Trust Certificate
pursuant to Section 2.01, a sum which, when added to the
proceeds of the sale of such Trust Certificate deposited with
or to the credit of the Trustee, will make the total sum
deposited equal to the principal amount of such Trust
Certificate; and
(2) Upon delivery of any such Trust Equipment, a
sum equal to the portion of the Cost of such delivered Trust
Equipment not paid out of Deposited Cash as provided for in
Section 3.02, but not less than 25% of such Cost.
(B) In addition to such amounts, the Company shall pay to
the Trustee, in cash (notwithstanding that any of the Trust
Certificates shall have been acquired by the Company or shall not have
been presented for payment), the following:
(1) from time to time upon demand of the Trustee,
(a) the reasonable expenses of the trust hereby created,
including, without limitation, reasonable compensation to the
Trustee and all expenses provided for herein, and (b) an
amount equal to any expenses incurred or loss of principal
(including interest accrued thereupon at time of purchase) in
connection with any purchase, sale or redemption by the
Trustee of Investments;
(2) from time to time upon demand of the Trustee,
any and all taxes, assessments, and governmental charges which
the Trustee as such may be required to pay, including, without
limitation, all taxes, assessments and governmental charges
upon or on account of the income or property of the Trust, or
upon or on account of this Agreement;
(3) (a) the amounts of interest payable on the
Trust Certificates, when and as the same shall become payable,
and (b) interest at the Penalty Rate from the due date, upon
the amount of any installments of purchase price payable in
respect of the principal of and interest on the Trust
Certificates which shall not be paid when due, to the extent
legally enforceable; and
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<PAGE> 21
(4) the principal of the Trust Certificates, when
and as the same shall become payable, whether upon the date of
maturity thereof or by declaration or otherwise.
All payments provided for in subsections 3 and 4 shall be payable in
such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private
debts.
Except as provided in the next sentence hereof, nothing contained
herein or in the Trust Certificates shall be deemed to impose on the Trustee or
on the Company any obligation to pay to the registered holder of any Trust
Certificate any tax, assessment or governmental charge required by any present
or future law of Canada or the United States of America, or of any state,
province, county, municipality or other taxing authority thereof, to be paid on
behalf of, or withheld from the amount payable to, the holder of any Trust
Certificate. If after the date of original issuance of the Trust Certificates,
the adoption of any applicable law, treaty, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof shall subject the holders of Trust
Certificates to any withholding tax, or similar charge the result of which is
to reduce the amount of any sum received or receivable by such holders under
the Trust Certificates, then the Company shall pay to the Trustee for
distribution to the holders such additional amount or amounts as will result in
such holders receiving the full amount of principal and interest, as the case
may be, then due.
The Company shall not be required to pay any tax, assessment or
governmental charge so long as it shall in good faith and by appropriate legal
proceedings contest the validity thereof; provided, however, that in the
judgment of the Trustee and as set forth in an Opinion of Counsel which shall
have been furnished to the Trustee by the Company, the rights or interests of
the Trustee or of the holders of the Trust Certificates will not be materially
endangered thereby.
SECTION 4.05. Termination of Trust. After (i) all payments which
are required to be made pursuant to this Agreement have been completed and
fully made to the Trustee or (ii) Union shall have made all payments required
to be made under its guarantee referred to in the last paragraph of Section
2.02 hereof or (iii) the Company shall have acquired all the Trust Certificates
pursuant to the exercise of its rights to purchase the Trust Certificates under
Section 6.1 of the Pass Through Trust Agreement and tendered such Trust
Certificates to the Trustee for cancellation, (1) such payments or tender shall
be applied and treated as purchase money as the full purchase price of the
Trust Equipment from the Trustee, (2) any moneys remaining in the hands of the
Trustee after providing for all outstanding Trust Certificates and after paying
the expenses of the Trustee, including its reasonable compensation, shall be
paid to the Company, (3) title to all the Trust Equipment shall vest in the
Company and (4) the Trustee shall execute for record in public offices, at the
expense of the Company, such instrument or instruments in writing as reasonably
shall be requested by the Company and acceptable to the Trustee in order to
make clear upon public records the Company's title to all the Trust Equipment
under the laws of any jurisdiction; provided, however, that (except as
otherwise
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<PAGE> 22
provided herein) until that time title to the Trust Equipment shall not pass to
or vest in the Company, but title to and ownership of all the Trust Equipment
shall be and remain with the Trustee, notwithstanding the delivery thereof to
and the possession and use thereof by the Company pursuant to this Agreement.
SECTION 4.06. Indemnity. The Company covenants and agrees to
indemnify the Trustee against any and all claims arising out of or connected
with the ownership or use of any of the Trust Equipment, and particularly
against any and all claims arising out of the use of any patented inventions in
and about the Trust Equipment, and to comply in all respects with the laws of
Canada and of all its provinces and other jurisdictions in which the Trust
Equipment, or any unit thereof, may be operated, and with all lawful acts,
rules, regulations and orders of any commissions, boards and other legislative,
executive, administrative or judicial bodies or officers having power to
regulate or supervise any of the Trust Equipment, including without limitation
all lawful acts, rules, regulations and orders of any body having competent
jurisdiction relating to automatic coupler devices or attachments, air brakes
or other appliances; provided, however, that the Company may in good faith
contest the validity of any such law, act, rule, regulation or order, or the
application thereof to the Trust Equipment or any part thereof, in any
reasonable manner which will not in the judgment of the Trustee materially
endanger the rights or interests of the Trustee or of the holders of the Trust
Certificates. The Company shall not be relieved from any of its obligations
hereunder by reason of the assertion or enforcement of any such claims or the
commencement or prosecution of any litigation in respect thereof. The
Company's obligation to indemnify the Trustee under this Section 4.06 shall
survive the termination of this Agreement.
SECTION 4.07. Substitution and Replacement of Trust Equipment.
Upon Request, the Trustee shall, at any time and from time to time, execute and
deliver a bill of sale assigning and transferring to the transferee named by
the Company all the right, title and interest of the Trustee in and to any of
the units of Trust Equipment as provided herein; provided, however, that, at
the option of the Company, (a) there shall be paid to the Trustee cash in an
amount not less than the Value, as of the date of such Request, of the units of
Trust Equipment to be assigned or transferred by the Trustee or (b) there shall
be conveyed to the Trustee, at the time of assignment or transfer of any units
of Trust Equipment, other units of Equipment and of a Value not less than the
Value, as of the date of such Request, of the units of Trust Equipment to be
assigned or transferred.
At the time of delivery of any Request pursuant to the first paragraph
of this Section, the Company shall, if other Equipment is to be conveyed to the
Trustee in substitution for the Trust Equipment to be assigned or transferred
by the Trustee, deliver to the Trustee the following papers:
(1) an Officers' Certificate stating (i) the Value, as of
the date of said Request, of the Trust Equipment so to be assigned or
transferred by the Trustee and the date such Trust Equipment was
first put into use (or that such Trust Equipment was first put into
use not later than a specified date), (ii) that the requested
assignment or transfer by the
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Trustee will not impair the security under this Agreement in
contravention of the provisions hereof, (iii) the Value of such
substituted Equipment as of such date and the date such substituted
Equipment was first put into use (or that such substituted Equipment
was first put into use not earlier than a specified date), (iv) that
each unit of Equipment so to be substituted has been marked as
provided in Section 4.10, (v) that each such unit so to be substituted
is Equipment as herein defined and (vi) that the Company is not in
Default;
(2) a certificate, and a bill or bills of sale in respect
of such substituted Equipment as provided for in subparagraphs (a) and
(c) of the first paragraph of Section 3.04;
(3) an Opinion of Counsel to the effect that (i) such
bill or bills of sale are valid and effective, either alone or
together with any other instruments referred to in and accompanying
such opinion, to vest in the Trustee title to such substituted
Equipment free from all claims, liens, security interests and other
encumbrances (except as permitted herein) other than the rights of the
Company hereunder and (ii) a proper supplement hereto in respect of
each substituted unit of Equipment has been duly executed by the
Trustee and the Company and has been filed with the Interstate
Commerce Commission pursuant to the requirements of 49 U.S.C. Section
11303 and as otherwise required by Section 6.05 and has been deposited
with the Registrar General of Canada pursuant to Section 90 of the
Railway Act (Canada) and publication of notice of such deposit in The
Canada Gazette in accordance with said Section 90 has been provided
for; and
(4) if the Cost of the Trust Equipment to be assigned or
transferred by the Trustee, less 1/20th of such Cost for each full
year elapsed between the date such Trust Equipment was first put into
use (as previously so certified) and the date as of which the Value
thereof is to be determined hereunder, plus the Cost of all other
Trust Equipment so assigned or transferred within the prior twelve
months, less 1/20th of such Cost for each full year elapsed between
the date such other Trust Equipment was first put into use (as
previously so certified) and the date as of which the Value thereof
was determined, as set forth in the certificate or certificates
required by this Section 4.07, is more than 10% of the principal
amount of Trust Certificates then outstanding, a certificate by an
Independent Engineer stating, as of the date of said Request, both the
Value of the Trust Equipment so to be assigned or transferred by the
Trustee and the Value of such substituted Equipment.
At the time of delivery of any Request pursuant to the first paragraph
of this Section, the Company shall, if cash is to be paid to the Trustee in
respect of the Trust Equipment to be assigned or transferred by the Trustee,
deliver to the Trustee an Officers' Certificate verifying the matters set forth
in clauses (i), (ii) and (vi) of subparagraph (1) of the second paragraph of
this Section.
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Cash deposited with the Trustee pursuant to this Section or Section
4.08 shall, from time to time, be paid over by the Trustee to the Company upon
Request, against conveyance to the Trustee of units of Equipment having a
Value, as of the date of said Request, not less than the amount of cash so
paid, and upon delivery to the Trustee of papers corresponding to those set
forth in the second paragraph of this Section, with such appropriate
modifications as may be approved by the Trustee.
SECTION 4.08. Maintenance of Trust Equipment; Casualty Occurrences.
The Company agrees that it will maintain and keep all the Trust Equipment in
good order and proper repair at its own cost and expense, unless and until it
becomes worn out, unsuitable for use or lost or destroyed (such occurrences
being hereinafter called Casualty Occurrences). Whenever any of the Trust
Equipment shall suffer a Casualty Occurrence, the Company shall on or before
the next following May 15, deliver to the Trustee an Engineer's Certificate
describing such Trust Equipment and stating the Value thereof as of the date
such Trust Equipment suffered such Casualty Occurrence. When the total Value
of all units of the Trust Equipment having suffered a Casualty Occurrence
(exclusive of units having suffered a Casualty Occurrence in respect of which a
payment shall have been made to the Trustee pursuant to this Section) shall
exceed U.S. $250,000, the Company, within 30 days after it shall have been
informed of such event, shall deliver to the Trustee an Engineer's Certificate
describing such Trust Equipment and stating the Value thereof as of the date
such Trust Equipment suffered such Casualty Occurrence and either (i) deposit
with the Trustee an amount in cash equal to the Value of such units as of the
date of the Casualty Occurrence in respect of each thereof or (ii) convey to
the Trustee, in accordance with the procedures and requirements of Section
4.07, units of Equipment with a Value, as of the date of such conveyance, not
less than the Value of the units suffering such Casualty Occurrences(s), as of
the date of the Casualty Occurrence in respect of each thereof. The rights and
remedies of the Trustee to enforce or to recover any of the amounts payable
hereunder shall not be affected by reason of any Casualty Occurrence. Cash
deposited with the Trustee pursuant to this Section shall be held and applied
as provided in the fourth paragraph of Section 4.07.
Upon the deposit of cash with the Trustee pursuant to this Section
4.08, the Trustee shall execute and deliver a bill of sale in the form
reasonably requested by the Company assigning and transferring to the
transferee named by the Company all the right, title and interest of the
Trustee in and to the Trust Equipment which has suffered a Casualty Occurrence
and in respect of which such deposit is made.
The Company agrees to furnish to the Trustee on or before May 15 in
every calendar year commencing May 15, 1996 and prior to the termination of the
security interest provided for herein, an Officers' Certificate, dated as of
the preceding February 14, (1) stating the description and numbers of all units
of Trust Equipment that may have suffered a Casualty Occurrence or which have
been withdrawn from use pending major repairs (other than running repairs)
since the date of the last preceding statement (or the date of this Agreement
in the case of the first such statement), (2) that in the case of all the Trust
Equipment repainted or repaired since the date of the last preceding statement
(or the date of this Agreement in the case of the first statement) the plates
or markers required by Section 4.10 have been preserved, or that such
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<PAGE> 25
Trust Equipment when repainted or repaired has been again plated or marked as
required thereby, (3) that no Event of Default has occurred and is continuing,
(4) that, in the opinion of the signers, the Company is in compliance with all
of the terms of this Agreement and (5) covering such other matters as the
Trustee may reasonably request.
The Trustee, by its agents, shall have the right at any reasonable
time (which may be more frequent than once in each calendar year), but shall be
under no duty, to inspect the Trust Equipment at the then existing locations
thereof.
SECTION 4.09. Possession of Trust Equipment. Except as provided in
this Section 4.09, without first obtaining the written consent of the Trustee,
the Company will not (a) assign or transfer its rights hereunder, (b) transfer
the Trust Equipment or any part thereof or (c) part with the possession of, or
suffer or allow to pass out of its possession and control, any of the Trust
Equipment. An assignment or transfer to any corporation which shall acquire all
or substantially all the property of the Company (by merger, consolidation or
otherwise) and which, by execution of an appropriate instrument satisfactory to
the Trustee, shall assume and agree to perform each and all the obligations and
covenants of the Company hereunder and under the guarantee of the Company
endorsed on the Trust Certificates shall not be deemed a breach of this
covenant or an assumption having the effect of releasing the Company from its
obligations hereunder. The appointment of a receiver or receivers in equity or
reorganization or a trustee or trustees in bankruptcy or reorganization for the
Company or for its property shall not be deemed an unauthorized assignment if,
prior to any action by the Trustee to exercise the remedies herein provided,
such receiver or receivers or trustee or trustees shall, pursuant to court
order or decree, in writing duly assume and agree to pay or perform each and
all of the obligations and covenants of the Company hereunder and under the
guarantee endorsed on the Trust Certificates, in such manner that such
obligations shall have the same status as obligations incurred by such receiver
or receivers or trustee or trustees.
Notwithstanding the foregoing, so long as the Company shall not be in
Default, the Company and any of its Affiliates shall be entitled to the
possession and use of the Trust Equipment in accordance with the terms hereof,
and the Company or such Affiliates may also (a) furnish the Trust Equipment or
any part thereof to railroad companies for use upon the lines of railroad owned
or operated by them or over which they have trackage rights and upon connecting
and other railroads in the usual interchange of traffic, or to other than
railroad companies for use in their business, and (b) lease or contract to
others located in the United States, Mexico and Canada all or any part of the
Trust Equipment, but only, in either case, upon and subject to all the terms
and conditions of this Agreement.
Any such lease or contract may provide that the party acquiring the
use of units of the Trust Equipment, so long as it shall not be in default
under such lease or contract, shall be entitled, subject to the rights of the
Trustee hereunder, to the possession of such units and the use thereof and,
subject to the provisions of Section 4.10 hereof, may provide for lettering or
marking upon such Equipment for convenience of identification of the leasehold
interest of such lessee therein. Every such lease or contract shall contain
provisions which have the effect of
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<PAGE> 26
subjecting the rights of the party acquiring the use of units of the Trust
Equipment under such lease or contract to the rights and remedies of the
Trustee in respect of such units.
The Trustee shall have the right to declare the conditional sale
provided for herein terminated in case of any unauthorized assignment or
transfer of the Company's rights hereunder or in case of any unauthorized
transfer or sublease of any of the Trust Equipment. The election of the
Trustee to terminate the conditional sale provided for herein shall have the
same effect as the retaking of the Trust Equipment by the Trustee as
hereinafter provided.
SECTION 4.10. Marking of Trust Equipment. The Company shall not
change, or permit to be changed, the numbers of any of the Trust Equipment at
any time covered hereby (or any numbers which may have been substituted as
herein provided) except in accordance with a statement of new numbers to be
substituted therefor which previously shall have been filed with the Trustee by
the Company and which shall be filed and recorded in like manner as this
Agreement.
The Trust Equipment may be lettered, "Union Tank Car Company", "Procor
Limited", "UTLX", "PROX", or in some other appropriate manner for convenience
of identification of the interest of the Company therein, and may also be
lettered, in case of a lease of any equipment made pursuant to Section 4.09
hereof, in such manner as may be appropriate for convenience of identification
of the leasehold interest therein; but the Company, during the continuance of
the security interest provided for herein, will not allow any lettering or
designation to be placed on any of the Trust Equipment claiming ownership
thereof by the Company or by any person, firm, association or corporation other
than the Trustee.
ARTICLE FIVE
Events of Default and Remedies
SECTION 5.01. Events of Default. The Company covenants and agrees
that in case:
(a) the Company shall default in the payment of any
amount payable hereunder for more than 10 Business Days after the same
shall have become due and payable, or
(b) the Company shall make or suffer any unauthorized
assignment or transfer of its rights hereunder or shall make any
unauthorized transfer or lease (including, for the purpose of this
clause, contracts for the use thereof) of any of the Trust Equipment,
or, except as herein authorized, shall part with the possession of any
of the Trust Equipment, and shall fail or refuse either to cause such
assignment or transfer or lease to be canceled by agreement of all
parties having any interest therein and recover possession of such
Trust Equipment within 30 days after the Trustee shall have demanded
in writing such cancellation and recovery of possession, or within
said 30 days to deposit with the Trustee a sum in cash equal to the
Value, as of the date of such unauthorized
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<PAGE> 27
action, of such Trust Equipment (any sum so deposited to be returned
to the Company upon the cancellation of such assignment, transfer or
lease and the recovery of possession by the Company of such Trust
Equipment), or
(c) the Company shall fail or refuse to comply with any
other of the terms and covenants hereof on its part to be kept and
performed, or to make provision satisfactory to the Trustee for such
compliance, for a period which is the shorter of (i) 60 days after the
Trustee shall have demanded in writing performance thereof and (ii) 30
days after the Company has knowledge of any failure on its part to so
comply, or
(d) the security interest provided for herein shall be
terminated by operation of law or pursuant to the last paragraph of
Section 4.09, or
(e) any order, judgment or decree is entered under any
bankruptcy reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction (herein called the Bankruptcy Law) adjudicating the
Company or Union bankrupt or insolvent, or the Company or Union
petitions or applies to any tribunal for, or consents to, the
appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official, of the Company or Union or
of substantially all the assets of the Company or Union or commences a
voluntary case under the Bankruptcy Law or any proceedings relating to
the Company or Union under the Bankruptcy Law, whether now or
hereafter in effect; or any such petition or application is filed, or
any such proceedings are commenced, against the Company or Union and
the Company or Union by any act or failure to act indicates its
approval thereof, consent thereto or acquiescence therein, or an order
for relief is entered in an involuntary case against the Company or
Union under the Bankruptcy Law, as now or hereafter constituted, or an
order, judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order, judgment or decree
remains unstayed and in effect for more than 60 days;
then, in any such case (herein sometimes called an "Event of Default"), the
Trustee in its discretion may, and upon the written request of the holders of
more than 50% in principal amount of the then outstanding Trust Certificates
shall, by notice in writing delivered to the Company, declare to be due and
payable forthwith the unpaid principal amount of all Trust Certificates then
outstanding and the entire amount (excluding amounts required for the payment
of interest accruing after the date of such declaration) payable by the Company
with respect to all such Trust Certificates then outstanding, as set forth in
Section 4.04, and not theretofore paid. Thereupon the entire amount shall
forthwith become and shall be due and payable immediately without further
demand, together with interest at the Penalty Rate, to the extent legally
enforceable, on any portion thereof overdue.
In case the Company shall fail to pay any installment of the amounts
payable pursuant to Section 4.04 in respect of the principal of, or interest
on, the Trust Certificates when and as
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the same shall have become due and payable hereunder, and such Default shall
have continued for a period of more than ten Business days, the Trustee, in its
own name and as trustee of an express trust, shall be entitled and empowered to
institute any action or proceedings at law or in equity for the collection of
the amounts so due and unpaid, and may prosecute any such action or proceedings
to judgment or final decree, and may enforce any such judgment or final decree
against the Company other obligor upon the Trust Certificates and collect in
the manner provided by law out of the property of the Company, Union or other
obligor upon the Trust Certificates wherever situated the moneys adjudged or
decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor upon the Trust
Certificates under the Bankruptcy Law or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or such other obligor, or in case of any other judicial proceedings relative to
the Company or such other obligor, or to the creditors or property of the
Company or such other obligor, the Trustee, irrespective of whether the
payments hereunder or the principal amount of the Trust Certificates shall then
be due and payable as herein or therein expressed whether by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand or
declaration pursuant to the provisions of this Section, shall be entitled and
empowered by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the entire amount then or thereafter payable (including any
unpaid amounts, but not including amounts required for the payment of interest
accruing after the date of such declaration) and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the Trustee, its
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee except as a result
of its negligence or willful misconduct) and of the holders of the Trust
Certificates allowed in such proceedings and to collect and receive any moneys
or other property payable or deliverable on any such claims, and to distribute
all amounts received with respect to the claims of the holders of the Trust
Certificates and of the Trustee on their behalf; and any receiver, assignee or
trustee in bankruptcy or reorganization is hereby authorized by each of the
holders of the Trust Certificates to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to the
holders of the Trust Certificates, to pay to the Trustee such amount as shall
be sufficient to cover reasonable compensation to the Trustee, its agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee except as a result of its negligence or willful
misconduct.
All rights of action and to assert claims under this Agreement, or
under any of the Trust Certificates, may be enforced by the Trustee without the
possession of any of the Trust Certificates or the production thereof on any
trial or other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Trust Certificates. In any proceedings brought by the
Trustee (and also any proceedings involving the interpretation of any provision
of this Agreement to which the Trustee shall be a
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<PAGE> 29
party) the Trustee shall be held to represent all the holders of the Trust
Certificates, and it shall not be necessary to make any holders of the Trust
Certificates parties to such proceedings.
SECTION 5.02. Remedies. In case of the happening and continuance
of any Event of Default, the Trustee may by its agents enter upon the premises
of the Company and any of its Affiliates or lessees (or other person having
acquired the use of the Trust Equipment) where any of the Trust Equipment may
be and take possession of all or any part of the Trust Equipment and withdraw
the same from said premises, retaining all payments which up to that time may
have been made for the Trust Equipment and otherwise, and shall be entitled to
collect, receive and retain all unpaid per diem, mileage or other charges of
any kind earned by the Trust Equipment or any part thereof, and may lease or
otherwise contract for the use of the Trust Equipment or any part thereof, or
with or without retaking possession thereof (but only after declaring due and
payable the entire amount payable by the Company and the principal of all the
then outstanding Trust Certificates, as provided in Section 5.01) may sell the
same or any part thereof, free from any and all claims of the Company at law or
in equity in one lot and as an entirety or in separate lots, at public or
private sale, for cash or upon credit, in its discretion, and may proceed
otherwise to enforce its rights and the rights of the holders of then
outstanding Trust Certificates, all subject to any mandatory requirements of
law applicable thereto. Upon any such sale, the Trustee itself may bid for the
property offered for sale or any part thereof. Any such sale may be held or
conducted at such place and at such time as the Trustee may specify, or as may
be required by law, and without gathering at the place of sale the Trust
Equipment to be sold, and in general in such manner as the Trustee may
determine, but so that the Company may and shall have a reasonable opportunity
to bid at any such sale. Upon such taking possession or withdrawal or lease or
sale of the Trust Equipment, the Company shall cease to have any rights or
remedies in respect of the Trust Equipment hereunder, but all such rights and
remedies shall be deemed thenceforth to have been waived and surrendered by the
Company, and no payments theretofore made by the Company in respect of the
Trust Equipment or any of it shall give to the Company any legal or equitable
interest or title in or to the Trust Equipment or any of it or any cause or
right of action at law or in equity in respect of the Trust Equipment against
the Trustee or the holders of interests hereunder. No such taking possession,
withdrawal, lease or sale of the Trust Equipment by the Trustee shall be a bar
to the recovery by the Trustee from the Company of amounts then or thereafter
due and payable, or of principal, interest or premium in respect of the Trust
Certificates, and the Company shall be and remain liable for the same until
such sums have been realized as, with the proceeds of the lease or sale of the
Trust Equipment, shall be sufficient for the discharge and payment in full of
all the obligations of the Company under this Agreement.
SECTION 5.03. Application of Proceeds. If the Trustee shall
exercise any of the powers conferred upon it by Sections 5.01 and 5.02, all
payments made by the Company to the Trustee, and the proceeds of any judgment
collected from the Company by the Trustee, and the proceeds of every sale or
lease by the Trustee of any of the Trust Equipment, together with any other
sums which may then be held by the Trustee under any of the provisions hereof
(other than sums held in trust for the payment of specific Trust Certificates
or a part thereof, or interest or any premium thereon), shall be applied by the
Trustee to the payment, in the following order
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of priority, (a) of all proper charges, expenses or advances made or incurred
by the Trustee in accordance with the provisions of this Agreement and (b) of
the interest then due, with interest on overdue interest at the Penalty Rate,
to the extent legally enforceable, and of the principal of all the outstanding
Trust Certificates, with interest thereon at the Penalty Rate, to the extent
legally enforceable, from the last preceding interest payment date, whether
such Trust Certificates shall have then matured by their terms or not, all such
payments to be pro rata and in full if such proceeds shall be sufficient, and
if not sufficient, then first to interest and then to principal.
After all such payments shall have been made in full, the title to any
of the Trust Equipment remaining unsold shall be conveyed by the Trustee to the
Company free from any further liabilities or obligations to the Trustee
hereunder. If after applying all such sums of money realized by the Trustee as
aforesaid there shall remain any amount due to the Trustee under the provisions
hereof, the Company agrees to pay the amount of such deficit to the Trustee.
If after applying as aforesaid the sums of money realized by the Trustee there
shall remain a surplus in the possession of the Trustee, such surplus shall be
paid to the Company.
SECTION 5.04. Waivers of Default. Prior to the declaration of the
acceleration of the maturity of the amounts due hereunder and of the maturity
of all the Trust Certificates as provided in Section 5.01, the holders of at
least 50% in aggregate unpaid principal amount of the Trust Certificates at the
time outstanding may on behalf of the holders of all the Trust Certificates
waive any past Default and its consequences, except a Default in the payment of
any installment of any amount then due and payable pursuant to Section 4.04 in
respect of the principal of, or interest on, the Trust Certificates, but no
such waiver shall extend to or affect any subsequent Default or impair any
right consequent thereon.
If at any time after the principal of all the Trust Certificates shall
have been declared and become due and payable or if at any time after the
entire amount of the payments required hereunder shall have been declared and
become due and payable, all as provided in Section 5.01, all arrears of amounts
payable under Section 4.04 (with interest at the Penalty Rate upon any overdue
installments, to the extent legally enforceable), the expenses and reasonable
compensation of the Trustee, together with all expenses of the trust occasioned
by Default, and all other sums which shall have become due and payable
hereunder shall be paid by Union pursuant to its guarantee endorsed on the
Trust Certificates before any sale or lease by the Trustee of any of the Trust
Equipment, and every other Default shall be made good or secured to the
satisfaction of the Trustee and the holders of the Trust Certificates, or
provision deemed by the Trustee to be adequate shall be made therefor, then,
and in every such case, the Trustee, if so requested by the holders of at least
66-2/3% in aggregate unpaid principal amount of the Trust Certificates then
outstanding according to their terms, shall by written notice to the Company
waive the Default by reason of which there shall have been such declaration or
declarations and the consequences of such Default, but no such waiver shall
extend to or affect any subsequent Default or impair any right consequent
thereon.
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SECTION 5.05. Obligations of Company Not Affected by Remedies. No
retaking of possession of the Trust Equipment by the Trustee, or any
withdrawal, lease or sale thereof, nor any action or failure or omission to act
against the Company or in respect of the Trust Equipment, on the part of the
Trustee or on the part of the holder of any Trust Certificate, nor any delay or
indulgence granted to the Company by the Trustee or by any such holder, shall
affect the obligations of the Company hereunder or the obligations of the
Company under its guarantee endorsed on the Trust Certificates. The Company
hereby waives presentation and demand in respect of any of the Trust
Certificates and waive notice of presentation, of demand and of any Default in
the payment of the principal of and interest on the Trust Certificates.
SECTION 5.06. Company To Deliver Trust Equipment to Trustee. In
case the Trustee shall rightfully demand possession of any of the Trust
Equipment in pursuance of this Agreement, the Company will, at its own expense,
forthwith and in the usual manner and at usual speed, cause such Trust
Equipment to be drawn to such point or points as shall reasonably be designated
by the Trustee and will there deliver or cause to be delivered the same to the
Trustee; or, at the option of the Trustee, the Trustee may keep such Trust
Equipment, at the expense of the Company, on any lines of railroad or premises
approved by the Trustee until the Trustee shall have leased, sold or otherwise
disposed of the same. The performance of the foregoing covenant is of the
essence of this Agreement and upon application to any court having jurisdiction
in the premises, the Trustee shall be entitled to a decree against the Company
requiring the specific performance thereof.
SECTION 5.07. Trustee To Give Notice of Default. Promptly after
the occurrence thereof, the Trustee shall give to the registered holders of the
Trust Certificates notice of each Default hereunder known to any officer of the
Trustee assigned by it to perform corporate trust administration functions with
respect to this Agreement or any other lease, agreement, equipment trust
agreement or indenture to which the Company or Union is a party and in respect
of which the Trustee is also the trustee.
SECTION 5.08. Control by Holders of Trust Certificates. The
holders of more than 50% in aggregate unpaid principal amount of the
outstanding Trust Certificates, by an instrument or instruments in writing
executed and delivered to the Trustee, shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that the Trustee shall have the right to decline to follow any such
direction if the Trustee shall be advised by counsel that the action so
directed may not lawfully be taken.
SECTION 5.09. Limitations on Suits by Holders of Trust
Certificates. No holder of any Trust Certificate shall have any right by
virtue or by availing of any provision of this Agreement to institute any
action or proceeding at law or in equity or in bankruptcy or otherwise, upon or
under or with respect to this Agreement, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless such holder previously
shall have given to the Trustee written notice of a Default and of the
continuance thereof, as herein provided, and unless also the holders of more
than 50% in aggregate principal amount of the Trust Certificates
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then outstanding shall have made written request to the Trustee to institute
such action or proceeding in its own name as trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for 30 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 5.08; and no one or more holders of Trust
Certificates shall have any right in any manner whatever to affect or prejudice
the rights of any other holder of Trust Certificates, or to obtain or seek to
obtain priority over any other such holder or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Trust Certificates. For the protection and
enforcement of the provisions of this Section, each and every holder of a Trust
Certificate and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
SECTION 5.10. Unconditional Right of Holders of Trust Certificates
To Sue for Principal and Interest. Notwithstanding any other provision in this
Agreement, the right of any holder of any Trust Certificate to receive payment
of the principal of, and interest on such Trust Certificate, on or after the
due date expressed in such Trust Certificate, or to institute suit for the
enforcement of any such payment on or after such date, shall not be impaired or
affected without the consent of such holder, except no such suit shall be
instituted if and to the extent that the institution or prosecution thereof or
the entry of judgment therein would, under applicable law, result in the
surrender, impairment, waiver or loss of the title reserved under this
Agreement upon any property subject hereto.
SECTION 5.11. Remedies Cumulative; Subject to Mandatory
Requirements of Law. The remedies in this Agreement provided in favor of the
Trustee and the holders of the Trust Certificates shall not be deemed
exclusive, but shall be cumulative, and shall be in addition to all other
remedies in their favor existing at law or in equity; and such remedies shall
be subject in all respects to any mandatory requirements of law at the time
applicable thereto, to the extent such requirements may not be waived on the
part of the Company.
ARTICLE SIX
Additional Agreements by the Company
SECTION 6.01. Guarantee of Company. The Company guarantees that
the holder of each of the Trust Certificates shall receive the principal amount
thereof, in such coin or currency of the United States of America as, at the
time of payment, shall be legal tender for the payment of public and private
debts, when and as the same shall become due and payable, in accordance with
the provisions thereof or of this Agreement (and, if not so paid, with interest
thereon until paid at the Penalty Rate, to the extent legally enforceable), and
shall receive interest thereon in like money at the rate specified therein, at
the times and place and otherwise as expressed in the Trust Certificates and
this Agreement (and, if not so paid, with interest thereon until paid at the
Penalty Rate, to the extent legally enforceable); and the Company agrees
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to endorse upon each of the Trust Certificates, at or before the issuance and
delivery thereof by the Trustee, its guarantee of the prompt payment of the
principal thereof and of the interest thereon, in substantially the form herein
set forth. Said guarantee so endorsed shall be signed in the name and on
behalf of the Company by the manual or facsimile signature of its President, a
Vice President or Treasurer. In case any officer of the Company whose
signature shall appear on said guarantee shall cease to be such officer before
the Trust Certificates shall have been issued and delivered by the Trustee, or
shall not have been acting in such capacity on the date of the Trust
Certificates, such guarantee shall nevertheless be as effective and binding
upon the Company as though the person who signed said guarantee had not ceased
to be or had then been such officer.
SECTION 6.02. Discharge of Liens. The Company agrees that it will
pay and discharge, or make adequate provision for the payment or discharge of,
any debt, tax, charge, assessment, obligation or claim which if unpaid might
become a lien or charge upon or against any of the Trust Equipment; but this
provision shall not require the payment of any such debt, tax, charge,
assessment, obligation or claim so long as the validity thereof shall be
contested in good faith and by appropriate legal proceedings that do not
materially endanger the rights or interests of the Trustee or of the holders of
the Trust Certificates and the Company shall have furnished the Trustee with an
Opinion of Counsel to such effect.
If the Company does not forthwith pay and discharge, or cause to be
paid and discharged, or make adequate provision for the satisfaction or
discharge of, any such debt, tax, charge, assessment, obligation or claim as
required by this Section, the Trustee may, but shall not be obligated to, pay
and discharge the same and any amounts so paid shall be secured by and under
this Agreement until reimbursed by the Company.
SECTION 6.03. Further Assurances. The Company agrees to do all
such acts and execute all such instruments of further assurance as it shall be
reasonably requested by the Trustee to do or execute for the purpose of fully
carrying out and effectuating this Agreement and the intent hereof.
SECTION 6.04. Payment of Expenses; Recording. The Company agrees
to pay the expenses incident to the preparation and execution of the Trust
Certificates to be issued hereunder, or connected with the preparation,
execution, recording and filing of this Agreement and of any instruments
executed under the provisions hereof. The Company shall, promptly after the
execution and delivery of this Agreement (and prior to the delivery of any of
the Trust Equipment hereunder pursuant to Section 3.01 hereof) and each
supplement hereto, respectively, cause this Agreement and such supplement, as
the case may be, to be duly filed with the Surface Transportation Board of the
Department of Transportation in accordance with __ U.S.C. Section _____ and to
be duly deposited with the Registrar General of Canada pursuant to Section 90
of the Railway Act (Canada) and shall provide for publication of notice of such
deposit in The Canada Gazette in accordance with said Section 90. The Company
will from time to time reregister, refile and rerecord this Agreement and each
supplement hereto and do and perform any other act and will execute,
acknowledge, deliver, file, register and record any and all further
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instruments required by the law of any jurisdiction in which use of the
Equipment is permitted by Section 4.09 hereof or reasonably requested by the
Trustee for the purpose of proper protection of the title of the Trustee and
the rights of the holders of the Trust Certificates and of fully carrying out
and effectuating this Agreement and the intent hereof; provided, however, that
the Company shall not be required to take any such action if (1) such action is
unduly burdensome and (2) after giving effect to the failure to take such
action, the Company has taken all action required by law so as to protect the
title of the Trustee to units of Trust Equipment having a Value of not less
than 90% of the aggregate Value of all the Trust Equipment.
Promptly after the execution and delivery of this Agreement and each
supplement hereto, the Company shall furnish to the Trustee an Opinion of
Counsel stating that, in the opinion of such counsel, this Agreement or such
supplement, as the case may be, has been properly recorded, filed and deposited
in compliance with the preceding paragraph of this Section and reciting the
details of such action and no other filing or recordation or refiling or
rerecordation or depositing or redepositing is necessary for the protection of
the rights of the Trustee in the United States of America, any State thereof or
the District of Columbia or for the protection of the rights of the Trustee in
Canada or any subdivision thereof so long as the Equipment is on tracks owned
by railway companies (as defined in the Railway Act (Canada)). The Company
shall furnish to the Trustee, not later than August 1 in each year, commencing
with the year 1996, an Opinion of Counsel stating that, in the opinion of such
counsel, either (i) such action has been taken with respect to the recording,
filing, registering and depositing and rerecording, refiling, reregistering and
redepositing of this Agreement and each supplement hereto as is necessary to
comply with the preceding paragraph of this Section and reciting the details of
such action or (ii) no such action is necessary for such purpose. In rendering
any such opinion, such counsel may conclusively rely upon an Officers'
Certificate as to the location of the Trust Equipment.
ARTICLE SEVEN
Concerning the Holders of Trust Certificates
SECTION 7.01. Evidence of Action Taken by Holders of Trust
Certificates. Whenever in this Agreement it is provided that the holders of a
specified percentage in aggregate unpaid principal amount of the Trust
Certificates may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action the holders of
such specified percentage have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by holders of
Trust Certificates in person or by agent or proxy appointed in writing in a
form reasonably acceptable to the Trustee.
SECTION 7.02. Proof of Execution of Instruments and of Holding of
Trust Certificates. The execution of any instrument by a holder of Trust
Certificates or his agent or proxy may be proved by the certificate of any
notary public or other officer of any jurisdiction within the United States of
America or Canada authorized to take acknowledgments of deeds to
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<PAGE> 35
be recorded in such jurisdiction that the person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or other such officer.
The ownership of Trust Certificates may be proved by the register of
such Trust Certificates or by a certificate of the registrar thereof.
SECTION 7.03. Trust Certificates Owned by Company. In determining
whether the holders of the requisite principal amount of the Trust Certificates
have concurred in any direction, request, consent, amendment or waiver under
this Agreement, Trust Certificates which are owned by the Company or Union or
by any other obligor on the Trust Certificates or by an Affiliate of the
Company or Union or any such other obligor shall be disregarded, except that
for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, request or consent, only Trust Certificates
which the Trustee actually knows are so owned shall be disregarded.
SECTION 7.04. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.01, of the taking of any action by the holders of the required percentage in
aggregate unpaid principal amount of the Trust Certificates specified in this
Agreement, any holder of a Trust Certificate may, by filing written notice with
the Trustee at the Corporate Trust Office and upon proof of holding as provided
in Section 7.02, revoke such action insofar as concerns such Trust Certificate.
Except as aforesaid, any such action taken by the holder of any Trust
Certificate shall be conclusive and binding upon such holder and upon all
future holders and owners of such Trust Certificate and of any Trust
Certificate issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon such Trust
Certificate. Any action taken by the holders of the required percentage in
aggregate unpaid principal amount of the Trust Certificates specified in this
Agreement shall be conclusive and binding upon the Company, the Trustee and the
holders of all the Trust Certificates.
SECTION 7.05. Amendment or Waiver. Any provision of this Agreement
may be amended or waived with the written consent of the holders of not less
than 66-2/3% of the aggregate unpaid principal amount of the Trust Certificates
then outstanding; provided, however, that without the consent of the holders of
100% of the aggregate unpaid principal amount of Trust Certificates then
outstanding, no such amendment or waiver shall (1) change the amount of
principal, change the amount or dates of payment of installments of principal
or reduce the rate or extend the time of payment of interest with respect to
the Trust Certificates without the consent of the holders of each Trust
Certificate so affected, (2) reduce the amount of or extend the time of payment
of any amounts payable by the Company under this Agreement or release or
provide for the release of any of the Trust Equipment or any other property or
cash held by the Trustee in trust, otherwise than as expressly permitted by the
present terms of this Agreement, or (3) reduce the percentage of the aggregate
unpaid principal amount of Trust Certificates then outstanding, the holders of
which are required to approve any amendment or to effect any waiver.
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ARTICLE EIGHT
The Trustee
SECTION 8.01. Acceptance of Trust. The Trustee hereby accepts the
trust imposed upon it by this Agreement and agrees to perform the same as
herein expressed.
SECTION 8.02. Duties and Responsibilities of the Trustee. In case
an Event of Default has occurred (which has not been cured), the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Agreement, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the
Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this
Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Agreement;
(b) the Trustee shall not be liable for any error of
judgment made in good faith, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts or that its
action or inaction was contrary to the express provisions of this
Agreement;
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the holders of more than 50% in aggregate
unpaid principal amount of the then outstanding Trust Certificates
relating to the time, method and place of conducting any proceeding
for any remedy
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<PAGE> 37
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement;
(d) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, Trust
Certificate, guarantee or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(e) the Trustee may consult with counsel, and any Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder in good faith
and in accordance with such Opinion of Counsel and not contrary to any
express provisions of this Agreement:
(f) the Trustee shall be under no obligation to exercise
any of its rights or powers vested in it by this Agreement at the
request, order or direction of any of the holders of the Trust
Certificates, pursuant to the provisions of this Agreement, unless
such holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby; and
(g) the Trustee shall not be liable for any action taken
by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement.
SECTION 8.03. Application of Payments. The Trustee agrees to apply
the amounts received by it under Section 4.04(B) when and as the same shall be
received, and to the extent that such amounts shall be sufficient therefor, for
the purposes specified in Section 4.04(B). In the event that amounts received
by the Trustee under Sections 4.04(B)(3) or 4.04(B)(4) are not sufficient to
pay in full the interest or principal then due and owing on the Trust
Certificates, such amounts shall be applied by the Trustee pro rata to each of
the Trust Certificates first to interest and then to principal then due and
payable.
The Trustee shall not be required to undertake any act or duty in the
way of insuring, taking care of or taking possession of the Trust Equipment or
to undertake any other act or duty under this Agreement until fully indemnified
by the Company, by Union or by one or more of the holders of the Trust
Certificates against all liability and expenses; and the Trustee shall not be
responsible for the filing or recording or refiling or rerecording of this
Agreement or of any supplement hereto or statement of new numbers.
SECTION 8.04. Funds May be Held by Trustee; Investments. Any funds
at any time paid to or held by the Trustee hereunder until paid out by the
Trustee as herein provided may be carried by the Trustee on deposit with
itself, and the Trustee will not be obligated to pay interest on such funds.
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At any time, and from time to time, if at the time no Event of Default
shall have occurred and be continuing, the Trustee, on Request, shall invest
and reinvest Deposited Cash held by it or cash deposited with it pursuant to
Section 4.07 or Section 4.08 (hereinafter in this Section called "Replacement
Funds") in Investments, at such prices, not in excess of fair market value at
the time of investment, including any premium and accrued interest, as are set
forth in such Request, such Investments to be held by the Trustee in trust for
the benefit of the holders of the Trust Certificates.
The Trustee shall, on Request, or the Trustee may, in the event funds
are required for payment against delivery of Trust Equipment or for payment of
the principal of or interest on any Trust Certificate, or in the event of a
Default, sell such Investments, or any portion thereof, and restore to
Deposited Cash or Replacement Funds, as the case may be, the proceeds of any
such sale up to the amount paid for such Investments, including accrued
interest, or apply such proceeds to the payment of said principal and interest
if and to the extent such proceeds are needed therefor. The Trustee shall not
be deemed responsible for any loss resulting from the purchase and sale of such
Investments on Request unless such loss results from the misconduct or
negligence of the Trustee and upon demand of the Trustee the Company will
reimburse the Trustee for any such loss for which the Trustee is not
responsible.
The Trustee shall restore to Deposited Cash or Replacement Funds, as
the case may be, out of payments received by it for that purpose under the
provisions of Section 4.04(B)(1), an amount equal to any expenses reasonably
incurred in connection with any purchase or sale of Investments and also an
amount equal to any loss of principal incident to the sale or redemption of any
Investments for a sum less than the amount paid therefor, including accrued
interest.
The Company, if not to the knowledge of the Trustee in Default, shall
be entitled to receive any interest allowed as provided in the first paragraph
of this Section and any interest (in excess of accrued interest paid from
Deposited Cash at the time of purchase) or other profit which may be realized
from any sale or redemption of Investments.
SECTION 8.05. Trustee Not Liable for Delivery Delays or Defects in
Equipment or Title. The Trustee shall not be liable to anyone for any delay in
the delivery of any of the Trust Equipment, or for any default on the part of
the manufacturers thereof or of the Company, or for any defect in any of the
Trust Equipment or in the title thereto, nor shall anything herein be construed
as a warranty on the part of the Trustee in respect thereof or as a
representation on the part of the Trustee in respect of the value thereof or in
respect of the title thereto or otherwise.
The Trustee may perform its powers and duties with respect to the
delivery and acceptance of the Trust Equipment by or through such attorney,
agents and servants as it shall appoint, and shall be answerable only for its
own acts, negligence and willful defaults and not for the default or misconduct
of any attorney, agent or servant appointed by it in respect thereof with
reasonable care.
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<PAGE> 39
The Trustee shall be entitled to receive payment of all of its
reasonable expenses and disbursements hereunder, including reasonable counsel
fees, and to receive reasonable compensation for all services rendered by it in
the execution of the trust hereby created, all of which shall be paid by the
Company.
The Trustee in its individual capacity may own, hold and dispose of
Trust Certificates.
Any moneys at any time held by the Trustee or any paying agent
hereunder shall until paid out or invested by the Trustee or any paying agent
as herein provided, be held by it in trust as herein provided for the benefit
of the holders of the Trust Certificates.
SECTION 8.06. Resignation and Removal; Appointment of
Successor Trustee. (a) The Trustee may resign and be discharged of the trust
created by this Agreement by giving 30 days' written notice to the Company and
such resignation shall take effect upon the earlier of 30 days after the
delivery thereof to the Company or upon receipt by the Trustee of an instrument
of acceptance executed by a successor trustee as hereinafter provided in
Section 8.07.
(b) The Trustee may be removed at any time by an instrument in
writing signed by the holders of more than 50% in principal amount of the
Trust Certificates then outstanding, delivered to the Trustee and to the
Company.
(c) If at any time the Trustee shall resign or be removed or
otherwise become incapable of acting or, if at any time a vacancy shall occur
in the office of the Trustee for any other cause, a successor trustee may be
appointed by the holders of more than 50% of the aggregate principal amount of
the then outstanding Trust Certificates by an instrument in writing delivered
to the Company and the Trustee. Until a successor trustee shall be appointed
by the holders of Trust Certificates as herein authorized, the Company by an
instrument in writing executed by order of its Board of Directors shall appoint
a trustee to fill such vacancy. A successor trustee so appointed by the
Company shall immediately and without further act be superseded by a successor
trustee appointed by the holders of Trust Certificates in the manner provided
above. Every successor trustee appointed pursuant to this Section shall be a
national bank, or a bank or trust company organized and doing business under
the laws of the United States of America, any State or territory thereof or of
the District of Columbia, and having capital and surplus of not less than
$250,000,000, if there be such an institution willing, qualified and able to
accept the trust upon reasonable or customary terms.
(d) The Company shall give notice of each resignation, removal or
incapacity of the then Trustee or of a vacancy occurring in the office of the
Trustee for any other cause and of each appointment by the Company of a
successor trustee pursuant to paragraph (c) of this Section by mailing written
notice of such event by first-class mail, postage prepaid, to the holders of
all outstanding Trust Certificates.
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<PAGE> 40
SECTION 8.07. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 8.06 shall execute,
acknowledge and deliver to the Company and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless,
on the written request of the Company or of the successor trustee, upon payment
of its charges then unpaid, the trustee ceasing to act shall execute and
deliver an instrument transferring to such successor trustee all the rights and
powers of the trustee so ceasing to act. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all
such rights and powers. Any trustee ceasing to act shall, nevertheless, retain
a lien upon all property or funds held or collected by such trustee to secure
any amounts then due it pursuant to the provisions of Section 8.05.
SECTION 8.08. Merger or Consolidation of Trustee. Any corporation
qualified under the provisions of Section 8.06 into which the Trustee may be
merged or with which it may be consolidated or any such corporation resulting
from any merger or consolidation to which the Trustee shall be a party or to
which all or substantially all the corporate trust business of the Trustee
shall be transferred shall be the successor of the Trustee hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.
SECTION 8.09. Return of Certain Moneys to Company.
Notwithstanding any provision of this Agreement, any moneys paid to the Trustee
which are applicable to the payment of the principal of or interest on any
Trust Certificates which remain unclaimed for two years after the day when such
moneys were due and payable shall then be repaid to the Company upon Request,
and the holders of such Trust Certificates shall thereafter be entitled to look
only to the Company for payment thereof and all liability of the Trustee with
respect to such moneys shall thereupon cease.
ARTICLE NINE
Miscellaneous
SECTION 9.01. Rights Confined to Parties and Holders. Nothing
expressed or implied herein shall be construed to confer upon any person, firm
or corporation, other than the parties hereto and the holders of the Trust
Certificates, any right, remedy or claim under or by reason of this Agreement
or of any term, agreement or condition herein, and all the terms, covenants and
conditions herein shall be for the sole and exclusive benefit of the parties
hereto and their successors and of the holders of the Trust Certificates.
SECTION 9.02. No Recourse. No recourse under this Agreement, or
under the guarantees, endorsed on any Trust Certificate, shall be had against
any person, solely by reason
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<PAGE> 41
of the fact that he is a stockholder, officer or director of the Company or
Union, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed that this Agreement and said guarantees are solely corporate
obligations, and that no personal liability whatever shall attach to or be
incurred by any person, solely by reason of the fact that he is a stockholder,
officer or director of the Company or Union, under or by reason of any of the
terms, agreements or conditions contained in this Agreement or in said
guarantees, or implied therefrom, and that any and all such personal liability,
either at common law or in equity, or by statute or constitution, is hereby
expressly waived as a condition of and consideration for the execution of this
Agreement and said guarantees.
SECTION 9.03. Binding Upon Assigns. Except as otherwise provided
herein, the provisions of this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 9.04. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been received by the
addressee on the date of actual receipt (if such date is a Business Date,
otherwise on the next Business Date), if transmitted by mail, telex, telecopy
(confirmed by hard copy) or similar transmission, or by hand, addressed as
follows: (a) in the case of the Company, 2001 Speers Road, Oakville, Ontario,
Canada L6J 5E1, facsimile: (905) 827-0800, marked to the attention of the
Controller, or such other address as may hereafter be furnished to the Trustee
in writing by the Company, (b) in the case of Union, 225 West Washington
Street, Chicago, Illinois 60606, facsimile: (312) 845-5305, marked to the
attention of its Treasurer, or such other address as may hereafter be furnished
to the Trustee in writing by Union, (c) in the case of the Trustee, the address
set forth in the definition of Corporate Trust Office in Section 1.01 or such
other address as may hereafter be furnished to the Company and Union in writing
by the Trustee, facsimile: ________________, and (d) in the case of any holder
of Trust Certificates, at its address shown on the registry books maintained by
the Trustee or at such other address as such holder may from time to time
furnish to the Trustee for such purpose. An affidavit by any person
representing or acting on behalf of the Company or the Trustee, as to such
mailing, having the registry receipt attached, shall be conclusive evidence of
the giving of such demand, notice or communication.
SECTION 9.05. Effect of Headings; Date Executed; and Governing Law.
(a) The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
(b) This Agreement shall be deemed to have been executed
on the date of the acknowledgment thereof by the officer of the Trustee who
signed it on behalf of the Trustee.
(c) This Agreement shall be governed by the laws of the State of Illinois.
SECTION 9.06. Legal Holidays. In any case where any date for
payment of interest, date for payment of amounts payable under Section 4.04 or
date of maturity of any
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<PAGE> 42
installment of principal on the Trust Certificates shall not be a Business Day,
then, notwithstanding any other provision of this Agreement or the Trust
Certificates, payment need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on such
date for payment of interest, date for payment of amounts payable under Section
4.04 or date of maturity of any installment of principal on the Trust
Certificates, and if payment is made on such next succeeding Business Day no
interest shall accrue on the amount of such payment for the period from and
after such date for payment of interest, or for payment of such amounts or date
of maturity of any installment of principal on the Trust Certificates, as the
case may be, to and including such next succeeding Business Day.
SECTION 9.07. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
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<PAGE> 43
IN WITNESS WHEREOF, the Company and the Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized and their respective corporate seals, duly attested, to be hereunto
affixed on the day and year first above written.
__________________________________,
Trustee
By _______________________________
Title
Attest:
__________________________
Authorized Officer PROCOR LIMITED
By _______________________________
Title
Attest:
__________________________
Secretary
By _______________________________
Title
Attest:
__________________________
Secretary
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<PAGE> 44
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this _____ day of May, 1996, before me personally appeared
_____________________________, to me personally known, who, being by me duly
sworn, says that such person is _______________________ of____________________,
and that said instrument was signed on behalf of said corporation by authority
of its Board of Directors and he acknowledged that the execution of the
foregoing instrument was the free act and deed of said corporation.
___________________________________
Notary Public
[Notarial Seal]
My commission expires: ___________________
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<PAGE> 45
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this _____ day of May, 1996, before me personally appeared
___________________and ______________________, to me personally known, who,
being by me duly sworn, says that they are ______________________ and
______________________ of PROCOR LIMITED, and that said instrument was signed
on behalf of PROCOR LIMITED by authority of its Directors, and they
acknowledged that the execution of the foregoing instrument was the free act
and deed of PROCOR LIMITED.
___________________________________
Notary Public
[Notarial Seal]
My Commission expires: _____________________
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<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected Financial
Information" and "Experts" in the Registration Statement (Form S-3) and related
Prospectus of Union Tank Car Company for the registration of Pass Through
Certificates Series 1996-A, and to the incorporation by reference therein of
our report dated March 7, 1996, with respect to the consolidated financial
statements of Union Tank Car Company included in its Annual Report (Form 10-K)
for the year ended December 31, 1995, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Chicago, Illinois
March 21, 1996
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Union Tank Car Company, a corporation organized under the laws of the
State of Delaware (the "Company"), hereby constitutes and appoints Robert C.
Gluth, Robert W. Webb and K.P. Fischl and each of them (with full power to each
of them to act alone), his true and lawful attorneys-in-fact and agents for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign the Registration Statement on Form S-3 to be filed by the Company with
the Securities and Exchange Commission in connection with the offer and sale of
Pass Through Certificates, Series 1996-A and any and all amendments to such
Registration Statement, and any other documents in connection therewith granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and to perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he himself might or could do if
personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
s/ Jay A. Pritzker
------------------
Jay A. Pritzker
Dated: March 19, 1996
<PAGE> 2
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Union Tank Car Company, a corporation organized under the laws of the
State of Delaware (the "Company"), hereby constitutes and appoints Robert C.
Gluth, Robert W. Webb and K.P. Fischl and each of them (with full power to each
of them to act alone), his true and lawful attorneys-in-fact and agents for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign the Registration Statement on Form S-3 to be filed by the Company with
the Securities and Exchange Commission in connection with the offer and sale of
Pass Through Certificates, Series 1996-A and any and all amendments to such
Registration Statement, and any other documents in connection therewith granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and to perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he himself might or could do if
personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ R.C. Gluth
------------------
R.C. Gluth
Dated: March 19, 1996
<PAGE> 3
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Union Tank Car Company, a corporation organized under the laws of the
State of Delaware (the "Company"), hereby constitutes and appoints Robert C.
Gluth, Robert W. Webb and K.P. Fischl and each of them (with full power to each
of them to act alone), his true and lawful attorneys-in-fact and agents for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign the Registration Statement on Form S-3 to be filed by the Company with
the Securities and Exchange Commission in connection with the offer and sale of
Pass Through Certificates, Series 1996-A and any and all amendments to such
Registration Statement, and any other documents in connection therewith granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and to perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he himself might or could do if
personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Robert A. Pritzker
----------------------
Robert A. Pritzker
Dated: March 19, 1996
<PAGE> 4
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Union Tank Car Company, a corporation organized under the laws of the
State of Delaware (the "Company"), hereby constitutes and appoints Robert C.
Gluth, Robert W. Webb and K.P. Fischl and each of them (with full power to each
of them to act alone), his true and lawful attorneys-in-fact and agents for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign the Registration Statement on Form S-3 to be filed by the Company with
the Securities and Exchange Commission in connection with the offer and sale of
Pass Through Certificates, Series 1996-A and any and all amendments to such
Registration Statement, and any other documents in connection therewith granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and to perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he himself might or could do if
personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ K.P. Fischl
----------------------
K.P. Fischl
Dated: March 19, 1996
<PAGE> 5
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Procor Limited, a corporation organized under the laws of Canada (the
"Company"), hereby constitutes and appoints Robert C. Gluth, Robert W. Webb and
K.P. Fischl and each of them (with full power to each of them to act alone), his
true and lawful attorneys-in-fact and agents for him and on his behalf and in
his name, place and stead, in any and all capacities, to sign the Registration
Statement on Form S-3 to be filed by the Company with the Securities and
Exchange Commission in connection with the offer and sale of Pass Through
Certificates, Series 1996-A and any and all amendments thereto, and any other
documents in connection therewith granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he
himself might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Frank Lester
----------------------
Frank Lester
Dated: March 19, 1996
<PAGE> 6
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Procor Limited, a corporation organized under the laws of Canada (the
"Company"), hereby constitutes and appoints Robert C. Gluth, Robert W. Webb and
K.P. Fischl and each of them (with full power to each of them to act alone), his
true and lawful attorneys-in-fact and agents for him and on his behalf and in
his name, place and stead, in any and all capacities, to sign the Registration
Statement on Form S-3 to be filed by the Company with the Securities and
Exchange Commission in connection with the offer and sale of Pass Through
Certificates, Series 1996-A and any and all amendments thereto, and any other
documents in connection therewith granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he
himself might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ David H. Patterson
----------------------
David H. Patterson
Dated: March 19, 1996
<PAGE> 7
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Procor Limited, a corporation organized under the laws of Canada (the
"Company"), hereby constitutes and appoints Robert C. Gluth, Robert W. Webb and
K.P. Fischl and each of them (with full power to each of them to act alone), his
true and lawful attorneys-in-fact and agents for him and on his behalf and in
his name, place and stead, in any and all capacities, to sign the Registration
Statement on Form S-3 to be filed by the Company with the Securities and
Exchange Commission in connection with the offer and sale of Pass Through
Certificates, Series 1996-A and any and all amendments thereto, and any other
documents in connection therewith granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he
himself might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ K.P. Fischl
----------------------
K.P. Fischl
Dated: March 19, 1996
<PAGE> 8
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Procor Limited, a corporation organized under the laws of Canada (the
"Company"), hereby constitutes and appoints Robert C. Gluth, Robert W. Webb and
K.P. Fischl and each of them (with full power to each of them to act alone), his
true and lawful attorneys-in-fact and agents for him and on his behalf and in
his name, place and stead, in any and all capacities, to sign the Registration
Statement on Form S-3 to be filed by the Company with the Securities and
Exchange Commission in connection with the offer and sale of Pass Through
Certificates, Series 1996-A and any and all amendments thereto, and any other
documents in connection therewith granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he
himself might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Peter Lawford
----------------------
Peter Lawford
Dated: March 19, 1996
<PAGE> 9
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director and/or
Officer of Procor Limited, a corporation organized under the laws of Canada (the
"Company"), hereby constitutes and appoints Robert C. Gluth, Robert W. Webb and
K.P. Fischl and each of them (with full power to each of them to act alone), his
true and lawful attorneys-in-fact and agents for him and on his behalf and in
his name, place and stead, in any and all capacities, to sign the Registration
Statement on Form S-3 to be filed by the Company with the Securities and
Exchange Commission in connection with the offer and sale of Pass Through
Certificates, Series 1996-A and any and all amendments thereto, and any other
documents in connection therewith granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he
himself might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ R.C. Gluth
----------------------
R.C. Gluth
Dated: March 19, 1996
<PAGE> 10
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director
and/or Officer of Procor Limited, a corporation organized under the
laws of Canada (the "Company"), hereby constitutes and appoints
Robert C. Gluth, Robert W. Webb and K.P. Fischl and each of them
(with full power to each of them to act alone), his true and lawful
attorneys-in-fact and agents for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign the
Registration Statement on Form S-3 to be filed by the Company with
the Securities and Exchange Commission in connection with the offer
and sale of Pass Through Certificates, Series 1996-A and any and
all amendments thereto, and any other documents in connection
therewith granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in and about
the premises in order to effectuate the same as fully to all
intents and purposes as he himself might or could do if personally
present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ S. Donald Hamilton
--------------------
S. Donald Hamilton
Dated: March 19, 1996
