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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARCH 18, 1998
Date of Report (Date of earliest event reported)
UNION TANK CAR COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 1-5666 36-3104688
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
225 W. WASHINGTON STREET, CHICAGO, IL 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312)372-9500
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
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On March 18, 1998, Union Tank Car Company (the "Company") entered into an
Underwriting Agreement with Salomon Brothers Inc relating to the issuance and
sale of $97,852,000 principal amount of Pass Through Certificates, Series 1998-A
(the "Pass Through Certificates"). The proceeds from the sale of the Pass
Through Certificates were used to purchase a like principal amount of equipment
notes issued by the trustee of an owner trust (the "Owner Trustee") in
connection with a leveraged lease transaction to finance a portion of the cost
of certain tank cars and covered hopper cars that were purchased by the Owner
Trustee and leased to the Company. The Pass Through Certificates were registered
under the Securities Act of 1933 pursuant to the Company's Registration
Statement on Form S-3 (333-45105).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a)-(b) Not applicable.
(c) Exhibits.
1(a) Underwriting Agreement, dated March 18, 1998, between the
Company and Salomon Brothers Inc.
4(a)(1) Pass Through Trust Agreement 1998-A, dated as of March 18,
1998, between the Company and Harris Trust and Savings Bank.
4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1)).
4(b)(1) Participation Agreement, dated as of March 18, 1998, among the
Company, Wilmington Trust Company, FNBC Leasing Corporation
and Harris Trust and Savings Bank.
4(b)(2) Equipment Lease Agreement, dated March 30, 1998, between
Wilmington Trust Company and the Company.
4(b)(3) Lease Supplement No. 1, dated March 30, 1998, between
Wilmington Trust Company and the Company.
4(b)(4) Trust Indenture and Security Agreement, dated March 30, 1998,
between Wilmington Trust Company and Harris Trust and Savings
Bank.
4(b)(5) Form of Equipment Note (included in Exhibit 4(b)(4)).
4(b)(6) Trust Indenture Supplement No. 1, dated March 30, 1998, between
Wilmington Trust Company and Harris Trust and Savings Bank.
4(b)(7) Appendix A to Participation Agreement, Equipment Lease Agreement
and Trust Indenture and Security Agreement - Definitions.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
UNION TANK CAR COMPANY
By: /s/ R.C. Gluth
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R.C. Gluth
Executive Vice President
Date: April 29, 1998
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Exhibit 1(a)
Union Tank Car Company
$97,852,000
Pass Through Certificates, Series 1998-A
Underwriting Agreement
New York, New York
March 18, 1998
Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Dear Ladies and Gentlemen:
Union Tank Car Company, a Delaware corporation (the "Company"), proposes
to cause to be sold to you the underwriter (the "Underwriter") $96,325,000
aggregate principal amount of Pass Through Certificates, Series 1998-A, with the
interest rate and final distribution date as set forth in Schedule A hereto (the
"Pass Through Certificates" or the "Securities"), to be issued under the Pass
Through Trust Agreement 1998-A, dated as of March 18, 1998 (the "Pass Through
Trust Agreement"), between the Company and Harris Trust and Savings Bank, as
Pass Through Trustee (the "Pass Through Trustee"). The property to be purchased
by the Pass Through Trustee under Pass Through Agreement 1998-A and contained in
such trust shall consist of $97,852,000 principal amount Equipment Notes, to be
issued under the Indenture.
All capitalized terms used, but not defined herein, shall have the
meanings attributed to them in the Pass Through Trust Agreement. 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 Company represents and warrants to,
and agrees with you, that:
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(a) The Company meets the requirements for the use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (File No. 333-45105) on such Form, including a basic prospectus,
for registration under the Act of the offering and sale of the Securities.
The Company may have filed one or more amendments thereto, and may have
used a Preliminary Final Prospectus, each of which has previously been
furnished to you. Such registration statement, as so amended, has become
effective, and the Pass Through Trust Agreement has been duly qualified
under the Trust Indenture Act. The offering of the Securities is a Delayed
Offering and, although the Basic Prospectus may not include all the
information with respect to the Securities and the offering thereof
required by the Act and the rules thereunder to be included in the Final
Prospectus, the Basic Prospectus includes all such information required by
the Act and the rules thereunder to be included therein as of the
Effective Date. The Company will next file with the Commission pursuant to
Rules 415 and the appropriate subparagraph of 424(b) a final supplement to
the form of prospectus included in such registration statement relating to
the Securities and the offering thereof. As filed, such final prospectus
supplement shall include all required information with respect to the
Securities and the offering thereof and, except to the extent the
Underwriter shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time 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 Basic Prospectus and any Preliminary Final Prospectus) as
the Company has advised you, prior to the Execution Time, will be included
or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Final Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date, the Final Prospectus (and any
supplement thereto) will, comply in all material respects with the
applicable requirements of the Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") and the respective rules and
regulations thereunder; on the Effective Date, the Registration Statement
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 the Pass Through Trust Agreement did or will
comply in all material respects with the requirements of the Trust
Indenture Act and the rules thereunder; and, on the Effective Date, the
Final 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 Final 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
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the Company makes 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 or (ii) the information contained in or omitted
from the Registration Statement or the Final Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Underwriter specifically for
inclusion in the Registration Statement or the Final Prospectus (or any
supplement thereto), it being understood and agreed that the only
information furnished by or on behalf of the Underwriter consists of (i)
the stabilization language appearing on the top of page S-2, (ii) the
third paragraph under the caption "Underwriting," and (iii) the first
sentence of the fifth paragraph under the caption "Underwriting," each as
contained in the Preliminary Final Prospectus and the Final Prospectus.
(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 Registration Statement and any post-effective amendment or
amendments thereto became or becomes effective and each date after the
date hereof on which a document incorporated by reference in the
Registration Statement is filed. "Execution Time" shall mean the date and
time that this Agreement is executed and delivered by the parties hereto.
"Basic Prospectus" shall mean the prospectus referred to in paragraph (a)
above contained in the Registration Statement at the Effective Date
including, in the case of a Non-Delayed Offering, any Preliminary Final
Prospectus. "Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Basic Prospectus which describes the
Securities and the offering thereof and is used prior to filing of the
Final Prospectus. "Final Prospectus" shall mean the prospectus supplement
relating to the Securities that is first filed pursuant to Rule 424(b)
after the Execution Time, together with the Basic Prospectus or, if, in
the case of a Non-Delayed Offering, no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus relating to the
Securities, including the Basic Prospectus, 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 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 415", "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 Securities 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, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which
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were filed under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be;
and any reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
Preliminary Final Prospectus or the Final 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 the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein by
reference. A "Non-Delayed Offering" shall mean an offering of securities
which is intended to commence promptly after the effective date of a
registration statement, with the result that, pursuant to Rules 415 and
430A, all information (other than Rule 430A Information) with respect to
the securities so offered must be included in such registration statement
at the effective date thereof. A "Delayed Offering" shall mean an offering
of securities pursuant to Rule 415 which does not commence promptly after
the effective date of a registration statement, with the result that only
information required pursuant to Rule 415 need be included in such
registration statement at the effective date thereof with respect to the
securities so offered. Whether the offering of the Securities is a
Non-Delayed Offering or a Delayed Offering shall be set forth in Schedule
I hereto.
(d) The consolidated financial statements incorporated by reference
in the Registration Statement and the Final Prospectus present fairly the
consolidated financial position of the Company 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 Final Prospectus,
at the time they were or hereafter are filed with the Commission, complied
and will comply in all 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 Final 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 the Company and its subsidiaries, taken as a whole.
(g) The Company and each Significant Subsidiary (with such term
having the meaning attributed to it under Rule 405 under the Act) of the
Company has been
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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 Final 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 the Company and its
subsidiaries taken as a whole. The Company owns either directly or
indirectly, all of the issued and outstanding capital stock of its
subsidiaries, free and clear of any lien, adverse claim, security interest
or other encumbrance.
(h) The execution and delivery by the Company of this Agreement, the
Participation Agreement, the Pass Through Trust Agreement, the Lease and
the other Operative Agreements to which the Company is, or is to be, a
party, the consummation by the Company of the transactions herein and
therein contemplated, and the compliance by the Company 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 the
Company or any of its subsidiaries or any material indenture, mortgage, or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of its properties is 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 Company or any of its subsidiaries or any of
its properties; and, assuming due authorization, execution and delivery by
all parties thereto other than the Company, 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 and the Equipment
Notes, the valid authorization, execution, delivery and performance by the
Company of this Agreement, the Participation Agreement, the Pass Through
Trust Agreement, the Lease and the other Operative Agreements to which the
Company is, or is to be, a party, or the consummation by the Company of
the transactions contemplated by this Agreement, the Participation
Agreement, the Pass Through Trust Agreement, the Lease and the other
Operative Agreements to which the Company 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) if required, 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.
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(i) This Agreement, the Participation Agreement, the Pass Through
Trust Agreement, the Lease and the other Operative Agreements to which the
Company is, or is to be, a party, have each been duly authorized by the
Company and, when executed and delivered by the Company will constitute
valid and binding obligations of the Company. The Pass Through
Certificates, the Equipment Notes, the Indenture, the Participation
Agreement, the Pass Through Trust Agreement, the Lease and the other
Operative Agreements to which the Company 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 the Company as of December 31, 1996
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) Assuming due authorization, execution and delivery by the Pass
Through Trust Agreement, 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 Agreement and this
Agreement, will be duly issued under the Pass Through Trust Agreement and
will constitute valid and binding obligations of the Pass Through Trustee;
and the holders thereof will be entitled to the benefits of the Pass
Through Trust Agreement.
(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 the 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 Company agrees to
request the Pass Through Trustee to sell to you, and you agree to purchase from
the Pass Through Trustee, at a purchase price of 100% of the principal amount
thereof, the Pass Through Certificates.
As compensation to you for your commitment and obligations hereunder in
respect of the Pass Through Certificates, including your undertaking to
distribute the Pass Through Certificates, the Company will pay when due, to you
an amount equal to the product of .625% times the original principal amount of
the Pass Through Certificates purchased by you. Such payment 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
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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 March 23, 1998 or
such later date and time (not later than March 31) as the Company 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 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 Company agrees 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. It is understood that, after the
Registration Statement becomes effective, you propose to offer the Pass Through
Certificates for sale to the public as set forth in the Prospectus.
5. Agreements. The Company agrees with you that:
(a) The Company will not file any amendment of the Registration
Statement or supplement to the Prospectus unless the Company has 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 Company will cause the Final 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 Company 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 Final 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 Final 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
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threatening of any proceeding for that purpose (and the Company agrees
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 Company 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.
(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 Final 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
Final Prospectus to comply with the Act or the Exchange Act or the
respective rules and regulations thereunder, the Company 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 and supply any
supplemental Prospectus to you in such quantities as you may reasonably
request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to you an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and the applicable rules and
regulations thereunder.
(d) The Company 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 Final
Prospectus and the Final 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 Company will
pay the expenses of printing all documents relating to the offering.
(e) The Company 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 Company
will not be
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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
Company 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 Company confirms as of the date hereof that it 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
Company further agrees that if the Company commences engaging in business
with the government of Cuba 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 the Company's
business with Cuba or with any person or affiliate located in Cuba changes
in any material way, the Company will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the
Department.
(h) On the date of the execution and delivery by the Company of the
Participation Agreement, the Lease and the other Operative Agreements to
which it is a party, the Company shall deliver to you a certificate, dated
such date, signed 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 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 the Company in the
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 such date as if made on and as of the
Closing Date;
(ii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied on or prior to such date pursuant to the terms of the
Participation Agreement, the Lease and the 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 as of such date the
Registration Statement contains any untrue statement of material
fact or omits to state any material fact necessary in
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order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(i) In connection with the execution and delivery of the Indenture
and the issuance of any Equipment Notes, the Company will cause to be
delivered to you and to the Rating Agencies (as hereinafter defined) such
opinions of counsel as you may reasonably request.
6. Conditions to the Obligations of Salomon Brothers Inc. Your obligations
to purchase the Pass Through Certificates shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time and the Closing Date, to the accuracy of the statements
of the Company made in any certificates delivered pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) If filing of the Final Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Final 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 Company shall have furnished to you and to Moody's Investors
Service, Inc. and Standard and Poor's Corporation (together, the "Rating
Agencies"), if requested by you, the opinion of Neal, Gerber & Eisenberg,
special counsel to the Company, dated the Closing Date, in form reasonably
satisfactory to you and to your special counsel, Mayer, Brown & Platt, to
the effect that:
(i) Each of the Company and its Significant Subsidiaries 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 the Company and its subsidiaries, taken
as a whole;
(ii) the Company 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
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Trust Agreement, the Lease and the other Operative Agreements to
which the Company is, or is to be, a party;
(iii) subject to the limitations and qualifications set forth
in clause (xiv) 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 Agreement, the holders of such
Pass Through Certificates are entitled to the benefits of the Pass
Through Trust Agreement;
(iv) the Pass Through Certificates conform in all material
respects to the description thereof contained in the Final
Prospectus, and such description conforms in all material respects
to the rights set forth in the instruments defining the same;
(v) 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 Company of this Agreement, the Participation Agreement, the Pass
Through Trust Agreement, the Lease and the other Operative
Agreements to which the Company is, or is to be, a party, or the
consummation by the Company of the transactions contemplated by this
Agreement, the Participation Agreement, the Pass Through Trust
Agreement, the Lease and the other Operative Agreements to which the
Company 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) if required, 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;
(vi) 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 Company or any of its 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 known to such counsel 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;
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(vii) the Registration Statement has become effective under
the Act; any required filing of the Basic Prospectus, any
Preliminary Final Prospectus and the Final 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 Agreement has 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
Agreement 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;
(viii)[Intentionally Omitted];
(ix) this Agreement, the Pass Through Trust Agreement, the
Participation Agreement, the Lease, and all the other Operative
Agreements to which the Company 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 the Company, upon execution and delivery by the Company, will
be valid and binding obligations of the Company, enforceable against
the Company, 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
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relating to indemnification or contribution for liabilities arising
under the Act, as to which such counsel need express no opinion;
(x) the Pass Through Trust Agreement, the Equipment Notes, the
Indenture, the Participation Agreement, the Lease and the other
Operative Agreements (to the extent described therein) conform, or
when duly executed and delivered by the parties thereto will
conform, in all material respects to the descriptions thereof
contained in the Prospectus;
(xi) the execution and delivery by the Company of this
Agreement, the Participation Agreement, the Pass Through Trust
Agreement, the Lease and the other Operative Agreements to which the
Company, is, or is to be, a party, the consummation by the Company
of the transactions herein and therein contemplated and in the
manner herein and therein contemplated and compliance by the Company
with the terms hereof and thereof, do not and will not conflict
with, or result in a breach by the Company 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
Company is a party or by which the Company is bound, or any law,
rule, regulation, judgment or order known to such counsel to be
applicable to the Company of any court, regulatory body,
administrative agency, government or governmental body having
jurisdiction over the Company, except that such counsel need express
no opinion or belief as to the accuracy or completeness of the
Registration Statement or Final Prospectus except for the opinions
expressed in clauses (iv), (x), and (xii) (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 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);
(xii) the statements in the Registration Statement and Final
Prospectus under the headings "Material Federal Income Tax
Consequences", "Certain Illinois 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;
(xiii) the Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(xiv) assuming due authorization, execution, issuance and
delivery of the Equipment Notes by the Owner Trustee as contemplated
by the Indenture,
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<PAGE> 14
and due authentication of such Equipment Notes by the Indenture
Trustee, each of the Equipment Notes, when issued, will constitute
valid and binding obligations of the Owner Trustee enforceable
against the Owner Trustee 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 whether
enforcement is considered in a proceeding in equity or at law); and
the holders of the Equipment Notes will be entitled to the benefits
of the Indenture;
(xv) assuming due authorization, execution and delivery of the
Pass Through Trust Agreement by the Pass Through Trustee, the Pass
Through Trust Agreement constitutes the valid and binding obligation
of the Company 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);
(xvi) the trust created by the Pass Through Trust Agreement
will not be classified as an association taxable as a corporation
for federal income tax purposes, but rather, 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 Equipment Notes and any other
property held in such Pass Through Trust;
(xvii) although counsel is not aware of any judicial
authority, the Pass Through Trust is not required to be registered
under the Investment Company Act of 1940, as amended;
(xviii) 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;
(xix) there are no taxes, fees or other governmental charges
payable under the laws of the State of Illinois 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, or Indenture Trustee, as the case may be, of the
Participation Agreement, the Pass Through Trust Agreement and the
other Operative Agreements, as the case may be, or in connection
with the issuance, execution, authentication and delivery of the
Pass
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<PAGE> 15
Through Certificates by the Pass Through Trustee pursuant to the
Pass Through Trust Agreement or the issuance, authentication or
delivery of the Equipment Notes;
(xx) Except to the extent the Indenture Trustee forecloses on
the Equipment and any of the Equipment is located in Illinois or to
the extent the Indenture Estate, or the trust created by the Pass
Through Trust Agreement, as applicable, engages in business in
Illinois as a result of such foreclosure:
(I) neither the trust created by the Pass Through Trust
Agreement, 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 Illinois 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 Agreement).
(II) Certificate Owners who are not residents of or
otherwise subject to tax in the State of Illinois 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 Illinois 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 Illinois 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 Equipment Notes or any
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<PAGE> 16
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 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 Equipment
Notes, (g) the property, or the income, earnings, receipts or other
proceeds received with respect to the property, to be held by the
Indenture Trustee under the Indenture 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 had not had its principal place of business in,
had not performed (either in its individual capacity or as Indenture
Trustee) any or all of its 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 Illinois.
In passing on the form of the Registration Statement and the Final
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 Final Prospectus as amended
or supplemented, its activities in connection with the preparation thereof
and its participation in conferences with certain officers and employees
of the Company and its subsidiaries and with representatives of Ernst &
Young LLP 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 Final 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 Final
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 Illinois, 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
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<PAGE> 17
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)(ix) that the laws
of the State of New York are identical to the laws of the State of
Illinois.
(c) You shall have received from the Law Department of Harris Trust
and Savings Bank, an opinion, dated the Closing Date, in form and
substance reasonably satisfactory to you and your special counsel, Mayer,
Brown & Platt, to the effect that:
(i) Harris Trust and Savings Bank is an Illinois banking
corporation validly existing and holding a valid certificate to do
business as an Illinois banking corporation with trust powers, and,
in its individual capacity or as Pass Through 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
Participation Agreement, the Pass Through Trust Agreement and the
other Operative Agreements to which it is a party;
(ii) Harris Trust and Savings Bank (in its individual
capacity, to the extent provided therein), has duly authorized,
executed and delivered the Pass Through Trust Agreement and,
assuming due authorization, execution and delivery by the Company,
such agreement constitutes the valid and binding obligation of
Harris Trust and Savings Bank (in its individual capacity, to the
extent provided therein), enforceable against Harris Trust and
Savings Bank (in its individual capacity, to the extent provided
therein), in accordance with its 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 Agreement;
and the holders of the Pass Through Certificates are entitled to the
benefits of the Pass Through Trust Agreement;
(iv) the authorization, execution, delivery and performance by
Harris Trust and Savings Bank (in its individual capacity, to the
extent provided
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<PAGE> 18
therein), the Pass Through Trustee or the Indenture Trustee, as the
case may be, of the Indenture, the Participation Agreement, the Pass
Through Trust Agreement 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 Certificate of
Merger dated April 1, 1972 which constitutes the articles of
association of Harris Trust and Savings Bank or the By-Laws of
Harris Trust and Savings Bank, 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 Harris Trust and Savings Bank, the Pass Through 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 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 Illinois or Federal law, rule or regulation governing Harris
Trust and Savings Bank's, the Pass Through Trustee's or the
Indenture Trustee's banking or trust powers, or of any judgment,
order or decree known to such counsel to be applicable to Harris
Trust and Savings Bank, the Pass Through Trustee or the Indenture
Trustee, as the case may be, of any court, regulatory body,
administrative agency, government or governmental body having
jurisdiction over Harris Trust and Savings Bank, the Pass Through
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 Illinois law governing the banking
or trust powers of Harris Trust and Savings Bank, the Pass Through
Trustee or the Indenture Trustee is required for the authorization,
execution, delivery and performance by Harris Trust and Savings
Bank, (in its individual capacity, to the extent provided therein),
the Pass Through Trustee or the Indenture Trustee of the Indenture,
the Participation Agreement, 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 or Indenture Trustee contemplated thereby or the issuance of
the Pass Through Certificates under the Pass Through Trust Agreement
(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;
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<PAGE> 19
(vi) assuming the due authorization, execution and delivery
thereof by the other parties thereto, upon the execution and
delivery of the Participation Agreement, Indenture and other
Operative Agreements by the Pass Through Trustee or the Indenture
Trustee, as the case may be, such agreement will have been duly
authorized, executed and delivered by the Pass Through Trustee or
Indenture Trustee, as the case may be, and each such agreement shall
consulate the valid and binding obligation thereof, and be
enforceable there against in accordance with their respective terms
subject to the qualifications set forth in Section 6(c)(ii) hereof.
In giving such opinion, the Law Department of Harris Trust and Savings Bank (A)
may state that no opinion is expressed as to laws other than the laws of the
State of Illinois 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 Illinois, 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.
(d) 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 Agreement, the Registration Statement, the Final Prospectus and
other related matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(e) You shall have been furnished with a certificate of the Company,
signed by the President or any Vice President and the principal financial
officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company 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 Company has 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;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the Company's
knowledge, no proceedings for that purpose have been instituted or
threatened; and
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<PAGE> 20
(iii) since the date of the most recent financial statements
incorporated by reference in the Final Prospectus, there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated
in the Final Prospectus.
(f) 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 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 Final 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, 1996 included in the Registration Statement and
the Final 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 the Company'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 the Company) set forth in the
Registration Statement and the Final 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.
(g) 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 the Company contained in the Company's Quarterly Reports on
Form 10-Q for the quarter ended September 30, 1997
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<PAGE> 21
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 Final
Prospectus and of the latest unaudited consolidated financial statements
made available to them by the Company 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 the Company and its subsidiaries;
and inquiries of certain officials of the Company who have responsibility
for financial and accounting matters of the Company and its subsidiaries
as to transactions and events subsequent to September 30, 1997 nothing
came to their attention which caused them to believe that (A) the
unaudited consolidated financial statements of the Company 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 the Company
incorporated by reference in the Registration Statement, and (B) with
respect to the period subsequent to December 31, 1996, 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 the Company and its
subsidiaries or capital stock of the Company or decreases in the
stockholder's equity of the Company and its subsidiaries as compared with
the amounts shown on the September 30, 1997, unaudited consolidated
balance sheet data included in "Selected Financial Information" in the
Registration Statement and the Prospectus, or for the period from December
31, 1996 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 the Company 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 the Company as to the
significance thereof unless said explanation is not deemed necessary by
you.
References to the Prospectus in paragraphs (f) and (g) include any
supplement thereto at the date of the letter.
(h) 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 (f) and (g) of this
Section 6 or (ii) any change, or any development involving a prospective
change, in or affecting the business or properties of the Company 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
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<PAGE> 22
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.
(i) 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 the Company's debt securities by
the Rating Agencies as of the Execution Time.
(j) Prior to the Closing Date, the Company shall have furnished to
you and the Rating Agencies such further information, certificates and
documents as you and they may reasonably request.
(k) The Pass Through Certificates shall have received ratings of "A1
senior secured" by Moody's Investors Service, Inc. and "A+" by Standard &
Poor's Corporation.
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 Company 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 Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by you, the Company 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) The Company 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
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<PAGE> 23
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) the Company 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 Company by or on behalf of you specifically for use
in connection with the preparation thereof, it being understood and agreed that
the only information furnished by or on behalf of the Underwriter consists of
(x) the stabilization language appearing on the top of page S-2, (y) the third
paragraph under the caption "Underwriting," and (z) the first sentence of the
fifth paragraph under the caption "Underwriting," each as contained in the
Preliminary Final Prospectus and the Final Prospectus and (ii) such indemnity
with respect to any Preliminary Final Prospectus shall not inure to your benefit
(or to the benefit of any 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 Final Prospectus (or
the Final 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 Final Prospectus was corrected in the Final
Prospectus (or the Final Prospectus as amended or supplemented). This indemnity
agreement will be in addition to any liability which Union may otherwise have.
(b) You agree to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration Statement, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
you, but only with reference to written information relating to you furnished to
the Company 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 Company
acknowledges that the statements set forth in the last paragraph of the cover
page and under the heading "Underwriting" in any Preliminary Final Prospectus
and the Final Prospectus and the stabilization language included on the inside
front cover of any Preliminary Final Prospectus and the Final Prospectus
constitute the only information furnished in writing by or on behalf of you for
inclusion in any Preliminary Final Prospectus or the Final Prospectus, and you
confirm that such statements are correct.
-23-
<PAGE> 24
(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 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 the Company on grounds of policy or otherwise, the
Company 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 the Company 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 the Company is responsible for the balance;
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<PAGE> 25
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 Company within the meaning
of the Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, 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 Company prior to delivery of and
payment for the Pass 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
Illinois 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 Company or
its 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 Company or any of its 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; or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at 225 West
Washington Street, Chicago, Illinois 60606, Attention: Secretary.
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
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<PAGE> 26
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.
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<PAGE> 27
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 between the
Company and you.
Very truly yours,
UNION TANK CAR COMPANY
By /s/ Mark J. Garrette
--------------------------------
Name: Mark J. Garrette
Title: Vice President
The foregoing Agreement is
hereby confirmed and accepted as of the
date first written above.
SALOMON BROTHERS INC
By /s/ Roy Chandran
--------------------------------
Name: Roy Chandran
Title: Vice President
<PAGE> 28
Schedule A
Final
Pass Through Certificate Principal Amount Interest Rate Distribution Date
- ------------------------ ---------------- ------------- -----------------
1998-A $97,852,000 6.57% January 2, 2014
Type of Offering: Delayed Offering
<PAGE> 1
EXHIBIT 4(a)(1)
================================================================================
PASS THROUGH TRUST AGREEMENT 1998-A
Dated as of March 18, 1998
between
UNION TANK CAR COMPANY
and
HARRIS TRUST AND SAVINGS BANK,
as Pass Through Trustee
================================================================================
$97,852,000
Union Tank Car Company
1998-A Pass Through Trust
Pass Through Certificates,
Series 1998-A
<PAGE> 2
This PASS THROUGH TRUST AGREEMENT 1998-A dated as of March 18, 1998, is
made with respect to the formation of the Union Tank Car Company 1998-A Pass
Through Trust, between UNION TANK CAR COMPANY, a Delaware corporation (the
"Company"), and HARRIS TRUST AND SAVINGS BANK, solely as Pass Through Trustee
and not it its individual capacity.
WITNESSETH:
WHEREAS, it is anticipated that the Owner Trustee, on behalf of the Owner
Participant, will purchase the Equipment (as defined) from the Company;
WHEREAS, it is anticipated that the Owner Trustee will lease the Equipment
to the Company pursuant to the Lease;
WHEREAS, it is anticipated that the 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 the Company for such
Equipment;
WHEREAS, subsequent to the date hereof, and pursuant to the terms and
conditions of this Pass Through Trust Agreement and the Participation Agreement,
certain Equipment Notes are to be sold to the Pass Through Trustee, and the Pass
Through Trustee shall purchase 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 subsequent sale of certain Equipment Notes to
the Pass Through Trustee and the purchase of such Equipment Notes by the Pass
Through Trustee, the Company 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
<PAGE> 3
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:
(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.
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<PAGE> 4
"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 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 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.
"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," in respect of any Unit, has the meaning assigned to
that term in the Lease.
"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.
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<PAGE> 5
"Company" means Union Tank Car Company, a Delaware corporation, or
its successor 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 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 all of the Units covered by the Lease.
"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.
"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. 1998-A), dated March 30, 1998, between the Owner Trustee and the
Indenture Trustee, as such 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 Harris Trust and Savings Bank, 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.
"Initial Cut-off Date" means April 30, 1998.
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<PAGE> 6
"Issuance Date" means the date of the issuance of the Certificates.
"Lease" means the Equipment Lease Agreement (UTC Trust No.
1998-A)(L-15) with respect to the Equipment between the Owner Trustee, as the
lessor, and the Company, as the lessee, as such Lease may be amended or
supplemented from time to time in accordance with its respective terms. Such
terms shall include each Lease Supplement entered into pursuant to the terms of
the Lease.
"Lease Event of Default" means, with respect to the Lease, any 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 Company,
the Pass Through Trustee and the initial Clearing Agency substantially in the
form attached hereto as Exhibit B.
"Make-Whole Amount" has the meaning assigned to that term in the
Indenture.
"Note Documents," with respect to any Equipment Note, means the
Indenture, Lease and Participation Agreement.
"Officer's Certificate" means a certificate signed, (a) in the case
of the Company, 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 an
Owner Trustee or an Indenture Trustee, a Responsible Officer of such Owner
Trustee or Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel, who
(i) in the case of counsel for the Company may be (A) a lawyer employed by the
Company, (B) Neal, Gerber & Eisenberg, or (C) such other counsel designated by
the Company and reasonably acceptable to the Pass Through Trustee and (ii) in
the case of the Owner 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> 7
(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 Wilmington Trust Company, in its individual capacity but
solely as 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. 1998-A), dated as of March 18, 1998, and to which the Pass Through
Trustee, the Owner Trustee, the Indenture Trustee, the Owner Participant, and
the Company are parties, as each such 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
-6-
<PAGE> 8
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-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 Equipment Notes held in the Pass Through Trust on such date plus
the amount of the
-7-
<PAGE> 9
principal payments on 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 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 Equipment Notes held in the Pass Through Trust and
distribution thereof to be made on that date.
"Postponed Notes" means the Equipment Notes as to which a
Postponement Notice shall have been delivered pursuant to Sections 2.1(b) and
(c).
"Postponement Notice" means a certificate of the Company signed by
an officer of the Company (i) identifying the amount of the purchase price of
each Equipment Note and the aggregate purchase price of all such Equipment
Notes, and (ii) indicating that a new Closing Date (which shall be on or prior
to the Initial Cut-off Date in the case of Equipment Notes relating to the
initial Closing, or on or prior to the Subsequent Cut-off Date in the case of
Equipment Notes relating to a subsequent Closing) will be set by subsequent
written notice not less than one Business Day prior to such new Closing Date.
"Record Date" means the Business Day preceding a Regular
Distribution Date or a Special Distribution Date, as applicable; provided,
however, that in the case of a Special Payment with respect to the Initial
Cut-off Date, the Record Date means April 30, 1998 and in the case of a Special
Payment with respect to the Subsequent Cut-off Date, the Record Date means June
15, 1998.
"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, January 2 and July 2 of each year, commencing on July 2,
1998 until payment of all the Scheduled Payments to be made under the Equipment
Notes has been made.
"Request" means a request by the Company 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.
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<PAGE> 10
"Responsible Officer" means (i) with respect to the initial Pass
Through Trustee or the initial Indenture Trustee, any officer in the Corporate
Trust Office or any other office at which the Pass Through Trustee or Indenture
Trustee conducts corporate trust business; and (ii) with respect to any
successor Pass Through 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
any Pass Through Trustee, the Indenture Trustee and the Owner Trustee, any other
officer of the Pass Through Trustee, the Owner 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 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.
"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 the Company 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 the Company
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, (iii) in the case of payments received following a default in respect
of any Equipment Note, on the second day of any month, (iv) in the case of a
Special Payment under Section 2.1(b), May 4, 1998 and (v) in the case of a
Special Payment under Section 2.1(c), June 19, 1998.
"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 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 applicable Owner Trustee of such Equipment Notes, (iii) the amounts required
to be distributed pursuant
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<PAGE> 11
to the fifth paragraph of Sections 2.1(b) or 2.1(c), or (iv) any proceeds from
the sale of any Equipment Note 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 the Subsequent Cut-off Date.
"Subsequent Cut-off Date" means June 15, 1998.
"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.
"Trust Property" means 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 Harris Trust and Savings Bank, in its
individual capacity, respectively, not resulting
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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 Harris Trust and Savings Bank, in its individual
capacity, respectively, in violation of or not permitted by any of the terms of
the Operative Agreements, (c) any claim against the Pass Through Trustee or
Harris Trust and Savings Bank 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 the Company is not
required to indemnify the Pass Through Trustee, Harris Trust and Savings Bank 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 Estate 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 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 Harris Trust and Savings Bank 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 the Company, as lessee and (iii) the
Pass Through Trustee or Harris Trust and Savings Bank in its individual
capacity, is diligently contesting such Trustee Lien by appropriate proceedings.
"Unit" has the meaning assigned to that term in the Lease.
SECTION 1.2. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Pass Through Trustee to take any
action under any provision of this Pass Through Trust Agreement, the Company
shall furnish to the Pass Through Trustee an Officer's 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;
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(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 or not, 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.
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 Company
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 Company and the Indenture
Trustee, if made in the manner provided in this Section.
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(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 the Company, 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 the
Company, the Owner Trustee, the Pass Through Trustee, the Owner Participant or
any Affiliate of any such Person.
(d) The Company 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
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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;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1. Issuance of Certificates; Acquisition of Equipment
Notes.
(a) Upon request of the Company, the Pass Through Trustee shall
execute, authenticate and deliver Certificates with an aggregate principal
amount equaling the aggregate principal amount of the Equipment Notes
anticipated to be purchased by the Pass Through Trustee pursuant to 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
such Equipment Notes and, prior to the Initial Cut-off Date and Subsequent
Cut-off Date, as the case may be, upon the written request of the Company, the
Pass Through Trustee shall purchase, pursuant to the terms and conditions of the
Participation Agreement, such Equipment Notes at a purchase price equal to the
principal amount thereof. 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 Subsection (b) below.
(b) The Pass Through Trustee shall postpone the purchase of the
Equipment Notes (the "Postponed Notes") and shall promptly deposit into an
escrow account (the "Escrow Account") the proceeds derived from the sale of the
Certificates (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, the Company in Specified
Investments maturing (i) no later than the Initial Cut-off Date or (ii) if at
least $50,000,000 in aggregate principal amount of Equipment Notes has been
purchased by the Pass Through
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Trustee prior to the Initial Cut-off Date, no later than the Subsequent Cut-off
Date or (iii) if the Company has given notice to the Pass Through Trustee that
any Postponed Notes will not be issued, on the Business Day immediately
preceding the applicable 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 the
Company shall be deemed written confirmation by the Company that the investment
transactions identified therein accurately reflect the investment directions
given to the Pass Through Trustee by the Company, unless the Company 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, and, if applicable, 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, the Company in Specified
Investments maturing (i) no later than the Initial Cut-off Date or (ii) if at
least $50,000,000 in aggregate principal amount of Equipment Notes has been
purchased by the Pass Through Trustee prior to the Initial Cut-off Date, no
later than the Subsequent Cut-off Date or (iii) if the Company has given notice
to the Pass Through Trustee that any Postponed Notes will not be issued, on the
Business Day immediately preceding the applicable 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 the Company to an
account specified in writing by the Company. The Company 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
the Company and the satisfaction of the closing conditions specified in the
Participation Agreement, the Pass Through Trustee shall purchase not less than
$50,000,000 in aggregate principal amount of the Postponed Notes with the
Escrowed Funds. The purchase price shall equal the principal amount of the
Postponed Notes so purchased.
If at least $50,000,000 in aggregate principal amount of Equipment
Notes have not been purchased by the Pass Through Trustee prior to the Initial
Cut-off Date, the Company shall pay to the Pass Through Trustee on the Initial
Cut-off Date for deposit in the Special Payments Account, in immediately
available funds, an amount equal to the interest that would have accrued on the
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, May 4, 1998. In such event, on the Initial
Cut-off Date, the Pass Through Trustee shall transfer the Escrowed Funds and the
amount paid by the Company under this paragraph to the Special Payments Account
for distribution as a Special Payment in accordance
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with the provisions hereof. If the Pass Through Trustee has purchased at least
$50,000,000 in aggregate principal amount of Equipment Notes prior to the
Initial Cut-off Date, unless the Company directs the Pass Through Trustee that
no additional Equipment Notes will be purchased, the balance of the Escrowed
Funds will be held by the Pass Through Trustee for the purchase of Equipment
Notes pursuant to the fourth paragraph of Section 2.1(c) or distribution
pursuant to the fifth paragraph of Section 2.1(c).
(c) Notwithstanding the foregoing Subsection (b), with respect to
amounts received by the Pass Through Trustee for the purchase of Equipment Notes
to be issued pursuant to the Participation Agreement after the Initial Cut-off
Date, and upon receipt by the Pass Through Trustee of a Postponement Notice to
such effect, the Pass Through Trustee shall retain in the Escrow Account an
amount equal to the purchase price of such Equipment Notes. 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, the
Company in Specified Investments maturing (i) no later than the Subsequent
Cut-off Date or (ii) if the Company has given notice to the Pass Through Trustee
that the aforementioned Equipment Notes will not be issued, on June 19, 1998, 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 the Company shall be deemed written confirmation by the Company that
the investment transactions identified therein accurately reflect the investment
directions given to the Pass Through Trustee by the Company, unless the Company
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, the Company in Specified Investments maturing (i) no later than the
Subsequent Cut-off Date or (ii) if the Company has given notice to the Pass
Through Trustee that the Postponed Notes will not be issued, on the Business Day
immediately preceding the applicable 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 the Company to an account
specified in writing by the Company. The Company 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
the Company and the satisfaction of the closing conditions specified in the
Participation Agreement, the Pass Through Trustee shall purchase the applicable
Equipment Notes with the Escrowed Funds. The purchase price shall equal the
principal amount of such Postponed Notes.
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If any of the applicable Equipment Notes will not be issued on or prior to
the Subsequent Cut-off Date for any reason, the Company shall so notify the Pass
Through Trustee and the Company shall pay to the Pass Through Trustee on the
Subsequent Cut-off Date for deposit in the Special Payments Account, in
immediately available funds, an amount equal to the interest that would have
accrued on such unissued Equipment Notes at a rate equal to the interest rate
applicable to the Certificates issued under the Pass Through Trust from the
Issuance Date to, but not including, June 19, 1998 and the Pass Through Trustee
shall transfer an amount equal to that amount of Escrowed Funds that would have
been used to purchase such unissued Equipment Notes and the amount paid by the
Company under this paragraph to the Special Payments Account for distribution as
a Special Payment in accordance with the provisions hereof. If on or prior to
the Subsequent Cut-off Date the Pass Through Trustee has purchased $97,852,000
in aggregate principal amount of Equipment Notes, then the Company shall pay to
the Pass Through Trustee on July 2, 1998, for deposit in the Certificate
Account, in immediately available funds, an amount equal to the interest that
would have accrued on each Equipment Note, at a rate equal to the interest rate
applicable to the Certificates issued under the Pass Through Trust, from the
Issuance Date to, but not including, the date that such Equipment Note was
purchased by the Pass Through Trustee, and the Pass Through Trustee shall
transfer such amount paid by the Company to the Certificate Account for
distribution as a Regular Distribution on July 2, 1998 in accordance with the
provisions of Section 4.2 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 acquired pursuant to Section 2.1 hereof
and 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, 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 Notes 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
the Company 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
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Person designated by the Company 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, 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 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.
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SECTION 3.2. Authentication of Certificates. The Pass Through
Trustee shall duly authenticate and deliver Certificates in authorized
denominations equaling in the aggregate the aggregate principal amount of the
Equipment Notes to be purchased by the Pass Through Trustee pursuant to 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 Company 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 Company 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.
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,
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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 Company 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 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.
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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 Company.
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 Company, 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;
(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
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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) the Company 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 the Company is unable to locate
a qualified successor, (ii) the Company, 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 Company 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, of the occurrence of any such
event and of the availability of Registered Certificates. Upon surrender to the
Pass Through Trustee of all
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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
Company, 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 Company nor the Pass Through
Trustee shall be liable if the Pass Through Trustee or the Company 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 to the Pass Through Trustee, as holder of the Equipment Notes issued
under such Indenture, 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) are made under the Indenture to the Pass Through Trustee, as holder of the
Equipment Notes issued under the Indenture, the Pass Through Trustee upon
receipt shall immediately deposit the aggregate amounts of such Special Payments
in the Special Payments Account. On
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the day the Company makes the payment to the Pass Through Trustee described in
the fifth paragraph of Sections 2.1(b) or 2.1(c), the Pass Through Trustee upon
receipt shall immediately deposit the aggregate amount thereof in the
Certificate Account. Upon the sale of any Equipment Note 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 Indenture, on the applicable prepayment date under the
Indenture.
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 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 realized upon the sale of
any Equipment Note, 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
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
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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 Company
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 Company that Postponed Notes
or the Equipment Notes 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
Company pursuant to Section 2.1(b) or (c), as applicable) , as 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.
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
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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 COMPANY
SECTION 5.1. Maintenance of Corporate Existence. The Company, 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 the Company shall not 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) The Company shall not consolidate with or merge into any other
corporation or sell or convey all or substantially all of its assets to any
Person, unless the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by sale or conveyance all or
substantially all of the assets of the Company shall be a corporation organized
and existing under the laws of the United States of America or any State or the
District of Columbia, 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 the Company is a party.
(b) Immediately after giving effect to such transaction, no Event of
Default and no Indenture Default, and no event that, after notice or lapse of
time, or both, would become an Event of Default or an Indenture 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 the Company, the successor corporation
formed by such consolidation or into which the Company 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, the Company under this Agreement with the
same effect as if such successor corporation had been named as the Company
herein. No such sale or conveyance of all or substantially all of the assets of
the Company as an entirety shall have the effect of releasing the Company 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 the Company as conclusive evidence that any such
consolidation, merger, sale, lease or conveyance, and any such assumption
complies with the provisions of this Section 5.2.
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ARTICLE VI
DEFAULT
SECTION 6.1. Events of Default. If an Indenture Default under the
Indenture (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 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,
in favor of directing the Indenture Trustee under the Indenture to declare the
unpaid principal amount of all Equipment Notes then outstanding under the
Indenture and accrued interest thereon to be due and payable under, and in
accordance with the provisions of, the Indenture. In addition, if an Indenture
Default shall have occurred and be continuing under the Indenture, 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 the Indenture that are held in the Pass Through
Trust to direct the Indenture Trustee regarding the exercise of remedies
provided in Article V of the Indenture.
In addition, after an Event of Default shall have occurred and be
continuing with respect to any Equipment Notes, 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 applicable law) all or part of such Equipment Notes, 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 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 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, 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.
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
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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 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.
SECTION 6.2. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes 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. 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, and upon compliance with the terms of
sale, may hold, retain, possess and dispose of such Equipment Notes in
their own absolute right without further accountability; provided,
however, that this provision shall not apply to the sale of Equipment
Notes 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 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, shall be, to the extent permitted by and in accordance with the terms of
the Note 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 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.
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(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 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), 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 Company, the Owner Trustee, the Owner Participant 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, 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; it being understood that (subject to
Section 7.1) the Pass Through Trustee shall have no duty or obligation to
ascertain whether or not such actions or forebearances are unjustly
prejudicial to such Certificateholders;
(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
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(iv) if an Indenture Default under the Indenture 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
held by the Trust in favor of directing any action by the Indenture
Trustee with respect to the Indenture Default.
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 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 (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 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 to waive the corresponding Indenture 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,
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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
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 on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (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
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Trustee, or 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 Company, the Owner 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, 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 Company 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
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absence of bad faith on its part, rely upon an Officer's Certificate of
the Company, the Owner Trustee or the Indenture Trustee;
(iv) before the Pass Through Trustee acts or refrains from
acting, it 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
security or indemnity reasonable to it 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;
(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;
(ix) the Pass Through Trustee shall not be required to give
any bond or surety with respect to the performance of its powers and
duties hereunder; and
(x) the permissive rights of the Pass Through Trustee shall
not be construed as a duty.
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, the Participation Agreement, the Equipment Notes
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.
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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 Company, the Owner Trustee 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 Company agrees:
(i) to pay, or cause to be paid, 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 or investigating 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 Company promptly of any claim for
which it may seek indemnity. The Company shall defend the claim and the
Pass Through
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Trustee shall cooperate in the defense. The Pass Through Trustee may have
separate counsel with the consent of the Company, and the Company will pay
the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent; and
(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 Company promptly of any tax for
which it may seek indemnity. The Company 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
Company, and the Company will pay the reasonable fees and expenses of such
counsel. The Company need not pay for any taxes paid, in settlement or
otherwise, without its 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 or 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
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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.
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 Company, the Authorized Agents, the Owner Trustee
and the Indenture Trustee. If an instrument of acceptance by a successor Pass
Through Trustee shall not have been delivered to the Company, the Owner Trustee
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 Company, the Owner
Trustee 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
Company 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
Company 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
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Through Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (x) the Company 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 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 Company and the Owner Trustees 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 Company or the Owner Trustees have
agreed to pay such tax. The Company 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
Company 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, the Company 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 Company, the Owner
Trustee, the Indenture Trustee 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.
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SECTION 7.10. Acceptance of Appointment by Successor. Every
successor Pass Through Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company 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, on request of the Company 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, the Company, 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 an affiliate of Harris
Trust and Savings Bank, Harris Trust Company of New York, 88 Pine Street, New
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York, New York 10005. 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 the Company, the Owner Trustee, the Indenture Trustee 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 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 Company, the Owner
Trustee and the Indenture Trustee. The Company 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 Company 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. The
Company shall give written notice of any such appointment made by them to the
Pass Through Trustee, the Owner Trustee 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.
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(e) The Company agrees to pay, or cause to be paid, 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 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 in Pass Through
Trustee's Name. The Pass Through Trustee agrees that all Equipment Notes,
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, Permitted
Investments, or Specified Investments, as the case may be, in the register of
the issuer of such Equipment Notes, Permitted Investments or Specified
Investments. In no event shall the Pass Through Trustee invest in, or hold,
Equipment Notes, Permitted Investments or Specified Investments in a manner that
would cause the Pass Through Trustee not to have the ownership
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interest in such Equipment Notes, 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, Permitted Investments or
Specified Investments or other applicable law then in effect.
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 an Illinois banking
corporation, validly existing and holding a valid certificate to conduct
business as an Illinois banking corporation with trust powers;
(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
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to the extent such agreements are enforceable against the other parties
thereto (as to which the Pass Through Trustee makes no representation or
warranty) 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 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 the Company 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 the Company 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 the Company 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.
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ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY PASS THROUGH TRUSTEE
SECTION 8.1. Company to Furnish Pass Through Trustee with Names and
Addresses of Certificateholders. The Company 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 Company of any such request, a
list, in such form as the Pass Through Trustee may reasonably require, of all
information in the possession or control of the Company 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 November 1 of each year commencing with the
year 1998, 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
November 1, 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 Company 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. The Company 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
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from time to time by rules and regulations prescribe) which the Company 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, 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 the
Company 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 the Company
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 as to his or her knowledge of
the Company'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.
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 Company 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 the
Company and the assumption by any such successor of the covenants of the
Company herein contained;
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(ii) to add to the covenants of the Company for the benefit of
the Certificateholders, or to surrender any right or power herein
conferred upon the Company;
(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 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 Company and the Pass Through Trustee, the Company 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 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 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 in the Pass Through Trust;
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<PAGE> 49
(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; or
(iv) 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,
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suitable notation may be made upon Outstanding Certificates after proper
presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
SECTION 10.1. Amendments and Supplements to Indenture and Other Note
Documents. In the event that the Pass Through Trustee, as holder of any
Equipment Note in trust for the benefit of the Certificateholders, receives a
request for a consent to any amendment, modification, waiver or supplement under
the Indenture or other Note 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 to take or refrain from taking any action which a holder of such
Equipment Note 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 and (c) how to vote any Equipment Note 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, the Pass Through Trustee
shall vote or consent with respect to such Equipment Note 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 of such consent to any amendment, modification,
waiver or supplement under the Indenture or other Note Document or the
Participation Agreement.
ARTICLE XI
TERMINATION OF TRUST
SECTION 11.1. Termination of the Pass Through Trust. The respective
obligations and responsibilities of the Company 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
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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.
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 the appropriate amount
of money relating to the Indenture Trustee and shall give written notice thereof
to the Owner Trustee and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. 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 12.2. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Pass
Through Trust, the Fractional
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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 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 12.3. 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 the Company, 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
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> 53
if to the Pass Through Trustee, to:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Indenture Trust Administration
Facsimile: (312) 461-3525
Telephone: (312) 461-2908
(b) The Company 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 Company mails 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 Company with
a copy of any demand, notice or written communication received by the Pass
Through Trustee hereunder from any Certificateholder, the Owner Trustee or the
Indenture Trustee.
SECTION 12.4. 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 Company and the Pass Through Trustee shall have the
protection of Section 312(c) of the Trust Indenture Act.
SECTION 12.5. Governing Law. THIS PASS THROUGH TRUST AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OF CONFLICT OF LAW PROVISION
OR RULE AND THE
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OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.6. 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 12.7. 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 12.8. 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 12.9. Successors and Assigns. All covenants, agreements,
representations and warranties in this Pass Through Trust Agreement by the Pass
Through Trustee, the Company 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 12.10. 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 12.11. 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 12.12. 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> 55
IN WITNESS WHEREOF, the Company and the Pass Through Trustee have caused
this Pass Through Trust Agreement to be duly executed by their respective
officers, duly attested, all as of the day and year first above written.
UNION TANK CAR COMPANY
Attest: By /s/ Mark J. Garrette
-------------------------------
Title: Vice President
/s/ Robert W. Webb
- -------------------------------
Title: Secretary
HARRIS TRUST AND SAVINGS BANK,
as Pass Through Trustee
Attest: By /s/ J. Bartolini
-------------------------------
Title: Vice President
/s/ Daniel G. Donovan
- -------------------------------
Title: Assistant Secretary
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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 issuer or
its 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 1998-A PASS THROUGH TRUST
Pass Through Certificate,
Series 1998-A
Final Distribution Date: January 2, 2014
evidencing a fractional undivided interest in a trust, the property of
which includes certain equipment notes each secured by equipment leased
to Union Tank Car Company.
Certificate
No. ___ $97,852,000 Fractional Undivided Interest
representing 100% of the Trust
THIS CERTIFIES THAT Cede & Co., for value received, is the
registered owner of a $97,852,000 (Ninety Seven Million Eight Hundred Fifty Two
Thousand dollar) Fractional Undivided Interest in the Union Tank Car Company
1998-A Pass Through Trust (the "Trust") created by Harris Trust and Savings
Bank, an Illinois banking corporation, as trustee (the "Pass Through Trustee"),
pursuant to a Pass Through Trust Agreement 1998-A dated as of March 18, 1998
(the "Pass Through Trust Agreement") between the Pass Through Trustee and Union
Tank Car Company, a Delaware corporation (the "Company"), 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 Certificate is one of
the duly authorized Certificates designated as "Pass Through Certificates,
Series 1998-A" (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")
<PAGE> 57
includes certain Equipment Notes. Each issue of Equipment Notes is secured by,
among other things, a security interest in Equipment leased to the Company.
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 January 2 and July 2 of each year (each a "Regular
Distribution Date"), commencing on July 2, 1998, 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 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 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, 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 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 ILLINOIS.
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.
A-2
<PAGE> 58
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
1998-A PASS THROUGH TRUST
By: HARRIS TRUST AND SAVINGS BANK,
as Pass Through Trustee
By:____________________________________
Title:
A-3
<PAGE> 59
[Reverse of Certificate]
The Certificates do not represent a direct obligation of, or an
obligation guaranteed by, or an interest in the Company, the Pass Through
Trustee, in its individual or trust capacities, any Owner Participant, any Owner
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 Company and the rights of the Certificateholders under the
Pass Through Trust Agreement at any time by the Company 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
A-4
<PAGE> 60
the same 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> 61
[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.
HARRIS TRUST AND SAVINGS BANK,
as Pass Through Trustee
By:_____________________________
Authorized Officer
A-6
<PAGE> 62
EXHIBIT B
FORM OF
LETTER OF REPRESENTATIONS
<PAGE> 63
SCHEDULE I
<TABLE>
<CAPTION>
================================================================================
Equipment Notes
Issued under Principal
Indenture: Amount Maturity
- --------------------------------------------------------------------------------
<S> <C> <C>
On the Issuance Date $0 N/A
- --------------------------------------------------------------------------------
Subsequent to the Issuance Date $96,325,000 January 2, 2014
- --------------------------------------------------------------------------------
Total $96,325,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
<PAGE> 64
Reconciliation and tie between Pass Through Trust Agreement 1998-A dated as of
March 18, 1998 and the Trust Indenture Act of 1939. This reconciliation does not
constitute part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- --------------- -----------------
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) ............................................. 12.4
(c) ............................................. 12.4
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) ............................................. 12.7
<PAGE> 65
TABLE OF CONTENTS TO PASS THROUGH TRUST AGREEMENT 1998-A1
Section Page
Exhibit A - Form of Certificate
Exhibit B - Form of Letter of Representations
Schedule I - Description of Equipment Notes to be Purchased
-i-
<PAGE> 1
EXHIBIT 4(b)(1)
Participation Agreement
(UTC Trust No. 1998-A)
(L-15)
Dated as of March 18, 1998
among
Union Tank Car Company,
as Lessee
Wilmington Trust Company,
not in its individual capacity
(except to the extent expressly set forth herein),
but solely as Owner Trustee
FNBC Leasing Corporation,
as Owner Participant
Harris Trust and Savings Bank,
as Indenture Trustee
and
Harris Trust and Savings Bank,
as Pass Through Trustee
Tank Cars and Covered Hoppers
<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 . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1. Representations and Warranties of the Bank and the Owner
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Representations and Warranties of the Lessee . . . . . . . . . . . . . . . . . . 16
Section 3.3. Representations and Warranties of the Indenture Trustee . . . . . . . . . . . . 20
Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes . . . . . . . . . . . . . . . . . . . . 21
Section 3.5. Representations and Warranties of the Pass Through Trustee . . . . . . . . . . . 21
Section 3.6. Representations and Warranties of the Owner Participant . . . . . . . . . . . . 23
Section 3.7. Opinion Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.1. Conditions Precedent to Investment by Each Participant . . . . . . . . . . . . . 24
Section 4.2. Additional Conditions Precedent to Investment by Pass
Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.3. Additional Conditions Precedent to Investment by Owner
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.4. Conditions Precedent to the Obligation of the Lessee . . . . . . . . . . . . . . 30
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE LESSEE . . . . . . . . . . . . . 33
Section 6.1. Restrictions on Transfer of Beneficial Interest . . . . . . . . . . . . . . . . 33
Section 6.2. Lessor's Liens Attributable to the Owner Participant . . . . . . . . . . . . . . 36
Section 6.3. Lessor's Liens Attributable to the Owner Trustee . . . . . . . . . . . . . . . . 36
Section 6.4. Liens Created by the Indenture Trustee and the Loan
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
Section 6.5. Covenants of Owner Trustee, Owner Participant and Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.6. Amendments to Operative Agreements . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.7. Covenant of the Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.8. Merger Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.9. Lessee's Purchase in Certain Circumstances . . . . . . . . . . . . . . . . . . . 39
Section 6.10. Owner Participant an Affiliate of Lessee . . . . . . . . . . . . . . . . . . . . 40
Section 6.11. Corporate Existence; Place of Business . . . . . . . . . . . . . . . . . . . . . 40
Section 6.12. No Impairment of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7. LESSEE'S INDEMNITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.1. General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.2. General Indemnification and Waiver of Certain Claims . . . . . . . . . . . . . . 48
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9. SUCCESSOR INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.1. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.2. Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.3. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.6. No Guarantee of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.8. Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.12. Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.13. Limitations of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.14. Maintenance of Non-Recourse Debt . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.15. Ownership of and Rights in Units . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
-ii-
<PAGE> 4
EXHIBITS
Exhibit A - Insurance
Exhibit B - Form of Guaranty
SCHEDULES
Schedule 1A - Description of Equipment (Equipment Group A) and Equipment
Cost (Initial Closing)
Schedule 1B - Description of Equipment (Equipment Group B) and Equipment
Cost (Initial Closing)
Schedule 1C - Description of Equipment (Equipment Group A) and Equipment
Cost (Subsequent Closing)
Schedule 2 - Payment Information for Participants; Commitment Percentages
Schedule 3A - Schedule of Basic Rent Payments (Equipment Group A) (Initial
Closing)
Schedule 3B - Schedule of Basic Rent Payments (Equipment Group B) (Initial
Closing)
Schedule 3C - Schedule of Basic Rent Payments (Equipment Group A)
(Subsequent Closing)
Schedule 4A - Schedule of Stipulated Loss Value (Equipment Group A) (Initial
Closing)
Schedule 4B - Schedule of Stipulated Loss Value (Equipment Group B) (Initial
Closing)
Schedule 4C - Schedule of Stipulated Loss Value (Equipment Group A)
(Subsequent Closing)
Schedule 5A - Schedule of Termination Value (Equipment Group A) (Initial
Closing)
Schedule 5B - Schedule of Termination Value (Equipment Group B) (Initial
Closing)
Schedule 5C - Schedule of Termination Value (Equipment Group A) (Subsequent
Closing)
Schedule 6 - Terms of Equipment Notes
Schedule 7 - Early Purchase Information
Schedule 7A - Early Purchase Information (Equipment Group A) (Initial
Closing)
Schedule 7B - Early Purchase Information (Equipment Group B) (Initial
Closing)
Schedule 7C - Early Purchase Information (Equipment Group A) (Subsequent
Closing)
Schedule 8 - Basic Term Purchase Information
Schedule 8A - Basic Term Purchase Information (Equipment Group A) (Initial
Closing)
Schedule 8B - Basic Term Purchase Information (Equipment Group B) (Initial
Closing)
Schedule 8C - Basic Term Purchase Information (Equipment Group A)
(Subsequent Closing)
Schedule 9 - Outside Date Purchase Information
Schedule 9A - Outside Date Purchase Information (Equipment Group A) (Initial
Closing)
Schedule 9B - Outside Date Purchase Information (Equipment Group B) (Initial
Closing)
Schedule 9C - Outside Date Purchase Information (Equipment Group A)
(Subsequent Closing)
-iii-
<PAGE> 5
PARTICIPATION AGREEMENT (UTC TRUST NO. 1998-A) (L-15)
This Participation Agreement (UTC Trust No. 1998-A) (L-15), dated as
of March 18, 1998 (this "Agreement"), among (i) Union Tank Car Company, a
Delaware corporation (herein, together with its successors and assigns, called
the "Lessee"), (ii) Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity except as expressly stated herein, but solely as
trustee under the Trust Agreement (as hereinafter defined) (herein, together
with its successors and assigns, in its trust capacity called the "Owner
Trustee" and in its individual capacity, called the "Bank"), (iii) FNBC Leasing
Corporation, a Delaware corporation (herein, together with its successors and
assigns, called the "Owner Participant"), (iv) Harris Trust and Savings Bank,
an Illinois banking corporation, as trustee under the Indenture (as defined
below) (herein in such capacity, together with its successors and assigns,
called the "Indenture Trustee"), and (v) Harris Trust and Savings Bank of
Chicago, an Illinois banking corporation, not in its individual capacity, but
solely as Pass Through Trustee under the Pass Through Trust Agreement (as
hereinafter defined) (herein in such capacity, together with its successors and
assigns, called the "Pass Through Trustee" or the "Loan Participant"). The
Owner Participant and the Loan Participant are herein sometimes referred to
together as the "Participants".
WITNESSETH:
WHEREAS, subsequent to the execution and delivery of this Agreement,
the Owner Participant intends to enter into the Trust Agreement (UTC Trust No.
1998-A) (L-15) pursuant to which the Owner Trustee will agree, among other
things, to hold the Trust Estate for the benefit of the Owner Participant
thereunder on the terms specified in the Trust Agreement, subject, however, to
the Lien created under the Indenture and, subject to the terms and conditions
hereof, to purchase from the Lessee on the Initial Closing Date the Units of
Equipment described in Schedules 1A and 1B hereto and purchase from the Lessee
on the Subsequent Closing Date the Units of Equipment described in Schedule 1C
hereto and concurrently with such purchases to lease such Units of Equipment to
the Lessee;
WHEREAS, pursuant to the Pass Through Trust Agreement, on or prior to
the Debt Closing Date, a grantor trust will be created to facilitate the
financing contemplated hereby;
WHEREAS, subsequent to the execution and delivery of this Agreement,
the Owner Trustee intends to enter into the Indenture with the Indenture
Trustee pursuant to which Indenture the Owner Trustee will agree, among other
things, for the benefit of the holder or holders of the Equipment Notes, to
issue to the Pass Through Trustee as Loan Participant, the Equipment Notes as
evidence of the loan made by the Loan Participant in connection with the
financing of the Equipment Cost for the Equipment;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee is authorized and directed by the Owner Participant (i) to accept
delivery of a 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
- 1 -
<PAGE> 6
set forth therein, the Owner Trustee agrees to lease to the Lessee, and the
Lessee agrees to lease from the Owner Trustee, each Unit of Equipment to be
delivered on the Initial Closing Date and the Subsequent Closing Date, such
lease to be evidenced by the execution and delivery of Lease Supplements
covering such Units;
WHEREAS, subsequent to the execution and delivery of this Agreement,
the Lessee and the Owner Participant will enter into the Tax Indemnity
Agreement relating to the Equipment; and
WHEREAS, the proceeds from the sale of the Equipment Notes to the Loan
Participant will be applied, together with the equity contribution made by the
Owner Participant pursuant to this Agreement, to effect the purchase of the
Equipment by the Owner Trustee contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT.
The capitalized terms used in this Agreement (including the foregoing
recitals) and not otherwise defined herein shall have the respective meanings
specified in Appendix A hereto, unless the context hereof shall otherwise
require. All references to Sections, Schedules and Exhibits herein are to
Sections, Schedules and Exhibits of this Agreement unless otherwise indicated.
All accounting terms not otherwise defined herein or in Appendix A hereto have
the meanings assigned to them in accordance with generally accepted accounting
principles. The words herein, hereof and hereunder and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSINGS;
TRANSACTION COSTS.
Section 2.1. Sale and Purchase. Subject to the terms and
conditions hereof and on the basis of the representations and warranties set
forth herein, the Lessee agrees to sell to the Owner Trustee and the Owner
Trustee agrees to purchase from the Lessee, (i) on the Initial Closing Date,
the Units described in Schedules 1A and 1B as hereinafter provided, and (ii) on
the Subsequent Closing Date, the Units described in Schedule 1C as hereinafter
provided, and in connection therewith, the Owner Trustee agrees to pay to the
Lessee the Equipment Cost for each of the various Units as specified in
Schedules 1A, 1B and 1C; provided, however, that the Owner Trustee shall not be
obligated to purchase on the Initial Closing Date or the Subsequent Closing
Date any Unit that is destroyed, damaged, defective, in unsuitable condition or
otherwise unacceptable to the Lessee for lease pursuant to the Lease. The
Lessee shall deliver said Units of Equipment to the Owner Trustee and the Owner
Trustee shall accept such delivery on delivery dates as more fully provided
herein (the first such delivery date being referred to herein as the "Initial
Closing Date" and the second such delivery date being referred to herein as the
"Subsequent Closing Date"); provided that the Initial Closing Date shall occur
on or prior
- 2 -
<PAGE> 7
to April 30, 1998 and the Subsequent Closing Date shall occur on or prior to
June 15, 1998. Each of the Initial Closing Date and the Subsequent Closing Date
are herein sometimes referred to individually as a "Closing Date" and together
as the "Closing Dates".
Section 2.2. Participation in Equipment Cost.
(a) Equity Participation. Subject to the terms and conditions
hereof and on the basis of the representations and warranties set forth herein,
on the Initial Closing Date and on the Subsequent Closing Date the Owner
Participant agrees to participate in the payment of the Equipment Cost for the
Units delivered on the Initial Closing Date and the Subsequent Closing Date, as
the case may be, by making an equity investment in the beneficial ownership of
such Units in the amount equal to the product of the aggregate Equipment Cost
for the Units delivered on the Initial Closing Date and the Subsequent Closing
Date, as the case may be, and the percentage set forth opposite the Owner
Participant's name in Schedule 2 (the respective amounts payable by the Owner
Participant on the Initial Closing Date and the Subsequent Closing Date being
referred to herein as the Owner Participant's "Commitment"). The aggregate
amount of the Owner Participant's Commitment together with Transaction Costs to
be funded by the Owner Participant and Interim Interest shall not exceed
$38,500,000. The Owner Participant's Commitment shall be paid to the Indenture
Trustee to be held (but not as part of the Indenture Estate) and applied on
behalf of the Owner Trustee toward the payment of the Equipment Cost for the
Units as provided in Section 2.3.
(b) Debt Participation. Subject to the terms and conditions
hereof and on the basis of the representations and warranties set forth herein,
on the Initial Closing Date and on the Subsequent Closing Date the Loan
Participant agrees to participate in the payment of the Equipment Cost for the
Units delivered on the Initial Closing Date and the Subsequent Closing Date, as
the case may be, by making a secured loan, to be evidenced by the Equipment
Notes, to the Owner Trustee in the amount equal to the product of the aggregate
Equipment Cost for the Units delivered on the Initial Closing Date and the
Subsequent Closing Date, as the case may be, and the percentage set forth
opposite the Loan Participant's name in Schedule 2 (the respective amounts
payable by the Loan Participant on the Initial Closing Date and the Subsequent
Closing Date being referred to herein as the Loan Participant's "Commitment").
The aggregate amount of the Loan Participant's Commitment shall not exceed
$97,852,000. The Equipment Notes shall bear interest at the rates set forth on
Schedule 6.
(c) Interim Interest Payment. On the Interim Interest Payment
Date, the Owner Trustee covenants and agrees that it will pay, using funds that
are to be advanced by the Owner Participant on such date, to the Indenture
Trustee the interest (the "Interim Interest") due and payable to the Loan
Participant on such date under the Equipment Notes. The Owner Participant
shall have no personal liability to advance any such funds and shall notify the
Owner Trustee and the Lessee at least five Business Days prior to the Interim
Interest Payment Date if the Owner Participant will not advance Interim
Interest to the Owner Trustee. The Owner Trustee shall promptly notify the
Lessee if the Owner Participant fails to advance Interim Interest pursuant to
this Section 2.2(c). The Owner Participant hereby agrees to the terms and
conditions set forth in Section 3.5 of the Lease.
- 3 -
<PAGE> 8
Section 2.3. Closing Dates; Procedure for Participation.
(a) Notice of Initial Closing Date. Not later than the Debt Closing
Date, the Lessee shall give the Owner Participant, the Indenture Trustee, the
Owner Trustee and the Loan Participant notice (a "Notice of Delivery") by
telex, telegraph, facsimile or other form of telecommunication or telephone (to
be promptly confirmed in writing) of the Initial Closing Date, which Notice of
Delivery shall specify in reasonable detail the number and type of Units and
identification numbers to be delivered on such date, the aggregate Equipment
Cost of such Units, and the respective amounts of the Owner Participant's
Commitment and the Loan Participant's Commitment required to be paid with
respect to such Units. Prior to 12:00 noon, Chicago time, on the Initial
Closing Date, the Owner Participant shall make the amount of the Owner
Participant's Commitment required to be paid on the Initial Closing Date
available to the Indenture Trustee, and immediately prior to the delivery and
acceptance of the Units specified in Section 2.3(b), the Loan Participant shall
make the amount of the Loan Participant's Commitment for the Equipment Cost
required to be paid on the Initial Closing Date available to the Indenture
Trustee, in either case, by transferring or delivering such amounts, in funds
immediately available on the Initial Closing Date, to the Indenture Trustee,
either directly to, or for deposit in, the Indenture Trustee's account at
Harris Trust and Savings Bank, ABA No. 071000288, Trust Department Account No.
109- 211-3, for credit to trust number 1046705, Attention: Bond Service
Unit-UTC Trust No. 1998-A (L-15). The making available by the Owner
Participant of the amount of its Commitment for the Equipment Cost required to
be paid on the Initial Closing Date shall be deemed a waiver of the Notice of
Delivery by the Owner Participant and the Owner Trustee and the making
available by the Loan Participant of the amount of its Commitment for the
Equipment Cost required to be paid on the Initial Closing Date shall be deemed
a waiver of the Notice of Delivery by the Loan Participant and the Indenture
Trustee.
(b) Initial Closing. The initial closing of the transactions
contemplated hereby (the "Initial Closing") shall take place beginning at 10:00
a.m., Chicago time, on the Initial Closing Date at the offices of 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, pursuant to the Bill of Sale, deliver such Units to the
Owner Trustee, (ii) the Owner Trustee shall, pursuant to the Lease, lease and
deliver the Equipment delivered on the Initial Closing Date to the Lessee, and
the Lessee, pursuant to the Lease, shall accept delivery of such Units under
the Lease, such lease, delivery and acceptance of the Units under the Lease
shall be conclusively evidenced by the execution and delivery by the Lessee and
Owner Trustee of a Lease Supplement covering the Equipment so delivered as
described in Schedules 1A and 1B, (iii) the Owner Trustee shall
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execute and deliver to the Loan Participant an Equipment Note relating to such
Lease Supplement. Each of the Lessee, the Owner Participant, the Owner
Trustee, the Loan Participant and the Indenture Trustee hereby agree to take
all actions required to be taken by it in connection therewith and pursuant to
this Section 2.3(b).
(c) Notice of Subsequent Closing Date. Not later than the fourth
Business Day prior to the Subsequent Closing Date, the Lessee shall give the
Owner Participant, the Indenture Trustee, the Owner Trustee and the Loan
Participant notice (a "Notice of Delivery") by telex, telegraph, facsimile or
other form of telecommunication or telephone (to be promptly confirmed in
writing) of the Subsequent Closing Date, which Notice of Delivery shall specify
in reasonable detail the number and type of Units and identification numbers to
be delivered on such date, the aggregate Equipment Cost of such Units, and the
respective amounts of the Owner Participant's Commitment and the Loan
Participant's Commitment required to be paid with respect to such Units.
Immediately prior to the delivery and acceptance of the Units specified in
Section 2.3(d), the Owner Participant shall make the amount of the Owner
Participant's Commitment required to be paid on the Subsequent Closing Date
available to the Indenture Trustee, and the Loan Participant shall make the
amount of the Loan Participant's Commitment for the Equipment Cost required to
be paid on the Subsequent Closing Date available to the Indenture Trustee, in
each case, by transferring or delivering such amounts, in funds immediately
available on the Subsequent Closing Date, to the Indenture Trustee, either
directly to, or for deposit in, the Indenture Trustee's account described in
Section 2.3(a). The making available by the Owner Participant of the amount of
its Commitment for the Equipment Cost required to be paid on the Subsequent
Closing Date shall be deemed a waiver of the Notice of Delivery by the Owner
Participant and the Owner Trustee and the making available by the Loan
Participant of the amount of its Commitment for the Equipment Cost required to
be paid on the Subsequent Closing Date shall be deemed a waiver of the Notice
of Delivery by the Loan Participant and the Indenture Trustee.
(d) Subsequent Closing. The subsequent closing of the
transactions contemplated hereby (the "Subsequent Closing") shall take place
beginning at 10:00 a.m., Chicago time, on the Subsequent Closing Date (which
date shall be June 8, 1998 unless another date is specified in the Notice of
Delivery) at the offices of 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, pursuant to
the Bill of Sale, deliver such Units to the Owner Trustee, (ii) the Owner
Trustee shall, pursuant to the Lease, lease and deliver the Equipment delivered
on the Subsequent Closing Date to the Lessee, and the Lessee, pursuant to the
Lease, shall accept delivery of such Units under the Lease, such lease,
delivery and acceptance of the Units under the Lease shall be conclusively
evidenced by the execution and delivery by the Lessee and Owner Trustee of
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a Lease Supplement covering the Equipment so delivered as described in Schedule
1C, (iii) the Owner Trustee shall execute and deliver to the Loan Participant
an Equipment Note relating to such Lease Supplement. Each of the Lessee, the
Owner Participant, the Owner Trustee, the Loan Participant and the Indenture
Trustee hereby agree to take all actions required to be taken by it in
connection therewith and pursuant to this Section 2.3(d).
Section 2.4. Owner Participant's Instructions to the Owner
Trustee; Satisfaction of Conditions.
(a) The Owner Participant agrees that the making available to the
Indenture Trustee of the amount of its Commitment for the Units delivered on
the Closing Dates in accordance with the terms of this Section 2 shall
constitute, without further act, authorization and direction by the Owner
Participant to the Owner Trustee, subject, on the Closing Dates, to the
conditions set forth in Sections 4.1 and 4.3 having been fulfilled to the
satisfaction of the Owner Participant or waived by the Owner Participant, to
take the actions specified in the Trust Agreement with respect to the Units on
the Closing Dates.
(b) The Owner Participant agrees that the authorization by the
Owner Participant or its counsel to the Indenture Trustee to release to the
Lessee the Owner Participant's Commitment with respect to the Units delivered
on the Closing Dates shall constitute, without further act, notice and
confirmation that all conditions to closing set forth in Sections 4.1 and 4.3
were either met to the satisfaction of the Owner Participant or, if not so met,
were waived by it with respect to such Units and shall be conclusive evidence
of the authorization and direction of the Owner Trustee set forth in Section
2.4(a).
Section 2.5. Expenses.
(a) If the Owner Participant shall have made its investments provided
for in Section 2.2 and the transactions contemplated by this Agreement are
consummated, either the Owner Participant will promptly pay, or the Owner
Trustee will promptly pay, with funds the Owner Participant hereby agrees to
pay to the Owner Trustee, the following (the "Transaction Costs") if evidenced
by an invoice delivered to the Owner Participant and approved by the Lessee
prior to the Basic Term Commencement Date:
(i) the cost of reproducing, printing and filing the
Operative Agreements, the Equipment Notes, the Pass Through
Certificates, the Registration Statement, the base prospectus, the
preliminary prospectus supplement, the final prospectus supplement and
the Underwriting Agreement and all amendments and supplements to the
foregoing, including all costs and fees in connection with filing the
Registration Statement and the initial filing and recording of the
Lease, the Indenture and any other document required to be filed or
recorded pursuant to the provisions hereof or of any other Operative
Agreement and the fees and expenses of the rating agencies in
connection with rating the Pass Through Certificates;
(ii) the fees of Winston & Strawn, special counsel for the
Owner Participant, in the amount of $85,000, plus reasonable
disbursements, for their services rendered in
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connection with the negotiation, execution and delivery of this
Participation Agreement and the Operative Agreements related hereto;
(iii) all costs and fees in connection with the qualification
of the Pass Through Certificates under securities or Blue Sky laws in
accordance with the provisions of Section 5(e) of the Underwriting
Agreement, including filing fees and the fees and disbursements of
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 fees of Mayer, Brown & Platt, special counsel for the
Underwriter, in the amount of $80,000, plus reasonable disbursements,
for their services rendered in connection with the preparation of
documentation, negotiation, execution and delivery of the base
prospectus, preliminary prospectus supplement, the final prospectus
supplement, the Underwriting Agreement, this Agreement and the
Operative Agreements related hereto;
(vi) the reasonable fees and expenses of 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 Morris, James,
Hitchens & Williams, special counsel for the Owner Trustee, for their
services rendered in connection with the negotiation, execution and
delivery of this Agreement and the Operative Agreements related hereto
and representation of the Bank at or in connection with the Initial
Closing and Subsequent Closing;
(viii) the commissions payable to the Underwriter in
connection with the sale of that principal amount of Pass Through
Certificates which is equal to the aggregate principal amount of the
Equipment Notes;
(ix) the initial fees and expenses of the Owner Trustee;
(x) the initial fees and expenses of the Indenture Trustee;
(xi) the initial fees and expenses of the Pass Through
Trustee;
(xii) the reasonable fees and expenses of Rail Solutions,
Inc. for their services rendered in connection with delivering the
Appraisal required by Section 4.3(a); and
(xiii) the reasonable out-of-pocket expenses of the Owner
Participant, including the reasonable fees and expenses of the Owner
Participant's insurance consultant; and
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(xiv) the costs incurred in connection with any adjustment
pursuant to Section 2.6(a).
Notwithstanding the foregoing, Transaction Costs shall not include
internal costs and expenses such as salaries and overhead of whatsoever kind or
nature of, nor costs incurred by, parties to this Participation Agreement
pursuant to arrangements with third parties for services (other than those
expressly referred to above), such as computer time procurement, financial
analysis and consulting, advisory services and costs of a similar nature.
(b) Upon the consummation of the transactions contemplated by this
Agreement, the Lessee agrees to pay when due: (i) the reasonable expenses
(including reasonable legal fees and expenses) of the Bank and the Owner
Trustee, the Indenture Trustee and the Participants incurred subsequent to the
delivery of the Equipment on the Initial Closing Date and the Subsequent
Closing Date, in connection with any supplements, amendments, modifications,
alterations, waivers or consents of or with respect to any of the Operative
Agreements which are (1) requested by, or necessitated by action or inaction on
the part of, the Lessee or by any applicable law or regulation (other than laws
or regulations solely relating to the business of the Lessor or the Owner
Participant) or entered into in connection with, or as a result of, a Lease
Default or (2) necessary or required to effectuate the purpose or intent of any
Operative Agreement (including costs incurred in connection with any adjustment
pursuant to Section 2.6); (ii) the ongoing reasonable fees and expenses
(including reasonable legal fees and expenses) of the Bank and the Owner
Trustee under the Trust Agreement; (iii) the ongoing reasonable fees and
expenses of the Indenture Trustee under the Operative Agreements; and (iv) the
ongoing reasonable fees and expenses of the Pass Through Trustee under the Pass
Through Trust Agreement.
(c) If the transactions contemplated hereby are not consummated as
a result of (i) the Lessee's default in its obligations to consummate the
transactions contemplated hereby, (ii) the Lessee's failure to consummate the
transactions contemplated hereby after the satisfaction or waiver of the
conditions set forth in Section 4 (other than conditions the satisfaction of
which are solely in the control of the Lessee), or (iii) subject to the next
sentence, in any other circumstance, the Lessee shall pay all Transaction
Costs; provided, however, that if the Initial Closing occurs but the Subsequent
Closing does not occur as the result of a circumstance described in clause (i),
(ii) or (iii) above, the Lessee shall pay all Transaction Costs incurred in
connection with or otherwise relating to the Subsequent Closing.
Notwithstanding anything contained herein to the contrary, if the transactions
contemplated hereby are not consummated as a result of (x) the Owner
Participant's default in its obligations to consummate the transactions
hereunder, or (y) the Owner Participant's failure to make its equity
investments as required by Section 2.2(a) after the conditions specified in
Section 4 have been satisfied or waived by it in writing (other than conditions
the satisfaction of which are solely in the control of the Owner Participant),
the Owner Participant shall pay its expenses, including the fees and expenses
of its counsel and of its insurance consultant in connection with the
transactions contemplated hereby; provided, however, that if the Initial
Closing occurs but the Subsequent Closing does not occur as a result of a
circumstance described in clause (x) or (y) above, the Owner Participant shall
pay its expenses and the expenses of its counsel incurred in connection with or
otherwise relating to the Subsequent Closing.
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<PAGE> 13
(d) Notwithstanding the foregoing provisions of this Section 2.5,
except as specifically provided in Section 7.2 or in any other Operative
Agreement, the Lessee shall have no liability for any costs or expenses
relating to any voluntary transfer of the Owner Participant's interest in the
Equipment including any transfer prior to the Initial Closing Date or the
Subsequent Closing Date of the Owner Participant's obligation to fund its
participation pursuant to Section 2 (other than in connection with any transfer
pursuant to Section 6.9 of this Agreement, Sections 8.3, 10.2, 11.4, 22.1 or
22.3 of the Lease or a Lease Event of Default) and no such costs or expenses
shall constitute Transaction Costs and the Lessee will not have any obligation
with respect to the costs and expenses resulting from any voluntary transfer of
any equity interest by any transferee of the Owner Participant, whenever
occurring (other than in connection with a Lease Event of Default).
Section 2.6. Calculation of Adjustments to Basic Rent, Stipulated
Loss Value and Termination Value; Confirmation and Verification.
(a) Calculation of Adjustments. In the event that (A) the Initial
Closing Date is other than March 30, 1998 or the Subsequent Closing Date is
other than June 8, 1998, the interest rate on any of the Equipment Notes or the
amortization in respect thereof is other than as set forth on Schedule 6 or (B)
the Transaction Costs paid by the Owner Participant pursuant to Section 2.5
prior to the Basic Term Commencement Date are less or more than 1.307% of the
Total Equipment Cost pertaining to the Equipment sold on the Initial Closing
Date or 0.90% of the Total Equipment Cost pertaining to the Equipment sold on
the Subsequent Closing Date or (C) a refinancing contemplated or required by
Section 10.2 occurs, or (D) the Equipment made subject to the Lease on the
Initial Closing Date or on the Subsequent Closing Date is other than as
described in Schedule 1A, 1B or 1C or (E) subsequent to the execution of the
Participation Agreement but prior to the acceptance of the Units to be
delivered on the Initial or Subsequent Closing Date: (1) there shall have
occurred a Change in Tax Law and (2) after having been advised in writing by
the Owner Participant of such Change in Tax Law and the proposed adjustment to
the payments of Basic Rent payable in respect of such Units resulting
therefrom, the Lessee shall have waived its right under Section 4.4 of this
Agreement to decline to proceed with the transaction or the Owner Participant
shall have agreed to limit the amount of such proposed adjustment as set forth
in such Section 4.4, or (F) with respect to the Units to be delivered on the
Subsequent Closing Date, the average yield of the five year U.S. Government
Treasury constant maturities as reported in the Federal Reserve statistical
release H.15 report calculated over the five business days ending on the Friday
preceding the week containing the Subsequent Closing Date (the "Average Yield")
is other than 5.52%, then, in each such case, the Owner Participant shall
recalculate the payments or amounts, as the case may be, of Basic Rent,
Stipulated Loss Values, Termination Values, Early Purchase Price, Basic Term
Purchase Price and, in the case of the occurrence of an event described in
clause (D) above, the Outside Date Purchase Price, (i) to preserve the Net
Economic Return that the Owner Participant would have realized had the Initial
Closing Date been March 30, 1998 or the Subsequent Closing Date been June 8,
1998, had the interest on all Equipment Notes and the amortization in respect
thereof been as set forth on Schedule 6, had the Transaction Costs equaled
1.307% of the Total Equipment Cost pertaining to the Equipment sold on the
Initial Closing Date or 0.90% of the Total Equipment Cost pertaining to the
Equipment sold on the Subsequent Closing Date, had the Equipment made subject
to the Lease on the Initial Closing Date or on the Subsequent Closing
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<PAGE> 14
Date been as so described, had such refinancing or Change in Tax Law not
occurred and had the Average Yield equaled 5.52% and (ii) to minimize to the
greatest extent possible, consistent with the foregoing clause (i), the present
value (discounted semiannually at an interest rate per annum equal to the Debt
Rate) of the payments of Basic Rent; provided, however, that any such
recalculation performed due to the occurrence of an event described in clause
(A) above shall be made only in respect of Units delivered on the Initial
Closing Date or the Subsequent Closing Date, as the case may be. Any such
recalculation performed due to the occurrence of an event described in clause
(A), (B), (D), (E) or (F) above shall be made prior to the Basic Term
Commencement Date. In performing any such recalculation and in determining the
Owner Participant's Net Economic Return, the Owner Participant shall utilize
the same methods and assumptions originally used in making the computations of
Basic Rent, Stipulated Loss Values, Termination Values, Early Purchase Price,
Basic Term Purchase Price and Outside Date Purchase Price with respect to the
Basic Term initially set forth in Schedules 3A, 3B, 3C, 4A, 4B, 4C, 5A, 5B, 5C,
7, 7A, 7B, 7C, 8, 8A, 8B, 8C and 9, 9A, 9B, 9C to this Participation Agreement
(other than those assumptions changed as a result of any of the events
described in clauses (A) through (E) of the preceding sentence necessitating
such recalculation; it being agreed that such recalculation shall reflect
solely any changes of assumptions or facts resulting directly from the event or
events necessitating such recalculation). Such adjustments shall comply (to
the extent the original structure complied) with section 467 of the Code and
the requirements of Sections 4.02(5), 4.07(1) and (2) and 4.08(1) of Revenue
Procedure 75-28, as amended, calculated, except in the case of a refinancing
pursuant to Section 10.2 or any rent adjustment pursuant to Section 5(a)(3)(B)
of the Tax Indemnity Agreement, without taking into account any change after
the Subsequent Closing Date in or to Section 467 of the Code (and any
regulations thereunder) and such requirements of Revenue Procedure 75-28.
(b) Confirmation and Verification. Upon completion of any
recalculation described above in this Section 2.6, a duly authorized officer of
the Owner Participant shall provide a certificate to the Lessee either (x)
stating that the payments of Basic Rent, Stipulated Loss Values, Termination
Values, Early Purchase Price, Basic Term Purchase Price and Outside Date
Purchase Price with respect to the Basic Term as are then set forth in
Schedules 3A, 3B, 3C, 4A, 4B, 4C, 5A, 5B, 5C, 7, 7A, 7B 7C, 8, 8A, 8B, 8C and
9, 9A, 9B, 9C of this Participation Agreement do not require change, or (y)
setting forth such adjustments to the payments of Basic Rent, Stipulated Loss
Values, Termination Values, Early Purchase Price, Basic Term Purchase Price or
Outside Date Purchase Price with respect to the Basic Term as have been
calculated by the Owner Participant in accordance with Section 2.6(a) above.
Such certificate shall describe in reasonable detail the basis for any such
adjustments. Any such adjustment shall become effective on the thirty-first
(31st) day following delivery by the Owner Participant of such certificate to
the Lessee unless Lessee, prior to such day, requests verification pursuant to
the following sentence. Any such adjustment and corresponding adjustments to
the Stipulated Loss Values, Termination Values, Early Purchase Price, Basic
Term Purchase Price and Outside Date Purchase Price will be computed on a basis
consistent with that used by the Owner Participant in the original calculation
of Basic Rent. If the Lessee shall so request, the recalculation of any such
adjustments described in this Section 2.6 shall be verified by a nationally
recognized firm of independent accountants selected by the Owner Participant
and reasonably acceptable to the Lessee and any such recalculation of such
adjustment as so verified shall be binding on the Lessee and the Owner
Participant. Such accounting firm shall be requested to make its
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determination within 30 days. The Owner Participant shall provide to a
representative of such accounting firm, on a confidential basis, such
information as it may reasonably require, including the original assumptions
used by the Owner Participant and the methods used by the Owner Participant in
the original calculation of, and any recalculation of, Basic Rent, Stipulated
Loss Values, Termination Values, Early Purchase Price, Basic Term Purchase
Price and Outside Date Purchase Price and such other information as is
necessary to determine whether the computation is accurate and in conformity
with the provisions of this Agreement, provided that in no event shall the
Owner Participant have any obligation to provide the Lessee with any such
information; and provided, further, that the Owner Participant shall have no
obligation to disclose to the Lessee, such accounting firm or any other Person,
or to permit the Lessee, such accounting firm or any other Person, to examine
any federal, state or local income tax returns of the Owner Participant, or
books or accounting records related thereto, for any taxable year. The Owner
Participant and the Lessee hereby agree that the sole responsibility of such
accounting firm shall be to verify the Owner Participant's computations under
this Section 2.6 and that the matters of interpretation of the Lease or any
other Operative Agreement are not within the scope of the accounting firm's
responsibilities. The costs of such verification shall be borne by the Lessee;
provided, however, if such accounting firm's verification shall result in a
decrease in the net present value (expressed as a percentage of Total Equipment
Cost) of the Basic Rent (discounted semiannually at a rate per annum equal to
the Debt Rate) under the Lease calculated as of the Initial Closing Date in the
case of Units delivered at the Initial Closing or as of the Subsequent Closing
Date in the case of Units delivered at the Subsequent Closing Date, as compared
to the net present value of Basic Rent proposed by the Owner Participant, by
more than the greater of (x) 10 basis points or (y) 10% of the proposed
adjustment, then the Owner Participant agrees to reimburse the Lessee for any
amounts paid for such verification. Any revised adjustment resulting from such
verification shall become effective on the next Rent Payment Date after such
verification has been concluded, and shall take into account any underpayment
or overpayment, together with interest thereon at the Debt Rate, resulting from
an earlier effectiveness of the original adjustment.
(c) Compliance. Notwithstanding the foregoing, any adjustment
made to the payments of Basic Rent, Stipulated Loss Values, Termination Values
or Early Purchase Price with respect to the Basic Term, pursuant to the
foregoing, shall comply with the following requirements: (i) each installment
of Basic Rent (together with any Advance payable under Section 3.5 of the
Lease), as so adjusted, under any circumstances and in any event, will be in an
amount at least sufficient for the Owner Trustee to pay in full as of the due
date of such installment any payment of principal of and interest on the
Equipment Notes required to be paid on the due date of such installment of
Basic Rent (or such Advance) and (ii) Stipulated Loss Value, Termination Value
and Early Purchase Price, as so adjusted, under any circumstances and in any
event, will be an amount which, together with any other amounts required to be
paid by the Lessee under the Lease in connection with an Event of Loss or a
termination of the Lease, as the case may be, will be at least sufficient to
pay in full, as of the date of payment thereof, the aggregate unpaid principal
of, Make-Whole Amount, if any, and all unpaid interest on the Equipment Notes,
accrued to the date on which Stipulated Loss Value, Termination Value or Early
Purchase Price, as the case may be, is paid in accordance with the terms of the
Lease.
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<PAGE> 16
(d) Invoices. All invoices in respect of Transaction Costs to the
extent not delivered on or before the Subsequent Closing Date shall be directed
to the Owner Participant at the address set forth in Section 10.4, with a copy
to the Lessee.
(e) Further Assurances. At the time any adjustment is made
pursuant to this Section 2.6, the parties hereto agree to enter into, at the
Lessee's expense, a supplement to this Participation Agreement to reflect such
adjustment and to enter into such amendments and supplements to the other
Operative Agreements and do such further acts as may be reasonably required in
order to effectuate such adjustment; provided, that such adjustment shall
become effective as provided in Section 2.6(b) without regard to the date on
which such supplement to this Participation Agreement is executed and
delivered.
Section 2.7. Postponement of Closing Dates.
(a) The scheduled Closing Dates may be postponed from time to time
with respect to all of the Units for any reason (but to no later than April 30,
1998 in the case of the Initial Closing Date and June 15, 1998 in the case of
the Subsequent Closing Date) if the Lessee gives the Owner Participant, the
Indenture Trustee, the Pass Through Trustee and the Owner Trustee telex,
telegraphic, facsimile or telephonic (confirmed in writing) notice of the
postponement and notice of the date to which such Closing Date has been
postponed, the notice of postponement to be received by each party no later
than 5:30 P.M., New York City time, on the originally scheduled Closing Date,
and the term "Initial Closing Date", "Subsequent Closing Date" and "Closing
Dates" as used in this Agreement shall mean the postponed "Initial Closing
Date", "Subsequent Closing Date" and "Closing Dates", as the case may be.
(b) In the event of any postponement of the originally scheduled
Initial Closing Date or Subsequent Closing Date pursuant to this Section 2.7
(such originally scheduled Initial Closing Date or Subsequent Closing Date
being referred to as a "Scheduled Closing Date" for the purposes of this
Section 2.7): (i) the Lessee will reimburse the Owner Participant for the loss
of the use of its funds with respect to each such Unit occasioned by such
postponement or failure to deliver or accept (unless such failure to accept is
caused by a default by the Owner Participant hereunder or by the Owner Trustee
(acting pursuant to instructions from the Owner Participant) under the Trust
Agreement, the Lease or the Indenture) by paying to the Owner Participant on
demand interest at the Debt Rate, for the period from and including the
Scheduled Closing Date to but excluding the earlier of the date upon which such
funds are returned to the Owner Participant (unless such returned funds are
received after 1:00 p.m. (Chicago time) in which case such date of return shall
be included) or the actual Initial Closing Date or Subsequent Closing Date, as
the case may be; provided that the Lessee shall in any event pay to the Owner
Participant at least one day's interest at the Debt Rate on the amount of such
funds, unless the Owner Participant shall have received, prior to 1:00 p.m.
(Chicago time) on the Business Day preceding the Scheduled Closing Date, a
notice of postponement of the Scheduled Closing Date pursuant to Section 2.7(a)
and (ii) the Indenture Trustee will return not later than 10:00 a.m. Chicago
time on the first Business Day following the Scheduled Closing Date, any funds
which it shall have received from the Owner Participant as its Commitment for
such Units, absent joint
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<PAGE> 17
instructions from the Lessee and the Owner Participant to retain such funds
until the specified date of postponement established under Section 2.7(a).
(c) The Indenture Trustee agrees that, in the event it has
received telephonic notice (to be confirmed promptly in writing) from the
Lessee on the Scheduled Closing Date that such Scheduled Closing Date is to be
postponed, it will if instructed in the aforementioned notice from the Lessee
(which notice shall specify the securities to be purchased) use reasonable best
efforts to invest, at the risk of the Lessee (except as provided below with
respect to the Indenture Trustee's gross negligence or willful misconduct), the
funds received by it from the Owner Participant with respect to its Commitment
in Specified Investments in accordance with the Lessee's instructions. Any
such Specified Investments purchased by the Indenture Trustee upon instructions
from the Lessee shall be held in trust by the Indenture Trustee (but not as
part of the Indenture Estate under the Indenture) for the benefit of the Owner
Participant whose funds are invested in Specified Investments upon instructions
from the Lessee and any net profits on the investment of such funds (including
interest), if any, shall be for the account of and shall on the Initial Closing
Date or Subsequent Closing Date, as the case may be, or on the date such funds
are returned to the Owner Participant, be paid over to, the Lessee. The Lessee
shall pay to the Indenture Trustee on the Initial Closing Date or Subsequent
Closing Date, as the case may be (if such Unit or Units are delivered and
accepted pursuant hereto), the amount of any net loss on the investment of such
funds invested at the instruction of the Lessee. If the funds furnished by the
Owner Participant with respect to such Unit or Units are required to be
returned to the Owner Participant, the Lessee shall, on the date on which such
funds are so required to be returned, reimburse the Indenture Trustee, for the
benefit of the Owner Participant, for any net losses incurred on such
investments. The Indenture Trustee shall not be liable for failure to invest
such funds or for any losses incurred on such investments except for its own
willful misconduct or gross negligence. In order to obtain funds for the
payment of the Equipment Cost for such Unit or Units or to return funds
furnished by the Owner Participant to the Indenture Trustee for the benefit of
the Owner Participant with respect to such Unit or Units, the Indenture Trustee
is authorized to sell any Specified Investments purchased as aforesaid with the
funds received by it from the Owner Participant in connection with such Unit or
Units.
(d) Notwithstanding the provisions of Section 2.7(a), the Owner
Participant shall not be under any obligation to make its Commitment available
beyond 2:00 P.M. (Chicago time) on April 30, 1998 in respect of the Units to be
delivered on the Initial Closing Date or June 15, 1998 in respect of the Units
to be delivered on the Subsequent Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1. Representations and Warranties of the Bank and the
Owner Trustee. The Bank, both in its individual capacity and as Owner Trustee
(except that (x) the representations and warranties in Sections 3.1(a)(i),
3.1(a)(ii), 3.1(b)(i) and 3.1(b)(iii) are made solely by the Bank, in its
individual capacity, and (y) the representations and warranties in Sections
3.1(c), 3.1(k) and 3.1(l) are made by the Owner Trustee solely in its capacity
as such), represents and warrants to the Owner Participant, the Indenture
Trustee, the Pass Through Trustee and the Lessee, notwithstanding the
provisions of Section 10.13 or any similar provision in any other Operative
Agreement, that, as of the date hereof:
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(a) the Bank (i) is a banking corporation duly organized and
validly existing in good standing under the laws of the State of Delaware, (ii)
has full corporate power and authority to carry on its business as now
conducted and to enter into and perform its obligations hereunder and under the
Trust Agreement and (iii) (assuming due authorization, execution and delivery
of the Trust Agreement by the Owner Participant) has full power and authority,
as Owner Trustee and/or, to the extent expressly provided herein or therein, in
its individual capacity, to enter into and perform its obligations under each
of the Owner Trustee Agreements;
(b) (i) the Bank, in its individual capacity, has duly authorized,
executed and delivered the Trust Agreement, (ii) (assuming the due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant) the Owner Trustee in its trust capacity and, to the extent
expressly provided therein, the Bank in its individual capacity, has duly
authorized, executed and delivered each of the other Owner Trustee Agreements
and, as of the Initial Closing Date and the Subsequent Closing Date, each of
the Owner Trustee Agreements to be delivered on such Closing Date and (iii) the
Trust Agreement constitutes a legal, valid and binding obligation of the Bank,
in its individual capacity, enforceable against it in its individual capacity
in accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of equity;
(c) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, each of the other Owner Trustee
Agreements to which it is a party constitutes, or when entered into will
constitute, a legal, valid and binding obligation of the Owner Trustee,
enforceable against it in accordance with its terms except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by general principles of
equity;
(d) neither the execution and delivery by the Bank, in its
individual capacity, or the Owner Trustee, as the case may be, of the Owner
Trustee Agreements or the Equipment Notes, nor the consummation by the Bank, in
its individual capacity, or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or thereby, nor the compliance by the
Owner Trustee, in its individual capacity, or the Owner Trustee, as the case
may be, with any of the terms and provisions hereof and thereof, (i) requires
or will require any approval of the Bank's stockholders, or approval or consent
of any trustees or holders of any indebtedness or obligations of the Bank in
its individual capacity, or (ii) violates or will violate the Bank's
certificate of incorporation or by-laws, or contravenes or will contravene any
provision of, or constitutes or will constitute a default under, or results or
will result in any breach of, any indenture, mortgage, chattel mortgage, deed
of trust, conditional sale contract, bank loan or credit agreement, license or
other agreement or instrument to which the Bank in its individual capacity is a
party or by which it is bound, or result in the creation of any Lien (except
for Permitted Liens upon the Units) upon the Trust Estate attributable to the
Bank and unrelated to the transactions contemplated by the Operative
Agreements, or contravenes or will contravene any law, governmental rule or
regulation of the State of Delaware governing the banking or trust powers of
the Bank, or any judgment or order applicable to or binding on it;
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<PAGE> 19
(e) there are no Taxes payable by the Bank, either in its
individual capacity or as Owner Trustee, imposed by the State of Delaware or
any political subdivision thereof in connection with the execution and delivery
by the Bank in its individual capacity of the Trust Agreement, and, in its
individual capacity or as Owner Trustee, as the case may be, of this Agreement,
the other Owner Trustee Agreements or the Equipment Notes solely because the
Bank in its individual capacity is a banking corporation with its principal
place of business in Delaware and performs certain of its duties as Owner
Trustee in Delaware; and there are no Taxes payable by the Bank, in its
individual capacity or as Owner Trustee, as the case may be, imposed by the
State of Delaware or any political subdivision thereof in connection with the
acquisition of its interest in the Equipment (other than franchise or other
taxes based on or measured by any fees or compensation received by the Owner
Trustee for services rendered in connection with the transactions contemplated
hereby) solely because the Bank in its individual capacity is a Delaware
banking corporation with its principal place of business in Delaware and
performs certain of its duties as Owner Trustee in Delaware;
(f) there are no pending or, to its knowledge, threatened actions
or proceedings against the Bank, either in its individual capacity or as Owner
Trustee, before any court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially adversely affect the
ability of the Bank, in its individual capacity or as Owner Trustee, as the
case may be, to perform its obligations under the Trust Agreement, the other
Owner Trustee Agreements or the Equipment Notes or which question the validity
of any Owner Trustee Agreement or any action taken or to be taken pursuant
thereto. The Bank, in its individual capacity and as Owner Trustee, is not in
default with respect to any order of any court or governmental authority or
arbitration board or tribunal, the default under which would affect adversely
the ability of the Bank, in its individual capacity or as Owner Trustee, to
perform its obligations under the Owner Trustee Agreements;
(g) the Bank's chief executive office and the place where its
records concerning the Equipment and all its interest in, to and under all
documents relating to the Trust Estate, are located at Rodney Square North,
1100 N. Market Street, Wilmington, Delaware, and the Bank, in its individual
capacity, agrees to give the Owner Participant, the Indenture Trustee and the
Lessee written notice within 30 days following any relocation of said chief
executive office or said place from its present location;
(h) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect of,
any State of Delaware or local governmental authority or agency or any United
States federal governmental authority or agency regulating the banking or trust
powers of the Bank, in its individual capacity, is required for the execution
and delivery of, or the carrying out by, the Bank in its individual capacity or
as Owner Trustee, as the case may be, of any of the transactions contemplated
hereby or by the Trust Agreement or of any of the transactions contemplated by
any of the other Owner Trustee Agreements, other than any such consent,
approval, order, authorization, registration, notice or action as has been duly
obtained, given or taken;
(i) on the Initial Closing Date and the Subsequent Closing Date,
the Owner Trustee's right, title and interest in and to the Equipment delivered
on such Closing Date shall be free of
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<PAGE> 20
any Liens attributable to the Bank in its individual capacity except Liens
created by or otherwise related to the terms of the Operative Agreements;
(j) the proceeds received by the Owner Trustee from the Owner
Participant pursuant to the Trust Agreement will be administered by it in
accordance with applicable provisions of the Trust Agreement;
(k) the Owner Trustee shall receive from the Lessee such title as
was conveyed to it by the Lessee, subject to the rights of the Owner Trustee
and the Lessee under the Lease and the security interest created pursuant to
the Indenture and the Indenture Supplements in respect of the Units delivered
on the Initial Closing Date and the Subsequent Closing Date; and
(l) the Owner Trustee is not in default under any of the Owner
Trustee Agreements and, to its knowledge, no Indenture Default or Indenture
Event of Default has occurred and is continuing.
Section 3.2. Representations and Warranties of the Lessee. The
Lessee represents and warrants to the Bank, the Indenture Trustee, the Pass
Through Trustee and the Owner Participant that, as of the date hereof:
(a) the Lessee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is duly licensed
or qualified and in good standing in each jurisdiction in which the failure to
so qualify would have a material adverse effect on its ability to carry on its
business as now conducted or to enter into and perform its obligations under
the Lessee Agreements, has the corporate power and authority to carry on its
business as now conducted and has the requisite power and authority to execute,
deliver and perform its obligations under the Lessee Agreements;
(b) the Lessee Agreements have been duly authorized by all
necessary corporate action (no stockholder approval being required), and will
on the Initial Closing Date or the Subsequent Closing Date, as the case may be,
have been duly executed and delivered by the Lessee and, assuming the due
authorization, execution and delivery by each other party thereto, will on such
Closing Date constitute the legal, valid and binding obligations of the Lessee,
enforceable against the Lessee in accordance with their respective terms except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by
general principles of equity;
(c) the execution, delivery and performance by the Lessee of each
Lessee Agreement and compliance by the Lessee with all of the provisions
thereof do not and will not contravene any law or regulation, or any order of
any court or governmental authority or agency applicable to or binding on the
Lessee or any of its properties, or contravene the provisions of, or constitute
a default by the Lessee under, or result in the creation of any Lien (except
for Permitted Liens) upon the property of the Lessee under its certificate of
incorporation or by-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Lessee is a party or by which the Lessee
or any of its property is bound or affected;
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<PAGE> 21
(d) except for those matters discussed in the financial statements
provided to the Participants under Section 3.2(e), there are no proceedings
pending or, to the knowledge of the Lessee, threatened against the Lessee or
any Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which individually or in the aggregate would, if
determined adversely to it, materially and adversely affect the financial
condition or business of the Lessee and its consolidated Subsidiaries, taken as
a whole, or impair the ability of the Lessee to perform its obligations under
the Lessee Agreements or which questions the validity of any Lessee Agreement
or any action taken or to be taken pursuant thereto. Neither the Lessee nor any
Subsidiary is in default with respect to any order of any court or governmental
authority or arbitration board or tribunal, the default under which would
affect adversely the ability of the Lessee to perform its obligations under the
Lessee Agreements;
(e) the audited consolidated balance sheets and consolidated
statements of income and retained earnings and cash flows of the Lessee as of
and for the fiscal year ended December 31, 1996, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Lessee and its Subsidiaries as of such date and the results of
their operations for the period then ended. Since December 31, 1996, there has
been no material adverse change in the condition, financial or otherwise, of
the Lessee and its consolidated Subsidiaries, taken as a whole, as shown on the
financial statements of Lessee as of such date;
(f) no consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any trustee or
any holder of indebtedness of Lessee or any governmental authority on the part
of the Lessee is required in connection with the execution and delivery by the
Lessee of the Lessee Agreements, other than (i) the filing with the Securities
and Exchange Commission of the Registration Statement under which the Pass
Through Certificates will be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and each amendment thereto; (ii) the
qualification of the Pass Through Trust Agreement under the Trust Indenture Act
of 1939, as amended, and (iii) the filings and registrations contemplated by
Section 16 of the Lease and such other filings and registrations as are
expressly contemplated by the other Operative Agreements;
(g) the Lease, the Indenture, the Lease Supplements in respect of
the Units delivered on the Initial Closing Date and the Subsequent Closing Date
and the Indenture Supplements in respect of the Units delivered on the Initial
Closing Date and the Subsequent Closing Date will on or before each such
Closing Date be duly filed with the STB pursuant to 49 U.S.C. Section 11301 and
deposited in the office of the Registrar General of Canada pursuant to Section
105 of the Canada Transportation Act and such filing with the STB pursuant to
49 U.S.C. Section 11301 and such deposit in the office of the Registrar General
of Canada, along with the other filings contemplated by Section 16 of the
Lease, will perfect the Owner Trustee's and the Indenture Trustee's rights in
such Operative Agreements and in the Units as required by Section 16 of the
Lease and, except as otherwise expressly contemplated by Section 16 of the
Lease or by any other Operative Agreements, and except for any filing or
recording necessary with respect to any subleases entered into by the Lessee as
permitted in Section 8.3 of the Lease, no other filing, recording or deposit
with, or giving of notice to any other federal, state, provincial or local
government or agency thereof is necessary in order to protect the rights of the
Owner
- 17 -
<PAGE> 22
Trustee and the Indenture Trustee in such Operative Agreements or in such Units
in the United States, any state thereof, the District of Columbia or to protect
the rights of the Owner Trustee and the Indenture Trustee in such Operative
Agreements or in such Units in Canada or any province thereof as long as the
Units are located on the rails of a railway (as such term is defined in the
Canada Transportation Act);
(h) the Units to be delivered on the Initial Closing Date are, and
the Units to be delivered on the Subsequent Closing Date will be, covered by
the insurance required by Section 12 of the Lease and all premiums due prior to
each such Closing Date in respect of such insurance shall have been paid in
full;
(i) the Lessee has timely filed all United States Federal income
tax returns and all other material tax returns which are required to be filed
by it and has paid all taxes due pursuant to such returns or pursuant to any
assessment made against the Lessee or any of its assets (other than
assessments, the payment of which is being contested in good faith by
appropriate proceedings by the Lessee and none of which are material), and no
tax liens have been filed and no claims are being asserted with respect to any
such taxes, fees or other charges which could reasonably be expected to have a
materially adverse effect on its ability to perform its obligations under the
Lessee Agreements. The provision for taxes on the books of the Lessee is
adequate for all open years and for its current fiscal period;
(j) no Lease Default or Lease Event of Default has occurred and is
continuing and to the knowledge of Lessee, no Event of Loss, or event with
which the giving of notice and/or the passage of time would constitute an Event
of Loss, has occurred;
(k) the Lessee is not an "investment company" or an "affiliated
person" of an "investment company" within the meaning of the Investment Company
Act of 1940;
(l) the acquisition and holding by the Owner Participant of the
Beneficial Interest for its own account will not constitute a prohibited
transaction within the meaning of Section 4975(c)(1)(A) through (D) of the Code
or a "Prohibited Transaction" under ERISA. The representation made by the
Lessee in the preceding clause is made in reliance upon and subject to the
accuracy of the representation of the Owner Participant in Section 3.6(h) of
this Agreement;
(m) on the Initial Closing Date and the Subsequent Closing Date,
Lessee shall have, and the 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
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which the Lessee has not disclosed in writing which materially
affects adversely or, so far as the Lessee can now reasonably foresee, will
materially
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<PAGE> 23
affect adversely the properties, business, prospects, results of operations or
condition (financial or otherwise) of the Lessee and its Subsidiaries, taken as
a whole;
(o) none of the transactions contemplated by the Operative
Agreements (including, without limitation, the use of the proceeds from the
sale of the Equipment Notes) will result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System, 12 C.F.R., Chapter II;
(p) the Lessee is not in violation of any term of any charter
instrument, by-law or in any material respect of any other material agreement
or instrument to which it is a party or by which it may be bound. The Lessee
is in compliance with all laws, ordinances, governmental rules and regulations
to which it is subject, the failure to comply with which would have a material
and adverse effect on its operations or condition, financial or otherwise, or
would impair the ability of the Lessee to perform its obligations under the
Operative Agreements to which it is a party, and has obtained all licenses,
permits, franchises and other governmental authorizations material to the
conduct of its business;
(q) on the Initial Closing Date and the Subsequent Closing Date
all sales, use or transfer taxes due and payable upon the purchase of Units on
such Closing Date by the Lessor and on the lease thereof to the Lessee will
have been paid or such transactions will then be exempt from any such taxes,
and the Lessee will cause any required forms or reports in connection with such
taxes to be filed in accordance with applicable laws and regulations. No
taxes, fees or other charges are payable in connection with the execution and
delivery of the Operative Agreements or the issuance and sale of the Equipment
Notes to be delivered on the Initial Closing Date or the Subsequent Closing
Date;
(r) no broker's or finder's or placement fee or commission will be
payable with respect to the transactions contemplated by the Operative
Agreements as a result of any action by Lessee, except for the fees of Salomon
Smith Barney and commissions payable to the Underwriter, which shall be
included in Transaction Costs, and Lessee agrees that it will hold the Owner
Participant, the Owner Trustee and the Indenture Trustee harmless from any
claim, demand or liability for any other broker's or finder's or placement fees
or commission alleged to have been incurred as a result of any action by Lessee
in connection with such transactions;
(s) each Unit of Equipment, taken as a whole, and each major
component thereof, will comply as of the Initial Closing Date or the Subsequent
Closing Date, as the case may be, in all material respects with all applicable
laws and regulations, will conform as of such Closing Date with the
specifications for such Unit contained in the Appraisals referred to in Section
4.3(a) hereof and will as of such Closing Date be substantially complete such
that it is ready and available to operate as of such date in commercial service
and otherwise perform the function for which it was designed; and
(t) the Lessee is not subject to regulation as a "holding
company," an "affiliate" of a "holding company," or a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
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<PAGE> 24
Section 3.3. Representations and Warranties of the Indenture
Trustee. The Indenture Trustee represents and warrants to the Owner
Participant, the Owner Trustee, the Bank and the Lessee that, as of the date
hereof:
(a) the Indenture Trustee is a banking corporation duly organized
and validly existing and in good standing under the laws of the State of
Illinois and has the full corporate power, authority and legal right under the
laws of the State of Illinois pertaining to its banking, trust and fiduciary
powers to execute, deliver and carry out the terms of each of the Indenture
Trustee Agreements;
(b) the execution, delivery and performance by the Indenture
Trustee of each of the Indenture Trustee Agreements have been duly authorized
by the Indenture Trustee and will not violate any applicable law or its
articles of association or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or by which it is
bound;
(c) this Agreement has been duly executed and delivered and
constitutes, and the other Indenture Trustee Agreements, when executed and
delivered, will constitute its legal, valid and binding obligation enforceable
against it to the extent that such agreements are enforceable against the other
parties thereto (as to which the Indenture Trustee makes no representation or
warranty) in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of equity;
(d) there are no proceedings pending or, to the knowledge of the
Indenture Trustee, threatened, and to the knowledge of the Indenture Trustee
there is no existing basis for any such proceedings, against or affecting the
Indenture Trustee in or before any court or before any governmental authority
or arbitration board or tribunal which, individually or in the aggregate, if
adversely determined, might impair the ability of the Indenture Trustee to
perform its obligations under the Indenture Trustee Agreements;
(e) no authorization or approval or other action by, and no notice
to or filing with, any stockholder, trustee or holder of indebtedness or any
governmental authority or regulatory body governing the Indenture Trustee in
its trust capacity, is required for the due execution, delivery and performance
by the Indenture Trustee of the Indenture Trustee Agreements, except as have
been previously obtained, given or taken;
(f) the Indenture Trustee is not in default under any of the
Indenture Trustee Agreements; and
(g) neither the Indenture Trustee, nor any Person authorized to
act on behalf of the Indenture Trustee, has directly or indirectly offered any
interest in the Trust Estate or the Equipment Notes or any security similar to
either thereof related to this transaction for sale to, or solicited offers to
buy any of the same from, or otherwise approached or negotiated with respect to
any of the same with, any Person other than the Pass Through Trustee, the
Underwriters and the initial purchasers of the Pass Through Certificates.
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<PAGE> 25
Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes.
(a) The Owner Trustee represents and warrants to the Lessee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant that, as
of the date hereof and as of each Closing Date, neither the Owner Trustee nor
any Person authorized or employed by the Owner Trustee as agent or otherwise in
connection with the placement of the Beneficial Interest or the Equipment Notes
or any similar interest has offered any of the Beneficial Interest or the
Equipment Notes or any similar interest for sale to, or solicited offers to buy
any thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, except for the Owner Participant with respect
to the Beneficial Interest and the Pass Through Trustee with respect to the
Equipment Notes.
(b) The Lessee represents and warrants to the Indenture Trustee,
the Pass Through Trustee, the Bank, the Owner Trustee and the Owner Participant
that, as of the date hereof and as of each Closing Date, neither the Lessee nor
any Person authorized or employed by the Lessee as agent or otherwise in
connection with the placement of the Beneficial Interest or the Equipment Notes
or any similar interest has offered any of the Beneficial Interest or the
Equipment Notes or similar interest for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto with,
any Person other than the Owner Participant and not more than 35 other
institutional investors with respect to the Beneficial Interest, and, except
for the issue and sale of the Pass Through Certificates as contemplated by the
Registration Statement, the base prospectus and the prospectus supplement, the
Pass Through Trustee with respect to the Equipment Notes.
(c) Each of the Owner Trustee, the Owner Participant and the
Lessee agree, as to its own actions only, severally but not jointly, that
neither the Owner Trustee, the Owner Participant nor the Lessee nor anyone
acting on behalf of the Owner Trustee, the Owner Participant or the Lessee will
offer the Beneficial Interest, the Equipment Notes, or any part thereof or any
similar interest for issue or sale to any prospective purchaser, or solicit any
offer to acquire any of the Beneficial Interest, the Equipment Notes, or any
part thereof so as to bring the issuance and sale of the Beneficial Interest,
the Equipment Notes, or any part thereof within the provisions of Section 5 of
the Securities Act, except as provided for in the Registration Statement.
Section 3.5. Representations and Warranties of the Pass Through
Trustee. The Pass Through Trustee represents and warrants to the Owner
Participant, the Bank, the Owner Trustee, the Indenture Trustee, and the Lessee
that, as of the date hereof:
(a) the Pass Through Trustee is a banking corporation duly
organized and validly existing in good standing under the laws of the State of
Illinois, and has the full corporate power, authority and legal right under the
laws of the State of Illinois pertaining to its banking, trust and fiduciary
powers to execute, deliver and carry out the terms of the Pass Through Trust
Agreement and this Agreement;
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<PAGE> 26
(b) the Pass Through Trust Agreement and this Agreement have been
duly authorized, executed and delivered by the Pass Through Trustee; this
Agreement and the Pass Through Trust Agreement constitute the legal, valid and
binding obligation of the Pass Through Trustee enforceable against it to the
extent that such agreements are enforceable against the other parties thereto
(as to which the Pass Through Trustee makes no representation or warranty) in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of equity;
(c) the execution, delivery and performance by the Pass Through
Trustee of the Pass Through Trust Agreement and this Agreement, the purchase by
the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, and
the issuance of the Pass Through Certificates pursuant to the Pass Through
Trust Agreement, do not contravene any law, rule or regulation of any United
States of America governmental authority or agency regulating the Pass Through
Trustee's banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Pass Through Trustee and do not contravene or
result in any breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any agreement or instrument to
which the Pass Through Trustee is a party or by which it or any of its
properties may be bound;
(d) neither the execution and delivery by the Pass Through Trustee
of the Pass Through Trust Agreement or this Agreement nor the consummation by
the Pass Through Trustee of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action with respect to, any
governmental authority or agency or any governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers;
(e) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative agency
which individually or in the aggregate, if determined adversely to it, would
materially adversely effect the ability of the Pass Through Trustee to perform
its obligations under this Agreement or the Pass Through Trust Agreement;
(f) the Pass Through Trustee is not in default under the Pass
Through Trust Agreement;
(g) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner Participant,
the Owner Trustee, the Underwriter or the Lessee;
(h) the Pass Through Trustee is purchasing the Equipment Notes for
the purposes contemplated by the Operative Agreements and not with a view to
the transfer or distribution of any Equipment Note to any other Person, except
as contemplated by the Operative Agreements; and
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<PAGE> 27
(i) except for the issue and sale of the Pass Through Certificates
contemplated hereby, the Pass Through Trustee has not directly or indirectly
offered any Equipment Note or Pass Through Certificate or any interest in or to
the Trust Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Trustee and the Owner Participant, and the Pass Through Trustee has not
authorized anyone to act on its behalf to offer directly or indirectly any
Equipment Note, any Pass Through Certificate or any interest in and to the
Trust Estate, the Trust Agreement or any similar interest related to this
transaction for sale to, or to solicit any offer to acquire any of the same
from, any person other than each Owner Trustee and the Owner Participant, and
the Pass Through Trustee is not in default under the Pass Through Trust
Agreement.
Section 3.6. Representations and Warranties of the Owner
Participant. The Owner Participant represents and warrants to the Bank, the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Lessee
that, as of the date hereof:
(a) the Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to carry on its business as now conducted;
(b) the Owner Participant has the requisite power and authority to
enter into the Owner Participant Agreements and to perform its obligations
thereunder, and the execution, delivery and performance thereof do not and will
not contravene any law or regulation, or any order of any court or governmental
authority or agency applicable to or binding on the Owner Participant or any of
its properties, or contravene the provisions of, or constitute a default under,
or result in the creation of any Lien (other than such as are created by the
Operative Agreements) upon the Equipment under, its certificate of
incorporation or by-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Owner Participant is a party or by which
it or any of its property is bound or affected;
(c) the Owner Participant Agreements have been duly authorized by
all necessary corporate action on the part of the Owner Participant, do not
require any approval not already obtained of the stockholders of the Owner
Participant or any approval or consent not already obtained of any trustee or
holders of indebtedness or obligations of the Owner Participant, have been, or
at the time of execution will be, duly executed and delivered by the Owner
Participant and (assuming the due authorization, execution and delivery by each
other party thereto) constitute the legal, valid and binding obligations of the
Owner Participant, enforceable against the Owner Participant in accordance with
their respective terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(d) no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
for the due execution, delivery or performance by the Owner Participant of the
Owner Participant Agreements;
(e) the Trust Estate is free of any Lessor's Liens attributable to
the Owner Participant;
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<PAGE> 28
(f) there are no pending or, to the Owner Participant's knowledge,
threatened actions or proceedings against the Owner Participant before any
court or administrative agency which would materially adversely affect the
Owner Participant's financial condition or its ability to perform its
obligations under the Trust Agreement, the Tax Indemnity Agreement or this
Agreement;
(g) as of the Initial Closing Date the Owner Participant is
purchasing the Beneficial Interest to be acquired by it for its account with no
present intention of distributing such Beneficial Interest or any part thereof
in any manner which would violate the Securities Act, but without prejudice,
however, to the right of the Owner Participant at all times to sell or
otherwise dispose of all or any part of such Beneficial Interest in compliance
with the Securities Act; provided, however, that subject to the provisions of
Section 6.1, the disposition of the Beneficial Interest shall at all times be
within the Owner Participant's control. The Owner Participant acknowledges
that its Beneficial Interest has not been registered under the Securities Act,
and that neither the Owner Trustee nor the Lessee contemplates filing, or is
legally required to file, any registration statement with respect thereto;
(h) with respect to the source of the amount to be advanced by the
Owner Participant pursuant to Section 2.2, no part of such amount constitutes
assets of any employee benefit plan subject to Title I of ERISA or Section 4975
of the Code;
(i) no broker's or finder's or placement fee or commission will be
payable with respect to the transactions contemplated by the Operative
Agreements as a result of any action by the Owner Participant;
(j) the Owner Participant's net worth exceeds US$75,000,000
determined in accordance with generally accepted accounting principles.
Section 3.7. Opinion Acknowledgment. Each of the parties hereto,
with respect to such party, expressly consents to the rendering by its counsel
of the opinion referred to in Section 4.1(e) and acknowledges that such opinion
shall be deemed to be rendered at the request and upon the instructions of such
party.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions Precedent to Investment by Each
Participant. The obligation of each Participant to make its investment
specified with respect to such Participant in Section 2 on the Initial Closing
Date and the Subsequent Closing Date shall be subject to the following
conditions (except that paragraph (k) and clause (i) of paragraph (p) shall not
be conditions precedent to the Owner Participant's obligations hereunder and
paragraph (n) and (s) and clause (ii) of paragraph (p) shall not be conditions
precedent to the Loan Participant's obligations hereunder):
(a) Execution of Operative Agreements. (i) On or before the Debt
Closing Date this Agreement and the Pass Through Trust Agreement, (ii) on or
before the Initial Closing Date, the Trust Agreement, the Lease, the Lease
Supplement in respect of the Units delivered on the
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Initial Closing Date, the Indenture, the Indenture Supplement, the Residual
Value Guaranty and the insurance Letter Agreement in respect of the Units
delivered on the Initial Closing Date and the Equipment Notes in respect of the
Units delivered on the Initial Closing Date, and (iii) on or before the
Subsequent Closing Date, the Lease Supplement, the Indenture Supplements and
the Equipment Notes in respect of the Units delivered on the Subsequent Closing
Date, shall each be satisfactory in form and substance to such Participant,
shall have been duly executed and delivered by the parties thereto (except that
the execution and delivery of the documents referred to above (other than this
Agreement) by a party hereto or thereto shall not be a condition precedent to
such party's obligations hereunder), shall each be in full force and effect and
executed counterparts of each shall have been delivered to such Participant or
its counsel on or before such Closing Date; and no event shall have occurred
and be continuing that constitutes a Lease Default or an Indenture Default.
(b) Recordation and Filing. On or before the Initial Closing
Date, the Lessee shall have caused the Lease, the Lease Supplement in respect
of the Units delivered on the Initial Closing Date, the Indenture and the
Indenture Supplement in respect of the Units delivered on the Initial Closing
Date, and on or before the Subsequent Closing Date, the Lessee shall have
caused the Lease Supplement and the Indenture Supplement in respect of the
Units delivered on the Subsequent Closing Date to be duly filed, recorded and
deposited with the STB in conformity with 49 U.S.C. Section 11301 and in the
office of the Registrar General of Canada pursuant to Section 105 of the Canada
Transportation Act and all necessary actions shall have been taken to cause
publication of notice of such deposit in The Canada Gazette in accordance with
said Section 105 without delay, and the Lessee shall furnish the Indenture
Trustee, the Owner Trustee and each Participant proof thereof. In addition, on
or before the Initial Closing Date or as soon thereafter as is reasonably
practicable (but in no event more than 30 days after such Closing Date), the
Lessee shall cause the Lease, the Lease Supplement in respect of the Units
delivered on the Initial Closing Date, the Indenture and the Indenture
Supplement in respect of the Units delivered on the Initial Closing Date, and
on or before the Subsequent Closing Date or as soon thereafter as is reasonably
practicable (but in no event more than 30 days after such Closing Date) the
Lessee shall have caused the Lease Supplement and the Indenture Supplement in
respect of the Units delivered on the Subsequent Closing Date, to be deposited
in the appropriate offices in the Canadian provinces of Ontario, Manitoba,
Saskatchewan, Alberta, British Columbia, Quebec, Nova Scotia and New Brunswick.
Precautionary Uniform Commercial Code financing statements naming the Lessee as
debtor, the Owner Trustee as secured party and the Indenture Trustee as
assignee of the secured party shall have been filed by the Lessee in the State
of Illinois.
(c) Representations and Warranties of Lessee. On the Initial
Closing Date and the Subsequent Closing Date, the representations and
warranties of the Lessee contained in Section 3.2 and Section 3.4(b) hereof
shall be true and correct in all material respects as of such Closing Date as
though then made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct on and as of such
earlier date), and the Bank, the Owner Trustee, the Indenture Trustee and each
Participant shall have received an Officer's Certificate dated such Closing
Date from the Lessee certifying to the foregoing matters, and the Lessee shall
have
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performed and complied with all agreements and conditions herein contained
which are required to be performed or complied with by the Lessee on or before
said date.
(d) Representations and Warranties of Owner Trustee. On the
Initial Closing Date and the Subsequent Closing Date, the representations and
warranties of the Owner Trustee contained in Section 3.1 and Section 3.4(a)
shall be true and correct in all material respects as of such Closing Date as
though then made on and as of such date except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct on and as of such
earlier date), and the Lessee, the Indenture Trustee, the Pass Through Trustee
and each Participant shall have received an Officer's Certificate dated such
Closing Date from the Owner Trustee and the Owner Trustee shall have performed
and complied with all agreements and conditions herein contained which are
required to be performed or complied with by the Owner Trustee on or before
said date.
(e) Opinions of Counsel. On the Initial Closing Date and the
Subsequent Closing Date, the Bank, the Owner Trustee, the Indenture Trustee and
each Participant shall have received the favorable written opinion of each of
(i) the Lessee's special counsel and General Counsel, (ii) counsel to the Owner
Trustee, (iii) special counsel to the Owner Participant, (iv) counsel to the
Pass Through Trustee, (v) counsel to the Indenture Trustee, (vi) special
regulatory counsel to the Lessee and (vii) special Canadian counsel to the
Lessee, in form and substance satisfactory to each Participant; provided that,
except as otherwise provided herein, receipt by a party hereto of a favorable
written opinion from counsel to such party shall not be a condition precedent
to such party's obligations hereunder.
(f) Title. On the Initial Closing Date and the Subsequent Closing
Date, after giving effect to the transactions contemplated hereby, the Owner
Trustee shall have all legal and beneficial title to each Unit to be delivered
on such Closing Date, free and clear of all Liens (other than Permitted Liens
of the type described in clause (ii) with respect to sublessees, and in clauses
(iii), (iv), (vi) and (vii) of the definition thereof).
(g) Bills of Sale. On the Initial Closing Date and the Subsequent
Closing Date the Lessee shall have delivered to the Owner Trustee (with copies
to the Indenture Trustee and each Participant) the 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
Owner Trustee legal and beneficial title to such Units free of all claims,
liens and encumbrances of any nature (other than Permitted Liens of the type
described in clause (ii) with respect to sublessees and in clauses (iii), (iv),
(vi) and (vii) of the definition thereof) and warranting to the Owner Trustee
that at the time of delivery of each such Unit, the Lessee had legal and
beneficial title thereto and good and lawful right to sell the same, and title
thereto was free and clear of all Liens (other than Permitted Liens of the type
described in clause (ii) with respect to sublessees, and in clauses (iii),
(iv), (vi) and (vii) of the definition thereof).
(h) Insurance Certificates. On or before the Initial Closing Date
and the Subsequent Closing Date, the Bank, the Owner Trustee, the Indenture
Trustee and each Participant shall have received (x) any certificate relating
to insurance that is required pursuant to Section 12 of
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<PAGE> 31
the Lease and (y) a certificate from a nationally recognized insurance broker
in the form attached hereto as Exhibit A.
(i) Corporate Documents. Each of the Participants shall have
received such documents and evidence with respect to the Lessee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee as the Participants may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement, the taking of
all corporate and other proceedings in connection therewith and compliance with
the conditions herein or therein set forth.
(j) No Threatened Proceedings. No action or proceeding shall have
been instituted nor shall governmental action be threatened before any court or
governmental agency, nor shall any order, judgment or decree have been issued
or proposed to be issued by any court or governmental agency as of the Initial
Closing Date or the Subsequent Closing Date, to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the transactions
contemplated hereby.
(k) Closing Certificates of Owner Participant. On the Initial
Closing Date and the Subsequent Closing Date, the Bank, the Lessee, the
Indenture Trustee and the Pass Through Trustee shall have received an Officer's
Certificate dated such Closing Date from the Owner Participant, to the effect
that the representations and warranties of the Owner Participant contained in
Section 3.6 are true and correct in all material respects on such Closing Date
with the same effect as though made on and as of said date, except to the
extent that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties were true and correct
on and as of such earlier date), and that the Owner Participant has performed
and complied with all agreements and conditions herein contained which are
required to be performed or complied with by the Owner Participant on or before
said date.
(l) Closing Notice. The Indenture Trustee and the Participants
shall have received the Notices of Delivery required pursuant to Section 2.3.
(m) Closing Certificates of Indenture Trustee. On the Initial
Closing Date and the Subsequent Closing Date, the Lessee, the Owner Trustee and
each Participant shall have received an Officer's Certificate dated such
Closing Date from the Indenture Trustee, to the effect that the representations
and warranties of the Indenture Trustee contained in Section 3.3 are true and
correct in all respects on such Closing Date with the same effect as though
made on and as of said date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties were true and correct on and as of such earlier date), and that
the Indenture Trustee has performed and complied with all agreements and
conditions herein contained which are required to be performed or complied with
by the Indenture Trustee on or before said date.
(n) Closing Certificates of the Pass Through Trustee. On the
Initial Closing Date and the Subsequent Closing Date, the Lessee, the Owner
Trustee and the Owner Participant shall have received an Officer's Certificate
dated such Closing Date from the Pass Through Trustee,
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to the effect that the representations and warranties of the Pass Through
Trustee contained in Section 3.5 are true and correct in all respects on such
Closing Date with the same effect as though made on and as of said date, except
to the extent that such representations and warranties relate solely to an
earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and that the Pass Through Trustee has
performed and complied with all agreements and conditions herein contained
which are required to be performed or complied with by the Pass Through Trustee
on or before said date.
(o) No Illegality. No change shall have occurred after the date
of the execution and delivery of this Agreement in applicable law or
regulations thereunder or interpretations thereof by regulatory authorities
that, in the opinion of such Participant or its counsel, would make it illegal
for such Participant to enter into any transaction contemplated by the
Operative Agreements.
(p) Participants' Investments. (i) The Owner Participant shall
have made available its Commitment in the respective amounts specified in, and
otherwise in accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan
Participant shall have made available its Commitment in the respective amounts
specified in, and otherwise in accordance with, Sections 2.2(b) and 2.3.
(q) Consents. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee which are required in
connection with the transactions contemplated by this Agreement, shall have
been duly obtained and be in full force and effect.
(r) Governmental Actions. All actions, if any, required to have
been taken on or prior to the Initial Closing Date and the Subsequent Closing
Date in connection with the transactions contemplated by this Agreement on such
Closing Date shall have been taken by any governmental or political agency,
subdivision or instrumentality of the United States and all orders, permits,
waivers, exemptions, authorizations and approvals of such entities required to
be in effect on the Initial Closing Date and the Subsequent Closing Date in
connection with the transactions contemplated by this Agreement on such Closing
Date shall have been issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect, on such Closing
Date.
(s) Tax Indemnity Agreement. On or before the Initial Closing
Date, the Tax Indemnity Agreement shall be satisfactory in form and substance
to the Owner Participant, shall have been duly executed and delivered by the
Lessee and, assuming due authorization, execution and delivery by the Owner
Participant, shall be in full force and effect.
(t) Securities Act Compliance. On or before the Debt Closing
Date, if filing of the final base prospectus, and the supplement thereto is
required pursuant to Rule 424(b) as promulgated pursuant to the Securities Act,
the final base prospectus and such supplement shall have been filed in the
manner and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
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<PAGE> 33
(u) Appointment of Representative. The Owner Trustee shall have
authorized its representative, who shall be an individual designated by the
Lessee and acceptable to the Owner Trustee, to accept the Units being delivered
on the Initial Closing Date and the Subsequent Closing Date from the Lessee and
to deliver such Units to the Lessee. The Lessee shall have authorized its
representative (who shall be the same individual designated by the Lessee under
this paragraph) to accept delivery of the Units from the Owner Trustee as the
Lessor pursuant
to the Lease.
(v) No Event of Default. No event or condition shall have
occurred and be continuing or would result from the purchase, sale or lease of
the Equipment to be purchased on the Initial Closing Date or the Subsequent
Closing Date or the taking of any other act as contemplated hereby, which
constitutes a Lease Default or a Lease Event of Default.
(w) No Event of Loss. Nothing shall have come to the attention of
any party to this Agreement to indicate that any Unit to be purchased on the
Initial Closing Date or the Subsequent Closing Date shall have been subject to
an Event of Loss on such closing date, or that any event shall have occurred
and be continuing which, given the passage of time, would constitute an Event
of Loss as to such Unit on such closing date.
Section 4.2. Additional Conditions Precedent to Investment by
Pass Through Trustee. The obligation of the Pass Through Trustee to purchase
and pay for the Equipment Notes to be purchased by it pursuant to Sections
2.2(b) and 2.3 on the Closing Date shall be subject to the additional
conditions that the Equipment Notes to be delivered on the Closing Date shall
have been duly authorized, executed and delivered to the Pass Through Trustee
by a duly authorized officer of the Owner Trustee and duly authenticated by the
Indenture Trustee and that on the Closing Date the Pass Through Trustee shall
have received the proceeds from the sale of the Pass Through Certificates.
Section 4.3. Additional Conditions Precedent to Investment by
Owner Participant. The obligation of the Owner Participant to make available
its Commitment pursuant to Sections 2.2(a) and 2.3 on the Initial Closing Date
and the Subsequent Closing Date with respect to any Unit to be delivered on
such Closing Date shall be subject to the following additional conditions:
(a) Appraisals. On or before the Initial Closing Date and the
Subsequent Closing Date, the Owner Participant shall have received an opinion
(each, an "Appraisal") of Rail Solutions, Inc., satisfactory in form and
substance to the Owner Participant, concluding that: (i) the fair market value
of each Unit being delivered on the Initial Closing Date or the Subsequent
Closing Date, as the case may be, is equal to the allocable portion of Total
Equipment Cost with respect to such Unit; (ii) the Basic Rents for the Basic
Term are fair market rents; (iii) at the expiration of the Basic Term and the
maximum fixed rate renewal period, (A) the remaining economic life of each Unit
will be at least equal to 20% of the original economic life of such Unit as
estimated in the Appraisal and (B) without taking into account inflation or
deflation from and after the Initial Closing Date or the Subsequent Closing
Date, as the case may be, or the existence of any purchase option, each Unit
will have a fair market
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<PAGE> 34
value of at least 20% of the Total Equipment Cost with respect to such Unit;
(iv) as of the Early Purchase Date, the estimated fair market value of such
Equipment, taking into account a reasonable annual rate of inflation or
deflation from and after the Initial Closing Date or the Subsequent Closing
Date, as the case may be, will be less than the Early Purchase Price for such
Unit; (v) as of the end of the Basic Term, the estimated fair market value of
each Unit, taking into account a reasonable annual rate of inflation or
deflation from and after the Initial Closing Date or the Subsequent Closing
Date, as the case may be, will be less than the Basic Term Purchase Price for
such Unit; (vi) as of the Outside Date, the estimated fair market value of each
Unit, taking into account a reasonable annual rate of inflation or deflation
from and after the Initial Closing Date or the Subsequent Closing Date, as the
case may be, will be less than the Outside Date Purchase Price for such Unit,
(vii) such Equipment is not Limited Use Property; (viii) Basic Rents from the
Early Purchase Date to the end of the Basic Term are fair market rents; (ix)
Basic Rents for the Fixed Rate Renewal Term are fair market rents; and (x) such
other matters as the Owner Participant reasonably may require; provided that the
Lessee makes no representation as to the fair market value, useful life or
estimated residual value of the Equipment, and the Lessee shall not be
responsible for, or incur any liabilities as a result of, the contents of either
Appraisal or report to which it relates or, except to the extent provided in the
Tax Indemnity Agreement, any information supplied by Lessee in connection
therewith.
(b) Opinion with Respect to Certain Tax Aspects. On the Initial
Closing Date and the Subsequent Closing Date, the Owner Participant shall have
received the opinion of Winston & Strawn addressed to the Owner Participant, in
form and substance satisfactory to the Owner Participant, containing such
counsel's favorable opinion with respect to such tax matters as the Owner
Participant may reasonably request.
(c) No Tax Law Change. No Change in Tax Law affecting Net
Economic Return shall have occurred or shall have been proposed on or prior to
the purchase of any Equipment on the Initial Closing Date or the Subsequent
Closing Date unless the Lessee shall have agreed to an adjustment to Basic Rent
in accordance with Section 2.6 of this Agreement to preserve the Owner
Participant's Net Economic Return.
Section 4.4. Conditions Precedent to the Obligation of the
Lessee. The obligation of the Lessee with respect to the sale of the Units to
the Owner Trustee and acceptance of the Units under the Lease is subject to the
following conditions as of the Initial Closing Date and the Subsequent Closing
Date (except for the condition set forth in Section 4.4(g) which is only
applicable to the sale and acceptance of Units on the Subsequent Closing Date):
(a) Corporate Documents. On or before the Initial Closing Date
and the Subsequent Closing Date, the Lessee shall have received such documents
and evidence with respect to the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee as the Lessee may reasonably
request in order to establish the consummation on such Closing Date of the
transactions contemplated by this Agreement, the taking of all corporate and
other proceedings in connection therewith and compliance with the conditions
herein or therein set forth.
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<PAGE> 35
(b) Operative Agreements. On or before the Initial Closing Date
and the Subsequent Closing Date, the Operative Agreements shall have been duly
authorized, executed and delivered by the respective party or parties thereto
(other than the Lessee), and an executed counterpart of each thereof shall have
been delivered to the Lessee or its special counsel.
(c) Representations and Warranties True. On the Initial Closing
Date and the Subsequent Closing Date, the representations and warranties of the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner
Participant contained in Section 3 hereof shall be true and correct in all
material respects as of such Closing Date as though made on and as of such
Closing Date, and the Lessee shall have received an Officer's Certificate dated
such date from each of the Owner Trustee as described in Section 4.1(d), the
Owner Participant as described in Section 4.1(k), the Indenture Trustee as
described in Section 4.1(m) and the Pass Through Trustee as described in
Section 4.1(n), addressed to the Lessee and certifying as to the foregoing
matters insofar as they relate to the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Pass Through Trustee, as the case may be.
(d) Opinions of Counsel. On the Initial Closing Date and the
Subsequent Closing Date, the Lessee shall have received the opinions of counsel
referred to in Section 4.1(e) (other than those set forth in clause (i)
therein), addressed to the Lessee.
(e) No Threatened Proceedings. No action or proceeding shall have
been instituted nor shall governmental action be threatened before any court or
governmental agency, nor shall any order, judgment or decree have been issued
or proposed to be issued by any court or governmental agency as of the Initial
Closing Date or the Subsequent Closing Date, to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the transactions
contemplated hereby.
(f) Participants' Investments. (i) The Owner Participant shall
have made available its Commitment in the amount specified in, and otherwise in
accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan Participant shall
have made available its Commitment in the amount specified in, and otherwise in
accordance with, Sections 2.2(b) and 2.3.
(g) No Change in Tax Law. No Change in Tax Law shall have
occurred nor shall any Change in Tax Law have been proposed subsequent to the
Initial Closing Date and prior to the acceptance and delivery of Units to be
delivered on the Subsequent Closing Date which, if enacted, adopted or made
effective, in the same or substantially similar form, would, as a consequence
of an adjustment to Basic Rent in respect thereof pursuant to Section 2.6,
cause the net present value of the installments of Basic Rent in respect of the
Units to be delivered on the Subsequent Closing Date, as so adjusted, payable
by the Lessee during the Basic Term (discounted at the Debt Rate), expressed as
a percentage of Total Equipment Cost, to be increased to an amount which is
more than 100 basis points higher than the net present value of the
installments of Basic Rent in respect of the Units to be delivered on the
Subsequent Closing Date, without giving effect to such adjustment, payable by
the Lessee during the Basic Term (similarly discounted), expressed as a
percentage of the aggregate Equipment Cost of such Units, such adjustments and
calculations to be determined and to be subject to verification in the
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<PAGE> 36
manner provided in Section 2.6. Notwithstanding the occurrence of any such
Change in Tax Law or rendering of such a judicial opinion, the condition
precedent set forth herein shall be deemed to have been satisfied if the Owner
Participant agrees that such increase in the present value of the installments
of Basic Rent payable by the Lessee during the Basic Term as a consequence of
such adjustment shall not exceed 100 basis points.
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE.
The Lessee agrees that it will furnish directly to each Participant
the following:
(a) unless included in a Form 10-Q delivered under clause (c)
below within the 60-day period specified in this clause (a), as soon as
available and in any event within 60 days after the end of each quarterly
period, except the last, of each fiscal year, the consolidated balance sheet of
the Lessee and its consolidated Subsidiaries as at the end of such period,
together with the related consolidated statements of income and cash flows of
the Lessee and its consolidated Subsidiaries for the period beginning on the
first day of such fiscal year and ending on the last day of such quarterly
period, setting forth in each case (except for the consolidated balance sheet)
in comparative form the figures for the corresponding periods of the previous
fiscal year, all in reasonable detail and prepared in accordance with generally
accepted accounting principles;
(b) unless included in a Form 10-K delivered under clause (c)
below within the 120-day period specified in this clause (b), as soon as
available and in any event within 120 days after the last day of each fiscal
year, a copy of the Lessee's audited financial statements covering the
operations of the Lessee and its consolidated Subsidiaries, including a
consolidated balance sheet, and related consolidated statements of income and
retained earnings and consolidated statement of cash flows of the Lessee and
its consolidated Subsidiaries for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with generally accepted accounting principles
applied on a consistent basis, which statements will have been certified by a
firm of independent public accountants of recognized national standing selected
by the Lessee;
(c) as soon as available, one copy of each Annual Report on Form
10-K (or any successor form) and Quarterly Report on Form 10-Q (or any
successor form) filed by the Lessee with the Securities and Exchange Commission
or any successor agency;
(d) within the time period prescribed in subparagraph (b) above, a
certificate, signed by the Treasurer or principal financial officer of the
Lessee, to the effect that the signer has reviewed the activities of the Lessee
during the immediately preceding fiscal year and that he is not aware of any
default in compliance by the Lessee with any of the covenants, terms and
provisions of the Participation Agreement or the Lease (except as specified),
and if a Lease Default or Lease Event of Default shall exist, specifying such
Lease Default or Lease Event of Default and the nature and status thereof and
the action, if any, that the Lessee is taking to remedy such Lease Default or
Lease Event of Default;
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(e) promptly, all material reports or statements which the Lessee may make
to, or file with, the Securities and Exchange Commission or any successor
thereto (excluding such reports or statements which are treated as confidential
and not available to the public, in accordance with applicable law, by the
Securities and Exchange Commission, for so long as such confidentiality shall be
maintained); and
(f) promptly, such additional information with respect to the financial
condition or business of the Lessee as any Participant may from time to time
reasonably request.
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND
THE LESSEE.
Section 6.1. Restrictions on Transfer of Beneficial Interest. The Owner
Participant agrees that it shall not sell, convey, assign, pledge, mortgage or
otherwise transfer any of its Beneficial Interest prior to the expiration or
earlier termination of the Lease Term without the Lessee's and, so long as any
Equipment Notes are outstanding, the Indenture Trustee's consent (which consent
shall not be unreasonably withheld) and absent indemnifying the Lessee to its
reasonable satisfaction unless:
(a) the Person to whom such transfer is to be made (a "Transferee") is (i)
an institutional or corporate investor with net worth or, in the case of a bank
or lending institution, combined capital and surplus at the time of such
transfer of at least US$75,000,000 determined in accordance with generally
accepted accounting principles or (ii) any Affiliate of any such institutional
or corporate investor if such investor guarantees the obligations so assumed by
such Affiliate pursuant to an instrument or instruments identical to Exhibit B
hereto in all material respects or otherwise reasonably satisfactory to the
Lessee, the Owner Trustee and the Indenture Trustee or (iii) an Affiliate of the
Owner Participant; provided that in the event of a transfer pursuant to clause
(iii) which does not qualify under clauses (i) or (ii), the Owner Participant
shall remain liable for all of its obligations under this Agreement and the
other Operative Agreements and any guarantee given pursuant to clause (ii) shall
remain in full force and effect;
(b) the Owner Participant is not in default under the Lease;
(c) neither the Transferee nor any of its Affiliates shall be a direct
competitor (other than as a passive investor or loan participant in the
financing of equipment or facilities used in full service railcar leasing) of
the Lessee in the business of leasing rail cars under full service operating
leases; provided, that no Transferee or Affiliate thereof shall be deemed to (i)
be engaged in full service railcar leasing or (ii) hold (directly or indirectly)
any material interest in any business that is competitive with the Lessee's full
service railcar leasing business, solely by reason of any sale, lease or other
disposition (or any actions in furtherance of any of the foregoing) of any of
such Person's interest in any equipment or facilities directly or indirectly
owned, leased or otherwise controlled pursuant to any such Person's passive
investment or loan participation in the financing of any such equipment or
facilities used in full service railcar leasing or any re-leasing or sale of any
rail equipment which is returned to or repossessed by or on behalf of the Owner
Participant or any Affiliate of the Owner Participant from a lessee
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<PAGE> 38
or borrower in connection with a lease financing or lender transaction entered
into by the Owner Participant or such Affiliate as a passive lessor, investor or
lender;
(d) the Indenture Trustee, the Bank and the Lessee shall have received 10
days prior written notice of such transfer specifying the name and address of
any proposed transferee and such additional information as shall be necessary to
determine whether the proposed transfer satisfies the requirements of this
Section 6.1; provided, however, that such 10 days prior written notice need not
be given to the Indenture Trustee and the Lessee if such sale, conveyance,
assignment, pledge, mortgage or other transfer is to an Affiliate of the Owner
Participant;
(e) so long as any Interim Interest has become due and payable but has not
been paid by, or reimbursed by, the Owner Participant, the Lessee shall have
consented in writing to such transfer;
(f) such Transferee enters into an agreement or agreements in form and
substance reasonably satisfactory to the Lessee, the Owner Trustee and the
Indenture Trustee whereby such Transferee confirms that it shall be deemed a
party to this Agreement and each other Operative Agreement to which the
transferring Owner Participant is a party, and agrees to be bound by all the
terms of, and to undertake all of the obligations and liabilities of the
transferring Owner Participant contained in, this Agreement and such other
Operative Agreements and in which the Transferee shall make representations and
warranties comparable to those of the Owner Participant contained herein and
therein;
(g) such transfer complies in all respects with and does not violate any
applicable federal securities law and the securities law of any applicable
state;
(h) an opinion of counsel to the Transferee (which counsel shall be
reasonably acceptable to the Lessee, the Bank and the Indenture Trustee and
which may be internal counsel of the Transferee), confirming (i) the existence,
power and authority of, and due authorization, execution and delivery of all
relevant documentation by, the Transferee (with appropriate reliance on
certificates of corporate officers or public officials as to matters of fact),
(ii) that each agreement referred to in subparagraph (f) above is the legal,
valid, binding and enforceable obligation of the Transferee (subject to
customary qualifications as to bankruptcy and equitable principles) and (iii)
compliance of the transfer with applicable federal securities laws and material
laws of the Transferee's domicile and other material laws applicable to the
Transferee, shall be provided, prior to such transfer, to the Lessee and the
Indenture Trustee, which opinion shall be in form and substance reasonably
satisfactory to each of them;
(i) except as specifically consented to in writing by the Lessee and the
Indenture Trustee, the terms of the Operative Agreements shall not be altered;
(j) such transfer shall not result in an increase in the Lessee's
obligations under Section 7.1 or under the Tax Indemnity Agreement;
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(k) no Owner Participant shall hold less than 20% of the Beneficial
Interest after giving effect to such transfer and the Beneficial Interest shall
be held by not more than four Owner Participants;
(l) all reasonable expenses of the parties hereto (including, without
limitation, legal fees and expenses of special counsel) incurred in connection
with each transfer of such Beneficial Interest shall be paid by the transferring
Owner Participant or the Transferee;
(m) such transfer (i) does not involve the use of an amount which
constitutes assets of an employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code or (ii) will not constitute a prohibited transaction
under ERISA;
(n) as a result of such transfer, no Indenture Default attributable to the
Owner Participant or the Owner Trustee shall have occurred and be continuing;
(o) as long as no Lease Event of Default has occurred and is continuing,
the transfer does not involve the sale of the stock of any Owner Participant the
sole asset of which is all or a portion of the Beneficial Interest to, or the
merger of any such Owner Participant with or into, any Person described in
paragraph (c) of this Section 6.1;
(p) the Transferee (i) is a "United States Person" within the meaning of
Section 7701(a)(30) of the Code or (ii) is engaged in a United States trade or
business for purposes of Subtitle A, Chapter 1, Subchapter N of the Code and is
acquiring such Beneficial Interest in connection with such trade or business;
(q) the Owner Participant shall have made available its Commitment in
respect of Units to be delivered on the Subsequent Closing Date; and
(r) the Owner Participant shall deliver an Officer's Certificate
certifying as to compliance with the transfer requirements contained herein.
Upon any such transfer, (i) except as the context otherwise requires, such
Transferee shall be deemed the "Owner Participant" for all purposes, and shall
enjoy the rights and privileges and perform the obligations of the Owner
Participant to the extent of the interest transferred hereunder and under each
other Operative Agreement to which the Owner Participant is a party, and, except
as the context otherwise requires, each reference in this Agreement and each
other Operative Agreement to the "Owner Participant" shall thereafter be deemed
to include such Transferee for all purposes to the extent of the interest
transferred, and (ii) the transferor, except as provided in Section 6.1(l)
hereof and except in the case of a transfer to a Transferee described in Section
6.1(a)(iii) hereof, shall be released from all obligations hereunder and under
each other Operative Agreement to which such transferor is a party or by which
such transferor is bound to the extent such obligations are expressly assumed by
a Transferee; and provided, further, that in no event shall any such transfer or
assignment waive or release the transferor from any liability on account of any
breach existing immediately prior to such transfer of any of its
representations, warranties, covenants or obligations set forth in the Operative
Agreements or for any fraudulent or willful misconduct. Any transfer or
assignment of the Beneficial
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Interest in violation of this Section 6.1 shall be void and of no effect as
between the parties to this Agreement. Subject to the rights of the Lessee
pursuant to subsection 6.1(o), the provisions of this Section 6.1 shall not be
construed to restrict the Owner Participant from consolidating with or merging
into any other corporation or restricting another corporation from merging into
or consolidating with the Owner Participant. No consent of the Lessee otherwise
required hereunder shall be required if any Lease Event of Default shall have
occurred and be continuing. Notwithstanding any transfer, the transferor Owner
Participant shall be entitled to all benefits accrued and all rights vested
prior to such transfer, including, without limitation, rights to indemnification
under any Operative Agreements.
Section 6.2. Lessor's Liens Attributable to the Owner Participant. The
Owner Participant hereby unconditionally agrees with and for the benefit of the
other parties to this Agreement that the Owner Participant will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Liens on or
against any part of the Trust Estate or the Equipment attributable to the Owner
Participant, and the Owner Participant agrees that it will, at its own cost and
expense, take such action as may be necessary to duly discharge and satisfy in
full any such Lessor's Lien (by bonding or otherwise, so long as Lessee's
operation and use of the Equipment and the interest of the Indenture Trustee in
the Indenture Estate is not impaired); provided that the Owner Participant may
contest any such Lessor's Lien in good faith by appropriate proceedings so long
as such proceedings do not involve any material danger of the sale, forfeiture
or loss of the Equipment or any interest therein or interference with the use,
operation, or possession of the Equipment by the Lessee under the Lease or the
rights of the Indenture Trustee under the Indenture.
Section 6.3. Lessor's Liens Attributable to the Owner Trustee. The Bank,
in its individual capacity, hereby unconditionally agrees with and for the
benefit of the other parties to this Agreement that the Bank in its individual
capacity will not directly or indirectly create, incur, assume or suffer to
exist any Lessor's Liens on or against any part of the Trust Estate or the
Equipment attributable to the Bank in its individual capacity and unrelated to
the transactions contemplated by the Operative Agreements, and the Bank in its
individual capacity agrees that it will, at its own cost and expense, take such
action as may be necessary to duly discharge and satisfy in full any such
Lessor's Lien attributable to the Bank in its individual capacity (by bonding or
otherwise, so long as Lessee's operation and use of the Equipment and the
interest of the Indenture Trustee in the Indenture Estate is not impaired);
provided that the Bank may contest any such Lessor's Lien in good faith by
appropriate proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of the Equipment or any interest therein
or interference with the use, operation, or possession of the Equipment by the
Lessee under the Lease or the right of the Indenture Trustee under the
Indenture.
Section 6.4. Liens Created by the Indenture Trustee and the Loan
Participant.
(a) The Indenture Trustee, in its individual capacity, covenants and
agrees with the Lessee, the Owner Trustee, the Owner Participant and the Loan
Participant that it shall not cause or permit to exist any Lien on the Equipment
or all or any portion of any Trust Estate or the Indenture Estate arising as a
result of (i) claims against the Indenture Trustee in its individual
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<PAGE> 41
capacity not related to its interest in the Equipment and any Trust Estate, or
to the administration of the Indenture Estate pursuant to the Indenture, (ii)
acts of the Indenture Trustee in its individual capacity not contemplated by, or
any lien arising out of the gross negligence or wilful misconduct of the
Indenture Trustee in performing its duties and obligations under, the Operative
Agreements, (iii) claims against the Indenture Trustee in its individual
capacity relating to Taxes or expenses that are not indemnified against by the
Lessee pursuant to Section 7 attributable to the actions of the Indenture
Trustee, solely in its individual capacity, or (iv) claims against the Indenture
Trustee arising out of the transfer by the Indenture Trustee of all or any
portion of its interest in the Equipment, the Indenture Estate or the Operative
Agreements, other than a transfer permitted by the Operative Agreements and that
the Indenture Trustee will, at its own cost and expense (and without any right
of reimbursement from any other party hereto), promptly take such action as may
be necessary duly to discharge any such Lien.
(b) The Loan Participant covenants and agrees with the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee that it shall not cause
or permit to exist any Lien on the Equipment or all or any portion of any Trust
Estate or the Indenture Estate arising as a result of (i) claims against such
Loan Participant not related to its interest in the Equipment and any Trust
Estate, (ii) acts of such Loan Participant not contemplated by, or failure of
such Loan Participant to take any action it is expressly required to perform by,
the Operative Agreements, (iii) claims against such Loan Participant relating to
Taxes or expenses that are not indemnified against by the Lessee pursuant to
Section 7, or (iv) claims against such Loan Participant arising out of the
transfer by such Loan Participant of all or any portion of its interest in the
Equipment, the Indenture Estate or the Operative Agreements, other than a
transfer permitted by the Operative Agreements and that such Loan Participant
will, at its own cost and expense (and without any right of reimbursement from
the Lessee), promptly take such action as may be necessary duly to discharge any
such Lien.
Section 6.5. Covenants of Owner Trustee, Owner Participant and Indenture
Trustee. The Owner Participant, and the Bank in its individual and trust
capacity, hereby agree, as to their own actions only, severally and not jointly,
with the Lessee, the Loan Participant and the Indenture Trustee (a) not to
amend, supplement, or otherwise modify any provision of the Trust Agreement in
such a manner as to adversely affect the rights of the Lessee, the Loan
Participant or the Indenture Trustee without the prior written consent of such
party and (b) not to terminate or revoke the Trust Agreement or the trusts
created by the Trust Agreement prior to the payment in full and discharge of the
Equipment Notes and all other indebtedness secured by the Indenture and the
final discharge thereof pursuant to Section 7.1 thereof or prior to the
expiration or early termination of the Lease. Each of the Owner Trustee and the
Indenture Trustee agrees, for the benefit of the Lessee and the Owner
Participant, to comply with the provisions of the Indenture and not to amend,
supplement, or otherwise modify any provision of the Indenture except in the
manner provided in Article IX thereof. Notwithstanding any provision herein or
in any of the Operative Agreements to the contrary, the Indenture Trustee's
obligation to take or refrain from taking any actions, or to use its discretion
(including, but not limited to, the giving or withholding of consent or approval
and the exercise of any rights or remedies under such Operative Agreements), and
any liability therefor, shall, in addition to any other limitations provided
herein or in the other Operative Agreements, be limited by the provisions of the
Indenture.
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Section 6.6. Amendments to Operative Agreements. The Trustees and
Participants will not terminate the Operative Agreements to which the Lessee is
not or will not be a party, or amend, supplement, waive or modify such Operative
Agreements in any manner that increases the obligations or liabilities, or
decreases the rights, of the Lessee under such Operative Agreements, except in
accordance with such Operative Agreements in effect on the date hereof (as
amended, modified or supplemented from time to time in accordance with the terms
hereof and of such Operative Agreements). The Owner Participant and the Trustees
(as applicable) agree that, in any event, they will not amend Section 2.10 or
Article IX of the Indenture or Article IX of the Trust Agreement without the
prior written consent of the Lessee.
Section 6.7. Covenant of the Lessee. The Lessee hereby agrees with the
Owner Trustee, each Participant and the Indenture Trustee to deliver to the
Owner Trustee on the Initial Closing Date and the Subsequent Closing Date a 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.
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Section 6.9. Lessee's Purchase in Certain Circumstances. If an Owner
Participant, any Transferee or any Affiliate of such Owner Participant or
Transferee is engaged, or acquires, is acquired by, merges or otherwise
consolidates with any company or Affiliate thereof engaged, in full service
railcar leasing, whether or not a direct competitor to the Lessee or any
Affiliate thereof, or by or with any Person that has a material interest
(whether held directly or indirectly) in an enterprise that engages in a
business that is competitive with the Lessee's full service railcar leasing
business, the Lessee may, on a Determination Date which is designated by the
Lessee by written notice to the Owner Trustee, the Indenture Trustee and the
Pass Through Trustee not less than 25 days prior to such Determination Date,
purchase all, but not less than all, the Equipment for a purchase price equal to
the greater of Termination Value or the Fair Market Sales Value, each calculated
as of such Determination Date, plus in either case all accrued and unpaid Rent
for the Equipment as of the date of purchase and any Make-Whole Amount then
payable on the Equipment Notes pursuant to Section 2.10(c) of the Indenture;
provided, that the Lessee's rights to purchase the Equipment pursuant to this
Section 6.9 shall terminate on the earlier to occur of (i) the 90th day after
receipt by the Lessee of written notice from the Owner Participant or any
Transferee or any Affiliate thereof, that it is engaged in full service railcar
leasing or of any such acquisition, merger or consolidation and (ii) the 90th
day after the Lessee otherwise obtains actual knowledge of any such occurrence;
provided further, that an institutional investor which is a passive investor in
the financing of equipment or facilities used in full service railcar leasing
shall not, solely by reason of such investment, be deemed to be engaged in such
business; provided, further, that neither the Owner Participant or any
Transferee nor Affiliate thereof shall be deemed to (i) be engaged in full
service railcar leasing or (ii) hold (directly or indirectly) any material
interest in any business that is competitive with the Lessee's full service
railcar leasing business, solely by reason of any sale, lease or other
disposition (or any actions in furtherance of any of the foregoing), of any of
such Person's interest in any equipment or facilities directly or indirectly
owned, leased or otherwise controlled pursuant to any such Person's passive
investment or loan participation in the financing of any such equipment or
facilities used in full service railcar leasing or any re-leasing or sale of any
rail equipment which is returned to or repossessed by or on behalf of the Owner
Participant or any Affiliate from a lessee or borrower in connection with a
lease financing or lender transaction entered into by the Owner Participant or
such Affiliate as a passive lessor, investor or lender.
If the Lessee elects to exercise the purchase option provided for in this
Section 6.9, Lessee shall, as the purchase price therefor, in the sole
discretion of the Lessee, either (i) pay the Termination Value or the Fair
Market Sales Value, as specified in the paragraph above, together with all other
amounts due and owing by Lessee under the Operative Agreements, or (ii) pay the
difference between the Termination Value or the Fair Market Sales Value, as
applicable, and the outstanding principal amount of the Equipment Notes as of
the Determination Date, together with all other amounts due and owing by the
Lessee under the Operative Agreements, and assume on a full recourse basis
pursuant to Section 4.01 of the Indenture, and agree to indemnify the Lessor
against, all of the Owner Trustee's obligations in respect of the related
Equipment Notes; provided, that, following such assumption, the purchased Units
shall remain subject to the lien of the Indenture. The Lessee will make the
payments required by foregoing clause (i) or assume the Equipment Notes as
provided in foregoing clause (ii) on the Determination Date against delivery of
a bill of sale transferring and assigning to the Lessee all
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right, title and interest of the Lessor in and to such Units on an "as-is"
"where-is" basis and containing a warranty against the Lessor's Liens. The
Lessor shall not be required to make any other representation or warranty as to
the condition of such Units or any other matters, and may specifically disclaim
any such representations or warranties.
Section 6.10. Owner Participant an Affiliate of Lessee. If at any time the
original or any successor Owner Participant shall be an Affiliate of the Lessee,
such Owner Participant and the Lessee agree that notwithstanding Section 10.05
of the Indenture such Owner Participant will not vote its Beneficial Interest to
modify, amend or supplement any provision of the Lease or this Agreement or
give, or permit the Owner Trustee to give, any consent, waiver, authorization or
approval thereunder if any such action would adversely affect in a material
manner the Indenture Trustee or any holder of an Equipment Note unless such
action shall have been consented to by a Majority in Interest.
Section 6.11. Corporate Existence; Place of Business. The Lessee shall at
all times maintain its corporate existence except as permitted by Section 6.8;
and it shall do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate rights, powers, privileges and franchises
except for any corporate right, power, privilege or franchise that it in good
faith determines is no longer necessary or desirable in the conduct of its
business.
Section 6.12. No Impairment of Warranties. From and after the Closing Date
and throughout the Lease Term, the Lessee shall not take any action (or fail to
take any action) if the result of such action (or failure to act) would abrogate
or invalidate or otherwise materially adversely affect the validity of any
warranties applicable to the Units which would otherwise be available with
respect to the Units.
SECTION 7. LESSEE'S INDEMNITIES.
Section 7.1. General Tax Indemnity.
(a) Tax Indemnitee Defined. For purposes of this Section 7.1, "Tax
Indemnitee" means the Owner Participant, its Affiliates, the Pass Through
Trustee, both in its individual capacity and as trustee, the Bank both in its
individual capacity and as Owner Trustee, the Indenture Trustee both in its
individual capacity and as trustee, each of their respective successors or
assigns permitted under the terms of the Operative Agreements, any officer,
director, employee or agent of any of the foregoing, the Trust Estate and the
Indenture Estate.
(b) Taxes Indemnified. All payments by the Lessee to any Tax Indemnitee in
connection with the transactions contemplated by the Operative Agreements shall
be free of withholdings of any nature whatsoever (and at the time that the
Lessee is required to make any payment upon which any withholding is required
the Lessee shall pay an additional amount such that the net amount actually
received will, after such withholding and on an After-Tax Basis, equal the full
amount of the payment then due) and shall be free of expense to each Tax
Indemnitee for collection or other charges. If, for any reason, the Lessee is
required to make any payment to a taxing authority with respect to, or as a
result of, any withholding tax imposed
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on any Tax Indemnitee in respect of the transactions contemplated by the
Operative Agreements which withholding tax is not the responsibility of the
Lessee under this Section 7.1, then such Tax Indemnitee shall pay to the Lessee
within 30 days of a demand an amount which equals the amount paid by the Lessee
with respect to, or as a result of, such withholding tax, plus interest computed
at such Tax Indemnitee's cost of funds rate during the period commencing on the
date the Lessee shall have paid an additional amount pursuant to the first
sentence of this paragraph and ending on the date prior to the date the Lessee
actually receives such payment. Subject to the exclusions stated in subsection
(c) below, whether or not any Unit is accepted under the Lease the Lessee agrees
to indemnify and hold harmless each Tax Indemnitee, on an After-Tax Basis,
taking into account the income tax consequences to the Tax Indemnitee of the
accrual or receipt of an indemnity payment, against all fees (including, without
limitation, license, documentation or other fees and registration fees), taxes
(including, without limitation, income, gross receipts, franchise, sales, use,
rental, turnover, business, occupation, excise, value-added, tangible and
intangible personal property and stamp taxes), levies, assessments, imposts,
duties, charges or withholdings of any nature, together with any and all
penalties, additions to tax, fines or interest thereon ("Taxes") imposed upon
any Tax Indemnitee, the Lessee or any Person in possession of the Equipment or
all or any part of the Equipment by any federal, state or local government,
political subdivision, or taxing authority in the United States or its
possessions, by any government or taxing authority of or in a foreign country or
by any international authority, upon, with respect to or in connection with:
(i) the Equipment or any part of any of the Equipment or
interest therein;
(ii) the acquisition, financing, ownership, leasing, possession,
purchase, acceptance, rejection, condition, registration, return, use,
storage, operation, transfer of title, maintenance, repair, improvement,
replacement, substitution, delivery, redelivery, non-delivery, transport,
preparation, assembly, insurance, construction, manufacture, insuring,
modification, transfer, control, occupancy, servicing, mortgaging,
location, refinancing, disposition, subleasing, repossession, abandonment,
sale or other application or disposition of or with respect to the
Equipment or any part of any of the Equipment or interest therein;
(iii) the rental payments, receipts of earnings arising from any
Unit of Equipment or payable pursuant to the Lease;
(iv) the Equipment Notes, their issuance, acquisition, transfer
or refinancing or (as between the Lessee and any Tax Indemnitee other
than the Indenture Estate) the payment of principal, interest or
Make-Whole Amount or other amounts with respect thereto;
(v) the Operative Agreements or otherwise in connection with the
transactions contemplated thereby; and
(vi) any acquisition, issuance, transfer or holding of Equipment
Notes or Pass Through Certificates being deemed to result in a "prohibited
transaction" under ERISA or the Code.
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<PAGE> 46
(c) Taxes Excluded. The indemnity provided for in paragraph (b) above
shall not extend to any of the following:
(i) In the case of the Owner Participant, the Owner Trustee or
the Trust Estate, Income Taxes (as defined in Section 7.1(l), below)
imposed by (A) the United States federal government, other than any United
States federal Income Taxes imposed by way of deduction or withholding upon
or with respect to payments on any Equipment Notes, together with any
penalties, fines, additions to Tax or interest related thereto (provided
that this subclause (A) shall not be construed as preventing Lessee from
recouping any such deduction or withholding from the Indenture Trustee, the
Pass Through Trustee or any Certificateholder or as giving to the Indenture
Trustee a right to indemnification by the Lessee for Taxes payable pursuant
to Section 6.09 of the Indenture), (B) any state or local tax jurisdiction
in the United States or any foreign government or any political subdivision
or taxing authority thereof or any territory or possession of the United
States or by any international authority (unless such Tax Indemnitee would
not have been subject to tax in such jurisdiction but for this transaction
(including the operation or presence of any Unit (or part thereof)) or the
Lessee making payment from or performing other actions in such jurisdiction
contemplated by the Operative Agreements)), provided, however, that for
purposes of this clause (B), the determination of whether any such Tax
Indemnitee is deemed to be subject to tax in any state or local tax
jurisdiction but for this transaction under this clause (B), shall be made
by treating each corporation which is a Tax Indemnitee on a stand-alone
basis and without regard to any Affiliates, related Tax Indemnitees or
other entities, except to the extent that such Tax Indemnitee files
combined or consolidated tax returns in such jurisdiction, with one or more
Affiliates which are also Tax Indemnitees, or (C) any government or
jurisdiction described in (A) or (B) of this clause (i) because the
applicable Tax Indemnitee is not a resident of the United States for tax
purposes.
(ii) Taxes imposed with respect to any period after the earliest
of (x) the return of possession of the Equipment to the Owner Participant
or the placement of the Equipment in storage at the request of the Owner
Participant, in either case pursuant to Section 6 of the Lease, (y) the
termination of the Lease Term pursuant to Section 22.1 or Section 22.3 of
the Lease with respect to all the Equipment, or (z) the discharge in full
of the Lessee's obligation to pay the Termination Value or the Stipulated
Loss Value and all other amounts due, if any, under Section 10 or 11.2 of
the Lease, as the case may be, with respect to the Equipment; provided that
the exclusion set forth in this clause (ii) shall not apply to Taxes to the
extent such Taxes relate to events occurring or matters arising prior to or
simultaneously with such time;
(iii) As to any Tax Indemnitee, Taxes to the extent caused by any
misrepresentation or breach of warranty or covenant under the Operative
Agreements or by the gross negligence or willful misconduct of such Tax
Indemnitee;
(iv) As to any Tax Indemnitee, Taxes which become payable as a
result of (x) a voluntary sale, assignment, transfer or other disposition
by such Tax Indemnitee of all or any portion of its interest in the
Equipment or any part thereof, the Trust Estate
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<PAGE> 47
or any of the Operative Agreements or rights created thereunder or (y) a
disposition by such Tax Indemnitee of all or any portion of its interest in
the Equipment or any part thereof, the Trust Estate or any of the Operative
Agreements or rights created thereunder in connection with a bankruptcy or
similar proceeding involving such Tax Indemnitee, other than as a result of
the replacement, sublease, substitution, modification or improvement of the
Equipment or any part thereof or a disposition which occurs as the result
of the exercise of remedies for a Lease Event of Default, any disposition
which occurs during the continuance of a Lease Event of Default or a
purchase of any Unit pursuant to the Lease; provided, that, notwithstanding
the foregoing, Lessee shall not be obligated to indemnify any Tax
Indemnitee with respect to net income taxes imposed within the United
States as the result of a sale, assignment, transfer or other disposition
by such Tax Indemnitee or any Taxes imposed as a result of the status of
the Tax Indemnitee as other than a resident of the United States for tax
purposes;
(v) Taxes which result from the Owner Trustee's engaging on
behalf of the Trust Estate in transactions unrelated to those permitted or
contemplated by the Operative Agreements;
(vi) As to any Tax Indemnitee, Taxes to the extent they exceed
the Taxes that would have been imposed had the initial Tax Indemnitee not
transferred, sold or otherwise disposed of any interest held by such Tax
Indemnitee pursuant to any of the Operative Agreements;
(vii) Taxes imposed on the Bank based on the Bank's fee for
services as Owner Trustee under the Trust Agreement;
(viii) Taxes on any item of "tax preference" or any "minimum tax;"
(ix) Taxes imposed by any jurisdiction to the extent that such
Taxes would have been imposed on the Tax Indemnitee for activities in such
jurisdiction unrelated to the transactions contemplated in the Operative
Agreements; and
(x) Taxes imposed on the Tax Indemnitee or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Tax Indemnitee as the
result of any prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code, occurring with respect to the
acquisition or holding of any Pass Through Certificate (or any funded
participation therein) involving the exercise of discretion or control by
such Tax Indemnitee but only to the extent the Tax Indemnitee knew or
should have known in the case of a purchase, or had actual knowledge in the
case of a holding, that the transaction was a prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975(c)(1) of the
Code.
(d) Other Obligations. Notwithstanding any other provision anywhere
contained in the Operative Agreements, it is understood that except as provided
in Section 6.2, with respect
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to the Owner Participant, and Section 6.3, with respect to the Owner Trustee or
the Bank, the Owner Participant, the Owner Trustee and the Bank shall have no
obligations with respect to Taxes or other charges to the Indenture Trustee or
the Loan Participant imposed under Section 7.16 of the Pass Through Trust
Agreement or Section 6.09 of the Indenture, or otherwise.
(e) Payments to Lessee.
(i) If any Tax Indemnitee shall realize a Tax benefit (net of
any Tax detriment not otherwise paid or indemnified against by the Lessee
hereunder) as a result of any Taxes paid or indemnified against by the
Lessee under this Section 7.1 (whether by way of deduction, credit,
allocation or apportionment or otherwise), such Tax Indemnitee shall pay to
the Lessee an amount equal to the amount of such Tax benefit, increased by
the Tax Indemnitee's additional saved Taxes attributable to the payment
being made to the Lessee hereunder.
(ii) Upon receipt by a Tax Indemnitee of a refund or credit of
all or part of any Taxes paid or indemnified against by the Lessee, such
Tax Indemnitee shall pay to the Lessee an amount equal to the amount of
such refund plus any interest received by or credited to such Tax
Indemnitee with respect to such refund increased or decreased, as the case
may be, by the Tax Indemnitee's net additional or saved taxes attributable
to the receipt of such amounts from the taxing authority and the payment
being made to the Lessee hereunder.
(iii) To the extent the amount of a payment by the Tax Indemnitee
to the Lessee under clause (i) or (ii) above would exceed the amount of all
prior payments by the Lessee to the Tax Indemnitee pursuant to paragraph
(b) less the amount of all prior payment by the Tax Indemnitee pursuant to
this paragraph (e), such excess shall not be paid but instead shall be
carried forward and shall reduce the Lessee's obligations to make
subsequent payments under paragraph (b) to the Tax Indemnitee.
(iv) The Tax Indemnitee shall in good faith file its Tax returns
and deal with taxing authorities to seek and claim any such tax benefits or
refunds.
(f) Procedures. Lessee will determine and timely pay to the applicable
taxing authority all Taxes which it is obligated to indemnify under this Section
7.1, except those that are being contested pursuant to Section 7.1(g). Any
amount payable to a Tax Indemnitee pursuant to paragraph (b) shall be paid
within 30 days after receipt of a written demand therefor from such Tax
Indemnitee accompanied by a written statement describing in reasonable detail
the basis for such indemnity and the computation of the amount so payable,
provided that such amount need not be paid prior to (i) the date on which such
Taxes are due, or (ii) in the case of amounts which are being contested pursuant
to paragraph (g) hereof, the time such Taxes are due and payable pursuant to the
resolution of such contest (including all appeals). Any amount payable to the
Lessee pursuant to paragraph (e) shall be paid within 30 days after the Tax
Indemnitee realizes a net tax benefit or receives a refund giving rise to a
payment under paragraph (e), and shall be accompanied by a written statement by
the Tax Indemnitee setting
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<PAGE> 49
forth in reasonable detail the basis for computing the amount of such payment.
Within 15 days following the Lessee's receipt of any computation from the Tax
Indemnitee, the Lessee may request that the accounting firm that regularly
prepares the certified financial statements of the Tax Indemnitee determine
whether such computations of the Tax Indemnitee are correct. Such accounting
firm shall be requested to make the determination contemplated by this paragraph
(f) within 30 days of its selection. In the event such accounting firm shall
determine that such computations are incorrect, then such firm shall determine
what it believes to be the correct computations. The Tax Indemnitee shall
cooperate with such accounting firm and supply it with all information necessary
to permit it to accomplish such determination on a confidential basis. The
computations of such accounting firm shall be final, binding and conclusive upon
the parties and the Lessee shall have no right to inspect the books, records or
tax returns of the Tax Indemnitee to verify such computation or for any other
purpose. All fees and expenses of the accounting firm payable under this Section
7.1(f) shall be borne by the Lessee except that if such accounting firm
determines that the Tax Indemnitee's computations were incorrect and understated
the payments owing to the Lessee or overstated the payments owing to such Tax
Indemnitee by the greater of $5,000 or 10% or more of the correct amount as
determined by such accounting firm, then the Tax Indemnitee shall bear the fees
and expenses of such accounting firm.
(g) Contest. If a written claim is made against a Tax Indemnitee for Taxes
with respect to which the Lessee may be liable for indemnity hereunder, the Tax
Indemnitee shall give the Lessee prompt notice in writing of such claim (and in
any event within 30 days after its receipt) and shall promptly furnish the
Lessee with copies of the claim and all other writings received from the taxing
authority relating to the claim; provided however, that the failure of such Tax
Indemnitee to timely provide such written notice shall not affect the Lessee's
obligations under this Section 7.1(g) except to the extent that the same
materially adversely affects the ability of the Lessee to contest such Taxes.
The Tax Indemnitee shall not pay such claim prior to the 30 days after providing
the Lessee with such written notice, unless required to do so by law or unless
deferral of payment would cause adverse consequences to the Tax Indemnitee. The
Tax Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if requested in writing by the Lessee, contest (including pursuing all
appeals permitted hereby) in the name of the Tax Indemnitee (or, if requested by
the Lessee and permissible as a matter of law, in the name of the Lessee), or
shall permit the Lessee to contest, if the conduct of the contest cannot
adversely affect the Tax liability of the Tax Indemnitee, in either the name of
the Lessee, or with the Tax Indemnitee's consent in the name of the Tax
Indemnitee, the validity, applicability or amount of such Taxes by,
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if protest is
necessary and proper;
(iii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; or
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<PAGE> 50
(iv) taking such other reasonable action as is reasonably
requested by the Lessee from time to time.
provided, however, that to the extent the contest is carried on in the name of
the Lessee or an Affiliate, or is brought in the name of a Tax Indemnitee and
the claim for Taxes involves only Taxes for which the Lessee is or will be
liable hereunder, such contest shall be undertaken by the Lessee at the Lessee's
expense (unless at any time the Tax Indemnitee determines in its reasonable good
faith judgment that based upon the Lessee's conduct of such contest the Lessee's
continued control of such contest is reasonably likely to have a material
adverse impact on the Tax Indemnitee) and at no-after-tax cost to any Tax
Indemnitee, but if such contest would involve any other Taxes or any Taxes in
the nature of a tax on net income then such Tax Indemnitee may in its sole
discretion control such contest (including selecting the forum for such
contest). In no event shall any Tax Indemnitee be required or the Lessee be
permitted to contest any Taxes for which the Lessee is obligated to indemnify
pursuant to this Section unless: (i) such Lessee shall have acknowledged its
liability to such Tax Indemnitee for an indemnity payment pursuant to this
Section as a result of such claim if and to the extent such Indemnitee or the
Lessee, as the case may be, shall not prevail in the contest of such claim; (ii)
such Tax Indemnitee shall have received the opinion of independent tax counsel
selected by the Tax Indemnitee and reasonably satisfactory to the Lessee
furnished at Lessee's sole expense, to the effect that a reasonable basis
consistent with ABA Opinion 85-352 exists for contesting such claim or, in the
event of an appeal, that it is more likely than not that an appellate court will
reverse or substantially modify the adverse determination (and provided that no
appeal shall be required to the United States Supreme Court); (iii) the Lessee
shall have agreed to pay such Tax Indemnitee on demand (and at no after-tax cost
to any Tax Indemnitee) all reasonable costs and expenses that such Tax
Indemnitee actually incurs in connection with contesting such claim (including,
without limitation, all costs, expenses, reasonable legal and accounting fees,
disbursements, penalties, interest and additions to the Taxes); (iv) no Lease
Event of Default shall have occurred and shall have been continuing; (v) such
Tax Indemnitee shall have determined that the action to be taken will not result
in any risk of imposition of criminal sanctions or penalties or material civil
liability or danger of sale, forfeiture or loss of, or the creation of any Lien
(except if such Lessee shall have adequately bonded such Lien or otherwise made
provision to protect the interests of such Tax Indemnitee in a manner reasonably
satisfactory to such Tax Indemnitee) on the Equipment or any portion thereof or
any interest therein; (vi) if such contest shall be conducted in a manner
requiring the payment of the claim, the Lessee shall have paid the amount
required (at no after-tax cost to such Tax Indemnitee); and (vii) the amount of
such claims alone, or, if the subject matter thereof shall be of a continuing or
recurring nature, when aggregated with identical potential claims with respect
to this transaction shall be at least $25,000. The Lessee shall cooperate with
the Tax Indemnitee with respect to any contest controlled and conducted by the
Tax Indemnitee and the Tax Indemnitee shall consult with the Lessee regarding
the conduct of such contest. The Tax Indemnitee shall cooperate with the Lessee
with respect to any contest controlled and conducted by the Lessee and the
Lessee shall consult with the Tax Indemnitee regarding the conduct of such
contest.
Notwithstanding anything contained in this Section to the contrary, no Tax
Indemnitee shall be required to contest any claim if the subject matter thereof
shall be of a continuing or recurring nature and shall have previously been
adversely decided to the Tax Indemnitee or the
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<PAGE> 51
Lessee, as the case may be, pursuant to the contest provisions of this Section
unless there shall have been a change in the law (including, without limitation,
amendments to statutes or regulations, administrative rulings or court
decisions) enacted, promulgated or effective after such claim shall have been so
previously decided, and such Tax Indemnitee shall have received an opinion of
independent tax counsel selected by the Lessee, reasonably acceptable to the Tax
Indemnitee, furnished at the Lessee's sole expense, to the effect that such
change is favorable to the position which such Tax Indemnitee or the Lessee, as
the case may be, had asserted in such previous contest and as a result of such
change, there is a reasonable basis to contest such claim.
In no event will a Tax Indemnitee be required to contest any Taxes if such
Tax Indemnitee shall waive its right to an indemnity under this Section 7.1.
Unless a Tax Indemnitee obtains the consent of the Lessee, which consent shall
not be unreasonably withheld (provided, however, the Lessee shall not be
considered to have unreasonably withheld such consent because of the Lessee's
consideration of the effects of such settlement on issues of the Lessee which
are not the subject of such claim), the settlement of any contest required under
Section 7.1 by a Tax Indemnitee shall constitute a waiver by such Tax Indemnitee
of its rights to indemnification hereunder as to such contest and as to any
future claims for which the Lessee's right to contest shall have been precluded
by such Tax Indemnitees' failure to contest.
(h) For purposes of this Section 7.1 and Section 7.2, in determining the
order in which any Tax Indemnitee utilizes withholding or other foreign taxes as
a credit against such Tax Indemnitee's United States income taxes, such Tax
Indemnitee shall be deemed to utilize (i) first, all foreign taxes other than
those described in clause (ii) below; provided, however, that such other foreign
taxes which are carried back to the taxable year for which a determination is
being made (other than any carrybacks which are known to be available at the
time such determination is made) pursuant to such clause (i) shall be deemed
utilized after the foreign taxes described in clause (ii) below, and (ii) then,
on a pro rata basis, all foreign taxes (including fees, taxes and other charges
hereunder) with respect to which such Tax Indemnitee is entitled to obtain
indemnification pursuant to an indemnification provision contained in any lease,
loan agreement, financing document or participation agreement (including the
Lease).
(i) In the event any reports with respect to Taxes are required to be
made, the Lessee will either prepare and file such reports (and in the case of
reports which are required to be filed on the basis of individual items of
Equipment, such reports shall be prepared and filed in such manner as to show as
required the interests of each Tax Indemnitee in such item of Equipment) or, if
it shall not be permitted to file the same, it will notify each Tax Indemnitee
of such reporting requirements, prepare such reports in such manner as shall be
reasonably satisfactory to each Tax Indemnitee and deliver the same to each Tax
Indemnitee within a reasonable period prior to the date the same is to be filed.
The Lessee shall provide such information as the Owner Participant or the Lessor
may reasonably require from the Lessee to enable the Owner Participant and the
Lessor to fulfill their respective tax filing, tax audit, and tax litigation
obligations.
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<PAGE> 52
(j) The provisions of this Section 7.1 shall continue in full force and
effect, notwithstanding the expiration or termination of any Operative
Agreement, until all obligations hereunder have been met and all liabilities
hereunder paid in full.
(k) Any amount payable to the Lessee pursuant to the terms of this Section
7.1 shall not be paid or retained by the Lessee if at the time of such payment
or retention a Lease Default relating to Sections 14(a), 14(b), 14(g) or 14(h)
or a Lease Event of Default shall have occurred and be continuing. Such
otherwise paid or retained amounts may be applied by the related Tax Indemnitee
to satisfy the obligations of the Lessee under the Operative Agreements. At such
time as there shall not be continuing any such Lease Default or Lease Event of
Default, such amount shall be paid to the Lessee without interest to the extent
not previously applied in accordance with the preceding sentence.
(l) For purposes of this Section 7.1, the term "Income Tax" means any Tax
based on or measured by or with respect to gross, adjusted gross or net income
(including without limitation, capital gains taxes, minimum taxes and tax
preferences) or gross or net receipts and Taxes which are capital, net worth,
conduct of business, franchise or excess profits taxes and interest, additions
to tax, penalties, or other charges in respect thereof (provided, however, that
sales, use, rental, value-added (other than a value-added tax which is a tax or
is in the nature of a tax on net or adjusted gross income), excise, or property
taxes shall not constitute an Income Tax).
Section 7.2. General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this Section 7.2, "Claims" shall
mean any and all costs, expenses, liabilities, obligations, losses, damages,
penalties, actions or suits or claims of whatsoever kind or nature (whether or
not on the basis of negligence, strict or absolute liability or liability in
tort) which may be imposed on, incurred by, suffered by, or asserted against an
Indemnified Person, as defined herein, or any Unit and, except as otherwise
expressly provided in this Section 7.2, shall include, but not be limited to,
all reasonable out-of-pocket costs, disbursements and expenses (including legal
fees and expenses) paid or incurred by an Indemnified Person in connection
therewith or related thereto.
(b) Indemnified Person Defined. For the purposes of this Section 7.2,
"Indemnified Person" means the Owner Participant, the Bank, in its individual
capacity and as Owner Trustee, the Indenture Trustee and the Pass Through
Trustee, and each of their respective Affiliates, directors, officers,
employees, successors and permitted assigns, agents and servants, the Trust
Estate and the Indenture Estate (the respective directors, officers, employees,
successors and permitted assigns, agents and servants of the Owner Participant,
the Bank, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee,
as applicable, together with the Owner Participant, the Bank, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee, as the case may be, being
referred to herein collectively as the "Related Indemnitee Group" of the Owner
Participant, the Indenture Trustee, the Bank, the Owner Trustee and the Pass
Through Trustee, respectively).
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(c) Claims Indemnified. Whether or not any Unit is accepted under the
Lease, or a closing occurs with respect thereto, and subject to the exclusions
stated in subsection (d) below, Lessee agrees to indemnify, protect, defend and
hold harmless each Indemnified Person on an After-Tax Basis against Claims
directly or indirectly resulting from or arising out of or alleged to result
from or arise out of (whether or not such Indemnified Person shall be
indemnified as to such Claim by any other Person):
(i) this Agreement or any other Operative Agreement or any of
the transactions contemplated hereby and thereby or any Unit or the
acquisition, ownership, lease, operation, possession, modification,
improvement, abandonment, use, non-use, maintenance, sublease,
substitution, control, repair, storage, alteration, transfer,
transportation or other application or disposition, return, overhaul,
testing, servicing, replacement or registration of any Unit (including,
without limitation, injury, death or property damage of passengers,
shippers or others, and environmental control, noise and pollution
regulations, or the discharge, spillage, release or escape of Hazardous
Substances or damage to the environment (including, without limitation,
clean-up costs, response costs, costs of corrective actions and natural
resource damages)) whether or not in compliance with the terms of the
Lease, or by any of the commodities, items or materials from time to time
contained in any Unit, whether or not in compliance with the terms of the
Lease, or by the inadequacy of any Unit or deficiency or defect in any Unit
or by any other circumstances in connection with any Unit, or by the
performance of any Unit or any risks relating thereto, or by any
interruption of service, loss of business or anticipated profits or
consequential damages;
(ii) the construction, manufacture, financing, refinancing,
design, purchase, acceptance, rejection, delivery, non-delivery or
condition of any Unit (including, without limitation, latent and other
defects, whether or not discoverable, and any claim for patent, trademark
or copyright infringement);
(iii) any act or omission (whether negligent or otherwise) or any
breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement to be performed by, or other
obligation of, Lessee under any of the Operative Agreements, or the falsity
of any representation or warranty of the Lessee in any of the Operative
Agreements or in any document or certificate delivered in connection
therewith other than representations and warranties in the Tax Indemnity
Agreement;
(iv) the offer, sale, delivery, refunding or refinancing of any
Equipment Notes or Pass Through Certificates or any interest in the Trust
Estate (including, without limitation, any claim arising out of the
Securities Act, the Securities Exchange Act of 1934, as amended, or any
other applicable law or at common law or otherwise relating to securities);
(v) any strict liability or negligence in tort or violation of
law, rule, regulation or order by the Lessee or any sublessee or their
respective directors, officers, employees, agents or servants; and
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(vi) any issuance, transfer or holding of Equipment Notes or Pass
Through Certificates being deemed to result in a "prohibited transaction"
under ERISA or the Code.
(d) Lessee's Claims Excluded. The following are excluded from the
agreement to indemnify under this Section 7.2:
(i) Claims with respect to any Unit to the extent attributable
to acts or events occurring after (A) in the case of the exercise by the
Lessee of a purchase option with respect to such Unit under Section 22.1
or 22.3 of the Lease, the exercise by the Lessee of an early termination
option with respect to such Unit under Section 10 of the Lease, the
exercise by the Lessee of its right to purchase the Equipment under
Section 6.9 of this Agreement, the occurrence of an Event of Loss with
respect to such Unit under Section 11 of the Lease, or the election to
replace such Unit under Section 8.1(b), 8.3, 8.4 or 9.1 of the Lease, the
last to occur of (x) the payment of all amounts due from the Lessee in
connection with any such event, (y) the release of the Lien of the
Indenture on such Unit, and (z) legal transfer of title to such Unit to
any Person other than Lessor, except in the case of a retention of any
Unit by Lessor pursuant to the terms and provisions of Section 10.3 of the
Lease, and in the case of any such retention, upon the effective date of
the termination of the Lease Term with respect to such Unit retained by
Lessor pursuant to Section 10.3 or (B) in all other cases (except in any
case where remedies are being exercised under Section 15 of the Lease),
the last to occur of (x) with respect to such Unit, the earlier to occur
of the termination of the Lease or the expiration of the Lease Term, (y)
with respect to each Unit, the return of such Unit to the Lessor in
accordance with the terms of the Lease (it being understood that, so long
as any Unit is in storage as provided in Section 6.3(c) of the Lease, the
date of return thereof for the purpose of this clause (B) shall be the
last day of the Storage Period), and (z) the release of the Lien of the
Indenture on such Unit, except, in any instance referenced in the
foregoing subsection (i), to the extent such Claim is fairly attributable
to acts or events occurring prior to any such date or occurrence;
(ii) Claims which are Taxes, whether or not the Lessee is
required to indemnify therefor under Section 7.1 hereof or the Tax
Indemnity Agreement;
(iii) with respect to any particular Indemnified Person, Claims to
the extent resulting from (x) the gross negligence or willful misconduct of
such Indemnified Person, or (y) any breach of any covenant to be performed
by such Indemnified Person under any of the Operative Agreements, or the
falsity of any representation or warranty of such Indemnified Person in any
of the Operative Agreements or in a document or certificate delivered in
connection therewith;
(iv) any Claim to the extent attributable to any transfer by the
Lessor of the Equipment or any portion thereof or any transfer by the Owner
Participant of all or any portion of its interest in the Trust Estate other
than (A) any transfer after a Lease Default or Lease Event of Default, (B)
the transfer of the Equipment or any Owner Participant's interest in the
Equipment to the Lessee, (C) the transfer of the Equipment to a third party
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<PAGE> 55
pursuant to Lessee's election to terminate the Lease or (D) any transfer of
the Equipment pursuant to Section 6.9;
(v) with respect to any particular Indemnified Person, any Claim
resulting from the imposition of any Lessor's Lien attributable to such
Indemnified Person; or
(vi) with respect to any particular Indemnified Person, any
Claim, to the extent the risk thereof has been assumed by such Indemnified
Person in connection with the exercise by such Indemnified Person of the
right of inspection granted under Section 6.1, inspection or restenciling
under Section 6.1 or inspection under Section 13.1 of the Lease.
(e) Insured Claims. In the case of any Claim indemnified by the Lessee
hereunder which is covered by a policy of insurance maintained by the Lessee
pursuant to Section 12 of the Lease or otherwise, each Indemnified Person agrees
to provide reasonable cooperation to the insurers in the exercise of their
rights to investigate, defend or compromise such Claim as may be required to
retain the benefits of such insurance with respect to such Claim.
(f) Claims Procedure. An Indemnified Person shall, after obtaining
knowledge thereof, promptly notify the Lessee of any Claim as to which
indemnification is sought; provided, however, that the failure to give such
notice shall not release the Lessee from any of its obligations under this
Section 7.2, except to the extent that failure to give notice of any action,
suit or proceeding against such Indemnified Person shall have a material adverse
affect on Lessee's ability to defend such Claim or recover proceeds under any
insurance policies maintained by Lessee hereunder. The Lessee shall, after
obtaining knowledge thereof, promptly notify each Indemnified Person of any
indemnified Claim affecting such Person. Subject to the provisions of the
following paragraph, the Lessee shall at its sole cost and expense be entitled
to control, and shall assume full responsibility for, the defense of such claim
or liability; provided that the Lessee shall keep the Indemnified Person which
is the subject of such proceeding fully apprised of the status of such
proceeding and shall provide such Indemnified Person with all information with
respect to such proceeding as such Indemnified Person shall reasonably request.
Upon the request of the Lessee, the Indemnified Person which is the subject of
any Claim will cooperate in all reasonable respects, at the expense of the
Lessee, in the defense thereof.
Notwithstanding any of the foregoing to the contrary, the Lessee shall not
be entitled to control and assume responsibility for the defense of such claim
or liability if (1) a Lease Default or Lease Event of Default shall have
occurred and be continuing, (2) such proceeding will involve any material danger
of the sale, forfeiture or loss of, or the creation of any Lien (other than any
Permitted Lien or a Lien which is adequately bonded to the satisfaction of such
Indemnified Person) on, any Unit, (3) the amounts involved, in the good faith
opinion of such Indemnified Person, are likely to have a materially adverse
effect on the business of such Indemnified Person other than the ownership,
leasing and financing of the Equipment, (4) in the good faith opinion of such
Indemnified Person, there exists an actual or potential conflict of interest
such that it is advisable for such Indemnified Person to retain control of such
proceeding, (5) such claim or liability involves the possibility of criminal
liability to such
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<PAGE> 56
Indemnified Person, or (6) Lessee shall not have acknowledged its obligation to
indemnify such Indemnified Person with respect to all liabilities in connection
with such contest. In the circumstances described in clauses (1) - (6), the
Indemnified Person shall be entitled to control and assume responsibility for
the defense of such claim or liability at the expense of the Lessee. In
addition, any Indemnified Person may participate in any proceeding controlled by
the Lessee pursuant to this Section 7.2, at its own expense, in respect of any
such proceeding as to which the Lessee shall have acknowledged in writing its
obligation to indemnify the Indemnified Person pursuant to this Section 7.2, and
at the expense of Lessee in respect of any such proceeding as to which the
Lessee shall not have so acknowledged its obligation to the Indemnified Person
pursuant to this Section 7.2. The Lessee may in any event participate in all
such proceedings at its own cost. Nothing contained in this Section 7.2(f) shall
be deemed to require an Indemnified Person to contest any Claim or to assume
responsibility for or control of any judicial proceeding with respect thereto.
(g) Subrogation. If a Claim indemnified by the Lessee under this Section
7.2 is paid in full by the Lessee and/or an insurer under a policy of insurance
maintained by the Lessee, the Lessee and/or such insurer, as the case may be,
shall be subrogated to the extent of such payment to the rights and remedies of
the Indemnified Person (other than under insurance policies maintained by such
Indemnified Person) on whose behalf such Claim was paid in full with respect to
the transaction or event giving rise to such Claim. So long as no Lease Default
under Section 14(a), (b), (g) or (h) of the Lease or no Lease Event of Default
shall have occurred and be continuing, should an Indemnified Person receive any
refund, in whole or in part, with respect to any Claim paid in full by the
Lessee hereunder, it shall promptly pay over the amount refunded (but not in
excess of the amount the Lessee or any of its insurers has paid) to the Lessee.
(h) Waiver of Certain Claims. The Lessee hereby waives and releases any
Claim now or hereafter existing against any Indemnified Person arising out of
death or personal injury to personnel of the Lessee, pollution incidents, loss
or damage to property of the Lessee, or the loss of profits or use of any
property of the Lessee, which may result from or arise out of the condition, use
or operation of the Equipment during the Lease Term, including, without
limitation, any latent or patent defect whether or not discoverable.
(i) No Guaranty. The general indemnification provisions of this Section
7.2 do not constitute a guaranty by the Lessee that the principal of, interest
on or any amounts payable with respect to the Equipment Notes will be paid.
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT.
Each party to this Agreement acknowledges notice of, and consents in all
respects to, the terms of the Lease, and expressly, severally and as to its own
actions only, agrees that, so long as no Lease Event of Default has occurred and
is continuing, it shall not take or cause to be taken any action contrary to the
Lessee's rights under the Lease, including, without limitation, the right to
possession, use and quiet enjoyment by the Lessee or any permitted sublessee of
the Equipment.
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SECTION 9. SUCCESSOR INDENTURE TRUSTEE.
In the event that the Indenture Trustee gives notice of its resignation
pursuant to Section 8.02 of the Trust Indenture, the Owner Trustee shall
promptly appoint a successor Indenture Trustee reasonably acceptable to the
Lessee and the Pass Through Trustee.
SECTION 10. MISCELLANEOUS.
Section 10.1. Consents. Each Participant covenants and agrees (subject, in
the case of the Loan Participant, to all of the terms and provisions of the
Trust Indenture) that it shall not unreasonably withhold its consent to any
consent requested of the Owner Trustee or the Indenture Trustee, as the case may
be, under the terms of the Operative Agreements that by its terms is not to be
unreasonably withheld by the Owner Trustee or the Indenture Trustee.
Section 10.2. Refinancing. So long as no Lease Default or Lease Event of
Default shall have occurred and be continuing, the Lessee shall have the right
not more than twice during the Lease Term to request the Owner Participant and
the Owner Trustee to effect an optional prepayment of all, and not less than
all, of the Equipment Notes pursuant to Section 2.10(e) of the Indenture as part
of a refunding or refinancing. The Owner Participant agrees to cooperate in good
faith with the Lessee in effecting or arranging any such refunding or
refinancing and, as soon as practicable after receipt of such request, the Owner
Participant and the Lessee will enter into good faith negotiations in order to
document the terms of such refunding or refinancing as follows:
(a) the Lessee, the Owner Participant, the Indenture Trustee, the Owner
Trustee, and any other appropriate parties will enter into a financing or loan
agreement (which may involve an underwriting agreement in connection with a
public offering), in form and substance reasonably satisfactory to the parties
thereto, providing for (i) the issuance and sale by the Owner Trustee or such
other party as may be appropriate on the date specified in such agreement (for
the purposes of this Section 10.2, the "Refunding Date") of debt securities in
an aggregate principal amount (in the lawful currency of the United States)
equal to the principal amount of the Equipment Notes outstanding on the
Refunding Date, having the same maturity date as said Equipment Notes and having
a weighted average life which is not less than or greater than the Remaining
Weighted Average Life of said Equipment Notes by more than three months, (ii)
the application of the proceeds of the sale of such debt securities to the
prepayment of all such Equipment Notes on the Refunding Date, and (iii) payment
by the Lessee to the Person or Persons entitled thereto of all other amounts, in
respect of accrued interest, any Make- Whole-Amount or other premium, if any,
payable on such Refunding Date;
(b) the Lessee and the Owner Trustee will amend the Lease in a manner in
form and substance reasonably satisfactory to the Owner Participant such that
(i) if the Refunding Date is not a Rent Payment Date and the accrued and unpaid
interest on the Equipment Notes is not otherwise paid pursuant to Section
10.2(a), the Lessee shall on the Refunding Date prepay that portion of the next
succeeding installment of Basic Rent as shall equal the aggregate interest
accrued on the Equipment Notes outstanding to the Refunding Date, (ii) Basic
Rent payable in respect of the period from and after the Refunding Date shall be
recalculated to preserve the Net
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<PAGE> 58
Economic Return which the Owner Participant would have realized had such
refunding not occurred, provided that the net present value of Basic Rent shall
be minimized to the extent consistent therewith, and (iii) amounts payable in
respect of Stipulated Loss Value, Early Purchase Price, Basic Term Purchase
Price and Termination Value from and after the Refunding Date shall be
appropriately recalculated to preserve the Net Economic Return which the Owner
Participant would have realized had such refunding not occurred (it being agreed
that any recalculations pursuant to subclauses (ii) and (iii) of this clause (b)
shall be performed in accordance with the requirements of Section 2.6 hereof);
(c) the Owner Trustee will enter into an agreement to provide for the
securing thereunder of the debt securities issued by the Owner Trustee pursuant
to clause (a) of this Section 10.2 in like manner as the Equipment Notes and/or
will enter into such amendments and supplements to the Indenture as may be
necessary to effect such refunding or refinancing, which agreements, amendments
and/or supplements shall be reasonably satisfactory in form and substance to the
Owner Participant; provided that, no such agreement or amendment shall provide
for any increase in the security for the new debt securities; and provided
further that, notwithstanding the foregoing (but subject to the provisions of
clause (a) above), the Lessee reserves the right to set the economic terms and
other terms not customarily negotiated between an owner participant and a lender
of the refunding or refinancing transaction to be so offered to the extent that
they are passed through to the Lessee in, or define rights or obligations of the
Lessee under, the Operative Agreements; provided, further, that no such
amendment or supplement will increase the obligations or impair the rights of
the Owner Participant under the Operative Agreements without the consent of the
Owner Participant;
(d) in the case of a refunding or refinancing involving a public offering
of debt securities, neither the Owner Trustee nor the Owner Participant shall be
an "issuer" for securities law purposes or an "obligor" within the meaning of
the Trust Indenture Act of 1939, as amended, the offering materials (including
any registration statement) for the refunding or refinancing transaction shall
be reasonably satisfactory to the Owner Participant and the Lessee shall provide
satisfactory indemnity to the Owner Trustee and Owner Participant with respect
thereto;
(e) unless otherwise agreed by the Owner Participant, the Lessee shall pay
to the Owner Trustee as Supplemental Rent an amount equal to the Make-Whole
Amount or other premium, if any, payable in respect of Equipment Notes
outstanding on the Refunding Date, and all reasonable fees, costs, expenses of
such refunding or refinancing;
(f) the Lessee shall give the Indenture Trustee and the Pass Through
Trustee not less than 25 days prior written notice of the Refunding Date;
(g) the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee shall have received (i) such opinions of counsel as
they may reasonably request concerning compliance with the Securities Act and
any other applicable law relating to the sale of securities and (ii) such other
opinions of counsel and such certificates and other documents, each in form and
substance satisfactory to them, as they may reasonably request in connection
with compliance with the terms and conditions of this Section 10.2; and
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<PAGE> 59
(h) all necessary authorizations, approvals and consents shall have been
obtained;
provided, however, that the Lessee will, to the extent then known, promptly
provide to the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee substantially final terms and conditions of any such
refunding or refinancing within 20 days prior to the execution and delivery of
the documents contemplated hereunder in connection therewith; and provided,
further, that (v) no refunding or refinancing of the Equipment Notes will be
permitted unless within 20 days after receipt by the Owner Participant of a
request from the Lessee to effect a refunding or refinancing pursuant to this
Section 10.2 and of information regarding the terms of such refunding or
refinancing necessary to render the opinion referred to below, the Lessee has
provided the Owner Participant with (a) a tax opinion from Neal, Gerber &
Eisenberg or other independent tax counsel reasonably acceptable to the Owner
Participant to the effect that there will be no adverse federal income tax
consequences for the Owner Participant as a result of such refunding or
refinancing and (b) an agreement to indemnify the Owner Participant against any
adverse federal income tax consequence suffered as a result of such refinancing
or refunding; alternatively, in the event such tax opinion cannot be provided
and the Lessee wishes to effect such refunding or refinancing, the Lessee will,
at such time as the Lessee receives written notice from the Owner Participant
that the Owner Participant has filed any income tax return wherein such adverse
income tax consequences are recognized, make an indemnity payment to the Owner
Participant in the incremental amount of such adverse tax consequence (on an
After-Tax Basis) attributable to such refunding or refinancing; (w) the Lessee
shall pay to or reimburse the Participants, the Owner Trustee and the Indenture
Trustee for all costs and expenses (including reasonable attorneys' and
accountants' fees) paid or incurred by them in connection with such refunding or
refinancing; (x) no refunding or refinancing of the Equipment Notes will be
permitted if it shall cause the Owner Participant to account for the transaction
contemplated hereby as other than a "leveraged lease" under the Financial
Accounting Standards Board ("FASB") Statement No. 13, as amended (including any
amendment effected by means of the adoption by FASB of a new statement in lieu
of FASB Statement No. 13); (y) no refunding or refinancing of the Equipment
Notes may, without the consent of the Owner Participant, constitute assets of
any "employee benefit plan" (as defined in Section 3(3) of ERISA) or any other
entity subject to Section 4975 of the Code other than a "governmental plan" or
"church plan" (as defined in Section 3(32) of ERISA) organized in a jurisdiction
not having prohibitions on transactions with such governmental plan or church
plan substantially similar to those contained in Section 406 of ERISA or Section
4975 of the Code, unless such refunding or refinancing is effected in connection
with a public offering in reliance on the underwriter's exemption; and (z) in no
event, in connection with or after giving effect to such refunding or
refinancing shall the Owner Participant be exposed to any unindemnified non-de
minimis loss, expense or risk (including tax risk) to which it is not exposed
prior to such refunding or refinancing.
Section 10.3. Amendments and Waivers. Except as otherwise provided in the
Indenture, no term, covenant, agreement or condition of this Agreement may be
terminated, amended or compliance therewith waived (either generally or in a
particular instance, retroactively or prospectively) except by an instrument or
instruments in writing executed by each party against which enforcement of the
termination, amendment or waiver is sought.
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<PAGE> 60
Section 10.4. Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all communications and notices provided for herein shall be in
writing or by facsimile, and any such notice shall become effective (i) upon
personal delivery thereof, including, without limitation, by overnight mail or
courier service, (ii) in the case of notice by United States mail, certified or
registered, postage prepaid, return receipt requested, upon receipt thereof, or
(iii) in the case of notice by facsimile, upon confirmation of receipt thereof,
provided such transmission is promptly further confirmed by any of the methods
set forth in clauses (i) or (ii) above, in each case addressed to each party
hereto at its address set forth below or, in the case of any such party hereto,
at such other address as such party may from time to time designate by written
notice to the other parties hereto:
If to the Lessee:
Union Tank Car Company
225 West Washington Street, 19th Floor
Chicago, Illinois 60606
Attention: Treasurer
(UTC Trust No. 1998-A)
Facsimile: (312) 845-5305
Confirmation No.: (312) 372-9500
If to the Owner Trustee:
Wilmington Trust Company
1100 N. Market Street
Rodney Square North
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Confirmation No.: (302) 651-1000
with a copy to:
the Owner Participant at the
address set forth below
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<PAGE> 61
If to the Owner Participant:
FNBC Leasing Corporation
One First National Plaza
Mail Suite 0502
Chicago, Illinois 60670-0502
Attention: Contract Administration
Facsimile: (312) 732-2231
Confirmation No.: (312) 732-8100
Reference: UTC Trust No. 1998-A
If to the Indenture Trustee or the Pass Through Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Indenture Trust/Dan Donovan
Facsimile: (312) 461-3525
Confirmation No.: (312) 461-2908
Section 10.5. Survival. All warranties, representations, indemnities and
covenants made by any party hereto, herein or in any certificate or other
instrument delivered by any such party or on the behalf of any such party under
this Agreement, shall be considered to have been relied upon by each other party
hereto and shall survive the consummation of the transactions contemplated
hereby on the Closing Date regardless of any investigation made by any such
party or on behalf of any such party.
Section 10.6. No Guarantee of Debt. Nothing contained herein or in the
Lease (except, in the context of clause (i) below, for the provisions of Section
6.3 thereof), the Trust Indenture, the Trust Agreement, the Pass Through Trust
Agreement, the Tax Indemnity Agreement or in any certificate or other statement
delivered by the Lessee in connection with the transactions contemplated hereby
shall be deemed to be (i) a guarantee by the Lessee to the Owner Trustee, the
Owner Participant, the Indenture Trustee or the Loan Participant that the
Equipment will have any residual value or useful life, or (ii) a guarantee by
the Indenture Trustee or the Lessee of payment of the principal of, Make-Whole
Amount, if any, or interest on the Equipment Notes.
Section 10.7. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and assigns as permitted by and in
accordance with the terms hereof, including each successive holder of the
Beneficial Interest permitted under Section 6.1 hereof and each successive
holder of any Equipment Note issued and delivered pursuant to this Agreement or
the Indenture. Except as expressly provided herein or in the other Operative
Agreements, no party hereto may assign their interests herein without the
consent of the parties hereto.
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<PAGE> 62
Section 10.8. Business Day. Notwithstanding anything herein or in any
other Operative Agreement to the contrary, if the date on which any payment is
to be made pursuant to this Agreement or any other Operative Agreement is not a
Business Day, the payment otherwise payable on such date shall be payable on the
next succeeding Business Day with the same force and effect as if made on such
succeeding Business Day and (provided such payment is made on such succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date to the time of such payment on such next succeeding
Business Day.
Section 10.9. Governing Law. This agreement shall be in all respects
governed by and construed in accordance with the laws of the State of Illinois
including all matters of construction, validity and performance; provided,
however, that the parties hereto shall be entitled to all rights conferred by
any applicable federal statute, rule or regulation.
Section 10.10. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.11. Counterparts. This Agreement may be executed in any number
of counterparts, each executed counterpart constituting an original but all
together only one Agreement.
Section 10.12. Headings and Table of Contents. The headings of the Sections
of this Agreement and the Table of Contents are inserted for purposes of
convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
Section 10.13. Limitations of Liability.
(a) Liabilities of Participants. Neither the Indenture Trustee, the Owner
Trustee nor any Participant shall have any obligation or duty to the Lessee, to
any other Participant or to others with respect to the transactions contemplated
hereby, except those obligations or duties of such Participant expressly set
forth in this Agreement and the other Operative Agreements, and neither the
Indenture Trustee nor any Participant shall be liable for performance by any
other party hereto of such other party, obligations or duties hereunder. Without
limitation of the generality of the foregoing, under no circumstances whatsoever
shall the Indenture Trustee or any Participant be liable to the Lessee for any
action or inaction on the part of the Owner Trustee in connection with the
transactions contemplated herein, whether or not such action or inaction is
caused by willful misconduct or gross negligence of the Owner Trustee unless
such action or inaction is at the direction of the Indenture Trustee or any
Participant, as the case may be, and such direction is expressly permitted
hereby.
(b) No Recourse to the Owner Trustee. It is expressly understood and
agreed by and between the Owner Trustee, the Lessee, the Owner Participant, the
Indenture Trustee, and the Loan Participant, and their respective successors and
permitted assigns that, subject to the proviso contained in this Section
10.13(b), all representations, warranties and undertakings of
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<PAGE> 63
the Owner Trustee hereunder shall be binding upon the Owner Trustee only in its
capacity as Owner Trustee under the Trust Agreement, and (except as expressly
provided herein) the Bank shall not be liable in its individual capacity for any
breach thereof, provided, however, that the Bank shall be liable to the parties
hereto to the extent of its gross negligence or willful misconduct, or for
breach of its covenants, representations and warranties expressly set forth
herein, to the extent covenanted or made in its individual capacity; and nothing
in this Section 10.13(b) shall be construed to limit in scope or substance those
representations and warranties of the Bank made expressly in its individual
capacity expressly set forth herein. The term "Owner Trustee" as used in this
Agreement shall include any successor trustee under the Trust Agreement, or the
Owner Participant if the trust created thereby is revoked.
Section 10.14. Maintenance of Non-Recourse Debt. The parties hereto agree
that if the Owner Trustee or the Trust Estate becomes a debtor subject to the
reorganization provisions of the Bankruptcy Code, 11 U.S.C. ss.101 et seq. (the
"Bankruptcy Code") or any successor provision, the parties hereto will make an
election under 1111(b)(1)(A)(i) of the Bankruptcy Code. If (a) the Owner Trustee
or the Trust Estate becomes a debtor subject to the reorganization provisions of
the Bankruptcy Code or any successor provision, (b) pursuant to such
reorganization provisions the Owner Trustee or the Owner Participant, as the
case may be, is required, by reason of the Owner Trustee or the Owner
Participant, as the case may be, being held to have recourse liability to the
Pass Through Trustee or the Indenture Trustee, directly or indirectly, to make
payment on account of any amount payable under the Equipment Notes or any of the
other Operative Agreements and (c) the Pass Through Trustee and/or the Indenture
Trustee actually receives any Excess Amount (as hereinafter defined) which
reflects any payment by the Owner Trustee or the Owner Participant, as the case
may be, on account of (b) above, then the Pass Through Trustee and/or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant, as the case may be, such Excess Amount. For
purposes of this Section 10.14 "Excess Amount" means the amount by which such
payment exceeds the amount which would have been received by the Pass Through
Trustee or the Indenture Trustee if the Owner Trustee or the Owner Participant,
as the case may be, had not become subject to the recourse liability referred to
in (b) above.
Section 10.15. Ownership of and Rights in Units. The sale of the Units
contemplated hereby is intended for all purposes to be a true sale of all of the
Lessee's right, title and interest in and to the Units to the Owner Trustee,
which shall be the legal owner thereof. Upon consummation of the sale and
leaseback transactions contemplated hereby, the Lessee's interest in the Units
is intended to be that of a lessee only. It is intended that for federal and
state income tax purposes the Owner Participant will be the owner of the Units.
The rights of the Indenture Trustee in and to the Units pursuant to the
Indenture is intended to be that of a secured party holding a security interest,
subject to the Lease and the rights of the Lessee thereunder. No holder of an
Equipment Note is intended to have any right, title or interest in or to the
Units except as a beneficiary of the security interest granted by the Owner
Trustee to the Indenture Trustee pursuant to the Indenture in trust for the
equal and ratable benefit of the holders from time to time of the Equipment
Notes.
* * * * *
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<PAGE> 64
In Witness Whereof, the parties hereto have caused this Participation
Agreement to be executed and delivered, all on the date first above written.
LESSEE:
UNION TANK CAR COMPANY
By: /s/ Mark Garrette
-------------------------------------------
Name: Mark Garrette
Title: Vice President
OWNER TRUSTEE:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee
under the Trust Agreement
By: /s/ Patricia A. Evans
-------------------------------------------
Name: Patricia A. Evans
Title: Financial Services Officer
OWNER PARTICIPANT:
FNBC LEASING CORPORATION
By: /s/ Steven Ignelzi
-------------------------------------------
Name: Steven Ignelzi
Title: Vice President
INDENTURE TRUSTEE:
HARRIS TRUST AND SAVINGS BANK, not
in its individual capacity except
as expressly provided herein but
solely as Indenture Trustee
By: /s/ J. Bartolini
-------------------------------------------
Name: J. Bartolini
Title: Vice President
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<PAGE> 65
PASS THROUGH TRUSTEE:
HARRIS TRUST AND SAVINGS BANK, not
in its individual capacity except
as expressly provided herein but
solely as Pass Through Trustee
By: /s/ J. Bartolini
-------------------------------------------
Name: J. Bartolini
Title: Vice President
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<PAGE> 66
EXHIBIT A
CERTIFICATE OF INSURANCE BROKER CONFIRMING INSURANCE COVERAGE
HARRIS TRUST AND SAVINGS BANK,
individually and as Pass Through Trustee
HARRIS TRUST AND SAVINGS BANK,
individually and as Indenture Trustee
WILMINGTON TRUST COMPANY,
individually and as Owner Trustee
FNBC LEASING CORPORATION,
as Owner Participant
Re: Union Tank Car Company Equipment Lease Agreement (L-15)
with Wilmington Trust Company
Gentlemen:
We hereby certify that the Lessee is insured under various policies, effective
January 1, 1998 to January 1, 1999, that provide primary and excess public
liability coverage for personal injury and property damage, subject to the
policy terms, conditions and exclusions. We further certify that said policies:
a. afford limits of liability as indicated on the attached
AppendixE"A" excess of various underlying insurance or retained amounts and
subject to aggregates where applicable;
b. are in full force and effect and all premiums due with respect
to said policies have been paid in full; and
c. comply with all of the requirements listed on the attached
AppendixE"B".
We hereby agree on each of the times specified in SectionE12.4 of the Lease to
issue a certificate (1)Edescribing in reasonable detail the insurance carried by
the Lessee relating to the Equipment and (2)Econfirming that all premiums due
thereon have been paid.
Capitalized terms not otherwise defined herein or in the exhibits attached
hereto have the meaning assigned thereto in the Lease.
Best regards,
[Name]
[Title]
<PAGE> 67
APPENDIX "A"
UNION TANK CAR COMPANY
PRIMARY AND EXCESS LIABILITY PROGRAM
JANUARY 1, 1998 TO JANUARY 1, 1999
COMMERCIAL GENERAL LIABILITY - OCCURRENCE BASIS
National Union Fire Insurance Company CGI
Policy #RMGL 113 5562 $1,000,000 General
Aggregate Limit
$2,000,000
Products/Completed
Operations Aggregate
Limit $1,000,000
Personal & Advertising
Injury Limit $1,000,000
Each Occurrence Limit
UMBRELLA LIABILITY - OCCURRENCE BASIS
Gerling-Konzern Allgemeine Versicherungs-A.G. $40,000,000 Each
Policy #LK 980 2140 Occurrence
and Aggregate as
Applicable Excess of
$25,000,000 Each Claim
and Aggregate as
Applicable
EXCESS LIABILITY - OCCURRENCE BASIS
American International Specialty Lines $35,000,000 Each Claim
Insurance Company and Aggregate as
Policy #818 9836 Applicable, Excess of
$40,000,000 Each Claim
and Aggregate as
Applicable, In Turn
Excess of $25,000,000
Each Claim and
Aggregate as Applicable
<PAGE> 68
APPENDIX "B"
INSURANCE REQUIREMENTS
The following applies to the policies indicated on Appendix "A":
1. The policies are in such amounts and for such risks and with such insurance
companies and subject to such self-insurance not less comprehensive in
amounts and against risks customarily insured against by Lessee in respect
of other similar equipment owned or leased by it:
2. The policies:
(i) provide that if any such insurance is cancelled or terminated
(other than for normal expiration) for any reason whatsoever, the
Lessor, Indenture Trustee and Owner Participant shall receive 30
days prior notice of such cancellation or termination,
(ii) name the Owner Participant, Lessor (both as lessor of the Equipment
and in its individual capacity) and the Indenture Trustee as
additional insured as their interests may appear (but only as
respects liability arising out of the Operative Agreements or the
Equipment),
(iii) provide that in as much as such public liability insurance policies
cover more than one insured, all terms, conditions, insuring
agreements and endorsements, with the exceptions of limits of
liability and liability for premiums, commissions, assessments or
calls, operate in the same manner as if there were a separate
policy or policies covering each insured,
(iv) provide that, as a result of Lessee's waiver of subrogation
contained in Section 12.3 (d) of the Lease, the insurer shall have
no rights of subrogation against the Owner Participant, Lessor
(both as lessor of the Equipment and in its individual capacity)
and the Indenture Trustee,
(v) provide that neither the Owner Participant, Lessor (both as lessor
of the Equipment and in its individual capacity) nor the Indenture
Trustee shall have any liability or obligation for insurance
premiums whether for coverage before or after cancellation or
termination of any such policies,
(vi) shall be primary without contribution from any similar insurance
maintained by Owner Participant, Lessor or Indenture Trustee.
The following extension has been requested from the underwriters, but unless
otherwise noted, has not as yet been granted:
<PAGE> 69
(vii) Such policies shall not invalidate coverage as to the Owner
Participant, Lessor (as lessor of the Equipment and in its
individual capacity) and the Indenture Trustee due to any action or
inaction of the Lessee or any other Person (other than the Owner
Participant, the Lessor or the Indenture Trustee, but only in
respect to their respective coverages). The Gerling/AISLIC policies
contain such a provision.
<PAGE> 70
EXHIBIT B
FORM OF GUARANTY
[Name of Guarantor]
Dated as of ________ ___,
To: Each of the Institutions listed
on Schedule A attached hereto and
their successors and permitted assigns
Gentlemen:
Reference is hereby made to the Participation Agreement (UTC Trust No.
1998-A) (L-15) dated March __, 1998 (as amended, modified or supplemented from
time to time, the "Participation Agreement"), among Union Tank Car Company, as
Lessee; Wilmington Trust Company, as Owner Trustee; FNBC Leasing Corporation, as
Owner Participant; and Harris Trust and Savings Bank, as Indenture Trustee and
as Pass Through Trustee. Capitalized terms used herein without definition which
are defined in the Participation Agreement are used herein with the respective
meanings given such terms in the Participation Agreement.
In connection with the transfer by the Owner Participant of _____% of its
Beneficial Interest to ___________________ (the "Subsidiary"),
___________________ (the "Guarantor") hereby represents, warrants, covenants and
agrees as follows:
1. Representations and Warranties. The Guarantor owns [all] of the issued
and outstanding shares of capital stock of the Subsidiary. The Guarantor is duly
incorporated and validly existing in good standing under the laws of the State
of _____________________. The execution, delivery and performance of this
Agreement are within the Guarantor's corporate powers and have been duly
authorized. This Agreement constitutes a legal, valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its terms
except as such enforceability may be limited by insolvency, reorganization,
receivership, liquidation or similar laws and equitable principles affecting the
rights of creditors generally. The execution, delivery and performance of this
Agreement does not and will not conflict with or result in any violation of or
default under any provision of the Certificate of Incorporation of the Guarantor
or any indenture, contract or other instrument to which the Guarantor is a party
or to which it or any of its properties are bound, or any law, rule or
regulation to which the Guarantor is a party or to which it or any of its
properties are bound, or any law, rule or regulation to which the Guarantor is
subject or violate any judgment or order applicable to the Guarantor or require
the creation or imposition of any Lien on any of the properties or revenues of
the Guarantor pursuant to any requirement of law or contractual obligation of
the Guarantor
<PAGE> 71
and does not require any consent, approval or authorization of, or registration,
or filing with, any governmental authority. The Guarantor has, as of the date
hereof a net worth of at least $____________ as determined in accordance with
generally accepted principles.
2. Guaranty. (a) The Guarantor does hereby unconditionally and irrevocably
guarantee to each Beneficiary, as a primary obligor and not merely as surety,
(i) the due and punctual performance and observance by the Subsidiary of each
term, provision and condition for which it is personally liable contained in the
Trust Agreement, the Participation Agreement and the Tax Indemnification
Agreement (such agreements, collectively, the "Subsidiary Documents") and (ii)
the due and punctual payment of each amount which the Subsidiary is or may
become personally obligated to pay under the Subsidiary Documents as and when
the same may become due and payable.
(b) This is a guaranty of payment and not of collection. Except as
provided in Section 2(d) hereof, the Guarantor hereby waives notice, promptness
and diligence as to the obligations guaranteed hereby and acceptance of this
guaranty, and agrees that it shall not be required to consent to, or receive any
notice of, any amendment or modification of, or waiver, consent or extension
with respect to, the Subsidiary Documents that may be made or given as provided
therein.
(c) The obligations of the Guarantor hereunder are absolute and
unconditional irrespective of the legality, validity or binding effect of the
Subsidiary Documents and will not be discharged or otherwise affected by: (i)
any extension or renewal with respect to any obligation of the Subsidiary under
any Subsidiary Document; (ii) any modification of, or amendment or supplement
to, any Subsidiary Document or any other agreement or instrument referred to
therein; (iii) any furnishings or acceptance of additional security or any
release of any security; (iv) any waiver, consent or other action or inaction or
any exercise or non-exercise of any right, remedy or power with respect to the
Subsidiary; (v) any change in the structure or organization of the Subsidiary or
any determination that the Subsidiary does not constitute a corporation or
otherwise lacks capacity or authority to contract; (vi) any insolvency,
bankruptcy, reorganization, arrangement, composition, liquidation, dissolution,
or similar proceedings with respect to the Subsidiary; (vii) any legal
prohibition against the exercise of any remedies against the Subsidiary under
any of the Subsidiary Documents which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, and (viii) any other
occurrence or circumstance whatsoever which might otherwise constitute a legal
or equitable discharge or defense of a surety or guaranty, except, without
regard to the consequence or effect of any of the foregoing actions or events,
(A) payment in full of all amounts payable by the Subsidiary under the
Subsidiary Documents for which the Subsidiary is personally liable and
performance in full of all obligations of the Subsidiary in respect of which the
Subsidiary is personally liable, in each case in accordance with the terms and
conditions of the Subsidiary Documents, unless such obligations of the
Subsidiary are sooner terminated pursuant to the provisions of the
B-2
<PAGE> 72
Subsidiary Documents and (B) payment and performance in full of the obligations
of the Guarantor hereunder.
(d) Notwithstanding any provision contained herein to the contrary,
the Guarantor shall have no obligation to make any payment or perform any
obligation hereunder unless the Guarantor shall have received notice of the
breach, failure, noncompliance, action or inaction on the part of the Subsidiary
giving rise to such payment or performance obligation and a demand for payment
under this guaranty (unless at the time a Beneficiary is prevented by applicable
law from giving such notice or making such demand).
3. Related Provisions. (a) The obligations of the Guarantor hereunder
shall continue to be effective, or shall be reinstated, if any payment by the
Subsidiary under any Subsidiary Document is rescinded or must otherwise be
restored for any reason, all as though such payment had not been made.
(b) The payment obligations of the Guarantor hereunder shall be
made without set-off, counterclaim, deduction or withholding, and shall be made
in U.S. Dollars.
(c) Guarantor hereby waives any right to which it may become
entitled, whether by subrogation, contribution or otherwise, against the
Subsidiary or any of its properties by reason of the performance by the
Guarantor of its obligations under this guaranty; provided, however that the
foregoing notwithstanding Guarantor shall be entitled to all such rights on and
after the date one year and five days after the date on which all amounts and
performance owing by the subsidiary under the Subsidiary Documents are paid and
performed in full.
(d) This guaranty shall not be deemed to create any right in any
person except a party or parties to a Subsidiary Document and the successors and
assigns of each such Party and shall not be construed in any respect to be a
contract in whole or in part for the benefit of any other person.
(e) This guaranty is a guarantee of payment and not of collection
and the Guarantor waives any right to require that any action be brought against
the Subsidiary or any other person or to require that resort be made to any
security.
(f) This guaranty shall be binding upon the successors and assigns
of the Guarantor and shall be governed, construed, applied and enforced in
accordance with the laws of the State of Illinois.
(g) The Guarantor agrees to pay the reasonable costs and expenses
(including reasonable legal fees) incurred by any Beneficiary in enforcing this
guaranty.
B-3
<PAGE> 73
4. Termination. The obligations of the Guarantor hereunder shall remain in
full force and effect until such time as (A) the Subsidiary shall have a net
worth or capital and surplus of at least $____________ at the end of any fiscal
year, (B) such amount of net worth or capital and surplus shall be as shown on a
balance sheet of the Subsidiary at such date furnished by the Guarantor to each
Beneficiary and prepared in accordance with generally accepted accounting
principles and accompanied by an opinion of nationally recognized independent
certified public accountants or as otherwise evidenced in a manner and
reasonably acceptable to the Beneficiaries and (C) no Indenture Event of Default
which is not attributable to a Lease Event of Default shall have occurred and be
continuing.
5. Notices. All notices, demands, requests, consents, approvals and other
communications required under the terms and provisions hereof shall be in
writing and may be given by airmail, telegram, cable, telex, telecopy or any
other customary means of communication, and any such notice shall be effective
when delivered, (i) if to the Guarantor, at ___________________________________
______________________, Attention: _______________________, Telecopy: (____)_
__ - _____ or at such other address as the Guarantor shall from time to time
designate in writing to the Beneficiaries, and (b) if to any Beneficiary,
addressed to it at the address set forth in the Participation Agreement.
Very truly yours,
____________________________
By:_________________________
Title: _________________
B-4
<PAGE> 74
SCHEDULE A
TO EXHIBIT B
Union Tank Car Company
Wilmington Trust Company, in its individual capacity and as Owner Trustee
Harris Trust and Savings Bank, as Indenture Trustee and as Pass Through Trustee
B-5
<PAGE> 75
Schedule 1A
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (INITIAL CLOSING)
(Equipment Group A)
See attached.
<PAGE> 76
Schedule 1B
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (INITIAL CLOSING)
(Equipment Group B)
See attached.
<PAGE> 77
Schedule 1C
Participation Agreement
DESCRIPTION OF EQUIPMENT AND EQUIPMENT COST (SUBSEQUENT CLOSING)
(Equipment Group A)
See attached.
<PAGE> 78
Schedule 2
Participation Agreement
PAYMENT INFORMATION FOR PARTICIPANTS
Participant's
Commitment
Percentage
1. Payments to Loan Participant to be made as follows:
By wire transfer of immediately available funds to:
Harris Trust and Savings Bank 75.26454775%
ABA No. 071000288
Trust Department Account No. 109-211-3
for credit to trust number 1046705
Reference: Union Tank Car Company
Pass Through Certificates, Series 1998-A
Attention: Bond Service Unit
2. All payments to FNBC Leasing Corporation, as Owner
Participant, should be made by wire transfer of
immediately available funds to:
The First National Bank of Chicago 24.73545225%
ABA#: 071000013
Account Name: FNBC Leasing Corporation
Account #: 58-13603
Reference: UTC Trust No. 1998-A
Attention: Marion Fitzer
<PAGE> 79
Schedule 3A
Participation Agreement
SCHEDULE OF BASIC RENT PAYMENTS (INITIAL CLOSING)
(Equipment Group A)
<PAGE> 80
Schedule 3B
Participation Agreement
SCHEDULE OF BASIC RENT PAYMENTS (INITIAL CLOSING)
(Equipment Group B)
<PAGE> 81
Schedule 3C
Participation Agreement
SCHEDULE OF BASIC RENT PAYMENTS (SUBSEQUENT CLOSING)
(Equipment Group A)
<PAGE> 82
Schedule 4A
Participation Agreement
SCHEDULE OF STIPULATED LOSS VALUE
The Stipulated Loss Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 1 as of the Basic Term Commencement Date and each Rent
Payment Date shall be an amount equal to the percentage of the Equipment Cost
for such Unit set opposite such date in this schedule.
<PAGE> 83
Schedule 4B
Participation Agreement
SCHEDULE OF STIPULATED LOSS VALUE
The Stipulated Loss Value for a Unit of Equipment in Equipment Group B under
Lease Supplement No. 1 as of the Basic Term Commencement Date and each Rent
Payment Date shall be an amount equal to the percentage of the Equipment Cost
for such Unit set opposite such date in this schedule.
<PAGE> 84
Schedule 4C
Participation Agreement
SCHEDULE OF STIPULATED LOSS VALUE
The Stipulated Loss Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 2 as of the Basic Term Commencement Date and each Rent
Payment Date shall be an amount equal to the percentage of the Equipment Cost
for such Unit set opposite such date in this schedule.
<PAGE> 85
Schedule 5A
Participation Agreement
SCHEDULE OF TERMINATION VALUE
The Termination Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 1 as of each Rent Payment Date and Determination Date shall
be an amount equal to the percentage of the Equipment Cost for such Unit set
opposite such date in this schedule.
<PAGE> 86
Schedule 5B
Participation Agreement
SCHEDULE OF TERMINATION VALUE
The Termination Value for a Unit of Equipment in Equipment Group B under
Lease Supplement No. 1 as of each Rent Payment Date and Determination Date shall
be an amount equal to the percentage of the Equipment Cost for such Unit set
opposite such date in this schedule.
<PAGE> 87
Schedule 5C
Participation Agreement
SCHEDULE OF TERMINATION VALUE
The Termination Value for a Unit of Equipment in Equipment Group A under
Lease Supplement No. 2 as of each Rent Payment Date and Determination Date shall
be an amount equal to the percentage of the Equipment Cost for such Unit set
opposite such date in this schedule.
<PAGE> 88
Schedule 6
Participation Agreement
TERMS OF EQUIPMENT NOTES
Note Principal Amount Interest Rate Final Maturity
Amortization Schedule
<PAGE> 89
Schedule 7
Participation Agreement
EARLY PURCHASE INFORMATION
The Early Purchase Price for a Unit of Equipment listed on Schedule 1A is
set forth on Schedule 7A. The Early Purchase Price for a Unit of Equipment
listed on Schedule 1B is set forth on Schedule 7B. The Early Purchase Price for
a Unit of Equipment listed on Schedule 1C is set forth on Schedule 7C.
<PAGE> 90
Schedule 7A
Participation Agreement
EARLY PURCHASE INFORMATION (EQUIPMENT GROUP A) (INITIAL CLOSING)
<PAGE> 91
Schedule 7B
Participation Agreement
EARLY PURCHASE INFORMATION (EQUIPMENT GROUP B) (INITIAL CLOSING)
<PAGE> 92
Schedule 7C
Participation Agreement
EARLY PURCHASE INFORMATION (EQUIPMENT GROUP A) (SUBSEQUENT CLOSING)
<PAGE> 93
Schedule 8
Participation Agreement
BASIC TERM PURCHASE INFORMATION
The Basic Term Purchase Price for a Unit of Equipment listed on Schedule 1A
is set forth on Schedule 8A. The Basic Term Purchase Price for a Unit of
Equipment listed on Schedule 1B is set forth on Schedule 8B. The Basic Term
Purchase Price for a Unit of Equipment listed on Schedule 1C is set forth on
Schedule 8C.
<PAGE> 94
Schedule 8A
Participation Agreement
BASIC TERM PURCHASE INFORMATION (EQUIPMENT GROUP A) (INITIAL CLOSING)
<PAGE> 95
Schedule 8B
Participation Agreement
BASIC TERM PURCHASE INFORMATION (EQUIPMENT GROUP B) (INITIAL CLOSING)
<PAGE> 96
Schedule 8C
Participation Agreement
BASIC TERM PURCHASE INFORMATION (EQUIPMENT GROUP A) (SUBSEQUENT CLOSING)
<PAGE> 97
Schedule 9
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION
The Outside Date Purchase Price for a Unit of Equipment listed on Schedule
1A is set forth on Schedule 9A. The Outside Date Purchase Price for a Unit of
Equipment listed on Schedule 1B is set forth on Schedule 9B. The Outside Date
Purchase Price for a Unit of Equipment listed on Schedule 1C is set forth on
Schedule 9C.
<PAGE> 98
Schedule 9A
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION (EQUIPMENT GROUP A) (INITIAL CLOSING)
<PAGE> 99
Schedule 9B
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION (EQUIPMENT GROUP B) (INITIAL CLOSING)
<PAGE> 100
Schedule 9C
Participation Agreement
OUTSIDE DATE PURCHASE INFORMATION (EQUIPMENT GROUP A) (SUBSEQUENT CLOSING)
<PAGE> 1
EXHIBIT 4(b)(2)
EQUIPMENT LEASE AGREEMENT
(UTC TRUST NO. 1998-A)
(L-15)
Dated March 30, 1998
Between
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee,
Lessor
and
UNION TANK CAR COMPANY,
Lessee
TANK CARS AND COVERED HOPPERS
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO
THIS LEASE, THE EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE
HEREUNDER HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A
SECURITY INTEREST IN FAVOR OF, HARRIS TRUST AND SAVINGS BANK, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND
SECURITY AGREEMENT (UTC TRUST NO. 1998-A) (L-15), DATED MARCH 30, 1998 BETWEEN
SAID INDENTURE TRUSTEE, AS SECURED PARTY, AND LESSOR, AS DEBTOR. INFORMATION
CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM THE INDENTURE TRUSTEE AT
ITS ADDRESS SET FORTH IN SECTION 20 OF THIS LEASE. SEE SECTION 25.2 FOR
INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND HOLDERS OF THE
VARIOUS COUNTERPARTS HEREOF.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C>
Section 1. Definitions................................................................................. 1
Section 2. Acceptance and Leasing of Equipment........................................................ 1
Section 3. Term and Rent.............................................................................. 1
Section 3.1 Lease Term....................................................................... 1
Section 3.2 Basic Rent....................................................................... 2
Section 3.3 Supplemental Rent................................................................ 2
Section 3.4 Adjustment of Rent............................................................... 3
Section 3.5 Advances......................................................................... 3
Section 3.6 Manner of Payments............................................................... 4
Section 4. Ownership and Marking of Equipment......................................................... 4
Section 4.1 Retention of Title............................................................... 4
Section 4.2 Duty to Number Equipment......................................................... 4
Section 4.3 Prohibition Against Certain Designations......................................... 5
Section 5. Disclaimer of Warranties................................................................... 5
Section 6. Return of Equipment; Storage............................................................... 6
Section 6.1 Return; Holdover Rent............................................................ 6
Section 6.2 Condition of Equipment........................................................... 10
Section 6.3 Residual Date Sale of Units...................................................... 10
Section 7. Liens...................................................................................... 12
Section 8. Maintenance; Possession; Compliance with Laws.............................................. 13
Section 8.1 Maintenance and Operation........................................................ 13
Section 8.2 Possession....................................................................... 14
Section 8.3 Sublease; Replacement of Units................................................... 14
Section 8.4 Replacement for Valid Business Reasons........................................... 15
Section 9. Modifications.............................................................................. 16
Section 9.1 Required Modifications........................................................... 16
Section 9.2 Optional Modifications........................................................... 17
Section 9.3 Removal of Property; Replacements................................................ 17
Section 10. Voluntary Termination with Respect to Obsolete or Surplus Units............................ 18
Section 10.1 Right of Termination............................................................ 18
Section 10.2 Sale of Equipment............................................................... 18
Section 10.3 Retention of Equipment by Lessor................................................ 19
Section 10.4 Termination of Lease............................................................ 20
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (cont'd)
<TABLE>
<CAPTION>
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<S> <C>
Section 11. Loss, Destruction or Requisition........................................................... 21
Section 11.1 Event of Loss................................................................... 21
Section 11.2 Replacement or Payment upon Event of Loss....................................... 21
Section 11.3 Rent Termination................................................................ 24
Section 11.4 Disposition of Equipment; Replacement of Unit................................... 24
Section 11.5 Eminent Domain...................................................... 26
Section 12. Insurance.................................................................................. 26
Section 12.1 Physical Damage and Public Liability Insurance.................................. 26
Section 12.2 Physical Damage Insurance....................................................... 27
Section 12.3 Public Liability Insurance...................................................... 28
Section 12.4 Certificate of Insurance........................................................ 29
Section 12.5 Additional Insurance............................................................ 30
Section 12.6 Pollution Coverage.............................................................. 30
Section 13. Reports; Inspection........................................................................ 30
Section 13.1 Duty of Lessee to Furnish....................................................... 30
Section 13.2 Lessor's Inspection Rights...................................................... 31
Section 14. Lease Events of Default.................................................................... 31
Section 15. Remedies................................................................................... 33
Section 15.1 Remedies........................................................................ 33
Section 15.2 Cumulative Remedies............................................................. 36
Section 15.3 No Waiver....................................................................... 36
Section 15.4 Notice of Lease Default......................................................... 36
Section 15.5 Lessee's Duty to Furnish Information with Respect to Subleases.................. 36
Section 15.6 Lessee's Duty to Return Equipment Upon Default.................................. 37
Section 15.7 Specific Performance; Lessor Appointed Lessee's Agent........................... 37
Section 16. Filings; Further Assurances................................................................ 38
Section 16.1 Filings......................................................................... 38
Section 16.2 Further Assurances.............................................................. 38
Section 16.3 Other Filings................................................................... 39
Section 16.4 Expenses........................................................................ 39
Section 17. Lessor's Right to Perform.................................................................. 39
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS (cont'd)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 18. Assignment................................................................................. 39
Section 18.1 Assignment by Lessor............................................................ 39
Section 18.2 Assignment by Lessee............................................................ 40
Section 18.3 Sublessee's Performance and Rights.............................................. 40
Section 19. Net Lease, Etc............................................................................. 41
Section 20. Notices.................................................................................... 42
Section 21. Concerning the Indenture Trustee........................................................... 43
Section 21.1 Limitation of the Indenture Trustee's Liabilities............................... 43
Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease.................. 43
Section 22. Purchase Options; Renewal Options.......................................................... 44
Section 22.1 Early Purchase Option........................................................... 44
Section 22.2 Election to Retain or Return Equipment at End of Basic or
Renewal Term.................................................................... 45
Section 22.3 Purchase Options................................................................ 45
Section 22.4 Renewal Options................................................................. 46
Section 22.5 Appraisal....................................................................... 47
Section 22.6 Stipulated Loss Value and Termination Value During Renewal
Term............................................................................ 47
Section 23. Limitation of Bank's Liability............................................................. 48
Section 24. Investment of Security Funds............................................................... 48
Section 25. Miscellaneous.............................................................................. 49
Section 25.1 Governing Law; Severability..................................................... 49
Section 25.2 Execution in Counterparts....................................................... 49
Section 25.3 Headings and Table of Contents; Section References.............................. 49
Section 25.4 Successors and Assigns.......................................................... 49
Section 25.5 True Lease...................................................................... 49
Section 25.6 Amendments and Waivers.......................................................... 50
Section 25.7 Survival........................................................................ 50
Section 25.8 Business Days................................................................... 50
</TABLE>
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<PAGE> 5
TABLE OF CONTENTS (cont'd)
<TABLE>
<CAPTION>
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<S> <C>
Section 25.9 Directly or Indirectly.......................................................... 50
Section 25.10 Incorporation by Reference...................................................... 50
Section 25.11 Lessee's Right of Quiet Enjoyment............................................... 50
Section 25.12 Entire Agreement................................................................ 50
Attachments to Equipment Lease Agreement:
Exhibit A -- Form of Lease Supplement A-1
Appendix A -- Definitions
</TABLE>
iv
<PAGE> 6
EQUIPMENT LEASE AGREEMENT
(UTC TRUST NO. 1998-A)
(L-15)
THIS EQUIPMENT LEASE AGREEMENT (UTC Trust No. 1998-A) (L-15),
dated March 30, 1998 (the "Lease"), between Wilmington Trust Company, a Delaware
banking corporation (the "Bank"), not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement (in such capacity, "Lessor"), and UNION
TANK CAR COMPANY, a Delaware corporation ("Lessee").
W I T N E S S E T H:
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, all capitalized terms
used herein without definition shall have the respective meanings set forth in
Appendix A hereto for all purposes of this Lease.
SECTION 2. ACCEPTANCE AND LEASING OF EQUIPMENT.
Lessor hereby agrees (subject to satisfaction or waiver of the
conditions set forth in Sections 4.1 and 4.3 of the Participation Agreement) to
accept delivery of each Unit from Lessee and to lease such Unit to Lessee
hereunder, and Lessee hereby agrees (subject to satisfaction or waiver of the
conditions set forth in Section 4.4 of the Participation Agreement), immediately
following such acceptance by Lessor, to lease from Lessor hereunder such Unit.
Such acceptance by Lessor and lease by Lessee is to be evidenced by the
execution and delivery by Lessee and Lessor of a Lease Supplement covering such
Unit, all in accordance with Section 2.3(b) of the Participation Agreement.
Lessee hereby agrees that its execution and delivery of a Lease Supplement
covering any Unit shall, without further act, irrevocably constitute acceptance
by Lessee of such Unit for all purposes of this Lease.
SECTION 3. TERM AND RENT.
Section 3.1 Lease Term. The interim term of this Lease for
each Unit covered by a Lease Supplement executed and delivered on the Initial
Closing Date shall commence on the Initial Closing Date and shall terminate on
the day before the Basic Term Commencement Date. The interim term of this Lease
for each Unit covered by a Lease Supplement executed and delivered on the
Subsequent Closing Date shall commence on the Subsequent Closing Date and
terminate on the day before the Basic Term Commencement Date. The basic term of
this
<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 installments payable on each Rent Payment Date. Each such payment of Basic
Rent shall be in an amount equal to the product of the Equipment Cost for such
Unit multiplied by the Basic Rent percentage for such Unit set forth opposite
such Rent Payment Date on (i) Schedules 3-A or 3-B, as applicable, to the
Participation Agreement with respect to each Unit covered by a Lease Supplement
executed and delivered on the Initial Closing Date or (ii) Schedule 3-C, with
respect to each Unit covered by a Lease Supplement executed and delivered on the
Subsequent Closing Date (as such Schedules shall be adjusted pursuant to Section
2.6 of the Participation Agreement). Basic Rent shall be payable in advance on
certain Rent Payment Dates and in arrears on certain Rent Payment Dates, as
specified in Schedules 3-A, 3-B and 3-C to the Participation Agreement, as so
adjusted, such Schedules as so adjusted from time to time being incorporated
herein by reference.
Anything contained herein or in the Participation Agreement to
the contrary notwithstanding, each installment of Basic Rent (both before and
after any adjustment pursuant to Section 2.6 of the Participation Agreement)
shall be, under any circumstances and in any event, in an amount at least
sufficient for Lessor to pay in full as of the due date of such installment, any
payment of principal of and interest on the Equipment Notes required to be paid
by Lessor pursuant to the Indenture on such due date.
Section 3.3 Supplemental Rent. Lessee also agrees to pay to
Lessor, or to whomsoever shall be entitled thereto, any and all Supplemental
Rent, promptly as the same shall become due and owing, or where no due date is
specified, promptly after demand by the Person entitled thereto, and in the
event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise as in the case of nonpayment of Basic Rent. Lessee will also
pay, as Supplemental Rent, (a) on demand, to the extent permitted by applicable
law, an amount equal to interest at the Late Rate on any part of any installment
of Basic Rent not paid when due for any period for which the same shall be
overdue and on any payment of Supplemental Rent not paid when due or demanded,
as the case may be, for the period from such due date or demand until the same
shall be paid, (b) in the case of the termination of this Lease with respect to
any Unit pursuant to Section 10, on the applicable Termination Date, an amount
equal to the Make-Whole Amount, if any, with respect to the principal amount of
each Equipment Note to be prepaid as a result of such termination, (c) in the
case of the purchase of any Unit pursuant to Section 22.1 hereof or Section 6.9
of the Participation Agreement, on such date of purchase, an amount equal to the
Make-Whole Amount, if any, with respect to the principal amount of each
Equipment Note
2
<PAGE> 8
to be prepaid as a result of such purchase, (d) an amount equal to any other
amount payable by Lessor on the Equipment Notes in excess of the principal and
interest payments due thereunder, as and when such amount shall be due and
payable, in accordance with the terms of the Equipment Notes and the Indenture,
and (e) in the case of any refinancing of the Equipment Notes pursuant to
Section 10.2 of the Participation Agreement, on the Refunding Date, an amount
equal to the Make-Whole Amount, if any, with respect to the aggregate principal
amount of the Equipment Notes being prepaid. All Supplemental Rent to be paid
pursuant to this Section 3.3 shall be payable in the type of funds and in the
manner set forth in Section 3.6.
Section 3.4 Adjustment of Rent. Lessee and Lessor agree that
the Basic Rent, Stipulated Loss Value and Termination Value percentages and the
Early Purchase Price, Basic Term Purchase Price and Outside Date Purchase Price
shall be adjusted to the extent provided in Section 2.6 of the Participation
Agreement, subject in all cases to the limitation set forth in the second
paragraph of Section 3.2.
Section 3.5 Advances. Lessor agrees to give notice to Lessee
and the Indenture Trustee at least five Business Days prior to the Interim
Interest Payment Date, if the funds for the payment of interest on the Equipment
Notes contemplated to be made by Owner Trustee on such date pursuant to Section
2.2(c) of the Participation Agreement will not be paid by Owner Trustee to the
Indenture Trustee in an amount equal to the amount contemplated to be paid
pursuant to Section 2.2(c) of the Participation Agreement. If and to the extent
that the Indenture Trustee on the Interim Interest Payment Date, shall not have
received funds from Owner Trustee sufficient for the payment in full of the
interest then due and owing on the Equipment Notes, Lessee shall pay as
Supplemental Rent, in one installment due on the Interim Interest Payment Date
an amount, if any, equal to such deficiency (such payment being referred to
herein as an "Advance"). In the event Lessee makes any Advance pursuant to this
Section 3.5 and is not promptly reimbursed therefor by Owner Participant after
demand for such reimbursement in the manner set forth in Section 20 and provided
no Lease Default shall have occurred and be continuing, Lessee shall be entitled
to offset and deduct (without duplication) against that portion of each
succeeding payment of Basic Rent, Stipulated Loss Value or Termination Value
which becomes payable to or to the order of Owner Trustee under the Indenture
and distributable to Owner Participant under the Trust Agreement, an amount
equal to such Advance plus interest on such amount at the Late Rate until Lessee
has been fully reimbursed for such Advance plus such interest and in each such
case, such offset shall be deemed to constitute a reduction in the amount of
such Advance so payable. No such offset or aggregate combined effect of separate
offsets shall reduce the amount of any indemnity or other claim payable by
Lessee to any holder of an Equipment Note, the Indenture Trustee or Owner
Trustee in its individual capacity, nor reduce any installment of Basic Rent, or
any payment of Stipulated Loss Value or Termination Value, to an amount that is
insufficient to pay in full the payments then required to be made on account of
the principal and interest on the Equipment Notes then outstanding.
3
<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 Rodney
Square North, 1100 N. Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration. All Rent shall be paid by Lessee in funds
consisting of lawful currency of the United States of America, which shall be
immediately available to the recipient not later than 12:00 noon (New York City
time) on the date of such payment, provided, that so long as the Indenture shall
not have been discharged pursuant to the terms thereof, Lessor hereby directs,
and Lessee agrees, that all Rent (excluding Excepted Property) payable to Lessor
shall be paid directly to the Indenture Trustee at the times and in funds of the
type specified in this Section 3.6 at the office of the Indenture Trustee at
Harris Trust and Savings Bank, ABA No. 071000288, Trust Department Account No.
109-211-3, for credit to trust number 1046705, Attention: Bond Service Unit-UTC
Trust No. 1998-A (L-15), or at such other location in the United States of
America as the Indenture Trustee may otherwise direct with written confirmation
of such payment delivered to Lessor at the address first stated in this Section
3.6.
SECTION 4. OWNERSHIP AND MARKING OF EQUIPMENT.
Section 4.1 Retention of Title. Lessor shall and hereby does
retain full legal title to the Equipment (for the benefit of the Owner
Participant under the Trust Agreement) notwithstanding the delivery to and
possession and use of the Equipment by Lessee hereunder or any sublessee under
any sublease permitted hereby.
Section 4.2 Duty to Number Equipment. With respect to the
Units to be delivered on the Initial Closing Date, Lessee has caused, and as
soon as practicable after the date on which a Lease Supplement is executed and
delivered in respect of the Units to be delivered on the Subsequent Closing Date
or Replacement Units pursuant to Section 11.2, Lessee will cause, each Unit to
be numbered with its reporting 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.
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Section 4.3 Prohibition Against Certain Designations. Except
as above provided, Lessee will not allow the name of any Person to be placed on
any Unit as a designation that might reasonably be interpreted as a claim of
ownership; provided, however, that subject to the delivery of the new reporting
marks statement specified in the second sentence of Section 4.2, Lessee may
cause the Equipment to be lettered with the names or initials or other insignia
customarily used by Lessee or any permitted sublessees or any of their
respective Affiliates on railroad equipment used by it of the same or a similar
type for convenience of identification of the right of Lessee to use the
Equipment hereunder or any permitted sublessee to use the Equipment pursuant to
a sublease permitted hereby.
SECTION 5. DISCLAIMER OF WARRANTIES.
Without waiving any claim Lessee may have against any seller,
supplier or manufacturer, LESSEE ACKNOWLEDGES AND AGREES THAT, (i) EACH UNIT IS
OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO
LESSEE, (ii) LESSEE IS SATISFIED THAT EACH UNIT IS SUITABLE FOR ITS PURPOSES AND
LESSEE HAS ACCEPTED EACH UNIT, (iii) NEITHER LESSOR, THE BANK NOR OWNER
PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND OR HAS
INSPECTED THE UNITS PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE, (iv) EACH
UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL
REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED, AND (v) LESSOR LEASES AND LESSEE
TAKES EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER CONDITION
IT MAY BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, THE BANK NOR OWNER
PARTICIPANT MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY
DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS EITHER
EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR
PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE TITLE, OF THE
EQUIPMENT, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK
INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR NOT
DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT LIABILITY
IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER
WITH RESPECT THERETO AND EACH OF LESSOR AND OWNER PARTICIPANT EXPRESSLY
DISCLAIMS SELECTION OF THE UNITS, except that Lessor represents and warrants
that on the Initial Closing Date or the Subsequent Closing Date, as the case may
be, Lessor shall have received whatever title to the Equipment as was conveyed
to Lessor by Lessee on such date and each Unit will be free of Lessor's Liens
attributable to Lessor and provided that the foregoing disclaimer in clause (v)
shall not extend to Owner Participant's representation and warranty contained in
Section 3.6(e) of the Participation Agreement or the Bank's representation
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and warranty in Section 3.1(i) of the Participation Agreement. Lessor hereby
appoints and constitutes Lessee its agent and attorney-in-fact during the Lease
Term to assert and enforce, from time to time, in the name and for the account
of Lessor and Lessee, as their interests may appear, but in all cases at the
sole cost and expense of Lessee, whatever claims and rights Lessor may have as
owner of the Equipment against the manufacturers or any prior owner thereof;
provided, however, that if at any time a Lease Event of Default shall have
occurred and be continuing, at Lessor's option, such power of attorney shall
terminate, and Lessor may assert and enforce, at Lessee's sole cost and expense,
such claims and rights. Lessor, the Bank and Owner Participant shall have no
responsibility or liability to Lessee or any other Person with respect to any of
the following: (i) any liability, loss or damage caused or alleged to be caused
directly or indirectly by any Unit, or by any of the commodities, items or
materials from time to time contained therein, whether or not permitted by the
terms hereof, or by any inadequacy thereof or deficiency or defect therein or by
any other circumstances in connection therewith; (ii) the use, operation or
performance of any Unit or any risks relating thereto; (iii) any interruption of
service, loss of business or anticipated profits or consequential damages; or
(iv) the delivery, operation, servicing, maintenance, repair, improvement or
replacement of any Unit. Lessee's delivery of a Lease Supplement shall be
conclusive evidence as between Lessee and Lessor that all Units described
therein are in all the foregoing respects satisfactory to Lessee, and Lessee
will not assert any claim of any nature whatsoever against Lessor based on any
of the foregoing matters.
SECTION 6. RETURN OF EQUIPMENT; STORAGE.
Section 6.1 Return; Holdover Rent.
(a) Not less than 150 days prior to the end of the Basic Term,
the end of any Fixed Rate Renewal Term, or the end of any Fair Market Renewal
Term, in each case with respect to any Units which Lessee has elected to return
under Section 22.2, Lessee will provide Lessor with a list specifying 21 storage
locations used for the storage of rolling stock within the continental United
States (excluding Alaska), which locations, to the extent practicable, shall be
geographically diverse. Not less than 90 days prior to the end of the Lease Term
with respect to any Unit Lessee has elected to return pursuant to Section 22.2,
Lessor will give Lessee irrevocable notice of its decision either to take
possession of or store such Unit. If Lessor shall have decided to take
possession of such Unit, the terms of Section 6.1(b) will apply. If Lessor shall
have decided to store such Unit, the terms of Section 6.1(c) hereof will apply.
Not less than 10 days prior to the date on which any Unit is to be returned to
the location specified pursuant to Section 6.1(b) or delivered and stored for
Lessor pursuant to Section 6.1(c), Lessee shall give Lessor irrevocable written
notice specifying the number, identification numbers and type of Units (i.e.
tank cars or hopper cars) which are to be returned or delivered and stored, the
location of such return or delivery and storage and the date on which the
Inspection Period is scheduled to commence with respect to each such Unit. Upon
the arrival of the Units at the return or delivery location(s) described in the
foregoing notice, Lessee will give Lessor prompt
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written confirmation of the number, identification numbers and type of Units
(i.e. tank cars or hopper cars) returned or delivered and the date on which the
Inspection Period commences with respect to the Inspectable Group(s)
(hereinafter defined) of which such Units are a part. In the event that,
subsequent to the date an Inspection Period commences for any Inspectable Group
but not less than five Business Days prior to the end of such Inspection Period,
additional Units are delivered to such location, unless Lessor is at that time
still conducting its inspection at such location pursuant to Section 6.1(h) and
the Person conducting the inspection on Lessor's behalf can reasonably inspect
such additional Units prior to the end of such Inspection Period, a new
Inspection Period will commence upon receipt of notice that an Inspectable Group
made up of such subsequently delivered Units has been assembled; provided,
however, that if less than 25 additional Units are to be subsequently returned
or delivered to such location, such new Inspection Period will commence upon
receipt of notice that all of such subsequently delivered Units have been
assembled; and provided, further, that if not less than five Business Days prior
to the end of an Inspection Period additional Units are delivered to a location
at which an Inspectable Group is then being inspected but the Person conducting
the inspection on Lessor's behalf cannot reasonably inspect such additional
Units prior to the end of such Inspection Period, the Inspection Period in
respect of such additional Units shall be extended to the end of the fifth
Business Day following the date on which such Inspection Period would otherwise
have expired.
(b) If Lessor shall have decided to take possession of any
Unit, Lessee will, at its own cost and expense, deliver possession of such Unit
at any track location, f.o.b. such location, (i) as may be agreed upon by Lessor
and Lessee in writing, or (ii) in the absence of such agreement, as Lessor may
reasonably select by written notice to Lessee delivered on or before the 90th
day before the end of the Lease Term; provided, that (x) there shall be no more
than 21 such locations designated by Lessor (each of which shall be located
within the continental United States, exclusive of Alaska), which locations, to
the extent practicable, shall be geographically diverse, (y) there shall be no
less than 25 Units (any group of 25 Units, an "Inspectable Group") returned to
each location; provided that upon Lessor's request for valid business reasons,
an Inspectable Group shall consist of less than 25 Units, and (z) Lessor's
notice shall specify the total number and type of Units (i.e. tank cars or
hopper cars) to be delivered to each location. Maintenance logs and records with
respect to each Unit shall be delivered to Lessor or its designee upon the
return of such Unit.
(c) (i) If Lessor shall have elected to store any Unit upon
the expiration of the Lease Term with respect thereto, Lessee shall
store such Unit, free of charge for a period (the "Storage Period")
beginning on the expiration of the Lease Term and ending not more than
60 days after the later of (A) the date of commencement of the
Inspection Period for the Inspectable Group of which such Unit is a
part and (B) the date on which such Unit is in compliance with the
conditions set forth in Section 6.2. Any storage provided by Lessee
during the Storage Period shall be at the sole risk (other than in the
case of Lessor's gross negligence or wilful misconduct) and expense of
Lessee, and Lessee shall maintain during the Storage Period the
insurance required by Section 12.1
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with respect to all stored Units. During the Storage Period, Lessee
will permit Lessor or any person designated by it, including the
authorized representative or representatives of any prospective
purchaser or user of such Unit, to restencil the marks on such Unit and
to inspect the same during the storage location's normal business hours
upon at least three Business Days' prior telephonic notice; provided,
however, that such inspection and restenciling shall not unreasonably
interfere with the normal conduct of the storage location's business
and shall be subject to the storage location's standard security and
safety rules and regulations; and provided, further, that (x) such
inspection and restenciling shall be at such Person's own risk, (y)
Lessee shall be protected against any loss or damage incurred by it in
connection with any such inspection or restenciling by such Person
through indemnification, insurance or other means reasonably
satisfactory to Lessee and (z) Lessee (except in the case of Lessee's
gross negligence or wilful misconduct) shall not be liable for any
injury to, or the death of, any Person exercising, either on behalf of
Lessor or any prospective purchaser or user, the rights of inspection
and restenciling granted pursuant hereto. Lessee shall not be required
to store any Unit after the Storage Period. If Lessee does store any
Unit after the expiration of the Storage Period, such storage shall be
at the sole risk (other than in the case of Lessee's gross negligence
or wilful misconduct, it being understood and agreed that the selection
by Lessee of a particular storage location shall not under any
circumstances constitute gross negligence or wilful misconduct provided
that such storage location is the same location or a storage location
which is comparable in all material respects to the location at which
such Unit was stored during the Storage Period) and expense of Lessor.
(ii) Upon the request and direction of Lessor (and at Lessor's
sole risk and expense), on not more than one occasion with respect to
each stored Unit and upon not less than 15 days' prior written notice
from Lessor to Lessee, Lessee will, on or before the expiration of the
Storage Period, transport such Units to any railroad interchange point
or points designated by Lessor within the continental United States
(except Alaska), with a minimum of at least an Inspectable Group
delivered to each interchange point on any railroad lines or to any
connecting carrier for shipment, whereupon Lessee shall have no further
liability or obligation with respect to such Units.
(d) Provided no Lease Default referred to in Section 14(g) or
(h) or Lease Event of Default shall have occurred and be continuing, all amounts
earned in respect of a Unit subsequent to the expiration of the Lease Term with
respect to such Unit and prior to the return of the Unit hereunder shall belong
to Lessee and, if received by Lessor, shall be promptly turned over to Lessee.
(e) Subject to the other provisions of this Section 6.1 with
respect to additional holdover rent, Lessee shall pay to Lessor the daily
equivalent of the rental rate in effect at the expiration or termination of the
most recent Lease Term with respect to such Unit ("Holdover Rent") for each Unit
for each day commencing on the date immediately following the expiration
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or termination of the Lease Term with respect to such Unit to and including the
day immediately preceding the commencement of the Inspection Period for the
Inspectable Group of which such Unit is a part. During such holdover period,
Lessee shall use its reasonable best efforts to secure the return of the
Equipment as required under this Section 6. Nothing herein shall be in
abrogation of Lessor's right to have such Unit returned to it for possession or
storage.
(f) In the event any Unit is not returned to Lessor in the
condition specified in Section 6.2, Lessee shall pay to Lessor Holdover Rent
multiplied by the number of days equal to the sum of (i) one-half of the number
of days elapsed beginning on the commencement of the Inspection Period for the
Inspectable Group of which such Unit is a part and ending on the date on which
Lessee receives notice from Lessor, which is given no later than the date
specified in the second sentence of Section 6.1(h), that such Unit is not in the
condition specified in Section 6.2 (provided, however, that in no event shall
the number determined pursuant to this clause (i) exceed 30), plus (ii) the
number of days beginning on the day immediately following receipt by Lessee of
notice from Lessor, which notice is given no later than the date specified in
the second sentence of Section 6.1(h), that such Unit is not in the condition
required by Section 6.2 to and including the day such Unit is restored to the
condition specified by Section 6.2 and redelivered to the location at which the
Unit was inspected by Lessor or such other location as may be agreed upon by
Lessor and Lessee in writing. Notwithstanding the foregoing, if the repairs
required to restore any Unit to the condition set forth in Section 6.2 cost less
than $2,500 and can be promptly performed at any track location, then (A) Lessor
shall be responsible for making such repairs, the cost of which shall be
reimbursed by Lessee, and (B) the Unit shall be deemed to comply with the
conditions set forth in Section 6.2 and no additional Holdover Rent shall be
payable under this Section 6.1(f) with respect thereto solely as a result of the
condition of such Unit.
(g) Holdover Rent shall be paid monthly in arrears, by payment
from Lessee to Lessor on or before the fifth day following the end of each
calendar month, in the manner specified in Section 3.6 hereof, such payment to
be accompanied by a statement setting forth in reasonable detail the calculation
of such payment on a per Unit basis.
(h) During the 30-day period commencing on the date on which a
minimum of at least an Inspectable Group is delivered, pursuant to Section 6.1
(b) or (c), to Lessor or to a storage location, as the case may be (the
"Inspection Period"), Lessor shall be entitled to inspect any Unit so delivered
to ensure that such Unit is in the condition required under Section 6.2. Lessor
shall promptly (but in no event later than 10 Business Days following receipt by
a Responsible Officer of the Owner Participant and the Owner Trustee of a final
report relating to the foregoing inspection) notify Lessee in writing if any
Units are not in compliance with the conditions specified in Section 6.2,
specifying in reasonable detail the manner in which such Units fail to comply
with such conditions. Subject to Section 6.1(f), no Holdover Rent shall be
payable by Lessee during the Inspection Period. The inspection of all
redelivered Units shall be performed at Lessor's sole cost, expense and risk
(including, without limitation, the risk of
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personal injury or death), by its authorized representatives. Lessee shall not
be liable for any injury to, or the death of, any Person exercising, on behalf
of Lessor, the rights of inspection granted under this Section 6.1 unless caused
by Lessee's gross negligence or wilful misconduct. If such Unit is not in
compliance with the conditions set forth in Section 6.2, then, subject to the
last sentence of Section 6.1(f), Lessee shall promptly take such steps as are
necessary to bring such Unit into such compliance and shall, subject to the last
sentence of Section 6.1(f) pay, in addition to Holdover Rent otherwise owing
under this Section 6.1, the reasonable cost and expense of any reinspection of
such Unit conducted by Lessor required because of such non-compliance with
Section 6.2. No reinspection pursuant to this Section 6.1(h) shall unreasonably
interfere with the normal conduct of business by Lessee, any sublessee or the
location to which such Unit is returned. Lessee shall provide (or cause any
sublessee or owner of the return location to provide) reasonable cooperation to
Lessor and its representatives in connection with such inspection, but Lessee
shall not be required to undertake or incur any additional liabilities in
connection therewith. A Unit shall not be deemed to have been returned to Lessor
for purposes of this Lease unless and until it is in compliance with the
conditions set forth in Section 6.2.
Section 6.2 Condition of Equipment. Each Unit, when returned
to Lessor pursuant to Section 6.1, shall be (a) capable of performing the
functions for which it was designed, with all loading and unloading components
operating in good working order with allowance for normal wear and tear, (b)
suitable for use in interchange in accordance with the Field Manual of the AAR
and FRA rules and regulations, (c) suitable for continued commercial use in the
commodity last carried immediately prior to such return, (d) in the condition
required by Section 8.1, (e) in conformance with any requirement pertaining to
warranties of the manufacturers of the Units during the warranty period, (f) fit
for loading and acceptable for interchange service generally in the
transportation industry after giving effect to a transfer or change in ownership
(in accordance with applicable interchange rules), (g) empty, (h) steam cleaned
or otherwise cleaned in a comparable commercially acceptable manner, and (i)
free and clear of all Liens except Lessor's Liens and Permitted Liens of the
type described in clause (iii) of the definition of Permitted Liens to the
extent arising as a result of a fleet wide action which includes such Unit;
provided, however, that Lessee's obligation to comply with the conditions set
forth in this Section 6.2 with respect to any Unit shall terminate 90 days after
the end of the Inspection Period for such Unit.
Section 6.3 Residual Date Sale of Units.
(a) Not later than April 30, 2014, Lessor will notify Lessee
of Lessor's decision, to be made in its sole discretion, to (i) retain the Units
then held by the Trust and the Beneficial Interest or (ii) sell, subject to
Lessee's rights under Section 22 of this Agreement, some or all of the Units
then held by the Trust and/or the Beneficial Interest. In the event the Lessor
elects to sell or cause to be sold any Units then held by the Trust or the
Beneficial Interest, such Units or Beneficial Interest will be offered for sale
after receipt by Lessee of
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notice from Lessor that Lessor elects to sell the Units or the Beneficial
Interest and will be sold on or after the Residual Date (regardless of whether
the Lease shall have terminated earlier or shall still be in effect) and before
90 days following the Residual Date to the Person making the highest bid
pursuant to an offer with terms reasonably satisfactory to Lessor and satisfying
any applicable terms and conditions of the Operative Agreements. If the Net
Proceeds from such sale are less than 7.75% of the Equipment Cost of the Units
or the Beneficial Interest sold, Lessee hereby irrevocably and unconditionally
agrees to pay Lessor an amount equal to the Unrealized Residual Value as
hereafter provided. Any costs and expenses incurred by Lessor hereunder shall be
for its own account and shall not be subtracted in the calculation of Net
Proceeds from the sale of any Units. Lessor may, in its sole discretion, reject
any purchase offer, provided that if Lessor rejects any bona fide offer to
purchase for cash on an as-is-where-is basis, Lessee's obligation to pay the
Unrealized Residual Value shall be limited to the amount which would have been
payable had such offer been accepted. If no bids that are acceptable to Lessor
are received prior to 90 days after the Residual Date, Lessee shall remit the
Unrealized Residual Value (limited, to the extent applicable, as set forth in
the foregoing sentence) to Lessor within 5 Business Days after such date, unless
Lessor shall have waived in writing its right to receive the Unrealized Residual
Value hereunder. Lessee will remit the Unrealized Residual Value with respect to
any sale pursuant to this paragraph within 5 Business Days after such sale,
unless Lessor shall have waived in writing its right to receive the Unrealized
Residual Value hereunder. Neither Lessor nor any Person acting on behalf of
Lessee may bid on or purchase any Unit or the Beneficial Interest under this
Section 6.3; provided, however, that Lessee shall be entitled to act an
nonexclusive remarketing agent for the disposition of the Units following the
Residual Date and otherwise to assist Lessor in the remarketing of the Units
after such date. Lessee shall not be entitled to share in, or receive any
additional amounts under this Section 6.3 based on or measured by, the Net
Proceeds from the sale of any Unit.
(b) The obligations of Lessee under this Section 6.3 shall
remain in full force and effect without regard to, and shall not be impaired or
affected by, any act or, except for the obligations of Lessor set forth in the
second sentence of Section 6.3(a), any omission to act of any kind by Lessor or
any other Person, or any other circumstances whatsoever which might constitute a
legal or equitable discharge of a guarantor, including but not limited to (i)
any waiver, consent, extension, indulgence, surrender or assignment or other
like action in respect of this Agreement or any other Operative Agreement, or
any agreements relating thereto, (ii) any exercise or non-exercise by Lessor or
any other Person of any right, remedy, power or privilege under or in respect of
this Agreement or any other Operative Agreement, or any agreements relating
thereto, or any waiver of any such right, remedy, power or privilege, (iii) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation, administrative proceeding or the like of Lessee or any other
Person, (iv) the invalidity, illegality or unenforceability of this Agreement or
any other Operative Agreement, or any other document for any reason, (v) any
set-off, counterclaim, recoupment, defense or other right Lessee may have
against Owner Participant, Lessor or any other Person, or (vi) any amendments,
modifications or supplements of or to this Agreement or any other Operative
Agreement, or any
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related document; it being the intention of Lessee that its obligations under
this Section 6.3 shall be absolute and unconditional in any and all
circumstances and that such obligations shall be discharged only by the payment
in full of all sums, and the full and complete performance and discharge of all
covenants, agreements and obligations, as agreed to by Lessee in accordance with
the terms hereof. The obligations of Lessee hereunder shall be reinstated and
revived with respect to any amount which at any time is paid to or for the
account of Lessor by Lessee and is thereafter required to be, and is, restored
and returned by Lessor to Lessee or Lessee's trustee or receiver or similar
official, upon the bankruptcy, insolvency or reorganization of Lessee or for any
other reason, all as though such amount had not been paid by Lessee.
(c) The obligations of Lessee under this Section 6.3 will be
in effect until the earliest to occur of the following: (i) Lessee shall have
paid or caused to be paid to Lessor the Unrealized Residual Value pursuant to
Section 6.3(a) hereof, (ii) Lessor shall not have demanded payment of the
Unrealized Residual Value pursuant to Section 6.3(a) hereof on or before 120
days following the Residual Date, or (iii) the termination of the Lease with
respect to all the Equipment prior to the scheduled termination of the Lease.
Lessee and Lessor agree that, notwithstanding anything to the contrary contained
herein or in any document executed in connection herewith, if there shall have
occurred an Event of Default under the Lease and the Lease shall have been
terminated as a result thereof, Lessee shall not under any circumstances be
deemed to have guaranteed or be responsible for any amounts due hereunder or any
residual exposure of Lessor or any other losses suffered or incurred by Lessor,
in each case, as a result of any such Event of Default.
(d) Lessor and Lessee agree that this Section 6.3 and the
transactions contemplated hereby do not create in Lessee a present or contingent
proprietary interest in Lessor's business, the Owner Trust or the Units. Lessor
and Lessee agree that Lessee is not a beneficiary of the Owner Trust. Lessor and
Lessee agree that neither this Section 6.3 nor any other provision of the
Operative Agreements is intended to provide Lessee any present ownership
interest in the Owner Trust or the Units. Lessor and Lessee specifically agree
that neither this Section 6.3 nor any of the transactions contemplated hereby
are intended to nor shall they create a partnership between Lessor and Lessee.
Lessee represents that it has not and agrees that it will not hold itself out as
a partner of Lessor or otherwise authorized to act so as to bind Lessor.
SECTION 7. LIENS.
Lessee will not directly or indirectly create, incur, assume,
permit or suffer to exist any Lien on or with respect to any Units or Lessee's
leasehold interest therein under this Lease, except Permitted Liens, Lessor's
Liens and Liens described in Section 6.4(a) and 6.4(b) of the Participation
Agreement, and Lessee shall promptly, at its own expense, take such action or
cause such action to be taken as may be necessary to duly discharge (by bonding
or otherwise) any such Lien not excepted above if the same shall arise at any
time.
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SECTION 8. MAINTENANCE; POSSESSION; COMPLIANCE WITH LAWS.
Section 8.1 Maintenance and Operation. (a) Lessee, at its own
cost and expense, shall maintain, repair and keep each Unit (i) according to
prudent industry practice, in good working order and in good physical condition
for railcars of a similar age and usage, normal wear and tear excepted, (ii) in
a manner consistent in all material respects with maintenance practices used by
Lessee in respect of equipment owned or leased by Lessee similar in type to such
Unit, (iii) in accordance in all material respects with all manufacturers'
warranties and in accordance with all applicable provisions, if any, of
insurance policies required to be maintained pursuant to Section 12, and (iv) in
compliance in all material respects with any applicable laws and regulations,
including, without limitation, the Field Manual of the AAR, FRA rules and
regulations and Interchange Rules as they apply to the maintenance and operation
of the Equipment in interchange regardless of upon whom such applicable laws and
regulations are nominally imposed; provided, however, that Lessee may, in good
faith and by appropriate proceedings diligently conducted, contest the validity
or application of any such standard, rule or regulation in any reasonable manner
which does not materially interfere with the use, possession, operation or
return of any of the Units or materially adversely affect the rights or
interests of Lessor and the Indenture Trustee in the Equipment or hereunder or
otherwise expose Lessor, the Bank, the Indenture Trustee or any Participant to
criminal liability, or material civil liability with respect to which Lessee is
not required to indemnify Lessor, the Bank, the Indenture Trustee or any
Participant pursuant to an Operative Agreement, or release Lessee from the
obligation to return the Equipment in compliance with the provisions of Section
6.2. Lessee shall provide Lessor and the Indenture Trustee with notice of any
contest of the type described in the preceding sentence in detail sufficient to
enable Lessor and the Indenture Trustee to ascertain whether such contest may
have an effect of the type described in the preceding sentence. In no event
shall Lessee discriminate as to the use or maintenance of any Unit (including
the periodicity of maintenance or record keeping in respect of such Unit) as
compared to equipment of a similar nature which Lessee owns or leases. Lessee
will maintain all records, logs and other materials required by relevant
industry standards or any governmental authority having jurisdiction over the
Units required to be maintained in respect of any Unit, all as if Lessee were
the owner of such Units, regardless of whether any such requirements, by their
terms, are nominally imposed on Lessee, Lessor or Owner Participant.
(b) Lessee shall not nor shall it expressly permit any
sublessee to change a DOT classification (as provided for in 49 C.F.R. Part 179
or any successor thereto), or expressly permit any sublessee to operate any Unit
under a different DOT classification, from that classification in effect for
such Unit on the Initial Closing Date or the Subsequent Closing Date, as
applicable, except for any change in tank test pressure rating, provided such
change does not increase the pressure rating of the Unit above the tank test
pressure to which the Unit was manufactured; provided however, that in the event
Lessor shall not have provided Lessee with a written waiver or consent to such a
reclassification or operation of any Unit within 10 Business Days of Lessee's
written request therefor (or Lessor expressly rejects such a request
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by Lessee), Lessee may replace such Unit in accordance with and subject to the
provisions of Section 11.2(i), 11.3 and 11.4.
Section 8.2 Possession. Lessee shall be entitled to the
possession and use of the Equipment by it or any Affiliate, in the United
States, Canada and Mexico, only in the manner for which it was designed and
intended and so as to subject it only to ordinary wear and tear. In no event
shall Lessee make use of any Equipment in any jurisdiction not included in the
insurance coverage required by Section 12. The Equipment shall be used primarily
on domestic routes in the United States, and in no event shall more than 20% of
the Units be used (as determined by mileage records) outside the continental
United States (exclusive of Alaska) during any taxable year in which the
transaction generates losses for federal or state income tax purposes. Nothing
in this Section 8.2 shall be deemed to constitute permission by Lessor to any
Person that acquires possession of any Unit to take any action inconsistent with
the terms and provisions of this Lease or any of the other Operative Agreements.
The rights of any Person that acquires possession of any Unit pursuant to this
Section 8.2 shall be subject and subordinate to the rights of Lessor hereunder.
Section 8.3 Sublease; Replacement of Units. Provided Lessor
shall not have declared the Lease to be in default (or the Lease shall not be
deemed to have been declared in default) pursuant to Section 15.1 hereof, Lessee
shall be entitled, without the prior approval of Lessor, to enter into a
sublease for any Unit or Units (pursuant to a car service contract or otherwise)
to, or to grant permission for the use thereof under car contracts by, (a) a
railroad company or companies incorporated under the laws of the United States
or any state thereof or the District of Columbia, Canada or any province
thereof, or Mexico or any state thereof, upon lines of railroad owned or
operated by such railroad company or companies or over which such railroad
company or companies have trackage rights or rights for operation of their
trains, and upon connecting and other carriers in the usual interchange of
traffic or (b) responsible companies other than railroad companies for use in
their business (leases to such sublessees being herein referred to as "Permitted
Subleases"); provided, however, that if Lessee subleases any Unit to a sublessee
which operates primarily in Mexico (or any state thereof), Lessee shall first
have made all registrations, filings and deposits which are necessary or
advisable under then-current prudent industry practice (including any actions
reasonably requested by Lessor or the Indenture Trustee) to protect the right,
title and interest of Lessor under this Lease and the Indenture Trustee under
the Indenture in and to the Units to be so subleased. In entering into any
sublease for any Unit or Units, Lessee shall not discriminate with respect to
the commodity to be shipped in such Unit or Units by the sublessee against
similar Units owned, leased or operated by Lessee. All subleases shall include
appropriate provisions so that such subleases, (i) shall in all events be
subject and subordinate to this Lease and the rights and interests of Lessor and
its respective successors and assigns hereunder and shall confirm such
subordination by a provision substantially in the form currently contained in
Lessee's standard car service contract delivered to Lessor and the Indenture
Trustee prior to the Initial Closing Date, or otherwise as reasonably
satisfactory to Lessor and the Indenture Trustee, (ii) shall not be for a
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term which extends beyond the Basic Term or any agreed upon Renewal Term, and
(iii) shall not include any term or provision which could reasonably be expected
to result in material adverse consequences to Lessor, the Bank, Owner
Participant or the Indenture Trustee. Notwithstanding the foregoing, in the
event Lessee (A) desires to sublease one or more Units for a term which extends
beyond the Basic Term or any Renewal Term, or (B) enters into a sublease with
respect to one or more Units, which sublease contains terms and conditions that
are not consistent with the requirements hereof (provided that in no event shall
the existence of such inconsistent term or condition relieve Lessee of any of
its obligations hereunder or constitute a waiver by Lessor of compliance by
Lessee with such obligations), Lessee may do so without violating this Lease and
will have the option to replace such Unit on or prior to the expiration of the
Basic Term or any Renewal Term with another Unit in accordance with and subject
to the provisions hereof and of Section 11.2(i), 11.3 and 11.4(b) (and in any
event shall effect such replacement prior to the time that such inconsistent
term or condition results in a breach of any provision of this Lease) by
delivering to Lessor, not less than 15 days prior to such replacement, a written
notice stating that Lessee has exercised its option hereunder and advising
Lessor of the date on which the Unit to be replaced will be so replaced and
appropriately identifying the Unit to be replaced and the Replacement Unit;
provided that if replacement is to be made pursuant to the foregoing clause (B),
such notice shall be accompanied by an Officer's Certificate (executed by
Lessee's President or any Vice President) stating that such replacement is
required for valid business reasons arising in the ordinary course of Lessee's
business as an operating lessor and briefly setting forth the reasons therefor;
and provided further, that except for the replacement of a Unit resulting from
the proposed sale of such Unit by Lessee to a sublessee of such Unit, Lessee may
not, during the last five years of the Basic Term, any Fixed Rate Renewal Term
or any Fair Market Renewal Term, replace a number of Units that exceeds 25% of
the Units subject to this Lease (determined as of the close of business on the
Subsequent Closing Date). In the event Lessee exercises its option pursuant to
the foregoing clause (A) or (B), on the date specified for replacement in the
notice delivered by Lessee in connection therewith, Lessee shall transfer title
to the replacement Unit to Lessor, Lessor shall transfer title to the replaced
Unit to Lessee, and Lessee and Lessor shall deliver to each other such documents
and other instruments as are required by Section 11.4(b). Except in connection
with an assignment pursuant to a transaction permitted by Section 6.8 of the
Participation Agreement, no sublease entered into by Lessee hereunder shall
relieve Lessee of any liability or obligation hereunder, which shall be and
remain those of a principal and not a surety. Nothing in this Section 8.3 shall
be deemed to constitute permission to any Person in possession of any Unit
pursuant to any such sublease to take any action inconsistent with the terms and
provisions of this Lease or any of the other Operative Agreements nor shall
anything contained herein relieve Lessee of its obligations under clause (i) of
Section 6.2.
Section 8.4 Replacement for Valid Business Reasons. Provided
Lessor shall not have declared the Lease to be in default (or the Lease shall
not be deemed to have been declared in default) pursuant to Section 15.1 hereof,
Lessee shall be entitled, without the prior approval of Lessor, when for valid
business reasons (independent of events solely in Lessee's control)
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arising in the ordinary course of business, to replace any Unit with another
Unit in accordance with the provisions hereof and of Section 11.2(i), 11.3 and
11.4(b) by delivering to Lessor, not less than 15 days prior to such
replacement, a written notice stating that Lessee has exercised its option
hereunder and advising Lessor of the date on which the Unit to be replaced and
appropriately identifying the Unit to be replaced and the Replacement Unit will
be so replaced; provided that, except for the replacement of a Unit resulting
from the proposed sale of such Unit by Lessee, Lessee may not, during the last
five years of the Basic Term, any Fixed Rate Renewal Term or any Fair Market
Renewal Term, replace a number of Units that exceeds 25% of the Units subject to
this Lease (determined as of the close of business on the Subsequent Closing
Date). Such notice shall be accompanied by an Officer's Certificate (executed by
Lessee's President or any Vice President) stating that such replacement is
required for valid business reasons arising in the ordinary course of Lessee's
business and briefly setting forth the reasons therefor. On the date specified
for replacement in the notice delivered by Lessee in connection therewith,
Lessee shall transfer title to the replacement Unit to Lessor, Lessor shall
transfer title to the replaced Unit to Lessee, and Lessee and Lessor shall
deliver to each other such documents and other instruments as are required by
Section 11.4(b).
SECTION 9. MODIFICATIONS.
Section 9.1 Required Modifications. In the event the AAR, the
United States Department of Transportation, or any other United States, state or
local governmental agency or any other applicable law or requirements of
insurance policies maintained pursuant to Section 12 requires that any Unit be
altered, replaced or modified (a "Required Modification"), Lessee agrees to make
such Required Modification at its own expense; provided, however, that Lessee
may, in good faith and by appropriate proceedings diligently conducted, contest
the validity or application of any such law, regulation, requirement or rule in
any reasonable manner which does not materially interfere with the use,
possession, operation or return of any Unit or materially adversely affect the
rights or interests of Lessor and the Indenture Trustee in the Equipment or
hereunder or otherwise expose Lessor, the Bank, the Indenture Trustee or any
Participant to criminal liability, or material civil liability with respect to
which Lessee is not required to indemnify Lessor, the Bank, the Indenture
Trustee or any Participant pursuant to an Operative Agreement, or relieve Lessee
of the obligation to return the Equipment in compliance with the provisions of
Section 6.2. Title to any Required Modification shall immediately vest in
Lessor. Notwithstanding anything herein to the contrary, if Lessee determines in
good faith that any Required Modification to a Unit would be economically
impractical, in lieu of making the Required Modification as provided above,
Lessee may provide written notice of such determination to Lessor and either (i)
treat such Unit as if an Event of Loss had occurred as of the date of such
written notice with respect to such Unit; provided that upon such occurrence
Lessee shall have only the right to replace such Unit under the provisions of
Section 11.2(i), 11.3 and 11.4, or (ii) if such determination is made on or
after the seventh anniversary of the Basic Term Commencement Date, either treat
such Unit as provided in clause (i) above or treat such Unit as a Terminated
Unit on the terms and conditions set forth in Section 10.1; provided
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that Lessee shall not discriminate against such Unit in making such
determination of economic impracticality as compared with other equipment of the
same type as such Unit which is owned or leased by Lessee.
Section 9.2 Optional Modifications. Lessee at any time may in
its discretion and at its own cost and expense modify, alter or improve any Unit
in a manner which is not required by Section 9.1 (a "Modification"); provided
that no Modification shall diminish the fair market value, utility, estimated
residual value or remaining useful life of such Unit below the value, utility,
estimated residual value or remaining useful life thereof immediately prior to
such Modification, other than in a de minimis manner, assuming such Unit was
then at least in the condition required to be maintained by the terms of this
Lease, or cause such Unit to become Limited Use Property. Title to any
Non-Severable Modification shall be immediately vested in Lessor. Title to any
Severable Modification shall remain with Lessee unless it is a Required
Modification, in which case title shall vest in Lessor pursuant to Section 9.1.
If Lessee, at its cost and expense, shall cause any Severable Modifications
(which are not Required Modifications) to be made to any Unit, Lessee shall give
written notice to Lessor briefly describing such Severable Modifications not
less than 120 days prior to the return other than pursuant to Section 15.6 of
such Unit to Lessor hereunder and Lessor shall have the right, upon 90 days
prior written notice in the case of a return other than pursuant to Section
15.6, prior to the return of such Unit to Lessor hereunder, to purchase such
Severable Modifications (other than Severable Modifications consisting of
proprietary or communications equipment) at their then Fair Market Sales Value
(taking into account their actual condition). If Lessor does not so elect to
purchase such Severable Modifications, Lessee may remove such Severable
Modifications at Lessee's cost and expense and, if requested (which request
shall be made by not less than 90 days prior written notice in the case of a
return other than pursuant to Section 15.6) by Lessor will so remove such
Severable Modifications at Lessee's cost and expense.
Section 9.3 Removal of Property; Replacements. Lessee may, in the
ordinary course of maintenance or repair of any Unit, remove any item of
property constituting a part of such Unit, and, unless the removal of such item
is required by Section 9.1 hereof, Lessee shall replace such item as promptly as
practicable with an item of property that is free and clear of all Liens (other
than Permitted Liens) and in as good operating condition as, and with a value,
utility, estimated residual value and remaining useful life at least equal to,
the item of property being replaced, assuming that such replaced item was in the
condition required to be maintained by the terms of this Lease. Any item of
property removed from such Unit as provided in the preceding sentence shall
remain the property of Lessor free and clear of all rights of Lessee until
replaced in accordance with the terms of such sentence, but shall then, without
further act, become the property of Lessee. Any such replacement property shall,
without further act, become the property of Lessor and be deemed part of such
Unit for all purposes hereof.
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SECTION 10. VOLUNTARY TERMINATION WITH RESPECT TO OBSOLETE OR SURPLUS
UNITS.
Section 10.1 Right of Termination. So long as no Lease Default
or Lease Event of Default shall have occurred and be continuing, Lessee shall
have the right, at its option at any time or from time to time during the Basic
Term on or after the seventh anniversary of the Basic Term Commencement Date, to
terminate the Lease Term with respect to any or all of the Units (provided that,
if such termination is for less than all Units in an Equipment Group, the
determination as to which Units are subject to termination shall be made by
Lessee on a random or other reasonable basis (including, without limitation, on
the basis of Car Type) without discrimination based on maintenance status or
operating condition of the Units in question) (the "Terminated Units") if Lessee
determines in good faith (as evidenced by a certified copy of a resolution
adopted by Lessee's Board of Directors and a certificate executed by the Chief
Financial Officer of Lessee) either (a) that such Units have become obsolete or
surplus to Lessee's requirements, or (b) in the circumstances described in
clause (ii) of the last sentence of Section 9.1, that a Required Modification to
such Units would be economically impractical. Lessee shall be entitled to
exercise its termination rights under this Section 10.1 by delivering at least
120 days' prior notice to Lessor, the Indenture Trustee and the Pass Through
Trustee (i) specifying a proposed date of termination for such Units (the
"Termination Date"), which date shall, except as provided in the last sentence
of Section 10.3, be a Rent Payment Date, any such termination to be effective on
the Termination Date, and (ii) if some but less than all of the Units in an
Equipment Group are designated as Terminated Units, describing the
nondiscriminatory manner (including, without limitation, on the basis of Car
Type) in which Lessee proposes to determine which Units in that Equipment Group
are to be Terminated Units. Except as expressly provided herein, there will be
no conditions to Lessee's right to terminate this Lease with respect to the
Terminated Units pursuant to this Section 10.1. So long as (A) Lessor shall not
have given Lessee a notice of election to retain the Terminated Units in
accordance with Section 10.3, or (B) notice of prepayment of the Equipment Notes
shall not have been given pursuant to Section 2.10 of the Indenture, Lessee may
withdraw the termination notice referred to above at any time up to sixty (60)
days prior to the scheduled Termination Date, whereupon this Lease shall
continue in full force and effect; provided that Lessee (1) may not exercise its
right to withdraw such a termination notice more than once annually, and (2) may
not withdraw any termination notice with respect to any Terminated Units after
receipt by Lessee of a bid equal to or greater than the Termination Value with
respect to such Terminated Units. Lessee agrees that if it withdraws a
termination notice it will reimburse Lessor, Owner Participant and the Indenture
Trustee for all reasonable out-of-pocket costs and expenses (including
reasonable legal fees and expenses) incurred by any thereof in connection
therewith.
Section 10.2 Sale of Equipment. During the period from the
date of each notice given pursuant to Section 10.1 to the Termination Date,
Lessee, as agent for Lessor and, except as provided in Section 10.3, at Lessee's
sole cost and expense, shall use its reasonable best efforts to obtain bids from
Persons other than Lessee or Affiliates thereof for the cash purchase
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of the Terminated Units, and Lessee shall promptly, and in any event at least
five Business Days prior to the proposed date of sale, certify to Lessor in
writing the amount and terms of each such bid, the proposed date of such sale
and the name and address of the party submitting such bid. Unless Lessor shall
have elected to retain the Terminated Units in accordance with Section 10.3, on
the Termination Date: (a) Lessee shall, subject to the prior or concurrent
receipt (x) by Lessor of all amounts owing to Lessor pursuant to the next
sentence, and (y) by the Persons entitled thereto of all unpaid Supplemental
Rent due on or before the Termination Date, deliver the Terminated Units
(excluding any optional Severable Modifications removed by Lessee pursuant to
Section 9.2) to the bidder (which shall not be Lessee or any Affiliate thereof),
if any, which shall have submitted the highest cash bid prior to such date (or
to such other bidder as Lessee and Lessor shall agree), in the condition
specified in Section 6.2 and (b) Lessor shall, without recourse or warranty
(except as to the absence of any Lessor's Lien) simultaneously therewith
transfer all of its right, title and interest in and to the Terminated Units to
such bidder. The net proceeds of sale realized at such sale shall be paid to
Lessor and, in addition, on the Termination Date, Lessee shall pay to Lessor,
(i) all unpaid Rent with respect to such Terminated Units due and payable on or
prior to the Termination Date (exclusive of any in advance Basic Rent due on
such date), (ii) the excess, if any, of (A) the Termination Value for the
Terminated Units computed as of the Termination Date, over (B) the net cash
sales proceeds (after the deduction of all reasonable costs and expenses
(including reasonable legal fees and expenses) of Lessor, the Bank and Owner
Participant in connection with such sale) of the Terminated Units, and (iii) an
amount equal to the Make-Whole Amount, if any, in respect of the principal
amount of the Equipment Notes to be prepaid in accordance with Section 2.10(a)
of the Indenture. If no sale shall have occurred, whether as a result of
Lessee's failure to pay all of the amounts hereinabove required or otherwise,
this Lease shall continue in full force and effect with respect to such Units,
and Lessee agrees to reimburse Lessor, the Bank, Owner Participant and the
Indenture Trustee for all reasonable costs and expenses (including reasonable
legal fees and expenses) incurred by any thereof in connection therewith;
provided that if such sale shall not have occurred solely because of Lessee's
failure to pay the amounts hereinabove required, Lessee shall have no further
right to terminate this Lease with respect to such Units. Lessee, in acting as
agent for Lessor, shall have no liability to Lessor for failure to obtain the
best price, shall act in its sole discretion and shall be under no duty to
solicit bids publicly or in any particular market. Lessee's sole interest in
acting as agent shall be to use its reasonable best efforts to sell the Units at
the highest price then obtainable consistent with the terms of this Lease.
Section 10.3 Retention of Equipment by Lessor. Notwithstanding
the provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect by
written notice to Lessee, no later than 60 days after receipt of Lessee's notice
of termination, not to sell the Terminated Units on the Termination Date,
whereupon Lessee shall (a) deliver the Terminated Units to Lessor in the same
manner and condition as if delivery were made to Lessor pursuant to Section 6,
treating the Termination Date as the termination date of the Lease Term with
respect to the Terminated Units, and (b) pay to Lessor, or to the Persons
entitled thereto, all Basic Rent and all
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Supplemental Rent due and owing on the Termination Date and unpaid (exclusive of
any in advance Basic Rent due on such date but inclusive of any Supplemental
Rent measured by the Make-Whole Amount). If Lessor elects not to sell the
Terminated Units as provided in this Section 10.3, then Lessor shall pay, or
cause to be paid, to the Indenture Trustee in funds of the type and in an amount
equal to the outstanding principal amount of the Equipment Notes issued in
respect of such Terminated Units and all accrued and unpaid interest to the date
of prepayment of such Equipment Notes on such Termination Date and an amount
equal to the Make-Whole Amount, if any, in respect of the principal amount of
the Equipment Notes to be prepaid without in any manner relieving Lessee of its
obligation to pay any such amount pursuant to the preceding sentence; provided
that unless Lessor shall have paid all such amounts to the Indenture Trustee on
the Termination Date, this Lease shall continue in full force and effect with
respect to such Terminated Units. If Lessee shall have complied with its
obligations under this Section 10.3 and Lessor shall fail to pay the amounts
required pursuant to this Section 10.3 and as a result thereof this Lease shall
not be terminated with respect to the Terminated Units on the proposed
Termination Date, Lessor shall (x) thereafter no longer be entitled to exercise
its election to retain such Terminated Units, and (y) reimburse Lessee for any
expenses (including reasonable legal fees and expenses) incurred by it in
attempting to sell the Terminated Units pursuant to Section 10.2 immediately
prior to Lessor's exercise of such preemptive election, and Lessee may at its
option at any time thereafter prior to the immediately following Rent Payment
Date submit a new termination notice pursuant to Section 10.1 with respect to
such Terminated Units specifying a proposed Termination Date occurring on a
Determination Date that is not less than 25 days after the date of such notice;
provided that for purposes of determining the amount to be paid by Lessee
pursuant to Section 10.2, the Termination Date shall be deemed to be the
Termination Date on which Lessor failed to make the payments provided in this
Section 10.3.
Section 10.4 Termination of Lease. In the event of either (a)
any sale of Terminated Units and receipt by Lessor and the Indenture Trustee of
all of the amounts provided in Section 10.2 or (b) retention of the Equipment
and payment in full by Lessor of all amounts required to be paid pursuant to
Section 10.3, and upon compliance by Lessee with the other provisions of this
Section 10, the obligation of Lessee to pay Basic Rent hereunder for such
Terminated Units shall cease and the Lease Term for such Terminated Units shall
end. Upon the payment of all amounts required to be paid in respect of any
Terminated Unit or Units as contemplated by clause (a) of the preceding
sentence, Lessor will convey to the purchaser thereof all right, title and
interest of Lessor in and to such Terminated Unit or Units, "as is", "where is",
without recourse or warranty, except for a warranty against Lessor's Liens, and
shall execute and deliver to the purchaser thereof such bills of sale and other
documents and instruments as the purchaser thereof may reasonably request to
evidence such conveyance.
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SECTION 11. LOSS, DESTRUCTION OR REQUISITION.
Section 11.1 Event of Loss. In the event that any Unit shall
(a) suffer damage or contamination which, in Lessee's reasonable judgment (as
evidenced by an Officer's Certificate to such effect), makes repair uneconomic
or renders such Unit unfit for commercial use, (b) suffer destruction, or shall
suffer theft or disappearance for a period exceeding 12 months, (c) in the case
of any Unit not manufactured by the Manufacturer, such Unit shall be permanently
returned to the manufacturer pursuant to any patent indemnity provisions, (d)
have title thereto taken or appropriated by any governmental authority, agency
or instrumentality under the power of eminent domain or otherwise, (e) suffer an
actual or constructive total loss, (f) in the normal course of interstate rail
transportation, have been prohibited from being used for a continuous period in
excess of six months as a result of any rule, regulation, order promulgated, or
any other action taken, by the United States government or any agency or
instrumentality thereof, (g) be subject to a sublease with any Person which
operates primarily outside the United States and shall not be returned to Lessee
within 60 days of a demand by Lessee for return of such Unit following the
termination or other expiration of the term of such sublease, or (h) be taken or
requisitioned for use by any governmental authority of the United States, Canada
or Mexico or any agency or instrumentality thereof under the power of eminent
domain or otherwise, and such taking or requisition is for a period that exceeds
the remaining Basic Term or any Renewal Term then in effect (unless such taking
or requisition is by Mexico or any governmental authority, agency or
instrumentality thereof, in which case such period shall be the lesser of the
period as aforesaid or 365 days) (any such occurrence being hereinafter called
an "Event of Loss"), Lessee, in accordance with the terms of Section 11.2, shall
promptly and fully inform Lessor and the Indenture Trustee of such Event of
Loss; provided, however, that if any Unit shall suffer a theft or disappearance
as described in clause (b) above for a period exceeding 6 months, Lessee shall
use its reasonable best efforts to inform Lessor and the Indenture Trustee of
such theft or disappearance as an Event of Loss once it has knowledge thereof,
regardless of whether the 12-month period referred to in said clause (b) has
run.
Section 11.2 Replacement or Payment upon Event of Loss. Lessee
shall report, by written notice to Lessor given (a) on the date that is 60 days
prior to each Rent Payment Date, or (b) promptly, but in no event later than 30
days, after the date on which a Responsible Officer of Lessee shall have
obtained actual knowledge that since the end of the last period for which a
report was delivered to Lessor under this Section 11.2 ten or more Units have
suffered an Event of Loss (a "Multiple Loss"), any and all occurrences of an
Event of Loss and shall in such written notice notify Lessor of its election to
perform one of the following options with respect to each such Unit:
(i) on the Rent Payment Date immediately following delivery of
the foregoing notice (or, in the case of a Multiple Loss, on the first
Business Day succeeding the 60th day following the date on which Lessee
is required to report such Multiple Loss pursuant to this Section
11.2), Lessee shall comply with Section 11.4 and shall convey or cause
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to be conveyed to Lessor a Replacement Unit to be leased to Lessee
hereunder, such Replacement Unit to be of the same Equipment Group, the
same or later year of manufacture of the Unit replaced and free and
clear of all Liens (other than Permitted Liens of the type described in
clause (ii) with respect to sublessees, and in clauses (iii), (iv),
(vi) and (vii) of the definition thereof) and to have a Fair Market
Sales Value, utility, remaining useful life, estimated residual value
and condition at least equal to the Unit so replaced (assuming such
Unit was at least in the condition required to be maintained by the
terms of this Lease), and Lessee shall identify in a written notice to
Lessor the Units to be replaced and the Replacement Units; provided
that if at the time of such replacement, only railcars (x) of a later
year of manufacture or (y) with a greater Fair Market Sales Value than
the replaced Units are available as Replacement Units, Lessee shall
convey such Replacement Units to Lessor as set forth above but Lessee
may, at a later date, replace such Replacement Units with other Units
of the same Equipment Group that are closer in age or Fair Market Sales
Value to the original replaced Units and which have a utility,
remaining useful life, estimated residual value and condition at least
equal to such Replacement Units; provided further that (a) a
Replacement Unit may only be replaced with another Unit on one
occasion, (b) any substitution of a Unit for a Replacement Unit must
occur within 18 months of the date on which such Replacement Unit was
conveyed to Lessor and (c) except in the event a purchase option has
been exercised by Lessee pursuant to Section 22 with respect to such
Replacement Unit, no Replacement Unit may be replaced with another Unit
within three years of the Basic Term Expiration Date or during the last
three years of any Renewal Term; provided further that if Lessee shall
either fail to elect an option under clause (i) or (ii) of this Section
11.2 by the applicable date, or timely elects the option under this
clause (i) but shall fail to perform its obligation to effect such
replacement under this paragraph (i) on a timely basis, then (except in
the case of a failure to perform an election to replace pursuant to
Section 8.1(b), Section 8.3 or Section 9.1) Lessee shall immediately
give Lessor, the Indenture Trustee and the Pass Through Trustee notice
of such failure and Lessee shall pay to Lessor on such Rent Payment
Date (or, in the case of a Multiple Loss, on the first Business Day
succeeding the 60th day following the date on which Lessee is required
to report such loss pursuant to this Section 11.2) or in the case of
Supplemental Rent, to the Person entitled thereto, the amounts
specified in clause (ii) below; provided further that Lessee shall have
no right to elect replacement under this clause (i) if at the time
Lessee delivers the notice described in the first sentence of this
Section 11.2, a Lease Event of Default or a Lease Default described in
Section 14(a), Section 14(g) or Section 14(h) shall have occurred and
be continuing; and provided further that the Lessee may substitute
fewer or more Replacement Units than the number of Units which have
suffered an Event of Loss so long as (A) such Replacement Unit(s) have
in the aggregate a Fair Market Sales Value, utility, remaining economic
useful life, estimated residual value and condition at least equal to
the aggregate Fair Market Sales Value, utility, remaining economic
useful life, estimated residual value and condition of the Unit(s) so
replaced (assuming such Unit(s) were in at least the condition required
to
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be maintained by the terms of this Lease), (B) each such Replacement
Unit has a utility and condition not materially worse than that of each
of the Units so replaced, (C) each such Replacement Unit has an
estimated residual value as of the end of the Lease Term (determined at
the date of such replacement) of at least 20% (without giving effect to
inflation or deflation) of the Fair Market Sales Value of such
Replacement Unit as of the date of such replacement and an estimated
economic useful life at the end of the Lease Term (determined at the
date of such replacement) of at least 20% of the economic useful life
of such Replacement Unit as of the date on such replacement, and (D)
such Replacement Unit(s) otherwise meet the requirements of this
paragraph (i); and provided further, that if Lessee substitutes fewer
or more Replacement Units than the number of Units which have suffered
an Event of Loss, then the Basic Rent, Stipulated Loss Value,
Termination Value, Early Purchase Price, Basic Term Purchase Price and
Outside Date Purchase Price of each Replacement Unit so substituted
shall be equal to the following amount: the Basic Rent, Stipulated Loss
Value, Termination Value, Early Purchase Price, Basic Term Purchase
Price and Outside Date Purchase Price, as applicable, with respect to
the Units which have suffered an Event of Loss, taken as a whole,
multiplied by a fraction, the numerator of which is the Fair Market
Sales Value as of the date of replacement of the particular Replacement
Unit and the denominator of which is the Fair Market Sales Value as of
the date of replacement of all the Replacements Units taken as a whole;
or
(ii) on the Rent Payment Date immediately following the
delivery of the notice described in the first sentence of this Section
11.2, Lessee shall pay or cause to be paid to Lessor (or in the case of
Supplemental Rent, to the Person entitled thereto) in funds of the type
specified in Section 3.6, an amount equal to (A) the Stipulated Loss
Value of each such Unit suffering an Event of Loss or deemed Event of
Loss determined as of such Rent Payment Date, (B) all Basic Rent
payable on such date in respect of such Unit (exclusive of any in
advance Basic Rent due on such date), and (C) all other Rent then due
and payable hereunder with respect to such Unit, it being understood
that until such Stipulated Loss Value and other sums are paid, there
shall be no abatement or reduction of Basic Rent; provided, however,
that in the event of a Multiple Loss, in lieu of the amounts otherwise
required to be paid in respect of each such Unit as provided above,
Lessee shall pay or cause to be paid on the first Business Day
succeeding the 60th day following the date on which Lessee is required
to report such loss pursuant to this Section 11.2 (the "Multiple Loss
Payment Date"), (A) an amount equal to the Stipulated Loss Value of
each such Unit determined as of (i) the second day of the month in
which the Multiple Loss Payment Date occurs or (ii) the second day of
the immediately preceding month if the Multiple Loss Payment Date is
the first day of a month (the second day of any such month a "Multiple
Loss Determination Date"), (B) an amount of accrued and unpaid Basic
Rent, if any, in respect of each such Unit equal to the product of (x)
the daily equivalent of the amount of Basic Rent scheduled to be paid
with respect to each such Unit on the Rent Payment Date next succeeding
such Multiple Loss
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Determination Date and (y) the number of days from and including such
Multiple Loss Determination Date to but excluding the Multiple Loss
Payment Date (but in no event less than the amount of accrued and
unpaid interest, if any, in respect of the principal amount of
Equipment Notes to be prepaid as a result of such Multiple Loss) and
(C) all other Rent then due and payable hereunder, it being understood
that until such Stipulated Loss Value and other sums are paid, there
shall be no abatement or reduction of Basic Rent; provided, further,
that if Lessee elects the option under this clause (ii), it shall
notify the Lessor, the Indenture Trustee and the Pass Through Trustee
thereof at least 20 days prior to the date such payment is to be made,
which election shall be irrevocable on the 15th day prior to the date
payment is required hereunder.
Section 11.3 Rent Termination. Upon the replacement of any
Unit or Units in compliance with Section 11.2(i) (but only as to replaced Units
and not any Replacement Unit) or upon the payment of all sums required to be
paid pursuant to Section 11.2 in respect of any Unit or Units, the Lease Term
with respect to such Unit or Units and the obligation to pay Basic Rent for such
Unit or Units accruing subsequent to the date of payment of Stipulated Loss
Value or date of conveyance of such Replacement Unit or Units shall terminate;
provided that Lessee shall be obligated to pay all Rent in respect of such Unit
or Units which is payable under Section 11.2 with respect to such payment of
Stipulated Loss Value or such replacement of such Unit or Units and in respect
of all other Units then continuing to remain subject to this Lease; provided
further that it is understood and agreed that, in the event of a replacement in
compliance with Section 11.2(i), the Rent paid with respect thereto on the Rent
Payment Date next following the conveyance of the Replacement Unit or Units
shall be deemed paid in respect of, and allocated between, both the Replacement
Unit or Units and the original Unit or Units it or they replaced.
Section 11.4 Disposition of Equipment; Replacement of Unit.
(a) Upon the payment of all sums required to be paid pursuant to Section 11.2 in
respect of any Unit or Units, Lessor will convey to Lessee or its designee all
right, title and interest of Lessor in and to such Unit or Units, "as is",
"where is", without recourse or warranty, except for a warranty against Lessor's
Liens, and shall execute and deliver to Lessee or its designee such bills of
sale and other documents and instruments as Lessee or its designee may
reasonably request to evidence such conveyance. As to each separate Unit so
disposed of, so long as no Lease Event of Default shall have occurred and be
continuing, Lessee or its designee shall be entitled to any amounts arising from
such disposition, plus any awards, insurance or other proceeds and damages
received by Lessee, Lessor or the Indenture Trustee by reason of such Event of
Loss after having paid the Stipulated Loss Value attributable thereto.
(b) At the time of or prior to any replacement of any Unit,
Lessee, at its own expense, will (i) furnish Lessor with a 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
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Replacement Unit to this Lease, and duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation as
required in Section 16.1, (iii) so long as the Indenture shall not have been
satisfied and discharged, cause an Indenture Supplement substantially in the
form of Exhibit A to the Indenture for such Replacement Unit, to be delivered to
Lessor and to the Indenture Trustee for execution and, upon such execution, to
be filed for recordation as required in Section 16.1, (iv) furnish Lessor with
an opinion of Lessee's counsel (which may be Lessee's General Counsel or
Assistant General Counsel), to the effect that (A) the 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) in form and substance reasonably satisfactory to
the Owner Participant certifying as to the value, utility, remaining useful life
and condition required under clause (i) of Section 11.2 and stating that the
Replacement Unit has an estimated residual value which is not less than the
estimated residual value of the Unit being replaced, (vi) furnish to Lessor and
the Indenture Trustee an Officer's Certificate certifying that the Replacement
Unit is free and clear of all Liens (other than Permitted Liens of the type
described in clause (ii) with respect to sublessees, and in clauses (iii), (iv),
(v) and (vi) of the definition thereof), (vii) furnish to Owner Participant an
agreement to indemnify Owner Participant against any adverse tax consequences
suffered as a result of such replacement, and (viii) furnish such other
documents and evidence as Owner Participant, Lessor, the Bank or the Indenture
Trustee, or their respective counsel, may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11.4. In addition, in connection with any substitution pursuant to this Section
11.4, and in addition to the Lessee's obligation to indemnify the Owner
Participant as set forth in the Tax Indemnity Agreement, Lessee shall elect, in
its sole discretion, (i) to furnish a tax opinion from 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) promptly following receipt of written
notice from Owner Participant that Owner Participant has filed its Federal
income tax returns wherein such gain or loss is required to recognized, to make
an indemnity payment to Owner Participant in the incremental amount of such
adverse tax consequence (on a net after-tax basis) attributable to the
conveyance of such Replacement Unit. For all purposes hereof, upon passage of
title thereto to Lessor, the Replacement Unit shall be deemed part of the
property leased hereunder and the Replacement Unit shall be deemed a "Unit" of
Equipment as defined herein. Upon such passage of title, Lessor will transfer to
Lessee, without recourse or warranty (except as to Lessor's Liens), all of
Lessor's right, title and interest in and to the replaced Unit (and shall
execute and deliver to
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Lessee or its designee such bills of sale and other documents and instruments as
Lessee may reasonably request to evidence such conveyance), and upon such
transfer, Lessor will request in writing that the Indenture Trustee execute and
deliver to Lessee an appropriate instrument releasing such replaced Unit from
the lien of the Indenture. Lessee shall pay all reasonable out-of-pocket costs
and expenses (including reasonable legal fees and expenses) incurred by Lessor,
the Bank, Owner Participant and the Indenture Trustee in connection with any
replacement pursuant to this Section 11.4.
Section 11.5 Eminent Domain. In the event that during the
Lease Term the use of any Unit is requisitioned or taken by any governmental
authority under the power of eminent domain or otherwise for a period which does
not constitute an Event of Loss, all of Lessee's obligations under the Operative
Agreements, including without limitation, Lessee's obligation to pay all
installments of Basic Rent and Supplemental Rent, shall continue for the
duration of such requisitioning or taking. All sums payable for any such period
by such governmental authority as compensation for the requisitioning or taking
of possession shall be divided between Lessor and Lessee as their respective
interests may appear. Any amount referred to in this Section 11.5, 11.4(a) or 12
which is payable to Lessee shall not be paid to Lessee, or if it has been
previously paid directly to Lessee, shall not be retained by Lessee, if at the
time of such payment a Lease Default under Section 14(g) or Section 14(h) or a
Lease Event of Default shall have occurred and be continuing, but shall be paid
to and held by Lessor pursuant to Section 24, or if the Indenture shall not then
have been discharged pursuant to its terms, to the Indenture Trustee, as
security for the obligations of Lessee under this Lease, and at such time as
there shall not be continuing any such Lease Default or Lease Event of Default,
such amount shall be paid to Lessee.
SECTION 12. INSURANCE.
Section 12.1 Physical Damage and Public Liability Insurance.
Lessee will at all times after delivery and acceptance of each Unit and until
such Unit is returned to Lessor, at its own expense, keep such Unit or cause
such Unit to be kept insured by a reputable insurance company or companies, in
amounts and against risks and with deductibles and terms and conditions not less
than the insurance, if any, maintained by Lessee with respect to similar
equipment which it owns or leases, but in no event shall such coverage be for
amounts or against risks less than the prudent industry standard for companies
engaged in full service leasing of tank and 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
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movement); provided that such coverage may provide for deductible amounts or
self-insured retention of not more than $1,000,000 per occurrence; and
(b) maintain public liability insurance naming Owner
Participant, Lessor, as lessor of the Equipment and the Bank in its individual
capacity, and the Indenture Trustee as additional insureds (but only with
respect to liability arising out of or related to the Operative Agreements and
the Equipment) against bodily injury, death or property damage arising out of
the use or operation of the Equipment with general and excess liability limits
of not less than $100,000,000 per occurrence and annually in the aggregate;
provided that such coverage may provide for deductible amounts or self-insured
retention not exceeding $25,000,000.
It is understood and agreed that the insurance required
hereunder may be part of a group-wide insurance program, including
risk-retention and self-insurance. Any policy of insurance maintained in
accordance with this Section 12.1 and any policy purchased in substitution or
replacement for any of such policies shall provide that if any such insurance is
cancelled or terminated, for any reason whatever (other than upon normal policy
expiration or non-payment of premiums), Lessor, the Indenture Trustee and Owner
Participant shall receive 30 days' prior written notice of such cancellation or
termination and shall further provide that if any such insurance is cancelled or
terminated for non-payment of premiums, the Indenture Trustee and Owner
Participant shall receive 10 days' prior written notice of such cancellation or
termination.
Section 12.2 Physical Damage Insurance. (a) The insurance
maintained pursuant to Section 12.1(a) shall provide that (i) so long as the
Equipment Notes remain outstanding, the proceeds up to the Stipulated Loss Value
for any loss or damage to any Unit shall be paid to the Indenture Trustee under
a standard mortgage loss payable clause, and thereafter to Lessor and (ii) so
long as no Lease Event of Default shall have occurred and be continuing, Lessee
will be entitled, at its own expense, to make all proofs of loss and take all
other steps necessary to collect the proceeds of such insurance.
(b) The entire proceeds of any property insurance or third
party payments for damage to any Unit received by Lessor or the Indenture
Trustee shall be held by such party until, with respect to such Unit, the
repairs referred to in clause (i) below are made as specified therein or payment
of the Stipulated Loss Value is made, and such entire proceeds will be paid, so
long as no Lease Event of Default shall have occurred and be continuing, either:
(i) to Lessee promptly following receipt by the Indenture
Trustee or Lessor, as the case may be, of a written application signed
by Lessee for payment to Lessee for repairing or restoring the Units
which have been damaged so long as (1) Lessee shall have complied with
the applicable provisions of the Lease, and (2) Lessee shall have
certified that any damage to such Units shall have been fully repaired
or restored; or
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(ii) if this Lease is terminated with respect to such Unit
because of an Event of Loss and Lessee has paid the Stipulated Loss
Value due as a result thereof, such proceeds shall promptly paid over
to, or retained by, Lessee.
Section 12.3 Public Liability Insurance. (a) The public
liability insurance referred to in paragraph 12.1(b) shall (i) provide that
inasmuch as such policies cover more than one insured, all terms, conditions,
insuring agreements and endorsements, with the exception of limits of liability
and liability for premiums, commissions, assessments or calls (which shall be
solely a liability of Lessee), shall operate in the same manner as if there were
a separate policy or policies covering each insured, (ii) provide that, as a
result of Lessee's waiver of subrogation contained in Section 12.3(d), the
insurers shall have no rights of subrogation against Owner Participant, Lessor,
as lessor of the Equipment or to the Bank in its individual capacity, and the
Indenture Trustee, (iii) provide that neither Owner Participant, Lessor, as
lessor of the Equipment, the Bank in its individual capacity, or the Indenture
Trustee shall have any responsibility for any insurance premiums, whether for
coverage before or after cancellation or termination of any such policies as to
Lessee and (iv) be primary without contribution from any similar insurance
maintained by Owner Participant, Lessor, the Bank or the Indenture Trustee.
(b) Lessee shall use its reasonable best efforts to obtain
public liability insurance policies stipulating that coverage thereunder will
not be invalidated (as to Owner Participant, Lessor, as lessor of the Equipment,
the Bank in its individual capacity, and the Indenture Trustee) due to any
action or inaction of Lessee or any other Person (other than Owner Participant,
Lessor or the Indenture Trustee, but only in respect of their respective
coverages), but shall be under no obligation to obtain such policies containing
such stipulations if they are not available to Lessee at commercially reasonable
rates in the markets in which Lessee has then placed its insurance program.
(c) In the event any public liability insurance policy or
coverage thereunder which are required to be maintained under Section 12.1(b)
shall not be available to Lessee in the commercial insurance market on
commercially reasonable terms, Lessor shall not unreasonably withhold its
agreement to waive such requirement to the extent the maintenance thereof is not
so available upon application therefore as set forth herein. Lessee shall make
written request for any such waiver in writing, accompanied by written reports
prepared, at Lessee's option, either by (i) one independent insurance advisor
chosen by Lessee and Lessor or (ii) three independent insurance advisors, one
chosen by Lessor, one chosen by Lessee and one chosen by the other two advisors
(one of which may be the regular insurance broker or brokers of Lessee), in
either case, such independent insurance advisors being of recognized national
standing. The fees and expenses of all such advisors shall be paid by Lessee.
The written reports required hereunder shall (x) state that such insurance (or
the required coverage thereunder) is not reasonably available to Lessee at
commercially reasonable premiums in the commercial insurance markets within
which Lessee normally purchases its insurance from insurers, acceptable to
Lessee, with a Best's rating of A- or better for railcars of similar type
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and capacity and (y) explain in detail the basis for such conclusions. Upon the
granting of any such waiver, Lessee shall within 15 days thereafter certify to
Lessor in writing the cost (on a fleet-wide basis) of liability insurance
premiums for the coverage required by Section 12.1(b) for the immediately
preceding fiscal year; and in the event that any such certificate is not
received by Lessor within such 15 day period, any such waiver shall be deemed
revoked. At any time after the granting of such waiver, but not more often than
once a year, Lessor may make a written request for a supplemental report (in
form reasonably acceptable to Lessor) from such insurance advisor(s) updating
the prior report and reaffirming the conclusions set forth therein. Lessee shall
provide any such required supplemental report within 60 days after receipt of
the written request therefor. Any such waiver shall be effective for only as
long as such insurance is not reasonably available to Lessee in the commercial
markets in which Lessee normally purchases its insurance at commercially
reasonable rates, it being understood that the failure of Lessee to furnish
timely any such supplemental report shall be conclusive evidence that such
condition no longer exists. If such supplemental report shows that such coverage
is available, Lessee shall within 90 days of such report obtain such insurance
coverage. During any period with respect to which such waiver has been granted
and remains in effect under this Section 12.3(c), Lessee shall obtain public
liability insurance as set forth in Section 12.1(b) from such carriers, in such
amounts and with coverage limits and deductibles as is prudent under the
circumstances, but in any event in an amount that may be purchased for a premium
equal to 110% of Lessee's cost (on a fleet-wide basis) of public liability
insurance premiums for the coverage required by Section 12.1(b) for the fiscal
year immediately preceding the fiscal year in which such waiver first was
granted.
(d) Lessee hereby waives (on behalf of itself and its
insurers) all of Lessee's and Lessee's insurers' rights of subrogation against
the Owner Participant, Lessor, as lessor of the Equipment, and the Bank in its
individual capacity, and the Indenture Trustee with respect to all matters
relating to or arising out of the Units, the Operative Documents or the
transactions contemplated thereby.
Section 12.4 Certificate of Insurance. Lessee shall, prior to
the Initial Closing Date and the Subsequent Closing Date and when the renewal
certificate referred to below is sent (but in any event not less than annually),
furnish Lessor, the Indenture Trustee and the Owner Participant with a
certificate signed by the insurer or an independent insurance broker showing the
insurance then maintained by Lessee pursuant to Section 12.1 and, with respect
to any renewal policy or policies, furnish certificates or binders evidencing
such renewal as soon as practicable, but in no event later than 30 days after
the earlier of the date such renewal is effected or the expiration date of the
original policy or policies. Simultaneously, with the furnishing of such
certificate, Lessee will provide appropriate evidence, reasonably satisfactory
to Lessor and the Indenture Trustee, that all premiums due on such insurance
have been paid.
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Section 12.5 Additional Insurance. In the event that Lessee
shall fail to maintain insurance as provided in Section 12.1 or, if applicable,
Section 12.3, Lessor may at its option, upon prior written notice to Lessee,
provide such insurance and, in such event, Lessee shall, upon demand from time
to time reimburse Lessor for the cost thereof together with interest from the
date of payment thereof at the Late Rate, on the amount of the cost to Lessor of
such insurance which Lessee shall have failed to maintain. If after Lessor has
provided such insurance, Lessee then obtains the coverage provided for in
Section 12.1 which was replaced by the insurance provided by Lessor, and Lessee
provides Lessor with evidence of such coverage reasonably satisfactory to
Lessor, Lessor shall cancel the insurance it has provided pursuant to the first
sentence of this Section 12.5. In such event, Lessee shall reimburse Lessor for
all costs to Lessor of cancellation, including without limitation any short rate
penalty, together with interest from the date of Lessor's payment thereof at the
Late Rate. In addition, at any time Lessor (either directly or in the name of
Owner Participant) may at its own expense carry insurance with respect to its
interest in the Units, provided that such insurance does not interfere with
Lessee's ability to insure the Equipment as required by this Section 12 or
adversely affect Lessee's insurance or the cost thereof, it being understood
that all salvage rights to each Unit shall remain with Lessee's insurers at all
times. Any insurance payments received from policies maintained by Lessor
pursuant to the previous sentence shall be retained by Lessor without reducing
or otherwise affecting Lessee's obligations hereunder, other than with respect
to Unit(s) with respect to which such payments have been made.
Section 12.6 Pollution Coverage. The public liability
insurance policies that are maintained pursuant to Section 12.1 on the date
hereof include coverage for pollution incidents (other than as may occur on
property owned, leased, controlled or occupied by Lessee) of a sudden and
accidental nature, including, without limiting the generality of the foregoing,
collision and overturn of railcars arising out of the use or operation of the
Units; provided however, that such insurance shall cover third-party bodily
injury and property damage claims and shall not cover property owned, leased or
occupied by Lessee. The coverage under such insurance shall be maintained as
long as it remains available on commercially reasonable terms under such public
liability insurance policy as determined in a manner consistent with Section
12.3(c).
SECTION 13. REPORTS; INSPECTION.
Section 13.1 Duty of Lessee to Furnish. On or before May 31,
1998, and on or before each May 31 thereafter during the Basic Term and each
Renewal Term, Lessee will furnish to Lessor, Owner Participant and the Indenture
Trustee an accurate statement, as of the preceding December 31, (a) showing the
amount, description and reporting marks of the Units then leased hereunder, the
amount, description and reporting marks of all Units that may have suffered an
Event of Loss during the 12 months ended on such December 31 (or since the
Initial Closing Date, in the case of the first such statement), and such other
information regarding the condition or repair of the Equipment as Lessor may
reasonably request, (b) stating that, in the
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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 regulations of the FRA and the
Interchange Rules as they apply to the maintenance and operation of the
Equipment in interchange.
Section 13.2 Lessor's Inspection Rights. Lessor, Owner
Participant and the Indenture Trustee each shall have the right, but not the
obligation, at their respective sole cost, expense and risk (including, without
limitation, the risk of bodily injury or death), by their respective authorized
representatives, to inspect the Equipment and Lessee's maintenance records with
respect to the Equipment (consisting of maintenance logs and records, and
sublessee identity and location). All inspections shall be conducted during
Lessee's normal business hours and upon reasonable prior notice to Lessee.
Lessee shall not be liable for any injury to, or the death of, any Person
exercising, either on behalf of Lessor, any Owner Participant, the Indenture
Trustee or any prospective user, the rights of inspection granted under this
Section 13.2 unless caused by Lessee's gross negligence or wilful misconduct. No
inspection pursuant to this Section 13.2 shall interfere with the use, operation
or maintenance of the Equipment or the normal conduct of Lessee's business, and
Lessee shall not be required to undertake or incur any additional liabilities in
connection therewith. Upon request by Lessor, which request shall not be made
more than once in any calendar year (unless an Event of Default shall have
occurred and be continuing in which case at any reasonable time), Lessee, upon
three Business Days' prior notice from Lessor, will provide Lessor with
reasonable access at Lessee's office where such information is located to
information regarding the Person in possession of any or all Units as specified
in such request; provided that, prior to providing Lessor with access to such
information, Lessee and Lessor shall have executed a confidentiality agreement
in form and substance reasonably satisfactory to Lessee with respect to such
information.
SECTION 14. LEASE EVENTS OF DEFAULT.
The following events shall constitute Lease Events of Default
hereunder (whether any such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) and each such Lease Event of Default
shall be deemed to exist and continue so long as, but only as long as, it shall
not have been remedied:
(a) Lessee shall fail to make any payment of Basic Rent,
Supplemental Rent in respect of Make-Whole Amounts, Early Purchase Price, Basic
Term Purchase Price or any other purchase price to be paid by Lessee for any
Units pursuant to this Lease or the
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Participation Agreement, Stipulated Loss Value or Termination Value within 10
Business Days after the same shall have become due; or
(b) Lessee shall fail to make any payment of Supplemental
Rent, including indemnity or tax indemnity payments, but not including
Stipulated Loss Value, Early Purchase Price, Basic Term Purchase Price or any
other purchase price to be paid by Lessee for any Units pursuant to this Lease
or the Participation Agreement, Termination Value, Supplemental Rent in respect
of Make-Whole Amount, after the same shall have become due and such failure
shall continue unremedied for 10 Business Days after receipt by Lessee of demand
therefor from Lessor, the Owner Participant or the Indenture Trustee; or
(c) Lessee shall fail to maintain in effect the insurance
required by Section 12 and such failure shall not have been waived as provided
for therein; or
(d) Lessee shall make or permit any possession of the
Equipment or any portion thereof not permitted by this Lease; provided that such
unauthorized possession shall not constitute a Lease Event of Default for a
period of 45 days after the occurrence thereof, or Lessee shall make or permit
any unauthorized assignment or transfer of this Lease in violation of Section
18.2; or
(e) Lessee shall fail to observe or perform any of the
covenants or agreements to be observed or performed by Lessee in Section 6.8 of
the Participation Agreement, and such failure shall continue unremedied for 30
days; or
(f) any representation or warranty made by Lessee in any
Lessee Agreement (other than the Tax Indemnity Agreement) is untrue or incorrect
in any material respect as of the date of making thereof and such untruth or
incorrectness shall continue to be material and unremedied for a period of 30
days after receipt by Lessee of written notice thereof from Lessor or the
Indenture Trustee; provided that, if such untruth or incorrectness is capable of
being remedied, no such untruth or incorrectness shall constitute a Lease Event
of Default hereunder for a period of 60 days after receipt of such notice so
long as Lessee is diligently proceeding to remedy such untruth or incorrectness
and shall in fact remedy such untruth or incorrectness within such period;
provided that such untrue or incorrect representation or warranty shall be
deemed to be remedied only after all adverse consequences thereof, if any, have
been remedied; or
(g) Lessee shall (i) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or (ii) consent to any such relief or to the appointment of or
taking possession by any such official in any voluntary case or other proceeding
commenced against it, or (iii) admit in
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writing its inability to pay its debts generally as they come due, or (iv) make
a general assignment for the benefit of creditors, or (v) take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against Lessee seeking liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or
(i) Lessee shall fail to observe or perform any other of the
covenants or agreements to be observed or performed by Lessee under any Lessee
Agreement (other than the Tax Indemnity Agreement) and such failure shall
continue unremedied for 30 days after notice from Lessor, Owner Participant or
the Indenture Trustee to Lessee, specifying the failure and demanding the same
to be remedied; provided that, if such failure is capable of being remedied, and
the remedy requires an action other than, or in addition to, the payment of
money, no such failure (other than one relating to the payment of such money)
shall constitute a Lease Event of Default hereunder for a period of 90 days
after receipt of such notice so long as Lessee is diligently proceeding to
remedy such failure and shall in fact remedy such failure within such period; or
(j) Lessee shall have given notice of its intention to retain
any Units at the end of the Basic Term or any Renewal Term and, prior to the
last day of the Basic Term or such Renewal Term, as the case may be, Lessee
shall not have notified Lessor of its election to purchase or continue leasing
such Unit;
provided that, notwithstanding anything to the contrary contained in this Lease,
any failure of Lessee to perform or observe any covenant or agreement herein
shall not constitute a Lease Event of Default if such failure is caused solely
by reason of an event referred to in the definition of "Event of Loss" so long
as Lessee is continuing to comply with the applicable terms of Section 11.
SECTION 15. REMEDIES.
Section 15.1 Remedies. Upon the occurrence of any Lease Event
of Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare this Lease to be in default by a written
notice to Lessee (except that this Lease shall, without any action on the part
of Lessor, be automatically deemed to have been declared in default upon the
occurrence of a Lease Event of Default described in Section 14(g) or (h)); and
at any time thereafter, unless Lessee shall have remedied all outstanding Lease
Events of Default prior to the commencement of the exercise by Lessor of any of
its remedies hereunder, Lessor may do
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one or more of the following as Lessor in its sole discretion shall elect, to
the extent permitted by, and subject to compliance with any mandatory
requirements of, applicable law then in effect:
(a) proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by Lessee of the applicable covenants
of this Lease or to recover damages for the breach thereof;
(b) by notice in writing to Lessee, Lessor may demand that
Lessee, and Lessee shall, upon written demand of Lessor and at Lessee's expense,
forthwith return all or any part of the Equipment to Lessor or its order in the
manner and condition required by, and otherwise in accordance with all of the
provisions of Section 15.6; or Lessor with or without notice or judicial process
may by its agents enter upon the premises of Lessee or other premises where any
of the Equipment may be located and take possession of and remove all or any of
the Units, and Lessor may use and employ in connection with such removal any
services, aids, equipment, trackage and other facilities of Lessee as is
reasonably required to remove such Units and thenceforth hold, possess and enjoy
the same free from any right of Lessee, or its successor or assigns, to use such
Units for any purpose whatever, and in connection with the foregoing, Lessee
hereby agrees that it will, if requested by Lessor, give prompt notice of such
demand for return of the Equipment to the AAR and all railroads having
possession of any such Unit;
(c) sell any Unit at public or private sale by such
advertisement or publication, if any, as Lessor may determine, free and clear of
any rights of Lessee and without any duty to account to Lessee with respect to
such sale or for the proceeds thereof (except to the extent required by
paragraph (f) below if Lessor elects to exercise its rights under said
paragraph), in which event Lessee's obligation to pay Basic Rent with respect to
such Unit hereunder due for any periods subsequent to the date of such sale
shall terminate (except to the extent that Basic Rent is to be included in
computations under paragraph (e) or (f) below if Lessor elects to exercise its
rights under either of said paragraphs);
(d) hold, keep idle or lease to others any Unit as Lessor in
its sole discretion may determine, free and clear of any rights of Lessee and
without any duty to account to Lessee with respect to such action or inaction or
for any proceeds with respect thereto;
(e) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a), (b), (c)
or (d) above with respect to any Unit, Lessor, by written notice to Lessee
specifying a payment date (which date shall be a Determination Date for the
purposes of computing Stipulated Loss Value), which shall be not earlier than 30
days after the date of such notice, may demand that Lessee pay to Lessor, and
Lessee shall pay to Lessor, on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent for such Unit due after the payment date specified in such notice),
all Rent due and payable, or accrued, for such Unit as of the payment date
specified in such notice (exclusive of any in advance Basic Rent due on such
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date) plus whichever of the following amounts Lessor, in its sole discretion,
shall specify in such notice: (i) an amount with respect to each such Unit which
represents the excess of the present value, at the time of such payment date, of
all Basic Rent for such Unit which would otherwise have accrued hereunder from
such payment date for the remainder of the Basic Term or any Renewal Term then
in effect over the then present value of the then Fair Market Rental Value of
such Unit (taking into account its actual condition) for such period computed by
discounting from the end of such Term to such payment date rentals which Lessor
reasonably estimates to be obtainable for the use of such Unit during such
period, such present value to be computed in each case on a basis of a per annum
discount at the Debt Rate, compounded semiannually from the respective dates
upon which rentals would have been payable hereunder had this Lease not been
terminated; or (ii) an amount equal to the excess, if any, of the Stipulated
Loss Value for such Unit computed as of the payment date specified in such
notice over the Fair Market Sales Value of such Unit (taking into account its
actual condition) as of the payment date specified in such notice; or (iii) if
Lessor shall not have sold such Unit pursuant to the exercise of its rights
under paragraph (c) above with respect to such Unit, an amount equal to the
higher of Stipulated Loss Value for such Unit computed as of the payment date
specified in such notice or the Fair Market Sales Value of such Unit (assuming
it is in the condition required by this Lease) as of the payment date specified
in such notice, and upon payment by Lessee pursuant to this clause (iii) of such
Stipulated Loss Value or Fair Market Sales Value, as the case may be, and of all
other amounts payable by Lessee under this Lease and under the other Operative
Agreements in respect of such Unit, Lessor shall transfer without recourse or
warranty all right, title and interest of Lessor in and to such Unit to Lessee
or as it may direct, Lessor shall execute and deliver such documents evidencing
such transfer as Lessee shall reasonably request, the obligation of Lessee to
pay Basic Rent hereunder for such Units shall cease and the Lease Term for such
Units shall end;
(f) if Lessor shall have sold any Unit pursuant to paragraph
(c) above, Lessor, in lieu of exercising its rights under paragraph (e) above
with respect to such Unit may, if it shall so elect, demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent for such Unit due
subsequent to the Rent Payment Date next preceding such sale), any accrued and
unpaid Rent for such Unit as of the date of such sale (Basic Rent for this
purpose accruing at a per diem rate equal to the semiannual amount due on the
next following Rent Payment Date divided by 180) and, if that date is a Rent
Payment Date, the Basic Rent due on that date (exclusive of any in advance Basic
Rent due on such date), plus the amount, if any, by which the Stipulated Loss
Value of such Unit computed as of the Rent Payment Date next preceding the date
of such sale or, if such sale occurs on a Rent Payment Date, then computed as of
such Rent Payment Date, exceeds the net proceeds of such sale, plus interest on
such amounts from the date of such sale to the date of payment at the Late Rate;
and
(g) Lessor may terminate the leasing of any or all Units under
this Lease or may exercise any other right or remedy that may be available to it
under applicable law.
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In addition, Lessee shall be liable, except as otherwise
provided above, for any and all unpaid Rent due hereunder before or during the
exercise of any of the foregoing remedies (exclusive of any in advance Basic
Rent due on such date), and for legal fees and other costs and expenses incurred
by reason of the occurrence of any Lease Event of Default or the exercise of
Lessor's remedies with respect thereto, including without limitation the
repayment in full of any costs and expenses necessary to be expended in
repairing any Unit in order to cause it to be in compliance with all maintenance
and regulatory standards imposed by this Lease.
Section 15.2 Cumulative Remedies. The remedies in this Lease
provided in favor of Lessor shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other remedies in its favor existing
at law or in equity. Lessee hereby waives any mandatory requirements of law, now
or hereafter in effect, which might limit or modify any of the remedies herein
provided, to the extent that such waiver is permitted by law. Lessee hereby
waives any and all existing or future claims of any right to assert any offset
or counterclaim against the Rent payments due hereunder, and agrees to make the
rent payments regardless of any offset or counterclaim or claim which may be
asserted by Lessee on its behalf in connection with the lease of the Equipment.
To the extent permitted by applicable law, Lessee hereby waives any rights now
or hereafter conferred by statute or otherwise that may require Lessor to sell,
lease or otherwise use the Equipment in mitigation of Lessor's damages as set
forth in Section 15.1 or that may otherwise limit or modify any of Lessor's
rights and remedies provided in this Section 15.
Section 15.3 No Waiver. No delay or omission to exercise any
right, power or remedy accruing to Lessor upon any breach or default by Lessee
under this Lease shall impair any such right, power or remedy of Lessor, nor
shall any such delay or omission be construed as a waiver of any breach or
default, or of any similar breach or default hereafter occurring; nor shall any
waiver of a single breach or default be deemed a waiver of any subsequent breach
or default.
Section 15.4 Notice of Lease Default. Lessee agrees to furnish
to Lessor, Owner Participant and the Indenture Trustee, promptly upon any
officer acquiring actual knowledge of any condition which constituted or
constitutes a Lease Default under this Lease, written notice specifying such
condition and the nature and status thereof.
Section 15.5 Lessee's Duty to Furnish Information with Respect
to Subleases. Upon the occurrence of a Lease Event of Default, Lessor may
request that Lessee deliver to Lessor, and upon such request Lessee agrees that
it will promptly provide to Lessor, a detailed list of all Units that are then
being subleased by Lessee, the identity of the sublessees with respect to such
Units, the identity of an employee or other agent of each such sublessee with
whom Lessee regularly communicates regarding such Units and the most recent
known location of such Units.
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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 designate or, in the absence of such designation, as Lessee may
select;
(b) permit Lessor to store such Equipment on such tracks
without charge for insurance, rent or storage until such Equipment has been
sold, leased or otherwise disposed of by Lessor and during such period of
storage Lessee shall continue to maintain all insurance required by Section 12.1
hereof; and
(c) transport the Equipment to any place on any lines of
railroad or to any connection carrier for shipment within the continental United
States (excluding Alaska), all as Lessor may direct in writing.
All Equipment returned shall be in the condition required by Section 6.2 hereof.
All amounts earned in respect of the Equipment after the date
of termination of this Lease pursuant to this Section 15, but not exceeding
amounts actually received therefor, shall be paid to Lessor or, so long as the
Indenture shall not have been discharged pursuant to its terms, the Indenture
Trustee, and, if received by Lessee, shall be promptly turned over to Lessor or
the Indenture Trustee as aforesaid. In the event any Unit is not assembled,
delivered and stored as hereinabove provided within 15 days after the
termination of the leasing of such Unit pursuant to Section 15, Lessee shall, in
addition, pay to Lessor or the Indenture Trustee as aforesaid as liquidated
damages and not as a penalty, for each day thereafter an amount equal to the
amount, if any, by which the higher of (i) an amount equal to 110% of the daily
equivalent of the Basic Rent in effect immediately prior to the expiration of
the Lease for such Unit and (ii) 125% of the Fair Market Rental Value for such
Unit for each such day exceeds the amount, if any, received by Lessor or the
Indenture Trustee as aforesaid (either directly or from Lessee) for such day for
such Unit pursuant to the preceding sentence.
Section 15.7 Specific Performance; Lessor Appointed Lessee's
Agent. The assembling, delivery, storage and transporting of the Equipment as
provided in Section 15.6 are of the essence of this Lease and, upon application
to any court of equity having jurisdiction in the premises, Lessor shall be
entitled to a decree against Lessee requiring specific performance
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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 49 U.S.C. Section 11301, and (ii) deposited in the office of the Registrar
General of Canada pursuant to Section 105 of the Canadian Transportation Act
(and all necessary actions shall have been taken for publication of such deposit
in The Canada Gazette in accordance with said Section 105), and (b) cause notice
of the security interests created in this Lease, the Lease Supplements dated the
Initial Closing Date or the Subsequent Closing Date, as the case may be, the
Indenture and the Indenture Supplements dated the Initial Closing Date or the
Subsequent Closing Date, as the case may be, to be filed in the appropriate
offices in the Canadian provinces of Ontario, Manitoba, Saskatchewan, Alberta,
British Columbia, Quebec, Nova Scotia and New Brunswick, and (c) furnish Lessor,
the Indenture Trustee and Owner Participant proof thereof.
Section 16.2 Further Assurances. Lessee will duly execute and
deliver to Lessor such further documents and assurances and take such further
action as Lessor may from time to time reasonably request or as may be required
by applicable law or regulation in order to effectively carry out the intent and
purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor, the Bank, Owner
Participant and the Indenture Trustee hereunder, including, without limitation,
the execution and delivery of supplements or amendments hereto, in recordable
form, subjecting to this Lease any Replacement Unit and the recording or filing
of counterparts hereof or thereof in accordance with the laws of such
jurisdiction as Lessor may from time to time deem advisable; provided, however
that Lessee shall not be required to make any recording or filing in any
province in Canada (or any political subdivision thereof) or in Mexico (or any
political subdivision thereof) in respect of a Replacement Unit if (a) Lessee in
good faith (as evidenced by an Officer's Certificate to such effect) deems such
action unduly burdensome and (b) after giving effect to the failure to take such
action, Lessee has taken all action required by law so as to perfect and protect
the right, title and interests of Owner Trustee and Owner Participant in the
Trust Estate
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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 territory of the
Northwest Territories, establishes a state or provincial system for filing and
perfecting the security and/or ownership interests of entities such as Lessor
and/or the Indenture Trustee, Lessee shall cause any of the Operative Agreements
required to be recorded under such system to be so recorded and shall cause all
other filings and recordings and all such other action required under such
system to be effected and taken, in order to perfect and protect the respective
right, title and interests of Lessor, the Bank, Owner Participant and the
Indenture Trustee. Notwithstanding anything contained herein to the contrary,
Lessee's obligations in this Section 16.3 shall be subject in all respects to
the provisions of Section 16.2.
Section 16.4 Expenses. Except as provided in Section 2.5(a) of
the Participation Agreement, Lessee will pay all costs, charges and expenses
(including reasonable attorneys fees) incident to any such filing, refiling,
recording and rerecording or depositing and re-depositing of any such
instruments or incident to the taking of such action.
SECTION 17. LESSOR'S RIGHT TO PERFORM.
If Lessee fails to make any payment required to be made by it
hereunder or fails to perform or comply with any of its other agreements
contained herein, Lessor may itself make such payment or perform or comply with
such agreement, after giving not less than five Business Days' prior notice
thereof to Lessee (except in the event that an Indenture Default resulting from
a Lease Default or a Lease Event of Default shall have occurred and be
continuing, in which event Lessor may effect such payment, performance or
compliance to the extent necessary to cure such Indenture Default with notice
given concurrently with such payment, performance or compliance), but shall not
be obligated hereunder to do so, and the amount of such payment and of the
reasonable expenses of Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may be, together
with interest thereon at the Late Rate from such date of payment, to the extent
permitted by applicable law, shall be deemed to be Supplemental Rent, payable by
Lessee to Lessor on demand.
SECTION 18. ASSIGNMENT.
Section 18.1 Assignment by Lessor. Lessee and Lessor hereby
confirm that concurrently with the execution and delivery of this Lease, Lessor
has executed and delivered to the Indenture Trustee the Indenture, which assigns
as collateral security and grants a security interest in favor of the Indenture
Trustee in, to and under this Lease and certain of the Rent payable hereunder
(excluding Excepted Property), all as more explicitly set forth in the
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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, the Bank, Owner Participant and the Indenture
Trustee under which such Affiliate assumes the obligations of Lessee hereunder,
and (b) Lessee irrevocably and unconditionally guarantees, pursuant to an
agreement in form and substance reasonably satisfactory to Lessor, the Bank,
Owner Participant and the Indenture Trustee, such assignee's performance of all
of such obligations as primary obligor and not as a surety.
Section 18.3 Sublessee's Performance and Rights. Any
obligation imposed on Lessee in this Lease shall require only that Lessee
perform or cause to be performed such obligation, even if stated herein as a
direct obligation, and the performance of any such obligation in accordance with
the terms and provisions of this Lease by any permitted assignee, sublessee or
transferee under an assignment, sublease or transfer agreement then in effect
and permitted by the terms of this Lease shall constitute performance by Lessee
and discharge such obligation by Lessee. Except as otherwise expressly provided
herein, any right granted to Lessee in this Lease shall grant Lessee the right
to (a) exercise such right or permit such right to be exercised by any such
assignee or transferee, or (b) in Lessee's capacity as sublessor pursuant to any
sublease permitted pursuant to Section 8.3 hereof, permit any sublessee to
exercise substantially equivalent rights under any such sublease as are granted
to Lessee under this Lease; provided, however, that Lessee's right to terminate
this Lease pursuant to Sections 10 and 11, Lessee's right of replacement set
forth in Sections 8.3 and 8.4 and Lessee's purchase and renewal options set
forth in Section 22 of the Lease and Section 6.9 of the Participation Agreement
may be exercised only by Lessee itself or by any assignee or transferee of, or
successor to, Lessee in a transaction permitted by Section 6.8 of the
Participation Agreement; provided, further, that nothing in this Section 18.3
shall or shall be deemed to (i) create any privity of contract between any such
sublessee, on the one hand, and any of Lessor, the Bank, Owner Participant or
any subsequent transferee or Affiliate of any such Person, on the other hand,
(ii) create any duty or other liability of any nature whatsoever on the part of
any of Lessor, the Bank, Owner Participant or any subsequent transferee or
Affiliate of any such Person, to any such sublessee or any Affiliate thereof, or
(iii) modify or waive any term or provision of Section 8.3 hereof, which Section
8.3 shall control if any conflict arises between any of the provisions thereof
and this Section 18.3. The inclusion of specific references to
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obligations or rights of any such assignee, sublessee or transferee in certain
provisions of this Lease shall not in any way prevent or diminish the
application of the provisions of the two sentences immediately preceding with
respect to obligations or rights in respect of which specific reference to any
such assignee, sublessee or transferee has not been made in this Lease.
SECTION 19. NET LEASE, ETC.
This Lease is a net lease and Lessee's obligation to pay all
Rent payable hereunder shall, subject to Section 3.5, be absolute, unconditional
and irrevocable and shall not be affected by any circumstance of any character
including, without limitation, (a) any set-off, abatement, counterclaim,
suspension, recoupment, reduction, rescission, defense or other right that
Lessee may have (other than pursuant to Section 3.5 hereof) against Lessor, the
Bank, Owner Participant, the Indenture Trustee or any holder of an Equipment
Note or Pass Through Certificate, any vendor or manufacturer of any Unit, or any
other Person for any reason whatsoever, (b) any defect in or failure of title,
merchantability, condition, design, compliance with specifications, operation or
fitness for use of all or any part of any Unit, (c) any damage to, or removal,
abandonment, requisition, taking, condemnation, loss, theft or destruction of
all or any part of any Unit or any interference, interruption, restriction,
curtailment or cessation in the use or possession of any Unit by Lessee or any
other Person for any reason whatsoever or of whatever duration, (d) any
insolvency, bankruptcy, reorganization or similar proceeding by or against
Lessee, Lessor, the Bank, Owner Participant, the Indenture Trustee, any holder
of an Equipment Note or Pass Through Certificate or any other Person, (e) the
invalidity, illegality or unenforceability of this Lease, any other Operative
Agreement, or any other instrument referred to herein or therein or any other
infirmity herein or therein or any lack of right, power or authority of Lessee,
Lessor, the Bank, Owner Participant, the Indenture Trustee, any holder of an
Equipment Note or Pass Through Certificate or any other Person to enter into
this Lease or any other Operative Agreement or to perform the obligations
hereunder or thereunder or consummate the transactions contemplated hereby or
thereby or any doctrine of force majeure, impossibility, frustration or failure
of consideration, (f) the breach or failure of any warranty or representation
made in this Lease or any other Operative Agreement by Lessee, Lessor, the Bank,
Owner Participant, the Indenture Trustee, any holder of an Equipment Note or
Pass Through Certificate or any other Person, (g) the requisitioning, seizure or
other taking of title to or use of such Unit by any government or governmental
authority or otherwise, whether or not by reason of any act or omission of
Lessor, Lessee or the Indenture Trustee, or any other deprivation or limitation
of use of such Unit in any respect or for any length of time, whether or not
resulting from accident and whether or not without fault on the part of Lessee,
or (h) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, any present or future law to the contrary notwithstanding
to the extent permitted by applicable law. To the extent permitted by applicable
law, Lessee hereby waives any and all rights which it may now have or which at
any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Lease with respect to any Unit, except
in accordance with the express terms hereof. If for any reason whatsoever this
Lease shall be terminated in
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whole or in part by operation of law or otherwise, except as specifically
provided herein, Lessee nonetheless agrees, subject to Section 3.5, to the
maximum extent permitted by law, to pay to Lessor or to the Indenture Trustee,
as the case may be, an amount equal to each installment of Basic Rent and all
Supplemental Rent due and owing, at the time such payment would have become due
and payable in accordance with the terms hereof had this Lease not been
terminated in whole or in part. Each payment of Rent made by Lessee hereunder
shall be final and Lessee shall not seek or have any right to recover all or any
part of such payment from Lessor or any Person for any reason whatsoever.
Nothing contained herein shall be construed to waive any claim which Lessee
might have under any of the Operative Agreements or otherwise or to limit the
right of Lessee to make any claim it might have against Lessor or any other
Person or to pursue such claim in such manner as Lessee shall deem appropriate,
except in the manners precluded by this Section 19.
SECTION 20. NOTICES.
Unless otherwise expressly specified or permitted by the terms
hereof, all communications and notices provided for herein shall be in writing
or by facsimile capable of creating a written record, and any such notice shall
become effective (a) upon personal delivery thereof, including, without
limitation, by overnight mail or courier service, (b) in the case of notice by
United States mail, certified or registered, postage prepaid, return receipt
requested, upon receipt thereof, or (c) in the case of notice by such facsimile,
upon confirmation of receipt thereof, provided such transmission is promptly
further confirmed in writing by either of the methods set forth in clause (a) or
(b), in each case addressed to the following Person at its respective address
set forth below or at such other address as such Person may from time to time
designate by written notice to the other Persons listed below:
If to Lessor: Wilmington Trust Company
Rodney Square North
1100 N. Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Fax No.: (302) 651-8915
Confirmation No.: (302) 651-1000
With copies to Owner Participant.
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If to Owner Participant: FNBC Leasing Corporation
One First National Plaza
Mail Suite 0502
Chicago, Illinois 60670-0502
Attention: Contract Administration
Fax No.: (312) 732-2231
Confirmation No.: (312) 732-8100
Reference: UTC Trust No. 1998-A
If to the Indenture Trustee: Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Indenture Trust Administration
Fax No.: (312) 461-3525
Confirmation No.: (312) 461-2908
If to Lessee: Union Tank Car Company
225 West Washington Street, 19th Floor
Chicago, Illinois 60606
Attention: General Counsel and Secretary
(UTC Trust No. 1998-A) (L-15)
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.
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SECTION 22. PURCHASE OPTIONS; RENEWAL OPTIONS.
Section 22.1 Early Purchase Option. (a) Provided that no Lease
Event of Default shall have occurred and be continuing either at the time of the
notice described below or on the Early Purchase Date (unless Lessor shall have
waived such Lease Event of Default solely for the purpose of this Section 22.1)
and Lessee shall have duly given the notice required by the next succeeding
sentence, Lessee shall have the right and, upon the giving of such notice, the
obligation to purchase any or all of the Units then leased hereunder (as
specified in such notice) on the Early Purchase Date; provided that if Lessee
elects to purchase some but less than all of the Units in any Equipment Group
the determination as to which Units are to be purchased shall be made on a
random or other reasonable basis (including, without limitation, on the basis of
Car Type) without discrimination based on maintenance status or operating
condition of the Units in question and such notice shall describe the manner in
which Lessee proposes to determine the Units in such Equipment Group which will
be purchased. Lessee shall give Lessor, the Indenture Trustee and the Pass
Through Trustee written notice not less than 90 days and not more than 360 days
prior to the Early Purchase Date of its election to exercise the purchase option
provided for in this Section 22.1, which notice shall be irrevocable.
(b) If Lessee elects to exercise the purchase option provided
for in this Section 22.1 with respect to any Units, Lessee shall, as the
purchase price therefor, in the sole discretion of the Lessee, either (i) pay
the Early Purchase Price of such Units, together with all other amounts due and
owing by Lessee under the Operative Agreements with respect to such Units,
including, without limitation, all unpaid Basic Rent therefor due and payable on
or prior to the Early Purchase Date (exclusive of any in advance Basic Rent due
on such date) payable at the place of payment specified in Section 3.6 hereof in
immediately available funds, or (ii) pay the difference between the Early
Purchase Price of such Units and the outstanding principal amount of the
Equipment Notes relating to the purchased Units as of the Early Purchase Date
(determined in accordance with Section 2.10(d) of the Indenture), together with
all other amounts due and owing by Lessee under the Operative Agreements, and
assume on a full recourse basis pursuant to Section 4.01 of the Indenture, and
agree to indemnify Lessor against, all of Lessor's obligations in respect of the
related Equipment Notes; provided, that following such assumption, the purchased
Units shall remain subject to the lien of the Indenture. Lessee will make the
payments required by foregoing clause (i) or make the payments required by
foregoing clause (ii) and assume the Equipment Notes as provided in foregoing
clause (ii) on the Early Purchase Date in the manner specified in Section 3.6
hereof against delivery of a 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
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<PAGE> 50
purchased Units (but only if no other indebtedness secured by such Units is then
outstanding), (2) a letter of credit in favor of Lessor in a form, and issued by
a financial institution, reasonably acceptable to Lessor, or (3) such other
collateral as may be mutually acceptable to Lessee and Lessor; and provided,
further, that unless Lessee shall have elected to assume all of the rights and
obligations of Lessor in respect of the related Equipment Notes, the portion of
the Early Purchase Price payable by Lessee on the Early Purchase Date, together
with other amounts of Supplemental Rent paid by Lessee on such date will be
under any circumstances and in any event, at least sufficient to pay in full, as
of the date of payment thereof, the aggregate unpaid principal of and all unpaid
interest on the Equipment Notes issued in respect of such Units and all other
amounts owed by Lessee under the Operative Agreements with respect to such
Units. Lessor shall not be required to make any other representation or warranty
as to the condition of such Units or any other matters, and may specifically
disclaim any such representations or warranties. In the event of any such
purchase and receipt by Lessor and the Indenture Trustee of all of the amounts
provided in this Section 22.1, the obligation of Lessee to pay Basic Rent
hereunder for such Units shall cease and the Lease Term for such Units shall
end.
Section 22.2 Election to Retain or Return Equipment at End of
Basic or Renewal Term. Not less than 180 days and not more than 360 days prior
to the end of the Basic Term, the end of any Fixed Rate Renewal Term or the end
of any Fair Market Renewal Term (as the latter two terms are defined in Section
22.4), Lessee shall give Lessor irrevocable written notice of its decision to
return or retain any or all of the Units at the end of the Basic Term or such
Renewal Term; provided that if Lessee elects to retain less than all of the
Units in an Equipment Group, the determination as to which Units are to be
retained shall be made on a random or other reasonable basis (including, without
limitation, on the basis of Car Type) without discrimination based on
maintenance status or operating condition of the Units in question, and Lessee
shall describe in such notice such manner in which it proposes to determine the
Units in such Equipment Group which will be retained. If Lessee elects to retain
some or all of the Units, Lessee shall comply with Section 22.3 and/or 22.4
hereof, as it may elect in accordance with the provisions thereof including the
notice requirements stated therein. If Lessee fails to give the 180 days' notice
required by this Section 22.2, Lessee shall be deemed to have irrevocably
elected to return the Units at the end of the Basic Term or the applicable
Renewal Term, as the case may be, in accordance with Section 6.
Section 22.3 Purchase Options. Provided that no Lease Event of
Default shall have occurred and be continuing either at the time of notice or
the expiration of the Lease Term (unless Lessor shall have waived such Lease
Event of Default solely for the purpose of this Section 22.3) and Lessee shall
have duly given the notice required by Section 22.2 and by the next succeeding
sentence of this Section 22.3, Lessee shall have the right and, upon the giving
of such notice under this Section 22.3, the obligation to purchase any or all of
the Units (as specified in such notice) (a) at the expiration of the Basic Term
at a price equal to the Basic Term Purchase Price of such Units plus all other
amounts due and owing by Lessee under the Operative Agreements; (b) on March 30,
2021 (the "Outside Date") at a price equal to the
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<PAGE> 51
Outside Date Purchase Price of such Units plus all other amounts due and owing
by Lessee under the Operative Agreements; provided that with respect to such
Units Lessee shall have renewed this Lease through the Outside Date on one or
more occasions pursuant to Section 22.4(a) or (b); or (c) at the expiration of
the Basic Term or any Renewal Term at a price equal to the Fair Market Sales
Value of such Units plus all other amounts due and owing by Lessee under the
Operative Agreements; and provided further that if Lessee elects to purchase
some but less than all of the Units in any Equipment Group, the determination as
to which Units are to be purchased shall be made on a random or other reasonable
basis (including, without limitation, on the basis of Car Type) without
discrimination based on maintenance status or operating condition of the Units
in question, and Lessee shall describe in such notice the manner in which it
proposes to determine the Units in such Equipment Group which will be purchased.
Lessee shall give Lessor written notice not less than 120 days and not more than
360 days prior to the end of the Basic Term, the Outside Date, the Fixed Rate
Renewal Term or the Fair Market Renewal Term, as the case may be, of its
election to exercise the purchase option provided for in this Section 22.3,
which notice shall be irrevocable. Payment of the purchase price, together with
all other amounts due and owing by Lessee under the Operative Agreements, shall
be made at the place of payment specified in Section 3.6 hereof in immediately
available funds against delivery of a 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 have the right
and, upon the giving of a notice under this Section 22.4 as below provided, the
obligation to lease pursuant to this Lease any or all of the Units at the
expiration of the Basic Term or any applicable Renewal Term which Lessee has not
elected to purchase pursuant to Section 22.3, which obligation may be fulfilled
by Lessee electing to renew this Lease under either of the following Section
22.4(a) or (b):
(a) Fixed Rate. Lessee may give Lessor written notice not less
than 120 days and not more than 360 days prior to the end of the Basic Term (or,
in the circumstances described in the third sentence of this Section 22.4(a),
the then Fixed Rate Renewal Term) that Lessee elects to renew this Lease under
this Section 22.4(a) with respect to any or all of the Units then leased
hereunder, which notice shall be irrevocable. The foregoing notice from Lessee
shall specify the term (the "Fixed Rate Renewal Term") that Lessee selects for
its initial renewal under this Section 22.4(a), which shall be for one or more
years as Lessee shall select; provided that such Fixed Rate Renewal Term in no
event shall extend beyond the Outside Date. If Lessee selects a Fixed Rate
Renewal Term such that the period following such term until the
46
<PAGE> 52
Outside Date is at least one year, then Lessee may elect one or more further
renewals of one or more years pursuant to this Section 22.4(a) so long as no
such term extends beyond the Outside Date. The Basic Rent for each Unit during
any Fixed Rate Renewal Term shall be 57% of the average of the semiannual Basic
Rent installments payable hereunder for such Unit during the Basic Term, payable
semiannually in arrears. Each Fixed Rate Renewal Term shall commence immediately
upon the expiration of the Basic Term or the preceding Fixed Rate Renewal Term,
as the case may be.
(b) Fair Market. Lessee may give Lessor written notice not
less than 120 days and not more than 360 days prior to the end of the Basic
Term, a Fixed Rate Renewal Term or a Fair Market Renewal Term (subject to the
limitations otherwise provided in this Section 22.4(b)), regardless of whether
Lessee is then entitled to renew this Lease for a Fixed Rate Renewal Term, that
Lessee elects to renew this Lease under this Section 22.4(b) with respect to any
or all of the Units then leased hereunder for a term of one or more years as
Lessee shall specify in such notice (the "Fair Market Renewal Term"), which
notice shall be irrevocable; provided that the aggregate of all Fixed Rate
Renewal Terms and Fair Market Renewal Terms shall not extend beyond the Outside
Date. The Basic Rent for the Units leased during the Fair Market Renewal Term
shall be the Fair Market Rental Value thereof, payable semiannually in arrears.
The Fair Market Renewal Term shall commence immediately upon the expiration of
the Base Term or the preceding Fixed Rate Renewal Term or Fair Market Renewal
Term, as the case may be.
(c) Exercise of Renewal Option for less than all Units. If
Lessee elects to renew this Lease under Section 22.4(a) or (b) with respect to
less than all of the Units in any Equipment Group, the determination as to which
Units are to be leased shall be made on a random or other reasonable basis
(including, without limitation, on the basis of Car Type) without discrimination
based on maintenance status or operating condition of the Units in question, and
Lessee shall describe in such notice the manner in which it proposes to
determine the Units in such Equipment Group which are to be leased.
Section 22.5 Appraisal. Promptly following Lessee's written
notice pursuant to Section 22.2 of its election to retain any Units at the end
of the Basic Term or a Renewal Term, as the case may be, Lessor and Lessee shall
determine the useful life (based on the actual condition of a reasonable
sampling of such Units), Fair Market Sales Value and Fair Market Rental Value of
the Units to be retained, in each case assuming the Units are in the condition
required by this Lease.
Section 22.6 Stipulated Loss Value and Termination Value
During Renewal Term. All of the provisions of this Lease, other than Section 10,
shall be applicable during any renewal term for such Units, except as specified
in the next sentence. During any Renewal Term, the Stipulated Loss Value and
Termination Value of any Unit shall be determined on the basis of the Fair
Market Sales Value of such Unit as of the first day of such Renewal Term,
reduced in
47
<PAGE> 53
equal monthly increments to the Fair Market Sales Value of such Unit as of the
last day of such Renewal Term; provided that in no event during any Fixed Rate
Renewal Term shall the Stipulated Loss Value and Termination Value of any Unit
be less than 20% of the Equipment Cost of such Unit.
SECTION 23. LIMITATION OF BANK'S LIABILITY.
It is expressly agreed and understood that all
representations, warranties and undertakings of Lessor hereunder shall be
binding upon Lessor, it being understood that Lessor's liability shall be
limited to the trust estate held by the Owner Trustee under the Trust Agreement
and in no case shall Wilmington Trust Company in its individual capacity be
personally liable for or on account of any statements, representations,
warranties, covenants or obligations stated to be those of Lessor hereunder,
except that the Bank (or any successor Owner Trustee) shall not be hereby
released as to any personal liability it may have for its gross negligence or
wilful misconduct and for its breach of its covenants, representations and
warranties, to the extent expressly agreed to, covenanted or made in its
individual capacity in the Participation Agreement or the Trust Agreement. If a
successor Owner Trustee is appointed in accordance with the terms of the Trust
Agreement, such successor shall, without any further act, succeed to all the
rights, duties, immunities and obligations of the Owner Trustee hereunder and
the predecessor Owner Trustee shall thereupon be deemed to be released from all
further duties and obligations hereunder arising after such successor's
appointment.
SECTION 24. INVESTMENT OF SECURITY FUNDS.
Any moneys received by Lessor or the Indenture Trustee
pursuant to Section 12.2 which are required to be paid to Lessee after
completion of repairs to be made pursuant to Section 12.2 or pursuant to Section
11.2, as the case may be, until paid to Lessee as provided in Section 11.4(a),
11.5 or 12.2 or the curing of Lease Default or a Lease Event of Default or
otherwise applied as provided herein or in the Trust Agreement and Indenture,
shall be invested at the risk and expense of Lessee in Specified Investments by
Lessor (unless the Indenture shall not have been discharged, in which case, by
the Indenture Trustee as provided in Section 6.04(b) of the Indenture) from time
to time as directed by telephone (and confirmed promptly thereafter in writing)
by Lessee if such investments are reasonably available for purchase. There shall
be promptly remitted to Lessee, so long as no Lease Default relating to Section
14(a), (b), (g) or (h) or Lease Event of Default shall have occurred and be
continuing, any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) and Lessee will promptly pay to
Lessor or the Indenture Trustee, as the case may be, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other expenses, if any, incurred in connection with such
investment), such amount to be disposed of in accordance with the terms of the
Trust Agreement and the Indenture. If a Lease Event of
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<PAGE> 54
Default shall have occurred and be continuing, any moneys held pursuant to this
Section 24, and any gain from the investment thereof, may be applied to Lessee's
obligations hereunder.
SECTION 25. MISCELLANEOUS.
Section 25.1 Governing Law; Severability. This Lease, and any
extensions, amendments, modifications, renewals or supplements hereto shall be
governed by and construed in accordance with the internal laws and decisions of
the State of Illinois; provided, however, that the parties shall be entitled to
all rights conferred by any applicable Federal statute, rule or regulation.
Whenever possible, each provision of this Lease shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Lease shall be prohibited by or invalid under the laws of any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Lease in any other
jurisdiction.
Section 25.2 Execution in Counterparts. This Lease may be
executed in any number of counterparts, each executed counterpart constituting
an original and in each case such counterparts shall constitute but one and the
same instrument; provided, however, that to the extent that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code) no security interest in this Lease may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page hereof,
which counterpart shall constitute the only "original" hereof for purposes of
the Uniform Commercial Code.
Section 25.3 Headings and Table of Contents; Section
References. The headings of the sections of this Lease and the Table of Contents
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof. All
references herein to numbered sections, unless otherwise indicated, are to
sections of this Lease.
Section 25.4 Successors and Assigns. This Lease shall be
binding upon and shall inure to the benefit of, and shall be enforceable by, the
parties hereto and their respective permitted successors and assigns.
Section 25.5 True Lease. It is the intent of the parties to
this Lease that it will be a true lease and not a "conditional sale," and that
Lessor shall at all times be considered to be the owner of each Unit which is
the subject of this Lease for the purposes of all Federal, state, city and local
income taxes, and that this Lease conveys to Lessee no right, title or interest
in any Unit except as lessee. Nothing contained in this Section 25.5 shall be
construed to limit Lessee's use or operation of any Unit or constitute a
representation, warranty or covenant by Lessee as to tax consequences.
49
<PAGE> 55
Section 25.6 Amendments and Waivers. No term, covenant,
agreement or condition of this Lease may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
each party hereto and except as may be permitted by the terms of the Indenture.
Section 25.7 Survival. All warranties, representations,
indemnities and covenants made by either party hereto, herein or in any
certificate or other instrument delivered by such party or on the behalf of any
such party under this Lease, shall be considered to have been relied upon by the
other party hereto and shall survive the consummation of the transactions
contemplated hereby on the Initial Closing Date and the Subsequent Closing Date
regardless of any investigation made by either such party or on behalf of either
such party, and to the extent having accrued and not been paid or relating to or
otherwise arising in connection with the transactions contemplated by the
Operative Agreements during the Lease Term, shall survive the expiration or
other termination of this Lease or any other Operative Agreement.
Section 25.8 Business Days. If any payment is to be made
hereunder or any action is to be taken hereunder on any date that is not a
Business Day, such payment or action otherwise required to be made or taken on
such date shall be made or taken on the immediately succeeding Business Day with
the same force and effect as if made or taken on such scheduled date and as to
any payment (provided any such payment is made on such succeeding Business Day)
no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.
Section 25.9 Directly or Indirectly. Where any provision in
this Lease refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.
Section 25.10 Incorporation by Reference. The payment
obligations set forth in Sections 7.1 and 7.2 of the Participation Agreement are
hereby incorporated by reference.
Section 25.11 Lessee's Right of Quiet Enjoyment. So long as no
Lease Event of Default has occurred and is continuing, Lessor shall not take, or
cause to be taken, any action contrary to Lessee's rights under this Lease,
including, without limitation, the right to possession and use by Lessee or any
permitted sublessee of the Equipment.
Section 25.12 Entire Agreement. This Lease, together with the
schedules, exhibits and documents delivered hereunder, and the other Operative
Agreements contain the entire agreement between the parties with respect to the
subject matter covered herein and therein, and supersede all prior agreements
(oral or written), negotiations and discussions between the parties relating
thereto.
50
<PAGE> 56
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
to be duly executed and delivered on the day and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee
under the Trust Agreement
By: /s/ Patricia A. Evans
--------------------------------
Name: Patricia A. Evans
Title: Financial Services Officer
LESSEE:
UNION TANK CAR COMPANY
By: /s/ Mark Garrette
--------------------------------
Name: Mark Garrette
Title: Vice President
51
<PAGE> 57
State of Delaware )
) SS
County of New Castle )
On this 24th day of March, 1998, before me personally appeared
Patricia A. Evans, to me personally known, who being by me duly sworn, say that
she is Financial Services Officer of Wilmington Trust Company, that said
instrument was signed on such date on behalf of said corporation solely in its
capacity as Owner Trustee under the Trust Agreement referred to in said
instrument, and she acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation in such capacity.
/s/ Patricia Pierce
---------------------------------------
Notary Public
[Notarial Seal]
My commission expires: August 22, 2000
State of Illinois )
) SS
County of Cook )
On this 25th day of March, 1998, before me personally appeared
Mark Garrette, to me personally known, who being by me duly sworn, say that he
is the Vice President of Union Tank Car Company, that said instrument was signed
on such date on behalf of said corporation by authority of its Board of
Directors, and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation.
/s/ Clare C. Potempa
---------------------------------------
Notary Public
[Notarial Seal]
My commission expires: May 20, 2000
52
<PAGE> 58
EXHIBIT A
LEASE SUPPLEMENT NO. ___
(UTC TRUST NO. 1998-A) (L-15)
This Lease Supplement No. , dated , 1998 between Wilmington
Trust Company, a Delaware banking corporation, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement ("Lessor"), and Union
Tank Car Company, a Delaware corporation ("Lessee");
Witnesseth:
Lessor and Lessee have heretofore entered into that certain
Equipment Lease Agreement (UTC Trust No. 1998-A) (L-15) dated March 30, 1998
(the "Lease"). The terms used herein are used with the meanings specified in the
Lease.
The Lease provides for the execution and delivery of one or more
Lease Supplements substantially in the form hereof for, among other things, the
purpose of particularly describing all or a portion of the Units of Equipment to
be leased to Lessee under the Lease.
Now, Therefore, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 2 of the Lease, Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby
accepts and leases from Lessor, under the Lease as herein supplemented, the
Units described in Schedule 1 hereto.
2. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
3. To the extent that this Lease Supplement constitutes chattel
paper (as such term is defined in the Uniform Commercial Code) no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page hereof,
which counterpart shall constitute the only "original" hereof for purposes of
the Uniform Commercial Code.
4. This Lease Supplement shall be governed by and construed in
accordance with the internal laws and decisions of the State of Illinois;
provided, however, that the parties shall be entitled to all rights conferred by
any applicable Federal statute, rule or regulation.
5. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
A-1
<PAGE> 59
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written and to be
delivered on the date first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee
under the Trust Agreement
By:______________________________________________
Name:
Title:
UNION TANK CAR COMPANY
By:______________________________________________
Name:
Title:
A-2
<PAGE> 60
State of )
) SS
County of )
On this ____ day of _______________, 1998, before me
personally appeared ______________________, to me personally known, who being by
me duly sworn, say that he is ____________________________ of Wilmington Trust
Company, that said instrument was signed on such date on behalf of said
corporation solely in its capacity as Owner Trustee under the Trust Agreement
referred to in said instrument, and he acknowledged that the execution of the
foregoing instrument was the free act and deed of said corporation in such
capacity.
___________________________________________
Notary Public
[Notarial Seal]
My commission expires:
State of Illinois )
) SS
County of Cook )
On this ____ day of _____________, 1998, before me personally
appeared __________________________, to me personally known, who being by me
duly sworn, say that he is ____________________________ of Union Tank Car
Company, that said instrument was signed on such date on behalf of said
corporation by authority of its Board of Directors, and he acknowledged that the
execution of the foregoing instrument was the free act and deed of said
corporation.
___________________________________________
Notary Public
[Notarial Seal]
My commission expires:
A-3
<PAGE> 1
EXHIBIT 4(b)(3)
LEASE SUPPLEMENT NO. 1
(UTC TRUST NO. 1998-A) (L-15)
This Lease Supplement No. 1, dated March 30, 1998 between Wilmington
Trust Company, a Delaware banking corporation, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement ("Lessor"), and Union Tank
Car Company, a Delaware corporation ("Lessee");
Witnesseth:
Lessor and Lessee have heretofore entered into that certain Equipment
Lease Agreement (UTC Trust No. 1998-A) (L-15) dated March 30, 1998 (the
"Lease"). The terms used herein are used with the meanings specified in the
Lease.
The Lease provides for the execution and delivery of one or more Lease
Supplements substantially in the form hereof for, among other things, the
purpose of particularly describing all or a portion of the Units of Equipment to
be leased to Lessee under the Lease.
Now, Therefore, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 2 of the Lease, Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby
accepts and leases from Lessor, under the Lease as herein supplemented, the
Units described in Schedule 1 hereto.
2. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
3. To the extent that this Lease Supplement constitutes chattel paper
(as such term is defined in the Uniform Commercial Code) no security interest in
this Lease Supplement may be created through the transfer or possession of any
counterpart hereof other than the counterpart bearing the receipt therefor
executed by the Indenture Trustee on the signature page hereof, which
counterpart shall constitute the only "original" hereof for purposes of the
Uniform Commercial Code.
4. This Lease Supplement shall be governed by and construed in
accordance with the internal laws and decisions of the State of Illinois;
provided, however, that the parties shall be entitled to all rights conferred by
any applicable Federal statute, rule or regulation.
5. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
<PAGE> 2
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
to be duly executed on the day and year first above written and to be delivered
on the date first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee
under the Trust Agreement
By: /s/ Patricia A. Evans
-----------------------------------------------
Name: Patricia A. Evans
Title: Financial Services Officer
UNION TANK CAR COMPANY
By: /s/ Mark Garrette
-----------------------------------------------
Name: Mark Garrette
Title: Vice President
-2-
<PAGE> 3
State of Delaware )
) SS
County of New Castle )
On this 24th day of March, 1998, before me personally appeared Patricia
A. Evans, to me personally known, who being by me duly sworn, say that she is
Financial Services Officer of Wilmington Trust Company, that said instrument was
signed on such date on behalf of said corporation solely in its capacity as
Owner Trustee under the Trust Agreement referred to in said instrument, and she
acknowledged that the execution of the foregoing instrument was the free act and
deed of said corporation in such capacity.
/s/ Patricia Pierce
--------------------------------------------------
Notary Public
[Notarial Seal]
My commission expires: August 22, 2000
State of Illinois )
) SS
County of Cook )
On this 25th day of March, 1998, before me personally appeared Mark
Garrette, to me personally known, who being by me duly sworn, say that he is
Vice President of Union Tank Car Company, that said instrument was signed on
such date on behalf of said corporation by authority of its Board of Directors,
and he acknowledged that the execution of the foregoing instrument was the free
act and deed of said corporation.
/s/ Clare C. Potempa
--------------------------------------------------
Notary Public
[Notarial Seal]
My commission expires: May 20, 2000
-3-
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EXHIBIT 4(b)(4)
TRUST INDENTURE AND SECURITY AGREEMENT
(UTC Trust No. 1998-A)
(L-15)
Dated March 30, 1998
Between
Wilmington Trust Company,
as Owner Trustee
And
Harris Trust and Savings Bank,
as Indenture Trustee
TANK CARS AND COVERED HOPPERS
--------------------
Filed with the Surface Transportation Board of the Department of
Transportation pursuant to 49 U.S.C. Section 11301 on March __, 1998 at
___ [a.m./p.m.], Recordation Number ___, and deposited in the Office of
the Registrar General of Canada pursuant to Section 105 of the Canada
Transportation Act on March __, 1998.
<PAGE> 2
TABLE OF CONTENTS
PAGE
GRANTING CLAUSE.............................................................. 1
HABENDUM CLAUSE.............................................................. 3
ARTICLE I.
DEFINITIONS
Section 1.01. Certain Definitions........................................... 4
ARTICLE II.
THE EQUIPMENT NOTES
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
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
Section 4.01. Assumption of Obligations of Owner Trustee by Lessee.......... 15
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PAGE
ARTICLE V.
REMEDIES OF THE INDENTURE TRUSTEE UPON AN INDENTURE
EVENT OF DEFAULT
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
ARTICLE VI.
DUTIES OF THE INDENTURE TRUSTEE
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............................................. 26
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
Section 7.01. Acceptance of Trusts and Duties............................... 27
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............................. 29
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........................................................ 29
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PAGE
ARTICLE IX.
SUCCESSOR TRUSTEES
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
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
Section 11.01. Termination of Indenture...................................... 35
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
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......... 36
Section 11.07. Notices....................................................... 36
Section 11.08. Severability.................................................. 36
Section 11.09. Separate Counterparts......................................... 36
Section 11.10. Successors and Assigns........................................ 37
Section 11.11. Headings...................................................... 37
Section 11.12. Governing Law................................................. 37
Section 11.13. Normal Commercial Relations................................... 37
Section 11.14. No Recourse Against Others.................................... 37
EXHIBIT A - Form of Trust Indenture Supplement
EXHIBIT B - Terms of Equipment Notes
EXHIBIT C - Loan Participant
APPENDIX A - Definitions
ANNEX A1 - Amortization Schedule (Note A-1)
ANNEX A2 - Amortization Schedule (Note A-2)
ANNEX A3 - Amortization Schedule (Note B)
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TRUST INDENTURE AND SECURITY AGREEMENT
(UTC TRUST NO. 1998-A) (L-15)
This TRUST INDENTURE AND SECURITY AGREEMENT (UTC Trust No. 1998-A)
dated March 30, 1998 (this "Indenture"), between Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity, except as
otherwise expressly set forth herein, 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 Harris Trust and Savings Bank, an Illinois banking
corporation, 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 one or more Equipment Notes on the
Initial Closing Date and the issuance of one or more Equipment Notes 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, the
Equipment Notes, as provided in the Indenture Supplement under which such
Equipment Notes are 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 the Equipment Notes all for the benefit of the
holders of the Equipment Notes, 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 by the
Loan Participant, the Owner Trustee does hereby sell, assign, transfer, convey,
mortgage, pledge, and confirm unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the holders of the
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Equipment Notes 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, Termination Value, Early Purchase
Price, Basic Term Purchase Price and Outside Date Purchase Price 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 or to the Owner Trustee pursuant to the Lease or
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 the Equipment Notes from time to time, without any
priority of any one Equipment Note over any other Equipment Note, 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 all moneys and claims for moneys due and to become due
to the Owner Trustee (other than Excepted Property), under or
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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:
1998-A ____% EQUIPMENT NOTE (Note ____),
(Secured by, among others, Lease Obligations of
Union Tank Car Company)
Issued in Connection with Certain Railroad Rolling Stock
No.______ Chicago, Illinois
____________ __, 1998
$__________________
Wilmington Trust Company, 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. 1998-A) (L-15), dated March __, 1998, as
from time to time supplemented and amended (herein called the "Trust
Agreement"), between the Owner Trustee in its individual capacity and FNBC
Leasing Corporation (the "Owner Participant"), hereby promises to pay to
_______________________________, or registered assigns, the principal sum of
$____________ in lawful currency of the United States of America, payable on
January 2 of each year, commencing January 2, 2000, and thereafter to and
including January 2, 2014, but excluding January 2, 2009, 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 July 2, 1998 and on each January 2 and July
2 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. 1998-A) (L-15), dated March 30, 1998, 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 Harris Trust and Savings Bank, 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 Wilmington Trust Company,
in its individual capacity or as the Owner
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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 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.
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THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT. THIS EQUIPMENT NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
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.
Wilmington Trust Company,
not in its individual capacity, but solely
as Owner Trustee under the Trust Agreement
By:_________________________________
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[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
Harris Trust and Savings Bank,
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 one or more 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 maturities 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. Each 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, shall 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
Wilmington Trust Company, in its individual capacity or as the Owner Trustee,
the Owner Participant, the Indenture Trustee or their
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permitted successors and assigns is or shall be personally liable to the 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
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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 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
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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 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, made 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) 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, made 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
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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 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, made 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) 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) 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 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, made 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, but without the
payment of any Make-Whole Amount.
(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 the Make-Whole Amount, if any.
(f) 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
deemed released from the Lien of this Indenture and 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 deemed released from the Lien of this Indenture
and 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
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Default shall have occurred and be continuing and after the Indenture Trustee
has declared (as assignee 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 deemed released from the Lien of the
Indenture and 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) the Indenture
Trustee shall have declared the unpaid principal amount of all Equipment Notes
then outstanding to be due and payable pursuant to Section 5.02 hereof 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,
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accelerated, then 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 shall on the 181st day 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 deemed
released from the Lien of this Indenture and 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 or Section 22.1 of the Lease 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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(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 to the extent
expressly provided herein and 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
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(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 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 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 an Indenture Event of
Default hereunder for a period of 60 days after receipt of such notice so long
as Owner Trustee or Owner Participant, as the case may be, is diligently
proceeding to remedy such failure and shall in fact remedy such failure within
such period; or
(d) any representation or warranty made by the Owner Trustee (except to
the extent made with respect to Wilmington Trust Company, 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 provided that, if such incorrectness is capable of being
remedied, no such incorrectness shall constitute an Indenture Event of Default
hereunder for a period of 60 days after receipt of such notice so long as Owner
Trustee or Owner Participant, as the case may be, is diligently proceeding to
remedy such incorrectness and shall in fact remedy such incorrectness within
such period; provided that such incorrect representation or warranty shall be
deemed to be remedied only after all adverse consequences thereof, if any, have
been remedied; 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
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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 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
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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' 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 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 in accordance with the
terms hereof following the occurrence and continuance of an Indenture Event of
Default, 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.
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(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 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
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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 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 $1,000,000, 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
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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 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 solely 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) 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
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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, 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 the Interim
Interest Payment Date or any Rent Payment Date shall not have been paid in full
on such Interim Interest Payment Date or 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
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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 10 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 10 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 written notice thereof from an
insurer or insurance broker) unless notified in writing by the Lessee, the 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
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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 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 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, whose obligation in such instance shall be in its individual capacity),
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
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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 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. 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
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in this Section 6.11, 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 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.
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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, 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
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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 not in
its individual capacity (unless otherwise expressly provided herein) and, in the
case of the Owner Trustee, solely in its trust capacity under and subject to the
terms of 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.
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
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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
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.
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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 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:
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(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
(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
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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 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 (except to the extent such Section relates to Persons other
than the Indenture Trustee or the Loan Participant), 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
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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.
(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
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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 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.
-35-
<PAGE> 40
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.
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 1100 North Market Street, Rodney Square North, Wilmington, DE 19890,
Attention: Corporate Trust Administration, (ii) if to the Indenture Trustee, at
its office at 311 West Monroe Street, 12th Floor, Chicago, IL 60606, Attn.:
Indenture Trust Division, (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 225 West Washington Street, 19th Floor, Chicago, Illinois 60606,
Attention: Treasurer, (v) if to the Owner Participant, One First National Plaza,
Suite 0502, 1-17, Chicago, Illinois 60670-0502, Attention: Contract
Administration, ref: UTC Trust No. 1998-A, 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.
-36-
<PAGE> 41
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
Illinois, including all matters of construction, validity and performance.
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 thereof 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 trustee, attorney, agent,
representative, 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.
WILMINGTON TRUST COMPANY,
not in its individual capacity except as set
forth in Section 7.03 hereof, but solely as
Owner Trustee
By: /s/ James P. Lawler
------------------------------
Name: James P. Lawler
Title: Vice President
HARRIS TRUST AND SAVINGS BANK,
as Indenture Trustee
By: /s/ J. Bartolini
------------------------------
Name: J. Bartolini
Title: Vice President
-38-
<PAGE> 43
State of Delaware )
) SS
County of New Castle )
On this 24th day of March, 1998, before me personally appeared James P.
Lawler, to me personally known, who being by me duly sworn, say that he is Vice
President of Wilmington Trust Company, that said instrument was signed on such
date on behalf of said corporation by authority of its Board of Directors, and
he or she acknowledged that the execution of the foregoing instrument was the
free act and deed of said corporation.
/s/ Patricia Pierce
------------------------------
Notary Public
[Notarial Seal]
My commission expires: August 22, 2000
State of Illinois )
) SS
County of Cook )
On this 25th day of March, 1998, before me personally appeared J.
Bartolini, to me personally known, who being by me duly sworn, say that he is
the Vice President of Harris Trust and Savings Bank, that said instrument was
signed on such date on behalf of said corporation by authority of its Board of
Directors, and he acknowledged that the execution of the foregoing instrument
was the free act and deed of said corporation.
/s/ Jacqueline L. Mason
------------------------------
Notary Public
[Notarial Seal]
My commission expires: January 9, 1999
-39-
<PAGE> 44
EXHIBIT A
TRUST INDENTURE SUPPLEMENT NO.__
(UTC TRUST NO. 1998-A)
(L-15)
This Indenture Supplement No. _ (UTC Trust No. 1998-A), dated _______
___, 1998 (this "Indenture Supplement"), of Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as trustee (the
"Owner Trustee") under the Trust Agreement (UTC Trust No. 1998-A), dated March
__, 1998 (the "Trust Agreement"), between the Owner Trustee in its individual
capacity and FNBC Leasing Corporation, a Delaware corporation, as Owner
Participant:
WITNESSETH:
WHEREAS, the Trust Indenture and Security Agreement (UTC Trust No.
1998-A) [L-15] dated March __, 1998 (the "Indenture"), between the Owner Trustee
and Harris Trust and Savings Bank, 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
A-1
<PAGE> 45
Equipment Notes and for the uses and purposes and subject to the terms and
provisions set forth in the Indenture.
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 1998-A. 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 Exhibit B hereto. The principal of each Equipment Note
shall be payable on January 2 of each year, commencing January 2, 2000, and
thereafter to and including January 2, 2014, but excluding January 2, 2009.
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.
WILMINGTON TRUST COMPANY,
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 March, 1998, before me personally appeared
___________________, to me personally known, who being by me duly sworn, say
that he is __________________ of Wilmington Trust Company, that said instrument
was signed on such date on behalf of said corporation by authority of its Board
of Directors, and he or she 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> <C>
Note A-1 $61,061,000 6.57% January 2, 2013
Note A-2 6,036,000 6.57% January 2, 2014
</TABLE>
TERMS OF EQUIPMENT NOTES (SUBSEQUENT CLOSING)
<TABLE>
<CAPTION>
Principal Amount Interest Rate Final Maturity
---------------- ------------- --------------
<S> <C> <C> <C>
Note B $30,755,000 6.57% January 2, 2014
</TABLE>
Aggregate Amount of Equipment Notes = $97,852,000
B-1
<PAGE> 48
EXHIBIT C
LOAN PARTICIPANT (INITIAL CLOSING)
<TABLE>
<CAPTION>
PERCENTAGE OF
LOAN PARTICIPANT PRINCIPAL AMOUNT
---------------- ----------------
<S> <C>
Harris Trust and Savings Bank 100%
as trustee under the Pass Through Trust
Agreement, dated as of March 18, 1998,
between Harris Trust and Savings Bank
and Union Tank Car Company
</TABLE>
LOAN PARTICIPANT (SUBSEQUENT CLOSING)
<TABLE>
<CAPTION>
PERCENTAGE OF
LOAN PARTICIPANT PRINCIPAL AMOUNT
---------------- ----------------
<S> <C>
The Harris Trust and Savings Bank, 100%
as trustee under the Pass Through Trust
Agreement, dated as of March 18, 1998,
between Harris Trust and Savings Bank
and Union Tank Car Company
</TABLE>
C-1
<PAGE> 49
ANNEX A1
AMORTIZATION SCHEDULES
1998 6.57% EQUIPMENT NOTES
Amortization Schedule for Equipment Note A-1 attached hereto.
Annex A1-1
<PAGE> 50
EQUIPMENT NOTE A-1
<TABLE>
<CAPTION>
INSTALLMENT
PAYMENT INSTALLMENT
DATE PERCENTAGE
----------- ----------
<S> <C>
January 2, 2000 2.841971144%
January 2, 2001 3.838291637%
January 2, 2002 4.249726005%
January 2, 2003 4.730014724%
January 2, 2004 5.291099327%
January 2, 2005 15.654517846%
January 2, 2006 10.271422404%
January 2, 2007 14.113132537%
January 2, 2008 17.548503301%
January 2, 2010 25.762088642%
January 2, 2011 32.967905648%
January 2, 2012 52.522669203%
January 2, 2013 100.000000000%
</TABLE>
Annex A1-2
<PAGE> 51
ANNEX A2
AMORTIZATION SCHEDULES
1998 6.57% EQUIPMENT NOTES
Amortization Schedule for Equipment Note A-2 attached hereto.
Annex A2-1
<PAGE> 52
EQUIPMENT NOTE A-2
<TABLE>
<CAPTION>
INSTALLMENT
PAYMENT INSTALLMENT
DATE PERCENTAGE
----------- ----------
<S> <C>
January 2, 2000 2.257157058%
January 2, 2001 3.966060981%
January 2, 2002 4.397619388%
January 2, 2003 4.902179610%
January 2, 2004 9.292965610%
January 2, 2005 12.924239431%
January 2, 2006 10.760276464%
January 2, 2007 14.829858189%
January 2, 2008 15.749103500%
January 2, 2010 0.000000000%
January 2, 2011 16.516568386%
January 2, 2012 28.343466723%
January 2, 2013 60.416510268%
January 2, 2014 100.000000000%
</TABLE>
Annex A2-2
<PAGE> 53
ANNEX A3
AMORTIZATION SCHEDULES
1998 6.57% EQUIPMENT NOTES
Amortization Schedule for Equipment Note B attached hereto.
Annex A3-1
<PAGE> 54
EQUIPMENT NOTE B
<TABLE>
<CAPTION>
INSTALLMENT
PAYMENT INSTALLMENT
DATE PERCENTAGE
----------- ----------
<S> <C>
January 2, 2000 2.647673549%
January 2, 2001 3.862073001%
January 2, 2002 4.277257912%
January 2, 2003 4.762028678%
January 2, 2004 5.328701313%
January 2, 2005 15.746671479%
January 2, 2006 10.351041141%
January 2, 2007 14.229332953%
January 2, 2008 17.716960170%
January 2, 2010 15.883696440%
January 2, 2011 28.613796822%
January 2, 2012 42.805475705%
January 2, 2013 79.925102922%
January 2, 2014 100.000000000%
</TABLE>
Annex A3-2
<PAGE> 1
EXHIBIT 4(b)(6)
TRUST INDENTURE SUPPLEMENT NO. 1
(UTC TRUST NO. 1998-A)
(L-15)
This Indenture Supplement No. 1 (UTC Trust No. 1998-A), dated March 30,
1998 (this "Indenture Supplement"), of Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as trustee (the
"Owner Trustee") under the Trust Agreement (UTC Trust No. 1998-A), dated March
30, 1998 (the "Trust Agreement"), between the Owner Trustee in its individual
capacity and FNBC Leasing Corporation, a Delaware corporation, as Owner
Participant:
WITNESSETH:
WHEREAS, the Trust Indenture and Security Agreement (UTC Trust No.
1998-A) (L-15) dated March 30, 1998 (the "Indenture"), between the Owner Trustee
and Harris Trust and Savings Bank, 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. 1 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.
1 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.
<PAGE> 2
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 1998-A. 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 Exhibit A hereto. The principal of each Equipment Note
shall be payable on January 2 of each year, commencing January 2, 2000, and
thereafter to and including January 2, 2014, but excluding January 2, 2009.
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.
<PAGE> 3
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.
WILMINGTON TRUST COMPANY,
not in its individual capacity, but
solely as Owner Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE> 4
State of Delaware )
) SS
County of New Castle)
On this 24th day of March, 1998, before me personally appeared
James P. Lawler, to me personally known, who being by me duly sworn, say that
he is Vice President of Wilmington Trust Company, that said instrument was
signed on such date on behalf of said corporation by authority of its Board of
Directors, and he or she acknowledged that the execution of the foregoing
instrument was the free act and deed of said corporation.
/s/ Patricia Pierce
---------------------------------------
Notary Public
[Notarial Seal]
My commission expires: August 22, 2000
<PAGE> 5
EXHIBIT A
TERMS OF EQUIPMENT NOTES
<TABLE>
<CAPTION>
Principal Amount Interest Rate Final Maturity
---------------- ------------- --------------
<S> <C> <C> <C>
Note A-1 $61,061,000 6.57% January 2, 2013
Note A-2 6,036,000 6.57% January 2, 2014
</TABLE>
B-1
<PAGE> 1
EXHIBIT 4(b)(7)
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. Notwithstanding the foregoing, the Bank shall
not be deemed an affiliate of the Owner Participant or Owner Trustee, and vice
versa, solely as a result of the transactions contemplated by the Operative
Agreements.
"After-Tax Basis" shall mean, with respect to any payment received or
accrued by any Person under an Operative Agreement (the "Initial Payment"),
that the amount of such Initial 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
Initial Payment due to such Person.
-1-
<PAGE> 2
"Alternative Minimum Tax" shall mean the alternative minimum tax
imposed under Section 55 of the Code or any successor section thereto.
"Appraisal" shall have the meaning specified in Section 4.3(a) of the
Participation Agreement.
"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.
"Bank" shall mean Wilmington Trust Company, a Delaware banking
corporation, in its individual capacity, together with its successors and
assigns.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act
of 1978, as amended from time to time, 11 U.S.C. Section 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 September 30, 1998.
"Basic Term Expiration Date" shall mean March 30, 2014.
"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, 8A, 8B
or 8C, as the case may be, 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.
"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.
"Car Type" shall mean a Unit which carries a particular commodity.
"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
- 2 - (L-15)
<PAGE> 3
Ruling, Revenue Procedure or other published administrative determination, or
an opinion of the United States Supreme Court on a tax issue that changes the
existing law on that issue, in each case, enacted, issued, promulgated or
rendered after the execution of the Participation Agreement and on or prior to
the Initial or 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.
"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 Closing Date" shall mean the date on which the transactions
contemplated by the Underwriting Agreement are consummated.
"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, 7A, 7B
or 7C, as the case may be, 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, 1B or 1C to the
Participation Agreement with respect to such Unit.
"Equipment Group" shall mean each of the two groups of Equipment so
designated in Schedule 1A, 1B or 1C 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 rate and payable as provided in Section 2.02 of the Indenture
and secured as provided in the Granting
- 3 - (L-15)
<PAGE> 4
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 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, the Bank, or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents is entitled pursuant to the Operative Agreements and all rights of the
Owner Participant in, to and under the Tax Indemnity Agreement, (ii) any right,
title or interest of the Owner Trustee, the Bank, 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, the Bank, 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, the Bank, or Owner Participant pursuant to the
Participation Agreement or the Trust Agreement, (vi) all right, title and
interest of Owner Participant, Owner Trustee or the Bank, 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, the Owner Trustee or the Bank, 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, (x) any payments
of Unrealized Residual Value to which the Owner Participant or the Owner
Trustee is entitled pursuant to Section 6.3 of the Lease and any and all rights
of the Owner Participant or the Owner Trustee in, to and under Section 6.3 of
the Lease and (xi) the respective rights of the Owner Trustee, the Bank 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
- 4 - (L-15)
<PAGE> 5
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 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 dangerous, 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, (g) defined as "hazardous substances" pursuant to Section 101 of
the Comprehensive Environmental Response, Compensation, and Liability Act, or
(h) natural gas, synthetic gas and any mixtures thereof.
"Holdover Rent" shall have the meaning specified in Section 6.1(e) of
the Lease.
"Initial Closing Date" shall have the meaning specified in Section 2.1
of the Participation Agreement.
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<PAGE> 6
"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. 1998-A) (L-15), dated March 30, 1998 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.
"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 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 Harris Trust and Savings Bank, an
Illinois banking corporation, 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 Interest Payment Date" shall mean July 2, 1998.
"Interim Term" shall have the meaning specified in Section 3.1 of the
Lease.
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<PAGE> 7
"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.
"Inspectable Group" shall have the meaning specified in Section 6.1(b)
of the Lease.
"Inspection Period" shall have the meaning specified in Section 6.1(h)
of the Lease.
"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. 1998-A) (L-15), relating to the
Equipment, dated March 30, 1998, between the Owner Trustee, 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.
"Lease Supplement" shall mean a Lease Supplement (UTC Trust No.
1998-A) (L-15), 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 or will be 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 (as the Bank 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 (as the Bank 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
(as the Bank 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.
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<PAGE> 8
"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 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 January 2 and July 2 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
the Investment Banker.
"Modification" shall have the meaning specified in Section 9.2 of the
Lease.
"Multiple Loss" shall have the meaning specified in Section 11.2 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, Termination Value, Early Purchase Price, Basic Term
Purchase Price and Outside Date Purchase Price initially set forth in Schedules
3A, 3B, 3C, 4A, 4B, 4C, 5A, 5B, 5C, 7, 7A, 7B, 7C, 8, 8A, 8B, 8C, 9, 9A, 9B and
9C to the Participation Agreement.
"Net Proceeds" shall mean the net amount actually received by Lessor
upon the sale of any Units or the Beneficial Interest, after subtracting all
fees, costs, expenses and withholdings incurred directly or indirectly in
connection with such sale, including, but not limited to, any commissions,
brokerage fees
- 8 - (L-15)
<PAGE> 9
or remarketing fees and related costs and expenses paid to any person
(including Lessee), any storage, transportation, reconditioning, removal, or
repair costs and expenses, and reasonable attorneys' fees and disbursements.
"Non-Severable Modification" shall mean any Modification that is not
readily removable without causing material damage to the Equipment or any Unit
or without diminishing the value, utility or remaining useful life of the
Equipment or any Unit below the value, utility or remaining useful life of the
Equipment or such Unit immediately prior to removal of such Modification,
assuming that the Equipment or such Unit is then at least in the condition
required to be maintained by the terms of the Lease 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, assistant officer or
other authorized employee 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, the
insurance side letter 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 Schedules 9, 9A,
9B or 9C, as the case may be, to the Participation Agreement and the Equipment
Cost for such Unit.
"Owner Participant" shall mean FNBC Leasing Corporation 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 Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely in its trust
capacity 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.
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<PAGE> 10
"Participation Agreement" shall mean the Participation Agreement (UTC
Trust No. 1998-A) (L-15) dated as of March 18, 1998, 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 the Pass Through Trust
Agreement, dated as of March 18, 1998, between the Lessee and the Pass Through
Trustee.
"Pass Through Trustee" shall mean Harris Trust and Savings Bank, an
Illinois banking corporation, 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, the Bank and
the Owner 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.
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<PAGE> 11
"Quarterly Date" shall mean April 15, June 15, September 15 and
December 15 following the 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 333-45105), including incorporated documents,
exhibits and financial statements, as amended at the time of the Debt Closing
Date, including any post-effective amendment thereto which has become effective
prior to the Debt 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 January 2 and
July 2 of each year occurring during the Lease Term, commencing January 2, 1998
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.
"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.
"Residual Date" shall mean, with respect to any Unit, March 30, 2014
or such later date as Lessee may return such Unit in compliance with Sections
6.1 and 6.2 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.
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"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 remaining useful life of the
Equipment or any Unit below the value, utility or remaining useful life of the
Equipment or such Unit immediately prior to such Modification, assuming that
the Equipment or such Unit was then at least 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 the Bank 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 4A, 4B or 4C, as the case may be,
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 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 6.1(c) 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
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<PAGE> 13
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
March 30, 1998 between the Lessee and the Owner Participant.
"10-Pay Period" shall have the meaning specified in Section 5.04(a) of
the Indenture.
"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 5A, 5B or 5C, as the case may be, 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.
"30-Day Period" shall have the meaning specified in Section 5.04(a) of
the Indenture.
"Total Equipment Cost" shall mean the sum of the Equipment Cost for
each Unit.
"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 semi-annual equivalent and as
a decimal and, in the case of U.S. Treasury bills, converted to a bond
equivalent yield), determined to be the per annum rate equal to the semi-annual
yield
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<PAGE> 14
to maturity for U.S. 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 U.S. 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
fourth 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. 1998-A) (L-15), dated as of March 18, 1998, between the Owner Participant
and the Owner Trustee.
"Trust Estate" shall have the meaning set forth in 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.
"Underwriter" shall mean Salomon Brothers Inc.
"Underwriting Agreement" shall mean that certain Underwriting
Agreement between the Lessee and the Underwriter, pertaining to the sale of the
Pass Through Certificates.
"Unit" shall mean each unit or item of Equipment.
"Unrealized Residual Value" shall mean an amount equal to the excess
of (a) an amount equal to 7.75% of the Equipment Cost of the Units being sold
over (b) any Net Proceeds from the sale of such Units or the Beneficial
Interest.
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