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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
Date of Report (Date of earliest event reported): April 13, 2000
GATX RAIL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
____________________________
New York 2-54754 36-2827991
(State or other jurisdiction (Commission file number) (I.R.S. employer
of incorporation) identification no.)
500 West Monroe Street 60661
Chicago, Illinois (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (312) 621-6200
General American Transportation Corporation
(Former name or former address, if changed since last report)
________________________________________________________________________________
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Item 7. Financial Statements and Exhibits.
(c) The following documents relating to GATX Rail Corporation Series 2000-
1 Pass Through Certificates are being filed in connection with, and incorporated
by reference into, the Registration Statement on Form S-3 (File No. 33-64697) of
GATX Rail Corporation, formerly known as General American Transportation
Corporation ("Registrant"), which was declared effective on December 7, 1995.
EXHIBIT DESCRIPTION
NUMBER -----------
- -------
1.3 Form of Underwriting Agreement among Registrant and the
Underwriters named therein relating to the Series 2000-1 Pass
Through Certificates.
4.5 Form of Pass Through Trust Supplement No. 8 dated April 13, 2000
between Registrant and the Pass Through Trustee relating to the
Series 2000-1 Pass Through Certificates.
4.6 Form of Series 2000-1 Pass Through Certificate (included in
Exhibit 4.5).
4.7 Forms of Trust Indenture and Security Agreement (GATX Rail Trust
No. 2000-1) and (GATX Rail Trust No. 2000-2) between the Owner
Trustee and the Indenture Trustee relating to the Equipment Notes.
4.8 Forms of 8.10% Equipment Note (GATX Rail Trust No. 2000-1) and
(GATX Rail Trust No. 2000-2) to be issued by the Owner Trustee
(included in Exhibit 4.7).
4.9 Forms of Participation Agreement (GATX Rail Trust No. 2000-1) and
(GATX Rail Trust No. 2000-2) among Registrant, the Owner Trustee,
the Owner Participant, the Indenture Trustee and the Pass Through
Trustee.
4.10 Forms of Equipment Lease Agreement (GATX Rail Trust No. 2000-1) and
(GATX Rail Trust No. 2000-2) between Registrant and the Owner
Trustee relating to the 8.10% Equipment Notes.
4.11 Forms of Trust Agreement (GATX Rail Trust No. 2000-1) and (GATX
Rail Trust No. 2000-2) between the Owner Trustee and the Owner
Participant.
23.4 Consent of Vedder, Price, Kaufman & Kammholz.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GATX RAIL CORPORATION
April 13, 2000
By: /s/ WILLIAM J. HASEK
---------------------
William J. Hasek, Treasurer
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EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION
NUMBER -----------
- -------
1.3 Form of Underwriting Agreement among Registrant and the Underwriters
named therein relating to the Series 2000-1 Pass Through
Certificates.
4.5 Form of Pass Through Trust Supplement No. 8 dated April 13, 2000
between Registrant and the Pass Through Trustee relating to the
Series 2000-1 Pass Through Certificates.
4.6 Form of Series 2000-1 Pass Through Certificate (included in Exhibit
4.5).
4.7 Forms of Trust Indenture and Security Agreement (GATX Rail Trust No.
2000-1) and (GATX Rail Trust No. 2000-2) between the Owner Trustee
and the Indenture Trustee relating to the Equipment Notes.
4.8 Forms of 8.10% Equipment Note (GATX Rail Trust No. 2000-1) and (GATX
Rail Trust No. 2000-2) to be issued by the Owner Trustee (included
in Exhibit 4.7).
4.9 Forms of Participation Agreement (GATX Rail Trust No. 2000-1) and
(GATX Rail Trust No. 2000-2) among Registrant, the Owner Trustee,
the Owner Participant, the Indenture Trustee and the Pass Through
Trustee.
4.10 Forms of Equipment Lease Agreement (GATX Rail Trust No. 2000-1) and
(GATX Rail Trust No. 2000-2) between Registrant and the Owner
Trustee relating to the 8.10% Equipment Notes.
4.11 Forms of Trust Agreement (GATX Rail Trust No. 2000-1) and (GATX Rail
Trust No. 2000-2) between the Owner Trustee and the Owner
Participant.
23.4 Consent of Vedder, Price, Kaufman & Kammholz.
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Exhibit 1.3
-----------
$119,869,000
GATX RAIL CORPORATION
SERIES 2000-1 PASS THROUGH CERTIFICATES
UNDERWRITING AGREEMENT
April 5, 2000
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April 5, 2000
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
GATX Rail Corporation, a New York corporation (the "Company"), in
connection with the financing of the debt portion of a separate leveraged lease
transaction in which the Company is lessee, proposes that the Trustee (as
defined below) will issue and sell to the several Underwriters named in Schedule
I hereto (the "Underwriters") $119,869,000 principal amount of the Pass Through
Certificates, Series 2000-1 (the "Securities") to be issued pursuant to the
provisions of a Pass Through Trust Agreement dated as of August 1, 1992 (the
"Basic Agreement") between the Company and the First National Bank of Chicago
(predecessor to Bank One, N.A.), as Trustee (the "Trustee"), as supplemented by
a separate Pass Through Trust Supplement to be dated on or about April 13, 2000
between the Company and the Trustee (the "Pass Through Trust Supplement") (the
Basic Agreement as supplemented by the Pass Through Trust Supplement is referred
to herein as the "Pass Through Trust Agreement"). The Pass Through Trust
Supplement is related to the creation and administration of GATX Rail
Corporation 2000-1 Pass Through Trust (the "Pass Through Trust").
As used in this Agreement the terms "Equipment Notes," "Equipment," "Trust
Agreement," "Indenture Trustee," "Lease," "Lease Supplement," "Owner Trustee,"
"Participation Agreement," and "Operative Agreements" shall have the meanings
attributed to them in Appendix A to each of the two Trust Indenture and Security
Agreements to be dated on or about April 13, 2000 between the Owner Trustee and
the Indenture Trustee (each an "Indenture" and collectively, the "Indentures").
All other capitalized terms used herein shall, for the purposes hereof, have the
meanings attributed to them in this Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Securities. The Prospectus (as described in Rule 434(a)(1) under the Securities
Act) in the form first used to confirm sales of Securities, including documents
incorporated therein by reference, is hereinafter referred to as the
"Distributed Prospectus"; the prospectus included in the Registration Statement
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at the time of its effectiveness is hereinafter referred to as the "Filed
Prospectus"; and the Distributed Prospectus and the Filed Prospectus are
hereinafter referred to collectively as the "Prospectus." The terms
"supplement" and "amendment" or "amend" as used in this Agreement with respect
to the Registration Statement or the Prospectus shall include all documents
subsequently filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that are deemed to be
incorporated by reference in the Prospectus.
1. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder, (ii)
the Registration Statement, when it became effective, did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (iii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iv) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to (A) statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein as set forth in
the letter from the Underwriters to be dated April 13, 2000, a copy of
which is attached hereto, or (B) that part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the
Trustee.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of New York, has
the corporate power and authority to own its property and
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to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole; and all of
the issued shares of common stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly by GATX Corporation.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly or indirectly through wholly-
owned subsidiaries by the Company to the extent reflected in the
Prospectus, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement, and each other Operative Agreement to which the
Company is, or is to be, a party, has been duly authorized, executed and
delivered by the Company and constitutes valid and binding obligations of
the Company enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity. The Pass Through Trust
Agreement has been duly qualified under the Trust Indenture Act.
(f) Assuming the accuracy of the Trustee's representations and
warranties in the Participation Agreement, the Securities have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Pass Through Trust Agreement and delivered to and paid
for by the Underwriters in accordance with the terms of this Agreement,
will be entitled to the benefits of the Pass Through Trust Agreement and
will be valid and binding obligations of the Trustee enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally and general
principles of equity.
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(g) The Equipment Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indentures and
delivered to and paid for by the Trustee in accordance with the terms of
the Indentures, will be entitled to the benefits of the Indentures and will
be valid and binding obligations of the Indenture Trustee enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally and general
principles of equity.
(h) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement and any other
Operative Agreements to which the Company is a party will not contravene
any provision of applicable law or the certificate of incorporation or by-
laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement or any
other Operative Agreement to which the Company is a party, except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities.
(i) Since the respective dates as of which information is given in
the Prospectus, except as otherwise stated therein, there has not occurred
any material adverse change, or any development reasonably likely to result
in a material adverse change, in the condition, financial or otherwise, or
in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement).
(j) Except as described in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), the Company is not in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it may be bound or to which
any of its properties may be subject, except for such defaults that would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
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(k) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects except where failure to have such title would not
have a material adverse effect on the Company and its subsidiaries taken as
a whole; and except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real property under valid and enforceable
leases with no exceptions that would have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(l) Except as disclosed in the prospectus, no labor dispute with
employees of the Company or any of its subsidiaries exists or to the
knowledge of the Company is imminent that could reasonably be expected to
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(m) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(n) The consolidated financial statements included or incorporated
by reference in the Registration Statement or Prospectus, together with the
related notes thereto, present fairly in all material respects the
financial position of the Company and its consolidated subsidiaries at the
dates indicated and the consolidated results of operations and cash flows
of the Company and its consolidated subsidiaries for the periods specified.
Such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved, except as otherwise stated therein. The financial
statement schedules, if any, included or incorporated by reference in the
Prospectus fairly present the information to be stated therein.
(o) Neither the Company nor the trust created pursuant to the Pass
Through Trust Agreement (the "Trust") is and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, neither the Company nor the Trust
will be required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
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(p) Except as disclosed in the Prospectus, the Company and its
subsidiaries (i) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances
or wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(q) Except as disclosed in the Prospectus, there are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(r) As of the Closing Date, the Securities will be rated A3 by
Moody's Investors Service, Inc. ("Moody's") and A- by Standard & Poor's
Corporation ("S&P").
(s) Ernst & Young LLP, who reported on the annual consolidated
financial statements of the Company incorporated by reference in the
Registration Statement, are independent auditors as required by the Act and
the rules and regulations thereunder.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Trustee the respective principal amounts of Securities set forth in Schedule I
hereto opposite its name at 100% of their principal amount plus accrued
interest, if any, from April 13, 2000 to the date of payment and delivery. The
Company agrees to pay the Underwriters an aggregate commission of $779,148.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Securities as soon after this Agreement has become effective as in your
judgment
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is advisable. The Company is further advised by you that the Securities are to
be offered to the public initially at 100% of their principal amount (the
"Public Offering Price") plus accrued interest, if any, from April 13, 2000 to
the date of payment and delivery and to certain dealers selected by you at a
price that represents a concession not in excess of .40% of their principal
amount, and that any Underwriter may allow, and such dealers may reallow, a
concession, not in excess of .25% of their principal amount, to any Underwriter
or to certain other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company in Federal or other funds immediately available in New York City at
10:00 a.m., New York City time, on April 13, 2000, or at such other time on the
same or such other date, not later than April 17, 2000, as shall be designated
in writing by you. The time and date of such payment are hereinafter referred
to as the "Closing Date."
Payment for the Securities shall be made against delivery to you on the
Closing Date for the respective accounts of the several Underwriters of the
Securities registered in such names and in such denominations as you shall
request in writing not less than one full business day prior to the Closing
Date, with any transfer taxes payable in connection with the transfer of the
Securities to the Underwriters duly paid.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities are
subject to the following conditions.
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded the Company
or any of the Company's securities or in the rating outlook for the
Company by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that,
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in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Securities on the terms and in
the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Section 5(a)(i) above and to the effect that
the representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of
Vedder, Price Kaufman & Kammholz, outside counsel for the Company, (except in
the case of clauses 5(c)(i), 5(c)(ii), 5(c)(iii), 5(c)(viii) and 5(c)(x)(C)
which opinions shall be delivered by Ronald J. Ciancio, in house counsel to the
Company), dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(ii) each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
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(iii) all of the outstanding shares of capital stock of each
subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of each
Significant Subsidiary (with such term having the meaning attributed
to it under Rule 405 under the Securities Act) are owned by the
Company either directly or through wholly-owned subsidiaries free and
clear of any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interest, claims, liens
or encumbrances;
(iv) this Agreement, and each other Operative Agreement to
which the Company is, or is to be, a party, has each been duly
authorized, executed and delivered by the Company and will constitute
valid and binding obligations of the Company enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general
principles of equity; and the Pass Through Trust Agreement has been
duly qualified under the Trust Indenture Act;
(v) the Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Pass Through Trust Agreement and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be
entitled to the benefits of the Pass Through Trust Agreement and will
be valid and binding obligations of the Trustee, enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity;
(vi) the Equipment Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indentures and delivered to and paid for by the Trustee in accordance
with the terms of Indentures, will be entitled to the benefits of the
Indentures and will be valid and binding obligations of the Indenture
Trustee, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
and any other Operative Agreement to which the Company is, or is to
be, a party will not contravene any provision
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of applicable law or the certificate of incorporation or by-laws of
the Company or, to the best of such counsel's knowledge, any agreement
or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or, to the best of such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement or any other Operative
Agreement to which the Company is, or is to be, party, except such as
may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Securities as to
which such counsel need not opine;
(viii) title to the Equipment to be subjected to a Lease
will, when such Equipment shall have been transferred to the Owner
Trustee as provided in the related Participation Agreement, be validly
vested in the Owner Trustee, subject to no liens or encumbrances of
record at the Surface Transportation Board except for such Lease and
the related Indenture;
(ix) no filing or recording of any document or instrument was
or is necessary to establish and perfect the security interest created
by the Indentures in all estate, right, title and interest of the
Owner Trustee in and to each Lease (and each Lease Supplement)
covering the Equipment (other than Excepted Property), and to
establish and perfect the Indenture Trustee's estate, right and
interest in and to the Equipment on the date of the Indentures, except
for such filings with the Surface Transportation Board as are
required; and
(x) the statements (A) in the Prospectus under the captions
"ERISA Considerations," "Certain Tax Aspects," "Federal Income Tax
Consequences" "Certain Illinois Taxes," "Description of the Pass
Through Certificates," and "Description of the Equipment Notes" except
to the extent amended or superceded by statement in the Prospectus
Supplement, (B) in the Prospectus Supplement under the captions
"Description of the Certificates," "Description of the Equipment
Notes," "Certain Tax Aspects," "ERISA Considerations," and "Certain
Illinois Taxes" and (C) in the Registration Statement in Items 15, in
each case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly
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present the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein;
(xi) other than taxes, fees or other governmental charges
payable by the Trustee in its individual capacity and not upon the
trust created under each Indenture or the trust created pursuant to
the Pass Through Trust Agreement, 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 (x) the
execution and delivery by the Trustee, as Indenture Trustee, of each
Indenture, each Participation Agreement and the other Operative
Agreements to which it is a party or (y) the execution and delivery by
the Trustee, as trustee under the Pass Through Trust Agreement, of the
Basic Agreement and the related Pass Trough Trust Supplement and the
issuance, execution and delivery of the Securities by the Trustee, as
trustee under the Pass Through Trust Agreement, pursuant to the Basic
Agreement and the Pass Through Trust Supplement or (z) the issuance,
authentication and delivery of the Equipment Notes;
(xii) while there is no authority addressing the
characterization of entities that are similar to the trust in all
material respects, the trust created pursuant to the Pass Through
Trust Agreement should be classified as a grantor trust for U.S.
federal income tax purposes. If, as may be the case, the trust
created pursuant to the Pass Through Trust Agreement is not classified
as a grantor trust, it will be classified as a partnership for U.S.
federal income tax purposes and will not be classified as a publicly
traded partnership taxable as a corporation provided that at least 90%
of each such trust's gross income for each taxable year of its
existence is "qualifying income" within the meaning of Section 7704(b)
of the Internal Revenue Code of 1986, as amended;
(xiii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
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(xiv) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be required
to register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act"). The Trust is not required to be registered under the
Investment Company Act;
(xv) such counsel (A) is of the opinion that the 1999 Form
10-K filed by the Company pursuant to the Exchange Act and
incorporated by reference in the Prospectus or the Prospectus
Supplement (except for financial statements and schedules as to which
such counsel need not express any opinion) complied when so filed as
to form in all material respects with the Exchange Act and the rules
and regulations of the Commission thereunder, (B) is of the opinion
that the Registration Statement, Prospectus and Prospectus Supplement
(except for financial statements and schedules and other financial and
statistical data included therein as to which such counsel need not
express any opinion) comply as to form in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder, (C) has no reason to believe that (except for
financial statements and schedules and other financial and statistical
data as to which such counsel need not express any belief and except
for that part of the Registration Statement that constitutes the Form
T-1 heretofore referred to) the Registration Statement and the
prospectus included therein at the time the Registration Statement
became effective contained any 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 and (D) has no
reason to believe that (except for financial statements and schedules
and other financial and statistical data as to which such counsel need
not express any belief) the Prospectus or the Prospectus Supplement
contains any untrue statement of a material fact or omits 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.
(d) The Underwriters shall have received on the Closing Date an opinion of
Milbank, Tweed, Hadley & McCloy LLP, special counsel for the Underwriters, dated
the Closing Date, covering the matters referred to in Sections 5(c)(iv), 5(c)(v)
and 5(c)(x) (but only as to the statements in the Prospectus under "Description
of the Certificates," "Plan of Distribution,"
12
<PAGE>
"Description of the Equipment Notes," and "Underwriting") and clauses
5(c)(xv)(B), 5(c)(xv)(C) and 5(c)(xv)(D) above.
With respect to Section 5(c)(xv) above, Vedder, Price, Kaufman & Kammholz
may state that their opinion and belief are based upon their participation in
the preparation of the Registration Statement and Prospectus and any amendments
or supplements thereto and other than the documents incorporated therein by
reference and review and discussion of the contents thereof (including documents
incorporated by reference), but is without independent check or verification
except as specified. With respect to clauses 5(c)(xv)(B), 5(c)(xv)(C) and
5(c)(xv)(D) above, Milbank, Tweed, Hadley & McCloy LLP may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
(other than the documents incorporated by reference) and review and discussion
of the contents thereof (including documents incorporated therein by reference),
but are without independent check or verification except as specified.
The opinion of Milbank, Tweed, Hadley & McCloy LLP described in Section
5(d) above shall be rendered to the Underwriters at the request of the Company
and shall so state therein.
(e) The Underwriters and the rating agencies (if so required) shall have
received from the law department of Bank One, N.A. ("Bank One"), individually,
as Trustee and Indenture Trustee under each of the Indentures, an opinion, dated
the Closing Date, in form and substance reasonably satisfactory to the
Underwriters, the rating agencies and Milbank, Tweed, Hadley & McCloy LLP,
special counsel for the Underwriters, to the effect that:
(i) Bank One is a national banking association duly organized
and validly existing in good standing under the laws of the United
States, and, in its individual capacity or as 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 Indentures, each
Participation Agreement, the Basic Agreement, the Pass Through Trust
Supplement and the other Operative Agreements to which it is, or is to
be, a party;
(ii) Bank One, the Trustee or the Indenture Trustee, as the
case may be, has duly authorized, executed and delivered each
Participation Agreement, the Basic Agreement, the Pass Through Trust
Supplement and the Indentures; the Basic Agreement, the Pass Through
Trust Supplement and each Participation Agreement constitute the valid
and binding obligations of Bank One, the Trustee or the Indenture
Trustee, as the case may be, enforceable
13
<PAGE>
against Bank One, the Trustee or the Indenture Trustee, as the case
may be, in accordance with their respective terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization 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 Securities have been duly authorized and validly
executed, authenticated, issued and delivered by the Trustee, pursuant
to the Basic Agreement and the Pass Through Trust Supplement;
(iv) the authorization, execution, delivery and performance
by Bank One, the Trustee or the Indenture Trustee, as the case may be,
of the Indentures, each Participation Agreement, the Basic Agreement,
the Pass Through Trust Supplement 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 the issuance of the Securities thereunder do not and will
not result in the violation of the provisions of the Articles of
Association or By-Laws of Bank One, and do not and will not conflict
with, or result in the creation or the imposition of any lien, charge
or encumbrance upon any property or assets of Bank One, the 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 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 state or
Federal law, rule or regulation governing Bank One's, the 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 Bank One,
the Trustee or the Indenture Trustee, as the case may be, of any
court, regulatory body, administrative agency, government or
governmental body having jurisdiction of Bank One, the Trustee or the
Indenture Trustee or its 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 state law governing the banking or trust
powers of Bank One, the Trustee or the Indenture Trustee is required
for the authorization, execution, delivery and performance by Bank
One, the Trustee or the Indenture Trustee of the Indentures, each
Participation Agreement, the Basic
14
<PAGE>
Agreement, the Pass Through Trust Supplement and the other Operative
Agreements to which it is or will be a party or the consummation of
any of the transactions by the Trustee or Indenture Trustee
contemplated thereby or the issuance of the Securities under the Basic
Agreement and the Pass Through Trust Supplement (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;
(vi) assuming due authorization, execution and delivery of
the Indenture Supplements covering the Equipment by the Owner Trustee,
such Indenture Supplements will, to the extent that Illinois law is
applicable thereto and on the basis of the law on the date of the
opinion, subject the Equipment covered thereby to the security
interest created by the related Indenture. Such opinion shall be to
such further effect with respect to other legal matters relating to
the Indentures, each Participation Agreement, the Basic Agreement, the
Pass Through Trust Supplement and the other Operative Agreements, to
which Bank One, the Trustee or the Indenture Trustee is, or is to be,
a party, and the sale of Securities hereunder as counsel for the
Underwriters may reasonably request. In giving such opinion, the law
department of Bank One (A) may state that no opinion is expressed as
to laws other than the laws of the State of Illinois and Federal law,
(B) may rely as to the opinions expressed in clauses (ii) and (iii),
insofar as they involve matters relating to the laws of the State of
New York, upon the opinions referred to in Section 5(c) and (d)
hereof, in which case the opinion shall state that they believe that
they and the Underwriters are entitled to so rely and (C) may assume
as to the opinions expressed in clause (ii) relating to each
Participation Agreement, insofar as they involve matters relating to
the laws of the State of New York, that such Participation Agreement
constitute legal, valid and binding instruments under such laws.
(f) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from Ernst
& Young LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Registration
Statement, the Prospectus and the Prospectus Supplement; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
15
<PAGE>
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish you, without charge, 3 conformed copies of the
Registration Statement (including exhibits thereto and documents
incorporated therein by reference) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto but including documents incorporated therein by
reference), in each case, if requested, and to furnish you in New York
City, without charge, prior to 10:00 a.m. New York City time on the
business day next succeeding the date of this Agreement and during the
period mentioned in Section 6(c) below, as many copies of the Prospectus
Supplement and the Prospectus, any documents incorporated therein by
reference and any supplements and amendments thereto as you may reasonably
request.
(b) During the period of five years after the Closing Date, the
Company will promptly furnish to each of the Underwriters, upon request,
copies of all Annual Reports on Form 10-K and any definitive proxy
statements of the Company filed with the Securities Exchange Commission.
(c) Before amending or supplementing the Registration Statement, the
Prospectus or the Prospectus Supplement, to furnish to you a copy of each
such proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file with
the Commission within the applicable period specified in Rule 424(b) under
the Securities Act any prospectus required to be filed pursuant to such
Rule.
(d) If, during such period after the first date of the public
offering of the Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the reasonable opinion of counsel for the
Underwriters and the Company, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other
16
<PAGE>
dealers upon request, either amendments or supplements to the Prospectus so
that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the Prospectus is delivered to
a purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(e) To endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(f) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the twelve-
month period ending June 30, 2001 that satisfies the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
(g) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase or otherwise acquire debt securities of the Company substantially
similar to the Securities (other than (i) the Securities and (ii)
commercial paper issued in the ordinary course of business), without the
prior written consent of Morgan Stanley & Co. Incorporated.
(h) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Securities under the Securities Act and
all other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Securities to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the cost of printing or producing any Blue Sky
or legal investment memorandum in connection with the offer and sale of the
Securities under state law and all expenses in connection with the
qualification of the Securities for offer and sale under state law as
provided in Section 6(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any filing fees and the reasonable fees and
17
<PAGE>
disbursements of counsel to the Underwriters incurred in connection with
the review and qualification of the offering of the Securities by the
National Association of Securities Dealers, Inc., (v) any fees charged by
the rating agencies for the rating of the Securities, (vi) the cost of
printing certificates representing the Securities, (vii) the costs and
charges of any trustee, transfer agent, registrar or depositary, (viii) any
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of
the Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in
this Section, Section 7 entitled "Indemnity and Contribution", and the last
paragraph of Section 9 below, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Securities by them and any
advertising expenses connected with any offers they may make.
7. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein as set forth in the letter from the Underwriters to be dated
April 13, 2000, a copy of which is attached hereto.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
18
<PAGE>
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Underwriter,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 7(a), and by the Company, in the case of
parties indemnified pursuant to Section 7(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or
19
<PAGE>
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if the allocation
provided by clause 7(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 7(d)(i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Securities shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Securities. The relative fault of the
Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the respective principal amounts of Securities they
have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by
20
<PAGE>
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 7 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this Section
7 and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Securities.
8. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange or the National Association of Securities Dealers, Inc.,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in your judgment, is material and adverse and (b) in
the case of any of the events specified in clauses 8(a)(i) through 8(a)(iv),
such event, singly or together with any other such event, makes it, in your
judgment, impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Underwriters shall fail or
refuse to purchase Securities that it has or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is
21
<PAGE>
not more than one-tenth of the aggregate principal amount of the Securities to
be purchased on such date, the other Underwriters shall be obligated severally
in the proportions that the principal amount of Securities set forth opposite
their respective names in Schedule I bears to the principal amount of Securities
set forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as you may specify, to purchase the Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the principal amount of Securities
that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 9 by an amount in excess of one-ninth of such
principal amount of Securities without the written consent of such Underwriter.
If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Securities and the aggregate principal amount of Securities with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Securities to be purchased on such date, and arrangements
satisfactory to you and the Company for the purchase of such Securities are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
22
<PAGE>
12. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
GATX Rail Corporation
By:
--------------------------------------
Name: William J. Hasek
Title: Treasurer
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Acting severally on behalf of themselves
and the Underwriters named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By:
-------------------------------------
Name: Christopher J. Chaput
Title: Principal
23
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of
Securities To Be
Underwriter Purchased
- -------------------------------------------------- ------------------------
<S> <C>
Morgan Stanley & Co. Incorporated................. $ 59,935,000
Credit Suisse First Boston Corporation............ $ 59,934,000
------------
Total $119,869,000
</TABLE>
<PAGE>
Exhibit 4.5
-----------
TRUST SUPPLEMENT NO. 8
DATED AS OF APRIL 13, 2000
TO
PASS THROUGH TRUST
AGREEMENT
DATED AS OF AUGUST 1, 1992
----------------
GATX RAIL CORPORATION
AND
BANK ONE, NA, as Trustee
----------------
GATX RAIL CORPORATION
2000-1 PASS THROUGH TRUST
SERIES 2000-1 PASS THROUGH CERTIFICATES
<PAGE>
TRUST SUPPLEMENT
DATED AS OF APRIL 13, 2000
SERIES 2000-1 PASS THROUGH CERTIFICATES
Table of Contents
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
ARTICLE I THE CERTIFICATES.....................................................2
Section 1.01. The Certificates
ARTICLE II DEFINITIONS.........................................................4
Section 2.01. Definitions
ARTICLE III THE TRUSTEE........................................................4
Section 3.01. The Trustee
Section 3.02. Acceptance by Trustee
ARTICLE IV MISCELLANEOUS PROVISIONS............................................5
Section 4.01. Basic Agreement Ratified
Section 4.02. Termination of Trust
Section 4.03. Governing Law
Section 4.04. Execution in Counterparts
SIGNATURE......................................................................6
</TABLE>
EXHIBIT A
EXHIBIT B
EXHIBIT C
<PAGE>
TRUST SUPPLEMENT
SERIES 2000-1 PASS THROUGH CERTIFICATES
This Trust Supplement No. 8, dated as of April 13, 2000 (herein called
the "Trust Supplement") between GATX Rail Corporation, a New York corporation,
formerly known as the General American Transportation Corporation, (the
"Company"), and Bank One, NA, a national banking association, as successor to
The First National Bank of Chicago, as trustee (the "Trustee"), to the Pass
Through Trust Agreement dated as of August 1, 1992, as supplemented, between the
Company and The First National Bank of Chicago (predecessor to the Trustee) (the
"Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have heretofore executed and
delivered the Basic Agreement, unlimited as to the aggregate principal amount of
Certificates (unless specified herein capitalized terms used herein without
definition have the respective meanings specified heretofore in the Basic
Agreement) which may be issued thereunder;
WHEREAS, each of the two Owner Trustees, acting on behalf of an Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to finance a portion of the purchase price of Equipment purchased by
such Owner Trustee and leased to the Company pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by the Owner Trustees of the same tenor as
the Certificates issued thereunder and shall hold such Equipment Notes in trust
for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of this Trust for
the benefit of the Certificateholders, and the initial Certificateholders as the
grantors of the Trust, by their respective acceptances of the Certificates, join
in the creation of this Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement 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 premises herein, it is agreed
between the Company and the Trustee as follows:
<PAGE>
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"GATX Rail Corporation 2000-1 Pass Through Certificates," (hereinafter defined
as the "Series 2000-1 Certificates"). Each Certificate represents a Fractional
Undivided Interest in the Trust created hereby. The terms and conditions
applicable to the Series 2000-1 Certificates are as follows:
1. The aggregate principal amount of the Series 2000-1 Certificates that
shall be authenticated under the Agreement (except for Series 2000-1
Certificates authenticated and delivered pursuant to Sections 3.03, 3.04 and
3.05 of the Basic Agreement) upon their initial issuance is $119,869,000.
2. The Cut-Off Date shall be April 28, 2000.
3. The Regular Distribution Dates with respect to any payment of Scheduled
Payments means each January 13 and July 13 commencing July 13, 2000 until
payment of all of the Scheduled Payments to be made under the Equipment Notes
has been made.
4. The Scheduled Payments shall be as set forth in Exhibit C hereto.
5. The Special Distribution Dates are as follows: with respect to the
prepayment of any Equipment Note, other than pursuant to a refinancing in
accordance with Section 10.2 of the related Participation Agreement, the 13th
day of the month on which such prepayment is scheduled to occur pursuant to the
terms of the related Indenture; with respect to the prepayment of any Equipment
Note pursuant to a refinancing in accordance with Section 10.2 of the related
Participation Agreement, the Refunding Date (as defined in such related
Participation Agreement); and with respect to any other Special Payment relating
to an Equipment Note, the earliest 13th day of a month for which it is
practicable for the Trustee to give the applicable notice pursuant to Section
4.02(c) of the Basic Agreement.
6. The Series 2000-1 Certificates shall be in the form attached hereto as
Exhibit A. The Series 2000-1 Certificates shall be Book-Entry Certificates and
shall be subject to the conditions set forth in the Letter of Representations
between the Company and the Clearing Agency attached hereto as Exhibit B.
7. The proceeds of the Series 2000-1 Certificates shall be used to purchase
the Equipment Notes at the Original Issue Prices specified below:
2
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL
ISSUE PRINCIPAL
EQUIPMENT NOTE PRICE AMOUNT MATURITY
<S> <C> <C> <C>
2000-1 I 100% $ 9,884,000 January 13, 2020
2000-1 II 100% $22,707,000 January 13, 2020
2000-1 III 100% $10,786,000 January 13, 2020
2000-1 IV 100% $18,382,000 January 13, 2020
2000-2 I 100% $ 9,222,000 January 13, 2020
2000-2 II 100% $21,460,000 January 13, 2020
2000-2 III 100% $10,144,000 January 13, 2020
2000-2 IV 100% $17,284,000 January 13, 2020
</TABLE>
8. Each of the two Owner Trustees, acting on behalf of an Owner Participant,
will issue on a non-recourse basis, the Equipment Notes, the proceeds of which
shall be used, among other things, to finance a portion of the purchase price of
the Equipment as set forth on Schedule 1 to the related Participation Agreement.
9. The related Note Documents are as follows:
(a) With respect to GATX Rail Trust No. 2000-1:
(i) Trust Indenture and Security Agreement (GATX Rail Trust No.
2000-1), dated as of April 3, 2000;
(ii) Equipment Lease Agreement (GATX Rail Trust No. 2000-1), dated as
of April 3, 2000;
(iii) Participation Agreement (GATX Rail Trust No. 2000-1), dated as
of April 3, 2000;
(iv) Indenture Supplement No. I (GATX Rail Trust No. 2000-1), dated
as of April 13, 2000; and
(v) Lease Supplement No. I (GATX Rail Trust No. 2000-1), dated as of
April 13, 2000.
(b) With respect to GATX Rail Trust No. 2000-2:
(i) Trust Indenture and Security Agreement (GATX Rail Trust No.
2000-2), dated as of April 3, 2000;
(ii) Equipment Lease Agreement (GATX Rail Trust No. 2000-2), dated as
of April 3, 2000;
3
<PAGE>
(iii) Participation Agreement (GATX Rail Trust No. 2000-2), dated as
of April 3, 2000;
(iv) Indenture Supplement No. I (GATX Rail Trust No. 2000-2), dated
as of April 13, 2000; and
(v) Lease Supplement No. I (GATX Rail Trust No. 2000-2), dated as of
April 13, 2000.
ARTICLE II
DEFINITIONS
Section 2.01. Definitions. The following terms, notwithstanding the
definitions therefor in the Basic Agreement, shall have the following meanings
for all purposes relating to the Series 2000-1 Certificates (including hereunder
and under the Basic Agreement):
NONE.
ARTICLE III
THE TRUSTEE
Section 3.01. The Trustee. Subject to Section 7.04 of the Basic Agreement,
the Trustee shall not be responsible in any manner whatsoever for or in respect
of the validity or sufficiency of this Trust Supplement or the due execution
hereof by the Company, or for or in respect of the recitals and statements
contained herein, all of which recitals and statements are made solely by the
Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed by the Trustee by
reason of this Trust Supplement other than as set forth in the Basic Agreement,
and this Trust Supplement is executed and accepted on behalf of the Trustee,
subject to all the terms and conditions set forth in the Basic Agreement, upon
the effectiveness thereof, as fully to all intents as if the same were herein
set forth at length.
Section 3.02. Acceptance by Trustee. The Trustee, upon execution and delivery
of this Trust Supplement, acknowledges its acceptance of all right, title, and
interest in and to the Equipment Notes described herein and acquired pursuant to
Section 2.02 of the Basic Agreement and the Participation Agreements and
declares that the Trustee holds and will hold such right, title, and interest,
together with all other property constituting the Trust Property of the Trust
created hereby, for the benefit of all present and future holders of the Series
2000-1 Certificates, upon the trusts set forth herein and in the Basic
Agreement. By its payment for and acceptance of each Certificate issued to it
hereunder, each initial holder of the Series 2000-1 Certificates as grantor of
the Trust thereby joins in the creation and declaration of the Trust created
hereby.
4
<PAGE>
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Basic Agreement Ratified. Except and so far as herein expressly
provided, all of the provisions, terms and conditions of the Basic Agreement are
in all respects ratified and confirmed; and the Basic Agreement and this Trust
Supplement shall be taken, read and construed as one and the same instrument.
Section 4.02. Termination of Trust. The Trust created hereby shall terminate
upon the distribution to all holders of the Series 2000-1 Certificates of all
amounts required to be distributed to them pursuant to the Basic Agreement and
this Trust Supplement and the disposition of all property held as part of the
Trust Property of the Trust created hereby; 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 all of the descendants of Joseph P. Kennedy,
the late ambassador of the United States to Great Britain, living on the date of
this Trust Supplement.
Section 4.03. Governing Law. THIS TRUST SUPPLEMENT AND THE SERIES 2000-1
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 4.04. Execution in Counterparts. This Trust Supplement may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one instrument.
5
<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
GATX RAIL CORPORATION
(f/k/a General American Transportation Corporation)
By: _______________________________
Name:
Title:
BANK ONE, NA,
(successor in interest to the First National Bank of
Chicago), as Trustee
By: _______________________________
Name:
Title:
6
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative of DTC, 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 as the registered owner hereof, Cede & Co., has an interest
herein.
GATX Rail Corporation
2000-1 PASS THROUGH TRUST
Series 2000-1 Pass Through Certificate
CUSIP 361452AA3
Final Regular Distribution Date: January 13, 2020
evidencing a fractional undivided interest in a trust, the property of which
includes certain Equipment Notes secured by certain railroad rolling stock
leased to GATX Rail Corporation.
Certificate
No. R-1 $119,869,000 Fractional Undivided Interest
representing .00000834 of the Trust per
$1,000 face amount
THIS CERTIFIES THAT CEDE & CO., for value received, is the registered owner of
a $119,869,000 (One Hundred Nineteen Million Eight Hundred and Sixty Nine
Thousand) Fractional Undivided Interest in GATX Rail Corporation 2000-1 Pass
Through Trust (the "Trust") created by Bank One, NA, as trustee (the "Trustee"),
pursuant to a Pass Through Trust Agreement dated as of August 1, 1992 and a
related Trust Supplement dated as of April 13, 2000 (collectively, the
"Agreement") between the Trustee and GATX Rail Corporation, a corporation
incorporated under New York law (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 Agreement. This Certificate is one of the duly authorized
Certificates designated as "Series 2000-1 Pass Through Certificates" (herein
called the "Certificates"). This Certificate is issued under and is subject to
the terms, provisions, and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The
<PAGE>
property of the Trust includes certain Equipment Notes (the "Trust Property").
The Equipment Notes are secured by a security interest in railroad rolling stock
leased to the Company.
The Certificates represent fractional undivided interests in the Trust and the
Trust Property, and have no rights, benefits or interest in respect of any other
separate trust established pursuant to the terms of the Agreement for any other
series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement, from funds then
available to the Trustee, there will be distributed on each January 13 and July
13 (a "Regular Distribution Date"), commencing on July 13, 2000, to the person
in whose name this Certificate is registered at the close of business on the day
of the month which is 15 days 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 Trustee, equal
to the product of the percentage interest in the 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 Agreement, in the event that Special
Payments on the Equipment Notes are received by the Trustee, from funds then
available to the 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 day of the month which is 15 days 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 Trustee, equal
to the product of the percentage interest in the 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. The
Special Distribution Date shall be: with respect to the prepayment of any
Equipment Note, other than pursuant to a refinancing in accordance with Section
10.2 of a Participation Agreement, the 13th day of the month on which such
prepayment is scheduled to occur pursuant to the terms of the related Indenture;
with respect to the prepayment of any Equipment Note pursuant to a refinancing
in accordance with Section 10.2 of a Participation Agreement, the Refunding Date
(as defined in such Participation Agreement); and with respect to any other
Special Payment relating to an Equipment Note, the earliest 13th day of a month
for which it is practicable for the Trustee to give the applicable notice
pursuant to Section 4.02(c) of the Basic Agreement. The Trustee shall mail
notice of each Special Payment and the Special Distribution Date therefor to the
Holders of the Certificates.
Distributions on this Certificate will be made by the Trustee (i) by check
mailed to the person entitled thereto or (ii) prior to the time Definitive
Certificates are issued by wire transfer of same-day funds to the account
designated by the Certificateholder to the Trustee on or prior to the applicable
Record Date, without the presentation or surrender of this Certificate or the
making of any notation hereon. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after notice mailed by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
of the Trustee specified in such notice.
2
<PAGE>
This Certificate shall be governed by and construed in accordance with the
laws of the State of New York.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
GATX RAIL CORPORATION 2000-1
PASS THROUGH TRUST
By: BANK ONE, N.A,
as Trustee
By: _______________________________
Name:
Title:
3
<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated: April 13, 2000
This is one of the Certificates referred to
in the within-mentioned Agreement.
BANK ONE, NA,
as Trustee
By: _______________________________
Authorized Officer
4
<PAGE>
[REVERSE OF CERTIFICATE]
The Certificates do not represent a direct obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth on the face hereof and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Holder 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 Holder as provided in the Agreement. This Certificate does not purport to
summarize the Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds, and
duties evidenced hereby. A copy of the Agreement may be examined during normal
business hours at the principal office of the Trustee, and at such other places,
if any, designated by the Trustee, by any Certificateholder upon request.
The 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 Agreement at any time by the
Company and the Trustee with the consent of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders 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 Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the 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 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 Trustee and the Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons
in denominations of $1,000 Fractional Undivided Interest and any integral
multiples of $1,000 in excess thereof except that one Certificate may be in a
denomination of less than $1,000. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations and like series evidencing the same
aggregate Fractional Undivided Interest in the Trust, as requested by the
5
<PAGE>
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the 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 Trustee, the Registrar, nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the distribution to Certificateholders of
all amounts required to be distributed to them pursuant to the Agreement and the
disposition of all property held as part of the Trust Property.
Unless this certificate is presented by an authorized representative of The
Depositary 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 as the registered owner hereof, Cede & Co. has an interest
herein.
6
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto
Insert Taxpayer Identification No.
-------------------------------------------------
-------------------------------------------------
Please print or typewrite name and address including postal zip code of
assignee
-------------------------------------------------
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
-------------------------------------------------
attorney to transfer said Certificate on the books of the Trust with full
power of substitution in the premises.
Date:__________________
_______________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within-mentioned instrument in every
particular, without alteration or any change whatever.
7
<PAGE>
EXHIBIT B
DTC Letter of Representations
<PAGE>
EXHIBIT C
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Total Series 2000-1
8.10% Equipment Notes
Schedule Payments
Regular Distribution Date of Principal
- ------------------------- ---------------------
<S> <C>
July 13, 2000............................. $ 0.00
January 13, 2001.......................... 0.00
July 13, 2001............................. 0.00
January 13, 2002.......................... 0.00
July 13, 2002............................. 707,666.40
January 13, 2003.......................... 2,607,805.42
July 13, 2003............................. 2,959,301.93
January 13, 2004.......................... 2,965,329.84
July 13, 2004............................. 2,961,997.01
January 13, 2005.......................... 2,973,274.59
July 13, 2005............................. 2,961,997.01
January 13, 2006.......................... 2,965,329.84
July 13, 2006............................. 2,961,997.01
January 13, 2007.......................... 2,970,579.51
July 13, 2007............................. 2,961,997.01
January 13, 2008.......................... 2,965,329.84
July 13, 2008............................. 2,961,997.01
January 13, 2009.......................... 3,456,076.33
July 13, 2009............................. 2,485,465.20
January 13, 2010.......................... 4,789,776.16
July 13, 2010............................. 1,134,855.60
January 13, 2011.......................... 5,054,444.57
July 13, 2011............................. 1,134,855.60
January 13, 2012.......................... 6,565,410.58
July 13, 2012............................. 523,569.48
January 13, 2013.......................... 8,017,954.98
July 13, 2013............................. 0.00
January 13, 2014.......................... 8,537,854.73
July 13, 2014............................. 0.00
January 13, 2015.......................... 9,678,265.36
July 13, 2015............................. 0.00
January 13, 2016.......................... 10,581,373.73
July 13, 2016............................. 0.00
January 13, 2017.......................... 3,255,995.43
July 13, 2017............................. 0.00
January 13, 2018.......................... 491,309.99
July 13, 2018............................. 0.00
January 13, 2019.......................... 10,989,423.27
July 13, 2019............................. 0.00
January 13, 2020.......................... 7,247,766.57
</TABLE>
<PAGE>
Exhibit 4.7
-----------
----------------------------------------------
TRUST INDENTURE AND SECURITY AGREEMENT
(GATX Rail Trust No. 2000-1)
Dated as of April 3, 2000
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly
provided herein but solely as Owner Trustee
and
BANK ONE, NA,
as Indenture Trustee
Assorted Railroad Tank
Cars and Covered Hopper Cars
----------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C>
Article I.
Definitions.................................................................... 4
Section 1.01. Certain Definitions................................... 4
Article II.
The Equipment Notes............................................................ 4
Section 2.01. Form of Equipment Notes............................... 4
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; Assumption of
Obligations of Owner Trustee by the Lessee.....................................13
Section 3.01. Basic Rent Distribution...............................13
Section 3.02. Payments in the Event of Prepayment...................13
Section 3.03. Payments after Indenture Event of Default.............14
Section 3.04. Other Payments........................................15
Section 3.05. Distribution of Excepted Property.....................15
Section 3.06. Assumption of Obligations of Owner Trustee
by the Lessee.........................................15
Article IV.
Remedies of the Indenture Trustee upon an Indenture Event of Default...........17
Section 4.01. Indenture Events of Default...........................17
Section 4.02. Acceleration; Rescission and Annulment................19
Section 4.03. Remedies with Respect to Indenture Estate.............19
Section 4.04. Right to Cure; Option to Purchase; Etc................22
Section 4.05. Rights of Lessee......................................24
Section 4.06. Waiver of Existing Defaults...........................24
Article V.
Duties of the Indenture Trustee................................................24
Section 5.01. Action upon Indenture Event of Default................24
Section 5.02. Action upon Instructions..............................25
Section 5.03. Indemnification.......................................26
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.04. No Duties Except as Specified in Indenture
or Instructions.........................................26
Section 5.05. No Action Except under Lease, Indenture
or Instructions.........................................26
Section 5.06. Disposition of Units....................................27
Section 5.07. Indenture Supplements for Replacements..................27
Section 5.08. Effect of Replacements..................................27
Section 5.09. Withholding Taxes.......................................27
Section 5.10. Lessee's Right of Quiet Enjoyment.......................27
Article VI.
The Owner Trustee and the Indenture Trustee......................................28
Section 6.01. Acceptance of Trusts and Duties.........................28
Section 6.02. Absence of Duties.......................................28
Section 6.03. No Representations or Warranties as to
the Equipment or Documents..............................28
Section 6.04. No Segregation of Moneys; No Interest; Investments......29
Section 6.05. Reliance; Agents; Advice of Counsel.....................29
Section 6.06. Not Acting in Individual Capacity.......................30
Article VII.
Certain Limitations on Owner Trustee's and Indenture Trustee's Rights............30
Article VIII.
Successor Trustees...............................................................30
Section 8.01. Notice of Successor Owner Trustee.......................30
Section 8.02. Resignation of Indenture Trustee; Appointment
of Successor............................................30
Article IX.
Supplements and Amendments to this Indenture and Other Documents.................32
Section 9.01. Supplemental Indentures without Consent of Holders......32
Section 9.02. Indenture Trustee Protected.............................33
Section 9.03. Request of Substance, Not Form..........................33
Section 9.04. Documents Mailed to Holders.............................34
Section 9.05. Amendments, Waivers, Etc. of Other Documents............34
Article X.
Miscellaneous....................................................................36
Section 10.01. Termination of Indenture................................36
Section 10.02. No Legal Title to Indenture Estate in Holders...........37
Section 10.03. Sale of Equipment by Indenture Trustee is Binding.......37
Section 10.04. Remedies Cumulative.....................................37
Section 10.05. Discontinuance of Proceedings...........................37
Section 10.06. Indenture and Equipment Notes for Benefit of
Owner Trustee, Indenture Trustee, Owner
Participant and Holders Only............................37
Section 10.07. Notices.................................................38
Section 10.08. Severability............................................39
Section 10.09. Separate Counterparts...................................39
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 10.10. Successors and Assigns.................................39
Section 10.11. Headings...............................................40
Section 10.12. Governing Law..........................................40
Section 10.13. Normal Commercial Relations............................40
Section 10.14. No Recourse Against Others.............................40
</TABLE>
EXHIBIT A- Form of Trust Indenture Supplement
EXHIBIT B- Terms of Equipment Notes
EXHIBIT C- Loan Participants
APPENDIX A- Definitions
ANNEX A- Amortization Schedule
iii
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
(GATX Rail Trust No. 2000-1)
This TRUST INDENTURE AND SECURITY AGREEMENT (GATX Rail Trust No. 2000-
1) dated as of April 3, 2000 (this "Indenture"), between Wilmington Trust
Company, not in its individual capacity except as expressly provided in Section
6.03 hereof, but solely as trustee under the Trust Agreement referred to below
and any successor appointed in accordance with the terms hereof and of the Trust
Agreement (herein in such trustee capacity called the "Owner Trustee"), and Bank
One, NA, a national banking association, as Indenture Trustee hereunder and any
successor appointed in accordance with the terms hereof (herein called the
"Indenture Trustee");
WITNESSETH:
WHEREAS, the Owner Participant and the Owner Trustee in its individual
capacity have entered into the Trust Agreement whereby, among other things, (i)
the Owner Trustee establishes a certain trust for the use and benefit of the
Owner Participant, subject, however, to the Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of the Equipment Notes, and (ii) the Owner Trustee is authorized and
directed to execute and deliver this Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee desire by this
Indenture, among other things, (i) to provide for the issuance by the Owner
Trustee of the Equipment Notes, 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 premium, if any, on and all other amounts due with respect to, the Equipment
Notes 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 Equipment Notes from time to time, a
first priority 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,
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[Trust Indenture and Security Agreement (GATX Rail Trust No. 2000-1)]
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 and prosecute an action at law to obtain
such Excepted Property and (B) to adjust Basic Rent, the percentages
relating to Stipulated Loss Value and Termination Value and the Early
Purchase Price and the Basic Term Purchase Price as provided in Section 3.4
of the Lease and Section 2.6 of the Participation Agreement; and
(ii) the Owner Trustee and the Indenture Trustee shall each
retain the right to receive from Lessee all notices, certificates, reports,
filings, opinions of counsel, copies of all documents and all information
which the Lessee is permitted or required to give or furnish to the Lessor
pursuant to the Lease or to the Owner Trustee pursuant to any other
Operative Agreement and to exercise the inspection rights provided for in
Section 13.2 of the Lease, to give any notice of default under Section 15
of the Lease; and
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[Trust Indenture and Security Agreement (GATX Rail Trust No. 2000-1)]
(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.
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, 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.
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), 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
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 (other than Excepted
Property) 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
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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.
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.
Article II.
The Equipment Notes
Section 2.01. Form of Equipment Notes. The Equipment Notes shall be
substantially in the form set forth below:
8.10% EQUIPMENT NOTE
(Secured by, among others, Lease Obligations of
GATX Rail Corporation)
GATX Rail Trust No. 2000-1 Series [I/II/III/IV]
Issued in Connection with certain Railroad Rolling Stock
No. ______ Chicago, Illinois
April __, 2000
$________________
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[Trust Indenture and Security Agreement (GATX Rail Trust No. 2000-1)]
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 (GATX Rail Trust No. 2000-1), dated as of April 3, 2000,
as from time to time supplemented and amended (herein called the "Trust
Agreement"), between the Owner Trustee in its individual capacity and the
institution referred to therein as the "Owner Participant", hereby promises to
pay to Bank One, NA, as Pass Through Trustee, or its registered assigns, the
principal sum of $_____________________________ (or such lesser amount as shall
equal the unpaid principal amount of this Equipment Note), in lawful currency of
the United States of America, in installments payable on the dates set forth in
Exhibit A hereto, commencing _____________ and thereafter to and including
January 13, 2020 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 each
January 13 and July 13, commencing July 13, 2000, to the maturity date hereof at
the rate of 8.10% 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 10.10% 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 premium, if any, to be made
hereunder and under the Trust Indenture and Security Agreement (GATX Rail Trust
No. 2000-1), dated as of April 3, 2000 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 Bank, One, NA, as Indenture Trustee thereunder for the holder
of this Equipment Note and the holders of other Equipment Notes outstanding
thereunder (herein in such capacity called the "Indenture Trustee") shall be
made only from the income and proceeds from the Indenture Estate and only to the
extent that the Indenture Trustee shall have sufficient income or proceeds from
the Indenture Estate to make such payments in accordance with the terms of
Article III of the Indenture. Each holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Indenture Estate to the extent available for distribution to the holder
hereof as provided in the Indenture and that none of the Owner Trustee, the
Owner Participant, the Indenture Trustee or their permitted successors and
assigns is or shall be personally liable to the holder hereof for any amount
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, premium, 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
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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 premium 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 premium as provided
in Section 4.04(b) of the Indenture. The holder hereof, by its acceptance of
this Equipment Note, agrees to be bound by said provisions.
This Equipment Note is a registered Equipment Note and is
transferable, as provided in the Indenture, only upon surrender of this
Equipment Note for registration of transfer duly endorsed by, or accompanied by
a written statement of transfer duly executed by, the registered holder hereof
or his attorney duly authorized in writing. Prior to the due presentation for
registration of transfer of this Equipment Note, the Owner Trustee and the
Indenture Trustee may deem and treat the registered holder of this Equipment
Note as the absolute owner and holder hereof for the purpose of receiving
payment of all amounts payable with respect hereto and for all other purposes
and shall not be affected by any notice to the contrary.
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR ANY SUCH
APPLICABLE LAWS. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
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.
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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
By:
---------------------------------
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
BANK ONE, NA,
as Indenture Trustee
By:
---------------------------------
Authorized Officer
[Insert the related Amortization Schedule from Annex A]
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Section 2.02. Terms of Equipment Notes. There shall be issued and
delivered to the Loan Participant one Equipment Note of the relevant Series for
each Lease Supplement executed and delivered in respect of the Units delivered
on the Closing Date in the maturity, principal amount and bearing the interest
rate as set forth for such Series in Exhibit B hereto, and the Equipment Notes
related to each such Lease Supplement shall be 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 such Units
by the Owner Trustee from the Lessee, each such Equipment Note to be
substantially in the form set forth in Section 2.01, with deletions and
insertions as appropriate, duly authenticated by the Indenture Trustee and dated
the Closing Date of the Equipment, 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 for the relevant Series.
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 of any one Series which may be
outstanding at any one time shall be limited to the aggregate amount of such
Series set forth in Exhibit B hereto. The aggregate principal amount of all
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. All payments to be
made under the Equipment Notes and this Indenture shall be made only from the
income and the proceeds from the Indenture Estate and only to the extent that
the Indenture Trustee shall have received sufficient income or proceeds from the
Indenture Estate to make such payments in accordance with the terms of Article
III hereof. Each holder of an Equipment Note, by its acceptance of such
Equipment Note, agrees that it will look solely to the income and proceeds from
the Indenture Estate to the extent available for distribution to such holder as
herein provided and that none of the Owner Trustee, the Owner Participant, the
Indenture Trustee or their permitted successors and assigns is or shall be
personally liable to the 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.
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Section 2.04. Method of Payment. (a) The principal of and premium, 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 premium, 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 premium 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 of any Series held by it for an Equipment Note or Equipment
Notes of a different denomination or denominations, may surrender such Equipment
Note or Equipment Notes to the Indenture Trustee at such principal corporate
trust administration office of the Indenture Trustee, together with a written
request from such holder for the issuance of a new
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Equipment Note or Equipment Notes of such Series, 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 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 of any Series 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 such 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
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Indenture Trustee. If the Equipment Note being replaced has been destroyed,
lost or stolen, the holder of such Equipment Note shall furnish to the Owner
Trustee and the Indenture Trustee such security or indemnity as may be required
by them to save the Owner Trustee and the Indenture Trustee harmless and
evidence satisfactory 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 of any Series
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 a Determination Date) upon at least 25 days' prior notice from the
Owner Trustee (or the Lessee on its behalf) to the Indenture Trustee in the
event that the Lease as applicable to any Unit or Units related to such
Equipment Note is terminated pursuant to Section 10 thereof, at a price equal to
the sum of (i) as to principal thereof, an amount equal to the product obtained
by multiplying the unpaid principal amount of such Equipment Note as at the date
of such prepayment (after deducting therefrom the principal installment, if any,
due on or prior to the date of such prepayment) by a fraction, the numerator of
which shall be the Equipment Cost of such Unit or Units and the denominator of
which shall be the aggregate Equipment Cost of all Units of the relevant Basic
Group 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) a premium in an amount equal to 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 of any Series shall be prepaid in whole or in
part by the Owner Trustee on a Rent Payment Date upon at least 25 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 or the deemed
occurrence of an Event of Loss pursuant to Section 9.1 of the Lease 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 15 or more Units on a Determination Date
pursuant to Section 11.2 of the Lease, such prepayment shall be made on such
Determination Date, at a price equal to the sum of (i) as to principal thereof,
an amount equal to the product obtained by multiplying the aggregate unpaid
principal amount of such Equipment Note as at such prepayment date (after
deducting therefrom the principal installment, if any, due on such date) by a
fraction, the numerator of which shall be the Equipment Cost of such Unit or
Units and the denominator of which shall be the aggregate Equipment Cost of all
Units of the relevant Basic Group 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
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application of any Basic Rent paid on or prior to the date of such prepayment,
but without the payment of any Make-Whole Amount or other premium.
(c) Unless Lessee shall have elected pursuant to Section 6.9 of the
Participation Agreement or Section 22.1 of the Lease to assume all of the rights
and obligations of the Owner Trustee under this Indenture in respect of the
Equipment Notes of any Series, each Equipment Note of such Series shall be
prepaid in whole or in part by the Owner Trustee on the Determination Date
specified by Lessee to Owner Trustee and Indenture Trustee in accordance with
Section 6.9 of the Participation Agreement or Section 22.1 of the Lease, as the
case may be, in the event that Lessee exercises a purchase option under Section
6.9 of the Participation Agreement or Section 22.1 of the Lease, as the case may
be, with respect to any Unit or Units related to such Equipment Note, 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 date of any prepayment under Section 6.9 of the Participation
Agreement or Section 22.1 of the Lease, as the case may be (after deducting
therefrom the principal installment, if any, due on the prepayment date) by a
fraction, the numerator of which shall be the Equipment Cost of such Unit or
Units to be purchased and the denominator of which shall be the aggregate
Equipment Cost of all Units of the relevant Basic Group 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 prepayment after giving effect to the
application of any Basic Rent paid on or prior to the date of such prepayment,
and (iii) a premium in an amount equal to the aggregate 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) On the Refunding Date specified by the Lessee 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, a premium in an amount equal to the Make-Whole Amount, if any.
(e) The Indenture Trustee shall give prompt notice of any prepayment
of any Equipment Notes to all holders of the Equipment Notes as soon as the
Indenture Trustee shall have knowledge that such prepayment is expected 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 expected
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 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; Assumption of
Obligations of Owner Trustee by the Lessee
Section 3.01. Basic Rent Distribution. Except as otherwise provided
in Section 3.03 or 3.05, each installment of 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 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 to pay in full the aggregate amount of the
payment or payments of principal, premium, if any, and interest (as well as any
interest on overdue principal or interest) then due, such distribution to be
made ratably, without priority of one over the other, in the proportion that the
amount of such payment or payments then due with respect to each such Equipment
Note bears to the aggregate amount of payments then due under all such Equipment
Notes; and second, the balance, if any, of such installment remaining thereafter
shall be distributed to the Owner Trustee for distribution in accordance with
the terms of the Trust Agreement. The portion of each such installment
distributed to a holder of an Equipment Note shall be applied by such holder in
payment of such Equipment Note in accordance with the terms of Section 2.05.
Section 3.02. Payments in the Event of Prepayment.
-----------------------------------
(a) Except as otherwise provided in Section 3.03 or 3.05, in the event
of any prepayment of an Equipment Note or Notes, in whole or in part, in
accordance with the provisions of Section 2.10 any amount received shall in each
case be distributed and paid in the following order of priority: first, so much
of such amount as shall be required for the purpose of prepayment shall be
distributed and paid to the holders of such Equipment Note or Notes to pay the
aggregate amount of the payment of principal, premium, if any, and interest to
be prepaid on such Equipment Note or Notes pursuant to Section 2.10, such
prepayment to be made ratably to such Equipment Note or Notes to which such
prepayment relates, without priority of one over any other, in the proportion
that the amount to be prepaid on each such Equipment Note bears to the aggregate
amount to be paid on all such Equipment Notes; and second, the balance, if any,
of such amount remaining thereafter shall be distributed to the Owner Trustee
for distribution in accordance with the terms of the Trust Agreement.
(b) Except as otherwise provided in Section 3.03 or 3.05 hereof, any
amounts received directly or through the Lessee from any governmental authority
or other party pursuant to Section 11 of the Lease with respect to any Unit as
the result of an Event of Loss, to the extent that such amounts are not at the
time required to be paid to the Lessee pursuant to said Section 11, and any
amounts of insurance proceeds for damage to the Indenture Estate received
directly or through 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
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to be paid to the Lessee pursuant to said Section 12, shall be applied as
provided in clause (a) of this Section 3.02.
Section 3.03. Payments after Indenture Event of Default.
-----------------------------------------
(a) Except as provided in Section 3.05, all payments received and
amounts realized by the Indenture Trustee after an Indenture Event of Default
shall have occurred and be continuing and after the Indenture Trustee has
declared (as assignee 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 4.02, 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 IV), 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 5.03 (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 premium, 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 4.02 or otherwise, and in case the aggregate amount so
to be distributed shall be insufficient to pay in full the aforesaid
amounts, then, ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Equipment
Notes held by each such holder, plus the accrued but unpaid interest
thereon to the date of distribution, bears to the aggregate unpaid
principal amount of all Equipment Notes, plus the accrued but unpaid
interest thereon to the date of distribution; and
Fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the Owner Trustee for
distribution in accordance with the terms of the Trust Agreement.
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(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 6.04(b)
until the earliest to occur of (a) the date on which such Indenture Default or
Indenture Event of Default shall have been cured or waived, and (b) such
acceleration occurs and such amounts are applied pursuant to Section 3.03(a);
provided, that if any amounts are held pursuant to this Section 3.03(b) for a
period of 180 days during which time the Equipment Notes could, but shall not
have been, accelerated, then (x) all amounts then held by the Indenture Trustee
under this Section 3.03(b) with respect to such Indenture Default or Indenture
Event of Default which have been so held for at least 90 days shall on the 181st
day be distributed to the Owner Trustee for distribution in accordance with the
terms of the Trust Agreement and (y) any such amounts which are being held
pursuant to this Section 3.03(b) with respect to such Indenture Default or
Indenture Event of Default but which have not been held for at least 90 days
shall, on the 91st day following the date on which such amount was initially
received by the Indenture Trustee, thereafter be distributed to the Owner
Trustee for distribution in accordance with the terms of the Trust Agreement.
Section 3.04. Other Payments. Except as otherwise provided in
Section 3.03 or 3.05, (a) any payments received by the Indenture Trustee for
which no provision as to the application thereof is made in the Lease or the
Participation Agreement or elsewhere in this Article III, and (b) all payments
received and amounts realized by the Indenture Trustee under the Lease or
otherwise with respect to the Equipment to the extent received or realized at
any time after payment in full of the principal of and interest and premium, 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
premium, if any, shall be distributed forthwith by the Indenture Trustee in the
order of priority set forth in Section 3.03(a), except that in the case of any
payment described in clause (b) above, such payment shall be distributed
omitting clause "third" of such Section 3.03(a) on all Equipment Notes issued
hereunder.
Any payments received by the Indenture Trustee for which provision as
to the application thereof is made in the Lease or the Participation Agreement
but not elsewhere in this Indenture shall be applied to the purposes for which
such payments were made in accordance with the provisions of the Lease or the
Participation Agreement, as the case may be.
Section 3.05. Distribution of Excepted Property. All amounts
constituting Excepted Property received by the Indenture Trustee shall be paid
promptly by the Indenture Trustee to the Person or Persons entitled thereto.
Section 3.06. Assumption of Obligations of Owner Trustee by the
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 on a full recourse basis in connection with the purchase by
the Lessee of Units pursuant to Section 6.9 of the Participation Agreement or
Section 22.1 of the Lease and, if on or prior to the applicable purchase date:
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(a) The Lessee shall have delivered to the Indenture Trustee and the
Owner Trustee a certificate, dated the date of such purchase, of a Responsible
Officer of the Lessee stating that the 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 Indenture Default shall have occurred and be continuing
immediately subsequent to such purchase or assumption after giving effect to the
indenture supplement referred to below and the Indenture Trustee and the Owner
Trustee shall have received a certificate, dated the date of such purchase, of a
Responsible Officer of the Lessee to such effect;
(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 and the Owner Trustee shall have received
an opinion or opinions of counsel for the Lessee, dated the date of such
purchase which without unusual qualification and permitting reliance on proposed
Treasury Regulations shall be to the effect that, after giving effect to the
indenture supplement referred to below:
(i) this Indenture, the indenture supplement referred to below
and the Equipment Notes issued thereunder each constitutes the legal, valid
and binding obligation of the Lessee, enforceable against the Lessee in
accordance with their respective 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;
(ii) all filings and recordings and other action necessary or
appropriate to protect the interests of the Indenture Trustee in the Units
to be so purchased by the Lessee have been accomplished;
(iii) no holder of Equipment Notes will be required to recognize
gain or loss for tax purposes in connection with such assumption; and
(iv) covering such other matters as the Indenture Trustee shall
reasonably request that are customary for transactions of this type; and
(e) upon delivery of an indenture supplement giving effect to such
assumption reasonably satisfactory to the Indenture Trustee and execution and
delivery of Equipment Notes reflecting such assumption, each 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
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the Equipment Notes and under this Indenture in respect of the Equipment Notes
or otherwise related to such Units (other than any obligations or liabilities of
the Owner Trustee in its individual capacity incurred on or prior to the date of
such purchase or arising out of or based upon events occurring on or prior to
the date of such purchase, which obligations and liabilities shall remain the
sole responsibility of the Owner Trustee) and the Lien of this Indenture upon
the sale proceeds paid or payable to the Owner Trustee shall be discharged. If
requested by the Owner Trustee, the Indenture Trustee shall execute and deliver
an instrument, in form and substance satisfactory to the Owner Trustee,
confirming such release and discharge. In the event that the affected Owner
Participant under Section 6.9 of the Participation Agreement holds less than
100% of the Beneficial Interest and the Lessee is therefore purchasing less than
all the Units pursuant to said Section 6.9 or the Lessee elects to purchase less
than all of the Units pursuant to Section 22.1 of the Lease, as the case may be,
the assumption by the Lessee of the rights and obligations of the Owner Trustee
under this Indenture in respect of that portion of the indebtedness evidenced by
the Equipment Notes which relates to such purchased Units shall be made on the
same terms and conditions as are described in clauses (a) through (e) above
except that (x) the opinion under clause (d) above shall be appropriately
modified to reflect such partial assumption of indebtedness, and (y) the
indenture supplement shall provide for a wholly new and separate indenture
between the Lessee and the Indenture Trustee for that portion of such
indebtedness evidenced by the Equipment Notes which is to be assumed by the
Lessee and secured by the Units to be purchased; and this Indenture shall
thereafter relate only to that portion of the indebtedness evidenced by the
Equipment Notes remaining outstanding under this Indenture after such
assumption. Any such new and separate indenture shall contain the same terms and
provisions of this Indenture with only such changes thereto which are necessary
to reflect the replacement of the Owner Trustee with the Lessee and which do not
adversely affect the rights of the holders of the Equipment Notes.
Article IV.
Remedies of the Indenture Trustee upon an Indenture Event of Default
Section 4.01. 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 4.04(a), a Lease Event of Default (other than
a Lease Event of Default by reason of a default by the Lessee to pay any amounts
which are part of the Excepted Property); or
(b) default by the Owner Trustee in making any payment when due of
principal of, premium, if any, or interest on, 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 any covenant or obligation of them or any of them, in this
Indenture or the Equipment Notes (other than as set forth in clause (b) above)
or in the Participation Agreement or by the Guarantor in the Guaranty, 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
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Trustee or by any holder of an Equipment Note a written notice specifying such
failure and requiring it to be remedied; or
(d) any representation or warranty made by the Owner Trustee or the
Owner Participant under the Participation Agreement, or by the Owner Trustee
hereunder or by the Guarantor in the Guaranty, or by any representative or
Affiliate of the Owner Trustee or the Owner Participant or the Guarantor in any
document or certificate furnished to the Indenture Trustee or the Loan
Participant in connection herewith or therewith or pursuant hereto or thereto,
shall prove at any time to have been incorrect in any material respect as of the
date made and such incorrectness shall remain material and continue unremedied
for a period of 30 days after there has been given to the Owner Trustee and the
Owner Participant a written notice specifying such incorrectness, stating that
such incorrectness is a default hereunder and requiring it to be remedied by the
Indenture Trustee or by any holder of an Equipment Note; or
(e) the Owner Trustee (as Owner Trustee and not in its individual
capacity), the Owner Participant, the OP General Partner or the Guarantor 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), the Owner Participant, the OP General Partner or the Guarantor 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), the Owner Participant, the OP
General Partner or the Guarantor, a receiver, trustee or liquidator of the
Indenture Estate, the Owner Trustee (as Owner Trustee and not in its individual
capacity), the Owner Participant, the OP General Partner or the Guarantor, or of
any substantial part of its property, or granting any order for relief in
respect of the Owner Trustee (as Owner Trustee and not in its individual
capacity), the Owner Participant, the OP General Partner or the Guarantor 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), the Owner Participant, the OP General Partner or the
Guarantor, 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), the
Owner Participant, the OP General Partner or the Guarantor, 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), the Owner Participant, the OP General Partner or the Guarantor or of
any substantial part of its property and such jurisdiction, custody or
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control shall remain in force unrelinquished, unstayed or unterminated for a
period of 60 days; or
(i) any repudiation by the Guarantor of its obligations under the
Guaranty; or
(j) the Guaranty ceases to be in full force and effect.
Notwithstanding any provision herein to the contrary, if an Indenture Event of
Default described in clause (e), (f), (g) or (h) of this Section 4.01 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 IV 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 4.02. 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
4.04, declare the unpaid principal amount of all Equipment Notes then
outstanding and accrued interest thereon to be due and payable, it being agreed
that no Make-Whole Amount or other premium should be payable in such event. 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 IV, 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 the
Equipment Notes, and the principal on any Equipment Notes that has 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 the Equipment Notes that have become due solely because of such acceleration,
have been cured or waived.
Section 4.03. 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 V hereof shall, subject to Sections 4.04 and 4.05, 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 IV and may recover judgment in its own
name as Indenture Trustee against the Indenture Estate and may take possession
of all or any part of the Indenture Estate, and may exclude the Owner Trustee
and the Owner Participant and all persons claiming under any of them wholly or
partly therefrom; provided, however, that nothing in this Indenture shall permit
or require the Indenture Trustee to take any action contrary to, or to disturb,
the Lessee's rights under the Lease, except in accordance with the provisions of
the Lease.
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(b) Subject to Section 4.04 and Section 4.05, 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 4.02; provided further, that, in the event the
circumstances contemplated by Section 4.04(c) exist, the Indenture Trustee shall
not be allowed to deliver the notice required by this Section 4.03(b) (x) until
the earlier of (1) such time as such circumstances no longer exist or (2) the
expiration of the 90 day period set forth in Section 4.04(c) or (y) if the
circumstances contemplated by the second proviso of Section 4.04(c) then exist.
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 may exercise
such right without including the holders as parties to any suit or proceeding
relating to foreclosure of any property in the Indenture Estate. The Owner
Trustee hereby irrevocably constitutes the Indenture Trustee the true and lawful
attorney-in-fact of the Owner Trustee (in the name of the Owner Trustee or
otherwise) for the purpose of effectuating any sale, assignment, transfer or
delivery for enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale or otherwise, to execute and deliver all such bills
of sale, assignments and other instruments as the Indenture Trustee may consider
necessary or appropriate, with full power of substitution, the Owner Trustee
hereby ratifying and confirming all that such attorney or any substitute shall
lawfully do by virtue hereof. Nevertheless, if so requested by the Indenture
Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such
sale, assignment, transfer or delivery, by executing and delivering to the
Indenture Trustee or such purchaser all bills of sale, assignments, releases and
other proper instruments to effect such ratification and confirmation as may be
designated in any such request.
(c) Subject to Section 4.04 and Section 4.05, 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
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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 4.04 and Section 4.05, 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 discretion to protect the Indenture
Estate and the Indenture Trustee, as trustee and individually, against any and
all liability for loss or damage to such Unit and for public liability and
property damage resulting from use or operation of such Unit and (ii) funds are
available in the Indenture Estate to pay for all such insurance or, in lieu of
such insurance, the Indenture Trustee is furnished with indemnification from the
holders of the Equipment Notes or any other Person upon terms and in amounts
satisfactory to the Indenture Trustee in its discretion to protect the Indenture
Estate and the Indenture Trustee, as trustee and individually, against any and
all such liabilities.
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(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 4.04. 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 4.04(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 IV), 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 4.04(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 IV), 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 (other than the payment of Basic Rent) 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 $3,000,000. Upon any cure by the Owner Participant or the Owner
Trustee in accordance with the first sentence of this Section 4.04(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
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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 4.04(a) except by demanding of the Lessee payment of
such amount or by prosecuting an action against the Lessee to require the
payment of such amount; provided further, that with respect to any amounts
advanced by and owing to the Owner Trustee and the Owner Participant, the Owner
Trustee and the Owner Participant shall be expressly subordinated to the right
of the holders of the Equipment Notes to receive any and all amounts then due
and owing on the Equipment Notes prior to any payment from the Lessee to the
Owner Trustee or the Owner Participant.
(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 4.02, (ii) the Equipment Notes shall have been accelerated
pursuant to Section 4.02 or (iii) the Indenture Trustee, as assignee hereunder
of the Lease, shall have declared the Lease to be in default and shall have
commenced the exercise of any additional remedy in respect of the Units under
the Lease, then and in any such case, upon 30 days' notice (which notice shall
be irrevocable) from the Owner Trustee to the Indenture Trustee designating a
date of purchase (the "Purchase Date") which shall be a Determination Date, each
holder of an Equipment Note will be obligated to, 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 without any Make-
Whole Amount or other premium, 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. During such 30-day notice period, the Indenture Trustee shall
not exercise any of the rights, remedies or powers pursuant to Section 15 of the
Lease or this Article IV, so long as the Owner Participant (or any nominee of
the Owner Participant reasonably acceptable to the Indenture Trustee) has
notified the Indenture Trustee that the notice so provided by the Owner Trustee
or its nominee pursuant to this Section 4.04(b) constitutes the binding
obligation of the Owner Trustee or its nominee to purchase the Equipment Notes.
(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
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proceeded or is then currently proceeding, to the extent it is then entitled to
do so hereunder and under the Lease and is not then stayed or otherwise
prevented from doing so by operation of law, to exercise one (or more, as it
shall in its good faith discretion determine) of the comparable remedies
provided for in Section 15 of the Lease with respect to the Equipment, provided
that in the event the Indenture Trustee shall be so stayed or otherwise
prevented from exercising such remedies under the Lease, it shall in any event
refrain from so foreclosing or exercising such other remedies hereunder for a
period of not less than 90 days, and further provided that in the event the
Lessee as debtor in a proceeding under Chapter 11 of the Bankruptcy Code (or any
trustee appointed for the Lessee as debtor in any such bankruptcy case) shall
have assumed the Lease 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, 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 and no Indenture Event of Default unrelated to a Lease Event of
Default occurring solely pursuant to Section 14(g) or 14(h) of the Lease shall
have occurred and be continuing, the Indenture Trustee shall refrain from so
foreclosing or exercising such other remedies hereunder. Nothing in this Section
4.04(c) shall prevent the Indenture Trustee from foreclosing or exercising such
other remedies hereunder to the extent the Lessee fails to comply with any
provisions of any order issued in connection with the assumption of the Lease.
Section 4.05. Rights of Lessee. Notwithstanding the provisions of
this Indenture, including, without limitation, Section 4.03, 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 4.06. 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, premium, if any, or interest on any
Equipment Note, 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
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 V.
Duties of the Indenture Trustee
Section 5.01. Action upon Indenture Event of Default. If any payments
of Basic Rent or payments of the principal or interest or premium, if any, on
the Equipment Notes due and payable on any Rent Payment Date shall not have been
paid in full on such Rent Payment Date, the Indenture Trustee shall give
telephonic notice within one Business Day (followed by prompt written notice) to
the Owner Trustee, the Owner Participant, the Loan Participant and the Lessee
specifying the amount and nature of such deficiency in payment. In the event the
Indenture Trustee shall have knowledge of an Indenture Event of Default or an
Indenture Default, the
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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, facsimile, 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 5.03, the Indenture Trustee shall
take such action, or refrain from taking such action, with respect to such
Indenture Event of Default or Indenture Default as the Indenture Trustee shall
be instructed in writing by a Majority in Interest. If the Indenture Trustee
shall not have received instructions as above provided within 20 days after the
mailing of notice of such Indenture Event of Default or such Indenture Default
to the Loan Participant by the Indenture Trustee, the Indenture Trustee may, but
shall not be obligated to, take such action, or refrain from taking such action,
with respect to such Indenture Event of Default or Indenture Default as it shall
determine to be advisable in the best interests of the Loan Participant. Any
provision of this Section 5.01 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 4.04(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 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 5.02. Action upon Instructions. Subject to the terms of
Sections 5.01 and 5.03, 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 premium, if any, on the Equipment Notes
in accordance with the terms of this Indenture, or,
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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 5.03. Indemnification.
---------------
(a) The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 5.01 (other than the first two
sentences thereof) or 5.02 or Article IV 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 5.01 or 5.02 or Article IV, 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 5.03. Each Loan Participant so participating shall
be entitled to reimbursement for such participation in accordance with Article
III.
Section 5.04. 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 5.01 or 5.02; and no implied duties or obligations shall be
read into this Indenture against the Indenture Trustee. Each of the Owner
Trustee (only in its individual capacity) and the Indenture Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge any liens or encumbrances on any part of the
Indenture Estate, or on any properties of the Owner Trustee assigned, pledged or
mortgaged as part of the Indenture Estate, which result from claims against it
in its individual capacity not related to the ownership of the Equipment (in the
case of the Owner Trustee), administration of the Indenture Estate (in the case
of the Indenture Trustee) or any other transaction under this Indenture or the
Trust Agreement or any document included in the Indenture Estate.
Section 5.05. 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
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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 5.01 or 5.02.
Section 5.06. 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 5.07. Indenture Supplements for Replacements. In the event of
a Replacement Unit being substituted as contemplated by Section 11.2 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the
holders of the Equipment Notes and the Lessee, subject to compliance by the
Lessee with its obligations set forth in Section 11 of the Lease, to execute and
deliver an Indenture Supplement substantially in the form of Exhibit A hereto
and, provided no Lease Event of Default or Lease Default shall have occurred and
be continuing, execute and deliver to the Lessee an appropriate instrument
releasing the Unit being replaced from the Lien of the Indenture.
Section 5.08. 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 5.09. Withholding Taxes. The Indenture Trustee, as agent for
the Owner Trustee, shall exclude and withhold from each payment of principal,
premium, 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
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 the
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 5.10. 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 5.10.
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Article VI.
The Owner Trustee and the Indenture Trustee
Section 6.01. 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 5.04; 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 6.02. Absence of Duties. Except in accordance with written
instructions or requests furnished pursuant to Section 5.01 or Section 5.02 and
except as provided in, and without limiting the generality of, Section 5.04, 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 6.03. 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
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warranties made by it in its individual capacity in Sections 3.1 and 3.3,
respectively, of the Participation Agreement.
Section 6.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
(a) Subject to Section 6.04(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 6.05. 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
29
<PAGE>
Indenture and to take all action permitted to be taken by it pursuant to the
provisions hereof, and need not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Indenture Trustee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the reasonable expense of the Indenture Estate, consult with independent
counsel, accountants and other skilled persons to be selected and employed by
it, and the Indenture Trustee shall not be liable for anything done, suffered,
or omitted in good faith by it in accordance with the written advice or opinion
of any such independent counsel, accountants or other skilled persons acting
within such persons' area of competence (so long as the Indenture Trustee shall
have exercised reasonable care in selecting such persons).
Section 6.06. Not Acting in Individual Capacity. The Owner Trustee
and the Indenture Trustee each acts hereunder solely as trustee hereunder and,
in the case of the Owner Trustee, under the Trust Agreement and not in its
individual capacity unless otherwise expressly provided; and all Persons, other
than the holders of Equipment Notes to the extent expressly provided in this
Indenture, having any claim against the Owner Trustee or the Indenture Trustee
by reason of the transactions contemplated hereby shall, subject to the Lien and
priorities of payment as herein provided, look only to the Indenture Estate for
payment or satisfaction thereof.
Article VII.
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 4.03 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 VIII.
Successor Trustees
Section 8.01. 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 8.02. 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 8.02. The Indenture Trustee or any successor thereto
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<PAGE>
may resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and the holders
of the Equipment Notes. A Majority in Interest may at any time remove the
Indenture Trustee without cause by an instrument in writing delivered to the
Owner Trustee, the Owner Participant, the Lessee and the Indenture Trustee. The
Owner Trustee may remove the Indenture Trustee if: (1) the Indenture Trustee
fails to comply with Section 8.02(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,
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<PAGE>
shall, subject to the terms of paragraph (c) of this Section, be the Indenture
Trustee under this Indenture without further act.
Article IX.
Supplements and Amendments to this Indenture and Other Documents
Section 9.01. 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 VIII) 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 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 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 the first sentence of Section 4.03(a) or Section 4.05 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 9.02 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 the Equipment Notes and of the Owner Trustee under this Indenture;
provided, however,
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<PAGE>
without the consent of each holder of an Equipment Note affected thereby, no
such supplemental indenture shall:
(1) 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, premium, if any, or interest on any Equipment Note, or reduce
the principal amount thereof or the premium, 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 premium,
if any, or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment of principal or premium, if
any, or interest on or after the date such principal or premium, 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 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 9.01(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 the first sentence of Section 4.03(a) or Section 4.05 be
so altered or modified without such Lessee consent.
Section 9.02. Indenture Trustee Protected. If in the opinion of the
Indenture Trustee any document required to be executed pursuant to the terms of
Section 9.01 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 9.03. Request of Substance, Not Form. It shall not be
necessary for the consent of the holders of Equipment Notes under Section
9.01(b) to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
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<PAGE>
Section 9.04. Documents Mailed to Holders. Promptly after the
execution by the Indenture Trustee of any document entered into pursuant to
Section 9.01(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 9.05. Amendments, Waivers, Etc. of Other Documents.
(a) Notwithstanding any provision of this Indenture to the contrary,
without the consent of a Majority in Interest, the respective parties to the
Lease, the Participation Agreement and the Trust Agreement may not modify, amend
or supplement any of such agreements, or give any consent, waiver, authorization
or approval under any of such agreements, 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 9.05 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 9.05,
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, 3.6 (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 3.4 and 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 (except that additional insurance requirements may be
imposed on the Lessee), 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 (if the
result thereof would be to provide any renewal or purchase option contained
in such Section prior to the final maturity of the Equipment Notes), 24,
25.1, 25.4, 25.6, 25.10, and any definition of terms used in the Lease, to
the extent that any modification of such definition would result in a
modification of the Lease not permitted as aforesaid in this clause (1) of
subsection (b); provided that, in the event an Indenture Event of Default
shall have occurred and be
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<PAGE>
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; provided, further, that, subject to the
Indenture Trustee's rights to exercise remedies under Section 15 of the
Lease without the prior consent of the Owner Trustee, and whether or not an
Indenture Event of Default shall have occurred and be continuing, no such
modification, amendment or supplement of the Lease or other action referred
to in the preceding proviso shall be taken without the prior written
consent of the Owner Trustee with respect to any of the provisions of
Sections 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 (with respect to insurance
coverage of the interests of the Owner Trustee and the Owner Participant),
13, 14, 15 (in respect of the obligation to pay and the measure of money
damages), 16 (with respect to filings or recordings benefiting the Owner
Trustee or the Owner Participant), 17, 18, 19, 20, 22, 23, 25.1 and 25.5 of
the Lease 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 pursuant to this proviso;
(2) modify, amend or supplement the Trust Agreement, or give any
consent, waiver, authorization or approval with respect thereto, except
that without the consent of a Majority of Interest, the parties to the
Trust Agreement shall not modify, amend or supplement, or give any consent,
waiver, authorization or approval for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof
or of modifying in any manner the rights of the respective parties
thereunder, with respect to Sections 2.1, 2.2, 3.1, 4.4, 7.1, 7.2, 9.1,
10.1, 10.2, 10.7, 10.11 or any other Section of the Trust Agreement if such
action would materially adversely affect the interest of the Loan
Participants, and any definition of terms used in the Trust Agreement, to
the extent that any modification of such definition would result in a
modification of the Trust Agreement not permitted pursuant to this
subsection (b);
(3) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without the consent of a Majority of Interest, the parties to
the Participation Agreement shall not modify, amend or supplement, or give
any consent, waiver, authorization or approval for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
respective parties thereunder, with respect to the following provisions of
the Participation Agreement: Sections 1, 2, 3, 4, 5, 6, 7, 10.2, 10.5,
10.7, 10.9 and 10.13(a), each provision of the Participation Agreement
which specifically refers to the Indenture Trustee or Loan Participants and
any definition of terms used in the Participation Agreement, to the extent
that any modification of such definition would result in a modification of
the Participation Agreement not permitted pursuant to this subsection (b);
and
(4) modify, amend or supplement any of said agreements in order
to cure any ambiguity, to correct or supplement any provision thereof which
may be defective or inconsistent with any other provision thereof or any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising
35
<PAGE>
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 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 9.05, 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 the 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 the Equipment Notes required
to be paid at the time of such payments; or
(2) modify, amend or supplement the Lease in such a way as to,
or consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
obligation in respect of payment of Basic Rent or Stipulated Loss Value and
any other amounts payable under, or as provided in, the Lease upon the
occurrence of an Event of Loss, or Termination Value and any other amounts
payable under, or as provided in, the Lease upon termination thereof,
except for any such assignment pursuant to Section 6.8 of the Participation
Agreement, and except as provided in the Lease.
Article X.
Miscellaneous
Section 10.01. 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, and (iii) the payment in full of the principal amount of
and interest on all Equipment Notes outstanding hereunder and all other sums
payable
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<PAGE>
to the Indenture Trustee and the holders of the Equipment Notes hereunder and
under such Equipment Notes and under the Participation Agreement.
Section 10.02. 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 10.03. 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
the Equipment Notes, the Owner Trustee and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trustee, the Owner Participant and such holders of the
Equipment Notes in and to the Equipment. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such sale or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Indenture Trustee.
Section 10.04. 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 10.05. 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 10.06. 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 the
Equipment Notes any legal or equitable right, remedy or claim under or in
respect of this Indenture or any Equipment Note.
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<PAGE>
Section 10.07. 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 (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 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 (i) or (ii),
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:
<TABLE>
<CAPTION>
<S> <C>
If to the Owner Trustee: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Fax No.: (312) 651-8882
Confirmation No.: (312) 651-1000
With copies to Owner Participant.
If to Owner Participant: With copies to:
Watson, Farley & Williams
380 Madison Avenue
New York, NY 10017
Attention: Caryn Hemsworth
Fax No.: (212) 922-1512
Confirmation No.: (212) 922-2200
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
If to the Indenture Bank One, NA
Trustee: 1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust
Services Division
(GATX Rail Trust No. 2000-1)
Fax No.: (312) 407-1708
Confirmation No.: (312) 407-8810
If to Lessee: GATX Rail Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: Treasurer
(GATX Trust Rail No. 2000-1)
Fax No.: (312) 621-6645
Confirmation No.: (312) 621-6200
If to the Loan At such address as is set forth on
Participant: 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.
</TABLE>
Notwithstanding the foregoing provisions, for purposes of Sections
4.01, 4.02, 4.04, 5.01 and 5.02, written notice shall be deemed given when it is
in fact received (by mail or otherwise) by any addressee at the respective
addresses specified above.
Section 10.08. 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 10.09. 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 10.10. 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
39
<PAGE>
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 10.11. 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 10.12. Governing Law. This Indenture shall in all respects
be governed by, and construed in accordance with, the laws of the State of New
York, including all matters of construction, validity and performance.
Section 10.13. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Owner Participant, the Owner
Trustee or the Indenture Trustee or any affiliate of the Owner Participant, the
Owner Trustee or the Indenture Trustee may enter into commercial banking or
other financial transactions, and conduct banking or other commercial
relationships, with the Lessee, any holder of an Equipment Note or the Indenture
Trustee (in its individual capacity or otherwise) fully to the same extent as if
this Indenture were not in effect, including, without limitation, the making of
loans or other extensions of credit for any purpose whatsoever.
Section 10.14. No Recourse Against Others. No director, officer,
employee or stockholder, as such, of Lessee, Owner Trustee, Owner Participant or
Indenture Trustee shall have any liability for any obligations of Lessee, Owner
Participant, Owner Trustee or Indenture Trustee or under the Equipment Notes or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each holder of the Equipment Notes by accepting
an Equipment Note waives and releases all such liability. The waiver and
release are part of the consideration of the Equipment Notes.
* * *
40
<PAGE>
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, as of the day and year first above written.
BANK ONE, NA,
as Indenture Trustee
By: ________________________________
Name: ______________________________
Title: _____________________________
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly provided in Section 6.03
hereof but solely as Owner Trustee
By: ________________________________
Name: ______________________________
Title: _____________________________
41
<PAGE>
EXHIBIT A
TRUST INDENTURE SUPPLEMENT NO. _
(GATX Rail Trust No. 2000-1)
This Indenture Supplement No. __ (GATX Rail Trust No. 2000-1), dated ______
____, ______ (this "Indenture Supplement"), of Wilmington Trust Company, a
Delaware corporation, not in its individual capacity except as expressly
provided herein but solely as owner trustee (the "Owner Trustee") under the
Trust Agreement (GATX Rail Trust No. 2000-1), dated as of April 3, 2000 (the
"Trust Agreement"), between the Owner Trustee in its individual capacity and
, as Owner Participant;
WITNESSETH:
WHEREAS, the Trust Indenture and Security Agreement (GATX Rail Trust No.
2000-1) dated as of April 3, 2000 (the "Indenture"), between the Owner Trustee
and Bank One, NA 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 Equipment 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 premium, 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>
Equipment Notes and for the uses and purposes and subject to the terms and
provisions set forth in the Indenture.
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>
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture Supplement
to be duly executed by one of its duly authorized officers, as of the day and
year first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly provided herein but
solely as Owner Trustee
By: _________________________________
Name: _______________________________
Title: ______________________________
A-3
<PAGE>
EXHIBIT B
Terms of Equipment Notes
------------------------
<TABLE>
<CAPTION>
Interest Rate
Series Principal Amount Interest Rate After Maturity Final Maturity
------ ---------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Series I $ 9,884,000 8.10% 10.10% January 13, 2020
Series II $22,707,000 8.10% 10.10% January 13, 2020
Series III $10,786,000 8.10% 10.10% January 13, 2020
Series IV $18,382,000 8.10% 10.10% January 13, 2020
</TABLE>
<PAGE>
EXHIBIT C
Loan Participant
----------------
<TABLE>
<CAPTION>
Percentage of
Equipment Notes Loan Participant Principal Amount
- --------------- ---------------- ----------------
<S> <C> <C>
Equipment Notes Bank One, NA, as Trustee under the Pass 100%
Through Trust Agreement, dated as of
April 3, 2000 between Bank One, NA and
GATX Rail Corporation, as supplemented
by Trust Supplement No. 1 thereto dated
April 3, 2000.
</TABLE>
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-1
Series I
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 0.0000000%
Jan 13 2003 2.5365582%
Jul 13 2003 2.6231419%
Jan 13 2004 2.7087698%
Jul 13 2004 2.7841870%
Jan 13 2005 2.8639240%
Jul 13 2005 2.9483629%
Jan 13 2006 3.0379322%
Jul 13 2006 3.1331141%
Jan 13 2007 3.2165833%
Jul 13 2007 3.3419498%
Jan 13 2008 3.4574976%
Jul 13 2008 3.5813217%
Jan 13 2009 7.4286887%
Jul 13 2009 0.0000000%
Jan 13 2010 8.0026601%
Jul 13 2010 0.0000000%
Jan 13 2011 8.7228915%
Jul 13 2011 0.0000000%
Jan 13 2012 9.5564941%
Jul 13 2012 0.0000000%
Jan 13 2013 15.3363115%
Jul 13 2013 0.0000000%
Jan 13 2014 21.4819982%
Jul 13 2014 0.0000000%
Jan 13 2015 29.6689750%
Jul 13 2015 0.0000000%
Jan 13 2016 25.4547879%
Jul 13 2016 0.0000000%
Jan 13 2017 0.0000000%
Jul 13 2017 0.0000000%
Jan 13 2018 0.0000000%
Jul 13 2018 0.0000000%
Jan 13 2019 64.2493611%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(1)
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-1
Series II
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 0.0000000%
Jan 13 2003 1.7164733%
Jul 13 2003 2.6277372%
Jan 13 2004 2.7136432%
Jul 13 2004 2.7739251%
Jan 13 2005 2.8689174%
Jul 13 2005 2.9373368%
Jan 13 2006 3.0430397%
Jul 13 2006 3.1212068%
Jan 13 2007 3.2396635%
Jul 13 2007 3.3296337%
Jan 13 2008 3.4634520%
Jul 13 2008 3.5678890%
Jan 13 2009 3.7204522%
Jul 13 2009 3.8642186%
Jan 13 2010 3.9973351%
Jul 13 2010 4.1869073%
Jan 13 2011 4.3457267%
Jul 13 2011 4.5683998%
Jan 13 2012 9.5477387%
Jul 13 2012 0.0000000%
Jan 13 2013 10.5555556%
Jul 13 2013 0.0000000%
Jan 13 2014 11.8012423%
Jul 13 2014 0.0000000%
Jan 13 2015 17.4491931%
Jul 13 2015 0.0000000%
Jan 13 2016 30.5873877%
Jul 13 2016 0.0000000%
Jan 13 2017 22.6482729%
Jul 13 2017 0.0000000%
Jan 13 2018 0.0000000%
Jul 13 2018 0.0000000%
Jan 13 2019 64.2493611%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(2)
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-1
Series III
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 0.0000000%
Jan 13 2003 1.6762891%
Jul 13 2003 2.4460432%
Jan 13 2004 2.4926254%
Jul 13 2004 2.5714718%
Jan 13 2005 2.6393417%
Jul 13 2005 2.7108914%
Jan 13 2006 2.7700377%
Jul 13 2006 2.8658126%
Jan 13 2007 2.9503645%
Jul 13 2007 3.0400572%
Jan 13 2008 3.1169310%
Jul 13 2008 3.2362460%
Jan 13 2009 3.3444816%
Jul 13 2009 3.4602076%
Jan 13 2010 7.1473751%
Jul 13 2010 0.0000000%
Jan 13 2011 9.9997119%
Jul 13 2011 0.0000000%
Jan 13 2012 13.5401121%
Jul 13 2012 0.0000000%
Jan 13 2013 16.9826204%
Jul 13 2013 0.0000000%
Jan 13 2014 22.1836388%
Jul 13 2014 0.0000000%
Jan 13 2015 30.9142683%
Jul 13 2015 0.0000000%
Jan 13 2016 48.5252427%
Jul 13 2016 0.0000000%
Jan 13 2017 0.0000000%
Jul 13 2017 0.0000000%
Jan 13 2018 0.0000000%
Jul 13 2018 0.0000000%
Jan 13 2019 45.5708285%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(3)
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-1
Series IV
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 0.0000000%
Jan 13 2003 1.9510991%
Jul 13 2003 2.4390244%
Jan 13 2004 2.5000000%
Jul 13 2004 2.5641026%
Jan 13 2005 2.6471504%
Jul 13 2005 2.7031350%
Jan 13 2006 2.7782344%
Jul 13 2006 2.8576260%
Jan 13 2007 2.9590948%
Jul 13 2007 3.0313902%
Jan 13 2008 3.1261561%
Jul 13 2008 3.2270384%
Jan 13 2009 3.3346488%
Jul 13 2009 3.4700959%
Jan 13 2010 7.1473884%
Jul 13 2010 0.0000000%
Jan 13 2011 8.6032648%
Jul 13 2011 0.0000000%
Jan 13 2012 13.1512110%
Jul 13 2012 0.0000000%
Jan 13 2013 16.4209804%
Jul 13 2013 0.0000000%
Jan 13 2014 21.3058525%
Jul 13 2014 0.0000000%
Jan 13 2015 29.3598334%
Jul 13 2015 0.0000000%
Jan 13 2016 45.0711851%
Jul 13 2016 0.0000000%
Jan 13 2017 0.0000000%
Jul 13 2017 0.0000000%
Jan 13 2018 0.0000000%
Jul 13 2018 0.0000000%
Jan 13 2019 52.0861181%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(4)
<PAGE>
___________________________________________
TRUST INDENTURE AND SECURITY AGREEMENT
(GATX Rail Trust No. 2000-2)
Dated as of April 3, 2000
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly
provided herein but solely as Owner Trustee
and
BANK ONE, NA,
as Indenture Trustee
Assorted Railroad Tank
Cars and Covered Hopper Cars
___________________________________________
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Article I. Definitions.................................................................... 4
Section 1.01. Certain Definitions..................................... 4
Article II. The Equipment Notes............................................................ 4
Section 2.01. Form of Equipment Notes................................. 4
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;
Assumption of Obligations of Owner Trustee by the Lessee....................... 13
Section 3.01. Basic Rent Distribution................................. 13
Section 3.02. Payments in the Event of Prepayment..................... 13
Section 3.03. Payments after Indenture Event of Default............... 14
Section 3.04. Other Payments.......................................... 15
Section 3.05. Distribution of Excepted Property....................... 15
Section 3.06. Assumption of Obligations of Owner Trustee by the
Lessee.................................................. 15
Article IV. Remedies of the Indenture Trustee upon an Indenture Event of Default........... 17
Section 4.01. Indenture Events of Default............................. 17
Section 4.02. Acceleration; Rescission and Annulment.................. 19
Section 4.03. Remedies with Respect to Indenture Estate............... 19
Section 4.04. Right to Cure; Option to Purchase; Etc.................. 22
Section 4.05. Rights of Lessee........................................ 24
Section 4.06. Waiver of Existing Defaults............................. 24
Article V. Duties of the Indenture Trustee................................................ 24
Section 5.01. Action upon Indenture Event of Default.................. 24
Section 5.02. Action upon Instructions................................ 25
Section 5.03. Indemnification......................................... 26
</TABLE>
i
<PAGE>
PAGE>
<TABLE>
<S> <C>
Section 5.04. No Duties Except as Specified in Indenture or
Instructions................................................... 26
Section 5.05. No Action Except under Lease, Indenture
or Instructions................................................ 26
Section 5.06. Disposition of Units........................................... 27
Section 5.07. Indenture Supplements for Replacements......................... 27
Section 5.08. Effect of Replacements......................................... 27
Section 5.09. Withholding Taxes.............................................. 27
Section 5.10. Lessee's Right of Quiet Enjoyment.............................. 27
Article VI. The Owner Trustee and the Indenture Trustee......................................... 28
Section 6.01. Acceptance of Trusts and Duties................................ 28
Section 6.02. Absence of Duties.............................................. 28
Section 6.03. No Representations or Warranties as to the Equipment or
Documents...................................................... 28
Section 6.04. No Segregation of Moneys; No Interest;
Investments.................................................... 29
Section 6.05. Reliance; Agents; Advice of Counsel............................ 29
Section 6.06. Not Acting in Individual Capacity.............................. 30
Article VII. Certain Limitations on Owner Trustee's and Indenture Trustee's Rights............... 30
Article VIII. Successor Trustees.................................................................. 30
Section 8.01. Notice of Successor Owner Trustee.............................. 30
Section 8.02. Resignation of Indenture Trustee; Appointment of
Successor...................................................... 30
Article IX. Supplements and Amendments to this Indenture and Other Documents.................... 32
Section 9.01. Supplemental Indentures without Consent of
Holders........................................................ 32
Section 9.02. Indenture Trustee Protected.................................... 33
Section 9.03. Request of Substance, Not Form................................. 33
Section 9.04. Documents Mailed to Holders.................................... 33
Section 9.05. Amendments, Waivers, Etc. of Other Documents................... 34
Article X. Miscellaneous....................................................................... 36
Section 10.01. Termination of Indenture....................................... 36
Section 10.02. No Legal Title to Indenture Estate in Holders.................. 37
Section 10.03. Sale of Equipment by Indenture Trustee is
Binding........................................................ 37
Section 10.04. Remedies Cumulative............................................ 37
Section 10.05. Discontinuance of Proceedings.................................. 37
Section 10.06. Indenture Trustee, Owner Participant and
Holders Only Indenture and Equipment Notes for
Benefit of Owner Trustee,...................................... 37
Section 10.07. Notices........................................................ 38
Section 10.08. Severability................................................... 39
Section 10.09. Separate Counterparts.......................................... 39
Section 10.10. Successors and Assigns......................................... 39
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 10.11. Headings........................................................ 40
Section 10.12. Governing Law................................................... 40
Section 10.13. Normal Commercial Relations..................................... 40
Section 10.14. No Recourse Against Others...................................... 40
</TABLE>
EXHIBIT A- Form of Trust Indenture Supplement
EXHIBIT B- Terms of Equipment Notes
EXHIBIT C- Loan Participants
APPENDIX A- Definitions
ANNEX A- Amortization Schedule
iii
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
(GATX Rail Trust No. 2000-2)
This TRUST INDENTURE AND SECURITY AGREEMENT (GATX Rail Trust No. 2000-
2) dated as of April 3, 2000 (this "Indenture"), between Wilmington Trust
---------
Company, not in its individual capacity except as expressly provided in Section
6.03 hereof, but solely as trustee under the Trust Agreement referred to below
and any successor appointed in accordance with the terms hereof and of the Trust
Agreement (herein in such trustee capacity called the "Owner Trustee"), and Bank
-------------
One, NA, a national banking association, as Indenture Trustee hereunder and any
successor appointed in accordance with the terms hereof (herein called the
"Indenture Trustee");
-----------------
WITNESSETH:
WHEREAS, the Owner Participant and the Owner Trustee in its individual
capacity have entered into the Trust Agreement whereby, among other things, (i)
the Owner Trustee establishes a certain trust for the use and benefit of the
Owner Participant, subject, however, to the Indenture Estate created pursuant
hereto for the use and benefit of, and with the priority of payment to, the
holders of the Equipment Notes, and (ii) the Owner Trustee is authorized and
directed to execute and deliver this Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee desire by this
Indenture, among other things, (i) to provide for the issuance by the Owner
Trustee of the Equipment Notes, 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 premium, if any, on and all other amounts due with respect to, the Equipment
Notes 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 Equipment Notes from time to time, a
first priority 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,
1
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT (GATX Rail Trust No. 2000-2)
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 and prosecute an action at law to obtain such
Excepted Property and (B) to adjust Basic Rent, the percentages relating to
Stipulated Loss Value and Termination Value and the Early Purchase Price
and the Basic Term Purchase Price as provided in Section 3.4 of the Lease
and Section 2.6 of the Participation Agreement; and
(ii) the Owner Trustee and the Indenture Trustee shall each retain
the right to receive from Lessee all notices, certificates, reports,
filings, opinions of counsel, copies of all documents and all information
which the Lessee is permitted or required to give or furnish to the Lessor
pursuant to the Lease or to the Owner Trustee pursuant to any other
Operative Agreement and to exercise the inspection rights provided for in
Section 13.2 of the Lease, to give any notice of default under Section 15
of the Lease; and
2
<PAGE>
(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.
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, 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.
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), 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
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 (other than Excepted
Property) 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
3
<PAGE>
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.
----------
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.
Article II.
The Equipment Notes
Section 2.01. Form of Equipment Notes. The Equipment Notes shall be
-----------------------
substantially in the form set forth below:
8.10% EQUIPMENT NOTE
(Secured by, among others, Lease Obligations of
GATX Rail Corporation)
GATX Rail Trust No. 2000-2 Series [I/II/III/IV]
Issued in Connection with certain Railroad Rolling Stock
No. ______ Chicago, Illinois
April __, 2000
$________________
4
<PAGE>
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 (GATX Rail Trust No. 2000-2), dated as of April 3, 2000,
as from time to time supplemented and amended (herein called the "Trust
-----
Agreement"), between the Owner Trustee in its individual capacity and the
- ---------
institution referred to therein as the "Owner Participant", hereby promises to
-----------------
pay to Bank One, NA, as Pass Through Trustee, or its registered assigns, the
principal sum of $_____________________________ (or such lesser amount as shall
equal the unpaid principal amount of this Equipment Note), in lawful currency of
the United States of America, in installments payable on the dates set forth in
Exhibit A hereto, commencing July 13, 2002 and thereafter to and including
- ---------
January 13, 2020 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 each
January 13 and July 13, commencing July 13, 2000, to the maturity date hereof at
the rate of 8.10% 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 10.10% 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 premium, if any, to be made
hereunder and under the Trust Indenture and Security Agreement (GATX Rail Trust
No. 2000-2), dated as of April 3, 2000 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 Bank, One, NA, as Indenture Trustee thereunder for the holder
of this Equipment Note and the holders of other Equipment Notes outstanding
thereunder (herein in such capacity called the "Indenture Trustee") shall be
-----------------
made only from the income and proceeds from the Indenture Estate and only to the
extent that the Indenture Trustee shall have sufficient income or proceeds from
the Indenture Estate to make such payments in accordance with the terms of
Article III of the Indenture. Each holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Indenture Estate to the extent available for distribution to the holder
hereof as provided in the Indenture and that none of the Owner Trustee, the
Owner Participant, the Indenture Trustee or their permitted successors and
assigns is or shall be personally liable to the holder hereof for any amount
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, premium, 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
5
<PAGE>
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 premium 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 premium as provided
in Section 4.04(b) of the Indenture. The holder hereof, by its acceptance of
this Equipment Note, agrees to be bound by said provisions.
This Equipment Note is a registered Equipment Note and is
transferable, as provided in the Indenture, only upon surrender of this
Equipment Note for registration of transfer duly endorsed by, or accompanied by
a written statement of transfer duly executed by, the registered holder hereof
or his attorney duly authorized in writing. Prior to the due presentation for
registration of transfer of this Equipment Note, the Owner Trustee and the
Indenture Trustee may deem and treat the registered holder of this Equipment
Note as the absolute owner and holder hereof for the purpose of receiving
payment of all amounts payable with respect hereto and for all other purposes
and shall not be affected by any notice to the contrary.
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR ANY SUCH
APPLICABLE LAWS. THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
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.
6
<PAGE>
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
By:_____________________________
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
BANK ONE, NA,
as Indenture Trustee
By:_____________________________
Authorized Officer
[Insert the related Amortization Schedule from Annex A]
7
<PAGE>
Section 2.02. Terms of Equipment Notes. There shall be issued and
------------------------
delivered to the Loan Participant one Equipment Note of the relevant Series for
each Lease Supplement executed and delivered in respect of the Units delivered
on the Closing Date in the maturity, principal amount and bearing the interest
rate as set forth for such Series in Exhibit B hereto, and the Equipment Notes
---------
related to each such Lease Supplement shall be 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 such Units
by the Owner Trustee from the Lessee, each such Equipment Note to be
substantially in the form set forth in Section 2.01, with deletions and
insertions as appropriate, duly authenticated by the Indenture Trustee and dated
the Closing Date of the Equipment, 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 for the relevant Series.
-------
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 of any one Series which may be
outstanding at any one time shall be limited to the aggregate amount of such
Series set forth in Exhibit B hereto. The aggregate principal amount of all
---------
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. All payments to be
----------------------------------
made under the Equipment Notes and this Indenture shall be made only from the
income and the proceeds from the Indenture Estate and only to the extent that
the Indenture Trustee shall have received sufficient income or proceeds from the
Indenture Estate to make such payments in accordance with the terms of Article
III hereof. Each holder of an Equipment Note, by its acceptance of such
Equipment Note, agrees that it will look solely to the income and proceeds from
the Indenture Estate to the extent available for distribution to such holder as
herein provided and that none of the Owner Trustee, the Owner Participant, the
Indenture Trustee or their permitted successors and assigns is or shall be
personally liable to the 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.
8
<PAGE>
Section 2.04. Method of Payment. (a) The principal of and premium, 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 premium, 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 premium 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 of any Series held by it for an Equipment Note or Equipment
Notes of a different denomination or denominations, may surrender such Equipment
Note or Equipment Notes to the Indenture Trustee at such principal corporate
trust administration office of the Indenture Trustee, together with a written
request from such holder for the issuance of a new
9
<PAGE>
Equipment Note or Equipment Notes of such Series, 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 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 of any Series 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 such 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
10
<PAGE>
Indenture Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the holder of such Equipment Note shall furnish to the Owner Trustee
and the Indenture Trustee such security or indemnity as may be required by them
to save the Owner Trustee and the Indenture Trustee harmless and evidence
satisfactory 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 of any Series
-----------
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 a Determination Date) upon at least 25 days' prior notice from the
Owner Trustee (or the Lessee on its behalf) to the Indenture Trustee in the
event that the Lease as applicable to any Unit or Units related to such
Equipment Note is terminated pursuant to Section 10 thereof, at a price equal to
the sum of (i) as to principal thereof, an amount equal to the product obtained
by multiplying the unpaid principal amount of such Equipment Note as at the date
of such prepayment (after deducting therefrom the principal installment, if any,
due on or prior to the date of such prepayment) by a fraction, the numerator of
which shall be the Equipment Cost of such Unit or Units and the denominator of
which shall be the aggregate Equipment Cost of all Units of the relevant Basic
Group 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) a premium in an amount equal to 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 of any Series shall be prepaid in whole or in
part by the Owner Trustee on a Rent Payment Date upon at least 25 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 or the deemed
occurrence of an Event of Loss pursuant to Section 9.1 of the Lease 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 15 or more Units on a Determination Date
pursuant to Section 11.2 of the Lease, such prepayment shall be made on such
Determination Date, at a price equal to the sum of (i) as to principal thereof,
an amount equal to the product obtained by multiplying the aggregate unpaid
principal amount of such Equipment Note as at such prepayment date (after
deducting therefrom the principal installment, if any, due on such date) by a
fraction, the numerator of which shall be the Equipment Cost of such Unit or
Units and the denominator of which shall be the aggregate Equipment Cost of all
Units of the relevant Basic Group 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
11
<PAGE>
application of any Basic Rent paid on or prior to the date of such prepayment,
but without the payment of any Make-Whole Amount or other premium.
(c) Unless Lessee shall have elected pursuant to Section 6.9 of the
Participation Agreement or Section 22.1 of the Lease to assume all of the rights
and obligations of the Owner Trustee under this Indenture in respect of the
Equipment Notes of any Series, each Equipment Note of such Series shall be
prepaid in whole or in part by the Owner Trustee on the Determination Date
specified by Lessee to Owner Trustee and Indenture Trustee in accordance with
Section 6.9 of the Participation Agreement or Section 22.1 of the Lease, as the
case may be, in the event that Lessee exercises a purchase option under Section
6.9 of the Participation Agreement or Section 22.1 of the Lease, as the case may
be, with respect to any Unit or Units related to such Equipment Note, 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 date of any prepayment under Section 6.9 of the Participation
Agreement or Section 22.1 of the Lease, as the case may be (after deducting
therefrom the principal installment, if any, due on the prepayment date) by a
fraction, the numerator of which shall be the Equipment Cost of such Unit or
Units to be purchased and the denominator of which shall be the aggregate
Equipment Cost of all Units of the relevant Basic Group 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 prepayment after giving effect to the
application of any Basic Rent paid on or prior to the date of such prepayment,
and (iii) a premium in an amount equal to the aggregate 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) On the Refunding Date specified by the Lessee 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, a premium in an amount equal to the Make-Whole Amount, if any.
(e) The Indenture Trustee shall give prompt notice of any prepayment
of any Equipment Notes to all holders of the Equipment Notes as soon as the
Indenture Trustee shall have knowledge that such prepayment is expected 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 expected
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 at any time issued and outstanding hereunder
shall have the same rights, Liens and preferences under and by virtue of this
Indenture.
12
<PAGE>
Article III.
Receipt, Distribution and Application of Income
from the Indenture Estate; Assumption of
Obligations of Owner Trustee by the Lessee
Section 3.01. Basic Rent Distribution. Except as otherwise provided
-----------------------
in Section 3.03 or 3.05, each installment of 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 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 to pay in full the aggregate amount of the
payment or payments of principal, premium, if any, and interest (as well as any
interest on overdue principal or interest) then due, such distribution to be
made ratably, without priority of one over the other, in the proportion that the
amount of such payment or payments then due with respect to each such Equipment
Note bears to the aggregate amount of payments then due under all such Equipment
Notes; and second, the balance, if any, of such installment remaining thereafter
------
shall be distributed to the Owner Trustee for distribution in accordance with
the terms of the Trust Agreement. The portion of each such installment
distributed to a holder of an Equipment Note shall be applied by such holder in
payment of such Equipment Note in accordance with the terms of Section 2.05.
Section 3.02. Payments in the Event of Prepayment.
-----------------------------------
(a) Except as otherwise provided in Section 3.03 or 3.05, in the event
of any prepayment of an Equipment Note or Notes, in whole or in part, in
accordance with the provisions of Section 2.10 any amount received shall in each
case be distributed and paid in the following order of priority: first, so much
-----
of such amount as shall be required for the purpose of prepayment shall be
distributed and paid to the holders of such Equipment Note or Notes to pay the
aggregate amount of the payment of principal, premium, if any, and interest to
be prepaid on such Equipment Note or Notes pursuant to Section 2.10, such
prepayment to be made ratably to such Equipment Note or Notes to which such
prepayment relates, without priority of one over any other, in the proportion
that the amount to be prepaid on each such Equipment Note bears to the aggregate
amount to be paid on all such Equipment Notes; and second, the balance, if any,
------
of such amount remaining thereafter shall be distributed to the Owner Trustee
for distribution in accordance with the terms of the Trust Agreement.
(b) Except as otherwise provided in Section 3.03 or 3.05 hereof, any
amounts received directly or through the Lessee from any governmental authority
or other party pursuant to Section 11 of the Lease with respect to any Unit as
the result of an Event of Loss, to the extent that such amounts are not at the
time required to be paid to the Lessee pursuant to said Section 11, and any
amounts of insurance proceeds for damage to the Indenture Estate received
directly or through 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
13
<PAGE>
to be paid to the Lessee pursuant to said Section 12, shall be applied as
provided in clause (a) of this Section 3.02.
Section 3.03. Payments after Indenture Event of Default.
-----------------------------------------
(a) Except as provided in Section 3.05, all payments received and
amounts realized by the Indenture Trustee after an Indenture Event of Default
shall have occurred and be continuing and after the Indenture Trustee has
declared (as assignee 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 4.02, 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 IV), 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 5.03 (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 premium, 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 4.02 or otherwise, and in case the aggregate amount so
to be distributed shall be insufficient to pay in full the aforesaid
amounts, then, ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Equipment
Notes held by each such holder, plus the accrued but unpaid interest
thereon to the date of distribution, bears to the aggregate unpaid
principal amount of all Equipment Notes, plus the accrued but unpaid
interest thereon to the date of distribution; and
Fourth, the balance, if any, of such payments or amounts
-------
remaining thereafter shall be distributed to the Owner Trustee for
distribution in accordance with the terms of the Trust Agreement.
14
<PAGE>
(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 6.04(b)
until the earliest to occur of (a) the date on which such Indenture Default or
Indenture Event of Default shall have been cured or waived, and (b) such
acceleration occurs and such amounts are applied pursuant to Section 3.03(a);
provided, that if any amounts are held pursuant to this Section 3.03(b) for a
- --------
period of 180 days during which time the Equipment Notes could, but shall not
have been, accelerated, then (x) all amounts then held by the Indenture Trustee
under this Section 3.03(b) with respect to such Indenture Default or Indenture
Event of Default which have been so held for at least 90 days shall on the 181st
day be distributed to the Owner Trustee for distribution in accordance with the
terms of the Trust Agreement and (y) any such amounts which are being held
pursuant to this Section 3.03(b) with respect to such Indenture Default or
Indenture Event of Default but which have not been held for at least 90 days
shall, on the 91st day following the date on which such amount was initially
received by the Indenture Trustee, thereafter be distributed to the Owner
Trustee for distribution in accordance with the terms of the Trust Agreement.
Section 3.04. Other Payments. Except as otherwise provided in
--------------
Section 3.03 or 3.05, (a) any payments received by the Indenture Trustee for
which no provision as to the application thereof is made in the Lease or the
Participation Agreement or elsewhere in this Article III, and (b) all payments
received and amounts realized by the Indenture Trustee under the Lease or
otherwise with respect to the Equipment to the extent received or realized at
any time after payment in full of the principal of and interest and premium, 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
premium, if any, shall be distributed forthwith by the Indenture Trustee in the
order of priority set forth in Section 3.03(a), except that in the case of any
payment described in clause (b) above, such payment shall be distributed
omitting clause "third" of such Section 3.03(a) on all Equipment Notes issued
-----
hereunder.
Any payments received by the Indenture Trustee for which provision as
to the application thereof is made in the Lease or the Participation Agreement
but not elsewhere in this Indenture shall be applied to the purposes for which
such payments were made in accordance with the provisions of the Lease or the
Participation Agreement, as the case may be.
Section 3.05. Distribution of Excepted Property. All amounts
---------------------------------
constituting Excepted Property received by the Indenture Trustee shall be paid
promptly by the Indenture Trustee to the Person or Persons entitled thereto.
Section 3.06. Assumption of Obligations of Owner Trustee by the
-------------------------------------------------
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 on a full recourse basis in connection with the purchase by
the Lessee of Units pursuant to Section 6.9 of the Participation Agreement or
Section 22.1 of the Lease and, if on or prior to the applicable purchase date:
15
<PAGE>
(a) The Lessee shall have delivered to the Indenture Trustee and the
Owner Trustee a certificate, dated the date of such purchase, of a Responsible
Officer of the Lessee stating that the 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 Indenture Default shall have occurred and be continuing
immediately subsequent to such purchase or assumption after giving effect to the
indenture supplement referred to below and the Indenture Trustee and the Owner
Trustee shall have received a certificate, dated the date of such purchase, of a
Responsible Officer of the Lessee to such effect;
(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 and the Owner Trustee shall have received an
opinion or opinions of counsel for the Lessee, dated the date of such purchase
which without unusual qualification and permitting reliance on proposed Treasury
Regulations shall be to the effect that, after giving effect to the indenture
supplement referred to below:
(i) this Indenture, the indenture supplement referred to below
and the Equipment Notes issued thereunder each constitutes the legal, valid
and binding obligation of the Lessee, enforceable against the Lessee in
accordance with their respective 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;
(ii) all filings and recordings and other action necessary or
appropriate to protect the interests of the Indenture Trustee in the Units
to be so purchased by the Lessee have been accomplished;
(iii) no holder of Equipment Notes will be required to recognize
gain or loss for tax purposes in connection with such assumption; and
(iv) covering such other matters as the Indenture Trustee shall
reasonably request that are customary for transactions of this type; and
(e) upon delivery of an indenture supplement giving effect to such
assumption reasonably satisfactory to the Indenture Trustee and execution and
delivery of Equipment Notes reflecting such assumption, each 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
16
<PAGE>
the Equipment Notes and under this Indenture in respect of the Equipment Notes
or otherwise related to such Units (other than any obligations or liabilities of
the Owner Trustee in its individual capacity incurred on or prior to the date of
such purchase or arising out of or based upon events occurring on or prior to
the date of such purchase, which obligations and liabilities shall remain the
sole responsibility of the Owner Trustee) and the Lien of this Indenture upon
the sale proceeds paid or payable to the Owner Trustee shall be discharged. If
requested by the Owner Trustee, the Indenture Trustee shall execute and deliver
an instrument, in form and substance satisfactory to the Owner Trustee,
confirming such release and discharge. In the event that the affected Owner
Participant under Section 6.9 of the Participation Agreement holds less than
100% of the Beneficial Interest and the Lessee is therefore purchasing less than
all the Units pursuant to said Section 6.9 or the Lessee elects to purchase less
than all of the Units pursuant to Section 22.1 of the Lease, as the case may be,
the assumption by the Lessee of the rights and obligations of the Owner Trustee
under this Indenture in respect of that portion of the indebtedness evidenced by
the Equipment Notes which relates to such purchased Units shall be made on the
same terms and conditions as are described in clauses (a) through (e) above
except that (x) the opinion under clause (d) above shall be appropriately
modified to reflect such partial assumption of indebtedness, and (y) the
indenture supplement shall provide for a wholly new and separate indenture
between the Lessee and the Indenture Trustee for that portion of such
indebtedness evidenced by the Equipment Notes which is to be assumed by the
Lessee and secured by the Units to be purchased; and this Indenture shall
thereafter relate only to that portion of the indebtedness evidenced by the
Equipment Notes remaining outstanding under this Indenture after such
assumption. Any such new and separate indenture shall contain the same terms and
provisions of this Indenture with only such changes thereto which are necessary
to reflect the replacement of the Owner Trustee with the Lessee and which do not
adversely affect the rights of the holders of the Equipment Notes.
Article IV.
Remedies of the Indenture Trustee upon an Indenture Event of Default
Section 4.01. 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 4.04(a), a Lease Event of Default (other than a
Lease Event of Default by reason of a default by the Lessee to pay any amounts
which are part of the Excepted Property); or
(b) default by the Owner Trustee in making any payment when due of
principal of, premium, if any, or interest on, 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 any covenant or obligation of them or any of them, in this
Indenture or the Equipment Notes (other than as set forth in clause (b) above)
or in the Participation Agreement or by the Guarantor in the Guaranty, 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
17
<PAGE>
Trustee or by any holder of an Equipment Note a written notice specifying such
failure and requiring it to be remedied; or
(d) any representation or warranty made by the Owner Trustee or the
Owner Participant under the Participation Agreement, or by the Owner Trustee
hereunder or by the Guarantor in the Guaranty, or by any representative or
Affiliate of the Owner Trustee or the Owner Participant or the Guarantor in any
document or certificate furnished to the Indenture Trustee or the Loan
Participant in connection herewith or therewith or pursuant hereto or thereto,
shall prove at any time to have been incorrect in any material respect as of the
date made and such incorrectness shall remain material and continue unremedied
for a period of 30 days after there has been given to the Owner Trustee and the
Owner Participant a written notice specifying such incorrectness, stating that
such incorrectness is a default hereunder and requiring it to be remedied by the
Indenture Trustee or by any holder of an Equipment Note; or
(e) the Owner Trustee (as Owner Trustee and not in its individual
capacity), the Owner Participant or the Guarantor 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), the Owner Participant or the Guarantor 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), the Owner Participant or the
Guarantor, a receiver, trustee or liquidator of the Indenture Estate, the Owner
Trustee (as Owner Trustee and not in its individual capacity), the Owner
Participant or the Guarantor, or of any substantial part of its property, or
granting any order for relief in respect of the Owner Trustee (as Owner Trustee
and not in its individual capacity), the Owner Participant or the Guarantor
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), the Owner Participant or the Guarantor, 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), the Owner
Participant or the Guarantor, 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), the Owner Participant or the
Guarantor 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; or
18
<PAGE>
Notwithstanding any provision herein to the contrary, if an Indenture Event of
Default described in clause (e), (f), (g) or (h) of this Section 4.01 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 IV 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 4.02. 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
4.04, declare the unpaid principal amount of all Equipment Notes then
outstanding and accrued interest thereon to be due and payable, it being agreed
that no Make-Whole Amount or other premium should be payable in such event. 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 IV, 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 the
Equipment Notes, and the principal on any Equipment Notes that has 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 the Equipment Notes that have become due solely because of such acceleration,
have been cured or waived.
Section 4.03. 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 V hereof shall, subject to Sections 4.04 and 4.05, 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 IV and may recover judgment in its own
name as Indenture Trustee against the Indenture Estate and may take possession
of all or any part of the Indenture Estate, and may exclude the Owner Trustee
and the Owner Participant and all persons claiming under any of them wholly or
partly therefrom; provided, however, that nothing in this Indenture shall permit
-------- -------
or require the Indenture Trustee to take any action contrary to, or to disturb,
the Lessee's rights under the Lease, except in accordance with the provisions of
the Lease.
(b) Subject to Section 4.04 and Section 4.05, 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
19
<PAGE>
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 4.02; provided further, that, in the event the circumstances
-------- -------
contemplated by Section 4.04(c) exist, the Indenture Trustee shall not be
allowed to deliver the notice required by this Section 4.03(b) (x) until the
earlier of (1) such time as such circumstances no longer exist or (2) the
expiration of the 90 day period set forth in Section 4.04(c) or (y) if the
circumstances contemplated by the second proviso of Section 4.04(c) then exist.
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 may exercise
such right without including the holders as parties to any suit or proceeding
relating to foreclosure of any property in the Indenture Estate. The Owner
Trustee hereby irrevocably constitutes the Indenture Trustee the true and lawful
attorney-in-fact of the Owner Trustee (in the name of the Owner Trustee or
otherwise) for the purpose of effectuating any sale, assignment, transfer or
delivery for enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale or otherwise, to execute and deliver all such bills
of sale, assignments and other instruments as the Indenture Trustee may consider
necessary or appropriate, with full power of substitution, the Owner Trustee
hereby ratifying and confirming all that such attorney or any substitute shall
lawfully do by virtue hereof. Nevertheless, if so requested by the Indenture
Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such
sale, assignment, transfer or delivery, by executing and delivering to the
Indenture Trustee or such purchaser all bills of sale, assignments, releases and
other proper instruments to effect such ratification and confirmation as may be
designated in any such request.
(c) Subject to Section 4.04 and Section 4.05, 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 4.04 and Section
4.05, take possession of and remove the Indenture Estate. Upon every such
taking of
20
<PAGE>
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 discretion to protect the Indenture
Estate and the Indenture Trustee, as trustee and individually, against any and
all liability for loss or damage to such Unit and for public liability and
property damage resulting from use or operation of such Unit and (ii) funds are
available in the Indenture Estate to pay for all such insurance or, in lieu of
such insurance, the Indenture Trustee is furnished with indemnification from the
holders of the Equipment Notes or any other Person upon terms and in amounts
satisfactory to the Indenture Trustee in its 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.
21
<PAGE>
Section 4.04. 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 4.04(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 IV), 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 4.04(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 IV), 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 (other than the payment of Basic Rent) 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 $3,000,000. Upon any cure by the Owner Participant or the Owner
Trustee in accordance with the first sentence of this Section 4.04(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 4.04(a) except by demanding of the Lessee
payment of such amount or by prosecuting an
22
<PAGE>
action against the Lessee to require the payment of such amount; provided
--------
further, that with respect to any amounts advanced by and owing to the Owner
- -------
Trustee and the Owner Participant, the Owner Trustee and the Owner Participant
shall be expressly subordinated to the right of the holders of the Equipment
Notes to receive any and all amounts then due and owing on the Equipment Notes
prior to any payment from the Lessee to the Owner Trustee or the Owner
Participant.
(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 4.02, (ii) the Equipment Notes shall have been accelerated
pursuant to Section 4.02 or (iii) the Indenture Trustee, as assignee hereunder
of the Lease, shall have declared the Lease to be in default and shall have
commenced the exercise of any additional remedy in respect of the Units under
the Lease, then and in any such case, upon 30 days' notice (which notice shall
be irrevocable) from the Owner Trustee to the Indenture Trustee designating a
date of purchase (the "Purchase Date") which shall be a Determination Date, each
-------------
holder of an Equipment Note will be obligated to, 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 without any Make-
Whole Amount or other premium, 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. During such 30-day notice period, the Indenture Trustee shall
not exercise any of the rights, remedies or powers pursuant to Section 15 of the
Lease or this Article IV, so long as the Owner Participant (or any nominee of
the Owner Participant reasonably acceptable to the Indenture Trustee) has
notified the Indenture Trustee that the notice so provided by the Owner Trustee
or its nominee pursuant to this Section 4.04(b) constitutes the binding
obligation of the Owner Trustee or its nominee to purchase the Equipment Notes.
(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 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
23
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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 assumed the Lease 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, 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 and no Indenture Event of Default unrelated to a Lease Event
of Default occurring solely pursuant to Section 14(g) or 14(h) of the Lease
shall have occurred and be continuing, the Indenture Trustee shall refrain from
so foreclosing or exercising such other remedies hereunder. Nothing in this
Section 4.04(c) shall prevent the Indenture Trustee from foreclosing or
exercising such other remedies hereunder to the extent the Lessee fails to
comply with any provisions of any order issued in connection with the assumption
of the Lease.
Section 4.05. Rights of Lessee. Notwithstanding the provisions of
----------------
this Indenture, including, without limitation, Section 4.03, 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 4.06. 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, premium, if any, or interest on any
Equipment Note, 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
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 V.
Duties of the Indenture Trustee
Section 5.01. Action upon Indenture Event of Default. If any
--------------------------------------
payments of Basic Rent or payments of the principal or interest or premium, if
any, on the Equipment Notes due and payable on any Rent Payment Date shall not
have been paid in full on such Rent Payment Date, the Indenture Trustee shall
give telephonic notice within one Business Day (followed by prompt written
notice) to the Owner Trustee, the Owner Participant, the Loan Participant and
the Lessee specifying the amount and nature of such deficiency in payment. In
the event the Indenture Trustee shall have knowledge of an Indenture Event of
Default or an Indenture Default, the Indenture Trustee shall give prompt notice
of such Indenture Event of Default or Indenture Default to the Lessee, the Owner
Trustee, the Owner Participant and the Loan Participant by telegram, facsimile,
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
5.03, the Indenture Trustee shall take such action, or
24
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refrain from taking such action, with respect to such Indenture Event of Default
or Indenture Default as the Indenture Trustee shall be instructed in writing by
a Majority in Interest. If the Indenture Trustee shall not have received
instructions as above provided within 20 days after the mailing of notice of
such Indenture Event of Default or such Indenture Default to the Loan
Participant by the Indenture Trustee, the Indenture Trustee may, but shall not
be obligated to, take such action, or refrain from taking such action, with
respect to such Indenture Event of Default or Indenture Default as it shall
determine to be advisable in the best interests of the Loan Participant. Any
provision of this Section 5.01 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 4.04(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 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 5.02. Action upon Instructions. Subject to the terms of
------------------------
Sections 5.01 and 5.03, 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 premium, 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
25
<PAGE>
(in due form for recording) furnished by the Owner Trustee or the Lessee
releasing such property from the Lien of this Indenture.
Section 5.03. Indemnification.
---------------
(a) The Indenture Trustee shall not be required to take any action or
refrain from taking any action under Section 5.01 (other than the first two
sentences thereof) or 5.02 or Article IV 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 5.01 or 5.02 or Article IV, 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 5.03. Each Loan Participant so participating shall
be entitled to reimbursement for such participation in accordance with Article
III.
Section 5.04. 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 5.01 or 5.02; and no implied duties or obligations shall be
read into this Indenture against the Indenture Trustee. Each of the Owner
Trustee (only in its individual capacity) and the Indenture Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge any liens or encumbrances on any part of the
Indenture Estate, or on any properties of the Owner Trustee assigned, pledged or
mortgaged as part of the Indenture Estate, which result from claims against it
in its individual capacity not related to the ownership of the Equipment (in the
case of the Owner Trustee), administration of the Indenture Estate (in the case
of the Indenture Trustee) or any other transaction under this Indenture or the
Trust Agreement or any document included in the Indenture Estate.
Section 5.05. 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 5.01 or 5.02.
26
<PAGE>
Section 5.06. 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 5.07. Indenture Supplements for Replacements. In the event
--------------------------------------
of a Replacement Unit being substituted as contemplated by Section 11.2 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the
holders of the Equipment Notes and the Lessee, subject to compliance by the
Lessee with its obligations set forth in Section 11 of the Lease, to execute and
deliver an Indenture Supplement substantially in the form of Exhibit A hereto
---------
and, provided no Lease Event of Default or Lease Default shall have occurred and
be continuing, execute and deliver to the Lessee an appropriate instrument
releasing the Unit being replaced from the Lien of the Indenture.
Section 5.08. 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 5.09. Withholding Taxes. The Indenture Trustee, as agent for
-----------------
the Owner Trustee, shall exclude and withhold from each payment of principal,
premium, 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
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 the
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 5.10. 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 5.10.
27
<PAGE>
Article VI.
The Owner Trustee and the Indenture Trustee
Section 6.01. 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 5.04; 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 6.02. Absence of Duties. Except in accordance with written
-----------------
instructions or requests furnished pursuant to Section 5.01 or Section 5.02 and
except as provided in, and without limiting the generality of, Section 5.04, 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 6.03. 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.
28
<PAGE>
Section 6.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
(a) Subject to Section 6.04(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 6.05. 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
29
<PAGE>
administration of the trusts hereunder, the Indenture Trustee may execute any of
the trusts or powers hereof and perform its powers and duties hereunder directly
or through agents or attorneys and may, at the reasonable expense of the
Indenture Estate, consult with independent counsel, accountants and other
skilled persons to be selected and employed by it, and the Indenture Trustee
shall not be liable for anything done, suffered, or omitted in good faith by it
in accordance with the written advice or opinion of any such independent
counsel, accountants or other skilled persons acting within such persons' area
of competence (so long as the Indenture Trustee shall have exercised reasonable
care in selecting such persons).
Section 6.06. Not Acting in Individual Capacity. The Owner Trustee
---------------------------------
and the Indenture Trustee each acts hereunder solely as trustee hereunder and,
in the case of the Owner Trustee, under the Trust Agreement and not in its
individual capacity unless otherwise expressly provided; and all Persons, other
than the holders of Equipment Notes to the extent expressly provided in this
Indenture, having any claim against the Owner Trustee or the Indenture Trustee
by reason of the transactions contemplated hereby shall, subject to the Lien and
priorities of payment as herein provided, look only to the Indenture Estate for
payment or satisfaction thereof.
Article VII.
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 4.03 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 VII.
Successor Trustees
Section 8.01. 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 8.02. 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 8.02. 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
30
<PAGE>
Majority in Interest may at any time remove the Indenture Trustee without cause
by an instrument in writing delivered to the Owner Trustee, the Owner
Participant, the Lessee and the Indenture Trustee. The Owner Trustee may remove
the Indenture Trustee if: (1) the Indenture Trustee fails to comply with Section
8.02(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.
31
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Article IX.
Supplements and Amendments to this Indenture and Other Documents
Section 9.01. 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 VIII) the succession of a new Indenture Trustee
hereunder; or
(ii) to add to the covenants of the Owner Trustee, for the
benefit of the holders 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 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 the first sentence of Section 4.03(a) or Section 4.05 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 9.02 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 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:
32
<PAGE>
(1) 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, premium, if any, or interest on any Equipment Note, or reduce
the principal amount thereof or the premium, 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 premium,
if any, or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment of principal or premium, if
any, or interest on or after the date such principal or premium, 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 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 9.01(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 the first sentence of Section 4.03(a) or Section 4.05 be
so altered or modified without such Lessee consent.
Section 9.02. Indenture Trustee Protected. If in the opinion of the
---------------------------
Indenture Trustee any document required to be executed pursuant to the terms of
Section 9.01 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 9.03. Request of Substance, Not Form. It shall not be
------------------------------
necessary for the consent of the holders of Equipment Notes under Section
9.01(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 9.04. Documents Mailed to Holders. Promptly after the
---------------------------
execution by the Indenture Trustee of any document entered into pursuant to
Section 9.01(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.
33
<PAGE>
Section 9.05. Amendments, Waivers, Etc. of Other Documents.
--------------------------------------------
(a) Notwithstanding any provision of this Indenture to the contrary,
without the consent of a Majority in Interest, the respective parties to the
Lease, the Participation Agreement and the Trust Agreement may not modify, amend
or supplement any of such agreements, or give any consent, waiver, authorization
or approval under any of such agreements, 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 9.05 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 9.05,
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, 3.6 (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 3.4 and 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 (except that additional insurance requirements may be
imposed on the Lessee), 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 (if the
result thereof would be to provide any renewal or purchase option contained
in such Section prior to the final maturity of the Equipment Notes), 24,
25.1, 25.4, 25.6, 25.10, and any definition of terms used in the Lease, to
the extent that any modification of such definition would result in a
modification of the Lease not permitted as aforesaid in this clause (1) of
subsection (b); provided that, in the event an Indenture Event of Default
--------
shall have occurred and be continuing, the Indenture Trustee shall have all
rights of the Owner Trustee as "Lessor" under the Lease to modify, amend or
supplement the Lease or give any consent, waiver, authorization or approval
thereunder, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the "Lessor" thereunder; provided, further, that,
-------- -------
subject to the Indenture Trustee's rights to exercise remedies under
Section 15 of the Lease without the
34
<PAGE>
prior consent of the Owner Trustee, and whether or not an Indenture Event
of Default shall have occurred and be continuing, no such modification,
amendment or supplement of the Lease or other action referred to in the
preceding proviso shall be taken without the prior written consent of the
Owner Trustee with respect to any of the provisions of Sections 3, 4, 5, 6,
7, 8, 9, 10, 11, 12 (with respect to insurance coverage of the interests of
the Owner Trustee and the Owner Participant), 13, 14, 15 (in respect of the
obligation to pay and the measure of money damages), 16 (with respect to
filings or recordings benefiting the Owner Trustee or the Owner
Participant), 17, 18, 19, 20, 22, 23, 25.1 and 25.5 of the Lease 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 pursuant to this proviso;
(2) modify, amend or supplement the Trust Agreement, or give any
consent, waiver, authorization or approval with respect thereto, except
that without the consent of a Majority of Interest, the parties to the
Trust Agreement shall not modify, amend or supplement, or give any consent,
waiver, authorization or approval for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof
or of modifying in any manner the rights of the respective parties
thereunder, with respect to Sections 2.1, 2.2, 3.1, 4.4, 7.1, 7.2, 9.1,
10.1, 10.2, 10.7, 10.11 or any other Section of the Trust Agreement if such
action would materially adversely affect the interest of the Loan
Participants, and any definition of terms used in the Trust Agreement, to
the extent that any modification of such definition would result in a
modification of the Trust Agreement not permitted pursuant to this
subsection (b);
(3) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without the consent of a Majority of Interest, the parties to
the Participation Agreement shall not modify, amend or supplement, or give
any consent, waiver, authorization or approval for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
respective parties thereunder, with respect to the following provisions of
the Participation Agreement: Sections 1, 2, 3, 4, 5, 6, 7, 10.2, 10.5,
10.7, 10.9 and 10.13(a), each provision of the Participation Agreement
which specifically refers to the Indenture Trustee or Loan Participants and
any definition of terms used in the Participation Agreement, to the extent
that any modification of such definition would result in a modification of
the Participation Agreement not permitted pursuant to this subsection (b);
and
(4) modify, amend or supplement any of said agreements in order
to cure any ambiguity, to correct or supplement any provision thereof which
may be defective or inconsistent with any other provision thereof or any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided any
such action shall not adversely affect the interests of the holders of the
Equipment Notes.
35
<PAGE>
(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 9.05, 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 the 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 the Equipment Notes required
to be paid at the time of such payments; or
(2) modify, amend or supplement the Lease in such a way as to, or
consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
obligation in respect of payment of Basic Rent or Stipulated Loss Value and
any other amounts payable under, or as provided in, the Lease upon the
occurrence of an Event of Loss, or Termination Value and any other amounts
payable under, or as provided in, the Lease upon termination thereof,
except for any such assignment pursuant to Section 6.8 of the Participation
Agreement, and except as provided in the Lease.
Article X.
Miscellaneous
Section 10.01. 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, and (iii) 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 the Equipment Notes
hereunder and under such Equipment Notes and under the Participation Agreement.
36
<PAGE>
Section 10.02. 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 10.03. 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 the
Equipment Notes, the Owner Trustee and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trustee, the Owner Participant and such holders of the
Equipment Notes in and to the Equipment. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such sale or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Indenture Trustee.
Section 10.04. 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 10.05. 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 10.06. 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 the
Equipment Notes any legal or equitable right, remedy or claim under or in
respect of this Indenture or any Equipment Note.
37
<PAGE>
Section 10.07. 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 (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 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 (i) or (ii),
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 the Owner Trustee: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust
Administration
Fax No.: (312) 651-8882
Confirmation No.: (312) 651-1000
With copies to Owner Participant.
If to Owner Participant: With copies to:
Watson, Farley & Williams
380 Madison Avenue
New York, NY 10017
Attention: Caryn Hemsworth
Fax No.: (212) 922-1512
Confirmation No.: (212) 922-2200
38
<PAGE>
<TABLE>
<S> <C>
If to the Indenture Bank One, NA
Trustee: 1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust
Services Division
(GATX Rail Trust No. 2000-2)
Fax No.: (312) 407-1708
Confirmation No.: (312) 407-8810
If to Lessee: GATX Rail Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: Treasurer
(GATX Trust Rail No. 2000-2)
Fax No.: (312) 621-6645
Confirmation No.: (312) 621-6200
If to the Loan At such address as is set forth on
Participant: 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.
</TABLE>
Notwithstanding the foregoing provisions, for purposes of Sections
4.01, 4.02, 4.04, 5.01 and 5.02, written notice shall be deemed given when it is
in fact received (by mail or otherwise) by any addressee at the respective
addresses specified above.
Section 10.08 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 10.09 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 10.10 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
39
<PAGE>
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 10.11 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 10.12 Governing Law. This Indenture shall in all respects be
-------------
governed by, and construed in accordance with, the laws of the State of New
York, including all matters of construction, validity and performance.
Section 10.13 Normal Commercial Relations. Anything contained in
---------------------------
this Indenture to the contrary notwithstanding, the Owner Participant, the Owner
Trustee or the Indenture Trustee or any affiliate of the Owner Participant, the
Owner Trustee or the Indenture Trustee may enter into commercial banking or
other financial transactions, and conduct banking or other commercial
relationships, with the Lessee, any holder of an Equipment Note or the Indenture
Trustee (in its individual capacity or otherwise) fully to the same extent as if
this Indenture were not in effect, including, without limitation, the making of
loans or other extensions of credit for any purpose whatsoever.
Section 10.14 No Recourse Against Others. No director, officer,
--------------------------
employee or stockholder, as such, of Lessee, Owner Trustee, Owner Participant or
Indenture Trustee shall have any liability for any obligations of Lessee, Owner
Participant, Owner Trustee or Indenture Trustee or under the Equipment Notes or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each holder of the Equipment Notes by accepting
an Equipment Note waives and releases all such liability. The waiver and
release are part of the consideration of the Equipment Notes.
* * *
40
<PAGE>
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, as of the day and year first above written.
BANK ONE, NA,
as Indenture Trustee
By:______________________________
Name:____________________________
Title:___________________________
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided in
Section 6.03 hereof but solely as
Owner Trustee
By:______________________________
Name:____________________________
Title:___________________________
41
<PAGE>
EXHIBIT A
TRUST INDENTURE SUPPLEMENT NO._
(GATX Rail Trust No. 2000-2)
This Indenture Supplement No. __ (GATX Rail Trust No. 2000-2), dated ______
____, ______ (this "Indenture Supplement"), of Wilmington Trust Company, a
--------------------
Delaware corporation, not in its individual capacity except as expressly
provided herein but solely as owner trustee (the "Owner Trustee") under the
-------------
Trust Agreement (GATX Rail Trust No. 2000-2), dated as of April 3, 2000 (the
"Trust Agreement"), between the Owner Trustee in its individual capacity and
---------------
, as Owner Participant;
WITNESSETH:
WHEREAS, the Trust Indenture and Security Agreement (GATX Rail Trust No.
2000-2) dated as of April 3, 2000 (the "Indenture"), between the Owner Trustee
---------
and Bank One, NA 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 Equipment 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 premium, 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>
Equipment Notes and for the uses and purposes and subject to the terms and
provisions set forth in the Indenture.
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>
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture Supplement
to be duly executed by one of its duly authorized officers, as of the day and
year first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided
herein but solely as Owner Trustee
By:___________________________________
Name:_________________________________
Title:________________________________
A-3
<PAGE>
EXHIBIT B
Terms of Equipment Notes
------------------------
<TABLE>
<CAPTION>
Interest Rate After
Series Principal Amount Interest Rate Maturity Final Maturity
- -------------- ---------------- -------------- -------------------- ----------------
<S> <C> <C> <C> <C>
Series I $ 9,222,000 8.10% 10.10% January 13, 2020
Series II $21,460,000 8.10% 10.10% January 13, 2020
Series III $10,144,000 8.10% 10.10% January 13, 2020
Series IV $17,284,000 8.10% 10.10% January 13, 2020
</TABLE>
<PAGE>
EXHIBIT C
Loan Participant
----------------
<TABLE>
<CAPTION>
Percentage of
Equipment Notes Loan Participant Principal Amount
- ----------------- ---------------------------------------- -----------------
<S> <C> <C>
Equipment Notes Bank One, NA, as Trustee under the Pass 100%
Through Trust Agreement, dated as of
April 3, 2000 between Bank One, NA and
GATX Rail Corporation, as supplemented
by Trust Supplement No. 1 thereto dated
April 3, 2000.
</TABLE>
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-2
Series I
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 1.3873378%
Jan 13 2003 2.5699276%
Jul 13 2003 2.6231419%
Jan 13 2004 2.7087698%
Jul 13 2004 2.7841871%
Jan 13 2005 2.8639241%
Jul 13 2005 2.9483629%
Jan 13 2006 3.0379322%
Jul 13 2006 3.1331141%
Jan 13 2007 3.2165833%
Jul 13 2007 3.3419498%
Jan 13 2008 3.4574976%
Jul 13 2008 3.5813217%
Jan 13 2009 7.4286887%
Jul 13 2009 0.0000000%
Jan 13 2010 8.0026602%
Jul 13 2010 0.0000000%
Jan 13 2011 8.7228916%
Jul 13 2011 0.0000000%
Jan 13 2012 9.5564942%
Jul 13 2012 0.0000000%
Jan 13 2013 10.5662581%
Jul 13 2013 0.0000000%
Jan 13 2014 11.7819844%
Jul 13 2014 0.0000000%
Jan 13 2015 21.7339732%
Jul 13 2015 0.0000000%
Jan 13 2016 32.9662311%
Jul 13 2016 0.0000000%
Jan 13 2017 0.0000000%
Jul 13 2017 0.0000000%
Jan 13 2018 15.0213606%
Jul 13 2018 0.0000000%
Jan 13 2019 64.2493611%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(1)
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-2
Series II
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 1.3193217%
Jan 13 2003 2.5743138%
Jul 13 2003 2.6277372%
Jan 13 2004 2.7136432%
Jul 13 2004 2.7739251%
Jan 13 2005 2.8689174%
Jul 13 2005 2.9373368%
Jan 13 2006 3.0430397%
Jul 13 2006 3.1212069%
Jan 13 2007 3.2396635%
Jul 13 2007 3.3296337%
Jan 13 2008 3.4634520%
Jul 13 2008 3.5678890%
Jan 13 2009 3.7204522%
Jul 13 2009 3.8642186%
Jan 13 2010 3.9973351%
Jul 13 2010 4.1869073%
Jan 13 2011 4.3457267%
Jul 13 2011 4.5683998%
Jan 13 2012 4.9502263%
Jul 13 2012 4.8369524%
Jan 13 2013 10.5555556%
Jul 13 2013 0.0000000%
Jan 13 2014 11.8012423%
Jul 13 2014 0.0000000%
Jan 13 2015 13.3802817%
Jul 13 2015 0.0000000%
Jan 13 2016 15.4471545%
Jul 13 2016 0.0000000%
Jan 13 2017 35.5411221%
Jul 13 2017 0.0000000%
Jan 13 2018 5.6370013%
Jul 13 2018 0.0000000%
Jan 13 2019 64.2493612%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(2)
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-2
Series III
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 0.9506578%
Jan 13 2003 2.3876404%
Jul 13 2003 2.4460431%
Jan 13 2004 2.4926254%
Jul 13 2004 2.5714718%
Jan 13 2005 2.6393417%
Jul 13 2005 2.7108914%
Jan 13 2006 2.7700377%
Jul 13 2006 2.8658125%
Jan 13 2007 2.9503644%
Jul 13 2007 3.0400572%
Jan 13 2008 3.1169310%
Jul 13 2008 3.2362459%
Jan 13 2009 3.3444816%
Jul 13 2009 3.4602076%
Jan 13 2010 7.1473751%
Jul 13 2010 0.0000000%
Jan 13 2011 7.7202544%
Jul 13 2011 0.0000000%
Jan 13 2012 11.7489332%
Jul 13 2012 0.0000000%
Jan 13 2013 16.0426849%
Jul 13 2013 0.0000000%
Jan 13 2014 20.7212341%
Jul 13 2014 0.0000000%
Jan 13 2015 28.3436541%
Jul 13 2015 0.0000000%
Jan 13 2016 42.8941718%
Jul 13 2016 0.0000000%
Jan 13 2017 0.0000000%
Jul 13 2017 0.0000000%
Jan 13 2018 0.0000000%
Jul 13 2018 0.0000000%
Jan 13 2019 55.7876298%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(3)
<PAGE>
ANNEX A
-------
Amortization Schedule
8.10% Equipment Note
2000-2
Series IV
<TABLE>
<CAPTION>
Percentage of Remaining Principal
Payment Date Balance Payment (1)
- ------------ ---------------------------------
<S> <C>
Apr 13 2000 0.0000000%
Jul 13 2000 0.0000000%
Jan 13 2001 0.0000000%
Jul 13 2001 0.0000000%
Jan 13 2002 0.0000000%
Jul 13 2002 1.1580939%
Jan 13 2003 2.3947035%
Jul 13 2003 2.4390244%
Jan 13 2004 2.5000000%
Jul 13 2004 2.5641026%
Jan 13 2005 2.6471504%
Jul 13 2005 2.7031350%
Jan 13 2006 2.7782344%
Jul 13 2006 2.8576260%
Jan 13 2007 2.9590948%
Jul 13 2007 3.0313901%
Jan 13 2008 3.1261561%
Jul 13 2008 3.2270384%
Jan 13 2009 3.3346488%
Jul 13 2009 3.4700959%
Jan 13 2010 7.1473885%
Jul 13 2010 0.0000000%
Jan 13 2011 7.7203370%
Jul 13 2011 0.0000000%
Jan 13 2012 10.0944652%
Jul 13 2012 0.0000000%
Jan 13 2013 15.5209992%
Jul 13 2013 0.0000000%
Jan 13 2014 19.9236090%
Jul 13 2014 0.0000000%
Jan 13 2015 26.9811605%
Jul 13 2015 0.0000000%
Jan 13 2016 40.0703195%
Jul 13 2016 0.0000000%
Jan 13 2017 0.0000000%
Jul 13 2017 0.0000000%
Jan 13 2018 0.0000000%
Jul 13 2018 0.0000000%
Jan 13 2019 60.1882953%
Jul 13 2019 0.0000000%
Jan 13 2020 100.0000000%
</TABLE>
(1) The Percentage should be applied to the remaining principal balance of the
Equipment Note after giving effect to prepayment, if any, to be made on the
Payment Date.
(4)
<PAGE>
Exhibit 4.9
-------------------------
PARTICIPATION AGREEMENT
(GATX Rail Trust No. 2000-1)
Dated as of April 3, 2000
among
GATX RAIL CORPORATION,
as Lessee
WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly
provided herein but solely as Owner Trustee
as Owner Participant
BANK ONE, NA,
as Indenture Trustee
and
BANK ONE, NA,
as Pass Through Trustee
Assorted Railroad Tank Cars
and Covered Hopper Cars
-------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT.....................2
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST................2
Section 2.1 Sale and Purchase....................................2
Section 2.2 Participation in Equipment Cost......................2
Section 2.3 Closing Date; Procedure for Participation............3
Section 2.4 Owner Participant's Instructions to the Owner
Trustee; Satisfaction of Conditions..................4
Section 2.5 Expenses.............................................4
Section 2.6 Calculation of Adjustments to Basic Rent,
Stipulated Loss Value and Termination Value;
Confirmation and Verification........................7
Section 2.7 Postponement of Closing Date.........................9
SECTION 3. REPRESENTATIONS AND WARRANTIES...................................11
Section 3.1 Representations and Warranties of the Owner
Trustee.............................................11
Section 3.2 Representations and Warranties of the Lessee........13
Section 3.3 Representations and Warranties of the
Indenture Trustee...................................17
Section 3.4 Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes.............17
Section 3.5 Representations and Warranties of the Pass Through
Trustee.............................................18
Section 3.6 Representations and Warranties of the Owner
Participant.........................................19
Section 3.7 Opinion Acknowledgment..............................21
SECTION 4. CLOSING CONDITIONS...............................................21
Section 4.1 Conditions Precedent to Investment by Each
Participant.........................................21
Section 4.2 Additional Conditions Precedent to Investment
by Pass Through Trustee.............................25
Section 4.3 Additional Conditions Precedent to Investment
by Owner Participant................................25
Section 4.4 Conditions Precedent to the Obligation of
the Lessee..........................................26
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE........................27
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND
THE LESSEE.......................................................28
Section 6.1 Restrictions on Transfer of Beneficial Interest.....28
Section 6.2 Lessor's Liens Attributable to the Owner
Participant.........................................31
Section 6.3 Lessor's Liens Attributable to the Owner Trustee....31
Section 6.4 Liens Created by the Indenture Trustee and
the Loan Participant................................32
Section 6.5 Covenants of Owner Trustee, Owner Participant
and Indenture Trustee...............................32
Section 6.6 Amendments to Operative Agreements..................33
Section 6.7 Covenant of the Lessee..............................33
Section 6.8 Merger Covenant.....................................33
-i-
<PAGE>
Section 6.9 Lessee's Purchase in Certain Circumstances.........34
Section 6.10 Owner Participant an Affiliate of Lessee...........35
Section 6.11 Corporate Existence; Place of Business.............35
Section 6.12 No Impairment of Warranties........................36
SECTION 7. LESSEE'S INDEMNITIES 36
Section 7.1 General Tax Indemnity..............................36
Section 7.2 General Indemnification and Waiver of
Certain Claims.....................................44
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT................................48
SECTION 9. SUCCESSOR INDENTURE TRUSTEE......................................48
SECTION 10. MISCELLANEOUS....................................................48
Section 10.1 Consents...........................................48
Section 10.2 Refinancing........................................48
Section 10.3 Amendments and Waivers.............................51
Section 10.4 Notices............................................51
Section 10.5 Survival...........................................52
Section 10.6 No Guarantee of Debt...............................53
Section 10.7 Successors and Assigns.............................53
Section 10.8 Business Day.......................................53
Section 10.9 Governing Law......................................53
Section 10.10 Severability.......................................53
Section 10.11 Counterparts.......................................53
Section 10.12 Headings and Table of Contents.....................53
Section 10.13 Limitations of Liability...........................54
Section 10.14 Maintenance of Non-Recourse Debt...................54
Section 10.15 Ownership of and Rights in Units...................55
Section 10.16 Deferred Payment for Early Purchase Option.........55
-ii-
<PAGE>
Appendix A Definitions
EXHIBITS
Exhibit A-1 Insurance (Primary Liability)
Exhibit A-2 Insurance (Excess Liability)
Exhibit B Insurance Requirements
SCHEDULES
Schedule 1 Description of Equipment, Designation of Basic Groups and
Equipment Cost
Schedule 2 Commitment Percentage and Payment Information for Participants
Schedule 3A Schedule of Basic Rent Payments for Basic Groups I-IV
Schedule 3B Schedule of Allocation of Basic Rent Payments for Basic
Groups I-IV
Schedule 4 Schedule of Stipulated Loss Value and Termination Value for Basic
Groups I-IV
Schedule 5 Terms of Equipment Notes
Schedule 6A Early Purchase Information for Basic Groups I-IV
Schedule 6B Deferred Early Purchase Information for Basic Group I-IV
Schedule 7 Basic Term Purchase Information for Basic Groups I-IV
Schedule 8 Cumulative Rent Payable and Allocated
-iii-
<PAGE>
PARTICIPATION AGREEMENT (GATX Rail Trust No. 2000-1)
This Participation Agreement (GATX Rail Trust No. 2000-1) dated as of April
3, 2000 (this "Agreement"), among (i) GATX Rail Corporation, a New York
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 provided herein, but solely as
trustee under the Trust Agreement (as hereinafter defined) (herein in such
capacity, together with its successors and assigns, called the "Owner Trustee"),
(iii) (herein, together
with its successors and assigns, called the "Owner Participant"), (iv) Bank One,
NA, a national banking association, as trustee under the Indenture (as defined
below) (herein in such capacity, together with its successors and assigns,
called the "Indenture Trustee"), and (v) Bank One, NA, a national banking
association, not in its individual capacity except as expressly provided herein
but solely as Pass Through Trustee under the Pass Through Trust Agreement (as
hereinafter defined) (herein in such capacity, together with its successors and
assigns, called the "Pass Through Trustee" or the "Loan Participant"). The Owner
Participant and the Loan Participant are herein sometimes referred to together
as the "Participants".
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Owner Participant has entered into the Trust Agreement (GATX Rail Trust No.
2000-1) pursuant to which the Owner Trustee agrees, among other things, to hold
the Trust Estate for the benefit of the Owner Participant thereunder on the
terms specified in the Trust Agreement, subject, however, to the Lien created
under the Indenture and, subject to the terms and conditions hereof, to purchase
the Units of Equipment described in Schedule 1 hereto from the Lessee and
concurrently therewith lease such Units of Equipment to the Lessee;
WHEREAS, pursuant to the Pass Through Trust Agreement, on the Closing Date,
a grantor trust will be created to facilitate the financing contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Owner Trustee has entered into the Indenture with the Indenture Trustee
pursuant to which Indenture the Owner Trustee agrees, among other things, for
the benefit of the holder or holders of the Equipment Notes, to issue to the
Pass Through Trustee as Loan Participant, the Equipment Notes as evidence of the
loan made by the Loan Participant participating in 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 the
Bill of Sale evidencing the purchase and transfer of title of each Unit to the
Owner Trustee and (ii) to execute and deliver the Lease pursuant to which,
subject to the terms and conditions set forth therein, the Owner Trustee agrees
to lease to the Lessee, and the Lessee agrees to lease from the Owner Trustee,
each Unit of Equipment to be delivered on the Closing Date, such lease to be
evidenced by the execution and delivery of four Lease Supplements covering such
Units;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Lessee and the Owner Participant have entered into the Tax Indemnity
Agreement relating to the Equipment;
1
<PAGE>
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; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Guarantor has delivered the Guaranty to the Lessee, the Owner Trustee, the
Trust Company, the Indenture Trustee and the Pass Through Trustee;
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.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSING;
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, on the Closing Date, the Units described in Schedule 1
as hereinafter provided, and in connection therewith, the Owner Trustee agrees
to pay to the Lessee the cost for each of the various Units as specified in
Schedule 1; provided, however, that the Owner Trustee shall not be obligated to
purchase on the 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 a delivery date as
more fully provided herein (the "Closing Date"); provided that the Closing Date
shall occur on or prior to April 28, 2000.
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
Closing Date the Owner Participant agrees to participate in the payment of the
Equipment Cost for the Units delivered on the Closing Date by making an equity
investment in the beneficial ownership of such Units in the amount equal to the
product of the aggregate Equipment Cost for the Units delivered on the Closing
Date and the percentage set forth opposite the Owner Participant's name in
Schedule 2 (the Owner Participant's "Commitment"). The aggregate amount of the
Owner Participant's Commitment plus the aggregate amount of Transaction Costs
payable by the Owner Participant shall not exceed $26,130,258. The Owner
Participant's Commitment shall be paid to the Indenture
2
<PAGE>
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 Closing
Date the Loan Participant agrees to participate in the payment of the Equipment
Cost for the Units delivered on the Closing Date 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
Closing Date and the percentage set forth opposite such Loan Participant's name
in Schedule 2 (the Loan Participant's "Commitment"). The aggregate amount of the
Loan Participant's Commitment shall not exceed $61,759,000. The Equipment Notes
shall bear interest at the rates set forth on Schedule 5.
Section 2.3 Closing Date; Procedure for Participation.
(a) Notice of Closing Date. Not later than the Pricing Date, the Lessee
shall give the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Loan Participant notice (a "Notice of Delivery") by telex, telegraph,
facsimile or other form of telecommunication or telephone (to be promptly
confirmed in writing) of the Closing Date, which Notice of Delivery shall
specify in reasonable detail the number and type of Units to be delivered on
such date, the aggregate Equipment Cost of such Units, and the respective
amounts of the Owner Participant's Commitment and the Loan Participant's
Commitment required to be paid with respect to such Units. Prior to 12:00 noon,
New York City time, on the Closing Date, the Owner Participant shall make the
amount of the Owner Participant's Commitment required to be paid on the Closing
Date available to the Indenture Trustee, and immediately prior to the delivery
and acceptance of the Units specified in Section 2.3(b), the Loan Participant
shall make the amount of such Loan Participant's Commitment for the Equipment
Cost required to be paid on the Closing Date available to the Indenture Trustee,
in either case, by transferring or delivering such amounts, in funds immediately
available on the Closing Date, to the Indenture Trustee, either directly to, or
for deposit in, the Indenture Trustee's account at Bank One, NA, 1 Bank One
Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, ABA No. 071000013, Clearing
Account 4811-5377, for credit to trust number 204884-000, Attn: M.J. Frye, GATX
Rail Trust No. 2000-1. The making available by the Owner Participant of the
amount of its Commitment for the Equipment Cost 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 shall be deemed a waiver of the Notice of Delivery by the Loan
Participant and the Indenture Trustee.
(b) Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at 11:00 A.M., Chicago time, on the Closing Date at
the offices of Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601 or at such other place or time as the parties hereto
shall agree. Upon receipt by the Indenture Trustee on the Closing Date of the
full amount of the Owner Participant's Commitment and Loan Participant's
Commitment in respect of the Units delivered on the 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
3
<PAGE>
amount equal to the Equipment Cost for the Units delivered on the Closing Date,
and simultaneously therewith, (i) the Lessee shall deliver the Units to the
Owner Trustee, (ii) the Owner Trustee shall, pursuant to the Lease, lease and
deliver the Equipment delivered on the Closing Date to the Lessee, and the
Lessee, pursuant to the Lease, shall accept delivery of the 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 separate Lease Supplement covering each Basic Group of Equipment so
delivered as described in Schedule 1, and (iii) the Owner Trustee shall execute
and deliver an Indenture Supplement relating to each Lease Supplement to the
Indenture Trustee and an Equipment Note for each Series relating to each such
Lease Supplement to the Loan Participant. 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).
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 Date in accordance with the terms of this Section 2 shall constitute,
without further act, authorization and direction by the Owner Participant to the
Owner Trustee, subject, on the Closing Date, to the conditions set forth in
Sections 4.1 and 4.3 having been fulfilled to the satisfaction of the Owner
Participant or waived by the Owner Participant, to take the actions specified in
Section 2.1 of the Trust Agreement with respect to the Units on the Closing
Date.
(b) The Owner Participant agrees that the authorization by the Owner
Participant or its counsel to the Indenture Trustee to release to the Lessee the
Owner Participant's Commitment with respect to the Units delivered on the
Closing Date shall constitute, without further act, notice and confirmation that
all conditions to closing set forth in Sections 4.1 and 4.3 were either met to
the satisfaction of the Owner Participant or, if not so met, were waived by it
with respect to such Units.
Section 2.5 Expenses.
(a) If the Owner Participant shall have made its investment provided for
in Section 2.2 and the transactions contemplated by this Agreement are
consummated, either the Owner Participant will promptly pay, or the Owner
Trustee will promptly pay, with funds the Owner Participant hereby agrees to pay
(which, together with its Commitment, shall not exceed the amount set forth in
Section 2.2(a)) to the Owner Trustee, the following (the "Transaction Costs") if
evidenced by an invoice delivered to the Owner Participant and approved by the
Lessee within six (6) months of the Closing Date:
(i) the cost of reproducing, printing and filing the Operative
Agreements, the Equipment Notes, the Pass Through Certificates, the
Offering Memorandum relating to the Pass Through Certificates, the
Registration Statement, the Basic Prospectus, the Preliminary Final
Prospectus, the Final Prospectus and the Underwriting Agreement and all
amendments and supplements to the foregoing, including all costs and fees
in
4
<PAGE>
connection with filing the Registration Statement and the initial filing
and recording of the Lease, the Indenture and any other document required
to be filed or recorded pursuant to the provisions hereof or of any other
Operative Agreement and the fees and expenses of the rating agencies in
connection with rating the Pass Through Certificates;
(ii) the reasonable fees and expenses of Watson, Farley & Williams,
special counsel for the Owner Participant, and Berkowitz, Lefkovits, Isom &
Kushner, reading counsel for the Owner Participant, in an amount not to
exceed the amount set forth in the letter dated March 9, 2000 from GATX
Rail Corporation, plus disbursements, for their services rendered in
connection with the negotiation, execution and delivery of this
Participation Agreement and the Operative Agreements related hereto and the
documents for the Related Transaction;
(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 6(h) of the Underwriting Agreement,
including filing fees and the fees and disbursements of Milbank, Tweed,
Hadley & McCloy LLP in connection therewith and in connection with the
preparation of any Blue Sky memorandum;
(iv) the reasonable fees and expenses of Ernst & Young, accountants
of the Lessee, for their services rendered in connection with issuing
"comfort letters" to the Underwriters;
(v) the reasonable fees and expenses of Vedder, Price, Kaufman &
Kammholz, special counsel for the Lessee, for their services rendered in
connection with the preparation of documentation, negotiation, execution
and delivery of the Registration Statement, the Basic Prospectus, the
Preliminary Final Prospectus, the Final Prospectus, the Underwriting
Agreement, this Participation Agreement and the Operative Agreements
related hereto;
(vi) the reasonable fees and expenses of Milbank, Tweed, Hadley &
McCloy LLP, special counsel for the Underwriters, for their services
rendered in connection with the preparation of documentation, negotiation,
execution and delivery of the Preliminary Final Prospectus, the Final
Prospectus, the Underwriting Agreement, this Participation Agreement and
the Operative Agreements related hereto;
(vii) the reasonable fees and expenses of Alvord and Alvord, special
STB counsel, and McCarthy Tetrault, special Canadian counsel, for the Owner
Participant and the Indenture Trustee;
(viii) the reasonable fees and expenses of Morris, James, Hitchens &
Williams, LLP, special counsel for the Owner Trustee, for their services
rendered in connection with the negotiation, execution and delivery of this
Participation Agreement and the Operative Agreements related hereto;
(ix) the commissions payable to the Underwriters in connection with
the sale of the Pass Through Certificates;
5
<PAGE>
(x) the initial fees and reasonable out-of-pocket expenses of the
Owner Trustee;
(xi) the initial fees and reasonable out-of-pocket expenses of the
Indenture Trustee;
(xii) the initial fees and reasonable out-of-pocket expenses of the
Pass Through Trustee;
(xiii) the reasonable fees and expenses of RailSolutions, Inc. for
their services rendered in connection with delivering the Appraisal
required by Section 4.3(a);
(xiv) the costs incurred in connection with any adjustment pursuant
to Section 2.6(a); and
(xv) the reasonable fees and expenses of GATX Lease Funding, Inc. for
advisory services.
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 travel expenses, computer time procurement,
financial analysis and consulting, advisory services and costs of a similar
nature.
(b) Upon the consummation of the transactions contemplated by this
Agreement, the Lessee agrees to pay when due: (i) the reasonable expenses
(including reasonable legal fees and expenses) of the Owner Trustee, the
Indenture Trustee and the Participants incurred subsequent to the delivery of
the Equipment on the Closing Date, in connection with any supplements,
amendments, modifications, alterations, waivers or consents of any of the
Operative Agreements which are (1) requested by, or necessitated by action or
inaction on the part of, the Lessee or by any applicable law or regulation
(other than laws or regulations solely relating to the business of the Lessor or
the Owner Participant) or entered into in connection with, or as a result of, a
Lease Default or (2) necessary or required to effectuate the purpose or intent
of any Operative Agreement (including costs incurred in connection with any
adjustment pursuant to Section 2.6); (ii) the ongoing reasonable fees and
expenses (including reasonable legal fees and expenses) of the Owner Trustee
under the Trust Agreement; (iii) the ongoing reasonable fees and expenses of the
Indenture Trustee under the Operative Agreements; and (iv) the ongoing
reasonable fees and expenses of the Pass Through Trustee under the Pass Through
Trust Agreement.
(c) If the transactions contemplated hereby are not consummated as a
result of (i) the Lessee's default in its obligations to consummate the
transactions contemplated hereby, (ii) the Lessee's failure to consummate the
transactions contemplated hereby after the satisfaction or waiver of the
conditions set forth in Section 4 (other than conditions the satisfaction of
which are solely in the control of the Lessee), or (iii) subject to the next
sentence, in any other circumstance, the Lessee shall pay all Transaction Costs.
Notwithstanding anything contained herein to the contrary, if the transactions
contemplated hereby are not consummated as a result of
6
<PAGE>
(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 investment 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 all Transaction Costs other than
such costs and expenses that would otherwise benefit the Lessee in ultimately
closing the transaction.
(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 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 Sections 10.2, 11.4, 22.1 or 22.3 of
the Lease or Section 6.9 hereof 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 Closing Date is
other than April 13, 2000 or (B) the Transaction Costs paid by the Owner
Participant pursuant to Section 2.5 prior to the first Rent Payment Date are
less or more than $834,947.94 for the Equipment or (C) a refinancing
contemplated by Section 10.2 occurs, (D) any change in the Code which is enacted
and effective and/or any change in the income tax regulations which is
promulgated, adopted and effective prior to the Closing Date (provided the Owner
Participant or the Lessee shall have given notice of such change to the other
party prior to such Closing Date), which change alters or eliminates the tax
assumptions upon which the calculation of Basic Rent, Stipulated Loss Values,
Termination Values, Early Purchase Price and Basic Term Purchase Price were
based, or (E) the Equipment Cost or the composition of the Units is different
than as described on Schedule 1 hereto, or (F) the Debt Rate on, and
amortization of the Equipment Notes is different than the assumptions upon which
the calculations of the Basic Rent was based, then, in each such case, the Owner
Participant shall recalculate the payments or amounts, as the case may be, of
Basic Rent, Stipulated Loss Values, Termination Values, Early Purchase Price and
Basic Term Purchase Price, (i) to preserve the Net Economic Return that the
Owner Participant would have realized in the absence of the changes referred to
in Sections (A) through (F) of this Section 2.6(a) 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. Any such recalculation performed due to the
occurrence of an event described in clause (A), (B), (D), (E), and (F) above
shall be made prior to the first Rent Payment Date. In performing any such
recalculation and in determining the Owner Participant's Net Economic Return,
the Owner Participant shall utilize the same methods and assumptions originally
used in making the computations of Basic Rent, Stipulated Loss Values,
Termination Values, Early Purchase Price and Basic Term Purchase Price with
respect to the Basic Term initially set forth in Schedules 3, 4, 6 and 7 to this
Participation Agreement (other than those assumptions changed as a result of any
of the events described in
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clauses (A) through (F) 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 but allowing variations to reflect the event
giving rise to the adjustment) with Section 467 of the Code and any regulations
thereunder so as not to cause the Lease to be a "disqualified leaseback or long-
term agreement" within the meaning of Section 467 of the Code and any regulation
thereunder, 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, without taking into account any
change after the Closing Date in or to Section 467 of the Code (and any
regulations thereunder) and such requirements of Revenue Procedure 75-28.
(b) Confirmation and Verification. Upon completion of any recalculation
described above in this Section 2.6, a duly authorized officer of the Owner
Participant shall provide a certificate to the Lessee either (x) stating that
the payments of Basic Rent, Stipulated Loss Values, Termination Values, Early
Purchase Price and Basic Term Purchase Price with respect to the Basic Term as
are then set forth in Schedules 3, 4, 6 and 7 of this Participation Agreement do
not require change, or (y) setting forth such adjustments to the payments of
Basic Rent, Stipulated Loss Values, Termination Values, Early Purchase Price or
Basic Term Purchase Price with respect to the Basic Term as have been calculated
by the Owner Participant in accordance with Section 2.6(a) above. Such
certificate shall describe in reasonable detail the basis for any such
adjustments, and any such adjustment and corresponding adjustments to the
Stipulated Loss Values, Termination Values, Early Purchase Price and Basic Term
Purchase Price will be computed on a basis consistent with that used by the
Owner Participant in the original calculation of Basic Rent. Any such adjustment
shall be deemed approved upon notice of such approval by the Lessee to the Owner
Participant or on the thirty-first (31st) day following delivery of such
certificate by the Owner Participant to the Lessee unless the Lessee, prior to
such day, requests verification pursuant to the following sentence, and shall
become effective as of the earlier of (i) the first Rent Payment Date and (ii)
the date the Lessee approves or has been deemed to have approved such adjustment
(except that any adjustment to Stipulated Loss Value shall be effective as of
the Closing Date). If the Lessee shall so request, the recalculation of any such
adjustments described in this Section 2.6 shall be verified on a confidential
basis by a nationally recognized firm of independent accountants selected by the
Owner Participant and reasonably acceptable to the Lessee and any such
recalculation of such adjustment as so verified shall be binding on the Lessee
and the Owner Participant. Such accounting firm shall be requested to make its
determination within 30 days. The Owner Participant shall provide to a
representative of such accounting firm, on a confidential basis, such
information as it may reasonably require, including the original assumptions
used by the Owner Participant and the methods used by the Owner Participant in
the original calculation of, and any recalculation of, Basic Rent, Stipulated
Loss Values, Termination Values, Early Purchase Price and Basic Term Purchase
Price and such other information as is necessary to determine whether the
computation is accurate and in conformity with the provisions of this Agreement,
provided that in no event shall the Owner Participant have any obligation to
provide the Lessee with any such information; and provided, further, that the
Owner Participant shall have no obligation to disclose to the Lessee, such
accounting firm or any other Person, or to permit the Lessee, such accounting
firm or any other Person, to examine any federal, state or local income tax
returns of the Owner Participant, or books or accounting records related
thereto, for any taxable year. Subject to the immediately following sentence,
the costs of
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such verification shall be borne by the Lessee. If such accounting firm's
verification shall result in a decrease in the net present value (expressed as a
percentage of Total Equipment Cost) of the Basic Rent (discounted semiannually
at a rate per annum equal to the Debt Rate) under this Lease calculated as of
the Closing Date, as compared to the net present value of Basic Rent proposed by
the Owner Participant, by more than the greater of (a) 10 basis points or (b)
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 (except that any adjustment to
Stipulated Loss Value shall be effective as of the Closing Date), 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, 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, 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, any Make-Whole Amount and
all unpaid interest on the Equipment Notes, accrued to the date on which
Stipulated Loss Value, Termination Value or Early Purchase Price, as the case
may be, is paid in accordance with the terms of the Lease.
(d) Invoices. All invoices in respect of Transaction Costs to the extent
not delivered on the Closing Date shall be directed to the Owner Participant at
the address set forth in Section 10.4, with a copy to the Lessee.
Section 2.7 Postponement of Closing Date.
----------------------------
(a) The scheduled Closing Date may be postponed from time to time with
respect to all of the Units for any reason (but to no later than April 28, 2000)
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 "Closing Date" as used in this
Agreement shall mean the postponed "Closing Date".
(b) In the event of any postponement of the originally scheduled Closing
Date pursuant to this Section 2.7 (the originally scheduled Closing Date being
referred to as the "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
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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 funds are returned after 1:00
p.m., New York City time, in which case such date of return shall be included)
or the actual Closing Date; 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 12:00
noon, New York City time, on the Business Day preceding the Scheduled Closing
Date, a notice of postponement of the Scheduled Closing Date pursuant to Section
2.7(a), and (ii) the Indenture Trustee will return not later than 10:00 a.m.,
New York City time, on the first Business Day following the Scheduled Closing
Date, any funds which it shall have received from the Owner Participant as its
Commitment for such Units, absent joint instructions from the Lessee and the
Owner Participant to retain such funds until the specified date of postponement
established under Section 2.7(a).
(c) The Indenture Trustee agrees that, in the event it has received
telephonic notice (to be confirmed promptly in writing) from the Lessee on the
Scheduled Closing Date that such Scheduled Closing Date is to be postponed, it
will if instructed in the aforementioned notice from the Lessee (which notice
shall specify the securities to be purchased) use reasonable best efforts to
invest, at the risk of the Lessee (except as provided below with respect to the
Indenture Trustee's gross negligence or willful misconduct), the funds received
by it from the Owner Participant with respect to its Commitment in Specified
Investments in accordance with the Lessee's instructions. Any such Specified
Investments purchased by the Indenture Trustee upon instructions from the Lessee
shall be held in trust by the Indenture Trustee (but not as part of the
Indenture Estate under the Indenture) for the benefit of the Owner Participant
whose funds are invested in Specified Investments upon instructions from the
Lessee and any net profits on the investment of such funds (including interest),
if any, shall be for the account of and shall on the Closing Date, 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 Closing Date (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 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 11:00 a.m., New York City time, on April 28, 2000.
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SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1 Representations and Warranties of the Owner Trustee. The
Trust Company (except with respect to clauses (c) and (k) (to the extent
applicable to the Owner Trustee in its capacity as Owner Trustee) below) and as
Owner Trustee with respect to clauses (c), (e) (to the extent provided therein)
and (k) (to the extent applicable to the Owner Trustee in its capacity as Owner
Trustee) below, represents and warrants to the Owner Participant, each of the
other Trustees and the Lessee, notwithstanding the provisions of Section 10.13
or any similar provision in any other Operative Agreement, that, as of the date
hereof:
(a) the Trust Company (i) is a Delaware 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 Trust Company has duly authorized, executed and delivered the
Trust Agreement, (ii) (assuming the due authorization, execution and delivery of
the Trust Agreement by the Owner Participant) the Owner Trustee in its trustee
capacity and, to the extent expressly provided therein, in its individual
capacity, has duly authorized, executed and delivered each of the other Owner
Trustee Agreements and, as of the Closing Date, the Equipment Notes, the Lease
Supplements and the Indenture Supplements to be delivered on the Closing Date,
and (iii) the Trust Agreement constitutes a legal, valid and binding obligation
of the Trust Company, enforceable against it in its individual capacity in
accordance with its terms except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(c) assuming the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant, each of the Owner Trustee Agreements (other
than the Trust Agreement) to which it is a party constitutes, or when entered
into will constitute, a legal, valid and binding obligation of the Owner
Trustee, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally and
by general principles of equity;
(d) neither the execution and delivery by the Trust Company, in its
individual capacity or as Owner Trustee, as the case may be, of the Owner
Trustee Agreements or the Equipment Notes to be delivered on the Closing Date,
nor the consummation by the Trust Company, in its individual capacity or as
Owner Trustee, as the case may be, of any of the transactions contemplated
hereby or thereby, nor the compliance by the Trust Company, in its individual
capacity, or as Owner Trustee, as the case may be, with any of the terms and
provisions hereof and thereof, (i) requires or will require any approval of its
stockholders, or approval or consent of any trustees or holders of any
indebtedness or obligations of it in its individual capacity, or (ii) violates
or will violate its charter documents or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute a default under,
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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 Trust Company
is a party or by which it is bound, or contravenes or will contravene any law,
governmental rule or regulation of the United States of America or the State of
Delaware governing the banking or trust powers of the Trust Company, or any
judgment or order applicable to or binding on it;
(e) there are no Taxes payable by the Trust Company, either in its
individual capacity or as Owner Trustee, imposed by the State of Delaware or any
political subdivision thereof or by the United States of America in connection
with the execution and delivery by the Owner Trustee in its individual capacity
of the Trust Agreement, and, in its individual capacity or as Owner Trustee, as
the case may be, of this Agreement, the other Owner Trustee Agreements (other
than the Trust Agreement) or the Equipment Notes to be delivered on the Closing
Date solely because the Owner Trustee in its individual capacity is a Delaware
banking corporation with its principal place of business in Wilmington, Delaware
and performs certain of its duties as Owner Trustee in the State of Delaware;
and there are no Taxes payable by the Trust Company, in its individual capacity
or as Owner Trustee, as the case may be, imposed by the State of Delaware or any
political subdivision thereof or by the United States of America 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 Trust Company in its individual capacity
is a Delaware banking corporation with its principal place of business in
Wilmington, Delaware, and performs certain of its duties as Owner Trustee in the
State of Delaware;
(f) there are no pending or, to its knowledge, threatened actions or
proceedings against the Trust Company, 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 Trust Company, 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 to be
delivered on the Closing Date;
(g) both its chief executive office, and the place where its records
concerning the Equipment and all its interest in, to and under all documents
relating to the Trust Estate, are located at Wilmington, Delaware, and the Trust
Company, 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 Delaware
state or local governmental authority or agency or any United States federal
governmental authority or agency regulating the banking or trust powers of the
Trust Company, in its individual capacity, is required for the execution and
delivery of, or the carrying out by, the Trust Company 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
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Agreements, other than any such consent, approval, order, authorization,
registration, notice or action as has been duly obtained, given or taken;
(i) on the Closing Date, the Owner Trustee's right, title and interest in
and to the Equipment delivered on the Closing Date shall be free of any Liens
attributable to the Trust Company in its individual capacity;
(j) the proceeds received by the Owner Trustee from the Owner Participant
pursuant to the Trust Agreement will be administered by it in accordance with
Article III of the Trust Agreement;
(k) the Owner Trustee shall receive from the Lessee such title as was
conveyed to it by the Lessee, subject to the rights of the Owner Trustee and the
Lessee under the Lease and the security interest created pursuant to the
Indenture and the Indenture Supplement in respect of the Units delivered on the
Closing Date, and there will be no Lessor's Liens attributable to it on the
Equipment or any interest therein or on the Trust Estate; and
(l) to its knowledge, no Indenture Default or Indenture Event of Default
has occurred and is continuing.
Section 3.2 Representations and Warranties of the Lessee. The Lessee
represents and warrants to the Trustees and the Owner Participant that, as of
the date hereof:
(a) the Lessee is a corporation duly organized, validly existing, and in
good standing under the laws of the State of New York, 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 sell the Equipment
to the Owner Trustee and 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 shareholder approval being required), executed and
delivered (or in the case of the Lease Supplements in respect of the Units
delivered on the Closing Date will on the Closing Date have been duly executed
and delivered) by the Lessee, and constitute (or in the case of the Lease
Supplement in respect of the Units delivered on the Closing Date will on the
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,
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mortgage, contract or other agreement or instrument to which the Lessee is a
party or by which the Lessee or any of its property is bound or affected;
(d) except for those matters discussed in the financial statements provided
to the Participants under Section 3.2(e), there are no proceedings pending or,
to the knowledge of the Lessee, threatened against the Lessee or any Subsidiary
in any court or before any governmental authority or arbitration board or
tribunal which individually or in the aggregate would, if determined adversely
to it, materially and adversely affect the financial condition or business of
the Lessee and its consolidated Subsidiaries, taken as a whole, or impair the
ability of the Lessee to perform its obligations under the Lessee Agreements or
which questions the validity of any Lessee Agreement or any action taken or to
be taken pursuant thereto. Neither the Lessee nor any Subsidiary is in default
with respect to any order of any court or governmental authority or arbitration
board or tribunal, the default under which would affect adversely the ability of
the Lessee to perform its obligations under the Lessee Agreements;
(e) the audited consolidated balance sheets and consolidated statements of
income and retained earnings and cash flows of the Lessee for the fiscal year
ended December 31, 1999 fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Lessee and its
Subsidiaries as of such date and the results of their operations for the period
then ended. The unaudited consolidated balance sheets and consolidated
statements of income and retained earnings and cash flows of the Lessee and its
Subsidiaries for the twelve-month period ended December 31, 1999 fairly present,
in conformity with generally accepted accounting principles consistently applied
(except for the absence of footnotes in the December 31, 1999 financial
statements), the consolidated financial position of the Lessee and its
Subsidiaries as of such date and the results of their operations for the period
then ended, subject to normal year-end adjustments. Since December 31, 1999,
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 notices required to be filed with the STB and the
Registrar General of Canada, which STB notice shall have been filed on the
Closing Date and which Canadian notice shall be filed promptly following the
Closing Date;
(g) the Lease, the Indenture, the Lease Supplements in respect of the Units
delivered on the Closing Date and the Indenture Supplements in respect of the
Units delivered on the Closing Date will on or before the Closing Date be duly
filed with the STB pursuant to 48 U.S.C. (S)11301 and deposited with the
Registrar General of Canada pursuant to Section 105 of the Canada Transportation
Act and such filing with the STB pursuant to 49 U.S.C. (S)11301 will perfect the
Owner Trustee's and the Indenture Trustee's rights in such Operative Agreements
and in the Units, and such deposit with the Registrar General of Canada will
perfect the Owner Trustee's and the Indenture Trustee's rights in such Operative
Agreements and in the Units and no other filing, recording or deposit with, or
giving of notice to any other federal, state, provincial or local government or
agency thereof, or any other action, is necessary in order to
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protect the rights of the Owner Trustee and the Indenture Trustee in such
Operative Agreements or in such Units in the United States, any state thereof,
the District of Columbia or to protect the rights of the Owner Trustee and the
Indenture Trustee in such Operative Agreements or in such Units in Canada or any
province thereof;
(h) the Equipment is covered by the insurance required by Section 12 of the
Lease and all premiums due prior to the Closing Date in respect of such
insurance shall have been paid in full;
(i) the Lessee has timely filed all United States Federal income tax
returns and all other material tax returns which are required to be filed by it
and has paid all taxes due pursuant to such returns or pursuant to any
assessment made against the Lessee or any of its assets (other than assessments,
the payment of which is being contested in good faith by appropriate proceedings
by the Lessee and none of which are material), and no tax liens have been filed
and no claims are being asserted with respect to any such taxes, fees or other
charges which could reasonably be expected to have a materially adverse effect
on its ability to perform its obligations under the Lessee Agreements. The
provision for taxes on the books of the Lessee is adequate for all open years,
and for its current fiscal period;
(j) no Lease Default or Lease Event of Default has occurred and is
continuing and to the knowledge of Lessee, no Event of Loss, or event with which
the giving of notice and/or the passage of time would constitute an Event of
Loss, has occurred;
(k) the Lessee is not an "investment company" or an "affiliated person" of
an "investment company" within the meaning of the Investment Company Act of
1940;
(l) the acquisition by the Owner Participant of the Beneficial Interest for
its own account will not constitute a prohibited transaction within the meaning
of Section 4975(c)(1)(A) 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 Closing Date, Lessee shall have, and the Bill of Sale to be
delivered on the Closing Date shall convey, to the Owner Trustee all legal and
beneficial title to the Units being delivered on the Closing Date, free and
clear of all Liens (other than Permitted Liens of the type described in clause
(ii) with respect to sublessee, and in clauses (iii), (iv), (vi) and (vii) of
the definition thereof), and such conveyance is not void or voidable under any
applicable law;
(n) the financial statements referred to in Section 3.2(e) do not, nor does
the Registration Statement relating to the Pass Through Certificates or any
written statement furnished by the Lessee or on behalf of the Lessee in
connection with the negotiation of the Lease or any other Operative Agreement,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which the Lessee has not disclosed in writing which materially
affects adversely or, so far as the Lessee can now reasonably foresee, will
materially affect adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Lessee and its Subsidiaries, taken as
a whole;
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(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. None of the
proceeds from the sale of the Equipment Notes will be used to purchase or carry
(or refinance any borrowing the proceeds of which were used to purchase or
carry) any "security" within the meaning of the Securities Exchange Act of 1934,
as amended;
(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 Closing Date all sales, use or transfer taxes due and payable
upon the purchase of the Equipment 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 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 Closing Date are payable;
(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 GATX Lease Funding, Inc.,
which Lessee agrees will be paid by it to the extent not included in the
Transaction Costs, and of Morgan Stanley Dean Witter and Credit Suisse First
Boston, 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 the Equipment, taken as a whole, and each major component
thereof, complies in all material respects with all applicable laws and
regulations, conforms with the specifications for such Unit contained in the
Appraisal referred to in Section 4.3(a) hereof and is substantially complete
such that it is ready and available to operate in commercial service and
otherwise perform the function for which it was designed; and
(t) the Lessee is not subject to regulation as a "holding company," an
"affiliate" of a "holding company," or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
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Section 3.3 Representations and Warranties of the Indenture Trustee.
The Indenture Trustee represents and warrants to the Owner Participant, the
Owner Trustee and the Lessee that, as of the date hereof:
(a) the Indenture Trustee is a national banking association duly organized
and validly existing and in good standing under the laws of the United States of
America and has the full corporate power, authority and legal right under the
laws of the United States of America pertaining to its banking, trust and
fiduciary powers to execute, deliver and carry out the terms of each of the
Indenture Trustee Agreements;
(b) the execution, delivery and performance by the Indenture Trustee of
each of the Indenture Trustee Agreements have been duly authorized by the
Indenture Trustee and will not violate any applicable law or its articles of
association or by-laws or the provisions of any indenture, mortgage, contract or
other agreement to which it is a party or by which it is bound;
(c) this Agreement has been duly executed and delivered and constitutes,
and the other Indenture Trustee Agreements, when executed and delivered, will
constitute its legal, valid and binding obligation enforceable against it in
accordance with its terms;
(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 of the United States of America
governing the Indenture Trustee in its trust capacity, is required for the due
execution, delivery and performance by the Indenture Trustee of the Indenture
Trustee Agreements, except as have been previously obtained, given or taken;
(f) the Indenture Trustee is not in default under any of the Indenture
Trustee Agreements; and
(g) neither the Indenture Trustee, nor any Person authorized to act on
behalf of the Indenture Trustee, has directly or indirectly offered any interest
in the Trust Estate or the Equipment Notes or any security similar to either
thereof related to this transaction for sale to, or solicited offers to buy any
of the same from, or otherwise approached or negotiated with respect to any of
the same with, any Person other than the Pass Through Trustee, the Underwriters
and the initial purchasers of the Pass Through Certificates.
Section 3.4 Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes.
(a) The Owner Trustee represents and warrants to the Lessee, each of the
other Trustees and the Owner Participant that, as of the date hereof and as of
the Closing Date, neither
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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.
(b) The Lessee represents and warrants to the Trustees and the Owner
Participant that, as of the date hereof and as of the Closing Date, neither the
Lessee nor any Person authorized or employed by the Lessee as agent or otherwise
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 31 other
institutional investors with respect to the Beneficial Interest, and, except for
the issue and sale of the Pass Through Certificates as contemplated by the
Registration Statement, the Pass Through Trustee with respect to the Equipment
Notes.
(c) Each of the Owner Trustee, the Owner Participant and the Lessee agree,
as to its own actions only, severally but not jointly that neither the Owner
Trustee, the Owner Participant nor the Lessee nor anyone acting on behalf of the
Owner Trustee, the Owner 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 of
1933, as amended.
Section 3.5 Representations and Warranties of the Pass Through Trustee.
The Pass Through Trustee represents and warrants to the Owner Participant, the
other Trustees, and the Lessee that, as of the date hereof:
(a) the Pass Through Trustee is a national banking association duly
organized and validly existing in good standing under the laws of the United
States of America and has the full corporate power, authority and legal right
under the laws of the United States of America pertaining to its banking, trust
and fiduciary powers to execute, deliver and carry out the terms of the Pass
Through Trust Agreement, the Pass Through Trust Supplements and this Agreement;
(b) the Pass Through Trust Agreement, the Pass Through Trust Supplements
and this Agreement have been duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement, the Pass Through Trust Supplements and the Pass
Through Trust Agreement constitute the legal, valid and binding obligation of
the Pass Through Trustee enforceable against it in accordance with its terms;
(c) the execution, delivery and performance by the Pass Through Trustee of
the Pass Through Trust Agreement, the Pass Through Trust Supplements 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 and the Pass Through Trust
Supplements, do not contravene any law, rule or regulation of any United
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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, the Pass Through Trust Supplements 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 United States of America governmental
authority or agency or any Federal 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, the Pass Through Trust Supplements or the
Pass Through Trust Agreement;
(f) the Pass Through Trustee is not in default under the Pass Through Trust
Agreement, as supplemented by the Pass Through Trust Supplements;
(g) the Pass Through Trustee is not directly or indirectly controlling,
controlled by or under common control with the Owner Participant, the Owner
Trustee, the Underwriters or the Lessee;
(h) the Pass Through Trustee is purchasing the Equipment Notes for the
purposes contemplated by the Operative Agreements and not with a view to the
transfer or distribution of any Equipment Note to any other Person, except as
contemplated by the Operative Agreements; and
(i) except for the issue and sale of the Pass Through Certificates
contemplated hereby, the Pass Through Trustee has not directly or indirectly
offered any Equipment Note or Pass Through Certificate or any interest in or to
the Trust Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, anyone other than the Owner
Trustee and the Owner Participant, and the Pass Through Trustee has not
authorized anyone to act on its behalf to offer directly or indirectly any
Equipment Note, any Pass Through Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest related to this transaction
for sale to, or to solicit any offer to acquire any of the same from, any person
other than each Owner Trustee and the Owner Participant, and the Pass Through
Trustee is not in default under the Pass Through Trust Agreement.
Section 3.6 Representations and Warranties of the Owner Participant.
The Owner Participant represents and warrants to the Trustees and the Lessee
that, as of the date hereof:
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(a) the Owner Participant is a limited partnership, duly organized, validly
existing and in good standing under the laws of the State of Alabama and has
full 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 partnership agreement or any
indenture, mortgage, contract or other agreement or instrument to which the
Owner Participant is a party or by which it or any of its property is bound or
affected;
(c) the Owner Participant Agreements have been duly authorized by all
necessary actions on the part of the Owner Participant, do not require any
approval not already obtained by 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 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, moratorium or other similar laws affecting
the rights of creditors generally and by general principles of equity;
(d) no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery or performance by the Owner Participant of the Trust
Agreement, the Tax Indemnity Agreement or this Agreement;
(e) the Trust Estate is free of any Lessor's Liens attributable to the
Owner Participant;
(f) there are no pending or, to the Owner Participant's knowledge,
threatened actions or proceedings against the Owner Participant before any court
or administrative agency which would materially adversely affect the Owner
Participant's financial condition or its ability to perform its obligations
under the Trust Agreement, the Tax Indemnity Agreement or this Agreement;
(g) as of the 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 of 1933, as amended, 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 of 1933, as amended; 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 of 1933, as amended, and that neither the
Owner Trustee nor the Lessee contemplates filing, or is legally required to
file, any such registration statement;
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(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 except for the fees of D'Accord
Financial Services, Inc., which will be paid by the Owner Participant and the
Owner Participant agrees that it will hold Lessee, the Indenture Trustee and
Lessor harmless from any claim, demand or liability for broker's or finder's or
placement fees or commission alleged to have been incurred as a result of any
action by the Owner Participant in connection with this transaction;
(j) the OP General Partner is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Alabama and has
full power and authority to carry on its business as now conducted;
(k) the OP General Partner is the sole general partner of the Owner
Participant;
(l) the OP General Partner has the requisite power and authority to
authorize the Owner Participant to enter into the Owner Participant Agreements
and to perform its obligations thereunder; and
(m) the Owner Participant Agreements have been duly authorized by all
necessary actions on the part of the OP General Partner, do not require any
approval not already obtained of the shareholders of the OP General Partner or
any approval or consent not already obtained of any trustee or holders of
indebtedness or obligations of the OP General Partner.
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 Closing Date shall be subject to the
following conditions (except that paragraph (k) and clause (i) of paragraph (p)
shall not be conditions precedent to the Owner Participant's obligations
hereunder and paragraph (n) and (s) and clause (ii) of paragraph (p) shall not
be conditions precedent to the Loan Participant's obligations hereunder):
(a) Execution of Operative Agreements. On or before the Closing Date, this
Agreement, the Trust Agreement, the Guaranty, the Lease, the Lease Supplements
in respect of the Units delivered on the Closing Date, the Indenture, the
Indenture Supplements in respect of the Units delivered on the Closing Date, the
Equipment Notes, the Pass Through Trust Agreement, the Pass Through Trust
Supplements and the Underwriting Agreement shall each be
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satisfactory in form and substance to such Participant, shall have been duly
executed and delivered by the parties thereto (except that the execution and
delivery of the documents referred to above (other than this Agreement) by a
party hereto or thereto shall not be a condition precedent to such party's
obligations hereunder), shall each be in full force and effect and executed
counterparts of each shall have been delivered to such Participant or its
counsel on or before the Closing Date; and no event shall have occurred and be
continuing that constitutes a Lease Default or an Indenture Default.
(b) Recordation and Filing. On or before the Closing Date the Lessee shall
have caused the Lease, the Lease Supplements in respect of Units delivered on
the Closing Date, the Indenture and the Indenture Supplements in respect of the
Units delivered on the Closing Date, to be duly filed, recorded and deposited
with the STB in conformity with 49 U.S.C. (S)11301 and with the Registrar
General of Canada pursuant to Section 105 of the Canada Transportation Act and
all necessary actions shall have been taken to cause publication of notice of
such deposit in The Canada Gazette in accordance with said Section 105 within 21
days after the Closing Date, and the Lessee shall furnish the Indenture Trustee,
the Owner Trustee and each Participant proof thereof.
(c) Representations and Warranties of Lessee. On the Closing Date, the
representations and warranties of the Lessee contained in Section 3.2 and
Section 3.4(b) hereof shall be true and correct in all material respects as of
the Closing Date as though then made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier date
(in which case such representations and warranties were true and correct on and
as of such earlier date), and the Owner Trustee, the Indenture Trustee and each
Participant shall have received an Officer's Certificate dated such date from
the Lessee certifying to the foregoing matters, and the Lessee shall have
performed and complied with all agreements and conditions herein contained which
are required to be performed or complied with by the Lessee on or before said
date.
(d) Representations and Warranties of Owner Trustee. On the 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 the
Closing Date as though then made on and as of such date except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date), and the Lessee, the Indenture Trustee, the Pass Through
Trustee and each Participant shall have received an Officer's Certificate dated
such 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 Closing Date, the Owner Trustee, the
Indenture Trustee and each Participant shall have received the favorable written
opinion of each of (i) the Lessee's special counsel and counsel for the Lessee
(which counsel shall be the General Counsel or Assistant General Counsel of the
Parent), (ii) counsel to the Owner Trustee, (iii) special counsel and counsel to
the Owner Participant, (iv) counsel to the Pass Through Trustee, (v) counsel to
the Indenture Trustee, (vi) special STB counsel and (vii) special Canadian
counsel, in form and substance satisfactory to each Participant; provided that,
except as otherwise
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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 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 the Closing Date, free and clear of all Liens
(other than Permitted Liens of the type described in clause (ii) with respect to
sublessee, and in clauses (iii), (iv), (vi) and (vii) of the definition
thereof).
(g) Bill of Sale. On the 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 date,
transferring to the Owner Trustee legal and beneficial title to such Units free
of all claims, liens and encumbrances of any nature 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 sublessee, and in clauses (iii), (iv),
(vi) and (vii) of the definition thereof).
(h) Insurance Certificate and Opinion. On or before the Closing Date, the
Indenture Trustee and each Participant shall have received (x) a certificate
relating to insurance that is required pursuant to Section 12 of the Lease and
(y) a certificate from a nationally recognized insurance broker in the form
attached hereto as Exhibit A with respect to the public liability insurance
required by Section 12.1(b) of the Lease.
(i) Corporate/Partnership Documents. Each of the Participants shall have
received such documents and evidence with respect to the Lessee, the Owner
Participant, the OP General Partner, the Guarantor, 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 at the time of the
Closing Date, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(k) Representations and Warranties of Owner Participant. On the Closing
Date, the representations and warranties of the Owner Participant contained in
Section 3.6 hereof shall be true and correct in all material respects as of the
Closing Date as though then made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date), and the Lessee, the Indenture Trustee and the Pass
Through Trustee shall have received an Officer's Certificate dated such date
from the Owner Participant certifying the foregoing matters, and the Owner
Participant shall have performed and complied with all
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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 Notice of Delivery required pursuant to Section 2.3.
(m) Representations and Warranties of the Indenture Trustee. On the
Closing Date, the representations and warranties of the Indenture Trustee
contained in Section 3.3 hereof shall be true and correct in all material
respects as of the Closing Date as though then made on and as of such date,
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and the Lessee, the Owner Trustee and
each Participant shall have received an Officer's Certificate dated such date
from the Indenture Trustee certifying the foregoing matters, and the Indenture
Trustee shall have performed and complied with all agreements and conditions
herein contained which are required to be performed or complied with by the
Indenture Trustee on or before said date.
(n) Representations and Warranties of the Pass Through Trustee. On the
Closing Date, the representations and warranties of the Pass Through Trustee
contained in Section 3.5 hereof shall be true and correct in all material
respects as of the Closing Date as though then made on and as of such date,
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and the Lessee, the Owner Trustee and
the Owner Participant shall have received an Officer's Certificate dated such
date from the Pass Through Trustee certifying the foregoing matters, and the
Pass Through Trustee shall have performed and complied with all agreements and
conditions herein contained which are required to be performed or complied with
by the Pass Through Trustee on or before said date.
(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 amount specified in, and otherwise in accordance
with, Sections 2.2(a) and 2.3 and (ii) the Loan Participant shall have made its
Commitment in the amount 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 Closing Date in connection with the transactions contemplated
by this Agreement on the Closing Date shall have been taken by any governmental
or political agency, subdivision or instrumentality of the United States and all
orders, permits, waivers, exemptions, authorizations
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and approvals of such entities required to be in effect on the Closing Date in
connection with the transactions contemplated by this Agreement on the Closing
Date shall have been issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect, on the Closing
Date.
(s) Tax Indemnity Agreement. On or before the Closing Date, the Tax
Indemnity Agreement shall be satisfactory in form and substance to the Owner
Participant, shall have been duly executed and delivered by the Lessee and,
assuming due authorization, execution and delivery by the Owner Participant,
shall be in full force and effect.
(t) Appointment of Representative. The Owner Trustee shall have authorized
its representative, who shall be an individual designated by the Lessee and
acceptable to the Owner Trustee, to accept the Units being delivered on the
Closing Date from Lessee and to deliver such Units to 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 Lessor pursuant to the Lease.
(u) Securities Act Compliance. On or before the Closing Date, the
Registration Statement shall have become effective under the Securities Act of
1933, as amended (the "Act"); if filing of the Final Prospectus, or any
supplement thereto is required pursuant to Rule 424(b) as promulgated pursuant
to the Act, the Final Prospectus and any such supplement, shall have been filed
in the manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
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 provide the funds
specified with respect to it in Sections 2.2(a) and 2.3 on the Closing Date with
respect to any Unit to be delivered on the Closing Date shall be subject to the
following additional conditions:
(a) Appraisal. On or before the Closing Date, the Owner Participant shall
have received an opinion (the "Appraisal") of RailSolutions, Inc., satisfactory
in form and substance to the Owner Participant, concluding that: (i) the fair
market value of the Equipment being delivered on the Closing Date is equal to
the Total Equipment Cost with respect to such Equipment; (ii) the Basic Rents
for the Basic Term are fair market rents; (iii) at the expiration of the Basic
Term, (A) without taking into account inflation or deflation from and after the
Closing Date or the existence of any purchase option, it is reasonable to expect
that the Equipment will have a fair market value of at least 20% of the Total
Equipment Cost with respect to such
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Equipment and (B) the remaining economic useful life of the Equipment will be at
least equal to 20% of the economic useful life of the Equipment as estimated in
the Appraisal; (iv) as of the Early Purchase Date, the estimated fair market
value of the Equipment being delivered on the Closing Date, taking into account
inflation or deflation from and after the Closing Date, will not exceed 95% of
the Early Purchase Price; (v) as of the end of the Basic Term, the estimated
fair market value of the Equipment being delivered on the Closing Date, taking
into account inflation or deflation from and after the Closing Date, will be 95%
or less than the Basic Term Purchase Price; (vi) the Equipment being delivered
on the Closing Date is not Limited Use Property and (vii) such other matters as
shall be reasonably requested by Lessor; 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 such 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 Closing Date, the
Owner Participant shall have received the opinion of Watson, Farley & Williams,
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. There shall not have occurred on or before the
Closing Date any change or proposed change in tax law (including the Code,
regulations, rulings or case law) that would have any adverse tax consequences
to the Owner Participant with respect to the transactions contemplated by the
Operative Documents, unless the Owner Participant is indemnified against such
consequences in an amount, form and manner reasonably acceptable to the Owner
Participant.
(d) Registration of Tax Shelter. On the Closing Date, the Owner
Participant shall have received (1) an executed "delegation agreement" in form
and substance reasonably satisfactory to the Owner Participant which shall
provide that the Lessee is the "designated organizer" (as defined in Temporary
Reg. (S) 301.6011-1T) responsible for the registration of the transactions
contemplated by the Operative Agreements under Section 6011 of the Code, and (2)
a copy of a properly completed, executed and filed IRS Form 8264 (Application
for Registration of Tax Shelter), with respect to the transactions contemplated
by the Operative Agreements, which shall have been properly completed, executed
and filed by the Lessee in accordance with Temporary Reg. (S)301.6011-2T(e)(2).
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 Closing Date:
(a) Corporate/Partnership Documents. On or before the Closing Date, the
Lessee shall have received such documents and evidence with respect to the Owner
Participant, the OP General Partner, the Guarantor, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee as the Lessee 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.
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(b) Operative Agreements. On or before the Closing Date, the Operative
Agreements shall have been duly authorized, executed and delivered by the
respective party or parties thereto (other than the Lessee), 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 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 the Closing Date as
though made on and as of such 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 Closing Date, the Lessee shall have
received the opinions of counsel referred to in Section 4.1(e) (other than that
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 at the time of the
Closing Date, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(f) 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 its
Commitment in the amount specified in, and otherwise in accordance with,
Sections 2.2(b) and 2.3.
(g) No Tax Law Change. There shall not have occurred on or before the
Closing Date any change or proposed change in tax law (including the Code,
regulations, rulings or case law) that would have any adverse tax consequences
to the Lessee with respect to the transactions contemplated by the Operative
Documents, unless the Lessee is indemnified against such consequences in an
amount, form and manner reasonably acceptable to the Lessee.
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, consolidated balance sheets of each of the Lessee and Parent
and their respective consolidated Subsidiaries as at the end of such period,
together with the related consolidated statements of income and cash flows of
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each of the Lessee and Parent and their respective 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 each of
the Lessee's and Parent's annual audited report covering the operations of the
Lessee and Parent and their respective consolidated Subsidiaries, including
consolidated balance sheets, and related consolidated statements of income and
retained earnings and consolidated statement of cash flows of each of the Lessee
and Parent and their respective 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 document filed by the Lessee or
Parent with the Securities and Exchange Commission or any successor agency
pursuant to Section 13(a), 13(c), 14 or 15(d) (or any successor sections) of the
Securities Exchange Act of 1934, as amended (or any successor statute)
(excluding such documents or portions thereof which are treated as confidential
and not available to the public, in accordance with applicable law, by the
Securities and Exchange Commission);
(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
(e) 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 (collectively, for purposes of
this Section 6.1, a "transfer") prior to the expiration or earlier termination
of the Lease Term without the Lessee's consent (which consent shall not be
unreasonably withheld); provided, however, that no such consent shall be
required if the following conditions are satisfied:
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(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 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;
(b) so long as no Lease Event of Default has occurred and is continuing,
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 Lessee's full service railcar
leasing business, solely by reason of any sale, lease or other disposition (or
any actions in furtherance of any of the foregoing), of any of such Person's
interest in any equipment or facilities directly or indirectly owned, leased or
otherwise controlled pursuant to any such Person's passive investment or loan
participation in the financing of any such equipment or facilities used in full
service railcar leasing or any re-leasing or sale of any rail equipment which is
returned to or repossessed by or on behalf of the Owner Participant or any
Affiliate of the Owner Participant from a lessee or borrower in connection with
a lease financing or lender transaction entered into by the Owner Participant or
such Affiliate as a passive lessor, investor or lender;
(c) the Indenture Trustee, the Owner Trustee and the Lessee shall have
received 10 days prior written notice of such transfer specifying the name and
address of any proposed transferee and such additional information as shall be
necessary to determine whether the proposed transfer satisfies the requirements
of this Section 6.1;
(d) [RESERVED];
(e) 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;
(f) an opinion of counsel of the Transferee (which counsel shall be
reasonably acceptable to the Lessee, the Owner Trustee and the Indenture Trustee
and which may be internal counsel of the Transferee), confirming (i) the
existence, power and authority of, and due authorization, execution and delivery
of all relevant documentation by, the Transferee (with
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appropriate reliance on certificates of corporate officers or public officials
as to matters of fact), (ii) that each agreement referred to in subparagraph (e)
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 laws and regulations
including Federal securities laws and securities laws of the Transferee's
domicile and other jurisdictions reasonably identified by the Lessee, the Owner
Trustee or the Indenture Trustee as potentially applicable to the transfer,
shall be provided, prior to such transfer, to the Lessee, the Owner Trustee and
the Indenture Trustee, which opinion shall be in form and substance reasonably
satisfactory to each of them;
(g) such transfer complies in all respects with and does not violate any
applicable provisions of the federal securities law and the securities law of
any applicable state;
(h) except as specifically consented to in writing by the Lessee, the Owner
Trustee and the Indenture Trustee, the terms of the Operative Agreements shall
not be altered;
(i) in the case of a transfer by the original Owner Participant, the
original Owner Participant shall have delivered on a timely basis the
certificates required pursuant to Section 7.1(c)(vi) hereof;
(j) no Owner Participant shall hold less than 10% of the Beneficial
Interest after giving effect to such transfer; and the Beneficial Interest shall
be held by not more than three Owner Participants at any one time; provided that
for the purpose of calculating the number of Owner Participants under this
paragraph (j), any Owner Participants that are Affiliates of each other shall be
considered to be one Owner Participant;
(k) all reasonable costs and expenses of the parties hereto (including,
without limitation, reasonable legal fees, costs 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;
(l) such transfer either (i) does not involve the use of any funds which
constitute assets of an employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code or (ii) will not constitute a prohibited transaction
under ERISA;
(m) as a result of and following such transfer, no Indenture Default
attributable to the Owner Participant or the Owner Trustee shall have occurred
and be continuing;
(n) 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 (b) of this Section 6.1;
(o) 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;
and
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(p) 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 to the extent provided in Section
6.1(k) hereof and except in the case of a transfer to a Transferee described in
the proviso to Section 6.1(a)(iii) hereof, shall be released from all
obligations hereunder and under each other Operative Agreement to which such
transferor is a party or by which such transferor is bound to the extent such
obligations are expressly assumed by a Transferee; and provided, further, that
in no event shall any such transfer or assignment waive or release the
transferor from any liability on account of any breach existing prior to such
transfer of any of its representations, warranties, covenants or obligations set
forth in the Operative Agreements or for any fraudulent or willful misconduct.
Any transfer or assignment of the Beneficial Interest in violation of this
Section 6.1 shall be of no effect as between the parties to this Agreement.
Subject to the rights of the Lessee pursuant to subsection 6.1(n), 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 Trust
Company hereby unconditionally agrees with and for the benefit of the other
parties to this Agreement that the Trust Company 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
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Owner Trustee in its individual capacity, and the Trust Company 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 Trust
Company (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 Trust Company or the Owner Trustee may contest
any such Lessor's Lien in good faith by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of the Equipment or any interest therein or interference with the use,
operation, or possession of the Equipment by the Lessee under the Lease or the
right of the Indenture Trustee under the Indenture.
Section 6.4 Liens Created by the Indenture Trustee and the Loan
Participant.
(a) The Indenture Trustee, in its individual capacity, covenants and agrees
with the Lessee, the Owner Trustee, the Owner Participant and the Loan
Participant that it shall not cause or permit to exist any Lien on the Equipment
or all or any portion of any Trust Estate or the Indenture Estate arising as a
result of (i) claims against the Indenture Trustee in its individual capacity
not related to its interest in the Equipment and any Trust Estate, or to the
administration of the Indenture Estate pursuant to the Indenture, (ii) acts of
the Indenture Trustee in its individual capacity not contemplated by, or failure
of the Indenture Trustee to take any action it is expressly required to perform
by, the Operative Agreements, (iii) claims against the Indenture Trustee in its
individual capacity relating to Taxes or expenses that are not indemnified
against by the Lessee pursuant to Section 7 attributable to the actions of the
Indenture Trustee, solely in its individual capacity, or (iv) claims against the
Indenture Trustee arising out of the transfer by the Indenture Trustee of all or
any portion of its interest in the Equipment, the Indenture Estate or the
Operative Agreements, other than a transfer permitted by the Operative
Agreements and that the Indenture Trustee will, at its own cost and expense (and
without any right of reimbursement from any other party hereto), promptly take
such action as may be necessary duly to discharge any such Lien.
(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 Trust Company (in its individual and in
its capacity as Owner Trustee) hereby agree, as to their own actions only and
severally and not jointly, with the Lessee, the Loan Participant and the
Indenture Trustee (a) not to amend, supplement, or otherwise
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modify any provision of the Trust Agreement in such a manner as to adversely
affect the rights of the Lessee, the Loan Participant or the Indenture Trustee
without the prior written consent of such party and (b) not to terminate or
revoke the Trust Agreement or the trusts created by the Trust Agreement prior to
the payment in full and discharge of the Equipment Notes and all other
indebtedness secured by the Indenture and the final discharge thereof pursuant
to Section 7.1 thereof or prior to the expiration or early termination of the
Lease. Each of the Owner Trustee and the Indenture Trustee agrees, for the
benefit of the Lessee and the Owner Participant, to comply with the provisions
of the Indenture and not to amend, supplement, or otherwise modify any provision
of the Indenture except in the manner provided in Article IX thereof.
Notwithstanding any provision herein or in any of the Operative Agreements to
the contrary, the Indenture Trustee's obligation to take or refrain from taking
any actions, or to use its discretion (including, but not limited to, the giving
or withholding of consent or approval and the exercise of any rights or remedies
under such Operative Agreements), and any liability therefor, shall, in addition
to any other limitations provided herein or in the other Operative Agreements,
be limited by the provisions of the Indenture.
Section 6.6 Amendments to Operative Agreements. The Trustees and
Participants will not terminate the Operative Agreements to which the Lessee is
not or will not be a party, or amend, supplement, waive or modify such Operative
Agreements in any manner that increases the obligations or liabilities, or
decreases the rights, of the Lessee under such Operative Agreements, except in
accordance with such Operative Agreements in effect on the date hereof (as
amended, modified or supplemented from time to time in accordance with the terms
hereof and of such Operative Agreements). The Owner Participant and the Trustees
(as applicable) agree that, in any event, they will not amend Section 2.10 or
Article IX of the Indenture or Article IX of the Trust Agreement without the
prior written consent of the Lessee.
Section 6.7 Covenant of the Lessee. The Lessee hereby agrees with the
Owner Trustee, each Participant and the Indenture Trustee to deliver to the
Owner Trustee on the Closing Date the Bill of Sale evidencing the purchase and
transfer of title of each Unit to be settled for on the 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 all or substantially all of its assets 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 of all or substantially all of the assets of the Lessee 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 in form and
substance reasonably satisfactory to such parties 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, (iv) there
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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, and (v) if the Person (x) formed by such consolidation or
surviving such merger (if other than the Lessee) or the Person which acquires by
conveyance, transfer or lease of all or substantially all of the assets of the
Lessee is not an Affiliate of the Lessee, the aggregate net worth of such
surviving or acquiring Person immediately after such merger, consolidation or
acquisition (determined in accordance with generally accepted accounting
principles) is not less than the consolidated net worth of the Lessee
immediately prior to such merger, consolidation or acquisition, or (y) with
which Lessee consolidates or merges or which acquires by conveyance, transfer or
lease of all or substantially all of the assets of the Lessee is an Affiliate of
the Lessee, such Person, immediately prior to such consolidation, merger or
acquisition, has a positive net worth (determined in accordance with generally
accepted accounting principles). Upon such consolidation or merger, or any
conveyance, transfer or lease of all or substantially all of the assets of the
Lessee in accordance with this Section 6.8, the successor corporation formed by
such consolidation or into which the Lessee is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Lessee under this Agreement and
the other Operative Agreements with the same effect as if such successor
corporation had been named as the Lessee herein.
Section 6.9 Lessee's Purchase in Certain Circumstances. If an Owner
Participant or any Affiliate thereof is or acquires, is acquired by, merges or
otherwise consolidates with any company or Affiliate thereof engaged in full
service railcar leasing, whether or not a direct competitor to the Lessee or any
Affiliate thereof, or 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, no later than one year after a Responsible Officer of the Lessee has actual
knowledge of such event, request that such Owner Participant transfer its
Beneficial Interest pursuant to Section 6.1. If such Owner Participant has not
transferred its Beneficial Interest within 180 days of such request, the Lessee
may, on a Determination Date which is designated by the Lessee by written notice
to the Owner Trustee and the Indenture Trustee not less than 25 days prior to
such Determination Date, purchase a number of the Units of Equipment equal to
the percentage of the Equipment that the portion of the Beneficial Interest held
by such Owner Participant bears to 100% of the Beneficial Interest for a
purchase price equal to the Termination Value for such Units calculated as of
such Determination Date, together with all other amounts due and owing by the
Lessee under the Operative Agreements with respect to such Units, including,
without limitation, all accrued and unpaid Basic Rent therefor as of such
Determination Date (exclusive of any in advance Basic Rent due on such date) and
any Make-Whole Amount then payable on the Equipment Notes pursuant to Section
2.10(c) of the Indenture with respect to such Units; provided, 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 businesses; provided,
further, that none of any Owner Participant 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
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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 in the financing of any such equipment or facilities used in full
service railcar leasing. In the event that such Owner Participant hereinabove
referred to holds less than 100% of the Beneficial Interest, the determination
as to which Units are to be purchased under this Section 6.9 shall be made on a
random or other basis (in each case reasonably acceptable to the Lessor) without
discrimination based on maintenance status, operating condition of the Units in
question or otherwise and the notice hereinabove referred to shall describe such
manner in which the Lessee proposes to determine which Units are to be purchased
hereunder.
If the Lessee elects to exercise the purchase option provided for in this
Section 6.9, the Lessee shall, as the purchase price therefor, in the sole
discretion of the Lessee, either (i) pay the Termination Value, as specified in
the paragraph above, with respect to such Units, together with all other amounts
due and owing by the Lessee under the Operative Agreements, or (ii) pay the
difference between the Termination Value and the portion of the outstanding
principal amount of the Equipment Notes which relates to such Units as of the
Determination Date specified by the Lessee in the first sentence of this Section
6.9 and assume on a full resource basis, and indemnify the Lessor against, all
of the Owner Trustee's obligations under the Indenture in respect of such
portion of the indebtedness evidenced by such Equipment Notes; provided, that,
following such assumption, the purchased Units shall remain subject to the lien
of a separate indenture similar to the Indenture pursuant to Section 3.06 of the
Indenture. The Lessee will make the payments required by foregoing clause (i) or
assume such portion of the indebtedness evidenced by the Equipment Notes which
relates to such Units as provided in foregoing clause (ii) on the Determination
Date designated in the first sentence of Section 6.9 in immediately available
funds against delivery of a bill of sale transferring and assigning to the
Lessee all right, title and interest of the Lessor in and to the Units on an
"as-is" "where-is" basis and containing a warranty against Lessor's Liens. In
such event, the costs of preparing the bill of sale and all other documentation
relating to such purchase and the costs of any necessary filings related thereto
will be borne by the Lessee. If the Lessee shall fail to fulfill its obligations
under this second paragraph of Section 6.9, all of the Lessee's obligations
under the Lease and the Operative Agreements, including, without limitation, the
Lessee's obligation to pay installments of Rent, with respect to the Units in
question shall continue.
Section 6.10 Owner Participant an Affiliate of Lessee. If at any time the
original or any successor Owner Participant shall be an Affiliate of the Lessee,
such Owner Participant and the Lessee agree that notwithstanding Section 9.05 of
the Indenture they will not vote its Beneficial Interest to modify, amend or
supplement any provision of the Lease or this Agreement or give, or permit the
Owner Trustee to give, any consent, waiver, authorization or approval thereunder
if any such action 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,
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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 Owner Trustee, the
Trust Company, the Indenture Trustee both in its individual capacity and as
trustee, the Pass Through Trustee both in its individual capacity and as
trustee, each of their respective successors or assigns permitted under the
terms of the Operative Agreements, any officer, director, employee or agent of
any of the foregoing, the Trust Estate and the Indenture Estate.
(b) Taxes Indemnified. All payments by the Lessee to any Tax Indemnitee in
connection with the transactions contemplated by the Operative Agreements shall
be free of withholdings of any nature whatsoever (and at the time that the
Lessee is required to make any payment upon which any withholding is required
the Lessee shall pay an additional amount such that the net amount actually
received will, after such withholding and on an After-Tax Basis, equal the full
amount of the payment then due) and shall be free of expense to each Tax
Indemnitee for collection or other charges, provided, however, that no such
additional amounts shall be paid by the Lessee and the Lessee assumes no
responsibility regarding any withholdings (i) imposed by reason of any transfer
of the Equipment or any interest in the Operative Agreements by the Lessor or
the Owner Participant, (ii) imposed solely by reason of a nexus between the
affected Tax Indemnitee and the jurisdiction imposing such withholding which
nexus is unrelated to the transactions contemplated by the Operative Agreements,
or (iii) imposed by the United States by reason of the status of the Tax
Indemnitee as a foreign corporation or nonresident individual, provided,
further, however, that, notwithstanding the exclusions contained in the
preceding clauses (i) - (iii), Lessee agrees to pay an additional amount of Rent
such that the net amount actually received by the Indenture Trustee, after all
such withholding, is sufficient to pay the related amounts due on the Equipment
Notes and the Lessee shall be entitled to recover such amounts under the next
succeeding sentence. If, for any reason, the Lessee is required to make any
payment to a taxing authority with respect to, or as a result of, any
withholding tax imposed on any Tax Indemnitee in respect of the transactions
contemplated by the Operative Agreements which withholding tax is not the
responsibility of the Lessee under this Section 7.1 then such Tax Indemnitee
shall pay to the Lessee within 30 days of a demand an amount which equals the
amount paid by the Lessee with respect to, or as a result of, such withholding
tax, plus interest computed at such Tax Indemnitee's cost of funds rate during
the period commencing on the date the Lessee shall have paid an additional
amount pursuant to the first sentence of this paragraph and ending on the date
the Lessee actually receives such payment.
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Subject to the exclusions stated in subsection (c) below, the Lessee agrees
to indemnify and hold harmless each Tax Indemnitee, on an After-Tax Basis,
taking into account the income tax consequences to the Tax Indemnitee of the
accrual or receipt of an indemnity 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) acquisition, financing, ownership, leasing, possession,
purchase, acceptance, rejection, condition, registration, return, use,
storage, operation, return, transfer of title, maintenance, repair,
improvement, replacement, substitution, delivery, redelivery, non-delivery,
transport, preparation, assembly, insurance, construction, manufacture,
insuring, modification, transfer, control, occupancy, servicing,
mortgaging, location, refinancing, disposition, subleasing, repossession,
abandonment, sale or other application or disposition of or with respect to
the Equipment or any part of any of the Equipment or interest therein;
(iii) the rental payments, receipts on 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 premium or other
amounts with respect thereto; and
(v) the Operative Agreements or otherwise in connection with the
transactions contemplated thereby.
(c) Taxes Excluded. The indemnity provided for in paragraph (b) above
shall not extend to any of the following:
(i) In the case of the Owner Participant, the Owner Trustee or the
Trust Estate, Income Taxes (as defined in Section 7.1(l), below) imposed by
(A) the United States federal government (provided that this subclause (A)
shall not be construed as preventing Lessee from recouping any such federal
Income Taxes imposed by way of 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 5.09 of the Indenture), (B) any state or local
tax jurisdiction in the United States (unless such Tax Indemnitee would not
have been subject to tax in such jurisdiction but for this transaction
(including the operation or
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presence of any Unit (or part thereof) and other leasing transactions
between the Lessee (or its Affiliates) and the Owner Participant (or its
Affiliates) or the Lessee making payment from or performing other actions
in such jurisdiction)), provided, that for purposes of determining whether
any Tax Indemnitee would not have been subject to tax in such jurisdiction
but for this transaction, the determination of (y) whether any Tax
Indemnitee is treated as being incorporated or having its principal place
of business in any state or local tax jurisdiction for purposes of this
clause (B), or (z) whether any such Tax Indemnitee is deemed to be subject
to tax in any state or local tax jurisdiction (and would have been subject
to such tax without regard to this transaction) for purposes of 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
Indemnitee or other entities, except to the extent that such Tax Indemnitee
files combined or consolidated tax returns in such state or local
jurisdiction, respectively, with one or more Affiliates which are also Tax
Indemnitee, (C) any foreign government or any political subdivision or
taxing authority thereof or any territory or possession of the United
States or by any international authority except to the extent such Income
Taxes would not have been imposed by such jurisdiction but for the use,
location, operation, presence or registration of any Unit or part thereof
in such jurisdiction or the activities of the Lessee or any of its
Affiliates in such jurisdiction or the making of any payments from such
jurisdiction by or on behalf of the Lessee pursuant to the Operative
Agreements or any other nexus between such jurisdiction and the
transactions contemplated by the Operative Agreements (other than such
nexus as may result solely from the activities, presence, ownership or
receipts of such Tax Indemnitee in each case unrelated to the Operative
Agreements or transactions contemplated thereby) or (D) any government or
jurisdiction described in (A), (B) or (C) of this clause (i) because the
applicable Tax Indemnitee is not a resident of the United States for tax
purposes.
(ii) Taxes imposed with respect to any period after the earliest of
the applicable dates of (x) the return of possession of the Equipment to
the Owner Participant or the placement of the Equipment in storage at the
request of the Owner Participant, in either case pursuant to Section 6 of
the Lease, (y) the termination of the Lease Term pursuant to Section 22.1
or Section 22.3 of the Lease, or (z) the discharge in full of the Lessee's
obligation to pay the Termination Value or the Stipulated Loss Value and
all other amounts due, if any, under Section 10 or 11.2 of the Lease, as
the case may be, with respect to the Equipment; provided that the exclusion
set forth in this clause (ii) shall not apply to Taxes to the extent such
Taxes relate to events occurring or matters arising prior to or
simultaneously with the applicable 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 by such Tax Indemnitee, or by the gross negligence or willful
misconduct of such Tax Indemnitee;
(iv) As to any Tax Indemnitee, Taxes which become payable as a result
of a sale, assignment, transfer or other disposition (whether voluntary or
involuntary) by such Tax Indemnitee of all or any portion of its interest
in the Equipment or any part thereof, the Trust Estate or any of the
Operative Agreements or rights created thereunder other
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than as a result of the substitution, modification or improvement of the
Equipment or any part thereof or a disposition which occurs as the result
of the exercise of remedies for a Lease Event of Default, any disposition
which occurs during the continuance of a Lease Event of Default or a
purchase of any Unit pursuant to the Lease; provided, that, notwithstanding
the foregoing but subject to the Tax Indemnity Agreement, 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 such excess to be
determined based on a certificate of the original Tax Indemnitee provided
to the Lessee immediately prior to a transfer, sale or other such
disposition of such interest, such certificate to set forth the state and
local jurisdictions in which the original Tax Indemnitee would not be
entitled to indemnification in accordance with (S) 7.1(c)(i)(B) and (C)
hereof, provided, however, that this provision shall not apply to the
determination of amounts required to make payments on an After-Tax Basis;
and
(vii) Taxes imposed on the Owner Trustee based on the Owner Trustee's
fee for services under the Trust Agreement.
(d) All Tax Obligations in this Section, etC. Notwithstanding any other
provision anywhere contained in the Operative Agreements, it is understood that
except as provided in Section 6.2, with respect to the Owner Participant, and
Section 6.3, with respect to the Owner Trustee, and except as provided in
Section 5.03 of the Indenture, the Owner Participant and the Owner Trustee shall
have no obligations with respect to Taxes or other charges to the Indenture
Trustee or the Loan Participant imposed under Section 7.16 of the Pass Through
Trust Agreement or Section 5.09 of the Indenture, or otherwise.
(e) Payments to Lessee.
(i) If any Tax Indemnitee shall realize a Tax benefit (net of any Tax
detriment not otherwise paid or indemnified against by the Lessee
hereunder) as a result of any Taxes paid or indemnified against by the
Lessee under this Section 7.1 (whether by way of deduction, credit,
allocation or apportionment or otherwise), such Tax Indemnitee shall pay to
the Lessee an amount equal to the amount of such Tax benefit, increased by
the Tax Indemnitee's additional saved Taxes attributable to the payment
being made to the Lessee hereunder; provided, however, that in no event
shall the aggregate amount paid by any Tax Indemnitee to the Lessee with
respect to any realized Tax benefit exceed the aggregate amount previously
advanced by the Lessee with respect to such Taxes (in each case, computed
on a pre-tax basis) but provided, further, that such excess shall be
carried
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forward to reduce or offset any future obligations of the Lessee to such
Tax Indemnitee under this Section 7.1.
(ii) Upon receipt by a Tax IndemnItee of a refund or credit of all or
part of any Taxes paid or indemnified against by the Lessee, such Tax
Indemnitee shall pay to the Lessee an amount equal to the amount of such
refund plus any interest received by or credited to such Tax Indemnitee
with respect to such refund increased or decreased, as the case may be, by
the Tax Indemnitee's net additional or saved taxes attributable to the
receipt of such amounts from the taxing authority and the payment being
made to the Lessee hereunder.
(iii) The Tax Indemnitee shall in good faith file its Tax returns and
deal with taxing authorities to seek and claim any such tax benefits or
refunds.
(iv) Any disallowance or other loss of a tax refund, credit, savings
or other benefit by a Tax Indemnitee, which refund, credit, savings or
other benefit was taken into account under this Section 7.1, shall be
treated as a tax indemnifiable by the Lessee under this Section 7.1 without
regard to the exclusions in Section 7.1(c) (other than clause (iii).
(f) Procedures. Any amount payable to a Tax Indemnitee pursuant to
paragraph (b) shall be paid within 30 days after receipt of a written demand
therefor from such Tax Indemnitee accompanied by a written statement describing
in reasonable detail the basis for such indemnity and the computation of the
amount so payable, provided that such amount need not be paid prior to (i) the
date which is the Business Day before the date on which such Taxes are due (but
in no event before the taxable year of the Tax Indemnitee in which such Taxes
are due), or (ii) in the case of amounts which are being contested pursuant to
paragraph (g) hereof, subject to the requirement of an advance in clause (vi) of
the second paragraph of paragraph (g) hereof, the time such Taxes are due and
payable pursuant to the resolution of such contest (including all appeals). Any
amount payable to the Lessee pursuant to paragraph (e) shall be paid within 30
days after the Tax Indemnitee realizes a net tax benefit or receives a refund
giving rise to a payment under paragraph (e), and shall be accompanied by a
written statement by the Tax Indemnitee setting forth in reasonable detail the
basis for computing the amount of such payment. Within 15 days following the
Lessee's receipt of any computation from the Tax Indemnitee, the Lessee may
request that the accounting firm that regularly prepares the certified financial
statements of the Tax Indemnitee determine whether such computations of the Tax
Indemnitee are correct. Such accounting firm shall be requested to make the
determination contemplated by this paragraph (f) within 30 days of its
selection. In the event such accounting firm shall determine that such
computations are incorrect, then such firm shall determine what it believes to
be the correct computations. The Tax Indemnitee shall cooperate with such
accounting firm and supply it with all information necessary to permit it to
accomplish such determination on a confidential basis. The computations of such
accounting firm shall be final, binding and conclusive upon the parties and the
Lessee shall have no right to inspect the books, records or tax returns of the
Tax Indemnitee to verify such computation or for any other purpose. All fees and
expenses of the accounting firm payable under this Section 7.1(f) shall be borne
by the Lessee except that if such accounting firm determines that the Tax
Indemnitee's computations were incorrect and understated the payments owing to
the Lessee or overstated the payments owing to such Tax Indemnitee by 10% or
more of the correct amount as determined by
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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 timely to 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 30 days after providing the
Lessee with such written notice, unless required to do so by law or unless
deferral of payment might, in the reasonable good faith judgment of the Tax
Indemnitee, cause material adverse consequences to the Tax Indemnitee or result
in the creation of any Lien other than a Permitted Lien. The Tax Indemnitee
shall in good faith, with due diligence and at the Lessee's expense, if
requested in writing by the Lessee, contest (including pursuing all appeals
permitted hereby) in the name of the Tax Indemnitee (or, if requested by the
Lessee and permissible as a matter of law, in the name of the Lessee), or shall
permit the Lessee to contest in either the name of the Lessee or with the Tax
Indemnitee's consent, in the name of the Tax Indemnitee the validity,
applicability or amount of such Taxes by,
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if protest is necessary
and proper;
(iii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; or
(iv) taking such other reasonable action as is reasonably requested
by the Lessee from time to time.
provided, however, that to the extent the contest is carried on in the name of
the Lessee or an Affiliate, or is brought in the name of a Tax Indemnitee and
involves only Taxes for which the Lessee is or will be liable hereunder, such
contest shall be undertaken by the Lessee at the Lessee's expense (unless at any
time the Tax Indemnitee determines in its reasonable good faith judgment that
based upon the Lessee's conduct of such contest the Lessee's control of such
contest would cause material adverse consequences or a material risk thereof to
the Tax Indemnitee) and at no-after-tax cost to any Tax Indemnitee (a "Lessee
Controlled Contest"), 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) (an "Indemnified Person Controlled 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
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the Lessee, as the case may be, shall not prevail in the contest of such claim;
(ii) such Tax Indemnitee shall have received the opinion of tax counsel (which
may, in the case of Taxes imposed by a taxing authority located in the United
States, include in-house counsel of the Lessee) selected by the Lessee and
satisfactory to the Tax Indemnitee furnished at Lessee's sole expense, to the
effect that a reasonable basis consistent with ABA Opinion 85-352 exists for
contesting such claim or, in the event of an appeal, that it is more likely than
not that an appellate court will reverse or substantially modify the adverse
determination (and provided that no appeal shall be required to the United
States Supreme Court); (iii) the Lessee shall have agreed to pay such Tax
Indemnitee on demand (and at no after-tax cost to any Tax Indemnitee) all
reasonable costs and expenses that such Tax Indemnitee actually incurs in
connection with contesting such claim (including, without limitation, all costs,
expenses, reasonable legal and accounting fees, disbursements, penalties,
interest and additions to the Taxes); (iv) no Lease Event of Default shall have
occurred and shall be continuing; (v) such Tax Indemnitee shall have determined
that the action to be taken will not result in any risk of imposition of
criminal penalties or substantial danger of sale, forfeiture or loss of, or the
creation of any Lien (except if such Lessee shall have adequately bonded such
Lien or otherwise made provision to protect the interests of such Tax Indemnitee
in a manner reasonably satisfactory to such Tax Indemnitee) on the Equipment or
any portion thereof or any interest therein; and (vi) if such contest shall be
conducted in a manner requiring the payment of the claim, the Lessee shall have
paid the amount required (at no after-tax cost to such Tax Indemnitee). The
Lessee shall cooperate with the Tax Indemnitee with respect to any contest
controlled and conducted by the Tax Indemnitee and the Tax Indemnitee shall
consult with the Lessee regarding the conduct of such contest. The Tax
Indemnitee shall cooperate with the Lessee with respect to any contest
controlled and conducted by the Lessee and the Lessee shall consult with the Tax
Indemnitee regarding the conduct of such contest.
In no event will a Tax Indemnitee be required to contest in an Indemnified
Person Controlled Contest any Taxes if such Tax Indemnitee shall waive its right
to an indemnity under this Section 7.1 except that a Tax Indemnitee shall not be
permitted to waive or not contest any Lessee Controlled Contest without Lessee's
consent. Unless a Tax Indemnitee obtains the consent of the Lessee, which
consent shall not be unreasonably withheld (provided, however, the Lessee shall
not be considered to have unreasonably withheld such consent because of (i) any
failure by the Lessee to consider any issue or dispute of the Tax Indemnitee not
directly related to the claim giving rise to the contest rights in issue or (ii)
the Lessee's consideration of the effects of such settlement on issues of the
Lessee which are not the subject of such claim), the failure to contest or 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 Indemnitee' failure to
contest.
(h) For purposes of this Section 7.1, 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 this 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
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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
in writing 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 pursue or fulfill their respective tax filing, tax
audit, and tax litigation rights and obligations.
(j) The provisions of this Section 7.1 shall continue in full force and
effect, notwithstanding the expiration or termination of any Operative
Agreement, until all obligations hereunder have been met and all liabilities
hereunder paid in full.
(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 Material Default 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
Material 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, excise, or property taxes shall not constitute an Income
Tax; and provided, further, that a value-added tax shall constitute an Income
Tax if it is in the nature of a tax on net income but shall not constitute an
Income Tax if it is in the nature of a sales, use, rental, excise, property or
other tax; and provided, further, that a withholding tax shall not constitute an
Income Tax notwithstanding its being a tax that is based on or measured by or
with respect to gross income or gross receipts).
(m) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through Certificate
who is a Non-U.S. Person except to the extent that such a holder of a Pass
Through Certificate has furnished evidence to the Pass Through Trustee
sufficient under applicable law to entitle such holder of a Pass Through
Certificate to any exemption from or reduction in the rate of withholding on
interest claimed by such holder of a Pass Through Certificate. The Indenture
Trustee shall withhold any Taxes required to be withheld on any payment to a
Holder pursuant to Section 5.09 of the Indenture. If
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the Indenture Trustee or Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Certificateholder or any claim is otherwise
asserted by a taxing authority against the Owner Trustee or Owner Participant
for any withholding tax, the Lessee will indemnify the Owner Trustee and the
Owner Participant (without regard to the exclusions set forth in Section 7.1(c)
hereof) on an After-Tax Basis against any such Taxes required to be withheld and
any interest and penalties with respect thereto, along with any other reasonable
out-of-pocket costs (including reasonable attorney's fees) incurred in
connection with any such claim. The Indenture Trustee or the Pass Through
Trustee, as the case may be, in its individual capacity (and without recourse to
the Indenture Estate), shall indemnify the Lessee (without regard to the
exclusions set forth in Section 7.1(c) hereof) on an After-Tax Basis for any
payment the Lessee shall have made pursuant to the preceding sentence.
Section 7.2 General Indemnification and Waiver of Certain Claims.
----------------------------------------------------
(a) Claims Defined. For the purposes of this Section 7.2, "Claims" shall
mean any and all costs, expenses, liabilities, obligations, losses, damages,
penalties, actions or suits or claims of whatsoever kind or nature (whether or
not on the basis of negligence, strict or absolute liability or liability in
tort) which may be imposed on, incurred by, suffered by, or asserted against an
Indemnified Person, as defined herein, or any Unit and, except as otherwise
expressly provided in this Section 7.2, shall include, but not be limited to,
all reasonable out-of-pocket costs, disbursements and expenses (including legal
fees and expenses) paid or incurred by an Indemnified Person in connection
therewith or related thereto.
(b) Indemnified Person Defined. For the purposes of this Section 7.2,
"Indemnified Person" means the Owner Participant, the Owner Trustee, the Trust
Company, the Indenture Trustee and the Pass Through Trustee, each of their
Affiliates and each of their respective directors, officers, employees,
successors and permitted assigns, agents and servants, the Trust Estate and the
Indenture Estate (the respective directors, officers, employees, successors and
permitted assigns, agents and servants of the Owner Participant, the Owner
Trustee, the Trust Company, the Indenture Trustee, the Pass Through Trustee and
each of their Affiliates, as applicable, together with the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and each of
their Affiliates, as the case may be, being referred to herein collectively as
the "Related Indemnitee Group" of the Owner Participant, the Indenture Trustee,
the Owner Trustee and the Pass Through Trustee, respectively).
(c) Claims Indemnified. Whether or not any Unit is accepted under the
Lease, or a closing occurs with respect thereto, and subject to the exclusions
stated in subsection (d) below, Lessee agrees to indemnify, protect, defend and
hold harmless each Indemnified Person on an After-Tax Basis against Claims
directly or indirectly resulting from or arising out of or alleged to result
from or arise out of (whether or not such Indemnified Person shall be
indemnified as to such Claim by any other Person):
(i) this Agreement or any other Operative Agreement or any of the
transactions contemplated hereby and thereby or any Unit or the ownership,
lease, operation, possession, modification, improvement, abandonment, use,
non-use, maintenance, sublease, substitution, control, repair, storage,
alteration, transfer or other application or disposition, return, overhaul,
testing, servicing, replacement or registration
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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 presence, discharge, spillage, release or
escape of Hazardous Substances or damage to the environment (including,
without limitation, clean-up costs, response costs, costs of corrective
actions and natural resource damages)) whether or not in compliance with
the terms of the Lease, or by any of the commodities, items or materials
from time to time contained in any Unit, whether or not in compliance with
the terms of the Lease, or by the inadequacy of any Unit or deficiency or
defect in any Unit or by any other circumstances in connection with any
Unit, or by the performance of any Unit or any risks relating thereto, or
by any interruption of service, loss of business or anticipated profits or
consequential damages;
(ii) the construction, manufacture, financing, refinancing, design,
purchase, acceptance, rejection, delivery, non-delivery or condition of any
Unit (including, without limitation, latent and other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement);
(iii) any act or omission (whether negligent or otherwise) or any
breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement to be performed by, or other
obligation of, Lessee under any of the Operative Agreements, or the falsity
of any representation or warranty of the Lessee in any of the Operative
Agreements or in any document or certificate delivered in connection
therewith other than representations and warranties in the Tax Indemnity
Agreement;
(iv) the offer, sale or delivery of any Equipment Notes or Pass
Through Certificates or any interest in the Trust Estate;
(v) any violation of law, rule, regulation or order by the Lessee or
any sublessee or their respective directors, officers, employees, agents or
servants; and
(vi) the acquisition or holding of any 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
occurrence or deemed occurrence of an Event of Loss with respect to such
Unit under Section 11 of the Lease, or the election to replace such Unit
under Section 8.1(b), 8.3 or 9.1 of the Lease, the last to occur of (x) the
payment of all amounts due from the Lessee in connection with any such
event, (y) the release of the Lien of the Indenture on such Unit, and (z)
legal transfer of title to such Unit to any Person other than Lessor,
except in
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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 in accordance with the terms thereof,
(y) with respect to each Unit, the return of such Unit to the Lessor in
accordance with the terms of the Lease (it being understood that, so long
as any Unit is in storage as provided in Section 6.1(c) of the Lease, the
date of return thereof for the purpose of this clause (B) shall be the last
day of the Storage Period), and (z) the release of the Lien of the
Indenture on such Unit;
(ii) Claims which are Taxes, whether or not the Lessee is required to
indemnify therefor under Section 7.1 hereof or the Tax Indemnity Agreement;
(iii) with respect to any particular Indemnified Person, Claims to
the extent resulting from (x) the gross negligence or willful misconduct of
such Indemnified Person, or (y) any breach of any covenant to be performed
by such Indemnified Person under any of the Operative Agreements, or the
falsity of any representation or warranty of such Indemnified Person in any
of the Operative Agreements or in a document or certificate delivered in
connection therewith;
(iv) any Claim to the extent attributable to any transfer by the
Lessor of the Equipment or any portion thereof or any transfer by the Owner
Participant of all or any portion of its interest in the Trust Estate other
than (A) any transfer after a Lease Default or Lease Event of Default, (B)
the transfer of the Equipment or any Owner Participant's interest in the
Equipment to the Lessee, (C) the transfer of the Equipment to a third party
pursuant to Lessee's election to terminate the Lease or (D) any transfer of
the Equipment pursuant to Section 6.9;
(v) with respect to any particular Indemnified Person, any Claim
resulting from the imposition of any Lessor's Lien attributable to such
Indemnified Person; or
(vi) with respect to any particular Indemnified Person, any Claim, to
the extent the risk thereof has been expressly assumed by such Indemnified
Person in connection with the exercise by such Indemnified Person of the
right of inspection or restenciling granted under Section 6.1 of the Lease
or right of inspection granted under Sections 6.2 or 13.2 of the Lease.
(e) Insured Claims. In the case of any Claim indemnified by the Lessee
hereunder which is covered by a policy of insurance maintained by the Lessee
pursuant to Section 12 of the Lease or otherwise, each Indemnified Person agrees
to provide reasonable cooperation to the insurers in the exercise of their
rights to investigate, defend or compromise such Claim as may be required to
retain the benefits of such insurance with respect to such Claim.
(f) Claims Procedure. An Indemnified Person shall, after obtaining
knowledge thereof, promptly notify the Lessee of any Claim as to which
indemnification is sought;
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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.
Notwithstanding any of the foregoing to the contrary, the Lessee shall not
be entitled to control and assume responsibility for the defense of such claim
or liability if (1) a Lease Event of Default shall have occurred and be
continuing, (2) such proceeding will involve any material danger of the sale,
forfeiture or loss of, or the creation of any Lien (other than any Lien
permitted under the Operative Agreements or a Lien which is adequately bonded to
the satisfaction of such Indemnified Person) on, any Unit, (3) the amounts
involved, in the good faith opinion of such Indemnified Person, are likely to
have a materially adverse effect on the business of such Indemnified Person
other than the ownership, leasing and financing of the Equipment, (4) in the
good faith opinion of such Indemnified Person, there exists an actual or
potential conflict of interest such that it is advisable for such Indemnified
Person to retain control of such proceeding or (5) such claim or liability
involves the possibility of criminal sanctions or liability to such Indemnified
Person. In the circumstances described in clauses (1) - (5), the Indemnified
Person shall be entitled to control and assume responsibility for the defense of
such claim or liability at the expense of the Lessee. In addition, any
Indemnified Person may participate in any proceeding controlled by the Lessee
pursuant to this Section 7.2, at its own expense, in respect of any such
proceeding as to which the Lessee shall have acknowledged in writing its
obligation to indemnify the Indemnified Person pursuant to this Section 7.2, and
at the expense of Lessee in respect of any such proceeding as to which the
Lessee shall not have so acknowledged its obligation to the Indemnified Person
pursuant to this Section 7.2. Lessee may in any event participate in all such
proceedings at its own cost. Nothing contained in this Section 7.2(f) shall be
deemed to require an Indemnified Person to contest any Claim or to assume
responsibility for or control of any judicial proceeding with respect thereto.
(g) Subrogation. If a Claim indemnified by the Lessee under this Section
7.2 is paid in full by the Lessee and/or an insurer under a policy of insurance
maintained by the Lessee, the Lessee and/or such insurer, as the case may be,
shall be subrogated to the extent of such payment to the rights and remedies of
the Indemnified Person (other than under insurance policies maintained by such
Indemnified Person) on whose behalf such Claim was paid with respect to the
transaction or event giving rise to such Claim. So long as no Lease Event of
Default shall have occurred and be continuing, should an Indemnified Person
receive any refund, in whole or in part, with respect to any Claim paid by the
Lessee hereunder, it shall promptly pay over the amount refunded (but not in
excess of the amount the Lessee or any of its insurers has paid) to the Lessee.
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(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
Lessee's rights under the Lease, including, without limitation, the right to
possession, use and quiet enjoyment by Lessee or any permitted sublessee of the
Equipment.
SECTION 9. SUCCESSOR INDENTURE TRUSTEE.
In the event that the Indenture Trustee gives notice of its resignation
pursuant to Section 8.02 of the Trust Indenture, the Owner Trustee shall
promptly appoint a successor Indenture Trustee reasonably acceptable to the
Lessee and the Pass Through Trustee.
SECTION 10. MISCELLANEOUS.
Section 10.1 Consents. Each Participant covenants and agrees (subject, in
the case of the Loan Participant, to all of the terms and provisions of the
Trust Indenture) that it shall not unreasonably withhold its consent to any
consent requested of the Owner Trustee or the Indenture Trustee, as the case may
be, under the terms of the Operative Agreements that by its terms is not to be
unreasonably withheld by the Owner Trustee or the Indenture Trustee.
Section 10.2 Refinancing. So long as no Lease Default or Lease Event of
Default shall be in existence (on the date of request or at any time through and
including the Refunding Date, as defined below), the Lessee shall have the right
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(d) of the Indenture as part of a refunding or refinancing
operation. As soon as practicable after receipt of such request, the Owner
Participant and the Lessee will enter into an agreement, in form and substance
reasonably satisfactory to the parties thereto, as to the terms of such
refunding or refinancing as follows:
(a) the Lessee, the Owner Participant, the Indenture Trustee, the Owner
Trustee, and any other appropriate parties will enter into a financing or loan
agreement (which may involve an underwriting agreement in connection with a
public offering), in form and substance reasonably satisfactory to the parties
thereto, providing for (i) the issuance and sale by the Owner Trustee or such
other party as may be appropriate on the date specified in such agreement (for
the
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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 Lessee to the Person or Persons entitled thereto of all other amounts, in
respect of accrued interest, any Make-Whole Amount or other premium, if any,
payable on such Refunding Date;
(b) the Lessee and the Owner Trustee will amend the Lease in a manner such
that (i) if the Refunding Date is not a Rent Payment Date and the accrued and
unpaid interest on the Equipment Notes is not otherwise paid pursuant to Section
10.2(a), the Lessee shall on the Refunding Date prepay that portion of the next
succeeding installment of Basic Rent as shall equal the aggregate interest
accrued on the Equipment Notes outstanding to the Refunding Date, (ii) Basic
Rent payable in respect of the period from and after the Refunding Date shall be
recalculated to preserve the Net Economic Return which the Owner Participant
would have realized had such refunding not occurred, provided that the net
present value of Basic Rent shall be minimized to the extent consistent
therewith, and (iii) 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
clauses (a) and (b) 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;
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(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 and of the parties hereto incurred in connection
with such refunding or refinancing (including all reasonable out-of-pocket legal
fees and expenses);
(f) the Lessee shall give the Indenture 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 of
1933, as amended, and any other applicable law relating to the sale of
securities and (ii) such other opinions of counsel and such certificates and
other documents, each in form and substance satisfactory to them, as they may
reasonably request in connection with compliance with the terms and conditions
of this Section 10.2; and
(h) all necessary authorizations, approvals and consents shall have been
obtained; provided, however, that the Lessee will, to the extent then known,
promptly provide to the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee substantially final terms and conditions of
any such refunding or refinancing within 30 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 Vedder, Price,
Kaufman & Kammholz or other tax counsel reasonably acceptable to the Owner
Participant to the effect that the Owner Participant would have a reasonable
basis within the meaning of Section 6662(d)(2)(B)(ii) of the Code not to report
any adverse federal income tax consequences as a result of such refunding or
refinancing and (b) an agreement to indemnify the Owner Participant against any
adverse tax consequence suffered as a result of such refinancing or refunding;
alternatively, in the event such reasonable basis tax opinion cannot be provided
and the Lessee wishes to effect such refunding or refinancing, the Lessee will,
at such time as the Lessee receives written notice from the Owner Participant
that the Owner Participant has filed any income tax return wherein such adverse
income tax consequences are recognized, make an indemnity payment to the Owner
Participant in the incremental amount of such adverse tax consequence (on an
After-Tax Basis) attributable to such refunding or refinancing; (w) the Lessee
shall pay to or reimburse the Participants, the Owner Trustee and the Indenture
Trustee for all costs and expenses (including reasonable attorneys' and
accountants' fees) paid or incurred by them in connection with such refunding or
refinancing; (x) no refunding or refinancing of the Equipment Notes will be
permitted if it shall cause the Owner Participant to account for the transaction
contemplated hereby as other than a "leveraged lease" under the Financial
Accounting Standards Board ("FASB") Statement No. 13, as amended (including any
amendment effected by means of the adoption by FASB of a new statement in lieu
of FASB Statement No. 13); and (y) in no event, in connection with or after
giving effect to such
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refunding or refinancing shall the Owner Participant be exposed to any
unindemnified risk or liability (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.
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:
GATX Rail Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: Treasurer
(GATX Rail Trust No. 2000-1)
Facsimile: (312) 621-6645
Confirmation No.: (312) 621-6200
If to the Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 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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If to the Owner Participant:
with a copy to:
Watson, Farley & Williams
380 Madison Avenue
New York, NY 10017
Attention: Caryn Hemsworth
Facsimile: (212) 922-1512
Confirmation No.: (212) 922-2200
If to the Indenture Trustee:
Bank One, NA
1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Global Corporate Trust Services
(GATX Rail Trust No. 2000-1)
Facsimile: (312) 407-1708
Confirmation No.: (312) 407-8810
If to the Pass Through Trustee:
Bank One, NA
1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Global Corporate Trust Services
(GATX Rail Trust No. 2000-1)
Facsimile: (312) 407-1708
Confirmation No.: (312) 407-8810
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
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contemplated hereby on the Closing Date regardless of any investigation made by
any such party or on behalf of any such party.
Section 10.6 No Guarantee of Debt. Nothing contained herein or in the
Lease, the Trust Indenture, the Trust Agreement, the Pass Through Trust
Agreement or the Tax Indemnity Agreement or in any certificate or other
statement delivered by the Lessee in connection with the transactions
contemplated hereby shall be deemed to be (i) a guarantee by the Lessee to the
Owner Trustee, the Owner Participant, the Indenture Trustee or the Loan
Participant that the Equipment will have any residual value or useful life, or
(ii) a guarantee by the Indenture Trustee or the Lessee of payment of the
principal of, premium, if any, or interest on the Equipment Notes.
Section 10.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and assigns as permitted by and in
accordance with the terms hereof, including each successive holder of the
Beneficial Interest permitted under Section 6.1 hereof and each successive
holder of any Equipment Note 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.
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 New York
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.
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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 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
Trust Company shall not be liable in its individual capacity for any breach
thereof, except for its gross negligence or willful misconduct, or for breach of
its covenants, representations and warranties contained herein, except to the
extent covenanted or made in its individual capacity; provided, however, that
nothing in this Section 10.13(b) shall be construed to limit in scope or
substance those representations and warranties of the Trust Company made
expressly in its individual capacity set forth herein. The term "Owner Trustee"
as used in this Agreement shall include any successor trustee under the Trust
Agreement, or the Owner Participant if the trust created thereby is revoked.
Section 10.14 Maintenance of Non-Recourse Debt. The parties hereto agree
that if the Owner Trustee becomes a debtor subject to the reorganization
provisions of the Bankruptcy Code, 11 U.S.C. (S)101 et seq. (the "Bankruptcy
Code") or any successor provision, the parties hereto will make an election
under 1111(b)(1)(A)(i) of the Bankruptcy Code. If (a) the Owner Trustee becomes
a debtor subject to the reorganization provisions of the Bankruptcy Code or any
successor provision, (b) pursuant to such reorganization provisions the Owner
Trustee is required, by reason of the Owner Trustee being held to have recourse
liability to the Pass Through Trustee or the Indenture Trustee, directly or
indirectly, to make payment on account of any amount payable under the Equipment
Notes or any of the other Operative Agreements and (c) the Pass Through Trustee
and/or the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee on account of (b)
above, then the Pass Through Trustee and/or the Indenture Trustee, as the case
may be, shall promptly refund to the Owner Trustee such Excess Amount. For
purposes of this Section 10.14 "Excess Amount" means the amount by which such
payment exceeds the amount which would have been received by the Pass Through
Trustee or the Indenture Trustee if the Owner Trustee had not become subject to
the recourse liability referred to in (b) above.
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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.
Section 10.16 Deferred Payment for Early Purchase Option. If Lessee
elects to exercise an early purchase option pursuant to Section 22.1(b) of the
Lease with respect to Units in a Basic Group, Lessee may, at its option, either
(x) pay the entire Early Purchase Price applicable to such Units on the
applicable Early Purchase Date, as provided in Section 22.1(b) of the Lease and
Schedule 6A of this Participation Agreement or (y) pay a portion of such Early
Purchase Price on the applicable Early Purchase Date and the balance in
installments thereafter, on the applicable dates and in the applicable amounts
for such Basic Group as indicated on Schedule 6B, provided that Lessee may not
elect the option set forth in this clause (y) herein unless the principal amount
of the related Equipment Note applicable to such Units together with accrued
interest thereon and any applicable Make-Whole Amount shall have been paid in
respect of such Units pursuant to Section 2.10(c) of the Indenture and all other
sums due owing to Indenture Trustee and Loan Participants under the Operative
Agreements shall have been paid in full on or prior to the Early Purchase Date.
Notwithstanding anything in this Agreement to the contrary, the Lessee shall not
be permitted to exercise any of its rights under Section 9 of this Agreement
with respect to any Units as to which the Lessee has exercised its option set
forth in clause (y) of the first paragraph of this Section 10.16.
Lessee shall elect its payment option in the applicable notice given
pursuant to Section 22.1(b) of the Lease. If Lessee elects the option specified
in clause (y) of the first paragraph of this Section 10.16, then on the date the
initial installment is paid,
(i) the Lease shall be deemed terminated as to such Units and the
Owner Trustee and the Lessee shall enter into a loan and security agreement
in respect of the deferred Early Purchase Price in form and substance
reasonably satisfactory to the Owner Trustee and which incorporates therein
events of default substantially similar to those set forth in the Lease and
covenants and terms substantially similar to those set forth in the Lease,
and the Lessee shall deliver a legal opinion in form and substance
reasonably satisfactory to the Owner Trustee as to the creation and
perfection of the Owner Trustee's security interest in such Units.
(ii) Basic Rent in respect of such Units shall cease to accrue,
(iii) the Owner Trustee will convey all of its right, title and
interest and to such Units to Lessee by delivery of a bill of sale without
recourse or warranty except as to the absence of Lessor's Liens, subject,
however, to the security interest of the Owner Trustee then being retained
under the agreement referred to in clause (y) above, and
(iv) the Lessee shall execute such documents and take all such
actions as Owner Trustee may reasonably request to perfect such security
interest.
Upon payment by Lessee of the last installment, the Owner Trustee shall execute
and deliver to Lessee a release of the security interest so retained. all
reasonable costs and expense of the Owner Trustee and the Owner Participant
incurred in connection with the Lessee's election under this Section 10.16,
including, without limitation, the costs and expenses of all filings necessary
and appropriate to perfect the security interest of the Owner Trustee intended
to be established pursuant to this Section 10.16, shall be paid by the Lessee.
* * *
55
<PAGE>
In Witness Whereof, the parties hereto have caused this Participation
Agreement to be executed and delivered, all as of the date first above written.
Lessee:
GATX RAIL CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Owner Trustee:
WILMINGTON TRUST COMPANY, not in its individual
capacity except as expressly provided herein but
solely as Owner Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Owner Participant:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
56
<PAGE>
Indenture Trustee:
BANK ONE, NA, not in its individual capacity
except as expressly provided herein but solely as
Indenture Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Pass Through Trustee:
BANK ONE, NA, not in its individual capacity
except as expressly provided herein but solely as
Pass Through Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
57
<PAGE>
EXHIBIT A-1
Certificate of Insurance Broker Confirming Insurance Coverage
(Primary Liability)
A-1
<PAGE>
EXHIBIT A
to Certificate of Insurance Broker
AA-1
<PAGE>
EXHIBIT A-2
Certificate of Insurance Broker Confirming Insurance Coverage
(Excess Liability)
A-2
<PAGE>
EXHIBIT A
to Certificate of Insurance Broker
AA-2
<PAGE>
EXHIBIT B
Insurance Requirements
B-1
<PAGE>
Schedule 1
Participation Agreement
Description of Equipment, Designation of Basic Groups,
and Equipment Cost
<PAGE>
Schedule 2
Participation Agreement
Commitment Percentage and Payment Information for Participants
<PAGE>
Schedule 3A
Participation Agreement
Schedule of Basic Rent Payments
Basic Group [I/II/III/IV]
<PAGE>
Schedule 3B
Participation Agreement
Schedule of Allocation
of Basic Rent Payments
Basic Group [I/II/III/IV]
<PAGE>
Schedule 4
Participation Agreement
Schedule of Stipulated Loss Value and Termination Value
<PAGE>
Schedule 5
Participation Agreement
Terms of Equipment Notes
<PAGE>
Schedule 6A
Participation Agreement
Early Purchase Information
<PAGE>
Schedule 6B
Participation Agreement
Deferred Early Purchase Information
<PAGE>
Schedule 7
Participation Agreement
Basic Term Purchase Information
<PAGE>
Schedule 8
Participation Agreement
Cumulative Rent Payable and Allocated
<PAGE>
*
Appendix A
Participation Agreement
Equipment Lease Agreement
Trust Indenture and Security Agreement
Trust Agreement
(GATX Rail Trust No. 2000-1)
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 Association of American Railroads or any successor
thereto.
"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; provided however that under no circumstances will
the Trust Company be deemed to be an Affiliate of either the Owner Trustee or
the Owner Participant, nor will either the Owner Participant or the Owner
Trustee be deemed an Affiliate of the Trust Company.
"After-Tax Basis" shall mean, with respect to any payment received or
accrued by any Person, that the amount of such payment is supplemented by a
further payment or payments so that the sum of all such payments, after
reduction for all Taxes payable by such Person imposed by any taxing authority,
shall be equal to the payment due to such Person.
<PAGE>
"Alternative Minimum Tax" shall mean the alternative minimum tax imposed
under Section 55 of the Code.
"Appraisal" shall have the meaning specified in Section 4.3(a) of the
Participation Agreement.
"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 Life of such Equipment Note.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act of
1978, as amended from time to time, 11 U.S.C. (S)101 et. seq.
"Basic Group" shall mean each of the four basic groups of Equipment
designated in Schedule 1 to the Participation Agreement.
"Basic Prospectus" shall mean the prospectus contained in the Registration
Statement when the most recent post-effective amendment thereto became
effective.
"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 April 13, 2000.
"Basic Term Expiration Date" shall mean July 13, 2021.
"Basic Term Purchase Price" shall mean, with respect to any Unit, the
amount equal to the product of the percentage set forth in Schedule 7 to the
Participation Agreement applicable to such Unit 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 of sale, dated the Closing
Date or the date that any Replacement Unit is subjected to the Lease, from
Lessee to Owner Trustee covering the Units delivered on the 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, Birmingham, Alabama, 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.
2
<PAGE>
"Certificateholder" shall mean the Person in whose name a Pass Through
Certificate is registered in the register for Pass Through Certificates of a
particular series.
"Claims" shall have the meaning specified in Section 7.2 of the
Participation Agreement.
"Closing Date" shall have the meaning specified in Section 2.1 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 Rate" shall mean a rate equal to the interest per annum borne by the
Equipment Notes (computed on the basis of a 360-day year of twelve 30-day
months).
"Deferred Adjustment Amount" with respect to any Unit shall mean, as of the
relevant determination date, an amount determined by multiplying the Equipment
Cost for such Unit by the percentage set forth in the column labeled "Deferred
Balance" in Schedule 8 to the Participation Agreement for the Basic Group to
which such Unit belongs. (Such Deferred Adjustment Amount with respect to any
Unit has been calculated as of the relevant determination date as an amount
equal to (x) the cumulative Basic Rent allocated pursuant to the Lease minus (y)
the cumulative Basic Rent payable pursuant to the Lease.)
"Determination Date" shall mean the 13th day of any calendar month.
"Early Purchase Date" shall mean the early purchase date specified on
Schedule 6 to the Participation Agreement for a related Basic Group of Units.
"Early Purchase Price" shall mean, with respect to any Unit, the amount
equal to the product of the percentage set forth in Schedule 6 to the
Participation Agreement for the Basic Group to which such Unit belongs and the
Equipment Cost for such Unit, which amount shall, in addition to the amounts
payable pursuant to Section 22.1(b) of the Lease, after giving effect to any
adjustment of the amount payable thereunder by Lessee on account of any Prepaid
Adjustment Amount, be sufficient to pay the unpaid principal of, Make-Whole
Amount, if any, and all unpaid interest on the Equipment Note to the extent
related to such Unit, accrued to the date on which the Early Purchase Price is
paid in accordance with the terms of the Lease; provided, however, the "Early
Purchase Price" shall be adjusted by the Adjustment Amount to take into account
prepaid/deferred rent actually paid by the Lessee.
"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 1 to the Participation
Agreement with respect to such Unit. Notwithstanding anything in the Operative
Agreements to the contrary, the Equipment Cost for any Replacement Unit shall be
deemed to be the Equipment Cost or deemed Equipment Cost of the Unit it
replaced.
"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
3
<PAGE>
Section 2.02 of the Indenture, and authenticated by the Indenture Trustee, in
principal amounts, maturities and bearing interest at the rates and payable as
provided in Section 2.02 of the Indenture and secured as provided in the
Granting Clause of the Indenture, and shall include any Equipment Notes issued
in exchange therefor or replacement thereof pursuant to Section 2.07 or 2.08 of
the Indenture. A "related" Equipment Note, when used with respect to any Unit or
Units of Equipment, shall mean one of the Equipment Notes issued with respect to
the Lease Supplement under which such Unit or Units of Equipment is or are
leased.
"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) to which the Owner
Participant, the Owner Trustee, the Trust Company, or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents is entitled pursuant to the Operative Agreements, (ii) any right, title
or interest of the Owner Trustee, the Trust Company, 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, the Trust Company, or to the Owner Participant, as the case may
be, (iii) any insurance proceeds payable under insurance maintained by the Owner
Trustee, as trustee or in its individual capacity, or the Owner Participant
pursuant to Section 12.5 of the Lease, (iv) any insurance proceeds payable to or
on behalf of the Owner Trustee, as trustee or in its individual capacity, or to
the Owner Participant, under any public liability insurance maintained by Lessee
pursuant to Section 12 of the Lease (which shall include the amount of any self-
insured retention paid by the Lessee) 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 Trust Company, or Owner Participant pursuant to the
Participation Agreement or the Trust Agreement, (vi) all right, title and
interest of Owner Participant or Owner Trustee, the Trust Company, in or
relating to any portion of the Units and any other property (tangible or
intangible), rights, titles or interests to the extent any of the foregoing has
been released from the Lien of the Indenture pursuant to the terms thereof,
(vii) upon termination of the Indenture pursuant to the terms thereof with
respect to any Unit, all remaining amounts which shall have been paid or are
payable by Lessee and calculated on the basis of Stipulated Loss Value, (viii)
any rights of the Owner Participant or the Owner Trustee, the Trust Company, to
demand, collect, sue for, or otherwise receive and enforce payment of the
foregoing amounts, (ix) any amount payable to the Owner Participant by any
Transferee as the purchase price of the Owner Participant's interest in the
Trust Estate in compliance with the terms of the Participation Agreement and the
Trust Agreement and (x) the respective rights of the Owner Trustee, the Trust
Company, or the Owner Participant to the proceeds of and interest on the
foregoing.
"Excess Amount" shall have the meaning specified in Section 10.14 of the
Participation Agreement.
"Fair Market Renewal Term" shall have the meaning specified in Section 22.4
of the Lease.
4
<PAGE>
"Fair Market Rental Value" or "Fair Market Sales Value" with respect to any
Unit of Equipment shall mean the cash rent or cash price obtainable for such
Unit in an arm's length lease or sale between an informed and willing lessee or
purchaser under no compulsion to lease or purchase, as the case may be, and an
informed and willing lessor or seller, under no compulsion to lease or sell, as
the case may be, as the same shall be specified by agreement between Lessor and
Lessee. If the parties are unable to agree upon a Fair Market Rental Value
and/or a Fair Market Sales Value within 30 days after delivery of notice by
Lessee pursuant to Section 22.2 of the Lease, or otherwise where such
determination is required, within a reasonable period of time, such value shall
be determined by appraisal. Lessee will within 15 days after such 30-day period
provide Lessor the name of an appraiser that would be satisfactory to Lessee,
and Lessor and Lessee will consult with the intent of selecting a mutually
acceptable appraiser. If a mutually acceptable appraiser is selected, the Fair
Market Rental Value or the Fair Market Sales Value, as the case may be, shall be
determined by such appraiser and Lessee shall bear the cost thereof. If Lessee
and Lessor are unable to agree upon a single appraiser within such 15-day
period, two independent qualified appraisers, one chosen by Lessee and one
chosen by Lessor shall jointly determine such value and, except as provided in
the penultimate sentence of this paragraph, 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 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 pursuant to Section 6.1(e) of the Lease or 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.
"Final Prospectus" shall mean the prospectus supplement relating to the
Pass Through Certificates that was first filed pursuant to Rule 424(b)
promulgated pursuant to the Securities Act of 1933, as amended, together with
the Basic Prospectus.
"Fixed Rate Renewal Term" shall have the meaning specified in Section
22.4(a) of the Lease.
"Fixed Rent" shall have the meaning specified in Section 22.4(a) of the
Lease.
"FRA" shall mean the Federal Railroad Administration or any successor
thereto.
"Guarantor" shall mean , or any other provider of a Guaranty.
5
<PAGE>
"Guaranty" shall mean the Guaranty dated as of April 3, 2000 by the
Guarantor in favor of the Lessee, the Owner Trustee and the Indenture Trustee,
and any guaranty delivered in connection with Section 6.1(a)(ii) of the
Participation Agreement and Section 10.8 of the Trust Agreement.
"Hazardous Substances" shall mean any hazardous or toxic substances,
materials or wastes, including, but not limited to, those substances, materials,
and wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR part 302) and amendments thereto, or such
substances, materials and wastes which are or become regulated under any
applicable local, state or federal law or the equivalent under applicable
foreign laws including, without limitation, any materials, waste or substance
which is (a) petroleum, (b) asbestos, (c) polychlorinated biphenyls, (d) defined
as a "hazardous material," "hazardous substance" or "hazardous waste" under
applicable local, state or federal law or the equivalent under applicable
foreign laws, (e) designated as a "hazardous substance" pursuant to Section 311
of the Clean Water Act, (f) defined as "hazardous waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act, or (g) defined as "hazardous
substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act.
"Income Tax" shall have the meaning specified in Section 7.1(l) of the
Participation Agreement.
"Indemnified Person" shall have the meaning specified in Section 7.2(b) of
the Participation Agreement.
"Indenture" or "Trust Indenture" shall mean the Trust Indenture and
Security Agreement (GATX Rail Trust No. 2000-1), dated as of April 3, 2000
between the Owner Trustee, in the capacities described therein, and the
Indenture Trustee. The term "Indenture" shall include, except where the context
otherwise requires, 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 (GATX Rail Trust
No. 2000-1) dated the Closing Date 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
6
<PAGE>
the Owner Trustee, in the capacities described therein, and the Indenture
Trustee, covering the Units delivered on the 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 Bank One, NA, a national banking
association, 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.
"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.
"Investment Banker" shall mean an independent investment banking
institution of national standing appointed by Lessee or, if the Indenture
Trustee does not receive notice of such appointment at least ten days prior to a
scheduled prepayment date or if a Lease Event of Default under the applicable
Lease shall have occurred and be continuing, appointed by the Indenture Trustee.
"Late Rate" shall mean 10.10 percent per annum.
"Lease" or "Lease Agreement" or "Equipment Lease" shall mean the Equipment
Lease Agreement (GATX Rail Trust 2000-1), relating to the Equipment, dated as of
April 3, 2000, between the Owner Trustee, as Lessor, and the Lessee. The terms
"Lease" shall, except where the context otherwise requires, 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 (GATX Rail Trust 2000-1),
dated the Closing Date 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 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 Basic Term
applicable to such Unit and any Renewal Term applicable to such Unit then in
effect.
7
<PAGE>
"Lessee" shall mean GATX Rail Corporation, a New York 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 mean the Owner Trustee.
"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, the Trust Company or the Owner Participant, not related to the
transactions contemplated by the Operative Agreements, or (ii) acts or omissions
of the Lessor, the Trust Company 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, the Trust Company or the
Owner Participant or the Trust Estate which are not indemnified against by the
Lessee pursuant to the Participation Agreement or under the Tax Indemnity
Agreement.
"Lien" shall mean any mortgage, pledge, security interest, lien,
encumbrance, lease, disposition of title or other charge of any kind on
property.
"Limited Use Property" shall have the meaning set forth in Revenue
Procedure 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 Amounts" shall mean, with respect to the principal amount of
any Equipment Note to be prepaid on any prepayment date, the amount which the
Investment Banker determines as of the third Business Day prior to such
prepayment date to equal the product obtained by multiplying (a) the excess, if
any, of (i) the sum of the present values of all the remaining scheduled
payments of principal and interest from the prepayment date to maturity of such
Equipment Note, discounted semi-annually on each January 13 and July 13 at a
rate equal to the Treasury Rate plus 20 basis points, 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 Notes; provided that the
aggregate unpaid principal amount of such Equipment Note for the purpose of
clause (a)(ii) and (b) of this
8
<PAGE>
definition shall be determined after deducting the principal installment, if
any, due on such prepayment date.
"Material Default" shall mean a Lease Default pursuant to Sections 14(a),
14(b), 14(g) or 14(h) of the Lease.
"Modification" shall have the meaning specified in Section 9.2 of the
Lease.
"Net Economic Return" shall mean the pattern of earnings within a 10%
variance during any calendar year, net after-tax book yield and total after-tax
cash flow expected by the original Owner Participant with respect to the
Equipment (both through the Early Purchase Date and the Basic Term Expiration
Date), utilizing the multiple investment sinking fund method of analysis and the
same assumption as used by such Owner Participant in making the computations of
Basic Rent, Stipulated Loss Value, Termination Value, Basic Term Purchase Price
and Early Purchase Price initially set forth in Schedules 3, 4, 6 and 7 to the
Participation Agreement.
"Non-Severable Modification" shall mean any Modification that is not
readily removable without impairing the value, utility or remaining useful life
of the Equipment or any Unit immediate prior to removal of such modification,
other than in a de minimis nature.
"Non-U.S. Person" means a Person that is not a "United States person"
within the meaning of Section 7701(a)(30) of the Code.
"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, (iii) in the case of a limited liability company, any Member, Manager
or other individual authorized to execute such document on behalf of the
company, and (iv) in the case of a commercial bank or trust company, the
Chairman or Vice Chairman of the Executive Committee or the Treasurer, any Trust
Officer, any Vice President, any Executive or Senior or Second or Assistant Vice
President, or any other officer or assistant officer customarily performing the
functions similar to those performed by the persons who at the time shall be
such officers, or to whom any corporate trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"Operative Agreements" shall mean the Participation Agreement, the Bill of
Sale, the Trust Agreement, the Guaranty, the Pass Through Trust Agreement, the
Pass Through Trust Supplement, the Pass Through Certificate, the Equipment
Notes, the Lease, the Lease Supplements, the Indenture, the Indenture
Supplements, the Tax Indemnity Agreement and the Underwriting Agreement.
"OP General Partner" shall mean .
"Outside Fixed Renewal Date" shall have the meaning specified in Section
22.4(a) of the Lease.
9
<PAGE>
"Owner Participant" shall mean ,
and its successors and permitted assigns.
"Owner Participant Agreements" shall mean the Operative Agreements to which
the Owner Participant is or will be a party.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement and its successors thereunder.
"Owner Trustee Agreements" shall mean the Operative Agreements to which the
Owner Trustee, either in its individual or fiduciary capacity, is or will be a
party.
"Parent" means GATX Corporation, a New York corporation, and its successors
and assigns.
"Participants" shall mean the Loan Participant and the Owner Participant.
"Participation Agreement" shall mean the Participation Agreement (GATX Rail
Trust 2000-1) dated as of April 3, 2000, among the Lessee, the Pass Through
Trustee, the Owner Participant, the Owner Trustee and the Indenture Trustee.
"Pass Through Certificate" shall mean the Pass Through Certificate issued
pursuant to the Pass Through Trust Supplement and the Pass Through Trust
Agreement.
"Pass Through Trust Agreement" shall mean the Pass Through Trust Agreement,
dated as of August 1, 1992, between the Lessee and the Pass Through Trustee.
"Pass Through Trust Supplement" shall mean Trust Supplement No. 8 dated
April 13, 2000 between the Lessee and the Pass Through Trustee which supplements
the Pass Through Trust Agreement (i) by creating a separate trust for the
holders of certain Pass Through Certificates, (ii) by authorizing the issuance
of such Pass Through Certificates and (iii) by establishing the terms of such
Pass Through Certificates.
"Pass Through Trustee" shall mean Bank One, NA, a national banking
association, in its capacity as trustee under the Pass Through Trust Agreement,
as supplemented by the Pass Through Trust Supplements, and each other person
which may from time to time be acting as successor trustee under the Pass
Through Trust Agreement, as supplemented by the Pass Through Trust Supplement.
"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
10
<PAGE>
governmental and similar charges not due and payable or the amount or validity
of which is being contested in good faith by appropriate proceedings so long as
there exists no material risk of sale, forfeiture, loss, or loss of or
interference with use or possession of any Unit or interference with the payment
of Rent; (iv) any Liens of mechanics, suppliers, materialmen, laborers,
employees, repairmen and other like Liens arising in the ordinary course of
Lessee's (or if a sublease is then in effect, any sublessee's) business securing
obligations which are not due and payable or the amount or validity of which is
being contested in good faith by appropriate proceedings so long as there exists
no material risk of sale, forfeiture, loss, or loss of or interference with use
or possession of any Unit or interference with the payment of Rent; (v) the Lien
and security interest granted to the Indenture Trustee under and pursuant to the
Indenture, and the respective rights of the Loan Participant, the Indenture
Trustee, the Owner Participant and the Owner 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 of 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.
"Permitted Subleases" shall have the meaning specified in Section 8.3 of
the Lease.
"Person" shall mean an individual, partnership, limited liability company,
corporation, trust, association or unincorporated organization, and a government
or agency or political subdivision thereof.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Pass Through Certificates
and the offering thereof and is used prior to the filing of the Final
Prospectus, together with the Basic Prospectus.
"Prepaid Adjustment Amount" with respect to any Unit shall mean, as of the
relevant determination date, an amount determined by multiplying the Equipment
Cost for such Unit by the percentage set forth in the column labeled "Prepaid
Balance" in Schedule 8 to the Participation Agreement for the Basic Group to
which such Unit belongs. (Such Prepaid Adjustment Amount with respect to any
Unit has been calculated as of the relevant determination date as an amount
equal to (x) the cumulative Basic Rent payable pursuant to the Lease minus (y)
the cumulative Basic Rent allocated pursuant to the Lease.)
"Pricing Date" shall mean the date on which the Underwriting Agreement is
executed by the Lessee and the Underwriters.
"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 33-64697), including incorporated documents, exhibits and
financial statements, as amended at the time of the Closing Date, including any
post-effective amendment thereto which has become effective prior to the Closing
Date.
"Related Indemnitee Group" shall have the meaning specified in Section
7.2(b) of the Participation Agreement.
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<PAGE>
"Related Transaction" means the additional leveraged lease transaction with
respect to which the Pass Through Trustee has agreed to acquire the equipment
notes to be issued pursuant to the participation agreement dated as of April 3,
2000 among the Lessee, the Pass Through Trustee, , the Owner Trustee
and the Indenture Trustee.
"Remaining Weighted Average Life" shall mean, with respect to any date of
prepayments 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 Notes.
"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 13 and July
13 of each year occurring during the Lease Term, commencing July 13, 2000,
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 tank car, as the case
may be, which shall have been leased under the Lease pursuant to Section 11.4 of
the Lease.
"Required Modification" shall have the meaning specified in Section 9.1 of
the Lease.
"Responsible Officer" shall mean, with respect to the subject matter of any
covenant, agreement or obligation of any party contained in any Operative
Agreement, the President, or any Vice President, Assistant Vice President,
Treasurer, Assistant Treasurer or other officer, who in the normal performance
of his operational responsibility would have knowledge of such matters and the
requirements with respect thereto.
"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.
"Series" shall mean each of the four series of Equipment Notes issued under
the Indenture, one with respect to each Lease Supplement executed and delivered
in respect of the Units delivered on the Closing Date.
"Severable Modification" shall mean any Modification that is readily
removable without causing material damage to the Equipment or any Unit and
without diminishing the value, utility or useful life of such Unit below the
value, utility or useful life of such Unit immediately prior to
12
<PAGE>
such Modification, assuming that such Unit was then in the condition required to
be maintained by the terms of the Lease, other than in a de minimis nature.
"Special Purchase Date" shall mean July 13, 2010.
"Special Purchase Defeasance" shall mean, with respect to any election by
Lessee to purchase Units under Section 22.1 or 22.3 of the Lease, the deposit by
Lessee with the Indenture Trustee prior to the date as of which Lessor shall
have declared the Lease to be in default as a result of a Lease Event of Default
under Section 14(c), 14(d), 14(e), 14(f) or 14(i) of the Lease (in circumstances
where such Lease Event of Default occurs after the date of Lessee's notice to
purchase under Sections 22.1 or 22.3 of the Lease but, before the Special
Purchase Date or the Early Purchase Date or the expiration of the Basic Term or
any Renewal Term, as applicable), of an amount sufficient to pay (i) the Special
Purchase Price, together with all other amounts due and owing by the Lessee
under the Operative Agreements, with respect to those Units which Lessee has
elected to purchase on the Special Purchase Date under Section 22.1(a) of the
Lease, (ii) the Early Purchase Price, together with all other amounts due and
owing by the Lessee under the Operative Agreements, with respect to those Units
which Lessee has elected to purchase on the Early Purchase Date under Section
22.1(b) of the Lease, or (iii) the Basic Term Purchase Price or Fair Market
Sales Value, as the case may be, together with all other amounts due and owing
by the Lessee under the Operative Agreements, with respect to those Units which
Lessee has elected to purchase at the expiration of the Basic Term or any
Renewal Term, as applicable, under Section 22.3 of the Lease. All amounts
deposited by Lessee with the Indenture Trustee in connection with a Special
Purchase Defeasance shall be held and invested by the Indenture Trustee in
accordance with Section 6.04(b) of the Indenture pending consummation of the
purchase of the related Units on the Early Purchase Date or upon the expiration
of the Basic Term or the Renewal Term, as applicable.
"Special Purchase Price" shall have the meaning specified in Section
22.1(a) of the Lease.
"Specified Investments" shall mean (i) direct obligations of the United
States of America and agencies thereof for which the full faith and credit of
the United States is pledged, (ii) obligations fully guaranteed by the United
States of America, (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $500,000,000 (including the Indenture
Trustee or Owner Trustee if such conditions are met), and (iv) repurchase
agreements with any financial institution having a combined capital and surplus
of at least $750,000,000 fully collateralized by obligations of the type
described in clauses (i) and (iii) above; provided that if all of the above
investments are unavailable, the entire amount to be invested may be used to
purchase Federal funds from an entity described in (iii) above; and provided
further that no investment shall be eligible as a "Specified Investment" unless
the final maturity or date of return of such investment is 91 days or less from
the date of purchase thereof.
"STB" shall mean the Surface Transportation Board of the United States
Department of Transportation or any successor thereto.
13
<PAGE>
"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 the column entitled "Net Amount" in Schedule 4 to
the Participation Agreement opposite the Rent Payment Date or the Determination
Date, as applicable, on which such Stipulated Loss Value is being determined for
the Basic Group to which such Unit belongs; 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), 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)(i) of
the Lease.
"Subsidiary" of any Person shall mean any corporation, association, or
other business entity of which more than 50% (by number of votes) of the voting
stock at the time outstanding shall at the time be owned, directly or
indirectly, by such Person or by any other corporation, association or trust
which is itself a Subsidiary within the meaning of this definition, or
collectively by such Person and any one or more such Subsidiaries.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee is obligated 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.
"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 as
of April 3, 2000 (GATX Rail Trust No. 2000-1) between the Lessee and the Owner
Participant.
"Taxes" shall have the meaning specified in Section 7.1(b) of the
Participation Agreement.
"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 the column entitled "Net Amount" in Schedule 4 to the
Participation Agreement opposite the Rent Payment Date or the Determination
Date, as applicable, on which such Termination Value is being determined for the
Basic Group to which such Unit belongs; provided that during any
14
<PAGE>
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) 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 due to the
holders of the Equipment Notes.
"Total Equipment Cost" shall mean the sum of the Equipment Costs 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 semiannual equivalent and as a decimal
and, in the case of United States Treasury bills, converted to a bond equivalent
yield), determined to be the per annum rate equal to the semiannual yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Equipment Note, as determined by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
securities, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) (or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported in the most recent H.15(519), as
published in H.15(510)). H.15(519) means "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System. The most recent H.15(519) means the
latest H.15(519) which is published prior to the close of business on the third
Business Day preceding the scheduled prepayment date.
"Trust Agreement" shall mean that certain Trust Agreement (GATX Rail Trust
No. 2000-1), dated as of April 3, 2000, between the Owner Participant and the
Owner Trustee.
"Trust Company" shall mean Wilmington Trust Company, in its individual
capacity and its successors and permitted assigns.
"Trust Estate" shall have the meaning set forth in Section 2.2 of the Trust
Agreement.
"Trustee" shall mean each of the Owner Trustee, the Indenture Trustee or
the Pass Through Trustee and "Trustees" shall mean the Owner Trustee, Indenture
Trustee and the Pass Through Trustee, collectively.
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<PAGE>
"Underwriters" shall mean Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston Corporation.
"Underwriting Agreement" shall mean that certain Underwriting Agreement
between the Lessee and the Underwriters, pertaining to the sale of the Pass
Through Certificates.
"Unit" shall mean each unit or item of Equipment.
16
<PAGE>
------------------------------------------------------
PARTICIPATION AGREEMENT
(GATX Rail Trust No. 2000-2)
Dated as of April 3, 2000
among
GATX RAIL CORPORATION,
as Lessee
WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly
provided herein but solely as Owner Trustee
as Owner Participant
BANK ONE, NA,
as Indenture Trustee
and
BANK ONE, NA,
as Pass Through Trustee
Assorted Railroad Tank Cars
and Covered Hopper Cars
------------------------------------------------------
<PAGE>
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................................... 2
Section 2.1 Sale and Purchase....................................................... 2
Section 2.2 Participation in Equipment Cost......................................... 2
Section 2.3 Closing Date; Procedure for Participation............................... 3
Section 2.4 Owner Participant's Instructions to the Owner Trustee; Satisfaction of
Conditions.............................................................. 4
Section 2.5 Expenses................................................................ 4
Section 2.6 Calculation of Adjustments to Basic Rent, Stipulated Loss Value and
Termination Value; Confirmation and Verification........................ 7
Section 2.7 Postponement of Closing Date............................................ 9
SECTION 3. REPRESENTATIONS AND WARRANTIES....................................................... 11
Section 3.1 Representations and Warranties of the Owner Trustee..................... 11
Section 3.2 Representations and Warranties of the Lessee............................ 13
Section 3.3 Representations and Warranties of the Indenture Trustee................. 17
Section 3.4 Representations, Warranties and Covenants Regarding Beneficial Interest
and Equipment Notes..................................................... 17
Section 3.5 Representations and Warranties of the Pass Through Trustee.............. 18
Section 3.6 Representations and Warranties of the Owner Participant................. 19
Section 3.7 Opinion Acknowledgment.................................................. 21
SECTION 4. CLOSING CONDITIONS................................................................... 21
Section 4.1 Conditions Precedent to Investment by Each Participant.................. 21
Section 4.2 Additional Conditions Precedent to Investment by Pass Through Trustee... 25
Section 4.3 Additional Conditions Precedent to Investment by Owner Participant...... 25
Section 4.4 Conditions Precedent to the Obligation of the Lessee.................... 26
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE............................................ 27
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE LESSEE................... 28
Section 6.1 Restrictions on Transfer of Beneficial Interest......................... 28
Section 6.2 Lessor's Liens Attributable to the Owner Participant.................... 31
Section 6.3 Lessor's Liens Attributable to the Owner Trustee........................ 31
Section 6.4 Liens Created by the Indenture Trustee and the Loan Participant......... 31
Section 6.5 Covenants of Owner Trustee, Owner Participant and Indenture Trustee..... 32
Section 6.6 Amendments to Operative Agreements...................................... 33
Section 6.7 Covenant of the Lessee.................................................. 33
Section 6.8 Merger Covenant......................................................... 33
</TABLE>
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 6.9 Lessee's Purchase in Certain Circumstances.............................. 34
Section 6.10 Owner Participant an Affiliate of Lessee................................ 35
Section 6.11 Corporate Existence; Place of Business.................................. 35
Section 6.12 No Impairment of Warranties............................................. 35
SECTION 7. LESSEE'S INDEMNITIES.................................................................. 35
Section 7.1 General Tax Indemnity................................................... 35
Section 7.2 General Indemnification and Waiver of Certain Claims.................... 43
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT..................................................... 47
SECTION 9. SUCCESSOR INDENTURE TRUSTEE........................................................... 48
SECTION 10. MISCELLANEOUS......................................................................... 48
Section 10.1 Consents................................................................ 48
Section 10.2 Refinancing............................................................. 48
Section 10.3 Amendments and Waivers.................................................. 50
Section 10.4 Notices................................................................. 50
Section 10.5 Survival................................................................ 52
Section 10.6 No Guarantee of Debt.................................................... 53
Section 10.7 Successors and Assigns.................................................. 53
Section 10.8 Business Day............................................................ 53
Section 10.9 Governing Law........................................................... 53
Section 10.10 Severability............................................................ 53
Section 10.11 Counterparts............................................................ 53
Section 10.12 Headings and Table of Contents.......................................... 53
Section 10.13 Limitations of Liability................................................ 54
Section 10.14 Maintenance of Non-Recourse Debt........................................ 54
Section 10.15 Ownership of and Rights in Units........................................ 55
Section 10.16 Deferred Payment for Early Purchase Option.............................. 55
</TABLE>
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<PAGE>
Appendix Definitions
EXHIBITS
Exhibit A-1 Insurance (Primary Liability)
Exhibit A-2 Insurance (Excess Liability)
Exhibit B Insurance Requirements
SCHEDULES
Schedule 1 Description of Equipment, Designation of Basic Groups and
Equipment Cost
Schedule 2 Commitment Percentage and Payment Information for
Participants
Schedule 3A Schedule of Basic Rent Payments for Basic Groups I-IV
Schedule 3B Schedule of Allocation of Basic Rent Payments for Basic
Groups I-IV
Schedule 4 Schedule of Stipulated Loss Value and Termination Value for
Basic Groups I-IV
Schedule 5 Terms of Equipment Notes
Schedule 6A Early Purchase Information for Basic Groups I-IV
Schedule 6B Deferred Early Purchase Information for Basic Group I-IV
Schedule 7 Basic Term Purchase information for Basic Groups I-IV
Schedule 8 Cumulative Rent Payable and Allocated
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<PAGE>
PARTICIPATION AGREEMENT (GATX Rail Trust No. 2000-2)
This Participation Agreement (GATX Rail Trust No. 2000-2) dated as of April
3, 2000 (this "Agreement"), among (i) GATX Rail Corporation, a New York
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 provided herein, but solely as
trustee under the Trust Agreement (as hereinafter defined) (herein in such
capacity, together with its successors and assigns, called the "Owner Trustee"),
(iii) a national banking association
(herein, together with its successors and assigns, called the "Owner
Participant"), (iv) Bank One, NA, a national banking association, as trustee
under the Indenture (as defined below) (herein in such capacity, together with
its successors and assigns, called the "Indenture Trustee"), and (v) Bank One,
NA, a national banking association, not in its individual capacity except as
expressly provided herein but solely as Pass Through Trustee under the Pass
Through Trust Agreement (as hereinafter defined) (herein in such capacity,
together with its successors and assigns, called the "Pass Through Trustee" or
the "Loan Participant"). The Owner Participant and the Loan Participant are
herein sometimes referred to together as the "Participants".
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Owner Participant has entered into the Trust Agreement (GATX Rail Trust No.
2000-2) pursuant to which the Owner Trustee agrees, among other things, to hold
the Trust Estate for the benefit of the Owner Participant thereunder on the
terms specified in the Trust Agreement, subject, however, to the Lien created
under the Indenture and, subject to the terms and conditions hereof, to purchase
the Units of Equipment described in Schedule 1 hereto from the Lessee and
----------
concurrently therewith lease such Units of Equipment to the Lessee;
WHEREAS, pursuant to the Pass Through Trust Agreement, on the Closing Date,
a grantor trust will be created to facilitate the financing contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Owner Trustee has entered into the Indenture with the Indenture Trustee
pursuant to which Indenture the Owner Trustee agrees, among other things, for
the benefit of the holder or holders of the Equipment Notes, to issue to the
Pass Through Trustee as Loan Participant, the Equipment Notes as evidence of the
loan made by the Loan Participant participating in 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 the
Bill of Sale evidencing the purchase and transfer of title of each Unit to the
Owner Trustee and (ii) to execute and deliver the Lease pursuant to which,
subject to the terms and conditions set forth therein, the Owner Trustee agrees
to lease to the Lessee, and the Lessee agrees to lease from the Owner Trustee,
each Unit of Equipment to be delivered on the Closing Date, such lease to be
evidenced by the execution and delivery of four Lease Supplements covering such
Units;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Lessee and the Owner Participant have entered into the Tax Indemnity
Agreement relating to the Equipment; and
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<PAGE>
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.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSING;
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, on the Closing Date, the Units described in Schedule 1
----------
as hereinafter provided, and in connection therewith, the Owner Trustee agrees
to pay to the Lessee the cost for each of the various Units as specified in
Schedule 1; provided, however, that the Owner Trustee shall not be obligated to
- ---------- -------- -------
purchase on the 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 a delivery date as
more fully provided herein (the "Closing Date"); provided that the Closing Date
--------
shall occur on or prior to April 28, 2000.
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
Closing Date the Owner Participant agrees to participate in the payment of the
Equipment Cost for the Units delivered on the Closing Date by making an equity
investment in the beneficial ownership of such Units in the amount equal to the
product of the aggregate Equipment Cost for the Units delivered on the Closing
Date and the percentage set forth opposite the Owner Participant's name in
Schedule 2 (the Owner Participant's "Commitment"). The aggregate amount of the
- ----------
Owner Participant's Commitment plus the aggregate amount of Transaction Costs
payable by the Owner Participant shall not exceed $23,098,365. 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.
2
<PAGE>
(b) Debt Participation. Subject to the terms and conditions hereof and on
the basis of the representations and warranties set forth herein, on the Closing
Date the Loan Participant agrees to participate in the payment of the Equipment
Cost for the Units delivered on the Closing Date 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
Closing Date and the percentage set forth opposite such Loan Participant's name
in Schedule 2 (the Loan Participant's "Commitment"). The aggregate amount of
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the Loan Participant's Commitment shall not exceed $58,110,000. The Equipment
Notes shall bear interest at the rates set forth on Schedule 5.
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Section 2.3 Closing Date; Procedure for Participation.
-----------------------------------------
(a) Notice of Closing Date. Not later than the Pricing Date, the Lessee
shall give the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Loan Participant notice (a "Notice of Delivery") by telex, telegraph,
facsimile or other form of telecommunication or telephone (to be promptly
confirmed in writing) of the Closing Date, which Notice of Delivery shall
specify in reasonable detail the number and type of Units to be delivered on
such date, the aggregate Equipment Cost of such Units, and the respective
amounts of the Owner Participant's Commitment and the Loan Participant's
Commitment required to be paid with respect to such Units. Prior to 12:00 noon,
New York City time, on the Closing Date, the Owner Participant shall make the
amount of the Owner Participant's Commitment required to be paid on the Closing
Date available to the Indenture Trustee, and immediately prior to the delivery
and acceptance of the Units specified in Section 2.3(b), the Loan Participant
shall make the amount of such Loan Participant's Commitment for the Equipment
Cost required to be paid on the Closing Date available to the Indenture Trustee,
in either case, by transferring or delivering such amounts, in funds immediately
available on the Closing Date, to the Indenture Trustee, either directly to, or
for deposit in, the Indenture Trustee's account at Bank One, NA, 1 Bank One
Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126, ABA No. 071000013,
Clearing Account 4811-5377, for credit to trust number 204884-000, Attn: M.J.
Frye, GATX Rail Trust No. 2000-2. The making available by the Owner Participant
of the amount of its Commitment for the Equipment Cost 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 shall be deemed a waiver of the Notice of Delivery by the Loan
Participant and the Indenture Trustee.
(b) Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at 11:00 A.M., Chicago time, on the Closing Date at
the offices of Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601 or at such other place or time as the parties hereto
shall agree. Upon receipt by the Indenture Trustee on the Closing Date of the
full amount of the Owner Participant's Commitment and Loan Participant's
Commitment in respect of the Units delivered on the 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 Closing Date, and simultaneously
therewith, (i) the Lessee shall deliver the Units to the Owner Trustee, (ii) the
Owner Trustee shall, pursuant to the Lease, lease and deliver the Equipment
delivered on the
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Closing Date to the Lessee, and the Lessee, pursuant to the Lease, shall accept
delivery of the 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 separate Lease Supplement covering
each Basic Group of Equipment so delivered as described in Schedule 1, and (iii)
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the Owner Trustee shall execute and deliver an Indenture Supplement relating to
each Lease Supplement to the Indenture Trustee and an Equipment Note for each
Series relating to each such Lease Supplement to the Loan Participant. 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).
Section 2.4 Owner Participant's Instructions to the Owner Trustee;
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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
Date in accordance with the terms of this Section 2 shall constitute, without
further act, authorization and direction by the Owner Participant to the Owner
Trustee, subject, on the Closing Date, to the conditions set forth in Sections
4.1 and 4.3 having been fulfilled to the satisfaction of the Owner Participant
or waived by the Owner Participant, to take the actions specified in Section 2.1
of the Trust Agreement with respect to the Units on the Closing Date.
(b) The Owner Participant agrees that the authorization by the Owner
Participant or its counsel to the Indenture Trustee to release to the Lessee the
Owner Participant's Commitment with respect to the Units delivered on the
Closing Date shall constitute, without further act, notice and confirmation that
all conditions to closing set forth in Sections 4.1 and 4.3 were either met to
the satisfaction of the Owner Participant or, if not so met, were waived by it
with respect to such Units.
Section 2.5 Expenses.
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(a) If the Owner Participant shall have made its investment provided for in
Section 2.2 and the transactions contemplated by this Agreement are consummated,
either the Owner Participant will promptly pay, or the Owner Trustee will
promptly pay, with funds the Owner Participant hereby agrees to pay (which,
together with its Commitment, shall not exceed the amount set forth in Section
2.2(a)) to the Owner Trustee, the following (the "Transaction Costs") if
evidenced by an invoice delivered to the Owner Participant and approved by the
Lessee within six (6) months of the Closing Date:
(i) the cost of reproducing, printing and filing the Operative
Agreements, the Equipment Notes, the Pass Through Certificates, the
Offering Memorandum relating to the Pass Through Certificates, the
Registration Statement, the Basic Prospectus, the Preliminary Final
Prospectus, the Final Prospectus and the Underwriting Agreement and all
amendments and supplements to the foregoing, including all costs and fees
in connection with filing the Registration Statement and the initial filing
and recording of the Lease, the Indenture and any other document required
to be filed or recorded pursuant
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to the provisions hereof or of any other Operative Agreement and the fees
and expenses of the rating agencies in connection with rating the Pass
Through Certificates;
(ii) the reasonable fees and expenses of Watson, Farley & Williams,
special counsel for the Owner Participant, and Burr & Forman LLP, reading
counsel for the Owner Participant, in an amount not to exceed the amount
set forth in the letter dated March 9, 2000 from GATX Rail Corporation,
plus disbursements, for their services rendered in connection with the
negotiation, execution and delivery of this Participation Agreement and the
Operative Agreements related hereto and the documents for the Related
Transaction;
(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 6(h) of the Underwriting Agreement,
including filing fees and the fees and disbursements of Milbank, Tweed,
Hadley & McCloy LLP in connection therewith and in connection with the
preparation of any Blue Sky memorandum;
(iv) the reasonable fees and expenses of Ernst & Young, accountants
of the Lessee, for their services rendered in connection with issuing
"comfort letters" to the Underwriters;
(v) the reasonable fees and expenses of Vedder, Price, Kaufman &
Kammholz, special counsel for the Lessee, for their services rendered in
connection with the preparation of documentation, negotiation, execution
and delivery of the Registration Statement, the Basic Prospectus, the
Preliminary Final Prospectus, the Final Prospectus, the Underwriting
Agreement, this Participation Agreement and the Operative Agreements
related hereto;
(vi) the reasonable fees and expenses of Milbank, Tweed, Hadley &
McCloy LLP, special counsel for the Underwriters, for their services
rendered in connection with the preparation of documentation, negotiation,
execution and delivery of the Preliminary Final Prospectus, the Final
Prospectus, the Underwriting Agreement, this Participation Agreement and
the Operative Agreements related hereto;
(vii) the reasonable fees and expenses of Alvord and Alvord, special
STB counsel, and McCarthy Tetrault, special Canadian counsel, for the Owner
Participant and the Indenture Trustee;
(viii) the reasonable fees and expenses of Morris, James, Hitchens &
Williams, LLP, special counsel for the Owner Trustee, for their services
rendered in connection with the negotiation, execution and delivery of this
Participation Agreement and the Operative Agreements related hereto;
(ix) the commissions payable to the Underwriters in connection with
the sale of the Pass Through Certificates;
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(x) the initial fees and reasonable out-of-pocket expenses of the
Owner Trustee;
(xi) the initial fees and reasonable out-of-pocket expenses of the
Indenture Trustee;
(xii) the initial fees and reasonable out-of-pocket expenses of the
Pass Through Trustee;
(xiii) the reasonable fees and expenses of RailSolutions, Inc. for
their services rendered in connection with delivering the Appraisal
required by Section 4.3(a);
(xiv) the costs incurred in connection with any adjustment pursuant
to Section 2.6(a); and
(xv) the reasonable fees and expenses of GATX Lease Funding, Inc.
for advisory services.
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 travel expenses, computer time procurement,
financial analysis and consulting, advisory services and costs of a similar
nature.
(b) Upon the consummation of the transactions contemplated by this
Agreement, the Lessee agrees to pay when due: (i) the reasonable expenses
(including reasonable legal fees and expenses) of the Owner Trustee, the
Indenture Trustee and the Participants incurred subsequent to the delivery of
the Equipment on the Closing Date, in connection with any supplements,
amendments, modifications, alterations, waivers or consents of any of the
Operative Agreements which are (1) requested by, or necessitated by action or
inaction on the part of, the Lessee or by any applicable law or regulation
(other than laws or regulations solely relating to the business of the Lessor or
the Owner Participant) or entered into in connection with, or as a result of, a
Lease Default or (2) necessary or required to effectuate the purpose or intent
of any Operative Agreement (including costs incurred in connection with any
adjustment pursuant to Section 2.6); (ii) the ongoing reasonable fees and
expenses (including reasonable legal fees and expenses) of the Owner Trustee
under the Trust Agreement; (iii) the ongoing reasonable fees and expenses of the
Indenture Trustee under the Operative Agreements; and (iv) the ongoing
reasonable fees and expenses of the Pass Through Trustee under the Pass Through
Trust Agreement.
(c) If the transactions contemplated hereby are not consummated as a
result of (i) the Lessee's default in its obligations to consummate the
transactions contemplated hereby, (ii) the Lessee's failure to consummate the
transactions contemplated hereby after the satisfaction or waiver of the
conditions set forth in Section 4 (other than conditions the satisfaction of
which are solely in the control of the Lessee), or (iii) subject to the next
sentence, in any other circumstance, the Lessee shall pay all Transaction Costs.
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,
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or (y) the Owner Participant's failure to make its equity investment 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 all Transaction Costs other than such costs and expenses that would
otherwise benefit the Lessee in ultimately closing the transaction.
(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 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 Sections 10.2, 11.4, 22.1 or 22.3 of
the Lease or Section 6.9 hereof 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 Closing Date is
other than April 13, 2000 or (B) the Transaction Costs paid by the Owner
Participant pursuant to Section 2.5 prior to the first Rent Payment Date are
less or more than $771,479.47 for the Equipment or (C) a refinancing
contemplated by Section 10.2 occurs, (D) any change in the Code which is enacted
and effective and/or any change in the income tax regulations which is
promulgated, adopted and effective prior to the Closing Date (provided the Owner
Participant or the Lessee shall have given notice of such change to the other
party prior to such Closing Date), which change alters or eliminates the tax
assumptions upon which the calculation of Basic Rent, Stipulated Loss Values,
Termination Values, Early Purchase Price and Basic Term Purchase Price were
based, or (E) the Equipment Cost or the composition of the Units is different
than as described on Schedule 1 hereto, or (F) the Debt Rate on, and
----------
amortization of the Equipment Notes is different than the assumptions upon which
the calculations of the Basic Rent was based, then, in each such case, the Owner
Participant shall recalculate the payments or amounts, as the case may be, of
Basic Rent, Stipulated Loss Values, Termination Values, Early Purchase Price and
Basic Term Purchase Price, (i) to preserve the Net Economic Return that the
Owner Participant would have realized in the absence of the changes referred to
in Sections (A) through (F) of this Section 2.6(a) 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. Any such recalculation performed due to
the occurrence of an event described in clause (A), (B), (D), (E), and (F) above
shall be made prior to the first Rent Payment Date. In performing any such
recalculation and in determining the Owner Participant's Net Economic Return,
the Owner Participant shall utilize the same methods and assumptions originally
used in making the computations of Basic Rent, Stipulated Loss Values,
Termination Values, Early Purchase Price and Basic Term Purchase Price with
respect to the Basic Term initially set forth in Schedules 3, 4, 6 and 7 to this
-----------------------
Participation Agreement (other than those assumptions changed as a result of any
of the events described in clauses (A) through (F) of the preceding sentence
necessitating such recalculation; it being
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<PAGE>
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 but allowing variations to reflect the event giving rise to
the adjustment) with Section 467 of the Code and any regulations thereunder so
as not to cause the Lease to be a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and any regulation
thereunder, 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, without taking into account any
change after the Closing Date in or to Section 467 of the Code (and any
regulations thereunder) and such requirements of Revenue Procedure 75-28.
(b) Confirmation and Verification. Upon completion of any recalculation
described above in this Section 2.6, a duly authorized officer of the Owner
Participant shall provide a certificate to the Lessee either (x) stating that
the payments of Basic Rent, Stipulated Loss Values, Termination Values, Early
Purchase Price and Basic Term Purchase Price with respect to the Basic Term as
are then set forth in Schedules 3, 4, 6 and 7 of this Participation Agreement do
-----------------------
not require change, or (y) setting forth such adjustments to the payments of
Basic Rent, Stipulated Loss Values, Termination Values, Early Purchase Price or
Basic Term Purchase Price with respect to the Basic Term as have been calculated
by the Owner Participant in accordance with Section 2.6(a) above. Such
certificate shall describe in reasonable detail the basis for any such
adjustments, and any such adjustment and corresponding adjustments to the
Stipulated Loss Values, Termination Values, Early Purchase Price and Basic Term
Purchase Price will be computed on a basis consistent with that used by the
Owner Participant in the original calculation of Basic Rent. Any such
adjustment shall be deemed approved upon notice of such approval by the Lessee
to the Owner Participant or on the thirty-first (31st) day following delivery of
such certificate by the Owner Participant to the Lessee unless the Lessee, prior
to such day, requests verification pursuant to the following sentence, and shall
become effective as of the earlier of (i) the first Rent Payment Date and (ii)
the date the Lessee approves or has been deemed to have approved such adjustment
(except that any adjustment to Stipulated Loss Value shall be effective as of
the Closing Date). If the Lessee shall so request, the recalculation of any
such adjustments described in this Section 2.6 shall be verified on a
confidential basis by a nationally recognized firm of independent accountants
selected by the Owner Participant and reasonably acceptable to the Lessee and
any such recalculation of such adjustment as so verified shall be binding on the
Lessee and the Owner Participant. Such accounting firm shall be requested to
make its determination within 30 days. The Owner Participant shall provide to a
representative of such accounting firm, on a confidential basis, such
information as it may reasonably require, including the original assumptions
used by the Owner Participant and the methods used by the Owner Participant in
the original calculation of, and any recalculation of, Basic Rent, Stipulated
Loss Values, Termination Values, Early Purchase Price and Basic Term Purchase
Price and such other information as is necessary to determine whether the
computation is accurate and in conformity with the provisions of this Agreement,
provided that in no event shall the Owner Participant have any obligation to
- --------
provide the Lessee with any such information; and provided, further, that the
-------- -------
Owner Participant shall have no obligation to disclose to the Lessee, such
accounting firm or any other Person, or to permit the Lessee, such accounting
firm or any other Person, to examine any federal, state or local income tax
returns of the Owner Participant, or books or accounting records related
thereto, for any taxable year. Subject to the immediately following sentence,
the costs of such verification shall be borne by the Lessee. If such accounting
firm's verification shall result
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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 this Lease calculated as of the Closing Date, as
compared to the net present value of Basic Rent proposed by the Owner
Participant, by more than the greater of (a) 10 basis points or (b) 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 (except that any adjustment to
Stipulated Loss Value shall be effective as of the Closing Date), 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, 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, 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, any Make-Whole Amount and
all unpaid interest on the Equipment Notes, accrued to the date on which
Stipulated Loss Value, Termination Value or Early Purchase Price, as the case
may be, is paid in accordance with the terms of the Lease.
(d) Invoices. All invoices in respect of Transaction Costs to the extent
not delivered on the Closing Date shall be directed to the Owner Participant at
the address set forth in Section 10.4, with a copy to the Lessee.
Section 2.7 Postponement of Closing Date.
----------------------------
(a) The scheduled Closing Date may be postponed from time to time with
respect to all of the Units for any reason (but to no later than April 28, 2000)
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 "Closing Date" as used in this
Agreement shall mean the postponed "Closing Date".
(b) In the event of any postponement of the originally scheduled Closing
Date pursuant to this Section 2.7 (the originally scheduled Closing Date being
referred to as the "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
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instructions from the Owner Participant) under the Trust Agreement, the Lease or
the Indenture) by paying to the Owner Participant on demand interest at the Debt
Rate, for the period from and including the Scheduled Closing Date to but
excluding the earlier of the date upon which such funds are returned to the
Owner Participant (unless such funds are returned after 1:00 p.m., New York City
time, in which case such date of return shall be included) or the actual Closing
Date; 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 12:00 noon, New York City
time, on the Business Day preceding the Scheduled Closing Date, a notice of
postponement of the Scheduled Closing Date pursuant to Section 2.7(a), and (ii)
the Indenture Trustee will return not later than 10:00 a.m., New York City time,
on the first Business Day following the Scheduled Closing Date, any funds which
it shall have received from the Owner Participant as its Commitment for such
Units, absent joint instructions from the Lessee and the Owner Participant to
retain such funds until the specified date of postponement established under
Section 2.7(a).
(c) The Indenture Trustee agrees that, in the event it has received
telephonic notice (to be confirmed promptly in writing) from the Lessee on the
Scheduled Closing Date that such Scheduled Closing Date is to be postponed, it
will if instructed in the aforementioned notice from the Lessee (which notice
shall specify the securities to be purchased) use reasonable best efforts to
invest, at the risk of the Lessee (except as provided below with respect to the
Indenture Trustee's gross negligence or willful misconduct), the funds received
by it from the Owner Participant with respect to its Commitment in Specified
Investments in accordance with the Lessee's instructions. Any such Specified
Investments purchased by the Indenture Trustee upon instructions from the Lessee
shall be held in trust by the Indenture Trustee (but not as part of the
Indenture Estate under the Indenture) for the benefit of the Owner Participant
whose funds are invested in Specified Investments upon instructions from the
Lessee and any net profits on the investment of such funds (including interest),
if any, shall be for the account of and shall on the Closing Date, 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 Closing Date (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 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 11:00
a.m., New York City time, on April 28, 2000.
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SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1 Representations and Warranties of the Owner Trustee. The Trust
---------------------------------------------------
Company (except with respect to clauses (c) and (k) (to the extent applicable to
the Owner Trustee in its capacity as Owner Trustee) below) and as Owner Trustee
with respect to clauses (c), (e) (to the extent provided therein) and (k) (to
the extent applicable to the Owner Trustee in its capacity as Owner Trustee)
below, represents and warrants to the Owner Participant, each of the other
Trustees and the Lessee, notwithstanding the provisions of Section 10.13 or any
similar provision in any other Operative Agreement, that, as of the date hereof:
(a) the Trust Company (i) is a Delaware 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 Trust Company has duly authorized, executed and delivered the
Trust Agreement, (ii) (assuming the due authorization, execution and delivery of
the Trust Agreement by the Owner Participant) the Owner Trustee in its trustee
capacity and, to the extent expressly provided therein, in its individual
capacity, has duly authorized, executed and delivered each of the other Owner
Trustee Agreements and, as of the Closing Date, the Equipment Notes, the Lease
Supplements and the Indenture Supplements to be delivered on the Closing Date,
and (iii) the Trust Agreement constitutes a legal, valid and binding obligation
of the Trust Company, enforceable against it in its individual capacity in
accordance with its terms except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(c) assuming the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant, each of the Owner Trustee Agreements (other
than the Trust Agreement) to which it is a party constitutes, or when entered
into will constitute, a legal, valid and binding obligation of the Owner
Trustee, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally and
by general principles of equity;
(d) neither the execution and delivery by the Trust Company, in its
individual capacity or as Owner Trustee, as the case may be, of the Owner
Trustee Agreements or the Equipment Notes to be delivered on the Closing Date,
nor the consummation by the Trust Company, in its individual capacity or as
Owner Trustee, as the case may be, of any of the transactions contemplated
hereby or thereby, nor the compliance by the Trust Company, in its individual
capacity, or as Owner Trustee, as the case may be, with any of the terms and
provisions hereof and thereof, (i) requires or will require any approval of its
stockholders, or approval or consent of any trustees or holders of any
indebtedness or obligations of it in its individual capacity, or (ii) violates
or will violate its charter documents or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute a default under,
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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 Trust Company
is a party or by which it is bound, or contravenes or will contravene any law,
governmental rule or regulation of the United States of America or the State of
Delaware governing the banking or trust powers of the Trust Company, or any
judgment or order applicable to or binding on it;
(e) there are no Taxes payable by the Trust Company, either in its
individual capacity or as Owner Trustee, imposed by the State of Delaware or any
political subdivision thereof or by the United States of America in connection
with the execution and delivery by the Owner Trustee in its individual capacity
of the Trust Agreement, and, in its individual capacity or as Owner Trustee, as
the case may be, of this Agreement, the other Owner Trustee Agreements (other
than the Trust Agreement) or the Equipment Notes to be delivered on the Closing
Date solely because the Owner Trustee in its individual capacity is a Delaware
banking corporation with its principal place of business in Wilmington, Delaware
and performs certain of its duties as Owner Trustee in the State of Delaware;
and there are no Taxes payable by the Trust Company, in its individual capacity
or as Owner Trustee, as the case may be, imposed by the State of Delaware or any
political subdivision thereof or by the United States of America 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 Trust Company in its individual capacity
is a Delaware banking corporation with its principal place of business in
Wilmington, Delaware, and performs certain of its duties as Owner Trustee in the
State of Delaware;
(f) there are no pending or, to its knowledge, threatened actions or
proceedings against the Trust Company, 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 Trust Company, 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 to be
delivered on the Closing Date;
(g) both its chief executive office, and the place where its records
concerning the Equipment and all its interest in, to and under all documents
relating to the Trust Estate, are located at Wilmington, Delaware, and the Trust
Company, 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 Delaware
state or local governmental authority or agency or any United States federal
governmental authority or agency regulating the banking or trust powers of the
Trust Company, in its individual capacity, is required for the execution and
delivery of, or the carrying out by, the Trust Company 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
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Agreements, other than any such consent, approval, order, authorization,
registration, notice or action as has been duly obtained, given or taken;
(i) on the Closing Date, the Owner Trustee's right, title and interest in
and to the Equipment delivered on the Closing Date shall be free of any Liens
attributable to the Trust Company in its individual capacity;
(j) the proceeds received by the Owner Trustee from the Owner Participant
pursuant to the Trust Agreement will be administered by it in accordance with
Article III of the Trust Agreement;
(k) the Owner Trustee shall receive from the Lessee such title as was
conveyed to it by the Lessee, subject to the rights of the Owner Trustee and the
Lessee under the Lease and the security interest created pursuant to the
Indenture and the Indenture Supplement in respect of the Units delivered on the
Closing Date, and there will be no Lessor's Liens attributable to it on the
Equipment or any interest therein or on the Trust Estate; and
(l) to its knowledge, no Indenture Default or Indenture Event of Default
has occurred and is continuing.
Section 3.2 Representations and Warranties of the Lessee. The Lessee
--------------------------------------------
represents and warrants to the Trustees and the Owner Participant that, as of
the date hereof:
(a) the Lessee is a corporation duly organized, validly existing, and in
good standing under the laws of the State of New York, 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 sell the Equipment
to the Owner Trustee and 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 shareholder approval being required), executed and
delivered (or in the case of the Lease Supplements in respect of the Units
delivered on the Closing Date will on the Closing Date have been duly executed
and delivered) by the Lessee, and constitute (or in the case of the Lease
Supplement in respect of the Units delivered on the Closing Date will on the
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,
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mortgage, contract or other agreement or instrument to which the Lessee is a
party or by which the Lessee or any of its property is bound or affected;
(d) except for those matters discussed in the financial statements provided
to the Participants under Section 3.2(e), there are no proceedings pending or,
to the knowledge of the Lessee, threatened against the Lessee or any Subsidiary
in any court or before any governmental authority or arbitration board or
tribunal which individually or in the aggregate would, if determined adversely
to it, materially and adversely affect the financial condition or business of
the Lessee and its consolidated Subsidiaries, taken as a whole, or impair the
ability of the Lessee to perform its obligations under the Lessee Agreements or
which questions the validity of any Lessee Agreement or any action taken or to
be taken pursuant thereto. Neither the Lessee nor any Subsidiary is in default
with respect to any order of any court or governmental authority or arbitration
board or tribunal, the default under which would affect adversely the ability of
the Lessee to perform its obligations under the Lessee Agreements;
(e) the audited consolidated balance sheets and consolidated statements of
income and retained earnings and cash flows of the Lessee for the fiscal year
ended December 31, 1999 fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Lessee and its
Subsidiaries as of such date and the results of their operations for the period
then ended. The unaudited consolidated balance sheets and consolidated
statements of income and retained earnings and cash flows of the Lessee and its
Subsidiaries for the twelve-month period ended December 31, 1999 fairly present,
in conformity with generally accepted accounting principles consistently applied
(except for the absence of footnotes in the December 31, 1999 financial
statements), the consolidated financial position of the Lessee and its
Subsidiaries as of such date and the results of their operations for the period
then ended, subject to normal year-end adjustments. Since December 31, 1999,
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 notices required to be filed with the STB and the
Registrar General of Canada, which STB notice shall have been filed on the
Closing Date and which Canadian notice shall be filed promptly following the
Closing Date;
(g) the Lease, the Indenture, the Lease Supplements in respect of the Units
delivered on the Closing Date and the Indenture Supplements in respect of the
Units delivered on the Closing Date will on or before the Closing Date be duly
filed with the STB pursuant to 48 U.S.C. (S)11301 and deposited with the
Registrar General of Canada pursuant to Section 105 of the Canada Transportation
Act and such filing with the STB pursuant to 49 U.S.C. (S)11301 will perfect the
Owner Trustee's and the Indenture Trustee's rights in such Operative Agreements
and in the Units, and such deposit with the Registrar General of Canada will
perfect the Owner Trustee's and the Indenture Trustee's rights in such Operative
Agreements and in the Units and no other filing, recording or deposit with, or
giving of notice to any other federal, state, provincial or local government or
agency thereof, or any other action, is necessary in order to
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protect the rights of the Owner Trustee and the Indenture Trustee in such
Operative Agreements or in such Units in the United States, any state thereof,
the District of Columbia or to protect the rights of the Owner Trustee and the
Indenture Trustee in such Operative Agreements or in such Units in Canada or any
province thereof;
(h) the Equipment is covered by the insurance required by Section 12 of the
Lease and all premiums due prior to the Closing Date in respect of such
insurance shall have been paid in full;
(i) the Lessee has timely filed all United States Federal income tax
returns and all other material tax returns which are required to be filed by it
and has paid all taxes due pursuant to such returns or pursuant to any
assessment made against the Lessee or any of its assets (other than assessments,
the payment of which is being contested in good faith by appropriate proceedings
by the Lessee and none of which are material), and no tax liens have been filed
and no claims are being asserted with respect to any such taxes, fees or other
charges which could reasonably be expected to have a materially adverse effect
on its ability to perform its obligations under the Lessee Agreements. The
provision for taxes on the books of the Lessee is adequate for all open years,
and for its current fiscal period;
(j) no Lease Default or Lease Event of Default has occurred and is
continuing and to the knowledge of Lessee, no Event of Loss, or event with which
the giving of notice and/or the passage of time would constitute an Event of
Loss, has occurred;
(k) the Lessee is not an "investment company" or an "affiliated person" of
an "investment company" within the meaning of the Investment Company Act of
1940;
(l) the acquisition by the Owner Participant of the Beneficial Interest for
its own account will not constitute a prohibited transaction within the meaning
of Section 4975(c)(1)(A) 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 Closing Date, Lessee shall have, and the Bill of Sale to be
delivered on the Closing Date shall convey, to the Owner Trustee all legal and
beneficial title to the Units being delivered on the Closing Date, free and
clear of all Liens (other than Permitted Liens of the type described in clause
(ii) with respect to sublessee, and in clauses (iii), (iv), (vi) and (vii) of
the definition thereof), and such conveyance is not void or voidable under any
applicable law;
(n) the financial statements referred to in Section 3.2(e) do not, nor does
the Registration Statement relating to the Pass Through Certificates or any
written statement furnished by the Lessee or on behalf of the Lessee in
connection with the negotiation of the Lease or any other Operative Agreement,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which the Lessee has not disclosed in writing which materially
affects adversely or, so far as the Lessee can now reasonably foresee, will
materially affect adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Lessee and its Subsidiaries, taken as
a whole;
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(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. None of the
proceeds from the sale of the Equipment Notes will be used to purchase or carry
(or refinance any borrowing the proceeds of which were used to purchase or
carry) any "security" within the meaning of the Securities Exchange Act of 1934,
as amended;
(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 Closing Date all sales, use or transfer taxes due and payable
upon the purchase of the Equipment 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 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 Closing Date are payable;
(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 GATX Lease Funding, Inc.,
which Lessee agrees will be paid by it to the extent not included in the
Transaction Costs, and of Morgan Stanley Dean Witter and Credit Suisse First
Boston, 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 the Equipment, taken as a whole, and each major component
thereof, complies in all material respects with all applicable laws and
regulations, conforms with the specifications for such Unit contained in the
Appraisal referred to in Section 4.3(a) hereof and is substantially complete
such that it is ready and available to operate in commercial service and
otherwise perform the function for which it was designed; and
(t) the Lessee is not subject to regulation as a "holding company," an
"affiliate" of a "holding company," or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
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Section 3.3 Representations and Warranties of the Indenture Trustee. The
-------------------------------------------------------
Indenture Trustee represents and warrants to the Owner Participant, the Owner
Trustee and the Lessee that, as of the date hereof:
(a) the Indenture Trustee is a national banking association duly organized
and validly existing and in good standing under the laws of the United States of
America and has the full corporate power, authority and legal right under the
laws of the United States of America pertaining to its banking, trust and
fiduciary powers to execute, deliver and carry out the terms of each of the
Indenture Trustee Agreements;
(b) the execution, delivery and performance by the Indenture Trustee of
each of the Indenture Trustee Agreements have been duly authorized by the
Indenture Trustee and will not violate any applicable law or its articles of
association or by-laws or the provisions of any indenture, mortgage, contract or
other agreement to which it is a party or by which it is bound;
(c) this Agreement has been duly executed and delivered and constitutes,
and the other Indenture Trustee Agreements, when executed and delivered, will
constitute its legal, valid and binding obligation enforceable against it in
accordance with its terms;
(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 of the United States of America
governing the Indenture Trustee in its trust capacity, is required for the due
execution, delivery and performance by the Indenture Trustee of the Indenture
Trustee Agreements, except as have been previously obtained, given or taken;
(f) the Indenture Trustee is not in default under any of the Indenture
Trustee Agreements; and
(g) neither the Indenture Trustee, nor any Person authorized to act on
behalf of the Indenture Trustee, has directly or indirectly offered any interest
in the Trust Estate or the Equipment Notes or any security similar to either
thereof related to this transaction for sale to, or solicited offers to buy any
of the same from, or otherwise approached or negotiated with respect to any of
the same with, any Person other than the Pass Through Trustee, the Underwriters
and the initial purchasers of the Pass Through Certificates.
Section 3.4 Representations, Warranties and Covenants Regarding Beneficial
--------------------------------------------------------------
Interest and Equipment Notes.
- ----------------------------
(a) The Owner Trustee represents and warrants to the Lessee, each of the
other Trustees and the Owner Participant that, as of the date hereof and as of
the Closing Date, neither
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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.
(b) The Lessee represents and warrants to the Trustees and the Owner
Participant that, as of the date hereof and as of the Closing Date, neither the
Lessee nor any Person authorized or employed by the Lessee as agent or otherwise
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 31 other
institutional investors with respect to the Beneficial Interest, and, except for
the issue and sale of the Pass Through Certificates as contemplated by the
Registration Statement, the Pass Through Trustee with respect to the Equipment
Notes.
(c) Each of the Owner Trustee, the Owner Participant and the Lessee agree,
as to its own actions only, severally but not jointly that neither the Owner
Trustee, the Owner Participant nor the Lessee nor anyone acting on behalf of the
Owner Trustee, the Owner 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 of
1933, as amended.
Section 3.5 Representations and Warranties of the Pass Through Trustee. The
----------------------------------------------------------
Pass Through Trustee represents and warrants to the Owner Participant, the other
Trustees, and the Lessee that, as of the date hereof:
(a) the Pass Through Trustee is a national banking association duly
organized and validly existing in good standing under the laws of the United
States of America and has the full corporate power, authority and legal right
under the laws of the United States of America pertaining to its banking, trust
and fiduciary powers to execute, deliver and carry out the terms of the Pass
Through Trust Agreement, the Pass Through Trust Supplements and this Agreement;
(b) the Pass Through Trust Agreement, the Pass Through Trust Supplements
and this Agreement have been duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement, the Pass Through Trust Supplements and the Pass
Through Trust Agreement constitute the legal, valid and binding obligation of
the Pass Through Trustee enforceable against it in accordance with its terms;
(c) the execution, delivery and performance by the Pass Through Trustee of
the Pass Through Trust Agreement, the Pass Through Trust Supplements 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 and the Pass Through Trust
Supplements, do not contravene any law, rule or regulation of any United
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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, the Pass Through Trust Supplements 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 United States of America governmental
authority or agency or any Federal 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, the Pass Through Trust Supplements or the
Pass Through Trust Agreement;
(f) the Pass Through Trustee is not in default under the Pass Through Trust
Agreement, as supplemented by the Pass Through Trust Supplements;
(g) the Pass Through Trustee is not directly or indirectly controlling,
controlled by or under common control with the Owner Participant, the Owner
Trustee, the Underwriters or the Lessee;
(h) the Pass Through Trustee is purchasing the Equipment Notes for the
purposes contemplated by the Operative Agreements and not with a view to the
transfer or distribution of any Equipment Note to any other Person, except as
contemplated by the Operative Agreements; and
(i) except for the issue and sale of the Pass Through Certificates
contemplated hereby, the Pass Through Trustee has not directly or indirectly
offered any Equipment Note or Pass Through Certificate or any interest in or to
the Trust Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, anyone other than the Owner
Trustee and the Owner Participant, and the Pass Through Trustee has not
authorized anyone to act on its behalf to offer directly or indirectly any
Equipment Note, any Pass Through Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest related to this transaction
for sale to, or to solicit any offer to acquire any of the same from, any person
other than each Owner Trustee and the Owner Participant, and the Pass Through
Trustee is not in default under the Pass Through Trust Agreement.
Section 3.6 Representations and Warranties of the Owner Participant. The
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Owner Participant represents and warrants to the Trustees and the Lessee that,
as of the date hereof:
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(a) the Owner Participant is a national banking association duly organized,
validly existing and in good standing under the laws of the United States of
America and has full corporate power, authority and legal right to carry on its
business as now conducted;
(b) the Owner Participant has the requisite corporate 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 charter documents 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 actions on the part of the Owner Participant, do not require
any approval not already obtained of the shareholders 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 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, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity;
(d) no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery or performance by the Owner Participant of the Trust
Agreement, the Tax Indemnity Agreement or this Agreement;
(e) the Trust Estate is free of any Lessor's Liens attributable to the
Owner Participant;
(f) there are no pending or, to the Owner Participant's knowledge,
threatened actions or proceedings against the Owner Participant before any court
or administrative agency which would materially adversely affect the Owner
Participant's financial condition or its ability to perform its obligations
under the Trust Agreement, the Tax Indemnity Agreement or this Agreement;
(g) as of the 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 of 1933, as amended, 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 of 1933, as amended; 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
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been registered under the Securities Act of 1933, as amended, and that neither
the Owner Trustee nor the Lessee contemplates filing, or is legally required to
file, any such registration statement;
(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; and
(i) no broker's or finder's or placement fee or commission will be payable
with respect to the transactions contemplated by the Operative Agreements as a
result of any action by the Owner Participant except for the fees of D'Accord
Financial Services, Inc., which will be paid by the Owner Participant and the
Owner Participant agrees that it will hold Lessee, the Indenture Trustee and
Lessor harmless from any claim, demand or liability for broker's or finder's or
placement fees or commission alleged to have been incurred as a result of any
action by the Owner Participant in connection with this transaction.
Section 3.7 Opinion Acknowledgment. Each of the parties hereto,
----------------------
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
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obligation of each Participant to make its investment specified with respect to
such Participant in Section 2 on the Closing Date shall be subject to the
following conditions (except that paragraph (k) and clause (i) of paragraph (p)
shall not be conditions precedent to the Owner Participant's obligations
hereunder and paragraph (n) and (s) and clause (ii) of paragraph (p) shall not
be conditions precedent to the Loan Participant's obligations hereunder):
(a) Execution of Operative Agreements. On or before the Closing Date, this
Agreement, the Trust Agreement, the Lease, the Lease Supplements in respect of
the Units delivered on the Closing Date, the Indenture, the Indenture
Supplements in respect of the Units delivered on the Closing Date, the Equipment
Notes, the Pass Through Trust Agreement, the Pass Through Trust Supplements and
the Underwriting Agreement shall each be satisfactory in form and substance to
such Participant, shall have been duly executed and delivered by the parties
thereto (except that the execution and delivery of the documents referred to
above (other than this Agreement) by a party hereto or thereto shall not be a
condition precedent to such party's obligations hereunder), shall each be in
full force and effect and executed counterparts of each shall have been
delivered to such Participant or its counsel on or before the Closing Date; and
no event shall have occurred and be continuing that constitutes a Lease Default
or an Indenture Default.
(b) Recordation and Filing. On or before the Closing Date the Lessee shall
have caused the Lease, the Lease Supplements in respect of Units delivered on
the Closing Date, the Indenture and the Indenture Supplements in respect of the
Units delivered on the Closing Date, to be duly filed, recorded and deposited
with the STB in conformity with 49 U.S.C. (S)11301 and with the Registrar
General of Canada pursuant to Section 105 of the Canada Transportation Act
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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 within
21 days after the Closing Date, and the Lessee shall furnish the Indenture
Trustee, the Owner Trustee and each Participant proof thereof.
(c) Representations and Warranties of Lessee. On the Closing Date, the
representations and warranties of the Lessee contained in Section 3.2 and
Section 3.4(b) hereof shall be true and correct in all material respects as of
the Closing Date as though then made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier date
(in which case such representations and warranties were true and correct on and
as of such earlier date), and the Owner Trustee, the Indenture Trustee and each
Participant shall have received an Officer's Certificate dated such date from
the Lessee certifying to the foregoing matters, and the Lessee shall have
performed and complied with all agreements and conditions herein contained which
are required to be performed or complied with by the Lessee on or before said
date.
(d) Representations and Warranties of Owner Trustee. On the 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 the
Closing Date as though then made on and as of such date except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date), and the Lessee, the Indenture Trustee, the Pass Through
Trustee and each Participant shall have received an Officer's Certificate dated
such 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 Closing Date, the Owner Trustee, the
Indenture Trustee and each Participant shall have received the favorable written
opinion of each of (i) the Lessee's special counsel and counsel for the Lessee
(which counsel shall be the General Counsel or Assistant General Counsel of the
Parent), (ii) counsel to the Owner Trustee, (iii) special counsel and counsel to
the Owner Participant, (iv) counsel to the Pass Through Trustee, (v) counsel to
the Indenture Trustee, (vi) special STB counsel and (vii) special Canadian
counsel, 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 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 the Closing Date, free and clear of all Liens
(other than Permitted Liens of the type described in clause (ii) with respect to
sublessee, and in clauses (iii), (iv), (vi) and (vii) of the definition
thereof).
(g) Bill of Sale. On the 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 date,
transferring to the Owner Trustee legal and beneficial title to such Units
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<PAGE>
free of all claims, liens and encumbrances of any nature 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 sublessee, and in clauses
(iii), (iv), (vi) and (vii) of the definition thereof).
(h) Insurance Certificate and Opinion. On or before the Closing Date, the
Indenture Trustee and each Participant shall have received (x) a certificate
relating to insurance that is required pursuant to Section 12 of the Lease and
(y) a certificate from a nationally recognized insurance broker in the form
attached hereto as Exhibit A with respect to the public liability insurance
---------
required by Section 12.1(b) of the Lease.
(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 at the time of the
Closing Date, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(k) Representations and Warranties of Owner Participant. On the Closing
Date, the representations and warranties of the Owner Participant contained in
Section 3.6 hereof shall be true and correct in all material respects as of the
Closing Date as though then made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties were true and correct on and as
of such earlier date), and the Lessee, the Indenture Trustee and the Pass
Through Trustee shall have received an Officer's Certificate dated such date
from the Owner Participant certifying the foregoing matters, and the Owner
Participant shall have performed and complied with all agreements and conditions
herein contained which are required to be performed or complied with by the
Owner Participant on or before said date.
(l) Closing Notice. The Indenture Trustee and the Participants shall have
received the Notice of Delivery required pursuant to Section 2.3.
(m) Representations and Warranties of the Indenture Trustee. On the
Closing Date, the representations and warranties of the Indenture Trustee
contained in Section 3.3 hereof shall be true and correct in all material
respects as of the Closing Date as though then made on and as of such date,
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and the Lessee, the Owner Trustee and
each Participant shall have received an Officer's Certificate dated such date
from the Indenture Trustee certifying the foregoing matters, and the Indenture
Trustee shall have performed and complied with all agreements and conditions
23
<PAGE>
herein contained which are required to be performed or complied with by the
Indenture Trustee on or before said date.
(n) Representations and Warranties of the Pass Through Trustee. On the
Closing Date, the representations and warranties of the Pass Through Trustee
contained in Section 3.5 hereof shall be true and correct in all material
respects as of the Closing Date as though then made on and as of such date,
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties were true and
correct on and as of such earlier date), and the Lessee, the Owner Trustee and
the Owner Participant shall have received an Officer's Certificate dated such
date from the Pass Through Trustee certifying the foregoing matters, and the
Pass Through Trustee shall have performed and complied with all agreements and
conditions herein contained which are required to be performed or complied with
by the Pass Through Trustee on or before said date.
(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 amount specified in, and otherwise in accordance
with, Sections 2.2(a) and 2.3 and (ii) the Loan Participant shall have made its
Commitment in the amount 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 Closing Date in connection with the transactions contemplated
by this Agreement on the Closing Date shall have been taken by any governmental
or political agency, subdivision or instrumentality of the United States and all
orders, permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Closing Date in connection with the
transactions contemplated by this Agreement on the Closing Date shall have been
issued, and all such orders, permits, waivers, exemptions, authorizations and
approvals shall be in full force and effect, on the Closing Date.
(s) Tax Indemnity Agreement. On or before the Closing Date, the Tax
Indemnity Agreement shall be satisfactory in form and substance to the Owner
Participant, shall have been duly executed and delivered by the Lessee and,
assuming due authorization, execution and delivery by the Owner Participant,
shall be in full force and effect.
(t) Appointment of Representative. The Owner Trustee shall have authorized
its representative, who shall be an individual designated by the Lessee and
acceptable to the Owner Trustee, to accept the Units being delivered on the
Closing Date from Lessee and to deliver such Units to Lessee. The Lessee shall
have authorized its representative (who shall be the same
24
<PAGE>
individual designated by the Lessee under this paragraph) to accept delivery of
the Units from the Owner Trustee as Lessor pursuant to the Lease.
(u) Securities Act Compliance. On or before the Closing Date, the
Registration Statement shall have become effective under the Securities Act of
1933, as amended (the "Act"); if filing of the Final Prospectus, or any
supplement thereto is required pursuant to Rule 424(b) as promulgated pursuant
to the Act, the Final Prospectus and any such supplement, shall have been filed
in the manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
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 provide the funds
- -----------
specified with respect to it in Sections 2.2(a) and 2.3 on the Closing Date with
respect to any Unit to be delivered on the Closing Date shall be subject to the
following additional conditions:
(a) Appraisal. On or before the Closing Date, the Owner Participant shall
have received an opinion (the "Appraisal") of RailSolutions, Inc., satisfactory
in form and substance to the Owner Participant, concluding that: (i) the fair
market value of the Equipment being delivered on the Closing Date is equal to
the Total Equipment Cost with respect to such Equipment; (ii) the Basic Rents
for the Basic Term are fair market rents; (iii) at the expiration of the Basic
Term, (A) without taking into account inflation or deflation from and after the
Closing Date or the existence of any purchase option, it is reasonable to expect
that the Equipment will have a fair market value of at least 20% of the Total
Equipment Cost with respect to such Equipment and (B) the remaining economic
useful life of the Equipment will be at least equal to 20% of the economic
useful life of the Equipment as estimated in the Appraisal; (iv) as of the Early
Purchase Date, the estimated fair market value of the Equipment being delivered
on the Closing Date, taking into account inflation or deflation from and after
the Closing Date, will not exceed 95% of the Early Purchase Price; (v) as of the
end of the Basic Term, the estimated fair market value of the Equipment being
delivered on the Closing Date, taking into account inflation or deflation from
and after the Closing Date, will be 95% or less than the Basic Term Purchase
Price; (vi) the Equipment being delivered on the Closing Date is not Limited Use
Property and (vii) such other matters as shall be reasonably requested by
Lessor; 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 such 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.
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<PAGE>
(b) Opinion with Respect to Certain Tax Aspects. On the Closing Date, the
Owner Participant shall have received the opinion of Watson, Farley & Williams,
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. There shall not have occurred on or before the
Closing Date any change or proposed change in tax law (including the Code,
regulations, rulings or case law) that would have any adverse tax consequences
to the Owner Participant with respect to the transactions contemplated by the
Operative Documents, unless the Owner Participant is indemnified against such
consequences in an amount, form and manner reasonably acceptable to the Owner
Participant.
(d) Registration of Tax Shelter. On the Closing Date, the Owner
Participant shall have received (1) an executed "delegation agreement" in form
and substance reasonably satisfactory to the Owner Participant which shall
provide that the Lessee is the "designated organizer" (as defined in Temporary
Reg. (S) 301.6011-1T) responsible for the registration of the transactions
contemplated by the Operative Agreements under Section 6011 of the Code, and (2)
a copy of a properly completed, executed and filed IRS Form 8264 (Application
for Registration of Tax Shelter), with respect to the transactions contemplated
by the Operative Agreements, which shall have been properly completed, executed
and filed by the Lessee in accordance with Temporary Reg. (S)301.6011-2T(e)(2).
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 Closing Date:
(a) Corporate Documents. On or before the 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 of the
transactions contemplated by this Agreement, the taking of all corporate and
other proceedings in connection therewith and compliance with the conditions
herein or therein set forth.
(b) Operative Agreements. On or before the 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 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 the Closing Date as
though made on and as of such 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
26
<PAGE>
Owner Trustee, the Owner Participant, the Indenture Trustee and the Pass Through
Trustee, as the case may be.
(d) Opinions of Counsel. On the Closing Date, the Lessee shall have
received the opinions of counsel referred to in Section 4.1(e) (other than that
set forth in 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 at the time of the
Closing Date, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(f) 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 its
Commitment in the amount specified in, and otherwise in accordance with,
Sections 2.2(b) and 2.3.
(g) No Tax Law Change. There shall not have occurred on or before the
Closing Date any change or proposed change in tax law (including the Code,
regulations, rulings or case law) that would have any adverse tax consequences
to the Lessee with respect to the transactions contemplated by the Operative
Documents, unless the Lessee is indemnified against such consequences in an
amount, form and manner reasonably acceptable to the Lessee.
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, consolidated balance sheets of each of the Lessee and Parent
and their respective consolidated Subsidiaries as at the end of such period,
together with the related consolidated statements of income and cash flows of
each of the Lessee and Parent and their respective 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 each of
the Lessee's and Parent's annual audited report covering the operations of the
Lessee and Parent and their respective consolidated Subsidiaries, including
consolidated balance sheets, and related consolidated statements of income and
retained earnings and consolidated statement of cash flows of each of the Lessee
and Parent and their respective 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
27
<PAGE>
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 document filed by the Lessee or
Parent with the Securities and Exchange Commission or any successor agency
pursuant to Section 13(a), 13(c), 14 or 15(d) (or any successor sections) of the
Securities Exchange Act of 1934, as amended (or any successor statute)
(excluding such documents or portions thereof which are treated as confidential
and not available to the public, in accordance with applicable law, by the
Securities and Exchange Commission);
(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
(e) 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 (collectively, for purposes of
this Section 6.1, a "transfer") prior to the expiration or earlier termination
of the Lease Term without the Lessee's consent (which consent shall not be
unreasonably withheld); provided, however, that no such consent shall be
-------- -------
required if the following conditions are satisfied:
(a) the Person to whom such transfer is to be made (a "Transferee") is (i)
an institutional or corporate investor with 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 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;
(b) so long as no Lease Event of Default has occurred and is continuing,
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
28
<PAGE>
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 Lessee's full service railcar
leasing business, solely by reason of any sale, lease or other disposition (or
any actions in furtherance of any of the foregoing), of any of such Person's
interest in any equipment or facilities directly or indirectly owned, leased or
otherwise controlled pursuant to any such Person's passive investment or loan
participation in the financing of any such equipment or facilities used in full
service railcar leasing or any re-leasing or sale of any rail equipment which is
returned to or repossessed by or on behalf of the Owner Participant or any
Affiliate of the Owner Participant from a lessee or borrower in connection with
a lease financing or lender transaction entered into by the Owner Participant or
such Affiliate as a passive lessor, investor or lender;
(c) the Indenture Trustee, the Owner Trustee and the Lessee shall have
received 10 days prior written notice of such transfer specifying the name and
address of any proposed transferee and such additional information as shall be
necessary to determine whether the proposed transfer satisfies the requirements
of this Section 6.1;
(d) [RESERVED];
(e) 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;
(f) an opinion of counsel of the Transferee (which counsel shall be
reasonably acceptable to the Lessee, the Owner Trustee and the Indenture Trustee
and which may be internal counsel of the Transferee), confirming (i) the
existence, 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 (e) 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 laws and regulations including
Federal securities laws and securities laws of the Transferee's domicile and
other jurisdictions reasonably identified by the Lessee, the Owner Trustee or
the Indenture Trustee as potentially applicable to the transfer, shall be
provided, prior to such transfer, to the Lessee, the Owner Trustee and the
Indenture Trustee, which opinion shall be in form and substance reasonably
satisfactory to each of them;
(g) such transfer complies in all respects with and does not violate any
applicable provisions of the federal securities law and the securities law of
any applicable state;
(h) except as specifically consented to in writing by the Lessee, the Owner
Trustee and the Indenture Trustee, the terms of the Operative Agreements shall
not be altered;
29
<PAGE>
(i) in the case of a transfer by the original Owner Participant, the
original Owner Participant shall have delivered on a timely basis the
certificates required pursuant to Section 7.1(c)(vi) hereof;
(j) no Owner Participant shall hold less than 10% of the Beneficial
Interest after giving effect to such transfer; and the Beneficial Interest shall
be held by not more than three Owner Participants at any one time; provided that
--------
for the purpose of calculating the number of Owner Participants under this
paragraph (j), any Owner Participants that are Affiliates of each other shall be
considered to be one Owner Participant;
(k) all reasonable costs and expenses of the parties hereto (including,
without limitation, reasonable legal fees, costs 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;
(l) such transfer either (i) does not involve the use of any funds which
constitute assets of an employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code or (ii) will not constitute a prohibited transaction
under ERISA;
(m) as a result of and following such transfer, no Indenture Default
attributable to the Owner Participant or the Owner Trustee shall have occurred
and be continuing;
(n) 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 (b) of this Section 6.1;
(o) 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;
and
(p) 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 to the extent provided in Section
6.1(k) hereof and except in the case of a transfer to a Transferee described in
the proviso to Section 6.1(a)(iii) hereof, shall be released from all
obligations hereunder and under each other Operative Agreement to which such
transferor is a party or by which such transferor is bound to the extent such
obligations are expressly assumed by a
30
<PAGE>
Transferee; and provided, further, that in no event shall any such transfer or
-------- -------
assignment waive or release the transferor from any liability on account of any
breach existing prior to such transfer of any of its representations,
warranties, covenants or obligations set forth in the Operative Agreements or
for any fraudulent or willful misconduct. Any transfer or assignment of the
Beneficial Interest in violation of this Section 6.1 shall be of no effect as
between the parties to this Agreement. Subject to the rights of the Lessee
pursuant to subsection 6.1(n), 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. 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 Trust
------------------------------------------------
Company hereby unconditionally agrees with and for the benefit of the other
parties to this Agreement that the Trust Company will not directly or indirectly
create, incur, assume or suffer to exist any Lessor's Liens on or against any
part of the Trust Estate or the Equipment attributable to the Owner Trustee in
its individual capacity, and the Trust Company 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 Trust Company (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 Trust Company or the Owner Trustee may contest any such
- --------
Lessor's Lien in good faith by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of the Equipment or any interest therein or interference with the use,
operation, or possession of the Equipment by the Lessee under the Lease or the
right of the Indenture Trustee under the Indenture.
Section 6.4 Liens Created by the Indenture Trustee and the Loan
---------------------------------------------------
Participant.
- -----------
(a) The Indenture Trustee, in its individual capacity, covenants and agrees
with the Lessee, the Owner Trustee, the Owner Participant and the Loan
Participant that it shall not cause or permit to exist any Lien on the Equipment
or all or any portion of any Trust Estate or the
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Indenture Estate arising as a result of (i) claims against the Indenture Trustee
in its individual capacity not related to its interest in the Equipment and any
Trust Estate, or to the administration of the Indenture Estate pursuant to the
Indenture, (ii) acts of the Indenture Trustee in its individual capacity not
contemplated by, or failure of the Indenture Trustee to take any action it is
expressly required to perform by, the Operative Agreements, (iii) claims against
the Indenture Trustee in its individual capacity relating to Taxes or expenses
that are not indemnified against by the Lessee pursuant to Section 7
attributable to the actions of the Indenture Trustee, solely in its individual
capacity, or (iv) claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its interest in the
Equipment, the Indenture Estate or the Operative Agreements, other than a
transfer permitted by the Operative Agreements and that the Indenture Trustee
will, at its own cost and expense (and without any right of reimbursement from
any other party hereto), promptly take such action as may be necessary duly to
discharge any such Lien.
(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 Trust Company (in its individual and in
- -------
its capacity as Owner Trustee) hereby agree, as to their own actions only and
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 Closing Date the Bill of Sale evidencing the purchase and
transfer of title of each Unit to be settled for on the 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 all or substantially all of its assets 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
of all or substantially all of the assets of the Lessee 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 in form and
substance reasonably satisfactory to such parties 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, (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, and (v) if
the Person (x) formed by such consolidation or surviving such merger (if other
than the Lessee) or the Person which acquires by conveyance, transfer or lease
of all or substantially all of the assets of the Lessee is not an Affiliate of
the Lessee, the aggregate net worth of such surviving or acquiring Person
immediately after such merger, consolidation or acquisition (determined in
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accordance with generally accepted accounting principles) is not less than the
consolidated net worth of the Lessee immediately prior to such merger,
consolidation or acquisition, or (y) with which Lessee consolidates or merges or
which acquires by conveyance, transfer or lease of all or substantially all of
the assets of the Lessee is an Affiliate of the Lessee, such Person, immediately
prior to such consolidation, merger or acquisition, has a positive net worth
(determined in accordance with generally accepted accounting principles). Upon
such consolidation or merger, or any conveyance, transfer or lease of all or
substantially all of the assets of the Lessee in accordance with this Section
6.8, the successor corporation formed by such consolidation or into which the
Lessee is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Lessee under this Agreement and the other Operative Agreements with the same
effect as if such successor corporation had been named as the Lessee herein.
Section 6.9 Lessee's Purchase in Certain Circumstances. If an Owner
------------------------------------------
Participant or any Affiliate thereof is or acquires, is acquired by, merges or
otherwise consolidates with any company or Affiliate thereof engaged in full
service railcar leasing, whether or not a direct competitor to the Lessee or any
Affiliate thereof, or 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, no later than one year after a Responsible Officer of the Lessee has actual
knowledge of such event, request that such Owner Participant transfer its
Beneficial Interest pursuant to Section 6.1. If such Owner Participant has not
transferred its Beneficial Interest within 180 days of such request, the Lessee
may, on a Determination Date which is designated by the Lessee by written notice
to the Owner Trustee and the Indenture Trustee not less than 25 days prior to
such Determination Date, purchase a number of the Units of Equipment equal to
the percentage of the Equipment that the portion of the Beneficial Interest held
by such Owner Participant bears to 100% of the Beneficial Interest for a
purchase price equal to the Termination Value for such Units calculated as of
such Determination Date, together with all other amounts due and owing by the
Lessee under the Operative Agreements with respect to such Units, including,
without limitation, all accrued and unpaid Basic Rent therefor as of such
Determination Date (exclusive of any in advance Basic Rent due on such date) and
any Make-Whole Amount then payable on the Equipment Notes pursuant to Section
2.10(c) of the Indenture with respect to such Units; provided, 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 businesses; provided,
--------
further, that none of any Owner Participant 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 in the financing of any such equipment or
facilities used in full service railcar leasing. In the event that such Owner
Participant hereinabove referred to holds less than 100% of the Beneficial
Interest, the determination as to which Units are to be purchased under this
Section 6.9 shall be made on a random or other basis (in each case reasonably
acceptable to the Lessor) without discrimination based on maintenance status,
operating condition of the Units in question or otherwise and the notice
hereinabove referred to shall describe such manner in which the Lessee proposes
to determine which Units are to be purchased hereunder.
If the Lessee elects to exercise the purchase option provided for in this
Section 6.9, the Lessee shall, as the purchase price therefor, in the sole
discretion of the Lessee, either (i) pay the Termination Value, as specified in
the paragraph above, with respect to such Units, together with
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all other amounts due and owing by the Lessee under the Operative Agreements, or
(ii) pay the difference between the Termination Value and the portion of the
outstanding principal amount of the Equipment Notes which relates to such Units
as of the Determination Date specified by the Lessee in the first sentence of
this Section 6.9 and assume on a full resource basis, and indemnify the Lessor
against, all of the Owner Trustee's obligations under the Indenture in respect
of such portion of the indebtedness evidenced by such Equipment Notes; provided,
--------
that, following such assumption, the purchased Units shall remain subject to the
lien of a separate indenture similar to the Indenture pursuant to Section 3.06
of the Indenture. The Lessee will make the payments required by foregoing clause
(i) or assume such portion of the indebtedness evidenced by the Equipment Notes
which relates to such Units as provided in foregoing clause (ii) on the
Determination Date designated in the first sentence of Section 6.9 in
immediately available funds against delivery of a bill of sale transferring and
assigning to the Lessee all right, title and interest of the Lessor in and to
the Units on an "as-is" "where-is" basis and containing a warranty against
Lessor's Liens. In such event, the costs of preparing the bill of sale and all
other documentation relating to such purchase and the costs of any necessary
filings related thereto will be borne by the Lessee. If the Lessee shall fail to
fulfill its obligations under this second paragraph of Section 6.9, all of the
Lessee's obligations under the Lease and the Operative Agreements, including,
without limitation, the Lessee's obligation to pay installments of Rent, with
respect to the Units in question shall continue.
Section 6.10 Owner Participant an Affiliate of Lessee. If at any time the
----------------------------------------
original or any successor Owner Participant shall be an Affiliate of the Lessee,
such Owner Participant and the Lessee agree that notwithstanding Section 9.05 of
the Indenture they will not vote its Beneficial Interest to modify, amend or
supplement any provision of the Lease or this Agreement or give, or permit the
Owner Trustee to give, any consent, waiver, authorization or approval thereunder
if any such action 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 Owner Trustee, the
Trust Company, the Indenture Trustee both in its individual capacity and as
trustee, the Pass Through Trustee both in its
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individual capacity and as trustee, each of their respective successors or
assigns permitted under the terms of the Operative Agreements, any officer,
director, employee or agent of any of the foregoing, the Trust Estate and the
Indenture Estate.
(b) Taxes Indemnified. All payments by the Lessee to any Tax Indemnitee in
connection with the transactions contemplated by the Operative Agreements shall
be free of withholdings of any nature whatsoever (and at the time that the
Lessee is required to make any payment upon which any withholding is required
the Lessee shall pay an additional amount such that the net amount actually
received will, after such withholding and on an After-Tax Basis, equal the full
amount of the payment then due) and shall be free of expense to each Tax
Indemnitee for collection or other charges, provided, however, that no such
-------- -------
additional amounts shall be paid by the Lessee and the Lessee assumes no
responsibility regarding any withholdings (i) imposed by reason of any transfer
of the Equipment or any interest in the Operative Agreements by the Lessor or
the Owner Participant, (ii) imposed solely by reason of a nexus between the
affected Tax Indemnitee and the jurisdiction imposing such withholding which
nexus is unrelated to the transactions contemplated by the Operative Agreements,
or (iii) imposed by the United States by reason of the status of the Tax
Indemnitee as a foreign corporation or nonresident individual, provided,
--------
further, however, that, notwithstanding the exclusions contained in the
- ------- -------
preceding clauses (i) - (iii), Lessee agrees to pay an additional amount of Rent
such that the net amount actually received by the Indenture Trustee, after all
such withholding, is sufficient to pay the related amounts due on the Equipment
Notes and the Lessee shall be entitled to recover such amounts under the next
succeeding sentence. If, for any reason, the Lessee is required to make any
payment to a taxing authority with respect to, or as a result of, any
withholding tax imposed on any Tax Indemnitee in respect of the transactions
contemplated by the Operative Agreements which withholding tax is not the
responsibility of the Lessee under this Section 7.1 then such Tax Indemnitee
shall pay to the Lessee within 30 days of a demand an amount which equals the
amount paid by the Lessee with respect to, or as a result of, such withholding
tax, plus interest computed at such Tax Indemnitee's cost of funds rate during
the period commencing on the date the Lessee shall have paid an additional
amount pursuant to the first sentence of this paragraph and ending on the date
the Lessee actually receives such payment.
Subject to the exclusions stated in subsection (c) below, the Lessee agrees
to indemnify and hold harmless each Tax Indemnitee, on an After-Tax Basis,
taking into account the income tax consequences to the Tax Indemnitee of the
accrual or receipt of an indemnity 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;
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(ii) acquisition, financing, ownership, leasing, possession, purchase,
acceptance, rejection, condition, registration, return, use, storage,
operation, return, transfer of title, maintenance, repair, improvement,
replacement, substitution, delivery, redelivery, non-delivery, transport,
preparation, assembly, insurance, construction, manufacture, insuring,
modification, transfer, control, occupancy, servicing, mortgaging,
location, refinancing, disposition, subleasing, repossession, abandonment,
sale or other application or disposition of or with respect to the
Equipment or any part of any of the Equipment or interest therein;
(iii) the rental payments, receipts on 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 premium or other
amounts with respect thereto; and
(v) the Operative Agreements or otherwise in connection with the
transactions contemplated thereby.
(c) Taxes Excluded. The indemnity provided for in paragraph (b) above
shall not extend to any of the following:
(i) In the case of the Owner Participant, the Owner Trustee or the
Trust Estate, Income Taxes (as defined in Section 7.1(l), below) imposed by
(A) the United States federal government (provided that this subclause (A)
shall not be construed as preventing Lessee from recouping any such federal
Income Taxes imposed by way of 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 5.09 of the Indenture), (B) any state or local
tax jurisdiction in the United States (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) and
other leasing transactions between the Lessee (or its Affiliates) and the
Owner Participant (or its Affiliates) or the Lessee making payment from or
performing other actions in such jurisdiction)), provided, that for
--------
purposes of determining whether any Tax Indemnitee would not have been
subject to tax in such jurisdiction but for this transaction, the
determination of (y) whether any Tax Indemnitee is treated as being
incorporated or having its principal place of business in any state or
local tax jurisdiction for purposes of this clause (B), or (z) whether any
such Tax Indemnitee is deemed to be subject to tax in any state or local
tax jurisdiction (and would have been subject to such tax without regard to
this transaction) for purposes of 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 Indemnitee or other
entities, except to the extent that such Tax Indemnitee files combined or
consolidated tax returns in such state or local jurisdiction, respectively,
with one or more Affiliates which are also Tax Indemnitee, (C) any foreign
government or any political subdivision or taxing authority thereof or any
territory or possession of the United States or by any international
authority except to the extent such Income Taxes would not have been
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imposed by such jurisdiction but for the use, location, operation, presence
or registration of any Unit or part thereof in such jurisdiction or the
activities of the Lessee or any of its Affiliates in such jurisdiction or
the making of any payments from such jurisdiction by or on behalf of the
Lessee pursuant to the Operative Agreements or any other nexus between such
jurisdiction and the transactions contemplated by the Operative Agreements
(other than such nexus as may result solely from the activities, presence,
ownership or receipts of such Tax Indemnitee in each case unrelated to the
Operative Agreements or transactions contemplated thereby) or (D) any
government or jurisdiction described in (A), (B) or (C) of this clause (i)
because the applicable Tax Indemnitee is not a resident of the United
States for tax purposes.
(ii) Taxes imposed with respect to any period after the earliest of
the applicable dates of (x) the return of possession of the Equipment to
the Owner Participant or the placement of the Equipment in storage at the
request of the Owner Participant, in either case pursuant to Section 6 of
the Lease, (y) the termination of the Lease Term pursuant to Section 22.1
or Section 22.3 of the Lease, or (z) the discharge in full of the Lessee's
obligation to pay the Termination Value or the Stipulated Loss Value and
all other amounts due, if any, under Section 10 or 11.2 of the Lease, as
the case may be, with respect to the Equipment; provided that the exclusion
--------
set forth in this clause (ii) shall not apply to Taxes to the extent such
Taxes relate to events occurring or matters arising prior to or
simultaneously with the applicable 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 by such Tax Indemnitee, or by the gross negligence or willful
misconduct of such Tax Indemnitee;
(iv) As to any Tax Indemnitee, Taxes which become payable as a result
of a sale, assignment, transfer or other disposition (whether voluntary or
involuntary) by such Tax Indemnitee of all or any portion of its interest
in the Equipment or any part thereof, the Trust Estate or any of the
Operative Agreements or rights created thereunder other than as a result of
the substitution, modification or improvement of the Equipment or any part
thereof or a disposition which occurs as the result of the exercise of
remedies for a Lease Event of Default, any disposition which occurs during
the continuance of a Lease Event of Default or a purchase of any Unit
pursuant to the Lease; provided, that, notwithstanding the foregoing but
--------
subject to the Tax Indemnity Agreement, 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
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otherwise disposed of any interest held by such Tax Indemnitee pursuant to
any of the Operative Agreements such excess to be determined based on a
certificate of the original Tax Indemnitee provided to the Lessee
immediately prior to a transfer, sale or other such disposition of such
interest, such certificate to set forth the state and local jurisdictions
in which the original Tax Indemnitee would not be entitled to
indemnification in accordance with (S) 7.1(c)(i)(B) and (C) hereof,
provided, however, that this provision shall not apply to the determination
-------- -------
of amounts required to make payments on an After-Tax Basis; and
(vii) Taxes imposed on the Owner Trustee based on the Owner Trustee's
fee for services under the Trust Agreement.
(d) All Tax Obligations in this Section, etc. Notwithstanding any other
provision anywhere contained in the Operative Agreements, it is understood that
except as provided in Section 6.2, with respect to the Owner Participant, and
Section 6.3, with respect to the Owner Trustee, and except as provided in
Section 5.03 of the Indenture, the Owner Participant and the Owner Trustee shall
have no obligations with respect to Taxes or other charges to the Indenture
Trustee or the Loan Participant imposed under Section 7.16 of the Pass Through
Trust Agreement or Section 5.09 of the Indenture, or otherwise.
(e) Payments to Lessee.
(i) If any Tax Indemnitee shall realize a Tax benefit (net of any
Tax detriment not otherwise paid or indemnified against by the Lessee
hereunder) as a result of any Taxes paid or indemnified against by the
Lessee under this Section 7.1 (whether by way of deduction, credit,
allocation or apportionment or otherwise), such Tax Indemnitee shall pay to
the Lessee an amount equal to the amount of such Tax benefit, increased by
the Tax Indemnitee's additional saved Taxes attributable to the payment
being made to the Lessee hereunder; provided, however, that in no event
-------- -------
shall the aggregate amount paid by any Tax Indemnitee to the Lessee with
respect to any realized Tax benefit exceed the aggregate amount previously
advanced by the Lessee with respect to such Taxes (in each case, computed
on a pre-tax basis) but provided, further, that such excess shall be
-------- -------
carried forward to reduce or offset any future obligations of the Lessee to
such Tax Indemnitee under this Section 7.1.
(ii) Upon receipt by a Tax Indemnitee of a refund or credit of all or
part of any Taxes paid or indemnified against by the Lessee, such Tax
Indemnitee shall pay to the Lessee an amount equal to the amount of such
refund plus any interest received by or credited to such Tax Indemnitee
with respect to such refund increased or decreased, as the case may be, by
the Tax Indemnitee's net additional or saved taxes attributable to the
receipt of such amounts from the taxing authority and the payment being
made to the Lessee hereunder.
(iii) The Tax Indemnitee shall in good faith file its Tax returns and
deal with taxing authorities to seek and claim any such tax benefits or
refunds.
(iv) Any disallowance or other loss of a tax refund, credit, savings
or other benefit by a Tax Indemnitee, which refund, credit, savings or
other benefit was taken into
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account under this Section 7.1, shall be treated as a tax indemnifiable by
the Lessee under this Section 7.1 without regard to the exclusions in
Section 7.1(c) (other than clause (iii).
(f) Procedures. Any amount payable to a Tax Indemnitee pursuant to
paragraph (b) shall be paid within 30 days after receipt of a written demand
therefor from such Tax Indemnitee accompanied by a written statement describing
in reasonable detail the basis for such indemnity and the computation of the
amount so payable, provided that such amount need not be paid prior to (i) the
--------
date which is the Business Day before the date on which such Taxes are due (but
in no event before the taxable year of the Tax Indemnitee in which such Taxes
are due), or (ii) in the case of amounts which are being contested pursuant to
paragraph (g) hereof, subject to the requirement of an advance in clause (vi) of
the second paragraph of paragraph (g) hereof, the time such Taxes are due and
payable pursuant to the resolution of such contest (including all appeals). Any
amount payable to the Lessee pursuant to paragraph (e) shall be paid within 30
days after the Tax Indemnitee realizes a net tax benefit or receives a refund
giving rise to a payment under paragraph (e), and shall be accompanied by a
written statement by the Tax Indemnitee setting forth in reasonable detail the
basis for computing the amount of such payment. Within 15 days following the
Lessee's receipt of any computation from the Tax Indemnitee, the Lessee may
request that the accounting firm that regularly prepares the certified financial
statements of the Tax Indemnitee determine whether such computations of the Tax
Indemnitee are correct. Such accounting firm shall be requested to make the
determination contemplated by this paragraph (f) within 30 days of its
selection. In the event such accounting firm shall determine that such
computations are incorrect, then such firm shall determine what it believes to
be the correct computations. The Tax Indemnitee shall cooperate with such
accounting firm and supply it with all information necessary to permit it to
accomplish such determination on a confidential basis. The computations of such
accounting firm shall be final, binding and conclusive upon the parties and the
Lessee shall have no right to inspect the books, records or tax returns of the
Tax Indemnitee to verify such computation or for any other purpose. All fees and
expenses of the accounting firm payable under this Section 7.1(f) shall be borne
by the Lessee except that if such accounting firm determines that the Tax
Indemnitee's computations were incorrect and understated the payments owing to
the Lessee or overstated the payments owing to such Tax Indemnitee by 10% or
more of the correct amount as determined by such accounting firm, then the Tax
Indemnitee shall bear the fees and expenses of such accounting firm.
(g) Contest. If a written claim is made against a Tax Indemnitee for Taxes
with respect to which the Lessee may be liable for indemnity hereunder, the Tax
Indemnitee shall give the Lessee prompt notice in writing of such claim (and in
any event within 30 days after its receipt) and shall promptly furnish the
Lessee with copies of the claim and all other writings received from the taxing
authority relating to the claim; provided however, that the failure of such Tax
-------- -------
Indemnitee timely to 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 30 days after providing the
Lessee with such written notice, unless required to do so by law or unless
deferral of payment might, in the reasonable good faith judgment of the Tax
Indemnitee, cause material adverse consequences to the Tax Indemnitee or result
in the creation of any Lien other than a Permitted Lien. 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
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pursuing all appeals permitted hereby) in the name of the Tax Indemnitee (or, if
requested by the Lessee and permissible as a matter of law, in the name of the
Lessee), or shall permit the Lessee to contest in either the name of the Lessee
or with the Tax Indemnitee's consent, in the name of the Tax Indemnitee the
validity, applicability or amount of such Taxes by,
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if protest is necessary
and proper;
(iii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; or
(iv) taking such other reasonable action as is reasonably requested
by the Lessee from time to time.
provided, however, that to the extent the contest is carried on in the name of
- -------- -------
the Lessee or an Affiliate, or is brought in the name of a Tax Indemnitee and
involves only Taxes for which the Lessee is or will be liable hereunder, such
contest shall be undertaken by the Lessee at the Lessee's expense (unless at any
time the Tax Indemnitee determines in its reasonable good faith judgment that
based upon the Lessee's conduct of such contest the Lessee's control of such
contest would cause material adverse consequences or a material risk thereof to
the Tax Indemnitee) and at no-after-tax cost to any Tax Indemnitee (a "Lessee
Controlled Contest"), 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) (an "Indemnified Person Controlled Contest").
In no event shall any Tax Indemnitee be required or the Lessee be permitted
to contest any Taxes for which the Lessee is obligated to indemnify pursuant to
this Section unless: (i) such Lessee shall have acknowledged its liability to
such Tax Indemnitee for an indemnity payment pursuant to this Section as a
result of such claim if and to the extent such Indemnitee or the Lessee, as the
case may be, shall not prevail in the contest of such claim; (ii) such Tax
Indemnitee shall have received the opinion of tax counsel (which may, in the
case of Taxes imposed by a taxing authority located in the United States,
include in-house counsel of the Lessee) selected by the Lessee and satisfactory
to the Tax Indemnitee furnished at Lessee's sole expense, to the effect that a
reasonable basis consistent with ABA Opinion 85-352 exists for contesting such
claim or, in the event of an appeal, that it is more likely than not that an
appellate court will reverse or substantially modify the adverse determination
(and provided that no appeal shall be required to the United States Supreme
Court); (iii) the Lessee shall have agreed to pay such Tax Indemnitee on demand
(and at no after-tax cost to any Tax Indemnitee) all reasonable costs and
expenses that such Tax Indemnitee actually incurs in connection with contesting
such claim (including, without limitation, all costs, expenses, reasonable legal
and accounting fees, disbursements, penalties, interest and additions to the
Taxes); (iv) no Lease Event of Default shall have occurred and shall be
continuing; (v) such Tax Indemnitee shall have determined that the action to be
taken will not result in any risk of imposition of criminal penalties or
substantial danger of sale, forfeiture or loss of, or the creation of any Lien
(except if such Lessee shall have adequately bonded such Lien or otherwise made
provision to protect the interests of such Tax
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Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee) on the
Equipment or any portion thereof or any interest therein; and (vi) if such
contest shall be conducted in a manner requiring the payment of the claim, the
Lessee shall have paid the amount required (at no after-tax cost to such Tax
Indemnitee). The Lessee shall cooperate with the Tax Indemnitee with respect to
any contest controlled and conducted by the Tax Indemnitee and the Tax
Indemnitee shall consult with the Lessee regarding the conduct of such contest.
The Tax Indemnitee shall cooperate with the Lessee with respect to any contest
controlled and conducted by the Lessee and the Lessee shall consult with the Tax
Indemnitee regarding the conduct of such contest.
In no event will a Tax Indemnitee be required to contest in an Indemnified
Person Controlled Contest any Taxes if such Tax Indemnitee shall waive its right
to an indemnity under this Section 7.1 except that a Tax Indemnitee shall not be
permitted to waive or not contest any Lessee Controlled Contest without Lessee's
consent. Unless a Tax Indemnitee obtains the consent of the Lessee, which
consent shall not be unreasonably withheld (provided, however, the Lessee shall
-------- -------
not be considered to have unreasonably withheld such consent because of (i) any
failure by the Lessee to consider any issue or dispute of the Tax Indemnitee not
directly related to the claim giving rise to the contest rights in issue or (ii)
the Lessee's consideration of the effects of such settlement on issues of the
Lessee which are not the subject of such claim), the failure to contest or 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 Indemnitee' failure to
contest.
(h) For purposes of this Section 7.1, 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 this 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 in writing
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 pursue or fulfill their respective tax filing, tax audit, and tax
litigation rights and obligations.
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(j) The provisions of this Section 7.1 shall continue in full force and
effect, notwithstanding the expiration or termination of any Operative
Agreement, until all obligations hereunder have been met and all liabilities
hereunder paid in full.
(k) Any amount payable to the Lessee pursuant to the terms of this Section
7.1 shall not be paid or retained by the Lessee if at the time of such payment
or retention a Material Default 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
Material 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, excise, or property taxes shall not constitute an Income
Tax; and provided, further, that a value-added tax shall constitute an Income
-------- -------
Tax if it is in the nature of a tax on net income but shall not constitute an
Income Tax if it is in the nature of a sales, use, rental, excise, property or
other tax; and provided, further, that a withholding tax shall not constitute an
-------- -------
Income Tax notwithstanding its being a tax that is based on or measured by or
with respect to gross income or gross receipts).
(m) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through Certificate
who is a Non-U.S. Person except to the extent that such a holder of a Pass
Through Certificate has furnished evidence to the Pass Through Trustee
sufficient under applicable law to entitle such holder of a Pass Through
Certificate to any exemption from or reduction in the rate of withholding on
interest claimed by such holder of a Pass Through Certificate. The Indenture
Trustee shall withhold any Taxes required to be withheld on any payment to a
Holder pursuant to Section 5.09 of the Indenture. If the Indenture Trustee or
Pass Through Trustee fails to withhold a Tax required to be withheld with
respect to any Certificateholder or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 7.1(c) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any interest
and penalties with respect thereto, along with any other reasonable out-of-
pocket costs (including reasonable attorney's fees) incurred in connection with
any such claim. The Indenture Trustee or the Pass Through Trustee, as the case
may be, in its individual capacity (and without recourse to the Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set forth
in Section 7.1(c) hereof) on an After-Tax Basis for any payment the Lessee shall
have made pursuant to the preceding sentence.
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
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claims of whatsoever kind or nature (whether or not on the basis of negligence,
strict or absolute liability or liability in tort) which may be imposed on,
incurred by, suffered by, or asserted against an Indemnified Person, as defined
herein, or any Unit and, except as otherwise expressly provided in this Section
7.2, shall include, but not be limited to, all reasonable out-of-pocket costs,
disbursements and expenses (including legal fees and expenses) paid or incurred
by an Indemnified Person in connection therewith or related thereto.
(b) Indemnified Person Defined. For the purposes of this Section 7.2,
"Indemnified Person" means the Owner Participant, the Owner Trustee, the Trust
Company, the Indenture Trustee and the Pass Through Trustee, each of their
Affiliates and each of their respective directors, officers, employees,
successors and permitted assigns, agents and servants, the Trust Estate and the
Indenture Estate (the respective directors, officers, employees, successors and
permitted assigns, agents and servants of the Owner Participant, the Owner
Trustee, the Trust Company, the Indenture Trustee, the Pass Through Trustee and
each of their Affiliates, as applicable, together with the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and each of
their Affiliates, as the case may be, being referred to herein collectively as
the "Related Indemnitee Group" of the Owner Participant, the Indenture Trustee,
the Owner Trustee and the Pass Through Trustee, respectively).
(c) Claims Indemnified. Whether or not any Unit is accepted under the
Lease, or a closing occurs with respect thereto, and subject to the exclusions
stated in subsection (d) below, Lessee agrees to indemnify, protect, defend and
hold harmless each Indemnified Person on an After-Tax Basis against Claims
directly or indirectly resulting from or arising out of or alleged to result
from or arise out of (whether or not such Indemnified Person shall be
indemnified as to such Claim by any other Person):
(i) this Agreement or any other Operative Agreement or any of the
transactions contemplated hereby and thereby or any Unit or the ownership,
lease, operation, possession, modification, improvement, abandonment, use,
non-use, maintenance, sublease, substitution, control, repair, storage,
alteration, transfer or other application or disposition, return, overhaul,
testing, servicing, replacement or registration of any Unit (including,
without limitation, injury, death or property damage of passengers,
shippers or others, and environmental control, noise and pollution
regulations, or the presence, 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);
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(iii) any act or omission (whether negligent or otherwise) or any
breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement to be performed by, or other
obligation of, Lessee under any of the Operative Agreements, or the falsity
of any representation or warranty of the Lessee in any of the Operative
Agreements or in any document or certificate delivered in connection
therewith other than representations and warranties in the Tax Indemnity
Agreement;
(iv) the offer, sale or delivery of any Equipment Notes or Pass
Through Certificates or any interest in the Trust Estate;
(v) any violation of law, rule, regulation or order by the Lessee or
any sublessee or their respective directors, officers, employees, agents or
servants; and
(vi) the acquisition or holding of any 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
occurrence or deemed occurrence of an Event of Loss with respect to such
Unit under Section 11 of the Lease, or the election to replace such Unit
under Section 8.1(b), 8.3 or 9.1 of the Lease, the last to occur of (x) the
payment of all amounts due from the Lessee in connection with any such
event, (y) the release of the Lien of the Indenture on such Unit, and (z)
legal transfer of title to such Unit to any Person other than Lessor,
except in the case of a retention of any Unit by Lessor pursuant to the
terms and provisions of Section 10.3 of the Lease, and in the case of any
such retention, upon the effective date of the termination of the Lease
Term with respect to such Unit retained by Lessor pursuant to Section 10.3
or (B) in all other cases (except in any case where remedies are being
exercised under Section 15 of the Lease), the last to occur of (x) with
respect to such Unit, the earlier to occur of the termination of the Lease
or the expiration of the Lease Term in accordance with the terms thereof,
(y) with respect to each Unit, the return of such Unit to the Lessor in
accordance with the terms of the Lease (it being understood that, so long
as any Unit is in storage as provided in Section 6.1(c) of the Lease, the
date of return thereof for the purpose of this clause (B) shall be the last
day of the Storage Period), and (z) the release of the Lien of the
Indenture on such Unit;
(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;
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(iii) with respect to any particular Indemnified Person, Claims to the
extent resulting from (x) the gross negligence or willful misconduct of
such Indemnified Person, or (y) any breach of any covenant to be performed
by such Indemnified Person under any of the Operative Agreements, or the
falsity of any representation or warranty of such Indemnified Person in any
of the Operative Agreements or in a document or certificate delivered in
connection therewith;
(iv) any Claim to the extent attributable to any transfer by the
Lessor of the Equipment or any portion thereof or any transfer by the Owner
Participant of all or any portion of its interest in the Trust Estate other
than (A) any transfer after a Lease Default or Lease Event of Default, (B)
the transfer of the Equipment or any Owner Participant's interest in the
Equipment to the Lessee, (C) the transfer of the Equipment to a third party
pursuant to Lessee's election to terminate the Lease or (D) any transfer of
the Equipment pursuant to Section 6.9;
(v) with respect to any particular Indemnified Person, any Claim
resulting from the imposition of any Lessor's Lien attributable to such
Indemnified Person; or
(vi) with respect to any particular Indemnified Person, any Claim, to
the extent the risk thereof has been expressly assumed by such Indemnified
Person in connection with the exercise by such Indemnified Person of the
right of inspection or restenciling granted under Section 6.1 of the Lease
or right of inspection granted under Sections 6.2 or 13.2 of the Lease.
(e) Insured Claims. In the case of any Claim indemnified by the Lessee
hereunder which is covered by a policy of insurance maintained by the Lessee
pursuant to Section 12 of the Lease or otherwise, each Indemnified Person agrees
to provide reasonable cooperation to the insurers in the exercise of their
rights to investigate, defend or compromise such Claim as may be required to
retain the benefits of such insurance with respect to such Claim.
(f) Claims Procedure. An Indemnified Person shall, after obtaining
knowledge thereof, promptly notify the Lessee of any Claim as to which
indemnification is sought; provided, however, that the failure to give such
-------- -------
notice shall not release the Lessee from any of its obligations under this
Section 7.2, except to the extent that failure to give notice of any action,
suit or proceeding against such Indemnified Person shall have a material adverse
affect on Lessee's ability to defend such Claim or recover proceeds under any
insurance policies maintained by Lessee hereunder. The Lessee shall, after
obtaining knowledge thereof, promptly notify each Indemnified Person of any
indemnified Claim affecting such Person. Subject to the provisions of the
following paragraph, the Lessee shall at its sole cost and expense be entitled
to control, and shall assume full responsibility for, the defense of such claim
or liability; provided that the Lessee shall keep the Indemnified Person which
--------
is the subject of such proceeding fully apprised of the status of such
proceeding and shall provide such Indemnified Person with all information with
respect to such proceeding as such Indemnified Person shall reasonably request.
Notwithstanding any of the foregoing to the contrary, the Lessee shall not
be entitled to control and assume responsibility for the defense of such claim
or liability if (1) a Lease Event of Default shall have occurred and be
continuing, (2) such proceeding will involve any material
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danger of the sale, forfeiture or loss of, or the creation of any Lien (other
than any Lien permitted under the Operative Agreements or a Lien which is
adequately bonded to the satisfaction of such Indemnified Person) on, any Unit,
(3) the amounts involved, in the good faith opinion of such Indemnified Person,
are likely to have a materially adverse effect on the business of such
Indemnified Person other than the ownership, leasing and financing of the
Equipment, (4) in the good faith opinion of such Indemnified Person, there
exists an actual or potential conflict of interest such that it is advisable for
such Indemnified Person to retain control of such proceeding or (5) such claim
or liability involves the possibility of criminal sanctions or liability to such
Indemnified Person. In the circumstances described in clauses (1) - (5), the
Indemnified Person shall be entitled to control and assume responsibility for
the defense of such claim or liability at the expense of the Lessee. In
addition, any Indemnified Person may participate in any proceeding controlled by
the Lessee pursuant to this Section 7.2, at its own expense, in respect of any
such proceeding as to which the Lessee shall have acknowledged in writing its
obligation to indemnify the Indemnified Person pursuant to this Section 7.2, and
at the expense of Lessee in respect of any such proceeding as to which the
Lessee shall not have so acknowledged its obligation to the Indemnified Person
pursuant to this Section 7.2. Lessee may in any event participate in all such
proceedings at its own cost. Nothing contained in this Section 7.2(f) shall be
deemed to require an Indemnified Person to contest any Claim or to assume
responsibility for or control of any judicial proceeding with respect thereto.
(g) Subrogation. If a Claim indemnified by the Lessee under this Section
7.2 is paid in full by the Lessee and/or an insurer under a policy of insurance
maintained by the Lessee, the Lessee and/or such insurer, as the case may be,
shall be subrogated to the extent of such payment to the rights and remedies of
the Indemnified Person (other than under insurance policies maintained by such
Indemnified Person) on whose behalf such Claim was paid with respect to the
transaction or event giving rise to such Claim. So long as no Lease Event of
Default shall have occurred and be continuing, should an Indemnified Person
receive any refund, in whole or in part, with respect to any Claim paid by the
Lessee hereunder, it shall promptly pay over the amount refunded (but not in
excess of the amount the Lessee or any of its insurers has paid) to the Lessee.
(h) Waiver of Certain Claims. The Lessee hereby waives and releases any
Claim now or hereafter existing against any Indemnified Person arising out of
death or personal injury to personnel of the Lessee, pollution incidents, loss
or damage to property of the Lessee, or the loss of profits or use of any
property of the Lessee, which may result from or arise out of the condition, use
or operation of the Equipment during the Lease Term, including without
limitation any latent or patent defect whether or not discoverable.
(i) No Guaranty. The general indemnification provisions of this Section
7.2 do not constitute a guaranty by the Lessee that the principal of, interest
on or any amounts payable with respect to the Equipment Notes will be paid.
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT.
Each party to this Agreement acknowledges notice of, and consents in all
respects to, the terms of the Lease, and expressly, severally and as to its own
actions only, agrees that, so long as no Lease Event of Default has occurred and
is continuing, it shall not take or cause to be taken
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any action contrary to Lessee's rights under the Lease, including, without
limitation, the right to possession, use and quiet enjoyment by Lessee or any
permitted sublessee of the Equipment.
SECTION 9. SUCCESSOR INDENTURE TRUSTEE.
In the event that the Indenture Trustee gives notice of its resignation
pursuant to Section 8.02 of the Trust Indenture, the Owner Trustee shall
promptly appoint a successor Indenture Trustee reasonably acceptable to the
Lessee and the Pass Through Trustee.
SECTION 10. MISCELLANEOUS.
Section 10.1 Consents. Each Participant covenants and agrees (subject, in
--------
the case of the Loan Participant, to all of the terms and provisions of the
Trust Indenture) that it shall not unreasonably withhold its consent to any
consent requested of the Owner Trustee or the Indenture Trustee, as the case may
be, under the terms of the Operative Agreements that by its terms is not to be
unreasonably withheld by the Owner Trustee or the Indenture Trustee.
Section 10.2 Refinancing. So long as no Lease Default or Lease Event of
-----------
Default shall be in existence (on the date of request or at any time through and
including the Refunding Date, as defined below), the Lessee shall have the right
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(d) of the Indenture as part of a refunding or refinancing
operation. As soon as practicable after receipt of such request, the Owner
Participant and the Lessee will enter into an agreement, in form and substance
reasonably satisfactory to the parties thereto, as to the terms of such
refunding or refinancing as follows:
(a) the Lessee, the Owner Participant, the Indenture Trustee, the Owner
Trustee, and any other appropriate parties will enter into a financing or loan
agreement (which may involve an underwriting agreement in connection with a
public offering), in form and substance reasonably satisfactory to the parties
thereto, providing for (i) the issuance and sale by the Owner Trustee or such
other party as may be appropriate on the date specified in such agreement (for
the purposes of this Section 10.2, the "Refunding Date") of debt securities in
an aggregate principal amount (in the lawful currency of the United States)
equal to the principal amount of the Equipment Notes outstanding on the
Refunding Date, having the same maturity date as said Equipment Notes and having
a weighted average life which is not less than or greater than 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 Lessee to the Person or Persons entitled thereto of all other amounts, in
respect of accrued interest, any Make-Whole Amount or other premium, if any,
payable on such Refunding Date;
(b) the Lessee and the Owner Trustee will amend the Lease in a manner
such that (i) if the Refunding Date is not a Rent Payment Date and the accrued
and unpaid interest on the Equipment Notes is not otherwise paid pursuant to
Section 10.2(a), the Lessee shall on the Refunding Date prepay that portion of
the next succeeding installment of Basic Rent as shall equal the aggregate
interest accrued on the Equipment Notes outstanding to the Refunding Date, (ii)
Basic Rent payable in respect of the period from and after the Refunding Date
shall be
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recalculated to preserve the Net Economic Return which the Owner Participant
would have realized had such refunding not occurred, provided that the net
--------
present value of Basic Rent shall be minimized to the extent consistent
therewith, and (iii) amounts payable in respect of Stipulated Loss Value, Early
Purchase Price, Basic Term Purchase Price and Termination Value from and after
the Refunding Date shall be appropriately recalculated to preserve the Net
Economic Return which the Owner Participant would have realized had such
refunding not occurred (it being agreed that any recalculations pursuant to
subclauses (ii) and (iii) of this clause (b) shall be performed in accordance
with the requirements of Section 2.6 hereof);
(c) the Owner Trustee will enter into an agreement to provide for the
securing thereunder of the debt securities issued by the Owner Trustee pursuant
to clause (a) of this Section 10.2 in like manner as the Equipment Notes and/or
will enter into such amendments and supplements to the Indenture as may be
necessary to effect such refunding or refinancing, which agreements, amendments
and/or supplements shall be reasonably satisfactory in form and substance to the
Owner Participant; provided that, no such agreement or amendment shall provide
--------
for any increase in the security for the new debt securities; and provided
--------
further that, notwithstanding the foregoing (but subject to the provisions of
- -------
clauses (a) and (b) 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 and of the parties hereto incurred in connection
with such refunding or refinancing (including all reasonable out-of-pocket legal
fees and expenses);
(f) the Lessee shall give the Indenture 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 of 1933, as
amended, and any other applicable law relating to the sale of securities and
(ii) such other opinions of counsel and such certificates and other documents,
each in form and substance satisfactory to them, as they may reasonably request
in connection with compliance with the terms and conditions of this Section
10.2; and
49
<PAGE>
(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 30 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 Vedder, Price,
Kaufman & Kammholz or other tax counsel reasonably acceptable to the Owner
Participant to the effect that the Owner Participant would have a reasonable
basis within the meaning of Section 6662(d)(2)(B)(ii) of the Code not to report
any adverse federal income tax consequences as a result of such refunding or
refinancing and (b) an agreement to indemnify the Owner Participant against any
adverse tax consequence suffered as a result of such refinancing or refunding;
alternatively, in the event such reasonable basis tax opinion cannot be provided
and the Lessee wishes to effect such refunding or refinancing, the Lessee will,
at such time as the Lessee receives written notice from the Owner Participant
that the Owner Participant has filed any income tax return wherein such adverse
income tax consequences are recognized, make an indemnity payment to the Owner
Participant in the incremental amount of such adverse tax consequence (on an
After-Tax Basis) attributable to such refunding or refinancing; (w) the Lessee
shall pay to or reimburse the Participants, the Owner Trustee and the Indenture
Trustee for all costs and expenses (including reasonable attorneys' and
accountants' fees) paid or incurred by them in connection with such refunding or
refinancing; (x) no refunding or refinancing of the Equipment Notes will be
permitted if it shall cause the Owner Participant to account for the transaction
contemplated hereby as other than a "leveraged lease" under the Financial
Accounting Standards Board ("FASB") Statement No. 13, as amended (including any
amendment effected by means of the adoption by FASB of a new statement in lieu
of FASB Statement No. 13); and (y) in no event, in connection with or after
giving effect to such refunding or refinancing shall the Owner Participant be
exposed to any unindemnified risk or liability (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.
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
50
<PAGE>
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:
GATX Rail Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: Treasurer
(GATX Rail Trust No. 2000-2)
Facsimile: (312) 621-6645
Confirmation No.: (312) 621-6200
If to the Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 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
51
<PAGE>
If to the Owner Participant:
with a copy to:
Watson, Farley & Williams
380 Madison Avenue
New York, NY 10017
Attention: Caryn Hemsworth
Facsimile: (212) 922-1512
Confirmation No.: (212) 922-2200
If to the Indenture Trustee:
Bank One, NA
1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Global Corporate Trust Services
(GATX Rail Trust No. 2000-2)
Facsimile: (312) 407-1708
Confirmation No.: (312) 407-8810
If to the Pass Through Trustee:
Bank One, NA
1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Global Corporate Trust Services
(GATX Rail Trust No. 2000-2)
Facsimile: (312) 407-1708
Confirmation No.: (312) 407-8810
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
52
<PAGE>
contemplated hereby on the Closing Date regardless of any investigation made by
any such party or on behalf of any such party.
Section 10.6 No Guarantee of Debt. Nothing contained herein or in the
--------------------
Lease, the Trust Indenture, the Trust Agreement, the Pass Through Trust
Agreement or the Tax Indemnity Agreement or in any certificate or other
statement delivered by the Lessee in connection with the transactions
contemplated hereby shall be deemed to be (i) a guarantee by the Lessee to the
Owner Trustee, the Owner Participant, the Indenture Trustee or the Loan
Participant that the Equipment will have any residual value or useful life, or
(ii) a guarantee by the Indenture Trustee or the Lessee of payment of the
principal of, premium, if any, or interest on the Equipment Notes.
Section 10.7 Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and assigns as permitted by and in
accordance with the terms hereof, including each successive holder of the
Beneficial Interest permitted under Section 6.1 hereof and each successive
holder of any Equipment Note 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.
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 New York
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.
53
<PAGE>
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 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
Trust Company shall not be liable in its individual capacity for any breach
thereof, except for its gross negligence or willful misconduct, or for breach of
its covenants, representations and warranties contained herein, except to the
extent covenanted or made in its individual capacity; provided, however, that
-------- -------
nothing in this Section 10.13(b) shall be construed to limit in scope or
substance those representations and warranties of the Trust Company made
expressly in its individual capacity set forth herein. The term "Owner Trustee"
as used in this Agreement shall include any successor trustee under the Trust
Agreement, or the Owner Participant if the trust created thereby is revoked.
Section 10.14 Maintenance of Non-Recourse Debt. The parties hereto agree
--------------------------------
that if the Owner Trustee becomes a debtor subject to the reorganization
provisions of the Bankruptcy Code, 11 U.S.C. (S)101 et seq. (the "Bankruptcy
Code") or any successor provision, the parties hereto will make an election
under 1111(b)(1)(A)(i) of the Bankruptcy Code. If (a) the Owner Trustee becomes
a debtor subject to the reorganization provisions of the Bankruptcy Code or any
successor provision, (b) pursuant to such reorganization provisions the Owner
Trustee is required, by reason of the Owner Trustee being held to have recourse
liability to the Pass Through Trustee or the Indenture Trustee, directly or
indirectly, to make payment on account of any amount payable under the Equipment
Notes or any of the other Operative Agreements and (c) the Pass Through Trustee
and/or the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee on account of (b)
above, then the Pass Through Trustee and/or the Indenture Trustee, as the case
may be, shall promptly refund to the Owner Trustee such Excess Amount. For
purposes of this Section 10.14 "Excess Amount" means the amount by which such
payment exceeds the amount which would have been received by the Pass Through
Trustee or the Indenture Trustee if the Owner Trustee had not become subject to
the recourse liability referred to in (b) above.
54
<PAGE>
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.
Section 10.16 Deferred Payment for Early Purchase Option. If Lessee
------------------------------------------
elects to exercise an early purchase option pursuant to Section 22.1(b) of the
Lease with respect to Units in a Basic Group, Lessee may, at its option, either
(x) pay the entire Early Purchase Price applicable to such Units on the
applicable Early Purchase Date, as provided in Section 22.1(b) of the Lease and
Schedule 6A of this Participation Agreement or (y) pay a portion of such Early
Purchase Price on the applicable Early Purchase Date and the balance in
installments thereafter, on the applicable dates and in the applicable amounts
for such Basic Group as indicated on Schedule 6B; provided that Lessee may not
elect the option set forth in this clause (y) herein unless the principal amount
of the related Equipment Note applicable to such Units together with accrued
interest thereon and any applicable Make-Whole Amount shall have been paid in
respect of such Units pursuant to Section 2.10(c) of the Indenture and all other
sums due and owing to Indenture Trustee and Loan Participants under the
Operative Agreements shall have been paid in full on or prior to the Early
Purchase Date. Notwithstanding anything in this Agreement to the contrary, the
Lessee shall not be permitted to exercise any of its rights under Section 9 of
this Agreement with respect to any Units as to which the Lessee has exercised
its option set forth in clause (y) of the first paragraph of this Section 10.16.
Lessee shall elect its payment option in the applicable notice given
pursuant to Section 22.1(b) of the Lease. If Lessee elects the option specified
in clause (y) of the first paragraph of this Section 10.16, then on the date the
initial installment is paid,
(i) the Lease shall be deemed terminated as to such Units and the
Owner Trustee and the Lessee shall enter into a loan and security agreement
in respect of the deferred Early Purchase Price in form and substance
reasonably satisfactory to the Owner Trustee and which incorporates therein
events of default substantially similar to those set forth in the Lease and
covenants and terms substantially similar to those set forth in the Lease,
and the Lessee shall deliver a legal opinion in form and substance
reasonably satisfactory to the Owner Trustee as to the creation and
perfection of the Owner Trustee's security interest in such Units,
(ii) Basic Rent in respect of such Units shall cease to accrue,
(iii) the Owner Trustee will convey all of its right, title and
interest in and to such Units to Lessee by delivery of a bill of sale
without recourse or warranty except as to the absence of Lessor's Liens,
subject, however, to the security interest of the Owner Trustee then being
retained under the agreement referred to in clause (y) above, and
(iv) the Lessee shall execute such documents and take all such actions
as Owner Trustee may reasonably request to perfect such security interest.
Upon payment by Lessee of the last such installment, the Owner Trustee shall
execute and deliver to Lessee a release of the security interest so retained.
All reasonable costs and expenses of the Owner Trustee and the Owner Participant
incurred in connection with the Lessee's election under this Section 10.16,
including, without limitation, the costs and expenses of all filings necessary
and appropriate to perfect the security interest of the Owner Trustee intended
to be established pursuant to this Section 10.16, shall be paid by the Lessee.
* * *
55
<PAGE>
In Witness Whereof, the parties hereto have caused this Participation
Agreement to be executed and delivered, all as of the date first above written.
Lessee:
GATX RAIL CORPORATION
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Owner Trustee:
WILMINGTON TRUST COMPANY, not in its individual
capacity except as expressly provided herein but
solely as Owner Trustee
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Owner Participant:
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
56
<PAGE>
Indenture Trustee:
BANK ONE, NA, not in its individual capacity
except as expressly provided herein but solely as
Indenture Trustee
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Pass Through Trustee:
BANK ONE, NA, not in its individual capacity
except as expressly provided herein but solely as
Pass Through Trustee
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
57
<PAGE>
EXHIBIT A-1
Certificate of Insurance Broker Confirming Insurance Coverage
(Primary Liability)
A-1
<PAGE>
EXHIBIT A
to Certificate of Insurance Broker
AA-1
<PAGE>
EXHIBIT A-2
Certificate of Insurance Broker Confirming Insurance Coverage
(Excess Liability)
A-2
<PAGE>
EXHIBIT A
to Certificate of Insurance Broker
AA-2
<PAGE>
EXHIBIT B
Insurance Requirements
B-1
<PAGE>
Schedule 1
Participation Agreement
Description of Equipment, Designation of Basic Groups,
and Equipment Cost
<PAGE>
Schedule 2
Participation Agreement
Commitment Percentage and Payment Information for Participants
<PAGE>
Schedule 3A
Participation Agreement
Schedule of Basic Rent Payments
Basic Group [I/II/III/IV]
<PAGE>
Schedule 3B
Participation Agreement
Schedule of Allocation
of Basic Rent Payments
Basic Group [I/II/III/IV]
<PAGE>
Schedule 4
Participation Agreement
Schedule of Stipulated Loss Value and Termination Value
<PAGE>
Schedule 5
Participation Agreement
Terms of Equipment Notes
<PAGE>
Schedule 6A
Participation Agreement
Early Purchase Information
<PAGE>
Schedule 6B
Participation Agreement
Deferred Early Purchase Information
<PAGE>
Schedule 7
Participation Agreement
Basic Term Purchase Information
<PAGE>
Schedule 8
Participation Agreement
Cumulative Rent Payable and Allocated
<PAGE>
Appendix A
Participation Agreement
Equipment Lease Agreement
Trust Indenture and Security Agreement
Trust Agreement
(GATX Rail Trust No. 2000-2)
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 Association of American Railroads or any successor
---
thereto.
"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; provided however that under no circumstances will
-------- -------
the Trust Company be deemed to be an Affiliate of either the Owner Trustee or
the Owner Participant, nor will either the Owner Participant or the Owner
Trustee be deemed an Affiliate of the Trust Company.
"After-Tax Basis" shall mean, with respect to any payment received or
---------------
accrued by any Person, that the amount of such payment is supplemented by a
further payment or payments so
<PAGE>
that the sum of all such payments, after reduction for all Taxes payable by such
Person imposed by any taxing authority, shall be equal to the payment due to
such Person.
"Alternative Minimum Tax" shall mean the alternative minimum tax imposed
-----------------------
under Section 55 of the Code.
"Appraisal" shall have the meaning specified in Section 4.3(a) of the
---------
Participation Agreement.
"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 Life of such Equipment Note.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act of
---------------
1978, as amended from time to time, 11 U.S.C. (S)101 et. seq.
--- ----
"Basic Group" shall mean each of the four basic groups of Equipment
-----------
designated in Schedule 1 to the Participation Agreement.
----------
"Basic Prospectus" shall mean the prospectus contained in the Registration
----------------
Statement when the most recent post-effective amendment thereto became
effective.
"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 April 13, 2000.
----------------------------
"Basic Term Expiration Date" shall mean July 13, 2021.
--------------------------
"Basic Term Purchase Price" shall mean, with respect to any Unit, the
-------------------------
amount equal to the product of the percentage set forth in Schedule 7 to the
----------
Participation Agreement applicable to such Unit 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 of sale, dated the Closing
------------
Date or the date that any Replacement Unit is subjected to the Lease, from
Lessee to Owner Trustee covering the Units delivered on the 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, Birmingham, Alabama, the city and state in which the principal
corporate trust office of the Owner Trustee is located, or, until the Lien of
2
<PAGE>
the Indenture has been discharged, the city and state in which the principal
corporate trust office of the Indenture Trustee is located.
"Certificateholder" shall mean the Person in whose name a Pass Through
-----------------
Certificate is registered in the register for Pass Through Certificates of a
particular series.
"Claims" shall have the meaning specified in Section 7.2 of the
------
Participation Agreement.
"Closing Date" shall have the meaning specified in Section 2.1 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 Rate" shall mean a rate equal to the interest per annum borne by the
---------
Equipment Notes (computed on the basis of a 360-day year of twelve 30-day
months).
"Deferred Adjustment Amount" with respect to any Unit shall mean, as of the
--------------------------
relevant determination date, an amount determined by multiplying the Equipment
Cost for such Unit by the percentage set forth in the column labeled "Deferred
Balance" in Schedule 8 to the Participation Agreement for the Basic Group to
which such Unit belongs. (Such Deferred Adjustment Amount with respect to any
Unit has been calculated as of the relevant determination date as an amount
equal to (x) the cumulative Basic Rent allocated pursuant to the Lease minus (y)
-----
the cumulative Basic Rent payable pursuant to the Lease.)
"Determination Date" shall mean the 13th day of any calendar month.
------------------
"Early Purchase Date" shall mean the early purchase date specified on
-------------------
Schedule 6 to the Participation Agreement for a related Basic Group of Units.
- ----------
"Early Purchase Price" shall mean, with respect to any Unit, the amount
--------------------
equal to the product of the percentage set forth in Schedule 6 to the
----------
Participation Agreement for the Basic Group to which such Unit belongs and the
Equipment Cost for such Unit, which amount shall, in addition to the amounts
payable pursuant to Section 22.1(b) of the Lease and after giving effect to any
adjustment of the amount payable thereunder by Lessee on account of any Prepaid
Adjustment Amount, be sufficient to pay the unpaid principal of, Make-Whole
Amount, if any, and all unpaid interest on the Equipment Note to the extent
related to such Unit, accrued to the date on which the Early Purchase Price is
paid in accordance with the terms of the Lease; provided, however, the "Early
-------- -------
Purchase Price" shall be adjusted by the Adjustment Amount to take into account
prepaid/deferred rent actually paid by the Lessee.
"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 1 to the Participation
----------
Agreement with respect to such Unit. Notwithstanding anything in the Operative
Agreements to the contrary, the Equipment Cost for any Replacement Unit shall be
deemed to be the Equipment Cost or deemed Equipment Cost of the Unit it
replaced.
3
<PAGE>
"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, maturities and bearing interest at
the rates and payable as provided in Section 2.02 of the Indenture and secured
as provided in the Granting Clause of the Indenture, and shall include any
Equipment Notes issued in exchange therefor or replacement thereof pursuant to
Section 2.07 or 2.08 of the Indenture. A "related" Equipment Note, when used
-------
with respect to any Unit or Units of Equipment, shall mean one of the Equipment
Notes issued with respect to the Lease Supplement under which such Unit or Units
of Equipment is or are leased.
"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) to which the Owner
Participant, the Owner Trustee, the Trust Company, or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents is entitled pursuant to the Operative Agreements, (ii) any right, title
or interest of the Owner Trustee, the Trust Company, 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, the Trust Company, or to the Owner Participant, as the case may
be, (iii) any insurance proceeds payable under insurance maintained by the Owner
Trustee, as trustee or in its individual capacity, or the Owner Participant
pursuant to Section 12.5 of the Lease, (iv) any insurance proceeds payable to or
on behalf of the Owner Trustee, as trustee or in its individual capacity, or to
the Owner Participant, under any public liability insurance maintained by Lessee
pursuant to Section 12 of the Lease (which shall include the amount of any self-
insured retention paid by the Lessee) 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 Trust Company, or Owner Participant pursuant to the
Participation Agreement or the Trust Agreement, (vi) all right, title and
interest of Owner Participant or Owner Trustee, the Trust Company, in or
relating to any portion of the Units and any other property (tangible or
intangible), rights, titles or interests to the extent any of the foregoing has
been released from the Lien of the Indenture pursuant to the terms thereof,
(vii) upon termination of the Indenture pursuant to the terms thereof with
respect to any Unit, all remaining amounts which shall have been paid or are
payable by Lessee and calculated on the basis of Stipulated Loss Value, (viii)
any rights of the Owner Participant or the Owner Trustee, the Trust Company, to
demand, collect, sue for, or otherwise receive and enforce payment of the
foregoing amounts, (ix) any amount payable to the Owner Participant by any
Transferee as the purchase price of the Owner Participant's interest in the
Trust Estate in compliance with the terms of the Participation Agreement and the
Trust Agreement and (x) the respective rights of the Owner Trustee, the Trust
Company, or the Owner Participant to the proceeds of and interest on the
foregoing.
"Excess Amount" shall have the meaning specified in Section 10.14 of the
-------------
Participation Agreement.
4
<PAGE>
"Fair Market Renewal Term" shall have the meaning specified in Section 22.4
------------------------
of the Lease.
"Fair Market Rental Value" or "Fair Market Sales Value" with respect to any
------------------------ -----------------------
Unit of Equipment shall mean the cash rent or cash price obtainable for such
Unit in an arm's length lease or sale between an informed and willing lessee or
purchaser under no compulsion to lease or purchase, as the case may be, and an
informed and willing lessor or seller, under no compulsion to lease or sell, as
the case may be, as the same shall be specified by agreement between Lessor and
Lessee. If the parties are unable to agree upon a Fair Market Rental Value
and/or a Fair Market Sales Value within 30 days after delivery of notice by
Lessee pursuant to Section 22.2 of the Lease, or otherwise where such
determination is required, within a reasonable period of time, such value shall
be determined by appraisal. Lessee will within 15 days after such 30-day period
provide Lessor the name of an appraiser that would be satisfactory to Lessee,
and Lessor and Lessee will consult with the intent of selecting a mutually
acceptable appraiser. If a mutually acceptable appraiser is selected, the Fair
Market Rental Value or the Fair Market Sales Value, as the case may be, shall be
determined by such appraiser and Lessee shall bear the cost thereof. If Lessee
and Lessor are unable to agree upon a single appraiser within such 15-day
period, two independent qualified appraisers, one chosen by Lessee and one
chosen by Lessor shall jointly determine such value and, except as provided in
the penultimate sentence of this paragraph, 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 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 pursuant to Section 6.1(e) of the Lease or 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.
"Final Prospectus" shall mean the prospectus supplement relating to the
----------------
Pass Through Certificates that was first filed pursuant to Rule 424(b)
promulgated pursuant to the Securities Act of 1933, as amended, together with
the Basic Prospectus.
"Fixed Rate Renewal Term" shall have the meaning specified in Section
-----------------------
22.4(a) of the Lease.
"Fixed Rent" shall have the meaning specified in Section 22.4(a) of the
----------
Lease.
"FRA" shall mean the Federal Railroad Administration or any successor
---
thereto.
"Guarantor" shall mean any provider of a Guaranty.
---------
5
<PAGE>
"Guaranty" shall mean any guaranty delivered in connection with Section
--------
6.1(a)(ii) of the Participation Agreement and Section 10.8 of the Trust
Agreement.
"Hazardous Substances" shall mean any hazardous or toxic substances,
--------------------
materials or wastes, including, but not limited to, those substances, materials,
and wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR part 302) and amendments thereto, or such
substances, materials and wastes which are or become regulated under any
applicable local, state or federal law or the equivalent under applicable
foreign laws including, without limitation, any materials, waste or substance
which is (a) petroleum, (b) asbestos, (c) polychlorinated biphenyls, (d) defined
as a "hazardous material," "hazardous substance" or "hazardous waste" under
applicable local, state or federal law or the equivalent under applicable
foreign laws, (e) designated as a "hazardous substance" pursuant to Section 311
of the Clean Water Act, (f) defined as "hazardous waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act, or (g) defined as "hazardous
substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act.
"Income Tax" shall have the meaning specified in Section 7.1(l) of the
----------
Participation Agreement.
"Indemnified Person" shall have the meaning specified in Section 7.2(b) of
------------------
the Participation Agreement.
"Indenture" or "Trust Indenture" shall mean the Trust Indenture and
--------- ---------------
Security Agreement (GATX Rail Trust No. 2000-2), dated as of April 3, 2000
between the Owner Trustee, in the capacities described therein, and the
Indenture Trustee. The term "Indenture" shall include, except where the context
---------
otherwise requires, 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 (GATX Rail Trust
--------------------
No. 2000-2) dated the Closing Date or the date that any Replacement Unit is
subjected to the lien and security interest of the Indenture, substantially in
the form of Exhibit A to the Indenture, between the Owner Trustee, in the
---------
capacities described therein, and the Indenture Trustee, covering the Units
delivered on the Closing Date or such Replacement Unit, as the case may be. A
"related"
-------
6
<PAGE>
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 Bank One, NA, a national banking
-----------------
association, 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.
"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.
"Investment Banker" shall mean an independent investment banking
-----------------
institution of national standing appointed by Lessee or, if the Indenture
Trustee does not receive notice of such appointment at least ten days prior to a
scheduled prepayment date or if a Lease Event of Default under the applicable
Lease shall have occurred and be continuing, appointed by the Indenture Trustee.
"Late Rate" shall mean 10.10 percent per annum.
---------
"Lease" or "Lease Agreement" or "Equipment Lease" shall mean the Equipment
----- --------------- ---------------
Lease Agreement (GATX Rail Trust 2000-2), relating to the Equipment, dated as of
April 3, 2000, between the Owner Trustee, as Lessor, and the Lessee. The terms
"Lease" shall, except where the context otherwise requires, 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 (GATX Rail Trust 2000-2),
----------------
dated the Closing Date 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 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 Basic Term
----------
applicable to such Unit and any Renewal Term applicable to such Unit then in
effect.
"Lessee" shall mean GATX Rail Corporation, a New York corporation, and its
------
successors and permitted assigns.
7
<PAGE>
"Lessee Agreements" shall mean the Operative Agreements to which Lessee is
-----------------
or will be a party.
"Lessor" shall mean the Owner Trustee.
------
"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, the Trust Company or the Owner Participant, not related to the
transactions contemplated by the Operative Agreements, or (ii) acts or omissions
of the Lessor, the Trust Company 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, the Trust Company or the
Owner Participant or the Trust Estate which are not indemnified against by the
Lessee pursuant to the Participation Agreement or under the Tax Indemnity
Agreement.
"Lien" shall mean any mortgage, pledge, security interest, lien,
----
encumbrance, lease, disposition of title or other charge of any kind on
property.
"Limited Use Property" shall have the meaning set forth in Revenue
--------------------
Procedure 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 Amounts" shall mean, with respect to the principal amount of
------------------
any Equipment Note to be prepaid on any prepayment date, the amount which the
Investment Banker determines as of the third Business Day prior to such
prepayment date to equal the product obtained by multiplying (a) the excess, if
any, of (i) the sum of the present values of all the remaining scheduled
payments of principal and interest from the prepayment date to maturity of such
Equipment Note, discounted semi-annually on each January 13 and July 13 at a
rate equal to the Treasury Rate plus 20 basis points, 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 Notes; 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.
8
<PAGE>
"Material Default" shall mean a Lease Default pursuant to Sections 14(a),
----------------
14(b), 14(g) or 14(h) of the Lease.
"Modification" shall have the meaning specified in Section 9.2 of the
------------
Lease.
"Net Economic Return" shall mean the pattern of earnings within a 10%
-------------------
variance during any calendar year, net after-tax book yield and total after-tax
cash flow expected by the original Owner Participant with respect to the
Equipment (both through the Early Purchase Date and the Basic Term Expiration
Date), utilizing the multiple investment sinking fund method of analysis and the
same assumption as used by such Owner Participant in making the computations of
Basic Rent, Stipulated Loss Value, Termination Value, Basic Term Purchase Price
and Early Purchase Price initially set forth in Schedules 3, 4, 6 and 7 to the
Participation Agreement.
"Non-Severable Modification" shall mean any Modification that is not
--------------------------
readily removable without impairing the value, utility or remaining useful life
of the Equipment or any Unit immediate prior to removal of such modification,
other than in a de minimis nature.
-- -------
"Non-U.S. Person" means a Person that is not a "United States person"
---------------
within the meaning of Section 7701(a)(30) of the Code.
"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, (iii) in the case of a limited liability company, any Member, Manager
or other individual authorized to execute such document on behalf of the
company, and (iv) in the case of a commercial bank or trust company, the
Chairman or Vice Chairman of the Executive Committee or the Treasurer, any Trust
Officer, any Vice President, any Executive or Senior or Second or Assistant Vice
President, or any other officer or assistant officer customarily performing the
functions similar to those performed by the persons who at the time shall be
such officers, or to whom any corporate trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"Operative Agreements" shall mean the Participation Agreement, the Bill of
--------------------
Sale, the Trust Agreement, the Guaranty, if any, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, the Pass Through Certificate, the
Equipment Notes, the Lease, the Lease Supplements, the Indenture, the Indenture
Supplements, the Tax Indemnity Agreement and the Underwriting Agreement.
"Outside Fixed Renewal Date" shall have the meaning specified in Section
--------------------------
22.4(a) of the Lease.
"Owner Participant" shall mean , a
-----------------
national banking association, 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.
9
<PAGE>
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
-------------
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement and its successors thereunder.
"Owner Trustee Agreements" shall mean the Operative Agreements to which the
------------------------
Owner Trustee, either in its individual or fiduciary capacity, is or will be a
party.
"Parent" means GATX Corporation, a New York corporation, and its successors
------
and assigns.
"Participants" shall mean the Loan Participant and the Owner Participant.
------------
"Participation Agreement" shall mean the Participation Agreement (GATX Rail
-----------------------
Trust 2000-2) dated as of April 3, 2000, among the Lessee, the Pass Through
Trustee, the Owner Participant, the Owner Trustee and the Indenture Trustee.
"Pass Through Certificate" shall mean the Pass Through Certificate issued
------------------------
pursuant to the Pass Through Trust Supplement and the Pass Through Trust
Agreement.
"Pass Through Trust Agreement" shall mean the Pass Through Trust Agreement,
----------------------------
dated as of August 1, 1992, between the Lessee and the Pass Through Trustee.
"Pass Through Trust Supplement" shall mean Trust Supplement No. 8 dated
-----------------------------
April 13, 2000 between the Lessee and the Pass Through Trustee which supplements
the Pass Through Trust Agreement (i) by creating a separate trust for the
holders of certain Pass Through Certificates, (ii) by authorizing the issuance
of such Pass Through Certificates and (iii) by establishing the terms of such
Pass Through Certificates.
"Pass Through Trustee" shall mean Bank One, NA, a national banking
--------------------
association, in its capacity as trustee under the Pass Through Trust Agreement,
as supplemented by the Pass Through Trust Supplements, and each other person
which may from time to time be acting as successor trustee under the Pass
Through Trust Agreement, as supplemented by the Pass Through Trust Supplement.
"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
10
<PAGE>
and payable or the amount or validity of which is being contested in good faith
by appropriate proceedings so long as there exists no material risk of sale,
forfeiture, loss, or loss of or interference with use or possession of any Unit
or interference with the payment of Rent; (v) the Lien and security interest
granted to the Indenture Trustee under and pursuant to the Indenture, and the
respective rights of the Loan Participant, the Indenture Trustee, the Owner
Participant and the Owner 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
of 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.
"Permitted Subleases" shall have the meaning specified in Section 8.3 of
-------------------
the Lease.
"Person" shall mean an individual, partnership, limited liability company,
------
corporation, trust, association or unincorporated organization, and a government
or agency or political subdivision thereof.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
----------------------------
supplement to the Basic Prospectus which describes the Pass Through Certificates
and the offering thereof and is used prior to the filing of the Final
Prospectus, together with the Basic Prospectus.
"Prepaid Adjustment Amount" with respect to any Unit shall mean, as of the
--------------------------
relevant determination date, an amount determined by multiplying the Equipment
Cost for such Unit by the percentage set forth in the column labeled "Prepaid
Balance" in Schedule 8 to the Participation Agreement for the Basic Group to
which such Unit belongs. (Such Prepaid Adjustment Amount with respect to any
Unit has been calculated as of the relevant determination date as an amount
equal to (x) the cumulative Basic Rent payable pursuant to the Lease minus (y)
-----
the cumulative Basic Rent allocated pursuant to the Lease.)
"Pricing Date" shall mean the date on which the Underwriting Agreement is
------------
executed by the Lessee and the Underwriters.
"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 33-64697), including incorporated documents, exhibits and
financial statements, as amended at the time of the Closing Date, including any
post-effective amendment thereto which has become effective prior to the Closing
Date.
"Related Indemnitee Group" shall have the meaning specified in Section
------------------------
7.2(b) of the Participation Agreement.
"Related Transaction" means the additional leveraged lease transaction with
-------------------
respect to which the Pass Through Trustee has agreed to acquire the equipment
notes to be issued pursuant to the participation agreement dated as of April 3,
2000 among the Lessee, the Pass Through Trustee, the
Owner Trustee and the Indenture Trustee.
"Remaining Weighted Average Life" shall mean, with respect to any date of
-------------------------------
prepayments or any date of determination of any Equipment Note, the number of
days equal to the quotient
11
<PAGE>
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 Notes.
"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 13 and July
----------------- ------------
13 of each year occurring during the Lease Term, commencing July 13, 2000,
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 tank car, as the case
----------------
may be, which shall have been leased under the Lease pursuant to Section 11.4 of
the Lease.
"Required Modification" shall have the meaning specified in Section 9.1 of
---------------------
the Lease.
"Responsible Officer" shall mean, with respect to the subject matter of any
-------------------
covenant, agreement or obligation of any party contained in any Operative
Agreement, the President, or any Vice President, Assistant Vice President,
Treasurer, Assistant Treasurer or other officer, who in the normal performance
of his operational responsibility would have knowledge of such matters and the
requirements with respect thereto.
"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.
"Series" shall mean each of the four series of Equipment Notes issued under
------
the Indenture, one with respect to each Lease Supplement executed and delivered
in respect of the Units delivered on the Closing Date.
"Severable Modification" shall mean any Modification that is readily
----------------------
removable without causing material damage to the Equipment or any Unit and
without diminishing the value, utility or useful life of such Unit below the
value, utility or useful life of such Unit immediately prior to such
Modification, assuming that such Unit was then in the condition required to be
maintained by the terms of the Lease, other than in a de minimis nature.
-- -------
"Special Purchase Date" shall mean July 13, 2010.
---------------------
"Special Purchase Defeasance" shall mean, with respect to any election by
---------------------------
Lessee to purchase Units under Section 22.1 or 22.3 of the Lease, the deposit by
Lessee with the Indenture
12
<PAGE>
Trustee prior to the date as of which Lessor shall have declared the Lease to be
in default as a result of a Lease Event of Default under Section 14(c), 14(d),
14(e), 14(f) or 14(i) of the Lease (in circumstances where such Lease Event of
Default occurs after the date of Lessee's notice to purchase under Sections 22.1
or 22.3 of the Lease but, before the Special Purchase Date or the Early Purchase
Date or the expiration of the Basic Term or any Renewal Term, as applicable), of
an amount sufficient to pay (i) the Special Purchase Price, together with all
other amounts due and owing by the Lessee under the Operative Agreements, with
respect to those Units which Lessee has elected to purchase on the Special
Purchase Date under Section 22.1(a) of the Lease, (ii) the Early Purchase Price,
together with all other amounts due and owing by the Lessee under the Operative
Agreements, with respect to those Units which Lessee has elected to purchase on
the Early Purchase Date under Section 22.1(b) of the Lease, or (iii) the Basic
Term Purchase Price or Fair Market Sales Value, as the case may be, together
with all other amounts due and owing by the Lessee under the Operative
Agreements, with respect to those Units which Lessee has elected to purchase at
the expiration of the Basic Term or any Renewal Term, as applicable, under
Section 22.3 of the Lease. All amounts deposited by Lessee with the Indenture
Trustee in connection with a Special Purchase Defeasance shall be held and
invested by the Indenture Trustee in accordance with Section 6.04(b) of the
Indenture pending consummation of the purchase of the related Units on the Early
Purchase Date or upon the expiration of the Basic Term or the Renewal Term, as
applicable.
"Special Purchase Price" shall have the meaning specified in Section
----------------------
22.1(a) of the Lease.
"Specified Investments" shall mean (i) direct obligations of the United
---------------------
States of America and agencies thereof for which the full faith and credit of
the United States is pledged, (ii) obligations fully guaranteed by the United
States of America, (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $500,000,000 (including the Indenture
Trustee or Owner Trustee if such conditions are met), and (iv) repurchase
agreements with any financial institution having a combined capital and surplus
of at least $750,000,000 fully collateralized by obligations of the type
described in clauses (i) and (iii) above; provided that if all of the above
--------
investments are unavailable, the entire amount to be invested may be used to
purchase Federal funds from an entity described in (iii) above; and provided
--------
further that no investment shall be eligible as a "Specified Investment" unless
- -------
the final maturity or date of return of such investment is 91 days or less from
the date of purchase thereof.
"STB" shall mean the Surface Transportation Board of the United States
---
Department of Transportation or any successor thereto.
"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 the column entitled "Net Amount" in Schedule 4 to
----------
the Participation Agreement opposite the Rent Payment Date or the Determination
Date, as applicable, on which such Stipulated Loss Value is being determined for
the Basic Group to which such Unit belongs; 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
13
<PAGE>
notwithstanding, Stipulated Loss Value for such Unit (both before and after any
adjustment pursuant to Section 2.6 of the Participation Agreement), 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)(i) of
--------------
the Lease.
"Subsidiary" of any Person shall mean any corporation, association, or
----------
other business entity of which more than 50% (by number of votes) of the voting
stock at the time outstanding shall at the time be owned, directly or
indirectly, by such Person or by any other corporation, association or trust
which is itself a Subsidiary within the meaning of this definition, or
collectively by such Person and any one or more such Subsidiaries.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
-----------------
(other than Basic Rent) which the Lessee is obligated 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.
"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 as
-----------------------
of April 3, 2000 (GATX Rail Trust No. 2000-2) between the Lessee and the Owner
Participant.
"Taxes" shall have the meaning specified in Section 7.1(b) of the
-----
Participation Agreement.
"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 the column entitled "Net Amount" in Schedule 4 to the
----------
Participation Agreement opposite the Rent Payment Date or the Determination
Date, as applicable, on which such Termination Value is being determined for the
Basic Group to which such Unit belongs; 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) 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
14
<PAGE>
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 due to the holders of the Equipment Notes.
"Total Equipment Cost" shall mean the sum of the Equipment Costs 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 semiannual equivalent and as a decimal
and, in the case of United States Treasury bills, converted to a bond equivalent
yield), determined to be the per annum rate equal to the semiannual yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Equipment Note, as determined by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
securities, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) (or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported in the most recent H.15(519), as
published in H.15(510)). H.15(519) means "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System. The most recent H.15(519) means the
latest H.15(519) which is published prior to the close of business on the third
Business Day preceding the scheduled prepayment date.
"Trust Agreement" shall mean that certain Trust Agreement (GATX Rail Trust
---------------
No. 2000-2), dated as of April 3, 2000, between the Owner Participant and the
Owner Trustee.
"Trust Company" shall mean Wilmington Trust Company, in its individual
-------------
capacity and its successors and permitted assigns.
"Trust Estate" shall have the meaning set forth in Section 2.2 of the Trust
------------
Agreement.
"Trustee" shall mean each of the Owner Trustee, the Indenture Trustee or
-------
the Pass Through Trustee and "Trustees" shall mean the Owner Trustee, Indenture
--------
Trustee and the Pass Through Trustee, collectively.
"Underwriters" shall mean Morgan Stanley & Co. Incorporated and Credit
------------
Suisse First Boston Corporation.
"Underwriting Agreement" shall mean that certain Underwriting Agreement
----------------------
between the Lessee and the Underwriters, pertaining to the sale of the Pass
Through Certificates.
"Unit" shall mean each unit or item of Equipment.
----
15
<PAGE>
Exhibit 4.10
----------------------------------------------
EQUIPMENT LEASE AGREEMENT
(GATX Rail Trust No. 2000-1)
Dated as of April 3, 2000
Between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly provided herein but
solely as Owner Trustee,
Lessor
And
GATX RAIL CORPORATION,
Lessee
Assorted Railroad Tank Cars
And Covered Hopper Cars
----------------------------------------------
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS
LEASE, THE EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE HEREUNDER
HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF, BANK ONE, NA, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND SECURITY AGREEMENT (GATX RAIL
TRUST NO. 2000-1), DATED AS OF APRIL 3, 2000 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>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C> <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...................................................... 1
Section 3.3 Supplemental Rent............................................... 2
Section 3.4 Adjustment of Rent.............................................. 2
Section 3.5 [RESERVED]...................................................... 2
Section 3.6 Manner of Payments.............................................. 2
SECTION 4. Ownership and Marking of Equipment....................................... 3
Section 4.1 Retention of Title.............................................. 3
Section 4.2 Duty to Number and Mark Equipment............................... 3
Section 4.3 Prohibition Against Certain Designations........................ 4
SECTION 5. Disclaimer of Warranties................................................. 4
Section 5.1 Disclaimer of Warranties........................................ 4
SECTION 6. Return of Equipment; Storage............................................. 5
Section 6.1 Return; Holdover Rent........................................... 5
Section 6.2 Condition of Equipment.......................................... 7
SECTION 7. Liens.................................................................... 8
SECTION 8. Maintenance; Possession; Compliance with Laws............................ 8
Section 8.1 Maintenance and Operation....................................... 8
Section 8.2 Possession...................................................... 9
Section 8.3 Sublease........................................................10
SECTION 9. Modifications............................................................11
Section 9.1 Required Modifications..........................................11
Section 9.2 Optional Modifications..........................................11
Section 9.3 Removal of Property; Replacements...............................12
SECTION 10. Voluntary Termination...................................................12
Section 10.1 Right of Termination............................................12
Section 10.2 Sale of Equipment...............................................13
Section 10.3 Retention of Equipment by Lessor................................14
Section 10.4 Termination of Lease............................................14
SECTION 11. Loss, Destruction, Requisition, Etc.....................................14
Section 11.1 Event of Loss...................................................14
Section 11.2 Replacement or Payment upon Event of Loss.......................15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 11.3 Rent Termination..................................................16
Section 11.4 Disposition of Equipment; Replacement of Unit.....................17
Section 11.5 Eminent Domain....................................................18
SECTION 12. Insurance.................................................................18
Section 12.1 Insurance.........................................................18
Section 12.2 Physical Damage Insurance.........................................19
Section 12.3 Public Liability Insurance........................................20
Section 12.4 Certificate of Insurance..........................................21
Section 12.5 Additional Insurance..............................................21
SECTION 13. Reports; Inspection.......................................................22
Section 13.1 Duty of Lessee to Furnish.........................................22
Section 13.2 Lessor's Inspection Rights........................................22
SECTION 14. Lease Events of Default...................................................22
SECTION 15. Remedies..................................................................24
Section 15.1 Remedies..........................................................24
Section 15.2 Cumulative Remedies...............................................27
Section 15.3 No Waiver.........................................................27
Section 15.4 Notice of Lease Default...........................................27
Section 15.5 Lessee's Duty to Furnish Information with Respect to Subleases....27
Section 15.6 Lessee's Duty to Return Equipment Upon Default....................27
Section 15.7 Specific Performance; Lessor Appointed Lessee's Agent.............28
SECTION 16. Filings; Further Assurances...............................................29
Section 16.1 Filings...........................................................29
Section 16.2 Further Assurances................................................29
Section 16.3 Other Filings.....................................................29
Section 16.4 Expenses..........................................................29
SECTION 17. Lessor's Right to Perform.................................................29
SECTION 18. Assignment................................................................30
Section 18.1 Assignment by Lessor..............................................30
SECTION 19. Net Lease, etc............................................................31
SECTION 20. Notices...................................................................32
SECTION 21. Concerning the Indenture Trustee..........................................33
Section 21.1 Limitation of the Indenture Trustee's Liabilities.................33
Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease....33
SECTION 22. Purchase Options; Renewal Options.........................................33
Section 22.1 (a) Special Purchase Option.................................33
(b) Early Purchase Option...................................34
(c) Payment; Assumption of Equipment Notes..................35
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 22.2 Election to Retain or Return Equipment at End of Basic
or Renewal Term.....................................................36
Section 22.3 Purchase Options....................................................36
Section 22.4 Renewal Options.....................................................37
Section 22.5 Appraisal...........................................................38
Section 22.6 Stipulated Loss Value and Termination Value During Renewal Term.....38
SECTION 23. Limitation of Lessor's Liability...............................................39
SECTION 24. Investment of Security Funds...................................................39
SECTION 25. Miscellaneous..................................................................39
Section 25.1 Governing Law; Severability.........................................39
Section 25.2 Execution in Counterparts...........................................40
Section 25.3 Headings and Table of Contents; Section References..................40
Section 25.4 Successors and Assigns..............................................40
Section 25.5 True Lease..........................................................40
Section 25.6 Amendments and Waivers..............................................40
Section 25.7 Survival............................................................40
Section 25.8 Business Days.......................................................40
Section 25.9 Directly or Indirectly..............................................41
Section 25.10 Incorporation by Reference..........................................41
</TABLE>
Attachments to Equipment Lease:
Exhibit A - Form of Lease Supplement
Appendix A - Definitions
iii
<PAGE>
EQUIPMENT LEASE AGREEMENT
(GATX Rail Trust No. 2000-1)
This Equipment Lease Agreement (GATX Rail Trust No. 2000-1), dated as of
April 3, 2000 (the "Lease"), between Wilmington Trust Company, not in its
individual capacity except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement ("Lessor"), and GATX Rail Corporation, a New
York corporation ("Lessee").
In consideration of the mutual agreements herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
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 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 basic term of this Lease (the "Basic
Term") shall commence on the Basic Term Commencement Date and, subject to
earlier termination pursuant to Sections 10, 11, 15 and 22.1 shall expire at
11:59 p.m. (Chicago time) on the Basic Term Expiration Date. Subject and
pursuant to Section 22.4, Lessee may elect one or more Renewal Terms.
Section 3.2 Basic Rent. Lessee hereby agrees to pay Lessor as
Basic Rent for each Unit throughout the Basic Term applicable thereto Basic Rent
in consecutive semi-annual installments payable on each Rent Payment Date. Each
such semi-annual payment of Basic Rent shall be in an amount equal to the
product of the Equipment Cost for such Unit multiplied by the Basic Rent
percentage for such Unit set forth opposite such Rent Payment Date on Schedule
3A to the Participation Agreement (as such Schedule 3A shall be adjusted
pursuant to Section 2.6 of the Participation Agreement). Each such semi-annual
payment of Basic Rent shall be allocated in accordance with Schedule 3B to the
Participation Agreement, and the Lessee and the Lessor agree that such
allocation is intended to constitute an allocation of fixed rent to the periods
indicated on such Schedule 3B within the meaning of Treasury Regulation
(S)1.467-1(c)(2)(ii)(A). Basic Rent shall be payable in advance on certain Rent
Payment Dates and in arrears on certain Rent Payment Dates, as specified in
Schedule 3A to the Participation Agreement, as so adjusted, such Schedule 3A as
so adjusted from time to time being incorporated herein by reference.
<PAGE>
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, (i) 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, (ii) in the case of the termination of this Lease with
respect to any Unit pursuant to Section 10.2, 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, (iii) in the case of the purchase of any Unit pursuant to Section
22.1 or Section 6.9 of the Participation Agreement, on such date of purchase, an
amount equal to the Make-Whole Amount, if any, with respect to the principal
amount of each Equipment Note to be prepaid as a result of such purchase, (iv)
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 (v) in the case of any refinancing of the Equipment
Notes pursuant to Section 10.2 of the Participation Agreement, on the Refunding
Date, an amount equal to the Make-Whole Amount, if any, with respect to the
aggregate principal amount of the Equipment Notes being prepaid. All
Supplemental Rent to be paid pursuant to this Section 3.3 shall be payable in
the type of funds and in the manner set forth in Section 3.6.
Section 3.4 Adjustment of Rent. Lessee and Lessor agree that the
Basic Rent, Stipulated Loss Value and Termination Value percentages and the
Early Purchase Price and Basic Term Purchase Price shall be adjusted to the
extent provided in Section 2.6 of the Participation Agreement, subject in all
cases to the limitation set forth in the second paragraph of Section 3.2.
Section 3.5 [RESERVED]
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 North Market Street, Wilmington, DE 19890-0001, Attention: Corporate Trust
Administration. All Rent shall be paid by Lessee in funds consisting of lawful
2
<PAGE>
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 Bank
One, NA, 1 Bank One Plaza, Suite IL1-0126, Chicago, IL 60670-0126, ABA No.
071000013, Clearing Account 4811-5377, for credit to trust number 204884-000,
Attn: M. J. Frye, GATX Rail Trust No. 2000-1 or at such other location in the
United States of America as the Indenture Trustee may otherwise direct.
SECTION 4. Ownership and Marking of Equipment.
Section 4.1 Retention of Title. Lessor shall and hereby does
retain full legal title to and beneficial ownership of the Equipment
notwithstanding the delivery to and possession and use of the Equipment by
Lessee hereunder or any sublessee under any sublease permitted hereby.
Section 4.2 Duty to Number and Mark Equipment. With respect to the
Units to be delivered on the 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 a Replacement Unit pursuant to Section 11.4(b), 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, and will
from and after such date keep and maintain, plainly, distinctly, permanently and
conspicuously marked by a plate or stencil printed in contrasting colors upon
each side of each Unit, in letters not less than one inch in height, a legend
substantially as follows:
"OWNERSHIP SUBJECT TO A SECURITY AGREEMENT FILED WITH THE SURFACE
TRANSPORTATION BOARD"
with appropriate changes thereof and additions thereto as from time to time may
be required by law in order to protect Lessor's right, title and interest in and
to such Unit, its rights under this Lease and the rights of the Indenture
Trustee. Except as provided hereinabove, Lessee will not place any such Units
in operation or exercise any control or dominion over the same until the
required legend shall have been so marked on both sides thereof, and will
replace promptly any such word or words in such legend which may be removed,
defaced, obliterated or destroyed. 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.
3
<PAGE>
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 statement of
new reporting marks specified in 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.
Section 5.1 Disclaimer of Warranties. Without waiving any claim
Lessee may have against any seller, supplier or manufacturer, LESSEE
ACKNOWLEDGES AND AGREES THAT, (i) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT
EACH UNIT IS SUITABLE FOR ITS PURPOSES AND LESSEE HAS ACCEPTED EACH UNIT, (iii)
NEITHER LESSOR NOR OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY
OF SUCH KIND OR HAS INSPECTED THE UNITS PRIOR TO DELIVERY TO AND ACCEPTANCE BY
LESSEE, (iv) EACH UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED, AND (v) LESSOR
LEASES AND LESSEE TAKES EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN
WHATEVER CONDITION IT MAY BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS
LESSOR OR IN ITS INDIVIDUAL CAPACITY, NOR OWNER PARTICIPANT MAKES NOR SHALL BE
DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS,
WARRANTIES OR REPRESENTATIONS EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY THEREOF OR AS TO THE TITLE, OF THE EQUIPMENT, THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM
FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR
OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND EACH OF LESSOR
AND OWNER PARTICIPANT EXPRESSLY DISCLAIMS SELECTION OF THE UNITS, except that
Lessor, in its individual capacity, represents and warrants that on the Closing
Date, Lessor shall have received whatever title to the Equipment as was conveyed
to Lessor by Lessee 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. 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
4
<PAGE>
Default shall have occurred and be continuing, at Lessor's option, such power of
attorney shall terminate, and Lessor may assert and enforce, at Lessee's sole
cost and expense, such claims and rights. Lessor shall have no responsibility or
liability to Lessee or any other Person with respect to any of the following:
(i) any liability, loss or damage caused or alleged to be caused directly or
indirectly by any Unit, or by any of the commodities, items or materials from
time to time contained therein, whether or not permitted by the terms hereof, or
by any inadequacy thereof or deficiency or defect therein or by any other
circumstances in connection therewith; (ii) the use, operation or performance of
any Unit or any risks relating thereto; (iii) any interruption of service, loss
of business or anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement or replacement
of any Unit. Lessee's delivery of a Lease Supplement shall be conclusive
evidence as between Lessee and Lessor that all Units described therein are in
all the foregoing respects satisfactory to Lessee, and Lessee will not assert
any claim of any nature whatsoever against Lessor based on any of the foregoing
matters.
SECTION 6. Return of Equipment; Storage.
Section 6.1 Return; Holdover Rent. (a) Not less than 120 days
prior to the end of the Basic Term, the end of any Fixed Rate Renewal Term, or
the end of any Fair Market Renewal Term, in each case with respect to any Units
which Lessee has elected to return under Section 22.2, Lessee will provide
Lessor with a list of alternative storage locations used for the storage of
rolling stock within the continental United States (excluding Alaska) sufficient
to store the returned Units and the available storage capacities of such
locations. Not less than 90 days prior to the end of the Lease Term with
respect to any Unit which has not been purchased by Lessee, Lessor will give
Lessee irrevocable notice of its decision either to take possession of or store
such Unit. If Lessor shall have decided to take possession of such Unit, the
terms of Section 6.1(b) will apply. If Lessor shall have decided to store such
Unit, the terms of Section 6.1(c) hereof will apply.
(b) If Lessor shall have decided to take possession of such Unit,
Lessee will, at its sole risk 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 direct by written notice to Lessee on or before the 90th day before
the end of the Lease Term; provided, that (x) such Units shall be returned to no
more than five (5) interchange locations (each of which shall be located within
the continental United States, exclusive of Alaska), (y) there shall be no less
than 100 Units (or, if less than 100 Units are then subject to the Lease, all
Units), returned to each location, and (z) Lessor's notice shall specify the
total number and type of Units to be delivered to each location.
(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, for any particular
storage location, on the later of the expiration of the Lease Term and the date
on which 50% of the total number of Units being returned and stored at such
location have arrived thereat (the "Storage Period Commencement Date") and
ending not more than 45 days after the later of (A) the Storage Period
Commencement Date and (B) the date on which such Unit is in compliance with the
conditions
5
<PAGE>
set forth in Section 6.2, and for an additional 60 days thereafter at the sole
risk and expense of Lessor. On or before the 90th day before the end of the
Lease Term, Lessor shall provide Lessee with written notice designating no more
than five (5) choices from among the alternative storage locations provided by
Lessee pursuant to Section 6.1(a), with a minimum of 100 Units to be stored per
location. Any storage provided by Lessee during the Storage Period (except for
such additional 60-day period referred to above) shall be at the sole risk and
expense of Lessee, and Lessee shall maintain the insurance required by Section
12.1 with respect to all stored Units; provided, however, any movement of the
Units being stored in connection with Section 6 shall be at the risk and expense
of Lessor. During the Storage Period, Lessee will permit Lessor or any Persons
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 Lessee's normal business hours upon at least
three Business Days' prior written or telephonic notice; provided, however, that
such inspection and restenciling shall not interfere with the normal conduct of
Lessee's business; 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 the Equipment after the
Storage Period. If Lessee does store any Unit after the expiration of the
Storage Period, such storage shall be at the sole risk and expense of Lessor.
(ii) Upon the request and direction of Lessor (and at Lessor's
sole risk and expense), on not more than one occasion with respect to each
stored Unit and upon not less than 30 days' prior written notice from Lessor to
Lessee, Lessee will, on or before the expiration of the Storage Period,
transport such Units to any railroad interchange point or points within the
continental United States (except Alaska) (with a minimum of 100 Units (or, if
less than 100 Units are then subject to the Lease, all Units) per interchange
point and to a maximum of five (5) interchange points) 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.
(iii) Upon receipt of Lessor's written notice designating its
choices from among the alternative storage locations provided by Lessee under
Section 6.1(a), Lessee shall have the option to store such Units at such storage
track locations anywhere within the continental United States as it shall choose
(provided that there shall be no less than 100 Units (or, if less than 100 Units
are then subject to the Lease, all Units) stored at each such location). Upon
receipt of such notice, Lessee will promptly give notice to Lessor of the
locations at which Lessee will store such Units. If Lessee shall exercise such
option, (x) the Storage Period shall be extended an additional 30 days and (y)
Lessee shall on or before the expiration of the Storage Period transport such
Units to any railroad interchange point within the continental United States
(except Alaska) (with a minimum of 100 Units (or, if less than 100 Units are
then subject to the Lease, all Units) per interchange point and to a maximum of
five (5) interchange points) designated by Lessor upon not less than 30 days'
prior written notice. The movement of any Unit from such Unit's location as
designated by Lessee pursuant to this Section 6.1(c)(iii) to a location
thereafter designated by Lessor in accordance with the foregoing sentence will
be at the
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risk and expense of Lessor. During any Storage Period, Lessee shall store the
Equipment in such manner as Lessee normally stores similar units of railroad
equipment owned or leased by it.
(d) Upon the later of (i) expiration of the Lease Term with respect to
such Unit, (ii) tender of such Unit at the location determined in accordance
with Section 6.1(b) or, as applicable, the tender of such Unit for storage in
accordance with Section 6.1(c), and (iii) compliance by such Unit with Section
6.2, this Lease and the obligation to pay Basic Rent for such Unit accruing
subsequent to the expiration of the Lease Term with respect to such Unit shall
terminate.
(e) So long as no Lease Event of Default has occurred and is
continuing, all amounts earned in respect of a Unit after the date of expiration
of the Lease Term with respect to such Unit and prior to the return of such Unit
hereunder shall belong to Lessee, and if received by Lessor, shall be promptly
turned over to Lessee. In the event any Unit is not returned to Lessor in
accordance with the provisions of Section 6.1(b) on the last day of the Lease
Term with respect thereto, or if requested by Lessor pursuant to Section 6.1(c),
delivered and stored on such last day of the Lease Term, and, in either case, in
the condition specified in Section 6.2, Lessee shall pay to Lessor for each such
day from the expiration of the Lease Term with respect to such Unit until the
date on which such Unit is returned to Lessor in accordance with the provisions
of Section 6.1(b) and in the condition specified in Section 6.2, an amount equal
to the daily equivalent of the average Basic Rent for the Basic Term or the
Renewal Term as applicable to such Unit. In the event Lessee is required to pay
such Rent subsequent to the expiration of the Lease Term with respect to a Unit
or Units, any amounts earned with respect to such Units shall be for the account
of Lessee. If such Unit is not returned to Lessor in accordance with the
provisions of Section 6.1(b) and in the condition specified in Section 6.2 on or
prior to the 180th day after the expiration of the Lease Term with respect to
such Unit, Lessor shall have the right to require Lessee to purchase such Unit
for a purchase price equal to the Stipulated Loss Value for such Unit as of the
181st day after the expiration of such Lease Term; provided that if more than 25
Units have not been returned on or prior to the expiration of such Lease Term,
the purchase price for such Unit shall be the higher of (x) the Fair Market
Sales Value, assuming such Unit is in the condition required by this Lease, and
(y) the Stipulated Loss Value of such Unit as of the 181st day after the
expiration of such Lease Term; provided further that, during the holdover period
described in this sentence and the immediately preceding sentence, Lessee shall
use its best efforts to secure the return of the Equipment as required under
this Section 6 in the condition specified in Section 6.2. Nothing herein shall
be in abrogation of Lessor's right to have such Unit returned to it for
possession or storage. 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 except as to the absence of any Lessor's
Liens, and may specifically disclaim any such representations or warranties.
Section 6.2 Condition of Equipment. Each Unit when returned to
Lessor pursuant to this Section 6 shall be (i) capable of performing the
functions for which it was designed, with all loading and unloading components
operating in good working order with
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allowance for normal wear and tear, (ii) suitable for continued commercial use
in the commodity last carried immediately prior to such return, (iii) suitable
for use in interchange by a new owner in the operating lease business in
accordance with then applicable Federal regulations (including but not limited
to AAR and FRA), (iv) in all material respects in the condition required by
Section 8.1, (v) in conformance with any requirement pertaining to warranties of
the manufacturer of the Units during the warranty period, (vi) empty, (vii)
steam cleaned or otherwise cleaned in a comparable commercially acceptable
manner, and (viii) 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. All logs, records, books and other materials relating to the
maintenance of such Unit shall, upon request, be delivered to Lessor or its
designee upon the return of such Unit. Lessor shall have the right to inspect
any Unit that is returned pursuant to Section 6.1 to ensure that such Unit is in
compliance with the conditions set forth in this Section 6.2, at Lessor's sole
cost, expense and risk (including, without limitation, the risk of personal
injury or death), by its authorized representatives, during Lessee's normal
business hours and upon reasonable prior notice to Lessee; provided, however,
that 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 6.2 unless caused by Lessee's gross negligence or wilful misconduct; and
further provided, that if such Unit is not in compliance with the conditions set
forth in this Section 6.2 then Lessee will (i) promptly take such steps as are
necessary to bring such Unit in compliance with the conditions set forth in this
Section 6.2 and (ii) pay 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 inspection pursuant to this Section 6.2 shall interfere with the
normal conduct of Lessee's business or the normal conduct of any sublessee's
business, and 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 this Section 6.2.
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 Unit 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.
Lessee shall promptly, at its own expense, take such action or cause such action
to be taken as may be necessary to duly discharge (by bonding or otherwise) any
such Lien not excepted above if the same shall arise at any time.
SECTION 8. Maintenance; Possession; Compliance with Laws.
Section 8.1 Maintenance and Operation. (a) Lessee, at its own
cost and expense, shall maintain, repair and keep each Unit, (i) according to
prudent industry practice, in good working order, and in good physical condition
for railcars of a similar age and usage, normal wear and tear excepted, (ii) in
a manner consistent with maintenance practices used by Lessee in respect of
equipment owned or leased by Lessee similar in type to such Unit, (iii) in
accordance in all material respects with all manufacturer's warranties in effect
and in accordance with all applicable provisions, if any, of insurance policies
required to be maintained pursuant to Section 12, (iv) in compliance in all
material respects with any applicable laws and regulations,
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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 and (v) in a condition mechanically suitable
for interchange by an operator in revenue service; 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 Indenture Trustee or any
Participant to criminal sanctions or release Lessee from the obligation to
return the Equipment in compliance with the provisions of Section 6.2. Lessee
shall provide Lessor and the Indenture Trustee with notice of any contest of the
type described in the preceding sentence in detail sufficient to enable Lessor
and the Indenture Trustee to ascertain whether such contest may have an effect
of the type described in the preceding sentence. In no event shall Lessee
discriminate as to the use or maintenance of any Unit (including the periodicity
of maintenance or recordkeeping 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) Without the written waiver or consent of Lessor (which waiver
or consent will not be unreasonably withheld), Lessee shall not or expressly
permit any sublessee to change a DOT classification (as provided for in 49
C.F.R. Part 179 or any successor thereto), or expressly permit any sublessee to
operate any Unit under a different DOT classification, from that classification
in effect for such Unit on the Closing Date, 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 after receipt of Lessee's written request therefor (or
Lessor expressly rejects such a request by Lessee), Lessee may replace such Unit
in accordance with and subject to the provisions of Section 11.2(i), 11.3 and
11.4.
Section 8.2 Possession. Lessee shall be entitled to the possession
of the Equipment and to the use of the Equipment by it or any Affiliate, in the
United States and, subject to the remaining provisions of this Section 8.2 and
Section 8.3, 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 thirty-five percent (35%) of the Units (as determined by mileage records)
be assigned outside the United States at the same time until after December 31,
2007. Thereafter, no more than forty-nine percent (49%) of the Units (as
determined by mileage records) shall be used outside the continental United
States (exclusive of Alaska) at the same time. Notwithstanding the foregoing,
no more than 15% of the Units shall be used in Mexico so long as Mexican law
does not afford protections to the Lessor comparable to U.S. law and unless
Lessee shall first have taken all
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actions necessary so as to protect the right, title and interest of Lessor and
the Indenture Trustee in the Equipment in Mexico pursuant to Section 16.3 and
shall have furnished Lessor and the Indenture Trustee with an opinion of Mexican
counsel, reasonably satisfactory to such parties, to the effect that all such
filings and recordings of the related Operative Agreements have been taken and
effected under such Mexican law. 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
and 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. Provided Lessor shall not have declared the
Lease to be in default (or the Lease shall 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, (i) a railroad company or companies
incorporated under the laws of the United States of America 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 (ii) responsible companies
(i.e., a company with which Lessee would do business in the ordinary course of
Lessee's business with respect to railcars which it owns, leases or manages)
other than railroad companies for use in their business (leases to such
sublessees being herein referred to as "Permitted Subleases") provided, however,
that Lessee shall not sublease more than 15% of the Units to a sublessee formed
under the laws of Mexico or any state thereof. 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 Closing Date, or otherwise as satisfactory to Lessor and
the Indenture Trustee, (ii) shall not be for a term which extends beyond the
Basic Term and 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, Owner Participant or the Indenture Trustee. In
the event Lessee desires to sublease one or more Units for a term which extends
beyond the Basic Term or any agreed upon Renewal Term, Lessee 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 of Section 11.2(i), 11.3 and 11.4. 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.
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SECTION 9. Modifications.
Section 9.1 Required Modifications. In the event the AAR, the
United States Department of Transportation, or any other United States or state
governmental agency or any other applicable law requires that any Unit be
altered, replaced or modified (a "Required Modification"), Lessee agrees to make
such Required Modification at its own expense; provided, however, that Lessee
may, in good faith and by appropriate proceedings diligently conducted, contest
the validity or application of any such law, regulation, requirement or rule in
any reasonable manner which does not materially interfere with the use,
possession, operation or return of any Unit or materially adversely affect the
rights or interests of Lessor and the Indenture Trustee in the Equipment or
hereunder or otherwise expose Lessor, the Indenture Trustee or any Participant
to criminal sanctions or relieve Lessee of the obligation to return the
Equipment in compliance with the provisions of Section 6.2. Title to any
Required Modification shall immediately vest in Lessor. Notwithstanding
anything herein to the contrary, if Lessee determines in good faith that any
Required Modification to a Unit would be economically impractical, in lieu of
making the Required Modification as provided above, Lessee may provide written
notice of such determination to Lessor and treat such Unit as if an Event of
Loss had occurred as of the date of such written notice with respect to such
Unit and in such event the provisions of Sections 11.2, 11.3 and 11.4 shall
apply with respect to such Unit; provided that Lessee shall not discriminate
against such Unit in making such determination of economic impracticality as
compared with other equipment of the same type as such Unit which is owned or
leased by Lessee.
Section 9.2 Optional Modifications. Lessee at any time may in its
discretion and at its own cost and expense modify, alter or improve any Unit in
a manner which is not required by Section 9.1 (a "Modification"); provided that
no Modification shall diminish the fair market value, utility, capacity, or
remaining economic useful life of such Unit below the fair market value,
utility, capacity, or remaining economic useful life thereof immediately prior
to such Modification, in any non de minimus respect, assuming such Unit was then
in the condition required to be maintained by the terms of this Lease, provided
that Lessee shall not discriminate against such Unit in making such
modification, alteration or improvement as compared with other equipment of the
same type as the Unit and which are owned or leased by the Lessee. Title to any
Non-Severable Modification shall be immediately vested in Lessor. Title to any
Severable Modification (other than Required Modifications) shall remain with
Lessee. If Lessee shall at its cost cause such Severable Modifications (other
than Required Modifications) to be made to any Unit, Lessor shall have the
right, upon 90 days prior written notice in the case of a return other than
pursuant to Section 15.6, prior to the return of such Unit to Lessor hereunder,
to purchase such Severable Modifications (other than Severable Modifications
consisting of proprietary or communications equipment) at their then Fair Market
Sales Value (taking into account their actual condition). If Lessor does not so
elect to purchase such Severable Modifications, Lessee may remove such Severable
Modifications at Lessee's cost and expense, and if requested (which request
shall be made by not less than 90 days prior written notice in the case of a
return other than pursuant to Section 15.6) by Lessor will so remove such
Severable Modifications at Lessee's cost and expense, and Lessee shall, at its
expense, repair any damage resulting from the removal of any such Severable
Modifications in a manner consistent with Section 8.1.
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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 by 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 fair
market value, utility, capacity and remaining economic 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 in the ordinary course of maintenance
and repair 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 property replaced in the ordinary course of
maintenance and repair shall, without further act, become the property of Lessor
and be deemed part of such Unit for all purposes hereof.
SECTION 10. Voluntary Termination.
Section 10.1 Right of Termination. So long as no Material 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 a Basic Group, Lessee shall
exercise such termination with respect to at least 25 Units, no fewer than 25
Units shall remain in such Basic Group as a result of such termination and the
determination as to which Units are subject to termination shall be made by
Lessee on a random or other basis (in each case reasonably acceptable to Lessor)
without discrimination based on maintenance status, operating condition of the
Units in question or otherwise) (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) that such Units have become obsolete or surplus to Lessee's requirements
by delivering at least 120 days' prior notice to Lessor and the Indenture
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 upon Lessee's compliance with this Section 10, and (ii) if
some but less than all of the Units in a Basic Group are designated as
Terminated Units, describing the nondiscriminatory manner in which Lessee
proposes to determine which Units in that Basic Group are to be Terminated
Units. Except as expressly provided herein, there will be no conditions to
Lessee's right to terminate this Lease with respect to the Terminated Units
pursuant to this Section 10.1. So long as (a) Lessor shall not have given
Lessee a notice of election to retain the Terminated Units in accordance with
Section 10.3, or (b) notice of prepayment of the Equipment Notes shall not have
been given pursuant to Section 2.10 of the Indenture, Lessee may withdraw the
termination notice referred to above at any time prior to the Termination Date,
whereupon this Lease shall continue in full force and effect; provided that
Lessee (i) may not exercise its right to withdraw such a termination notice more
than once annually or more than four times during the Basic Term, and (ii) may
not withdraw any termination notice with respect to any Terminated Units after
receipt by Lessee of a bid equal to or greater than Termination Value with
respect to such Terminated Units or later than sixty (60) days prior to the
scheduled Termination Date. Lessee agrees that if it withdraws a termination
notice it will reimburse Lessor, Owner Participant and
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the Indenture Trustee for all reasonable out-of-pocket costs and expenses
(including reasonable legal fees and expenses) incurred by any thereof in
connection therewith.
Section 10.2 Sale of Equipment. During the period from the date of
such notice given pursuant to Section 10.1 to the Termination Date, Lessee, as
agent for Lessor and, except as provided in Section 10.3, at Lessee's sole cost
and expense, shall use reasonable best efforts to obtain bids from Persons other
than Lessee or Affiliates thereof for the cash purchase of the Terminated Units,
and Lessee shall promptly, and in any event at least five Business Days prior to
the proposed date of sale, certify to Lessor in writing the amount and terms of
each such bid, the proposed date of such sale and the name and address of the
party submitting such bid. Unless Lessor shall have elected to retain the
Terminated Units in accordance with Section 10.3, on the Termination Date: (i)
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) and (ii) 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 and retained by Lessor and, in addition, on the Termination Date, Lessee
shall pay to Lessor, (A) all unpaid Rent with respect to such Terminated Units
due and payable on or prior to the Termination Date (exclusive of any Basic Rent
first becoming due on such date), (B) the excess, if any, of (1) the Termination
Value for the Terminated Units computed as of the Termination Date, over (2) the
net cash sales proceeds (after the deduction of all reasonable costs and
expenses of Lessor and Owner Participant in connection with such sale) of the
Terminated Units, and (C) 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; provided however, in the event
that the net cash proceeds with respect to such Units referred to above exceed
the Termination Value for such Units, Lessee shall receive a credit against
amounts payable to Lessor pursuant to this Section 10.2 in an amount equal to
the lesser of (I) the Prepaid Adjustment Amount, if any, and (II) the amount by
which such net cash proceeds exceed the Termination Value for such Units any (y)
Lessee shall pay to Lessor an amount equal to the Deferred Adjustment Amount, if
any. If no sale shall have occurred, whether as a result of Lessee's failure to
pay all of the amounts hereinabove required or otherwise, this Lease shall
continue in full force and effect with respect to such Units and Lessee agrees
to reimburse Lessor, Owner Participant and the Indenture Trustee for all
reasonable costs and expenses (including reasonable legal fees and expenses)
incurred by any thereof in connection therewith; provided that if such sale
shall not have occurred solely because of Lessee's failure to pay the amounts
hereinabove required, Lessee shall have no further right to terminate this Lease
with respect to such Units. Lessee, in acting as agent for Lessor, shall have no
liability to Lessor for failure to obtain the best price, shall act in its sole
discretion and shall be under no duty to solicit bids publicly or in any
particular market. Lessee's sole interest in acting as agent shall be to use its
reasonable best efforts to sell the Units at the highest price then obtainable
consistent with the terms of this Lease.
Section 10.3 Retention of Equipment by Lessor. Notwithstanding the
provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect by written
notice to Lessee,
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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 (i)
deliver the Terminated Units to Lessor in the same manner and condition as if
delivery were made to Lessor pursuant to Section 6.1(b) and Section 6.2,
treating the Termination Date as the termination date of the Lease Term with
respect to the Terminated Units, and (ii) pay to Lessor, or to the Persons
entitled thereto, all 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 the
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. If Lessor shall fail to pay the amounts required pursuant to
this Section 10.3 and as a result thereof this Lease shall not be terminated
with respect to the Terminated Units on a 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 reasonable out-of-pocket
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 occurring not earlier than 25 days from the date of such
notice.
Section 10.4 Termination of Lease. In the event of either (x) any
such sale and receipt by Lessor and the Indenture Trustee of all of the amounts
provided in Section 10.2 or (y) retention of the Equipment and full performance
by Lessor of its payment obligations in compliance with 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 the Terminated Units shall end.
SECTION 11. Loss, Destruction, Requisition, Etc.
Section 11.1 Event of Loss. In the event that any Unit (i) shall
suffer damage or contamination which, in Lessee's reasonable judgment (as
evidenced by an Officers' Certificate to such effect), makes repair uneconomic
or renders such Unit unfit for commercial use, (ii) shall suffer destruction, or
shall suffer theft or disappearance (after reasonable efforts by Lessee to
locate the same) for a period exceeding 12 months (or, if earlier, the end of
the Basic Term or Renewal Term then in effect), (iii) shall be permanently
returned to the manufacturer pursuant to any patent indemnity provisions, (iv)
shall have title thereto taken or appropriated by any governmental authority,
agency or instrumentality under the power of eminent domain or otherwise, (v)
shall be taken or requisitioned for use by (x) any governmental authority of
Mexico or any agency or instrumentality thereof under the power of eminent
domain or otherwise for a period in excess of the lesser of (A) 365 days and (B)
the remaining Basic Term
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or any Renewal Term then in effect or (y) any other governmental agency or
instrumentality thereof under the power of eminent domain or otherwise for a
period in excess of the remaining Basic Term or any Renewal Term then in effect
(unless such taking or requisition is by any governmental authority, agency or
instrumentality other than the United States or Canada 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.
Section 11.2 Replacement or Payment upon Event of Loss. Upon the
occurrence of (a) an Event of Loss or the deemed occurrence of an Event of Loss
pursuant to Section 9.1 or (b) an election to replace pursuant to Section 8.1(b)
or 8.3, with respect to any Unit, Lessee shall as soon as reasonably practical
and in any event within 60 days after a Responsible Officer of Lessee shall have
actual knowledge of such occurrence or election give Lessor and the Indenture
Trustee notice of such occurrence of such Event of Loss or election to replace
(which notice shall identify the Unit involved) and then within the 60-day
period following such notice give Lessor and the Indenture Trustee notice as to
which of the following options Lessee shall elect to perform (it being agreed
that if Lessee shall fail to give notice of such election, Lessee shall be
deemed to have elected to perform the option set forth in Section 11.2(ii)):
(i) Upon Lessee's election to perform under this clause (i),
as promptly as practicable following such election, and in any event on or
before the 60th day following the date of notice of such Event of Loss or
deemed Event of Loss pursuant to Section 9.1, or the date Lessee exercises
an option to replace pursuant to Section 8.1(b) or Section 8.3, as the case
may be, Lessee shall comply with Section 11.4(b) and shall convey or cause
to be conveyed to Lessor a Replacement Unit to be leased to Lessee
hereunder, such Replacement Unit to be of the same car type of the same or
newer model year (or otherwise approved by Lessor, which approval shall not
be unreasonably withheld), 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 value, utility, capacity, remaining
economic useful life and condition at least equal to the Unit so replaced
(assuming such Unit was in the condition required to be maintained by the
terms of this Lease); provided that, if, at the time of such replacement,
only railcars (x) of a newer model year or (y) with a greater fair market
value (or a greater Fair Market Sales Value in the situation set forth in
the next proviso) than the replaced Units are available as Replacement
Units, Lessee shall convey such Replacement Unit to Lessor as set forth
above but Lessee may, at a later date, replace such Replacement Units with
other Units that are closer in fair market value (or Fair Market Sales
Value in the situation set forth in the next proviso) to the original
replaced Units so long as such replacement does not result in any
additional unindemnified tax liability; provided further that, if such
replacement is performed (a) pursuant to Section 8.3 after the 180th day
prior to the end of the Lease Term of such Units or (b) with respect to 15
or more Units, each of such Replacement Units must have, in addition to the
requirements set forth above, a Fair Market Sales Value at least equal to
the Unit so replaced (assuming such Unit was in the condition required to
be maintained by the terms of this Lease); provided further that, if Lessee
shall elect the option under
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this clause (i) within such period but shall fail to perform its obligation
to effect such replacement under this paragraph (i) within the 60-day
period hereinabove provided for, then (except in the case of a failure to
perform an election to replace pursuant to Section 8.1(b) or Section 8.3)
at the end of such 60-day period Lessee shall immediately give Lessor and
the Indenture Trustee notice of such failure and specify that Lessee shall
pay to Lessor on the next succeeding Rent Payment Date that is at least 25
days after the end of such 60-day period, or in the case of Supplemental
Rent, to the Person entitled thereto, the amounts specified in paragraph
(ii) below as of such next succeeding Rent Payment Date, and Lessee shall
pay such amounts on such Rent Payment Date; provided further that Lessee
shall have no right to elect replacement under this clause (i) if at the
time of the notice of the Event of Loss under Section 11.2 above a Material
Default or Lease Event of Default shall have occurred and be continuing; or
(ii) on the Rent Payment Date which is not less than 25 days
following the date of notice of Lessee's election to perform under this
clause (ii), Lessee shall pay or cause to be paid to Lessor (or in the case
of Supplemental Rent, to the Persons entitled thereto) in funds of the type
specified in Section 3.6, (a) an amount equal to 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 Basic Rent first becoming
due on such date) [and an amount equal to the Adjustment Amount (which
amount, if negative, shall be a credit against amounts payable by Lessee
pursuant to this Section 11.2(ii))], 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 that in the event at any time a Responsible Officer of Lessee shall
have actual knowledge of the occurrence or deemed occurrence of an Event of Loss
with respect to an aggregate of 15 or more Units as to which Lessee would
otherwise be obligated to make payment pursuant to the second proviso to
paragraph (i) above or pursuant to paragraph (ii) above on a Rent Payment Date,
then Lessee shall thereupon give Lessor and the Indenture Trustee notice that in
lieu of making payments with respect to such Units as otherwise above provided
on a Rent Payment Date, Lessee will make a payment with respect to such Units on
the next succeeding Determination Date which is at least 25 days after such
notice, and on such Determination Date Lessee shall pay, in lieu of the amounts
otherwise required to be paid in respect of such Units on a Rent Payment Date as
provided above, (a) an amount equal to the Stipulated Loss Value of such Units
determined as of such Determination Date, (b) if such Determination Date is also
a Rent Payment Date, all Basic Rent payable on such date in respect of such
Units (exclusive of any in advance Basic Rent due on such date) 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.
Section 11.3 Rent Termination. Upon the replacement of any Unit or
Units in compliance with Sections 11.2(i) and 11.4(b) (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
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of Stipulated Loss Value or date of conveyance of such Replacement Unit or Units
pursuant to Section 11.2 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.
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 and any other Rent attributable
thereto.
(b) At the time of or prior to any replacement of any Unit or
Replacement Unit, Lessee, at its own expense, will (A) 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, (B) cause a
Lease Supplement substantially in the form of Exhibit A hereto, subjecting such
Replacement Unit to this Lease, and duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation in
the same manner as provided for the original Lease Supplement in Section 16.1,
(C) 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 in
the same manner and within the same time periods as provided for the original
Indenture Supplement in Section 16.1, (D) furnish Lessor with an opinion of
Lessee's counsel (which may be Lessee's General Counsel or Assistant General
Counsel), (x) to the effect that the Bill of Sale referred to in clause (A)
above constitutes an effective instrument for the conveyance of title to the
Replacement Unit to Lessor, and that 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), (vi) and (vii) of the definition
thereof), and (y) describing all filings and recordings and other actions
necessary or appropriate to protect the respective interests of Lessor and the
Indenture Trustee in the Replacement Units, (E) furnish Owner Participant with
either (I) an opinion of tax counsel (who shall be, and which opinion shall be
in form and substance reasonably acceptable to the Owner Participant) that the
Owner Participant will not suffer any adverse tax consequences as a result of
such substitution, or (II) an agreement to indemnify Owner Participant against
any adverse tax consequences suffered as a result of such replacement, (F)
furnish Lessor with an engineer's certificate (which may be from an employee of
Lessee) certifying as to the utility, capacity, condition, model year and
remaining useful life required under clause (i) of Section 11.2, (G) furnish to
Lessor and the Indenture Trustee an Officer's Certificate certifying that the
Replacement Unit has a fair market value, utility, capacity, model year and
remaining economic useful life and condition at least equal to the Unit being
replaced and is free and clear of all Liens
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(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 (H) furnish such other documents and evidence as Owner
Participant, Lessor or the Indenture Trustee, or their respective counsel, may
reasonably request in order to establish the consummation of the transactions
contemplated by this Section 11.4. For all purposes hereof, (i) Lessee shall be
deemed to have complied with the requirements of this Section 11.4(b) as of the
date of its delivery to Lessor, the Participants and the Indenture Trustee of
the documents and instruments referred to in the foregoing clauses (A) through
(H), signed by Lessee or its counsel, as applicable, in due form for any
required filing or recording, and such filing or recording shall have been made
if such documents and instruments have been executed and delivered by the Lessor
or Indenture Trustee or both of them in a timely manner, (ii) title to the
Replacement Unit shall be deemed to have been transferred to Lessor as of such
date, and (iii) upon such 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, "as is" and "where is" and without
recourse or warranty (except as to Lessor's Liens), all Lessor's right, title
and interest in and to the replaced Unit, and upon such transfer, Lessor will
request in writing that the Indenture Trustee execute and deliver to Lessee an
appropriate instrument releasing such replaced Unit from the lien of the
Indenture. Lessee shall pay all reasonable out of pocket costs and expenses
(including reasonable legal fees and expenses) incurred by Lessor, Owner
Participant and the Indenture Trustee in connection with any replacement
pursuant to this Section 11.4.
Section 11.5 Eminent Domain. In the event that during the Lease
Term the use of any Unit is requisitioned or taken by any governmental authority
under the power of eminent domain or otherwise for a period which does not
constitute an Event of Loss, all of Lessee's obligations under the Operative
Agreements, including without limitation, Lessee's obligation to pay all
installments of Basic Rent, shall continue for the duration of such
requisitioning or taking. Lessee shall be entitled to receive and retain for its
own account all sums payable for any such period by such governmental authority
as compensation for requisition or taking of possession. Any amount referred to
in this Section 11.5, in Section 11.4(a) or in Section 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 Insurance. Lessee will at all times after delivery and
acceptance of each Unit, at its own expense, keep or cause to be kept such Unit
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 railcars. Without limiting the foregoing, Lessee will in any event:
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(a) keep each Unit of the Equipment 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
each for flood and earth movement), provided that such coverage may provide for
deductible amounts of not more than $1,000,000 per occurrence; and
(b) maintain public liability insurance naming Owner Participant,
the Lessor, the Trust Company 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 $50,000,000 per occurrence or in the
aggregate, provided that such coverage may provide for deductible amounts not
exceeding the lesser of (x) $10,000,000 or (y) 5% of the book value of the
railcar fleet of Lessee.
It is understood and agreed that the insurance required hereunder may
be part of a company-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), Lessor,
Indenture Trustee and Owner Participant shall receive 30 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 made to the Indenture Trustee
under a standard 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) In lieu of maintaining the physical damage insurance required
by Section 12.1(a), Lessee may self-insure with respect to the Equipment for
such amounts and against such risks as shall be consented to by Lessor and the
Indenture Trustee, which consent shall be based upon reasonable practices then
in effect in the railcar leasing and insurance industries and upon the financial
condition of Lessee.
(c) The entire proceeds of any property insurance or third party
payments for damages 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:
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(i) to Lessee promptly following receipt by the Indenture
Trustee or Lessor, as the case may be, of a written application signed by
Lessee for payment to Lessee for repairing or restoring the Units which
have been damaged so long as (1) Lessee shall have complied with the
applicable provisions of the Lease, and (2) Lessee shall have certified
that any damage to such Units shall have been fully repaired or restored;
or
(ii) if this Lease is terminated with respect to such Unit
because of an Event of Loss and Lessee has paid the Stipulated Loss Value
due as a result thereof, such proceeds shall be 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 in as much 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) waive any rights of
subrogation of the insurers against Owner Participant, Lessor, the Trust Company
and the Indenture Trustee, (iii) provide that none of Owner Participant, Lessor,
the Trust Company, or Indenture Trustee shall have any responsibility for any
insurance premiums, whether for coverage before or after cancellation or
termination of any such policies as to Lessee and (iv) be primary without
contribution from any similar insurance maintained by Owner Participant, Lessor
or the Indenture Trustee.
(b) Lessee shall use its reasonable efforts to obtain public
liability insurance policies stipulating that coverage thereunder will not be
invalidated (as to Owner Participant, Lessor, the Trust Company 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 is 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. 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 of Lessee), in either case, such independent
insurance advisors being of recognized national standing. The fees and expenses
of all such advisors shall be paid by Lessee. The written reports required
hereunder shall (x) state that such insurance (or the required coverage
thereunder) is not reasonably available to Lessee at commercially reasonable
premiums in the commercial insurance markets within which Lessee normally
purchases its insurance from insurers, acceptable to Lessee, with a Best's
rating of A- or better for railcars of similar type and capacity and (y) explain
in detail the basis for such conclusions. Upon the granting of any such waiver,
Lessee shall within 15 days thereafter certify to Lessor in writing the cost (on
a fleet-wide basis) of liability insurance
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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.
Section 12.4 Certificate of Insurance. Lessee shall, prior to the
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
this Section. With respect to any renewal policy or policies, certificates or
binders evidencing such renewal shall be furnished as soon as practicable, but
in no event later than 30 days after the earlier of the date such renewal is
effected or the expiration date of the original policy or policies.
Simultaneously, with the furnishing of such certificate, Lessee will provide
appropriate evidence, reasonably satisfactory to Lessor and the Indenture
Trustee, that all premiums due on such insurance have been paid.
Section 12.5 Additional Insurance. In the event that Lessee shall
fail to maintain insurance as herein 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
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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 13. Reports; Inspection.
Section 13.1 Duty of Lessee to Furnish. On or before April 30,
2001, and on or before each April 30 thereafter, Lessee will furnish to Lessor,
Owner Participant and the Indenture Trustee an accurate statement, as of the
preceding December 31, (a) showing the amount, description and reporting marks
of the Units then leased hereunder, the amount, description and reporting marks
of all Units that may have suffered an Event of Loss during the 12 months ending
on such December 31 (or since the Closing Date, in the case of the first such
statement), and such other information regarding the condition or repair of the
Equipment as Lessor may reasonably request, (b) stating that, in the case of all
Equipment repainted during the period covered by such statement, the markings
required by Section 4.2 hereof shall have been preserved or replaced, (c)
showing the percentage of use in each state in the United States and in both
Canada and Mexico based on the total mileage traveled by all railcars in
Lessee's fleet (or by the Units, if and to the extent generally made available
to Lessee in the ordinary course with respect to railcars in general interchange
service similar to the Units) for the prior calendar year as reported to Lessee
by railroads (provided, that Lessee shall cooperate with Owner Participant and
Lessor and shall provide such additional information on such matters as Owner
Participant or Lessor may reasonably request to enable Owner Participant and
Lessor to pursue or fulfill their respective tax audit and tax litigation rights
and obligations), and (d) 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 of the Field
Manual of the AAR as they apply to the maintenance and operation of the
Equipment in interchange.
Section 13.2 Lessor's Inspection Rights. Lessor, Owner Participant
and the Indenture Trustee each shall have the right, but not the obligation, at
their respective sole cost, expense and risk (including, without limitation, the
risk of bodily injury or death), by their respective authorized representatives,
to inspect (a) the Equipment and Lessee's records with respect thereto, and (b)
following the occurrence of a Lease Default and during the continuance thereof,
or following notice by Lessee that it will be returning any Unit to Lessor
pursuant to Section 10 or Section 22, any sublease of the Equipment and Lessee's
records with respect thereto. All inspections shall be conducted during
Lessee's normal business hours, on Lessee's premises or in areas that are not
the premises of a sublessee to which Lessee has reasonable access, 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
ordinary course of Lessee's or any sublessee's business, and Lessee shall not be
required to undertake or incur any additional liabilities in connection
therewith.
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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, Special
Purchase Price, Early Purchase Price, Basic Term Purchase Price or any other
purchase price to be paid by Lessee for any Units pursuant to this Lease or the
Participation Agreement, Stipulated Loss Value or Termination Value within 10
Business Days after the same shall have become due; or
(b) Lessee shall fail to make any payment of Supplemental Rent,
including indemnity or tax indemnity payments, but not including Stipulated Loss
Value, Special Purchase Price, 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 after the same shall have become due and
such failure shall continue unremedied for 10 Business Days after receipt by
Lessee of written notice of such failure from Lessor, 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 so long as (i) such unauthorized
possession is not the result of any willful action of Lessee and (ii) such
unauthorized possession is capable of being cured and Lessee diligently pursues
such cure throughout such 45-day period; 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
during which period Lessee diligently pursues the cure of such failure; 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, Owner
Participant 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
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such untruth or incorrectness within such period; provided that such untrue or
incorrect representation or warranty shall be deemed to be remedied only after
all adverse consequences thereof, if any, have been remedied; or
(g) Lessee shall (i) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or (ii) consent to any such relief or to the appointment of or
taking possession by any such official in any voluntary case or other proceeding
commenced against it, or (iii) admit in writing its inability to pay its debts
generally as they come due, or (iv) make a general assignment for the benefit of
creditors, or (v) take any corporate action to authorize any of the foregoing;
or
(h) an involuntary case or other proceeding shall be commenced
against Lessee seeking liquidation, reorganization or other relief with respect
to it or its debts under any 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) or any certificate 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;
provided that, notwithstanding anything to the contrary contained in this Lease,
any failure of Lessee to perform or observe any covenant or agreement herein
shall not constitute a Lease Event of Default if such failure is caused solely
by reason of an event referred to in the definition of "Event of Loss" so long
as Lessee is continuing to comply with the applicable terms of Section 11.
SECTION 15. Remedies.
Section 15.1 Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare this Lease to be in default by a written
notice to Lessee (except that this Lease shall, without any action on the part
of Lessor, be automatically deemed to have been declared in default upon the
occurrence of a Lease Event of Default described in Section 14(g) or (h)); and
at any time thereafter, unless Lessee shall have remedied all outstanding Lease
Events of Default prior to the commencement of the exercise by Lessor of any of
its remedies hereunder, Lessor may do one or
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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;
(c) sell any Unit at public or private sale in such manner 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, except that Lessee's obligation to pay
Basic Rent with respect to such Unit due for any periods subsequent to the date
upon which Lessee shall have been deprived of possession and use of such Unit
pursuant to this Section 15 shall be reduced by the net proceeds, if any,
received by Lessor from leasing such Unit to any Person other than Lessee;
(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 less 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 Basic Rent first becoming due on such
date) plus whichever of the following amounts Lessor, in its sole discretion,
shall specify in such notice: (i) an amount with respect to each such Unit which
represents the excess of the present value, at the time of such payment date, of
all rentals for such Unit which would otherwise have
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accrued hereunder from such payment date for the remainder of the Basic Term or
any Renewal Term then in effect over the then present value of the then Fair
Market Rental Value of such Unit (taking into account its actual condition) for
such period computed by discounting from the end of such Term to such payment
date rentals which Lessor reasonably estimates to be obtainable for the use of
such Unit during such period, such present value to be computed in each case on
a basis of a per annum discount at the Debt Rate, compounded semiannually from
the respective dates upon which rentals would have been payable hereunder had
this Lease not been terminated plus an amount equal to the Deferred Adjustment
Amount, if any, provided, however, the Prepaid Adjustment Amount, if any, shall
be a credit against amounts payable by Lessee pursuant to this Section
15.1(e)(i); 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, provided, however, in the event that the Fair Market Sales Value
with respect to such Unit referred to above exceeds Termination Value for such
Unit, then (a) Lessee shall receive a credit against amounts payable to Lessor
pursuant to this Section 15.1(e)(iii) in an amount equal to the lesser of (I)
the Prepaid Adjustment Amount, if any, and (II) the amount that such Fair Market
Sales Value exceeds the Termination Value for such Unit and (b) Lessee shall pay
to Lessor an amount equal to the Deferred Adjustment Amount, if any; and upon
payment by Lessee pursuant to said 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 "as is" and "where is" and without recourse or
warranty all right, title and interest of Lessor in and to such Unit to Lessee
or as it may direct, and Lessor shall execute and deliver such documents
evidencing such transfer as Lessee shall reasonably request;
(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), 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
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(g) Lessor may terminate the leasing of any or all Units under
this Lease or may exercise any other right or remedy that may be available to it
under applicable law.
In addition, Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Rent due hereunder before or during the exercise
of any of the foregoing 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. Lessee further agrees that Lessee's obligations to pay all Rent
(including, without limitation, all Basic Rent and Supplemental Rent) and its
obligations to maintain the Equipment pursuant to Section 8 hereof and to
maintain the insurance pursuant to Section 12 hereof shall constitute monetary
obligations of the Lessee for all purposes of Section 365 of the Bankruptcy
Code. 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 declaration of a Lease Event of Default pursuant to Section
14(a), (b), (d) (with respect to the Units affected thereby), (g) or (h), Lessor
may request that Lessee deliver to Lessor, and
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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 with
in respect of such Units and the most recent known location of such Units.
Section 15.6 Lessee's Duty to Return Equipment Upon Default. If
Lessor or any assignee of Lessor shall terminate this Lease pursuant to this
Section 15 and shall have provided to Lessee the written demand specified in
Section 15.1(b), Lessee shall forthwith deliver possession of the Equipment 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, 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, 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 (determined upon the assumption that such Unit is in the condition required
by the terms of this Lease) 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 of the
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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 the Closing Date
Lessee will cause this Lease, the Lease Supplements dated the Closing Date, the
Indenture and the Indenture Supplements dated the Closing Date (i) to be duly
filed and recorded with the STB in accordance with 49 U.S.C. (S)11301, (ii) to
be deposited with the Registrar General of Canada pursuant to Section 105 of the
Canada 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 (iii) will furnish Lessor, the Indenture Trustee and Owner
Participant proof thereof.
Section 16.2 Further Assurances. Lessee will duly execute and
deliver to Lessor such further documents and assurances and take such further
action as Lessor may from time to time reasonably request or as may be required
by applicable law or regulation in order to effectively carry out the intent and
purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor, Owner Participant and the
Indenture Trustee hereunder, including, without limitation, the execution and
delivery of supplements or amendments hereto, in recordable form, subjecting to
this Lease any Replacement Unit and the recording or filing of counterparts
hereof or thereof in accordance with the laws of such jurisdiction as Lessor may
from time to time deem advisable.
Section 16.3 Other Filings. If, at any time during the Lease Term,
Mexico, or one or more states in Mexico, or any of the Canadian provinces
establishes a state or provincial or other system for filing and perfecting the
security and/or ownership interests of entities such as Lessor and/or the
Indenture Trustee, at the time that Lessee takes such action with respect to
other equipment similar to the Equipment (whether owned or leased by Lessee) and
also upon the request of Lessor, at the direction of the Owner Participant, or
the Indenture Trustee, Lessee shall cause any and all of the Operative
Agreements to be recorded with or under such system and shall cause all other
filings and recordings and all such other action required under such system to
be effected and taken, in order to perfect and protect the respective right,
title and interests of Lessor, Owner Participant and the Indenture Trustee.
Section 16.4 Expenses. 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.
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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
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 11.1,
Lessee will not, without the prior written consent of Lessor and the Indenture
Trustee (which consent shall not be unreasonably withheld), assign any of its
rights hereunder, except as provided herein and in the Participation Agreement;
provided that Lessee may assign its rights and/or obligations hereunder to any
corporation in accordance with the provisions of Section 6.8 of the
Participation Agreement or to any corporation which is an Affiliate of Lessee,
provided that in the case of an assignment to an Affiliate, (a) Lessor shall
have received an instrument or instruments reasonably satisfactory to it, Owner
Participant and the Indenture Trustee under which such Affiliate assumes the
obligations of Lessee hereunder, and (b) Lessee irrevocably and unconditionally
guarantees, pursuant to an agreement in form and substance reasonably
satisfactory to Lessor, Owner Participant and the Indenture Trustee, such
assignee's performance of all of such obligations as primary obligor and not as
a surety.
Section 18.3 Sublessee's Performance and Rights. Any obligation
imposed on Lessee in this Lease shall require only that Lessee perform or cause
to be performed such obligation, even if stated herein as a direct obligation,
and the performance of any such obligation by any permitted assignee, sublessee
or transferee under an assignment, sublease or transfer agreement then in effect
and permitted by the terms of this Lease shall constitute performance by Lessee
and discharge such obligation by Lessee. Except as otherwise expressly provided
herein, any right granted to Lessee in this Lease shall grant Lessee the right
to
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(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 Section 10 and Lessee's purchase and renewal options set
forth in Section 22 may be exercised only by Lessee itself or by any assignee or
transferee of, or successor to, Lessee in a transaction permitted by Section 6.8
of the Participation Agreement; provided, further, that nothing in this Section
18.3 shall or shall be deemed to (i) create any privity of contract between any
such sublessee, on the one hand, and any of Lessor, any 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, any Owner Participant or any subsequent transferee or Affiliate of
any such Person, to any such sublessee or any Affiliate thereof, or (iii) modify
or waive any term or provision of Section 8.3 hereof, which Section 8.3 shall
control if any conflict arises between any of the provisions thereof and this
Section 18.3. The inclusion of specific references to obligations or rights of
any such assignee, sublessee or transferee in certain provisions of this Lease
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding 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 be absolute, unconditional
and irrevocable and shall not be affected by any circumstance of any character
including, without limitation, (i) any set-off, abatement, counterclaim,
suspension, recoupment, reduction, rescission, defense or other right that
Lessee may have against Lessor, Owner Participant, the Indenture Trustee or any
holder of an Equipment Note or Pass Through Certificate, any vendor or
manufacturer of any Unit, or any other Person for any reason whatsoever, (ii)
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, (iii) 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, (iv) any insolvency, bankruptcy, reorganization or
similar proceeding by or against Lessee, Lessor, Owner Participant, the
Indenture Trustee, any holder of an Equipment Note or Pass Through Certificate
or any other Person, (v) the invalidity, illegality or unenforceability of this
Lease, any other Operative Agreement, or any other instrument referred to herein
or therein or any other infirmity herein or therein or any lack of right, power
or authority of Lessee, Lessor, Owner Participant, the Indenture Trustee, any
holder of an Equipment Note or Pass Through Certificate or any other Person to
enter into this Lease or any other Operative Agreement or to perform the
obligations hereunder or thereunder or consummate the transactions contemplated
hereby or thereby or any doctrine of force majeure, impossibility, frustration
or failure of consideration, (vi) the breach or failure of any warranty or
representation made in this Lease or any other Operative Agreement by Lessee,
Lessor, Owner Participant, the Indenture Trustee, any holder of an Equipment
Note or Pass Through Certificate or any other Person, (vii) 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
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and whether or not without fault on the part of Lessee, or (viii) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing. To the extent permitted by applicable law, Lessee hereby waives any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease with respect to any Unit, except in accordance with the
express terms hereof. If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of law or otherwise, except as
specifically provided herein, Lessee nonetheless agrees, 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.
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 (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 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 (i) or (ii), 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 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
Confirmation No.: (302) 651-1000
With copies to Owner Participant.
If to Owner Participant:
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With copies to:
Watson, Farley & Williams
380 Madison Avenue
New York, NY 10017
Attention: Caryn Hemsworth
Facsimile: (212) 922-1512
Confirmation No.: (212) 922-2200
If to the Indenture Trustee: Bank One, NA
1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust
Services Division
(GATX Trust No. 2000-1)
Fax No.: (312) 407-1708
Confirmation No.: (312) 407-1892
If to Lessee: GATX Rail Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: Treasurer
(GATX Trust No. 2000-1)
Fax No.: (312) 621-6645
Confirmation No.: (312) 621-6200
SECTION 21. Concerning the Indenture Trustee.
Section 21.1 Limitation of the Indenture Trustee's Liabilities.
Notwithstanding any provision herein or in any of the Operative Agreements to
the contrary, the Indenture Trustee's obligation to take or refrain from taking
any actions, or to use its discretion (including, but not limited to, the giving
or withholding of consent or approval and the exercise of any rights or remedies
under such Operative Agreements), and any liability therefor, shall, in addition
to any other limitations provided herein or in the other Operative Agreements,
be limited by the provisions of the Indenture, including, but not limited to,
Article VI thereof.
Section 21.2 Right, Title and Interest of the Indenture Trustee
Under Lease. It is understood and agreed that the right, title and interest of
the Indenture Trustee in, to and under this Lease and the Rent due and to become
due hereunder shall by the express terms granting and conveying the same be
subject to the interest of Lessee in and to the Equipment.
SECTION 22. Purchase Options; Renewal Options.
Section 22.1 (a) Special Purchase Option. Provided that no
Material Default or Lease Event of Default shall have occurred and be continuing
at the time of the notice described below or on the date of the proposed
purchase of Units pursuant to the terms of this Section 22.1(a) (unless (i)
Lessor shall have waived such Material Default or Lease Event of Default
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solely for the purpose of this Section 22.1(a), (ii) in the case of a Lease
Event of Default under Section 14(c), 14(d), 14(e), 14(f) or 14(i), Lessee shall
have properly made a Special Purchase Defeasance after giving effect to the
purchase described below, no such Lease Event of Default shall be continuing, or
(iii) in the event of a Lease Event of Default under Section 14(g) or 14(h),
Lessee shall have obtained a final, nonappealable order of a United States court
having appropriate bankruptcy jurisdiction over Lessee which (x) authorizes such
purchase and (y) is in form and substance satisfactory to Lessor and Indenture
Trustee) and provided that Lessee shall have duly given the notice required by
the next succeeding sentence, Lessee shall have the right and, upon giving of
such notice, the obligation to purchase any or all of the Units then leased
hereunder (as specified in such notice) on the Special Purchase Date at a price
equal to the greater of the then applicable Termination Value for such Units and
the then current Fair Market Sales Value for such Units as determined in
accordance with Section 22.5 (the "Special Purchase Price"), provided that after
giving effect to such purchase (unless Lessee shall have elected to purchase all
of the Units then leased hereunder), (i) no fewer than 425 Units shall remain
subject to the Lease, (ii) the allocation of Units (by Basic Group) shall be
substantially similar to the allocation immediately prior to such purchase and
(iii) no Basic Group shall have less than 25 Units, and provided further that
the determination as to which Units are to be purchased shall be made on a
random or other basis (in each case reasonably acceptable to Lessor) without
discrimination based on maintenance status, operating condition of the Units in
question or otherwise and such notice shall describe such manner in which Lessee
proposes to determine the Units in such Basic Group which will be purchased.
Lessee shall give Lessor written notice not less than 90 days prior to the
Special Purchase Date of the proposed purchase of Units pursuant to the terms of
this Section 22.1(a), which notice shall be irrevocable. On the Special Purchase
Date, Lessee shall pay the Special Purchase Price, together with all other
amounts due and owing by Lessee under the Operative Agreements with respect to
such Units, including, without limitation, all unpaid Rent therefor due and
payable on or prior to such purchase date (exclusive of any Basic Rent first
becoming due on such date) and, in the event that the Fair Market Sales Value
with respect to such Units referred to above exceeds the Termination Value for
such Units, then (a) Lessee shall receive credit against amounts payable to
Lessor pursuant to this Section 22.1(a), in an amount equal to the lessor of (I)
the Prepaid Adjustment, if any, and (II) the amount that such Fair Market Sales
Value exceeds the Termination Value for such Units and (b) Lessee shall pay to
Lessor an amount equal to the Deferred Adjustment Amount, if any. Such payments
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. In the event of any such purchase and
receipt by Lessor of all the amounts provided in this Section 22.1(a), the
obligation of Lessee to pay Basic Rent hereunder for such Units shall cease and
the Lease Term for such Units shall end.
(b) Early Purchase Option. Provided that no Material Default or
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 (i) Lessor
shall have waived such Lease Event of Default or Lease Default solely for the
purpose of this Section 22.1(b), (ii) in the case of a Lease Event of Default
under Section 14(c), 14(d), 14(e), 14(f) or 14(i), Lessee shall have properly
made a Special Purchase Defeasance and after giving effect to the purchase
described below, no such Lease Event of Default shall be continuing or (iii) in
the case of a Lease Event of Default under Section 14(g) or 14(h), Lessee shall
have obtained a final, nonappealable order of a United States court having
appropriate bankruptcy jurisdiction over Lessee which (x) authorizes such
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<PAGE>
purchase and (y) is in form and substance satisfactory to Lessor and Indenture
Trustee) and provided that 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 in a Basic
Group then leased hereunder (as specified in such notice) on the Early Purchase
Date for such Units at a price equal to the Early Purchase Price of such Units,
provided that if Lessee elects to purchase some but less than all of the Units
in any Basic Group, Lessee shall exercise such purchase with respect to at least
25 Units, no fewer than 25 Units shall remain in such Basic Group as a result of
such purchase and the determination as to which Units are to be purchased shall
be made on a random or other basis (in each case reasonably acceptable to
Lessor) without discrimination based on maintenance status, operating condition
of the Units in question or otherwise and such notice shall describe such manner
in which Lessee proposes to determine the Units in such Basic Group which will
be purchased. Lessee shall give Lessor written notice not less than 90 days
prior to the Early Purchase Date for the related Units of its election to
exercise the purchase option provided for in this Section 22.1(b), which notice
shall be irrevocable. Payment of the Early Purchase Price, 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 Basic Rent first becoming due on such date), plus an amount equal to the
Prepaid Adjustment Amount, if any, minus an amount equal to the Deferred
Adjustment Amount, if any, and any Make-Whole Amount with respect to the
Equipment Notes then being prepaid, shall be made on the Early Purchase Date 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. In the event of any such purchase and receipt by
Lessor of all of the amounts provided in this Section 22.1(b), the obligation of
Lessee to pay Basic Rent hereunder for such Units shall cease and the Lease Term
for such Units shall end.
(c) Payment; Assumption of Equipment Notes. If the Lessee elects
to exercise either purchase option provided for in this Section 22.1, the Lessee
shall, as the purchase price therefor, in the sole discretion of the Lessee,
either (i) pay the applicable purchase price with respect to such Units,
together with all other amounts due and owing by the Lessee under the Operative
Agreements, or (ii) pay the difference between the Early Purchase Price and the
portion of the outstanding principal amount of the Equipment Notes which relates
to such Units as of the Early Purchase Date and assume on a full recourse basis,
and indemnify the Lessor against, all of the Owner Trustee's obligations under
the Indenture in respect of such portion of the indebtedness evidenced by such
Equipment Notes; provided, that, following such assumption, the purchased Units
shall remain subject to the lien of a separate indenture similar to the
Indenture pursuant to Section 3.06 of the Indenture. The Lessee will make the
payments required by foregoing clause (i) or assume such portion of the
indebtedness evidenced by the Equipment Notes which relates to such Units as
provided in foregoing clause (ii) on the Special Purchase Date with respect to
the purchase option described in Section 22.1(a) and on the Early Purchase Date
with respect to the purchase option described in Section 22.1(b), in immediately
available funds against delivery of a bill of sale transferring and assigning to
the Lessee all right, title and interest of the Lessor in and to the Units on an
"as-is" "where-is" basis and containing a
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warranty against Lessor's Liens. In such event, the costs of preparing the bill
of sale and all other documentation relating to such purchase and the costs of
any necessary filings related thereto will be borne by the Lessee. If the Lessee
shall fail to fulfill its obligations under this Section 22.1(c), all of the
Lessee's obligations under the Lease and the Operative Agreements, including,
without limitation, the Lessee's obligation to pay installments of Rent, with
respect to the Units in question shall continue.
Section 22.2 Election to Retain or Return Equipment at End of Basic
or Renewal Term. Not less than 180 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,
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 a
Basic Group, Lessee must return at least 25 Units from such Basic Group to
Lessor and the determination as to which Units are to be retained shall be made
on a random or other basis (in each case reasonably acceptable to Lessor)
without discrimination based on maintenance status, operating condition of the
Units in question or otherwise, and Lessee shall describe in such notice such
manner in which it proposes to determine the Units in such Basic 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 all of 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 Material Default or
Lease Event of Default shall have occurred and be continuing either at the time
of notice or the expiration of the Lease Term (unless (i) Lessor shall have
waived such Material Default or Lease Default solely for the purpose of this
Section 22.3, (ii) in the case of a Lease Event of Default under Section 14(c),
14(d), 14(e), 14(f) or 14(i), Lessee shall have properly made a Special Purchase
Defeasance and after giving effect to the purchase described below, no such
Lease Event of Default shall be continuing or (iii) in the case of a Lease Event
of Default under Section 14(g) or 14(h), Lessee shall have obtained a final,
nonappealable order of a United States court having appropriate bankruptcy
jurisdiction over Lessee which (x) authorizes such purchase and (y) is in form
and substance satisfactory to Lessor and Indenture Trustee) and provided that
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, and subject to the minimum
number of Units and the criteria for selection of such Units referred to in
Section 22.2) either (x) at the expiration of the Basic Term at a price equal to
the Basic Term Purchase Price of such Units or (y) at the expiration of the
Basic Term or any Renewal Term at a price equal to the Fair Market Sales Value
of such Units as determined in accordance with Section 22.5 hereof. Lessee
shall give Lessor written notice not less than 90 days prior to the end of the
Basic Term, 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 (but in any event subject to the minimum number of Units
referred to in Section 22.2), 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
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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 Material Default or
Lease Event of Default shall have occurred and be continuing either at the time
of notice or the expiration of the Basic Term or any applicable Renewal Term
(unless Lessor shall have waived such Material Default or 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 (as specified in such
notice, and subject to the minimum number of Units and the criteria for
selection of such Units referred to in Section 22.2) at the expiration of the
Basic Term or any applicable Renewal Term which Lessee has not elected to
purchase pursuant to Section 22.3, which obligation may be fulfilled by Lessee
electing to renew this Lease under either of the following Section 22.4(a) or
(b):
(a) Fixed Rate. Lessee may give Lessor written notice not less
than 90 days prior to the end of the Basic Term (or, in the circumstances
described in the fourth 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 (as specified in such notice, and
subject to the minimum number of Units and the criteria for selection of such
Units referred to in Section 22.2) then leased hereunder, for a term of one or
more years as Lessee shall specify in such notice (the "Fixed Rate Renewal
Term"), but in no event longer than the Outside Fixed Renewal Date, which notice
shall be irrevocable. In such event, promptly following such notice, a
determination in accordance with Section 22.5 shall be made of the date such
that (1) the period from the Closing Date to such date would not exceed 80% of
the useful life of such Units from and after the Closing Date, and (2) the Fair
Market Sales Value (determined without regard to inflation or deflation) on such
date would not be less than 20% of the Equipment Cost of such Units. Such date
shall thereafter be the latest date to which this Lease may be renewed pursuant
to this Section 22.4(a) (the "Outside Fixed Renewal Date"). Lessee shall
promptly following the determination of the Outside Fixed Renewal Date give
Lessor written notice of the Fixed Rate Renewal Term which Lessee selects for
its initial renewal under this Section 22.4(a), which in no event shall be
longer than the Outside Fixed Renewal Date. If Lessee selects a Fixed Rate
Renewal Term such that the period following such term until the Outside Fixed
Renewal Date is longer than 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 Fixed Renewal Date. The Basic Rent for each
Unit during any Fixed Rate Renewal Term (the "Fixed Rent") shall be for the
first such renewal, an amount equal to 105% of the average of the semiannual
Basic Rent installments payable hereunder for such Unit during the Basic Term,
and for any subsequent renewal under this Section 22.4(a), an amount equal to
the average of the semiannual Basic Rent installments payable hereunder for such
Unit during the Basic Term, payable semiannually in arrears provided, however,
if prior to the commencement of the first Fixed Rate Renewal Term, Lessee and
Owner Participant shall have received an opinion of Watson, Farley & Williams,
or of other independent counsel of national recognition selected by
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the Owner Participant and reasonably acceptable to the Lessee (which the Owner
Participant agrees to seek at the request and expense of the Lessee) to the
effect that the elimination of such premium will not result in such renewal term
being includable in the "lease term", as defined in Treasury Regulation
(S)1.467-1(h)(6), or any successor thereto, in a manner that adversely affects
the Net Economic Return, such 5% premium above the average of the semi-annual
Basic Rent installments shall not be included in the first Fixed Rate Renewal
Term hereunder. Each Fixed Rate Renewal Term shall commence immediately upon the
expiration of the Basic Term or the preceding Fixed Rate Renewal Term, as the
case may be.
(b) Fair Market. Lessee may give Lessor written notice not less
than 90 days prior to the end of the Basic Term, a Fixed Rate Renewal Term or a
Fair Market Renewal Term (subject to the limitations otherwise provided in this
Section 22.4(b)) that Lessee elects to renew this Lease under this Section
22.4(b) with respect to any or all of the Units (as specified in such notice,
and subject to the minimum number of Units and the criteria for selection of
such Units referred to in Section 22.2) then leased hereunder for a term of one
or more years as Lessee shall specify in such notice (the "Fair Market Renewal
Term"), which notice shall be irrevocable. The Basic Rent for the Units leased
during the Fair Market Renewal Term shall be determined in accordance with
Section 22.5 and shall be for the first such renewal, an amount equal to 105% of
the Fair Market Rental Value of such Units, and for any subsequent renewal under
this Section 22.4(b), an amount equal to the Fair Market Rental Value of such
Units, payable semiannually in arrears provided, however, if prior to the
commencement of the first Fixed Rate Renewal Term, Lessee and Owner Participant
shall have received an opinion of Watson, Farley & Williams, or of other
independent counsel of national recognition selected by the Owner Participant
and reasonably acceptable to the Lessee (which the Owner Participant agrees to
seek at the request and expense of the Lessee) to the effect that the
elimination of such premium will not result in such renewal term being
includable in the "lease term", as defined in Treasury Regulation
(S)1.467-1(h)(6), or any successor thereto, in a manner that adversely affects
the Net Economic Return, such 5% premium above Fair Market Rental Value shall
not be included in the first Fair Market Renewal Term hereunder. The Fair Market
Renewal Term shall commence immediately upon the expiration of the Basic Term or
the preceding Fixed Rate Renewal Term or Fair Market Renewal Term, as the case
may be.
Section 22.5 Appraisal. Promptly following Lessee's written notice
pursuant to Section 22.2 of its election to retain any Units at the end of the
Basic Term or a Renewal Term, as the case may be, Lessor and Lessee shall
determine the remaining useful life (based on the actual condition of a
reasonable sampling of such Units and determined pursuant to the appraisal
procedure set forth in the definition of Fair Market Sales Value) and the 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.
Promptly following Lessee's written notice pursuant to Section 22.1(a) of its
election to purchase any Units on the Special Purchase Date, Lessor and Lessee
shall determine the Fair Market Sales Value of the Units to be purchased,
assuming the Units are in the condition required by this Lease, which Fair
Market Sales Value shall be used to determine the Special Purchase Price, as
provided in Section 22.1(a).
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,
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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, assuming such Unit is in the condition required by this
Lease, reduced in equal monthly increments to the Fair Market Sales Value of
such Unit as of the last day of such Renewal Term; provided that in no event
during any Fixed Rate Renewal Term shall the Stipulated Loss Value and
Termination Value of any Unit be less than 20% of the Equipment Cost of such
Unit.
SECTION 23. Limitation of Lessor's Liability. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder (except as expressly provided herein) shall be binding upon Lessor
only in its capacity as Owner Trustee under the Trust Agreement and in no case
shall the Trust Company be personally liable for or on account of any
statements, representations, warranties, covenants or obligations stated to be
those of Lessor hereunder, except that Lessor (or any successor Owner Trustee)
shall be personally liable for its gross negligence or wilful misconduct and for
its breach of its covenants, representations and warranties contained herein to
the extent covenanted or made in its individual capacity.
SECTION 24. Investment of Security Funds. Any moneys received by Lessor
or the Indenture Trustee pursuant to Section 12.2 which are required to be paid
to Lessee after completion of repairs to be made pursuant to Section 12.2 or
pursuant to Section 11.4(a) or 11.5, 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 a Lease Default or
Lease Event of Default or as 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 Material Default 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.
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 New York; 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.
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Section 25.2 Execution in Counterparts. This Lease may be executed
in any number of counterparts, each executed counterpart constituting an
original and in each case such counterparts shall constitute but one and the
same instrument; provided, however, that to the extent that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code) no security interest in this Lease may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page hereof,
which counterpart shall constitute the only "original" hereof for purposes of
the Uniform Commercial Code.
Section 25.3 Headings and Table of Contents; Section References.
The headings of the sections of this Lease and the Table of Contents are
inserted for purposes of convenience only and shall not be construed to affect
the meaning or construction of any of the provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to sections of this
Lease.
Section 25.4 Successors and Assigns. This Lease shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective permitted successors and assigns.
Section 25.5 True Lease. It is the intent of the parties to this
Lease that it will be a true lease and not a "conditional sale," and that Lessor
shall at all times be considered to be the owner of each Unit which is the
subject of this Lease for the purposes of all Federal, state, city and local
income taxes or for franchise taxes measured by income, and that this Lease
conveys to Lessee no right, title or interest in any Unit except as lessee.
Nothing contained in this Section 25.5 shall be construed to limit Lessee's use
or operation of any Unit or constitute a representation, warranty or covenant by
Lessee as to tax consequences.
Section 25.6 Amendments and Waivers. No term, covenant, agreement
or condition of this Lease may be terminated, amended or compliance therewith
waived (either 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 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
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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.
* * *
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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 except as expressly
provided herein but solely as Owner Trustee
By:__________________________________________
Name:
Title:
Lessee:
GATX RAIL CORPORATION
By:__________________________________________
Name:
Title
/1/Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on this ____ day of April, 2000.
BANK ONE, NA,
as Indenture Trustee
By:__________________________________________
Name:
Title:
- ----------------------
/1/ This language contained in the original counterpart only.
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Exhibit A
LEASE SUPPLEMENT NO. _______
(GATX Rail Trust No. 2000-1)
This Lease Supplement No. ___, dated as of _________, between Wilmington
Trust Company, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement ("Lessor"), and GATX Rail Corporation, a New York
corporation ("Lessee");
Witnesseth:
Lessor and Lessee have heretofore entered into that certain Equipment Lease
Agreement (GATX Rail Trust No. 2000-1) dated as of April 3, 2000 (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 New York; 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>
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written and to
be delivered as of the date first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly
provided herein but solely as Owner Trustee
By:_________________________________________
Name:
Title:
GATX RAIL CORPORATION
By:_________________________________________
Name:
Title:
/1/Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of April, 2000.
BANK ONE, NA,
as Indenture Trustee
By:____________________________________
Name:
Title:
- ----------------------
/1/ This language contained in the original counterpart only.
A-2
<PAGE>
_________________________________________
EQUIPMENT LEASE AGREEMENT
(GATX Rail Trust No. 2000-2)
Dated as of April 3, 2000
Between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly provided herein but
solely as Owner Trustee,
Lessor
And
GATX RAIL CORPORATION,
Lessee
Assorted Railroad Tank Cars
And Covered Hopper Cars
_________________________________________
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS
LEASE, THE EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE HEREUNDER
HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF, BANK ONE, NA, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND SECURITY AGREEMENT (GATX RAIL
TRUST NO. 2000-2), DATED AS OF APRIL 3, 2000 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>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<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........................................ 1
Section 3.3 Supplemental Rent................................. 2
Section 3.4 Adjustment of Rent................................ 2
Section 3.5 [RESERVED]........................................ 2
Section 3.6 Manner of Payments................................ 2
SECTION 4. Ownership and Marking of Equipment.................................. 3
Section 4.1 Retention of Title................................ 3
Section 4.2 Duty to Number and Mark Equipment................. 3
Section 4.3 Prohibition Against Certain Designations.......... 4
SECTION 5. Disclaimer of Warranties............................................ 4
Section 5.1 Disclaimer of Warranties.......................... 4
SECTION 6. Return of Equipment; Storage........................................ 5
Section 6.1 Return; Holdover Rent............................. 5
Section 6.2 Condition of Equipment............................ 7
SECTION 7. Liens............................................................... 8
SECTION 8. Maintenance; Possession; Compliance with Laws....................... 8
Section 8.1 Maintenance and Operation......................... 8
Section 8.2 Possession........................................ 9
Section 8.3 Sublease.......................................... 10
SECTION 9. Modifications....................................................... 11
Section 9.1 Required Modifications............................ 11
Section 9.2 Optional Modifications............................ 11
Section 9.3 Removal of Property; Replacements................. 12
SECTION 10. Voluntary Termination............................................... 12
Section 10.1 Right of Termination.............................. 12
Section 10.2 Sale of Equipment................................. 13
Section 10.3 Retention of Equipment by Lessor.................. 14
Section 10.4 Termination of Lease.............................. 14
SECTION 11. Loss, Destruction, Requisition, Etc................................. 14
Section 11.1 Event of Loss..................................... 14
Section 11.2 Replacement or Payment upon Event of Loss......... 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 11.3 Rent Termination..................................................... 16
Section 11.4 Disposition of Equipment; Replacement of Unit........................ 17
Section 11.5 Eminent Domain....................................................... 18
SECTION 12. Insurance............................................................................. 18
Section 12.1 Insurance............................................................ 18
Section 12.2 Physical Damage Insurance............................................ 19
Section 12.3 Public Liability Insurance........................................... 20
Section 12.4 Certificate of Insurance............................................. 21
Section 12.5 Additional Insurance................................................. 21
SECTION 13. Reports; Inspection................................................................... 22
Section 13.1 Duty of Lessee to Furnish............................................ 22
Section 13.2 Lessor's Inspection Rights........................................... 22
SECTION 14. Lease Events of Default............................................................... 23
SECTION 15. Remedies.............................................................................. 24
Section 15.1 Remedies............................................................. 24
Section 15.2 Cumulative Remedies.................................................. 27
Section 15.3 No Waiver............................................................ 27
Section 15.4 Notice of Lease Default.............................................. 27
Section 15.5 Lessee's Duty to Furnish Information with Respect to
Subleases............................................................ 27
Section 15.6 Lessee's Duty to Return Equipment Upon Default....................... 27
Section 15.7 Specific Performance; Lessor Appointed Lessee's
Agent................................................................ 28
SECTION 16. Filings; Further Assurances........................................................... 29
Section 16.1 Filings.............................................................. 29
Section 16.2 Further Assurances................................................... 29
Section 16.3 Other Filings........................................................ 29
Section 16.4 Expenses............................................................. 29
SECTION 17. Lessor's Right to Perform............................................................. 30
SECTION 18. Assignment............................................................................ 30
Section 18.1 Assignment by Lessor................................................. 30
Section 18.2 Assignment by Lessee................................................. 30
Section 18.3 Sublessee's Performance and Rights................................... 30
SECTION 19. Net Lease, etc........................................................................ 31
SECTION 20. Notices............................................................................... 32
SECTION 21. Concerning the Indenture Trustee...................................................... 33
Section 21.1 Limitation of the Indenture Trustee's Liabilities.................... 33
Section 21.2 Right, Title and Interest of the Indenture Trustee Under Lease....... 34
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 22. Purchase Options; Renewal Options.......................................... 34
Section 22.1 (a) Special Purchase Option........................... 34
(b) Early Purchase Option............................. 35
(c) Payment; Assumption of Equipment Notes............ 35
Section 22.2 Election to Retain or Return Equipment at End of
Basic or Renewal Term............................... 36
Section 22.3 Purchase Options....................................... 36
Section 22.4 Renewal Options........................................ 37
Section 22.5 Appraisal.............................................. 38
Section 22.6 Stipulated Loss Value and Termination Value During
Renewal Term........................................ 39
SECTION 23. Limitation of Lessor's Liability........................................... 39
SECTION 24. Investment of Security Funds............................................... 39
SECTION 25. Miscellaneous.............................................................. 40
Section 25.1 Governing Law; Severability............................ 40
Section 25.2 Execution in Counterparts.............................. 40
Section 25.3 Headings and Table of Contents; Section References..... 40
Section 25.4 Successors and Assigns................................. 40
Section 25.5 True Lease............................................. 40
Section 25.6 Amendments and Waivers................................. 40
Section 25.7 Survival............................................... 40
Section 25.8 Business Days.......................................... 41
Section 25.9 Directly or Indirectly................................. 41
Section 25.10 Incorporation by Reference............................. 41
</TABLE>
Attachments to Equipment Lease:
Exhibit A - Form of Lease Supplement
Appendix A - Definitions
iii
<PAGE>
EQUIPMENT LEASE AGREEMENT
(GATX Rail Trust No. 2000-2)
This Equipment Lease Agreement (GATX Rail Trust No. 2000-2), dated as of
April 3, 2000 (the "Lease"), between Wilmington Trust Company, not in its
-----
individual capacity except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement ("Lessor"), and GATX Rail Corporation, a New
------
York corporation ("Lessee").
------
In consideration of the mutual agreements herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
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 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 basic term of this Lease (the "Basic
---------- -----
Term") shall commence on the Basic Term Commencement Date and, subject to
- ----
earlier termination pursuant to Sections 10, 11, 15 and 22.1 shall expire at
11:59 p.m. (Chicago time) on the Basic Term Expiration Date. Subject and
pursuant to Section 22.4, Lessee may elect one or more Renewal Terms.
Section 3.2 Basic Rent. Lessee hereby agrees to pay Lessor as
----------
Basic Rent for each Unit throughout the Basic Term applicable thereto Basic Rent
in consecutive semi-annual installments payable on each Rent Payment Date. Each
such semi-annual payment of Basic Rent shall be in an amount equal to the
product of the Equipment Cost for such Unit multiplied by the Basic Rent
percentage for such Unit set forth opposite such Rent Payment Date on Schedule
--------
3A to the Participation Agreement (as such Schedule 3A shall be adjusted
- -- -----------
pursuant to Section 2.6 of the Participation Agreement). Each such semi-annual
payment of Basic Rent shall be allocated in accordance with Schedule 3B to the
-----------
Participation Agreement, and the Lessee and the Lessor agree that such
allocation is intended to constitute an allocation of fixed rent to the periods
indicated on such Schedule 3B within the meaning of Treasury Regulation
-----------
(S)1.467-1(c)(2)(ii)(A). Basic Rent shall be payable in advance on certain Rent
Payment Dates and in arrears on certain Rent Payment Dates, as specified in
Schedule 3A to the Participation Agreement, as so adjusted, such Schedule 3A as
- ----------- -----------
so adjusted from time to time being incorporated herein by reference.
<PAGE>
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, (i) 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, (ii) in the case of the termination of this Lease with
respect to any Unit pursuant to Section 10.2, 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, (iii) in the case of the purchase of any Unit pursuant to Section
22.1 or Section 6.9 of the Participation Agreement, on such date of purchase, an
amount equal to the Make-Whole Amount, if any, with respect to the principal
amount of each Equipment Note to be prepaid as a result of such purchase, (iv)
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 (v) in the case of any refinancing of the Equipment
Notes pursuant to Section 10.2 of the Participation Agreement, on the Refunding
Date, an amount equal to the Make-Whole Amount, if any, with respect to the
aggregate principal amount of the Equipment Notes being prepaid. All
Supplemental Rent to be paid pursuant to this Section 3.3 shall be payable in
the type of funds and in the manner set forth in Section 3.6.
Section 3.4 Adjustment of Rent. Lessee and Lessor agree that the
------------------
Basic Rent, Stipulated Loss Value and Termination Value percentages and the
Early Purchase Price and Basic Term Purchase Price shall be adjusted to the
extent provided in Section 2.6 of the Participation Agreement, subject in all
cases to the limitation set forth in the second paragraph of Section 3.2.
Section 3.5 [RESERVED]
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 North Market Street, Wilmington, DE 19890-0001, Attention: Corporate Trust
Administration. All Rent shall be paid by Lessee in funds consisting of lawful
2
<PAGE>
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 Bank
One, NA, 1 Bank One Plaza, Suite IL1-0126, Chicago, IL 60670-0126, ABA No.
071000013, Clearing Account 4811-5377, for credit to trust number 204884-000,
Attn: M. J. Frye, GATX Rail Trust No. 2000-2 or at such other location in the
United States of America as the Indenture Trustee may otherwise direct.
SECTION 4. Ownership and Marking of Equipment.
Section 4.1 Retention of Title. Lessor shall and hereby does
------------------
retain full legal title to and beneficial ownership of the Equipment
notwithstanding the delivery to and possession and use of the Equipment by
Lessee hereunder or any sublessee under any sublease permitted hereby.
Section 4.2 Duty to Number and Mark Equipment. With respect to the
---------------------------------
Units to be delivered on the 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 a Replacement Unit pursuant to Section 11.4(b), 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, and will
from and after such date keep and maintain, plainly, distinctly, permanently and
conspicuously marked by a plate or stencil printed in contrasting colors upon
each side of each Unit, in letters not less than one inch in height, a legend
substantially as follows:
"OWNERSHIP SUBJECT TO A SECURITY AGREEMENT FILED WITH THE SURFACE
TRANSPORTATION BOARD"
with appropriate changes thereof and additions thereto as from time to time may
be required by law in order to protect Lessor's right, title and interest in and
to such Unit, its rights under this Lease and the rights of the Indenture
Trustee. Except as provided hereinabove, Lessee will not place any such Units
in operation or exercise any control or dominion over the same until the
required legend shall have been so marked on both sides thereof, and will
replace promptly any such word or words in such legend which may be removed,
defaced, obliterated or destroyed. 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.
3
<PAGE>
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 statement of
-----------------
new reporting marks specified in 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.
------------------------
Section 5.1 Disclaimer of Warranties. Without waiving any claim
------------------------
Lessee may have against any seller, supplier or manufacturer, LESSEE
ACKNOWLEDGES AND AGREES THAT, (i) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT
EACH UNIT IS SUITABLE FOR ITS PURPOSES AND LESSEE HAS ACCEPTED EACH UNIT, (iii)
NEITHER LESSOR NOR OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN PROPERTY
OF SUCH KIND OR HAS INSPECTED THE UNITS PRIOR TO DELIVERY TO AND ACCEPTANCE BY
LESSEE, (iv) EACH UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED, AND (v) LESSOR
LEASES AND LESSEE TAKES EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN
WHATEVER CONDITION IT MAY BE, AND LESSEE ACKNOWLEDGES THAT NEITHER LESSOR, AS
LESSOR OR IN ITS INDIVIDUAL CAPACITY, NOR OWNER PARTICIPANT MAKES NOR SHALL BE
DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS,
WARRANTIES OR REPRESENTATIONS EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY THEREOF OR AS TO THE TITLE, OF THE EQUIPMENT, THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM
FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR
OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND EACH OF LESSOR
AND OWNER PARTICIPANT EXPRESSLY DISCLAIMS SELECTION OF THE UNITS, except that
Lessor, in its individual capacity, represents and warrants that on the Closing
Date, Lessor shall have received whatever title to the Equipment as was conveyed
to Lessor by Lessee 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. 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
4
<PAGE>
Default shall have occurred and be continuing, at Lessor's option, such power of
attorney shall terminate, and Lessor may assert and enforce, at Lessee's sole
cost and expense, such claims and rights. Lessor shall have no responsibility or
liability to Lessee or any other Person with respect to any of the following:
(i) any liability, loss or damage caused or alleged to be caused directly or
indirectly by any Unit, or by any of the commodities, items or materials from
time to time contained therein, whether or not permitted by the terms hereof, or
by any inadequacy thereof or deficiency or defect therein or by any other
circumstances in connection therewith; (ii) the use, operation or performance of
any Unit or any risks relating thereto; (iii) any interruption of service, loss
of business or anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement or replacement
of any Unit. Lessee's delivery of a Lease Supplement shall be conclusive
evidence as between Lessee and Lessor that all Units described therein are in
all the foregoing respects satisfactory to Lessee, and Lessee will not assert
any claim of any nature whatsoever against Lessor based on any of the foregoing
matters.
SECTION 6. Return of Equipment; Storage.
----------------------------
Section 6.1 Return; Holdover Rent. (a) Not less than 120 days
---------------------
prior to the end of the Basic Term, the end of any Fixed Rate Renewal Term, or
the end of any Fair Market Renewal Term, in each case with respect to any Units
which Lessee has elected to return under Section 22.2, Lessee will provide
Lessor with a list of alternative storage locations used for the storage of
rolling stock within the continental United States (excluding Alaska) sufficient
to store the returned Units and the available storage capacities of such
locations. Not less than 90 days prior to the end of the Lease Term with
respect to any Unit which has not been purchased by Lessee, Lessor will give
Lessee irrevocable notice of its decision either to take possession of or store
such Unit. If Lessor shall have decided to take possession of such Unit, the
terms of Section 6.1(b) will apply. If Lessor shall have decided to store such
Unit, the terms of Section 6.1(c) hereof will apply.
(b) If Lessor shall have decided to take possession of such Unit,
Lessee will, at its sole risk 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 direct by written notice to Lessee on or before the 90th day before
the end of the Lease Term; provided, that (x) such Units shall be returned to no
--------
more than five (5) interchange locations (each of which shall be located within
the continental United States, exclusive of Alaska), (y) there shall be no less
than 100 Units (or, if less than 100 Units are then subject to the Lease, all
Units), returned to each location, and (z) Lessor's notice shall specify the
total number and type of Units to be delivered to each location.
(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, for any particular
--------------
storage location, on the later of the expiration of the Lease Term and the date
on which 50% of the total number of Units being returned and stored at such
location have arrived thereat (the "Storage Period Commencement Date") and
--------------------------------
ending not more than 45 days after the later of (A) the Storage Period
Commencement Date and (B) the date on which such Unit is in compliance with the
conditions
5
<PAGE>
set forth in Section 6.2, and for an additional 60 days thereafter at the sole
risk and expense of Lessor. On or before the 90th day before the end of the
Lease Term, Lessor shall provide Lessee with written notice designating no more
than five (5) choices from among the alternative storage locations provided by
Lessee pursuant to Section 6.1(a), with a minimum of 100 Units to be stored per
location. Any storage provided by Lessee during the Storage Period (except for
such additional 60-day period referred to above) shall be at the sole risk and
expense of Lessee, and Lessee shall maintain the insurance required by Section
12.1 with respect to all stored Units; provided, however, any movement of the
-------- -------
Units being stored in connection with Section 6 shall be at the risk and expense
of Lessor. During the Storage Period, Lessee will permit Lessor or any Persons
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 Lessee's normal business hours upon at least
three Business Days' prior written or telephonic notice; provided, however, that
-----------------
such inspection and restenciling shall not interfere with the normal conduct of
Lessee's business; 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 the Equipment after the
Storage Period. If Lessee does store any Unit after the expiration of the
Storage Period, such storage shall be at the sole risk and expense of Lessor.
(ii) Upon the request and direction of Lessor (and at Lessor's sole
risk and expense), on not more than one occasion with respect to each stored
Unit and upon not less than 30 days' prior written notice from Lessor to Lessee,
Lessee will, on or before the expiration of the Storage Period, transport such
Units to any railroad interchange point or points within the continental United
States (except Alaska) (with a minimum of 100 Units (or, if less than 100 Units
are then subject to the Lease, all Units) per interchange point and to a maximum
of five (5) interchange points) 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.
(iii) Upon receipt of Lessor's written notice designating its choices
from among the alternative storage locations provided by Lessee under Section
6.1(a), Lessee shall have the option to store such Units at such storage track
locations anywhere within the continental United States as it shall choose
(provided that there shall be no less than 100 Units (or, if less than 100 Units
are then subject to the Lease, all Units) stored at each such location). Upon
receipt of such notice, Lessee will promptly give notice to Lessor of the
locations at which Lessee will store such Units. If Lessee shall exercise such
option, (x) the Storage Period shall be extended an additional 30 days and (y)
Lessee shall on or before the expiration of the Storage Period transport such
Units to any railroad interchange point within the continental United States
(except Alaska) (with a minimum of 100 Units (or, if less than 100 Units are
then subject to the Lease, all Units) per interchange point and to a maximum of
five (5) interchange points) designated by Lessor upon not less than 30 days'
prior written notice. The movement of any Unit from such Unit's location as
designated by Lessee pursuant to this Section 6.1(c)(iii) to a location
thereafter designated by Lessor in accordance with the foregoing sentence will
be at the
6
<PAGE>
risk and expense of Lessor. During any Storage Period, Lessee shall store the
Equipment in such manner as Lessee normally stores similar units of railroad
equipment owned or leased by it.
(d) Upon the later of (i) expiration of the Lease Term with respect to
such Unit, (ii) tender of such Unit at the location determined in accordance
with Section 6.1(b) or, as applicable, the tender of such Unit for storage in
accordance with Section 6.1(c), and (iii) compliance by such Unit with Section
6.2, this Lease and the obligation to pay Basic Rent for such Unit accruing
subsequent to the expiration of the Lease Term with respect to such Unit shall
terminate.
(e) So long as no Lease Event of Default has occurred and is
continuing, all amounts earned in respect of a Unit after the date of expiration
of the Lease Term with respect to such Unit and prior to the return of such Unit
hereunder shall belong to Lessee, and if received by Lessor, shall be promptly
turned over to Lessee. In the event any Unit is not returned to Lessor in
accordance with the provisions of Section 6.1(b) on the last day of the Lease
Term with respect thereto, or if requested by Lessor pursuant to Section 6.1(c),
delivered and stored on such last day of the Lease Term, and, in either case, in
the condition specified in Section 6.2, Lessee shall pay to Lessor for each such
day from the expiration of the Lease Term with respect to such Unit until the
date on which such Unit is returned to Lessor in accordance with the provisions
of Section 6.1(b) and in the condition specified in Section 6.2, an amount equal
to the daily equivalent of the average Basic Rent for the Basic Term or the
Renewal Term as applicable to such Unit. In the event Lessee is required to pay
such Rent subsequent to the expiration of the Lease Term with respect to a Unit
or Units, any amounts earned with respect to such Units shall be for the account
of Lessee. If such Unit is not returned to Lessor in accordance with the
provisions of Section 6.1(b) and in the condition specified in Section 6.2 on or
prior to the 180th day after the expiration of the Lease Term with respect to
such Unit, Lessor shall have the right to require Lessee to purchase such Unit
for a purchase price equal to the Stipulated Loss Value for such Unit as of the
181st day after the expiration of such Lease Term; provided that if more than 25
--------
Units have not been returned on or prior to the expiration of such Lease Term,
the purchase price for such Unit shall be the higher of (x) the Fair Market
Sales Value, assuming such Unit is in the condition required by this Lease, and
(y) the Stipulated Loss Value of such Unit as of the 181st day after the
expiration of such Lease Term; provided further that, during the holdover period
----------------
described in this sentence and the immediately preceding sentence, Lessee shall
use its best efforts to secure the return of the Equipment as required under
this Section 6 in the condition specified in Section 6.2. Nothing herein shall
be in abrogation of Lessor's right to have such Unit returned to it for
possession or storage. 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 except as to the absence of any Lessor's
Liens, and may specifically disclaim any such representations or warranties.
Section 6.2 Condition of Equipment. Each Unit when returned to
----------------------
Lessor pursuant to this Section 6 shall be (i) capable of performing the
functions for which it was designed, with all loading and unloading components
operating in good working order with
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allowance for normal wear and tear, (ii) suitable for continued commercial use
in the commodity last carried immediately prior to such return, (iii) suitable
for use in interchange by a new owner in the operating lease business in
accordance with then applicable Federal regulations (including but not limited
to AAR and FRA), (iv) in all material respects in the condition required by
Section 8.1, (v) in conformance with any requirement pertaining to warranties of
the manufacturer of the Units during the warranty period, (vi) empty, (vii)
steam cleaned or otherwise cleaned in a comparable commercially acceptable
manner, and (viii) 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. All logs, records, books and other materials relating to the
maintenance of such Unit shall, upon request, be delivered to Lessor or its
designee upon the return of such Unit. Lessor shall have the right to inspect
any Unit that is returned pursuant to Section 6.1 to ensure that such Unit is in
compliance with the conditions set forth in this Section 6.2, at Lessor's sole
cost, expense and risk (including, without limitation, the risk of personal
injury or death), by its authorized representatives, during Lessee's normal
business hours and upon reasonable prior notice to Lessee; provided, however,
-----------------
that 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 6.2 unless caused by Lessee's gross negligence or wilful misconduct; and
further provided, that if such Unit is not in compliance with the conditions
- ----------------
set forth in this Section 6.2 then Lessee will (i) promptly take such steps as
are necessary to bring such Unit in compliance with the conditions set forth in
this Section 6.2 and (ii) pay 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 inspection pursuant to this Section 6.2 shall
interfere with the normal conduct of Lessee's business or the normal conduct of
any sublessee's business, and 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 this Section 6.2.
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 Unit 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.
Lessee shall promptly, at its own expense, take such action or cause such action
to be taken as may be necessary to duly discharge (by bonding or otherwise) any
such Lien not excepted above if the same shall arise at any time.
SECTION 8. Maintenance; Possession; Compliance with Laws.
---------------------------------------------
Section 8.1 Maintenance and Operation. (a) Lessee, at its own
-------------------------
cost and expense, shall maintain, repair and keep each Unit, (i) according to
prudent industry practice, in good working order, and in good physical condition
for railcars of a similar age and usage, normal wear and tear excepted, (ii) in
a manner consistent with maintenance practices used by Lessee in respect of
equipment owned or leased by Lessee similar in type to such Unit, (iii) in
accordance in all material respects with all manufacturer's warranties in effect
and in accordance with all applicable provisions, if any, of insurance policies
required to be maintained pursuant to Section 12, (iv) in compliance in all
material respects with any applicable laws and regulations,
8
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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 and (v) in a condition mechanically suitable
for interchange by an operator in revenue service; 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 Indenture Trustee or any
Participant to criminal sanctions or release Lessee from the obligation to
return the Equipment in compliance with the provisions of Section 6.2. Lessee
shall provide Lessor and the Indenture Trustee with notice of any contest of the
type described in the preceding sentence in detail sufficient to enable Lessor
and the Indenture Trustee to ascertain whether such contest may have an effect
of the type described in the preceding sentence. In no event shall Lessee
discriminate as to the use or maintenance of any Unit (including the periodicity
of maintenance or recordkeeping 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) Without the written waiver or consent of Lessor (which waiver or
consent will not be unreasonably withheld), Lessee shall not or expressly permit
any sublessee to change a DOT classification (as provided for in 49 C.F.R. Part
179 or any successor thereto), or expressly permit any sublessee to operate any
Unit under a different DOT classification, from that classification in effect
for such Unit on the Closing Date, 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 after receipt of Lessee's written request therefor (or Lessor
expressly rejects such a request by Lessee), Lessee may replace such Unit in
accordance with and subject to the provisions of Section 11.2(i), 11.3 and 11.4.
Section 8.2 Possession. Lessee shall be entitled to the possession
----------
of the Equipment and to the use of the Equipment by it or any Affiliate, in the
United States and, subject to the remaining provisions of this Section 8.2 and
Section 8.3, 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 thirty-five percent (35%) of the Units (as determined by mileage records)
be assigned outside the United States at the same time until after December 31,
2007. Thereafter, no more than forty-nine percent (49%) of the Units (as
determined by mileage records) shall be used outside the continental United
States (exclusive of Alaska) at the same time. Notwithstanding the foregoing,
no more than 15% of the Units shall be used in Mexico so long as Mexican law
does not afford protections to the Lessor comparable to U.S. law and unless
Lessee shall first have taken all
9
<PAGE>
actions necessary so as to protect the right, title and interest of Lessor and
the Indenture Trustee in the Equipment in Mexico pursuant to Section 16.3 and
shall have furnished Lessor and the Indenture Trustee with an opinion of Mexican
counsel, reasonably satisfactory to such parties, to the effect that all such
filings and recordings of the related Operative Agreements have been taken and
effected under such Mexican law. 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
and 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. Provided Lessor shall not have declared the
--------
Lease to be in default (or the Lease shall 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, (i) a railroad company or companies
incorporated under the laws of the United States of America 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 (ii) responsible companies
(i.e., a company with which Lessee would do business in the ordinary course of
Lessee's business with respect to railcars which it owns, leases or manages)
other than railroad companies for use in their business (leases to such
sublessees being herein referred to as "Permitted Subleases") provided, however,
------------------- -----------------
that Lessee shall not sublease more than 15% of the Units to a sublessee formed
under the laws of Mexico or any state thereof. 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 Closing Date, or otherwise as satisfactory to Lessor and
the Indenture Trustee, (ii) shall not be for a term which extends beyond the
Basic Term and 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, Owner Participant or the Indenture Trustee. In
the event Lessee desires to sublease one or more Units for a term which extends
beyond the Basic Term or any agreed upon Renewal Term, Lessee 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 of Section 11.2(i), 11.3 and 11.4. 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.
10
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SECTION 9. Modifications.
-------------
Section 9.1 Required Modifications. In the event the AAR, the
----------------------
United States Department of Transportation, or any other United States or state
governmental agency or any other applicable law requires that any Unit be
altered, replaced or modified (a "Required Modification"), Lessee agrees to make
---------------------
such Required Modification at its own expense; provided, however, that Lessee
-----------------
may, in good faith and by appropriate proceedings diligently conducted, contest
the validity or application of any such law, regulation, requirement or rule in
any reasonable manner which does not materially interfere with the use,
possession, operation or return of any Unit or materially adversely affect the
rights or interests of Lessor and the Indenture Trustee in the Equipment or
hereunder or otherwise expose Lessor, the Indenture Trustee or any Participant
to criminal sanctions or relieve Lessee of the obligation to return the
Equipment in compliance with the provisions of Section 6.2. Title to any
Required Modification shall immediately vest in Lessor. Notwithstanding
anything herein to the contrary, if Lessee determines in good faith that any
Required Modification to a Unit would be economically impractical, in lieu of
making the Required Modification as provided above, Lessee may provide written
notice of such determination to Lessor and treat such Unit as if an Event of
Loss had occurred as of the date of such written notice with respect to such
Unit and in such event the provisions of Sections 11.2, 11.3 and 11.4 shall
apply with respect to such Unit; provided that Lessee shall not discriminate
--------
against such Unit in making such determination of economic impracticality as
compared with other equipment of the same type as such Unit which is owned or
leased by Lessee.
Section 9.2 Optional Modifications. Lessee at any time may in its
----------------------
discretion and at its own cost and expense modify, alter or improve any Unit in
a manner which is not required by Section 9.1 (a "Modification"); provided that
------------
no Modification shall diminish the fair market value, utility, capacity, or
remaining economic useful life of such Unit below the fair market value,
utility, capacity, or remaining economic useful life thereof immediately prior
to such Modification, in any non de minimus respect, assuming such Unit was then
in the condition required to be maintained by the terms of this Lease, provided
--------
that Lessee shall not discriminate against such Unit in making such
modification, alteration or improvement as compared with other equipment of the
same type as the Unit and which are owned or leased by the Lessee. Title to any
Non-Severable Modification shall be immediately vested in Lessor. Title to any
Severable Modification (other than Required Modifications) shall remain with
Lessee. If Lessee shall at its cost cause such Severable Modifications (other
than Required Modifications) to be made to any Unit, Lessor shall have the
right, upon 90 days prior written notice in the case of a return other than
pursuant to Section 15.6, prior to the return of such Unit to Lessor hereunder,
to purchase such Severable Modifications (other than Severable Modifications
consisting of proprietary or communications equipment) at their then Fair Market
Sales Value (taking into account their actual condition). If Lessor does not so
elect to purchase such Severable Modifications, Lessee may remove such Severable
Modifications at Lessee's cost and expense, and if requested (which request
shall be made by not less than 90 days prior written notice in the case of a
return other than pursuant to Section 15.6) by Lessor will so remove such
Severable Modifications at Lessee's cost and expense, and Lessee shall, at its
expense, repair any damage resulting from the removal of any such Severable
Modifications in a manner consistent with Section 8.1.
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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 by 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 fair
market value, utility, capacity and remaining economic 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 in the ordinary course of maintenance
and repair 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 property replaced in the ordinary course of
maintenance and repair shall, without further act, become the property of Lessor
and be deemed part of such Unit for all purposes hereof.
SECTION 10. Voluntary Termination.
---------------------
Section 10.1 Right of Termination. So long as no Material 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 a Basic Group, Lessee shall
exercise such termination with respect to at least 25 Units, no fewer than 25
Units shall remain in such Basic Group as a result of such termination and the
determination as to which Units are subject to termination shall be made by
Lessee on a random or other basis (in each case reasonably acceptable to Lessor)
without discrimination based on maintenance status, operating condition of the
Units in question or otherwise) (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) that such Units have become obsolete or surplus to Lessee's requirements
by delivering at least 120 days' prior notice to Lessor and the Indenture
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 upon Lessee's compliance with this Section 10, and (ii) if
some but less than all of the Units in a Basic Group are designated as
Terminated Units, describing the nondiscriminatory manner in which Lessee
proposes to determine which Units in that Basic Group are to be Terminated
Units. Except as expressly provided herein, there will be no conditions to
Lessee's right to terminate this Lease with respect to the Terminated Units
pursuant to this Section 10.1. So long as (a) Lessor shall not have given
Lessee a notice of election to retain the Terminated Units in accordance with
Section 10.3, or (b) notice of prepayment of the Equipment Notes shall not have
been given pursuant to Section 2.10 of the Indenture, Lessee may withdraw the
termination notice referred to above at any time prior to the Termination Date,
whereupon this Lease shall continue in full force and effect; provided that
--------
Lessee (i) may not exercise its right to withdraw such a termination notice more
than once annually or more than four times during the Basic Term, and (ii) may
not withdraw any termination notice with respect to any Terminated Units after
receipt by Lessee of a bid equal to or greater than Termination Value with
respect to such Terminated Units or later than sixty (60) days prior to the
scheduled Termination Date. Lessee agrees that if it withdraws a termination
notice it will reimburse Lessor, Owner Participant and
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<PAGE>
the Indenture Trustee for all reasonable out-of-pocket costs and expenses
(including reasonable legal fees and expenses) incurred by any thereof in
connection therewith.
Section 10.2 Sale of Equipment. During the period from the date of
-----------------
such notice given pursuant to Section 10.1 to the Termination Date, Lessee, as
agent for Lessor and, except as provided in Section 10.3, at Lessee's sole cost
and expense, shall use reasonable best efforts to obtain bids from Persons other
than Lessee or Affiliates thereof for the cash purchase of the Terminated Units,
and Lessee shall promptly, and in any event at least five Business Days prior to
the proposed date of sale, certify to Lessor in writing the amount and terms of
each such bid, the proposed date of such sale and the name and address of the
party submitting such bid. Unless Lessor shall have elected to retain the
Terminated Units in accordance with Section 10.3, on the Termination Date: (i)
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) and (ii) 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 and retained by Lessor and, in addition, on the Termination Date, Lessee
shall pay to Lessor, (A) all unpaid Rent with respect to such Terminated Units
due and payable on or prior to the Termination Date (exclusive of any Basic Rent
first becoming due on such date), (B) the excess, if any, of (1) the Termination
Value for the Terminated Units computed as of the Termination Date, over (2) the
net cash sales proceeds (after the deduction of all reasonable costs and
expenses of Lessor and Owner Participant in connection with such sale) of the
Terminated Units, and (C) 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; provided however, in the event
-------- -------
that the net cash proceeds with respect to such Units referred to above exceed
the Termination Value for such Units, then, (x) Lessee shall receive a credit
against amounts payable to Lessor pursuant to this Section 10.2 in an amount
equal to the lesser of (I) the Prepaid Adjustment Amount, if any, and (II) the
amount by which such net cash proceeds exceed the Termination Value for such
Units any (y) Lessee shall pay to Lessor an amount equal to the Deferred
Adjustment Amount, if any. If no sale shall have occurred, whether as a result
of Lessee's failure to pay all of the amounts hereinabove required or otherwise,
this Lease shall continue in full force and effect with respect to such Units
and Lessee agrees to reimburse Lessor, Owner Participant and the Indenture
Trustee for all reasonable costs and expenses (including reasonable legal fees
and expenses) incurred by any thereof in connection therewith; provided that if
--------
such sale shall not have occurred solely because of Lessee's failure to pay the
amounts hereinabove required, Lessee shall have no further right to terminate
this Lease with respect to such Units. Lessee, in acting as agent for Lessor,
shall have no liability to Lessor for failure to obtain the best price, shall
act in its sole discretion and shall be under no duty to solicit bids publicly
or in any particular market. Lessee's sole interest in acting as agent shall be
to use its reasonable best efforts to sell the Units at the highest price then
obtainable consistent with the terms of this Lease.
Section 10.3 Retention of Equipment by Lessor. Notwithstanding the
--------------------------------
provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect by written
notice to Lessee,
13
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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 (i)
deliver the Terminated Units to Lessor in the same manner and condition as if
delivery were made to Lessor pursuant to Section 6.1(b) and Section 6.2,
treating the Termination Date as the termination date of the Lease Term with
respect to the Terminated Units, and (ii) pay to Lessor, or to the Persons
entitled thereto, all 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 the
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. If Lessor shall fail to pay the amounts required pursuant to
this Section 10.3 and as a result thereof this Lease shall not be terminated
with respect to the Terminated Units on a 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 reasonable out-of-pocket
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 occurring not earlier than 25 days from the date of such
notice.
Section 10.4 Termination of Lease. In the event of either (x) any
--------------------
such sale and receipt by Lessor and the Indenture Trustee of all of the amounts
provided in Section 10.2 or (y) retention of the Equipment and full performance
by Lessor of its payment obligations in compliance with 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 the Terminated Units shall end.
SECTION 11. Loss, Destruction, Requisition, Etc.
------------------------------------
Section 11.1 Event of Loss. In the event that any Unit (i) shall
-------------
suffer damage or contamination which, in Lessee's reasonable judgment (as
evidenced by an Officers' Certificate to such effect), makes repair uneconomic
or renders such Unit unfit for commercial use, (ii) shall suffer destruction, or
shall suffer theft or disappearance (after reasonable efforts by Lessee to
locate the same) for a period exceeding 12 months (or, if earlier, the end of
the Basic Term or Renewal Term then in effect), (iii) shall be permanently
returned to the manufacturer pursuant to any patent indemnity provisions, (iv)
shall have title thereto taken or appropriated by any governmental authority,
agency or instrumentality under the power of eminent domain or otherwise, (v)
shall be taken or requisitioned for use by (x) any governmental authority of
Mexico or any agency or instrumentality thereof under the power of eminent
domain or otherwise for a period in excess of the lesser of (A) 365 days and (B)
the remaining Basic Term
14
<PAGE>
or any Renewal Term then in effect or (y) any other governmental agency or
instrumentality thereof under the power of eminent domain or otherwise for a
period in excess of the remaining Basic Term or any Renewal Term then in effect
(unless such taking or requisition is by any governmental authority, agency or
instrumentality other than the United States or Canada 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.
Section 11.2 Replacement or Payment upon Event of Loss. Upon the
-----------------------------------------
occurrence of (a) an Event of Loss or the deemed occurrence of an Event of Loss
pursuant to Section 9.1 or (b) an election to replace pursuant to Section 8.1(b)
or 8.3, with respect to any Unit, Lessee shall as soon as reasonably practical
and in any event within 60 days after a Responsible Officer of Lessee shall have
actual knowledge of such occurrence or election give Lessor and the Indenture
Trustee notice of such occurrence of such Event of Loss or election to replace
(which notice shall identify the Unit involved) and then within the 60-day
period following such notice give Lessor and the Indenture Trustee notice as to
which of the following options Lessee shall elect to perform (it being agreed
that if Lessee shall fail to give notice of such election, Lessee shall be
deemed to have elected to perform the option set forth in Section 11.2(ii)):
(i) Upon Lessee's election to perform under this clause (i), as
promptly as practicable following such election, and in any event on or
before the 60th day following the date of notice of such Event of Loss or
deemed Event of Loss pursuant to Section 9.1, or the date Lessee exercises
an option to replace pursuant to Section 8.1(b) or Section 8.3, as the case
may be, Lessee shall comply with Section 11.4(b) and shall convey or cause
to be conveyed to Lessor a Replacement Unit to be leased to Lessee
hereunder, such Replacement Unit to be of the same car type of the same or
newer model year (or otherwise approved by Lessor, which approval shall not
be unreasonably withheld), 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 value, utility, capacity, remaining
economic useful life and condition at least equal to the Unit so replaced
(assuming such Unit was in the condition required to be maintained by the
terms of this Lease); provided that, if, at the time of such replacement,
--------
only railcars (x) of a newer model year or (y) with a greater fair market
value (or a greater Fair Market Sales Value in the situation set forth in
the next proviso) than the replaced Units are available as Replacement
Units, Lessee shall convey such Replacement Unit to Lessor as set forth
above but Lessee may, at a later date, replace such Replacement Units with
other Units that are closer in fair market value (or Fair Market Sales
Value in the situation set forth in the next proviso) to the original
replaced Units so long as such replacement does not result in any
additional unindemnified tax liability; provided further that, if such
----------------
replacement is performed (a) pursuant to Section 8.3 after the 180th day
prior to the end of the Lease Term of such Units or (b) with respect to 15
or more Units, each of such Replacement Units must have, in addition to the
requirements set forth above, a Fair Market Sales Value at least equal to
the Unit so replaced (assuming such Unit was in the condition required to
be maintained by the terms of this Lease); provided further that, if Lessee
----------------
shall elect the option under
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<PAGE>
this clause (i) within such period but shall fail to perform its obligation
to effect such replacement under this paragraph (i) within the 60-day
period hereinabove provided for, then (except in the case of a failure to
perform an election to replace pursuant to Section 8.1(b) or Section 8.3)
at the end of such 60-day period Lessee shall immediately give Lessor and
the Indenture Trustee notice of such failure and specify that Lessee shall
pay to Lessor on the next succeeding Rent Payment Date that is at least 25
days after the end of such 60-day period, or in the case of Supplemental
Rent, to the Person entitled thereto, the amounts specified in paragraph
(ii) below as of such next succeeding Rent Payment Date, and Lessee shall
pay such amounts on such Rent Payment Date; provided further that Lessee
----------------
shall have no right to elect replacement under this clause (i) if at the
time of the notice of the Event of Loss under Section 11.2 above a Material
Default or Lease Event of Default shall have occurred and be continuing; or
(ii) on the Rent Payment Date which is not less than 25 days
following the date of notice of Lessee's election to perform under this
clause (ii), Lessee shall pay or cause to be paid to Lessor (or in the case
of Supplemental Rent, to the Persons entitled thereto) in funds of the type
specified in Section 3.6, (a) an amount equal to 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 Basic Rent first becoming
due on such date) [and an amount equal to the Adjustment Amount (which
amount, if negative, shall be a credit against amounts payable by Lessee
pursuant to this Section 11.2(ii))], 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 that in the event at any time a Responsible Officer of Lessee shall
- --------
have actual knowledge of the occurrence or deemed occurrence of an Event of Loss
with respect to an aggregate of 15 or more Units as to which Lessee would
otherwise be obligated to make payment pursuant to the second proviso to
paragraph (i) above or pursuant to paragraph (ii) above on a Rent Payment Date,
then Lessee shall thereupon give Lessor and the Indenture Trustee notice that in
lieu of making payments with respect to such Units as otherwise above provided
on a Rent Payment Date, Lessee will make a payment with respect to such Units on
the next succeeding Determination Date which is at least 25 days after such
notice, and on such Determination Date Lessee shall pay, in lieu of the amounts
otherwise required to be paid in respect of such Units on a Rent Payment Date as
provided above, (a) an amount equal to the Stipulated Loss Value of such Units
determined as of such Determination Date, (b) if such Determination Date is also
a Rent Payment Date, all Basic Rent payable on such date in respect of such
Units (exclusive of any in advance Basic Rent due on such date) 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.
Section 11.3 Rent Termination. Upon the replacement of any Unit or
----------------
Units in compliance with Sections 11.2(i) and 11.4(b) (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
16
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of Stipulated Loss Value or date of conveyance of such Replacement Unit or Units
pursuant to Section 11.2 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.
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 and any other Rent attributable
thereto.
(b) At the time of or prior to any replacement of any Unit or
Replacement Unit, Lessee, at its own expense, will (A) 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, (B) cause a
Lease Supplement substantially in the form of Exhibit A hereto, subjecting such
---------
Replacement Unit to this Lease, and duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation in
the same manner as provided for the original Lease Supplement in Section 16.1,
(C) 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 in
the same manner and within the same time periods as provided for the original
Indenture Supplement in Section 16.1, (D) furnish Lessor with an opinion of
Lessee's counsel (which may be Lessee's General Counsel or Assistant General
Counsel), (x) to the effect that the Bill of Sale referred to in clause (A)
above constitutes an effective instrument for the conveyance of title to the
Replacement Unit to Lessor, and that 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), (vi) and (vii) of the definition
thereof), and (y) describing all filings and recordings and other actions
necessary or appropriate to protect the respective interests of Lessor and the
Indenture Trustee in the Replacement Units, (E) furnish Owner Participant with
either (I) an opinion of tax counsel (who shall be, and which opinion shall be
in form and substance reasonably acceptable to the Owner Participant) that the
Owner Participant will not suffer any adverse tax consequences as a result of
such substitution, or (II) an agreement to indemnify Owner Participant against
any adverse tax consequences suffered as a result of such replacement, (F)
furnish Lessor with an engineer's certificate (which may be from an employee of
Lessee) certifying as to the utility, capacity, condition, model year and
remaining useful life required under clause (i) of Section 11.2, (G) furnish to
Lessor and the Indenture Trustee an Officer's Certificate certifying that the
Replacement Unit has a fair market value, utility, capacity, model year and
remaining economic useful life and condition at least equal to the Unit being
replaced and is free and clear of all Liens
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(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 (H) furnish such other documents and evidence as Owner
Participant, Lessor or the Indenture Trustee, or their respective counsel, may
reasonably request in order to establish the consummation of the transactions
contemplated by this Section 11.4. For all purposes hereof, (i) Lessee shall be
deemed to have complied with the requirements of this Section 11.4(b) as of the
date of its delivery to Lessor, the Participants and the Indenture Trustee of
the documents and instruments referred to in the foregoing clauses (A) through
(H), signed by Lessee or its counsel, as applicable, in due form for any
required filing or recording, and such filing or recording shall have been made
if such documents and instruments have been executed and delivered by the Lessor
or Indenture Trustee or both of them in a timely manner, (ii) title to the
Replacement Unit shall be deemed to have been transferred to Lessor as of such
date, and (iii) upon such 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, "as is" and "where is" and without
recourse or warranty (except as to Lessor's Liens), all Lessor's right, title
and interest in and to the replaced Unit, and upon such transfer, Lessor will
request in writing that the Indenture Trustee execute and deliver to Lessee an
appropriate instrument releasing such replaced Unit from the lien of the
Indenture. Lessee shall pay all reasonable out of pocket costs and expenses
(including reasonable legal fees and expenses) incurred by Lessor, Owner
Participant and the Indenture Trustee in connection with any replacement
pursuant to this Section 11.4.
Section 11.5 Eminent Domain. In the event that during the Lease
--------------
Term the use of any Unit is requisitioned or taken by any governmental authority
under the power of eminent domain or otherwise for a period which does not
constitute an Event of Loss, all of Lessee's obligations under the Operative
Agreements, including without limitation, Lessee's obligation to pay all
installments of Basic Rent, shall continue for the duration of such
requisitioning or taking. Lessee shall be entitled to receive and retain for
its own account all sums payable for any such period by such governmental
authority as compensation for requisition or taking of possession. Any amount
referred to in this Section 11.5, in Section 11.4(a) or in Section 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 Insurance. Lessee will at all times after delivery and
---------
acceptance of each Unit, at its own expense, keep or cause to be kept such Unit
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 railcars. Without limiting the foregoing, Lessee will in any event:
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<PAGE>
(a) keep each Unit of the Equipment 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 each
for flood and earth movement), provided that such coverage may provide for
--------
deductible amounts of not more than $1,000,000 per occurrence; and
(b) maintain public liability insurance naming Owner Participant, the
Lessor, the Trust Company 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 $50,000,000 per occurrence or in the
aggregate, provided that such coverage may provide for deductible amounts not
--------
exceeding the lesser of (x) $10,000,000 or (y) 5% of the book value of the
railcar fleet of Lessee.
It is understood and agreed that the insurance required hereunder may
be part of a company-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), Lessor,
Indenture Trustee and Owner Participant shall receive 30 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 made to the Indenture Trustee
under a standard 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) In lieu of maintaining the physical damage insurance required by
Section 12.1(a), Lessee may self-insure with respect to the Equipment for such
amounts and against such risks as shall be consented to by Lessor and the
Indenture Trustee, which consent shall be based upon reasonable practices then
in effect in the railcar leasing and insurance industries and upon the financial
condition of Lessee.
(c) The entire proceeds of any property insurance or third party
payments for damages 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:
19
<PAGE>
(i) to Lessee promptly following receipt by the Indenture
Trustee or Lessor, as the case may be, of a written application signed by
Lessee for payment to Lessee for repairing or restoring the Units which
have been damaged so long as (1) Lessee shall have complied with the
applicable provisions of the Lease, and (2) Lessee shall have certified
that any damage to such Units shall have been fully repaired or restored;
or
(ii) if this Lease is terminated with respect to such Unit
because of an Event of Loss and Lessee has paid the Stipulated Loss Value
due as a result thereof, such proceeds shall be 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 in as much 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) waive any rights of
subrogation of the insurers against Owner Participant, Lessor, the Trust Company
and the Indenture Trustee, (iii) provide that none of Owner Participant, Lessor,
the Trust Company, or Indenture Trustee shall have any responsibility for any
insurance premiums, whether for coverage before or after cancellation or
termination of any such policies as to Lessee and (iv) be primary without
contribution from any similar insurance maintained by Owner Participant, Lessor
or the Indenture Trustee.
(b) Lessee shall use its reasonable efforts to obtain public
liability insurance policies stipulating that coverage thereunder will not be
invalidated (as to Owner Participant, Lessor, the Trust Company 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 is 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. 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 of Lessee), in either case, such independent
insurance advisors being of recognized national standing. The fees and expenses
of all such advisors shall be paid by Lessee. The written reports required
hereunder shall (x) state that such insurance (or the required coverage
thereunder) is not reasonably available to Lessee at commercially reasonable
premiums in the commercial insurance markets within which Lessee normally
purchases its insurance from insurers, acceptable to Lessee, with a Best's
rating of A- or better for railcars of similar type and capacity and (y) explain
in detail the basis for such conclusions. Upon the granting of any such waiver,
Lessee shall within 15 days thereafter certify to Lessor in writing the cost (on
a fleet-wide basis) of liability insurance
20
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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.
Section 12.4 Certificate of Insurance. Lessee shall, prior to the
------------------------
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
this Section. With respect to any renewal policy or policies, certificates or
binders evidencing such renewal shall be furnished as soon as practicable, but
in no event later than 30 days after the earlier of the date such renewal is
effected or the expiration date of the original policy or policies.
Simultaneously, with the furnishing of such certificate, Lessee will provide
appropriate evidence, reasonably satisfactory to Lessor and the Indenture
Trustee, that all premiums due on such insurance have been paid.
Section 12.5 Additional Insurance. In the event that Lessee shall
--------------------
fail to maintain insurance as herein 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
21
<PAGE>
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 13. Reports; Inspection.
-------------------
Section 13.1 Duty of Lessee to Furnish. On or before April 30,
-------------------------
2001, and on or before each April 30 thereafter, Lessee will furnish to Lessor,
Owner Participant and the Indenture Trustee an accurate statement, as of the
preceding December 31, (a) showing the amount, description and reporting marks
of the Units then leased hereunder, the amount, description and reporting marks
of all Units that may have suffered an Event of Loss during the 12 months ending
on such December 31 (or since the Closing Date, in the case of the first such
statement), and such other information regarding the condition or repair of the
Equipment as Lessor may reasonably request, (b) stating that, in the case of all
Equipment repainted during the period covered by such statement, the markings
required by Section 4.2 hereof shall have been preserved or replaced, (c)
showing the percentage of use in each state in the United States and in both
Canada and Mexico based on the total mileage traveled by all railcars in
Lessee's fleet (or by the Units, if and to the extent generally made available
to Lessee in the ordinary course with respect to railcars in general interchange
service similar to the Units) for the prior calendar year as reported to Lessee
by railroads (provided, that Lessee shall cooperate with Owner Participant and
Lessor and shall provide such additional information on such matters as Owner
Participant or Lessor may reasonably request to enable Owner Participant and
Lessor to pursue or fulfill their respective tax audit and tax litigation rights
and obligations), and (d) 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 of the Field
Manual of the AAR as they apply to the maintenance and operation of the
Equipment in interchange.
Section 13.2 Lessor's Inspection Rights. Lessor, Owner Participant
--------------------------
and the Indenture Trustee each shall have the right, but not the obligation, at
their respective sole cost, expense and risk (including, without limitation, the
risk of bodily injury or death), by their respective authorized representatives,
to inspect (a) the Equipment and Lessee's records with respect thereto, and (b)
following the occurrence of a Lease Default and during the continuance thereof,
or following notice by Lessee that it will be returning any Unit to Lessor
pursuant to Section 10 or Section 22, any sublease of the Equipment and Lessee's
records with respect thereto. All inspections shall be conducted during
Lessee's normal business hours, on Lessee's premises or in areas that are not
the premises of a sublessee to which Lessee has reasonable access, 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
ordinary course of Lessee's or any sublessee's business, and Lessee shall not be
required to undertake or incur any additional liabilities in connection
therewith.
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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, Special
Purchase Price, Early Purchase Price, Basic Term Purchase Price or any other
purchase price to be paid by Lessee for any Units pursuant to this Lease or the
Participation Agreement, Stipulated Loss Value or Termination Value within 10
Business Days after the same shall have become due; or
(b) Lessee shall fail to make any payment of Supplemental Rent,
including indemnity or tax indemnity payments, but not including Stipulated Loss
Value, Special Purchase Price, 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 after the same shall have become due and
such failure shall continue unremedied for 10 Business Days after receipt by
Lessee of written notice of such failure from Lessor, 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 so long as (i) such unauthorized
possession is not the result of any willful action of Lessee and (ii) such
unauthorized possession is capable of being cured and Lessee diligently pursues
such cure throughout such 45-day period; 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
during which period Lessee diligently pursues the cure of such failure; 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, Owner
Participant 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
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such untruth or incorrectness within such period; provided that such untrue or
--------
incorrect representation or warranty shall be deemed to be remedied only after
all adverse consequences thereof, if any, have been remedied; or
(g) Lessee shall (i) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or (ii) consent to any such relief or to the appointment of or
taking possession by any such official in any voluntary case or other proceeding
commenced against it, or (iii) admit in writing its inability to pay its debts
generally as they come due, or (iv) make a general assignment for the benefit of
creditors, or (v) take any corporate action to authorize any of the foregoing;
or
(h) an involuntary case or other proceeding shall be commenced
against Lessee seeking liquidation, reorganization or other relief with respect
to it or its debts under any 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) or any certificate 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;
provided that, notwithstanding anything to the contrary contained in this Lease,
- --------
any failure of Lessee to perform or observe any covenant or agreement herein
shall not constitute a Lease Event of Default if such failure is caused solely
by reason of an event referred to in the definition of "Event of Loss" so long
-------------
as Lessee is continuing to comply with the applicable terms of Section 11.
SECTION 15. Remedies.
--------
Section 15.1 Remedies. Upon the occurrence of any Lease Event of
--------
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare this Lease to be in default by a written
notice to Lessee (except that this Lease shall, without any action on the part
of Lessor, be automatically deemed to have been declared in default upon the
occurrence of a Lease Event of Default described in Section 14(g) or (h)); and
at any time thereafter, unless Lessee shall have remedied all outstanding Lease
Events of Default prior to the commencement of the exercise by Lessor of any of
its remedies hereunder, Lessor may do one or
24
<PAGE>
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;
(c) sell any Unit at public or private sale in such manner 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, except that Lessee's obligation to pay Basic Rent
with respect to such Unit due for any periods subsequent to the date upon which
Lessee shall have been deprived of possession and use of such Unit pursuant to
this Section 15 shall be reduced by the net proceeds, if any, received by Lessor
from leasing such Unit to any Person other than Lessee;
(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 less 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 Basic Rent first becoming due on such date) plus
whichever of the following amounts Lessor, in its sole discretion, shall specify
in such notice: (i) an amount with respect to each such Unit which represents
the excess of the present value, at the time of such payment date, of all
rentals for such Unit which would otherwise have
25
<PAGE>
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 plus an amount equal to the Deferred Adjustment
Amount, if any, provided, however, the Prepaid Adjustment Amount, if any, shall
be a credit against amounts payable by Lessee pursuant to this Section
15.1(e)(i); 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, provided, however, in the event that the Fair Market Sales Value
with respect to such Unit referred to above exceeds Termination Value for such
Unit, then (a) Lessee shall receive a credit against amounts payable to Lessor
pursuant to this Section 15.1(e) (iii) in an amount equal to the lesser of (I)
the Prepaid Adjustment Amount, if any, and (II) the amount that such Fair Market
Sales Value exceeds the Termination Value for such Unit and (b) Lessee shall pay
to Lessor an amount equal to the Deferred Adjustment Amount, if any; and upon
payment by Lessee pursuant to said 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 "as is" and "where is" and without recourse or
warranty all right, title and interest of Lessor in and to such Unit to Lessee
or as it may direct, and Lessor shall execute and deliver such documents
evidencing such transfer as Lessee shall reasonably request;
(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), 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
26
<PAGE>
(g) Lessor may terminate the leasing of any or all Units under
this Lease or may exercise any other right or remedy that may be available to it
under applicable law.
In addition, Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Rent due hereunder before or during the exercise
of any of the foregoing 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. Lessee further agrees that Lessee's obligations to pay all Rent
(including, without limitation, all Basic Rent and Supplemental Rent) and its
obligations to maintain the Equipment pursuant to Section 8 hereof and to
maintain the insurance pursuant to Section 12 hereof shall constitute monetary
obligations of the Lessee for all purposes of Section 365 of the Bankruptcy
Code. 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 declaration of a Lease Event of Default pursuant to Section
- ---------
14(a), (b), (d) (with respect to the Units affected thereby), (g) or (h), Lessor
may request that Lessee deliver to Lessor, and
27
<PAGE>
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 with
in respect of such Units and the most recent known location of such Units.
Section 15.6 Lessee's Duty to Return Equipment Upon Default. If
----------------------------------------------
Lessor or any assignee of Lessor shall terminate this Lease pursuant to this
Section 15 and shall have provided to Lessee the written demand specified in
Section 15.1(b), Lessee shall forthwith deliver possession of the Equipment 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, 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, 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 (determined upon the assumption that such Unit is in the condition required
by the terms of this Lease) 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 of the
28
<PAGE>
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 the Closing Date
Lessee will cause this Lease, the Lease Supplements dated the Closing Date, the
Indenture and the Indenture Supplements dated the Closing Date (i) to be duly
filed and recorded with the STB in accordance with 49 U.S.C. (S)11301, (ii) to
be deposited with the Registrar General of Canada pursuant to Section 105 of the
Canada 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 (iii) will furnish Lessor, the Indenture Trustee and Owner
Participant proof thereof.
Section 16.2 Further Assurances. Lessee will duly execute and
------------------
deliver to Lessor such further documents and assurances and take such further
action as Lessor may from time to time reasonably request or as may be required
by applicable law or regulation in order to effectively carry out the intent and
purpose of this Lease and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor, Owner Participant and the
Indenture Trustee hereunder, including, without limitation, the execution and
delivery of supplements or amendments hereto, in recordable form, subjecting to
this Lease any Replacement Unit and the recording or filing of counterparts
hereof or thereof in accordance with the laws of such jurisdiction as Lessor may
from time to time deem advisable.
Section 16.3 Other Filings. If, at any time during the Lease Term,
-------------
Mexico, or one or more states in Mexico, or any of the Canadian provinces
establishes a state or provincial or other system for filing and perfecting the
security and/or ownership interests of entities such as Lessor and/or the
Indenture Trustee, at the time that Lessee takes such action with respect to
other equipment similar to the Equipment (whether owned or leased by Lessee) and
also upon the request of Lessor, at the direction of the Owner Participant, or
the Indenture Trustee, Lessee shall cause any and all of the Operative
Agreements to be recorded with or under such system and shall cause all other
filings and recordings and all such other action required under such system to
be effected and taken, in order to perfect and protect the respective right,
title and interests of Lessor, Owner Participant and the Indenture Trustee.
Section 16.4 Expenses. 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.
29
<PAGE>
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
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 11.1,
Lessee will not, without the prior written consent of Lessor and the Indenture
Trustee (which consent shall not be unreasonably withheld), assign any of its
rights hereunder, except as provided herein and in the Participation Agreement;
--------
provided that Lessee may assign its rights and/or obligations hereunder to any
- --------
corporation in accordance with the provisions of Section 6.8 of the
Participation Agreement or to any corporation which is an Affiliate of Lessee,
provided that in the case of an assignment to an Affiliate, (a) Lessor shall
- --------
have received an instrument or instruments reasonably satisfactory to it, Owner
Participant and the Indenture Trustee under which such Affiliate assumes the
obligations of Lessee hereunder, and (b) Lessee irrevocably and unconditionally
guarantees, pursuant to an agreement in form and substance reasonably
satisfactory to Lessor, Owner Participant and the Indenture Trustee, such
assignee's performance of all of such obligations as primary obligor and not as
a surety.
Section 18.3 Sublessee's Performance and Rights. Any obligation
----------------------------------
imposed on Lessee in this Lease shall require only that Lessee perform or cause
to be performed such obligation, even if stated herein as a direct obligation,
and the performance of any such obligation by any permitted assignee, sublessee
or transferee under an assignment, sublease or transfer agreement then in effect
and permitted by the terms of this Lease shall constitute performance by Lessee
and discharge such obligation by Lessee. Except as otherwise expressly
30
<PAGE>
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 Section 10 and Lessee's purchase and renewal
options set forth in Section 22 may be exercised only by Lessee itself or by any
assignee or transferee of, or successor to, Lessee in a transaction permitted by
Section 6.8 of the Participation Agreement; provided, further, that nothing in
-----------------
this Section 18.3 shall or shall be deemed to (i) create any privity of contract
between any such sublessee, on the one hand, and any of Lessor, any 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, any Owner Participant or any subsequent transferee or
Affiliate of any such Person, to any such sublessee or any Affiliate thereof, or
(iii) modify or waive any term or provision of Section 8.3 hereof, which Section
8.3 shall control if any conflict arises between any of the provisions thereof
and this Section 18.3. The inclusion of specific references to obligations or
rights of any such assignee, sublessee or transferee in certain provisions of
this Lease shall not in any way prevent or diminish the application of the
provisions of the two sentences immediately preceding 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 be absolute, unconditional
and irrevocable and shall not be affected by any circumstance of any character
including, without limitation, (i) any set-off, abatement, counterclaim,
suspension, recoupment, reduction, rescission, defense or other right that
Lessee may have against Lessor, Owner Participant, the Indenture Trustee or any
holder of an Equipment Note or Pass Through Certificate, any vendor or
manufacturer of any Unit, or any other Person for any reason whatsoever, (ii)
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, (iii) 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, (iv) any insolvency, bankruptcy, reorganization or
similar proceeding by or against Lessee, Lessor, Owner Participant, the
Indenture Trustee, any holder of an Equipment Note or Pass Through Certificate
or any other Person, (v) the invalidity, illegality or unenforceability of this
Lease, any other Operative Agreement, or any other instrument referred to herein
or therein or any other infirmity herein or therein or any lack of right, power
or authority of Lessee, Lessor, Owner Participant, the Indenture Trustee, any
holder of an Equipment Note or Pass Through Certificate or any other Person to
enter into this Lease or any other Operative Agreement or to perform the
obligations hereunder or thereunder or consummate the transactions contemplated
hereby or thereby or any doctrine of force majeure, impossibility, frustration
or failure of consideration, (vi) the breach or failure of any warranty or
representation made in this Lease or any other Operative Agreement by Lessee,
Lessor, Owner Participant, the Indenture Trustee, any holder of an Equipment
Note or Pass Through Certificate or any other Person, (vii) 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
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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 (viii) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing. To the extent permitted by applicable law, Lessee
hereby waives any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Lease with respect to any Unit, except in
accordance with the express terms hereof. If for any reason whatsoever this
Lease shall be terminated in whole or in part by operation of law or otherwise,
except as specifically provided herein, Lessee nonetheless agrees, 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.
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 (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 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 (i) or (ii), 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 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
Confirmation No.: (302) 651-1000
32
<PAGE>
With copies to Owner Participant.
If to Owner Participant: With copies to:
Watson, Farley & Williams
380 Madison Avenue
New York, NY 10017
Attention: Caryn Hemsworth
Facsimile: (212) 922-1512
Confirmation No.: (212) 922-2200
If to the Indenture Trustee: Bank One, NA
1 Bank One Plaza
Suite IL1-0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Services
Division
(GATX Trust No. 2000-2)
Fax No.: (312) 407-1708
Confirmation No.: (312) 407-1892
If to Lessee: GATX Rail Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: Treasurer
(GATX Trust No. 2000-2)
Fax No.: (312) 621-6645
Confirmation No.: (312) 621-6200
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.
33
<PAGE>
Section 21.2 Right, Title and Interest of the Indenture Trustee
--------------------------------------------------
Under Lease. It is understood and agreed that the right, title and interest of
- -----------
the Indenture Trustee in, to and under this Lease and the Rent due and to become
due hereunder shall by the express terms granting and conveying the same be
subject to the interest of Lessee in and to the Equipment.
SECTION 22. Purchase Options; Renewal Options.
---------------------------------
Section 22.1 (a) Special Purchase Option. Provided that no
-----------------------
Material Default or Lease Event of Default shall have occurred and be continuing
at the time of the notice described below or on the date of the proposed
purchase of Units pursuant to the terms of this Section 22.1(a) (unless (i)
Lessor shall have waived such Material Default or Lease Event of Default solely
for the purpose of this Section 22.1(a), (ii) in the case of a Lease Event of
Default under Section 14(c), 14(d), 14(e), 14(f) or 14(i), Lessee shall have
properly made a Special Purchase Defeasance after giving effect to the purchase
described below, no such Lease Event of Default shall be continuing, or (iii) in
the event of a Lease Event of Default under Section 14(g) or 14(h), Lessee shall
have obtained a final, nonappealable order of a United States court having
appropriate bankruptcy jurisdiction over Lessee which (x) authorizes such
purchase and (y) is in form and substance satisfactory to Lessor and Indenture
Trustee) and provided that Lessee shall have duly given the notice required by
the next succeeding sentence, Lessee shall have the right and, upon giving of
such notice, the obligation to purchase any or all of the Units then leased
hereunder (as specified in such notice) on the Special Purchase Date at a price
equal to the greater of the then applicable Termination Value for such Units and
the then current Fair Market Sales Value for such Units as determined in
accordance with Section 22.5 (the "Special Purchase Price"), provided that after
---------------------- --------
giving effect to such purchase (unless Lessee shall have elected to purchase all
of the Units then leased hereunder), (i) no fewer than 425 Units shall remain
subject to the Lease, (ii) the allocation of Units (by Basic Group) shall be
substantially similar to the allocation immediately prior to such purchase and
(iii) no Basic Group shall have less than 25 Units, and provided further that
-------- -------
the determination as to which Units are to be purchased shall be made on a
random or other basis (in each case reasonably acceptable to Lessor) without
discrimination based on maintenance status, operating condition of the Units in
question or otherwise and such notice shall describe such manner in which Lessee
proposes to determine the Units in such Basic Group which will be purchased.
Lessee shall give Lessor written notice not less than 90 days prior to the
Special Purchase Date of the proposed purchase of Units pursuant to the terms of
- ---------------------
this Section 22.1(a), which notice shall be irrevocable. On the Special Purchase
Date, Lessee shall pay the Special Purchase Price, together with all other
amounts due and owing by Lessee under the Operative Agreements with respect to
such Units, including, without limitation, all unpaid Rent therefor due and
payable on or prior to such purchase date (exclusive of any Basic Rent first
becoming due on such date) and, in the event that the Fair Market Sales Value
with respect to such Units referred to above exceeds the Termination Value for
such Units, then (a) Lessee shall receive a credit against amounts payable to
Lessor pursuant to this Section 22.1(a) in an amount equal to the lesser of (I)
the Prepaid Adjustment Amount, if any, and (II) the amount that such Fair Market
Sales Value exceeds the Termination Value for such Units and (b) Lessee shall
pay to Lessor an amount equal to the Deferred Adjustment Amount, if any. Such
payments 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. In the event of any such
purchase and receipt by Lessor of all the amounts provided in this Section
22.1(a), the obligation of Lessee
34
<PAGE>
to pay Basic Rent hereunder for such Units shall cease and the Lease Term for
such Units shall end.
(b) Early Purchase Option. Provided that no Material Default or 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 (i) Lessor shall
have waived such Lease Event of Default or Lease Default solely for the purpose
of this Section 22.1(b), (ii) in the case of a Lease Event of Default under
Section 14(c), 14(d), 14(e), 14(f) or 14(i), Lessee shall have properly made a
Special Purchase Defeasance and after giving effect to the purchase described
below, no such Lease Event of Default shall be continuing or (iii) in the case
of a Lease Event of Default under Section 14(g) or 14(h), Lessee shall have
obtained a final, nonappealable order of a United States court having
appropriate bankruptcy jurisdiction over Lessee which (x) authorizes such
purchase and (y) is in form and substance satisfactory to Lessor and Indenture
Trustee) and provided that 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 in a Basic
Group then leased hereunder (as specified in such notice) on the Early Purchase
Date for such Units at a price equal to the Early Purchase Price of such Units,
provided that if Lessee elects to purchase some but less than all of the Units
- --------
in any Basic Group, Lessee shall exercise such purchase with respect to at least
25 Units, no fewer than 25 Units shall remain in such Basic Group as a result of
such purchase and the determination as to which Units are to be purchased shall
be made on a random or other basis (in each case reasonably acceptable to
Lessor) without discrimination based on maintenance status, operating condition
of the Units in question or otherwise and such notice shall describe such manner
in which Lessee proposes to determine the Units in such Basic Group which will
be purchased. Lessee shall give Lessor written notice not less than 90 days
prior to the Early Purchase Date for the related Units of its election to
exercise the purchase option provided for in this Section 22.1(b), which notice
shall be irrevocable. Payment of the Early Purchase Price, 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 Basic Rent first becoming due on such date), plus an amount equal to the
Prepaid Adjustment Amount, if any, minus an amount equal to the Deferred
Adjustment Amount, if any, and any Make-Whole Amount with respect to the
Equipment Notes then being prepaid, shall be made on the Early Purchase Date 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. In the event of any such purchase and receipt by
Lessor of all of the amounts provided in this Section 22.1(b), the obligation of
Lessee to pay Basic Rent hereunder for such Units shall cease and the Lease Term
for such Units shall end.
(c) Payment; Assumption of Equipment Notes. If the Lessee elects to
--------------------------------------
exercise either purchase option provided for in this Section 22.1, the Lessee
shall, as the purchase price therefor, in the sole discretion of the Lessee,
either (i) pay the applicable purchase price with respect to such Units,
together with all other amounts due and owing by the Lessee under the Operative
Agreements, or (ii) pay the difference between the Early Purchase Price and the
35
<PAGE>
portion of the outstanding principal amount of the Equipment Notes which relates
to such Units as of the Early Purchase Date and assume on a full recourse basis,
and indemnify the Lessor against, all of the Owner Trustee's obligations under
the Indenture in respect of such portion of the indebtedness evidenced by such
Equipment Notes; provided, that, following such assumption, the purchased Units
--------
shall remain subject to the lien of a separate indenture similar to the
Indenture pursuant to Section 3.06 of the Indenture. The Lessee will make the
payments required by foregoing clause (i) or assume such portion of the
indebtedness evidenced by the Equipment Notes which relates to such Units as
provided in foregoing clause (ii) on the Special Purchase Date with respect to
the purchase option described in Section 22.1(a) and on the Early Purchase Date
with respect to the purchase option described in Section 22.1(b), in immediately
available funds against delivery of a bill of sale transferring and assigning to
the Lessee all right, title and interest of the Lessor in and to the Units on an
"as-is" "where-is" basis and containing a warranty against Lessor's Liens. In
such event, the costs of preparing the bill of sale and all other documentation
relating to such purchase and the costs of any necessary filings related thereto
will be borne by the Lessee. If the Lessee shall fail to fulfill its
obligations under this Section 22.1(c), all of the Lessee's obligations under
the Lease and the Operative Agreements, including, without limitation, the
Lessee's obligation to pay installments of Rent, with respect to the Units in
question shall continue.
Section 22.2 Election to Retain or Return Equipment at End of Basic
------------------------------------------------------
or Renewal Term. Not less than 180 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,
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 a
--------
Basic Group, Lessee must return at least 25 Units from such Basic Group to
Lessor and the determination as to which Units are to be retained shall be made
on a random or other basis (in each case reasonably acceptable to Lessor)
without discrimination based on maintenance status, operating condition of the
Units in question or otherwise, and Lessee shall describe in such notice such
manner in which it proposes to determine the Units in such Basic 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 all of 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 Material Default or
----------------
Lease Event of Default shall have occurred and be continuing either at the time
of notice or the expiration of the Lease Term (unless (i) Lessor shall have
waived such Material Default or Lease Default solely for the purpose of this
Section 22.3, (ii) in the case of a Lease Event of Default under Section 14(c),
14(d), 14(e), 14(f) or 14(i), Lessee shall have properly made a Special Purchase
Defeasance and after giving effect to the purchase described below, no such
Lease Event of Default shall be continuing or (iii) in the case of a Lease Event
of Default under Section 14(g) or 14(h), Lessee shall have obtained a final,
nonappealable order of a United States court having appropriate bankruptcy
jurisdiction over Lessee which (x) authorizes such purchase and (y) is in form
and substance satisfactory to Lessor and Indenture Trustee) and provided that
Lessee shall have duly given the notice required by Section 22.2 and by the next
succeeding
36
<PAGE>
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, and subject to the minimum number of
Units and the criteria for selection of such Units referred to in Section 22.2)
either (x) at the expiration of the Basic Term at a price equal to the Basic
Term Purchase Price of such Units or (y) at the expiration of the Basic Term or
any Renewal Term at a price equal to the Fair Market Sales Value of such Units
as determined in accordance with Section 22.5 hereof. Lessee shall give Lessor
written notice not less than 90 days prior to the end of the Basic Term, 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
(but in any event subject to the minimum number of Units referred to in Section
22.2), 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 Material Default or
---------------
Lease Event of Default shall have occurred and be continuing either at the time
of notice or the expiration of the Basic Term or any applicable Renewal Term
(unless Lessor shall have waived such Material Default or 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 (as specified in such
notice, and subject to the minimum number of Units and the criteria for
selection of such Units referred to in Section 22.2) at the expiration of the
Basic Term or any applicable Renewal Term which Lessee has not elected to
purchase pursuant to Section 22.3, which obligation may be fulfilled by Lessee
electing to renew this Lease under either of the following Section 22.4(a) or
(b):
(a) Fixed Rate. Lessee may give Lessor written notice not
----------
less than 90 days prior to the end of the Basic Term (or, in the circumstances
described in the fourth 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 (as specified in such notice, and
subject to the minimum number of Units and the criteria for selection of such
Units referred to in Section 22.2) then leased hereunder, for a term of one or
more years as Lessee shall specify in such notice (the "Fixed Rate Renewal
------------------
Term"), but in no event longer than the Outside Fixed Renewal Date, which notice
shall be irrevocable. In such event, promptly following such notice, a
determination in accordance with Section 22.5 shall be made of the date such
that (1) the period from the Closing Date to such date would not exceed 80% of
the useful life of such Units from and after the Closing Date, and (2) the Fair
Market Sales Value (determined without regard to inflation or deflation) on such
date would not be less than 20% of the Equipment Cost of such Units. Such date
shall thereafter be the latest date to which this Lease may be renewed pursuant
to this Section 22.4(a) (the "Outside Fixed Renewal Date"). Lessee shall
--------------------------
promptly following the determination of the Outside Fixed Renewal Date give
Lessor written notice of the Fixed Rate Renewal Term which Lessee selects for
its initial renewal under this Section 22.4(a), which in no
37
<PAGE>
event shall be longer than the Outside Fixed Renewal Date. If Lessee selects a
Fixed Rate Renewal Term such that the period following such term until the
Outside Fixed Renewal Date is longer than 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 Fixed Renewal Date. The Basic
Rent for each Unit during any Fixed Rate Renewal Term (the "Fixed Rent") shall
----------
be for the first such renewal, an amount equal to 105% of the average of the
semiannual Basic Rent installments payable hereunder for such Unit during the
Basic Term, and for any subsequent renewal under this Section 22.4(a), an amount
equal to the average of the semiannual Basic Rent installments payable hereunder
for such Unit during the Basic Term, payable semiannually in arrears provided,
--------
however, if prior to the commencement of the first Fixed Rate Renewal Term,
- -------
Lessee and Owner Participant shall have received an opinion of Watson, Farley &
Williams, or of other independent counsel of national recognition selected by
the Owner Participant and reasonably acceptable to the Lessee (which the Owner
Participant agrees to seek at the request and expense of the Lessee) to the
effect that the elimination of such premium will not result in such renewal term
being includable in the "lease term", as defined in Treasury Regulation
(S)1.467-1(h)(6), or any successor thereto, in a manner that adversely affects
the Net Economic Return, such 5% premium above the average of the semi-annual
Basic Rent installments shall not be included in the first Fixed Rate Renewal
Term hereunder. Each Fixed Rate Renewal Term shall commence immediately upon the
expiration of the Basic Term or the preceding Fixed Rate Renewal Term, as the
case may be.
(b) Fair Market. Lessee may give Lessor written notice not
-----------
less than 90 days prior to the end of the Basic Term, a Fixed Rate Renewal Term
or a Fair Market Renewal Term (subject to the limitations otherwise provided in
this Section 22.4(b)) that Lessee elects to renew this Lease under this Section
22.4(b) with respect to any or all of the Units (as specified in such notice,
and subject to the minimum number of Units and the criteria for selection of
such Units referred to in Section 22.2) then leased hereunder for a term of one
or more years as Lessee shall specify in such notice (the "Fair Market Renewal
-------------------
Term"), which notice shall be irrevocable. The Basic Rent for the Units leased
- ----
during the Fair Market Renewal Term shall be determined in accordance with
Section 22.5 and shall be for the first such renewal, an amount equal to 105% of
the Fair Market Rental Value of such Units, and for any subsequent renewal under
this Section 22.4(b), an amount equal to the Fair Market Rental Value of such
Units, payable semiannually in arrears provided, however, if prior to the
-------- -------
commencement of the first Fixed Rate Renewal Term, Lessee and Owner Participant
shall have received an opinion of Watson, Farley & Williams, or of other
independent counsel of national recognition selected by the Owner Participant
and reasonably acceptable to the Lessee (which the Owner Participant agrees to
seek at the request and expense of the Lessee) to the effect that the
elimination of such premium will not result in such renewal term being
includable in the "lease term", as defined in Treasury Regulation (S)1.467-
1(h)(6), or any successor thereto, in a manner that adversely affects the Net
Economic Return, such 5% premium above Fair Market Rental Value shall not be
included in the first Fair Market Renewal Term hereunder. The Fair Market
Renewal Term shall commence immediately upon the expiration of the Basic Term or
the preceding Fixed Rate Renewal Term or Fair Market Renewal Term, as the case
may be.
Section 22.5 Appraisal. Promptly following Lessee's written notice
---------
pursuant to Section 22.2 of its election to retain any Units at the end of the
Basic Term or a Renewal Term, as the case may be, Lessor and Lessee shall
determine the remaining useful life (based on the
38
<PAGE>
actual condition of a reasonable sampling of such Units and determined pursuant
to the appraisal procedure set forth in the definition of Fair Market Sales
Value) and the 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. Promptly following Lessee's written notice pursuant to Section
22.1(a) of its election to purchase any Units on the Special Purchase Date,
Lessor and Lessee shall determine the Fair Market Sales Value of the Units to be
purchased, assuming the Units are in the condition required by this Lease, which
Fair Market Sales Value shall be used to determine the Special Purchase Price,
as provided in Section 22.1(a).
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,
assuming such Unit is in the condition required by this Lease, reduced in equal
monthly increments to the Fair Market Sales Value of such Unit as of the last
day of such Renewal Term; provided that in no event during any Fixed Rate
--------
Renewal Term shall the Stipulated Loss Value and Termination Value of any Unit
be less than 20% of the Equipment Cost of such Unit.
SECTION 23. Limitation of Lessor's Liability. It is expressly agreed and
--------------------------------
understood that all representations, warranties and undertakings of Lessor
hereunder (except as expressly provided herein) shall be binding upon Lessor
only in its capacity as Owner Trustee under the Trust Agreement and in no case
shall the Trust Company be personally liable for or on account of any
statements, representations, warranties, covenants or obligations stated to be
those of Lessor hereunder, except that Lessor (or any successor Owner Trustee)
shall be personally liable for its gross negligence or wilful misconduct and for
its breach of its covenants, representations and warranties contained herein to
the extent covenanted or made in its individual capacity.
SECTION 24. Investment of Security Funds. Any moneys received by Lessor
----------------------------
or the Indenture Trustee pursuant to Section 12.2 which are required to be paid
to Lessee after completion of repairs to be made pursuant to Section 12.2 or
pursuant to Section 11.4(a) or 11.5, 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 a Lease Default or
Lease Event of Default or as 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 Material Default 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.
39
<PAGE>
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 New York; provided, however, that the parties shall be entitled to
-----------------
all rights conferred by any applicable Federal statute, rule or regulation.
Whenever possible, each provision of this Lease shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Lease shall be prohibited by or invalid under the laws of any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Lease in any other
jurisdiction.
Section 25.2 Execution in Counterparts. This Lease may be executed
-------------------------
in any number of counterparts, each executed counterpart constituting an
original and in each case such counterparts shall constitute but one and the
same instrument; provided, however, that to the extent that this Lease
-----------------
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code) no security interest in this Lease may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page hereof,
which counterpart shall constitute the only "original" hereof for purposes of
the Uniform Commercial Code.
Section 25.3 Headings and Table of Contents; Section References.
--------------------------------------------------
The headings of the sections of this Lease and the Table of Contents are
inserted for purposes of convenience only and shall not be construed to affect
the meaning or construction of any of the provisions hereof. All references
herein to numbered sections, unless otherwise indicated, are to sections of this
Lease.
Section 25.4 Successors and Assigns. This Lease shall be binding
----------------------
upon and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective permitted successors and assigns.
Section 25.5 True Lease. It is the intent of the parties to this
----------
Lease that it will be a true lease and not a "conditional sale," and that Lessor
shall at all times be considered to be the owner of each Unit which is the
subject of this Lease for the purposes of all Federal, state, city and local
income taxes or for franchise taxes measured by income, and that this Lease
conveys to Lessee no right, title or interest in any Unit except as lessee.
Nothing contained in this Section 25.5 shall be construed to limit Lessee's use
or operation of any Unit or constitute a representation, warranty or covenant by
Lessee as to tax consequences.
Section 25.6 Amendments and Waivers. No term, covenant, agreement
----------------------
or condition of this Lease may be terminated, amended or compliance therewith
waived (either 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
40
<PAGE>
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 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.
* * *
41
<PAGE>
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 except as expressly
provided herein but solely as Owner Trustee
By:___________________________________
Name:
Title:
Lessee:
GATX RAIL CORPORATION
By:____________________________________
Name:
Title
/1/Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on this ____ day of April, 2000.
BANK ONE, NA,
as Indenture Trustee
By:____________________________________
Name:
Title:
_________________________
/1/ This language contained in the original counterpart only.
42
<PAGE>
Exhibit A
LEASE SUPPLEMENT NO. _______
(GATX Rail Trust No. 2000-2)
This Lease Supplement No. ___, dated as of _________, between Wilmington
Trust Company, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement ("Lessor"), and GATX Rail Corporation, a New York
------
corporation ("Lessee");
------
Witnesseth:
Lessor and Lessee have heretofore entered into that certain Equipment Lease
Agreement (GATX Rail Trust No. 2000-2) dated as of April 3, 2000 (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 New York; 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>
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to be
duly executed as of the day and year first above written and to be delivered as
of the date first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity except as
expressly provided herein but solely as
Owner Trustee
By:______________________________
Name:
Title:
GATX RAIL CORPORATION
By:______________________________
Name:
Title:
/1/Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of April, 2000.
BANK ONE, NA,
as Indenture Trustee
By:______________________________
Name:
Title:
_________________________
/1/ This language contained in the original counterpart only.
A-2
<PAGE>
Exhibit 4.11
-----------------------------------
TRUST AGREEMENT
Dated as of April 3, 2000
between
Owner Participant
and
WILMINGTON TRUST COMPANY,
Owner Trustee
Assorted Railroad Tank Cars and Covered Hopper Cars
GATX Rail Trust No. 2000-1
-----------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS...................................................................... 3
Section 1.1 Definitions.............................................. 3
Section 1.2 Interpretation........................................... 3
ARTICLE II
AUTHORITY; DECLARATION OF TRUST.................................................. 3
Section 2.1 Authority to Execute and Perform Various Documents....... 3
Section 2.2 Declaration of Trust..................................... 4
ARTICLE III
DISTRIBUTIONS AND PAYMENTS....................................................... 4
Section 3.1 Payments to the Indenture Trustee........................ 4
Section 3.2 Payments to the Owner Trustee; Other Parties............. 4
Section 3.3 Certain Distributions to the Owner Participant........... 5
Section 3.4 Excepted Property........................................ 5
Section 3.5 Method of Payment........................................ 5
ARTICLE IV
CERTAIN DUTIES OF THE OWNER TRUSTEE.............................................. 5
Section 4.1 Notice of Certain Events................................. 5
Section 4.2 Action Upon Instructions................................. 6
Section 4.3 Indemnification.......................................... 6
Section 4.4 No Duties Except as Specified............................ 6
Section 4.5 No Action Except Under Specified
Agreements or Instructions............................... 7
Section 4.6 Tax Returns; Records..................................... 7
Section 4.7 Absence of Certain Duties................................ 7
Section 4.8 Furnishing of Documents.................................. 8
ARTICLE V
THE OWNER TRUSTEE................................................................ 8
Section 5.1 Acceptance of Trusts and Duties.......................... 8
Section 5.2 No Representations or Warranties as
to Equipment or Documents................................ 9
Section 5.3 No Segregation of Moneys; No Interest.................... 9
Section 5.4 Reliance; Advice of Counsel.............................. 9
Section 5.5 Not Acting in Individual Capacity........................10
ARTICLE VI
INDEMNIFICATION..................................................................10
Section 6.1 Indemnification of Trust Company.........................10
Section 6.2 Expenses.................................................11
ARTICLE VII
TERMINATION OF TRUST AGREEMENT...................................................12
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 7.1 Termination of Trust Agreement...........................12
Section 7.2 Termination at Option of the Owner Participant...........12
ARTICLE VIII
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES......................................................13
Section 8.1 Resignation of the Owner Trustee;
Appointment of Successor.................................13
Section 8.2 Additional and Separate Trustees.........................14
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS.......................................................16
Section 9.1 Supplements and Amendments...............................16
ARTICLE X
MISCELLANEOUS....................................................................16
Section 10.1 No Legal Title to Trust Estate in
the Owner Participant....................................16
Section 10.2 Sale of Accepted Equipment by
the Owner Trustee is Binding.............................16
Section 10.3 Notices..................................................16
Section 10.4 Severability.............................................17
Section 10.5 Separate Counterparts....................................17
Section 10.6 Waivers, etc.............................................17
Section 10.7 Successors and Assigns...................................17
Section 10.8 Transfer of Owner Participant's Interest.................17
Section 10.9 Actions of the Owner Participants........................17
Section 10.10 Headings; Table of Contents..............................17
Section 10.11 Governing Law............................................18
Section 10.12 Benefit..................................................18
Section 10.13 Performance by the Owner Participant.....................18
Section 10.14 Conflict with Operative Agreements.......................18
Section 10.15 Limitation on Owner Participant's Liability..............18
Section 10.16 Identification of Trust..................................18
</TABLE>
-ii-
<PAGE>
TRUST AGREEMENT
This Trust Agreement is entered into as of April 3, 2000 between
(the "Owner Participant"), and WILMINGTON TRUST COMPANY, (in its
individual capacity, "Trust Company," and otherwise not in its individual
capacity but solely as trustee hereunder, the "Owner Trustee"). In consideration
of the mutual agreements herein contained, the agreements contained in the other
Operative Agreements and the acceptance by Trust Company of the trusts hereby
created, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The capitalized terms used in this Trust
Agreement have the meanings given in Appendix A unless otherwise defined herein
or unless the context otherwise requires. For all purposes hereof, the following
terms shall have the following meanings:
"Accepted Equipment" means all of the Accepted Units.
"Accepted Unit" means each Unit that has been purchased by the Owner
Trustee pursuant to the Participation Agreement and any Replacement Unit.
"Actual Knowledge" of Trust Company or the Owner Trustee means actual
knowledge of, including any written notices received by, a responsible officer
in the Corporate Trust Administration of Trust Company.
Section 1.2 Interpretation. Unless otherwise indicated, references in this
Trust Agreement to Sections, subsections, paragraphs and Appendices are to
Sections, subsections, paragraphs and Appendices of this Trust Agreement. The
terms "hereof," "herein," "hereby," "hereto" and "hereunder" refer to this Trust
Agreement, taken as a whole. References to a given agreement or instrument are
references to such agreement or instrument as originally entered into, as
modified, amended, supplemented and restated through the date as of which such
reference is made.
ARTICLE II
AUTHORITY; DECLARATION OF TRUST
Section 2.1 Authority to Execute and Perform Various Documents. The Owner
Participant hereby authorizes and directs the Owner Trustee to, and the Owner
Trustee agrees for the benefit of the Owner Participant that it will, execute
and deliver the Participation Agreement, on the Closing Date, upon receipt of
the confirmation by the Owner Participant pursuant to Section 2.4 of the
Participation Agreement, execute and deliver the Operative Agreements
contemplated by the Participation Agreement to be executed and delivered by the
Owner Trustee on the Closing Date, in the respective forms thereof in which
delivered by the Owner Participant to the Owner Trustee for execution and
delivery, and to take the other actions contemplated to be taken by the Owner
Trustee on the Closing Date in Section 2 of the Participation Agreement, execute
and deliver any other agreement, instrument or certificate contemplated by the
Operative Agreements as the Owner Participant from time to time may direct in
writing, subject to the terms of this Trust Agreement, exercise the rights (upon
written instructions received from the Owner Participant) and perform the duties
of the Owner Trustee under each of the documents,
<PAGE>
agreements, instruments and certificates referred to in this Section 2.1 as set
forth in such documents, agreements, instruments and certificates, and subject
to the terms of this Trust Agreement, take such other action in connection with
the foregoing as the Owner Participant may from time to time direct in writing.
Section 2.2 Declaration of Trust. The Trust Company hereby declares that
it will hold as Owner Trustee all estate, right, title and interest of the Owner
Trustee in and to the Accepted Equipment and the Owner Trustee Agreements, and
any other property contributed by the Owner Participant pursuant to the terms of
any of the Operative Agreements, including without limitation all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind, but specifically excluding Excepted Property (collectively, the "Trust
Estate"), upon the trusts set forth herein and for the use and benefit of the
Owner Participant as sole beneficiary, subject, however, to the provisions of
and the Lien created by the Indenture.
ARTICLE III
DISTRIBUTIONS AND PAYMENTS
Section 3.1 Payments to the Indenture Trustee. Until the Lien of the
Indenture shall have been discharged pursuant to the terms thereof, all Basic
Rent, Supplemental Rent, insurance proceeds and requisition or other payments of
any kind (other than payments constituting Excepted Property and other than
payments received from the Indenture Trustee) for or with respect to any
Accepted Unit payable to the Owner Trustee shall be payable directly to the
Indenture Trustee for distribution in accordance with the provisions of the
Indenture, and if any such amount or payment is received by the Owner Trustee,
such amount or payment upon receipt thereof shall be paid over to the Indenture
Trustee without deduction, set-off or adjustment of any kind for distribution in
accordance with the provisions of the Indenture.
Section 3.2 Payments to the Owner Trustee; Other Parties. Any payment of
the type referred to in Section 3.1 (other than payments constituting Excepted
Property) received by the Owner Trustee after the Indenture shall have been
discharged pursuant to the terms thereof, any payment received from the
Indenture Trustee other than as specified in Section 3.4 and any other amount
received as part of the Trust Estate and for the application or distribution of
which no provision is made herein shall be distributed forthwith upon receipt by
the Owner Trustee in the following order of priority: first, so much of such
payment as shall be required to reimburse the Owner Trustee for any expenses not
otherwise reimbursed as to which the Owner Trustee is entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by the Owner
Trustee; second, so much of the remainder for which provision as to the
application thereof is contained in the Lease, any of the other Operative
Agreements or any of the other Owner Trustee Agreements shall be applied and
distributed in accordance with the terms of the Lease, such other Operative
Agreement or such other Owner Trustee Agreement, as the case may be; and third,
the balance, if any, shall be paid to the Owner Participant.
Section 3.3 Certain Distributions to the Owner Participant. All amounts
from time to time distributable by the Indenture Trustee to the Owner
Participant pursuant to the terms of the Indenture shall, if paid to the Owner
Trustee, be distributed by the Owner Trustee to the Owner Participant.
2
<PAGE>
Section 3.4 Excepted Property. Anything in this Trust Agreement to the
contrary notwithstanding, any amounts or payments constituting Excepted Property
received by the Owner Trustee shall be paid promptly by the Owner Trustee to the
Person to whom such amounts or payments are payable pursuant to the terms of the
Operative Agreements.
Section 3.5 Method of Payment.
(a) All amounts payable to the Owner Participant or to the Indenture
Trustee pursuant to this Trust Agreement shall be paid by the Owner Trustee, if
to the Owner Participant, by transferring such amount in immediately available
funds to the account of the Owner Participant specified in Schedule 2 to the
Participation Agreement or, if to the Indenture Trustee, in the manner specified
in the Indenture. The Owner Trustee shall pay such amounts on the day received,
or on the next succeeding Business Day if the funds to be so paid shall not have
been received by the Owner Trustee by 1:00 p.m. New York time, provided that the
Owner Trustee shall use reasonable efforts to invest overnight in Specified
Investments at the direction and for the benefit of the Owner Participant all
funds received by it at or later than 1:00 p.m. New York time.
(b) Notwithstanding the foregoing, the Owner Trustee will pay, if so
requested by the Owner Participant in writing, any or all amounts in immediately
available funds payable by the Owner Trustee hereunder to the Owner Participant
either by crediting such amount or amounts to an account or accounts maintained
by the Owner Participant with Trust Company, by payment to such account at such
financial institution as the Owner Participant may from time to time direct in
writing or by mailing an official bank check or checks in such amount or amounts
payable to the Owner Participant at such address as the Owner Participant may
from time to time designate in writing.
ARTICLE IV
CERTAIN DUTIES OF THE OWNER TRUSTEE
Section 4.1 Notice of Certain Events. In the event that the Owner Trustee
shall have Actual Knowledge of any Lease Default, Lease Event of Default,
Indenture Default, Indenture Event of Default or Event of Loss, the Owner
Trustee shall give prompt telephonic notice thereof (promptly confirmed in
writing) to the Owner Participant, the Lessee and the Indenture Trustee unless
such Lease Default, Lease Event of Default, Indenture Default, Indenture Event
of Default or Event of Loss, as the case may be, has been remedied before the
giving of such notice and the Owner Trustee has Actual Knowledge that such Lease
Default, Lease Event of Default, Indenture Default, Indenture Event of Default
or Event of Loss has been so remedied. Subject to the terms of Section 4.3, the
Owner Trustee shall take or refrain from taking such action with respect
thereto, not inconsistent with the provisions of the Operative Agreements, as
the Owner Trustee shall be instructed in writing by the Owner Participant.
Section 4.2 Action Upon Instructions. Subject to the terms of Sections 4.1
and 4.3, upon the written instructions at any time and from time to time of the
Owner Participant, the Owner Trustee will take such of the following actions as
may be specified in such instructions: give such notice or direction or exercise
such right, remedy or power under the Owner Trustee Agreements with respect
thereto or to any Accepted Equipment, including, without limitation,
3
<PAGE>
the right to transfer, assign or convey the Owner Trustee's interest in the
Owner Trustee Agreements or any Accepted Unit, or take such other action with
respect to the Owner Trustee Agreements or any Accepted Unit as shall be
specified in such instructions; and after the expiration or earlier termination
of the Lease with respect to any Accepted Unit, convey all of the Owner
Trustee's right, title and interest in and to such Accepted Unit to the Owner
Participant or for such amount, on such terms and to such purchaser or
purchasers as shall be designated in such instructions, or net lease such
Accepted Unit as designated in such instructions; provided, however, that if
such instructions have not been delivered to the Owner Trustee prior to the
expiration of one year following such expiration or earlier termination of the
Lease, the Owner Trustee shall transfer title to such right, title and interest
to the Owner Participant.
Section 4.3 Indemnification. The Owner Trustee shall not be required to
take or refrain from taking any action under Section 4.1 or 4.2 (other than the
actions specified in the first sentence of Sections 3.1 and 4.1 and the last
sentence of Section 4.4) unless the Owner Trustee shall have been indemnified,
in manner and form reasonably satisfactory to the Owner Trustee, against any
liability, fee, cost or expense (including, without limitation, reasonable
attorneys' fees and expenses) which may be incurred or charged in connection
therewith, other than any such liability, fee, cost or expense arising as a
result of any action or circumstance for which the Owner Trustee is answerable
or accountable pursuant to the third sentence of Section 5.1. The Owner Trustee
shall not be required to take any action under any Operative Agreement or any
Owner Trustee Agreement (other than the actions specified in the first sentence
of Section 4.1 or in the second sentence of Section 4.4) if the Owner Trustee
reasonably shall determine, or shall have been advised by counsel, that such
action is likely to result in unindemnified personal liability to the Owner
Trustee or is contrary to the terms hereof or of any documents contemplated
hereby to which the Owner Trustee is a party, or otherwise contrary to law, and
the Owner Trustee in such case shall deliver promptly to the Owner Participant
written notice of the basis of its refusal to act.
Section 4.4 No Duties Except as Specified. The Owner Trustee shall not
have any duty or obligation to manage, control, use, make any payment in respect
of, register, record, insure, inspect, sell, dispose of or otherwise deal with
any Accepted Unit or any other part of the Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, any Owner Trustee
Agreement or any of the other Operative Agreements, except as expressly provided
by the terms of this Trust Agreement, the Indenture or the Owner Trustee
Agreements or in written instructions from the Owner Participant received
pursuant to Section 4.1 or 4.2; and no implied duties or obligations shall be
read into this Trust Agreement against the Owner Trustee. Notwithstanding and
without limiting the foregoing, Trust Company agrees that it will promptly
(without any right to indemnification hereunder) take all action necessary to
discharge any Lessor's Lien attributable to Trust Company on any part of the
Trust Estate or Indenture Estate. Trust Company agrees to indemnify, protect,
save and keep harmless the Owner Participant from and against any loss, cost or
expense (including reasonable legal fees and expenses) incurred by the Owner
Participant as a result of the imposition or enforcement of any such Lessor's
Lien against the Accepted Units, any interest herein or on the Trust Estate or
the Indenture Estate resulting from the Lessor's Liens attributable to Trust
Company.
4
<PAGE>
Section 4.5 No Action Except Under Specified Agreements or Instructions.
The Owner Trustee shall have no right, power or authority to, and the Owner
Trustee agrees that it will not, manage, control, use, sell, dispose of or
otherwise deal with any Accepted Unit or any other part of the Trust Estate
except as expressly provided by the terms of this Trust Agreement, expressly
required by the terms of any Owner Trustee Agreement or expressly directed or
authorized in written instructions from the Owner Participant pursuant to
Section 4.1 or 4.2.
Section 4.6 Tax Returns; Records. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt and
disbursement of all money which it may receive or be entitled to hereunder or
under any agreement contemplated hereby. The Owner Trustee agrees at the expense
of the Lessee to file an application with the Internal Revenue Service for a
taxpayer identification number with respect to the trust created by this Trust
Agreement. The Owner Participant shall be responsible for causing to be prepared
all income tax returns required to be filed by the Owner Participant. The Owner
Trustee shall be responsible for causing to be prepared, at the request of the
Owner Participant and the expense of the Lessee, all income tax returns required
to be filed with respect to the trusts created hereby and shall execute and file
such returns. The Owner Trustee and the Owner Participant, upon request, will
furnish each other with all such information as may be reasonably required in
connection with the preparation of such tax returns; provided that the Owner
Trustee shall send a completed copy of such return to the Owner Participant not
more than 60 nor less than 30 days prior to the due date of the return (provided
that the Owner Trustee shall have timely received all necessary information to
complete and deliver to the Owner Participant such return). The Owner Trustee
shall keep copies of all returns delivered to or filed by it.
Section 4.7 Absence of Certain Duties. Except in accordance with written
instructions furnished pursuant to Sections 4.1 and 4.2, and except as expressly
provided in any Owner Trustee Agreement, and without limiting the generality of
Section 4.4, the Owner Trustee shall not have any duty to file, record or
deposit any Operative Agreement or Owner Trustee Agreement, including without
limitation this Trust Agreement, or any other document, or to maintain any such
filing, recording or deposit, or to refile, re-record or redeposit any such
document, except that the Owner Trustee shall, upon written request by the
Lessee or the Owner Participant, sign and file such documents as Lessee or the
Owner Participant prepares as necessary to maintain the filing and recordation
for the Lease, any Lease Supplement, the Indenture and any Indenture Supplement
in the name of the Owner Trustee with the STB pursuant to 49 U.S.C. (S)11301 of
the Interstate Commerce Act or Registrar General of Canada pursuant to Section
90 of the Railway Act of Canada, or as otherwise required under applicable law,
and to the extent that such documents for that purpose are supplied by the
Lessee pursuant to any of the Operative Agreements, timely submit any and all
such documents and reports with respect to the Accepted Units which may from
time to time be required by the STB, the AAR, or any other authority having
jurisdiction, obtain insurance with respect to any Accepted Unit or to effect or
maintain any such insurance, other than to receive and promptly forward to the
Owner Participant any notices, policies, certificates or binders furnished to
the Owner Trustee by the Lessee or its insurance brokers, maintain or mark any
Accepted Unit, pay or discharge any tax, assessment or other governmental
charge, or any Lien or encumbrance of any kind, owing with respect to or
assessed or levied against any part of the Trust Estate, except as provided in
Sections 4.4 or 5.1 hereof, and Section 6.3 of the Participation Agreement
confirm, verify, investigate or inquire into the failure to receive any reports
or financial statements of the Lessee,
5
<PAGE>
inspect the Accepted Equipment at any time, or ascertain or inquire as to the
performance or observance of any of the covenants of the Lessee or any other
Person under any Operative Agreement or Owner Trustee Agreement with respect to
any Accepted Unit or any other part of the Trust Estate or manage, control, use,
sell, dispose of or otherwise deal with any Accepted Unit or any other part of
the Trust Estate, or any part thereof, except as provided in Sections 3.5(a) or
4.5 hereof.
Section 4.8 Furnishing of Documents. The Owner Trustee will furnish to the
Owner Participant, promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, opinions, certificates, financial
statements and any other instruments furnished to the Owner Trustee under any
Operative Agreement or any Owner Trustee Agreement, unless the Owner Trustee
shall have determined that the same already has been furnished to the Owner
Participant.
ARTICLE V
THE OWNER TRUSTEE
Section 5.1 Acceptance of Trusts and Duties. Trust Company accepts the
trusts hereby created and agrees to perform the same on the terms of this Trust
Agreement. Trust Company also agrees to disburse all moneys actually received by
it constituting part of the Trust Estate pursuant to the terms of this Trust
Agreement. Trust Company shall not be answerable or accountable under any
circumstances except for its own willful misconduct or gross negligence
(including, without limitation, in connection with any activities of the Owner
Trustee in violation of Section 4.5), in the case of the breach or inaccuracy of
any of its representations or warranties contained in any Operative Agreement
given expressly in its individual capacity and not in its capacity as a trustee
hereunder, as arising from its failure to perform obligations expressly
undertaken by it in the penultimate and last sentence of Section 4.4 hereof or
expressly undertaken by it in its individual capacity under the Participation
Agreement, for any Taxes based on or measured by any fees, commissions or
compensation received by it for acting as Owner Trustee in connection with any
of the transactions contemplated by the Operative Agreements or for its failure
to disburse or invest funds actually received by it in accordance with the terms
hereof or the Lease or for any negligence or willful misconduct of the Owner
Trustee arising out of its obligations under Sections 4.1 or 4.4.
Section 5.2 No Representations or Warranties as to Equipment or Documents.
(a) NEITHER TRUST COMPANY NOR THE OWNER TRUSTEE MAKES ANY
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE DESIGN,
OPERATION OR CONDITION OF ANY UNIT OR ANY PART THEREOF, THE MERCHANTABILITY
THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO ANY UNIT OR
ANY PART THEREOF, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR
CONFORMITY THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, except that Trust Company hereby
represents and warrants that on the Closing Date for such Accepted Unit, the
Owner Trustee shall have received whatever title thereto was conveyed to it by
the Lessee and (ii) while a part of the Trust Estate, such Accepted Unit shall
be free and clear of Lessor's Liens attributable to it.
6
<PAGE>
(b) Neither Trust Company nor the Owner Trustee makes any
representation or warranty as to the validity or enforceability of any Operative
Agreement, or as to the correctness of any statement therein, except to the
extent that any such representation, warranty or statement is expressly made
therein or in any written certificate delivered pursuant thereto by the Owner
Trustee or Trust Company and except that Trust Company hereby represents and
warrants that this Trust Agreement has been duly executed and delivered by Trust
Company and each of the Owner Trustee Agreements has been or will be executed
and delivered by officers of the Owner Trustee who are or will be duly
authorized to execute and deliver documents on its behalf, and that each of this
Agreement and each of the other Owner Trustee Agreements constitutes (assuming
the due authorization, execution, and delivery of this Agreement and each such
other agreement by the other parties thereto) the legal, valid and binding
obligation of the Trust Company (or the Owner Trustee if expressly stated
therein) enforceable against it in accordance with its terms except as limited
by bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of creditors
rights generally from time to time in effect.
Section 5.3 No Segregation of Moneys; No Interest. Except as required by
Section 2.4 of the Participation Agreement, moneys received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and such moneys may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
Section 5.4 Reliance; Advice of Counsel. The Owner Trustee shall not incur
any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper reasonably believed by it in good faith to be genuine and
reasonably believed by it in good faith to be signed by the proper party or
parties. Any request, direction, order or demand of the Owner Participant or the
Lessee mentioned herein or in any other Operative Agreement to which the Owner
Trustee is a party shall be sufficiently evidenced by an Officer's Certificate
of the Owner Participant or the Lessee, as the case may be. The Owner Trustee
may accept in good faith a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body 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 prescribed herein, the Owner Trustee may for all
purposes hereof rely on an Officer's Certificate of the relevant party as to
such fact or matter, and such Officer's Certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon. In the administration of the trusts
hereunder, the Owner 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 consult with counsel, accountants and other skilled persons to be
selected and employed by it (other than persons regularly employed by it), and
the Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written advice or opinion within the
scope of the competence of any such counsel, accountants or other skilled
persons and not contrary to this Trust Agreement, except for the use of due care
in the appointment of counsel, accountants or other skilled persons.
7
<PAGE>
Section 5.5 Not Acting in Individual Capacity. Trust Company is entering
into this Agreement and accepting the trust created hereby in its individual
capacity. Otherwise, except as provided in this Trust Agreement and in the other
Operative Agreements, Trust Company agrees to act solely as trustee hereunder
and not in its individual capacity; and all Persons having any claim against the
Owner Trustee by reason of the transactions contemplated by the Operative
Agreements or the Owner Trustee Agreements shall look only to the Trust Estate
(or a part thereof, as the case may be) for payment or satisfaction thereof,
except as specifically provided in this Trust Agreement and except to the extent
the Owner Trustee otherwise shall agree in any Owner Trustee Agreement.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification of Trust Company. The Owner Participant agrees
to assume liability for, and to indemnify and hold harmless Trust Company
against and from any and all liabilities, obligations, losses, damages, taxes
(excluding any taxes, fees or other charges payable by Trust Company or measured
by any compensation received by Trust Company for its services hereunder),
penalties, claims, actions, suits, proceedings, costs, expenses and
disbursements of any kind and nature whatsoever, including, without limitation,
the reasonable fees and expenses of counsel (collectively, "Trust Expenses")
which may be imposed on, incurred by or asserted against Trust Company whether
or not also indemnified by any other Person (provided, however, that to the
extent Trust Company shall have actually received any payment in the nature of
an indemnity payment from any such other Person relating to a claim hereunder,
Trust Company shall not be entitled to the amount of any such payment pursuant
to this Section 6.1) in any way relating to or arising out of the administration
of the Trust Estate or the action or inaction of Trust Company hereunder or
under the other Operative Agreements, any Accepted Equipment or any part
thereof, the Operative Agreements or any of them, or the enforcement by Trust
Company of any of its rights under the Operative Agreements, or the design,
manufacture, financing, refinancing, installation, acceptance, rejection,
ownership, delivery, nondelivery, lease, sublease, possession, control, use,
operation, condition, modification, servicing, maintenance, repair, improvement,
replacement, sale, return or other disposition of the Accepted Equipment, any
Accepted Unit or any part thereof including, without limitation, (A) any
inadequacy or deficiency or defect therein, including latent defects, whether or
not discoverable or any claim based on negligence or arising from any violation
of law or for strict liability in tort or any claim for patent, trademark or
copyright tort or any claim for patent, trademark or copyright infringement, and
(B) any loss or damage to property or the environment or injury or death to any
Person; except only that the Owner Participant shall not be required to
indemnify Trust Company for Trust Expenses arising or resulting from any of the
matters described in the last sentence of Section 5.1; provided that the Owner
Participant shall be liable under this Section 6.1 only to the extent that the
Owner Trustee is indemnified by the Lessee pursuant to Section 7 of the
Participation Agreement (with the exception of the limitations to Lessee's
indemnification obligations set forth in Sections 7.1(c)(ii), 7.1(c)(iv) (to the
extent relating to any such transfer by the Owner Participant or transfer by the
Owner Trustee at the direction of the Owner Participant), 7.2(d)(i), 7.2(d)(iv)
(to the extent relating to any such transfer by the Owner Participant or
transfer by the Owner Trustee at the direction of the Owner Participant) and
7.2(d)(vi) (when the Owner Trustee is acting on instructions from the Owner
Participant) of the Participation Agreement); provided, further, that before
asserting its right to
8
<PAGE>
indemnification pursuant to this Section 6.1, the Owner Trustee shall first
demand its corresponding right to indemnification, if any, pursuant to Section 7
of the Participation Agreement (but need not exhaust any or all remedies
available thereunder), and the Owner Participant shall have the right to pursue
any such remedies against the Lessee which are not pursued by the Owner Trustee.
The indemnities contained in this Section 6.1 shall survive the termination of
this Trust Agreement. To secure the foregoing indemnities, the Owner Trustee
shall be entitled to apply any amount otherwise distributable to the Owner
Participant pursuant to Section 3.2 against any such indemnity which has not
been paid when due. The indemnities contained in this Section 6.1 extend to
Trust Company only and shall not be construed as indemnities of the Trust
Estate. The payor of any indemnity under this Section 6.1 shall be subrogated to
any right of the Person indemnified in respect of the matter as to which such
indemnity was paid.
Section 6.2 Expenses. The Owner Participant shall pay, or reimburse the
Owner Trustee for, all reasonable expenses of the Owner Trustee, including,
without limitation, the reasonable expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and duties under the
Operative Agreements, unless and to the extent that the Owner Trustee otherwise
receives payment or reimbursement pursuant to any Operative Agreement, whether
or not the transactions contemplated hereby are consummated; provided that the
Owner Participant shall have no obligation hereunder to the extent Lessee is not
obligated to pay such amounts pursuant to Section 2.5 of the Participation
Agreement. The Owner Trustee agrees to look first to the Lessee for such payment
pursuant to Section 2.5 of the Participation Agreement. Except as provided
herein, the Owner Trustee and Trust Company shall have no right to compensation
with respect to the transactions contemplated by the Operative Agreements.
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
Section 7.1 Termination of Trust Agreement.
(a) Subject to the terms of the Participation Agreement, the
Indenture and Section 7.2, this Trust Agreement and the trusts created hereby
shall terminate and the Trust Estate shall be distributed to the Owner
Participant, and this Trust Agreement shall be of no further force or effect,
upon the earlier of the sale or other final disposition by the Owner Trustee of
all property constituting part of the Trust Estate and the final distribution by
the Owner Trustee of all moneys or other property or proceeds constituting part
of the Trust Estate in accordance with the terms of Article III and one hundred
ten (110) years after the earlier execution of this Trust Agreement by either
party hereto, but if any rights, privileges or options hereunder shall be or
become valid under applicable law for a period subsequent to one hundred ten
(110) years after the earlier execution of this Trust Agreement by either party
hereto (or, without limiting the generality of the foregoing, if legislation
shall become effective providing for the validity or permitting the effective
grant of such rights, privileges and options for a period in gross exceeding the
period for which such rights, privileges and options are hereinabove stated to
extend and be valid), then such rights, privileges or options shall not
terminate as aforesaid but shall extend to and continue in effect, but only if
such nontermination and extension shall then be
9
<PAGE>
valid under applicable law, until such time as the same shall cease to be valid
under applicable law.
(b) Except as expressly provided in Section 7.2, the Owner
Participant shall not be entitled to revoke or terminate this Trust Agreement or
the trust created hereby. Except as otherwise provided herein, the Owner
Participant may not withdraw any of the Trust Estate until the Lien of the
Indenture on the Trust Estate shall have been discharged pursuant to the terms
thereof.
Section 7.2 Termination at Option of the Owner Participant. The provisions
of Section 7.1 notwithstanding, this Trust Agreement and the trusts created
hereby shall terminate and the Trust Estate shall be distributed to the Owner
Participant, and this Trust Agreement shall be of no further force and effect,
upon the election of the Owner Participant by notice to the Owner Trustee to
revoke the trusts created hereby; provided that, in addition to the giving of
such notice, the Owner Participant, with the cooperation of the Owner Trustee,
shall execute and deliver such written agreements and instruments and take such
actions as shall be necessary in order to cause the succession of the Owner
Participant to all the rights, title, interests, duties and liabilities of the
Owner Trustee under the Operative Agreements (other than obligations
attributable to any gross negligence or willful misconduct of Trust Company or
any breach by the Owner Trustee of its obligations under the Operative
Agreements); provided, however, that until the Lien of the Indenture on the
Trust Estate shall have been discharged pursuant to the terms thereof the Owner
Participant may not revoke such trusts without the consent of the Indenture
Trustee. The written agreements and instruments referred to in the preceding
sentence shall be reasonably satisfactory in form and substance to the Owner
Trustee and shall release the Owner Trustee from all further obligations of the
Owner Trustee hereunder and under the agreements and other instruments mentioned
in the preceding sentence.
ARTICLE VII
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
Section 8.1 Resignation of the Owner Trustee; Appointment of Successor.
(a) The Owner Trustee may resign as the Owner Trustee at any time
without cause by giving at least thirty (30) days' prior written notice to the
Owner Participant, the Indenture Trustee and the Lessee, such resignation to be
effective on the acceptance of appointment by a successor to the Owner Trustee
under paragraph (b) of this Section 8.1. In addition, the Owner Participant at
any time may remove the Owner Trustee without cause by an instrument in writing
delivered to the Owner Trustee, the Indenture Trustee and the Lessee, such
removal to be effective upon the acceptance of appointment by a successor to the
Owner Trustee under paragraph (b) of this Section 8.1. In case of the
resignation or removal of the Owner Trustee, the Owner Participant may appoint a
successor to the Owner Trustee by an instrument in writing, signed by the Owner
Participant. If a successor to the Owner Trustee shall not have been appointed
within thirty (30) days after the giving of written notice of such resignation
or the delivery of the written instrument with respect to such removal, the
Owner Trustee or the Owner Participant may apply to any court of competent
jurisdiction to appoint a successor to the Owner Trustee to act until such time,
if any, as a successor shall have been appointed as above provided
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<PAGE>
in this Section 8.1. Any successor to the Owner Trustee so appointed by such
court shall immediately and without further act be superseded by any successor
to the Owner Trustee appointed as above provided in this Section 8.1.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment and shall give the Owner Participant, the Indenture Trustee and
Lessee written notice of such acceptance. Upon the execution and delivery of
such instrument, such successor Owner Trustee, without further act, shall become
vested with all the estates, properties, rights, powers, duties and trusts of
the predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named a trustee herein; provided, however, that upon the written
request of such successor Owner Trustee, such predecessor Owner Trustee shall
execute and deliver an instrument transferring to such successor Owner Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers,
duties and trusts of such predecessor trustee as the Owner Trustee hereunder,
and such predecessor trustee shall duly assign, transfer, deliver and pay over
to such successor Owner Trustee all moneys or other property then held by such
predecessor trustee as the Owner Trustee upon the trusts herein expressed. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor Owner
Trustee, pursuant to written instructions of the Owner Participant, will execute
all documents and take all reasonable action within its control in order to
cause title to the Trust Estate to be transferred to the successor Owner
Trustee.
(c) Any successor Owner Trustee, however appointed, shall be a bank
or trust company incorporated and doing business within the United States of
America and 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 Owner Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Owner 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 Owner Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Owner Trustee may be transferred, shall be, subject to
compliance with the terms of paragraph (c) of this Section 8.1, the Owner
Trustee under this Trust Agreement without further act; provided, that such
corporation shall in no event be the Indenture Trustee.
Section 8.2 Additional and Separate Trustees.
--------------------------------
(a) If the Owner Trustee or the Owner Participant shall conclude that
it is necessary or prudent in order to conform to the law of any jurisdiction in
which all or any part of the Trust Estate shall be situated, or to make or
defend any claim or bring or defend any suit with respect to the Trust Estate or
any Operative Agreement, or pursuant to advice of counsel satisfactory to it, or
if the Owner Trustee shall have been instructed to do so by the Owner
Participant, the Owner Trustee shall appoint another Person to act as additional
or separate trustee for all or any part of the Trust Estate with such property,
title, right, power or duty of the Owner Trustee as the Owner Trustee and the
Owner Participant may determine. In case any such additional trustee or separate
trustee shall resign or be removed, all the assets, property, rights, powers or
duties of such additional trustee or separate trustee, as the case may be, so
far as
11
<PAGE>
permitted by any applicable law, shall vest in and be exercised by a new
successor to such additional trustee, appointed in the manner otherwise provided
in this Trust Agreement.
(b) In the event that either the Owner Participant or the Owner
Trustee shall determine to appoint another Person as additional or separate
trustee, the Owner Trustee and the Owner Participant shall execute and deliver
an agreement supplemental hereto, and all other instruments and agreements
necessary or proper to constitute another bank or trust company, or one or more
Persons approved by the Owner Trustee and the Owner Participant, either to act
as an additional trustee or trustees of all or any part of the Trust Estate,
jointly with the Owner Trustee, or to act as separate trustee or trustees of all
or any part of the Trust Estate, in any such case with such powers of the Owner
Trustee as may be provided in such agreement supplemental hereto, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the Owner
Trustee deemed necessary or proper by the Owner Trustee or the Owner
Participant, subject to the remaining provisions of this Section 8.2. The Owner
Trustee may execute, deliver and perform any deed, conveyance, assignment or
other instrument in writing as may be required by an additional trustee or
separate trustee for more fully and certainly vesting in and confirming to such
person any property, title, right or power which, by the terms of such agreement
supplemental hereto, are expressed to be conveyed or conferred to or upon such
additional trustee or separate trustee, and the Owner Participant shall, upon
the Owner Trustee's request, join therein and execute, acknowledge and deliver
the same.
(c) Every additional trustee and separate trustee hereunder shall, to
the extent permitted by law, be appointed to act and the Owner Trustee shall
act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred or
imposed upon the Owner Trustee in respect of the receipt, custody,
investment and payment of moneys, shall be exercised solely by the
Owner Trustee;
(ii) all other rights, powers, duties, and obligations conferred
or imposed upon the Owner Trustee shall be conferred or imposed upon
and exercised or performed by the Owner Trustee and such additional
trustee or trustees and separate trustee or trustees jointly, except
to the extent that under any law of the jurisdiction in which any
particular act or acts are to be performed by the Owner Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
holding of title to the Trust Estate in any such jurisdiction) shall
be exercised and performed by such additional trustee or trustees or
separate trustee or trustees;
(iii) no power hereby given to, or which may be exercised by,
any such additional trustee or separate trustee shall be exercised
hereunder by such additional trustee or separate trustee except
jointly with, or with the consent of, the Owner Trustee; and
12
<PAGE>
(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder.
(d) If at any time the Owner Trustee and the Owner Participant shall
deem it no longer necessary or prudent in order to conform to any applicable law
or shall be advised by its counsel that it is no longer necessary or prudent in
the interest of the Owner Trustee and the Owner Participant to maintain the
appointment of such additional or separate trustee as provided herein, the Owner
Trustee and the Owner Participant shall execute and deliver any agreement
supplemental hereto and all other instruments and agreements necessary or proper
to remove any such additional or separate trustee. The Owner Participant, at any
time, by an instrument in writing may remove any separate trustee or additional
trustee.
(e) Any additional trustee or separate trustee may at any time by an
instrument in writing constitute the Owner Trustee its agent or attorney-in-fact
with full power and authority, to the extent which may be authorized by
applicable law, to do all acts and things and exercise all discretion which it
is authorized or permitted to do or exercise, for and in its behalf and in its
name. In case any such additional trustee or separate trustee shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such additional trustee or separate
trustee, as the case may be, so far as permitted by law, shall vest in and be
exercised by the Owner Trustee without necessity of any act by any party and
without the appointment of a new successor to such additional or separate
trustee, unless and until a successor is appointed in the manner provided in
this Section 8.2.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
Section 9.1 Supplements and Amendments. Subject to Section 9.05 of the
Indenture, at the written request of the Owner Participant (and subject to the
provisions of Sections 6.5 and 6.6 of the Participation Agreement), this Trust
Agreement and each other Owner Trustee Agreement shall be amended by a written
instrument signed by Trust Company and the Owner Participant; provided, however,
if in the reasonable opinion of Trust Company any instrument required to be so
executed adversely affects any right, duty or liability of, or immunity or
indemnity in favor of, Trust Company under this Trust Agreement or any of the
documents contemplated hereby to which it is a party, or would cause or result
in any conflict with or breach of any term, condition or provision of, or
default under, its charter documents or by-laws, Trust Company in its reasonable
discretion may decline to execute such instrument, unless the Trust Company is
indemnified therefor under Section 4.3, as determined by the Trust Company in
its reasonable discretion.
ARTICLE X
MISCELLANEOUS
Section 10.1 No Legal Title to Trust Estate in the Owner Participant. The
Owner Participant shall not have legal title to any part of the Trust Estate. No
transfer, by operation of law or otherwise, of any right, title and interest of
the Owner Participant in and to the Trust Estate or hereunder, or insolvency,
dissolution or other termination of the Owner Participant, shall operate to
terminate this Trust Agreement or the trusts created hereby or entitle any
13
<PAGE>
successor or transferee to an accounting or to the transfer to it of legal title
to any part of the Trust Estate.
Section 10.2 Sale of Accepted Equipment by the Owner Trustee is Binding.
Any sale, transfer or other conveyance of any Accepted Unit or part thereof by
the Owner Trustee made pursuant to the terms of this Trust Agreement or the
Lease shall bind the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to such Accepted Unit or part thereof, as the case may be. 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 Owner
Trustee.
Section 10.3 Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices hereunder shall be given as provided in Section
10.4 of the Participation Agreement.
Section 10.4 Severability. If any term or provision of this Trust
Agreement is invalid or unenforceable in any jurisdiction, such term or
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 10.5 Separate Counterparts. This Trust Agreement may be executed
by the parties hereto in any number of counterparts and by the parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, and all of which shall together constitute but one and the same
instrument.
Section 10.6 Waivers, etc. No term or provision hereof may be changed,
waived, discharged or terminated orally, but may be changed, waived, discharged
or terminated by an instrument in writing, and any waiver of the terms hereof
shall be effective only in the specific instance and for the specific purpose
given.
Section 10.7 Successors and Assigns. This Trust Agreement, including the
terms and provisions hereof, shall be binding upon the Owner Participant and
Trust Company or the Owner Trustee, whichever is applicable pursuant to the
terms hereof, and their respective successors and assigns, and inure to the
benefit of the Owner Participant and Trust Company or the Owner Trustee,
whichever is applicable pursuant to the terms hereof, and their respective
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by the Owner
Participant shall bind the successors and assigns of the Owner Participant.
Section 10.8 Transfer of Owner Participant's Interest. All provisions of
Section 6.1 of the Participation Agreement shall (with the same force and effect
as if set forth in full, mutatis mutandis, in this Section 10.8) be applicable
to any assignment, conveyance or other transfer by the Owner Participant of any
of its right, title or interest in and to the Trust Estate or this Trust
Agreement or any other Operative Agreement.
14
<PAGE>
Section 10.9 Actions of the Owner Participants. If at any time prior to
the termination of this Trust Agreement there is more than one Owner
Participant, then during such time, if any action is required to be taken by the
Owner Participant, such action shall be taken by or on behalf of all Owner
Participants and whenever any direction, authorization, approval, consent,
instruction or other action is permitted to be given or taken by the Owner
Participant it shall be given or taken only upon such percentage agreement of
the Owner Participants as all Owner Participants may instruct the Owner Trustee.
Section 10.10 Headings; Table of Contents. The division of this Trust
Agreement into sections, the provision of a table of contents and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
Section 10.11 Governing Law. The terms of this Trust Agreement and the
rights and obligations of the parties hereto shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to contracts
made and to be performed entirely within such state.
Section 10.12 Benefit. Nothing herein, whether express or implied, shall
be construed to give any Person other than the Owner Trustee, the Indenture
Trustee and the Owner Participant any legal or equitable right, remedy or claim
under or in respect of this Trust Agreement.
Section 10.13 Performance by the Owner Participant. Any obligation of
Trust Company or the Owner Trustee hereunder or under any other Operative
Agreement or other document contemplated hereby, may be performed by the Owner
Participant and any such performance shall not be construed as a revocation of
the trusts created hereby.
Section 10.14 Conflict with Operative Agreements. If this Trust Agreement
(or any instructions given by the Owner Participant pursuant hereto) shall
require that any action be taken with respect to any matter or any other
Operative Agreement (or any instruction duly given in accordance with the terms
thereof) shall require that a different action be taken with respect to such
matter, and such actions shall be mutually exclusive, the provisions of this
Trust Agreement, in respect thereof, shall control.
Section 10.15 Limitation on Owner Participant's Liability. The Owner
Participant shall not have any liability for the performance of this Trust
Agreement, except as expressly set forth herein.
Section 10.16 Identification of Trust. The trust created hereunder may be
referred to for convenience as GATX Rail Trust No. 2000-1.
* * *
15
<PAGE>
In Witness Whereof, the parties hereto have each caused this Trust
Agreement to be duly executed and delivered as of the day and year first above
written.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
WILMINGTON TRUST COMPANY
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
16
<PAGE>
---------------------------------------------
TRUST AGREEMENT
(GATX Rail Trust No. 2000-2)
Dated as of April 3, 2000
between
Owner Participant
and
WILMINGTON TRUST COMPANY,
Owner Trustee
Assorted Railroad Tank Cars and Covered Hopper Cars
GATX Rail Trust No. 2000-2
---------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS....................................................................... 3
Section 1.1 Definitions.......................................................... 3
Section 1.2 Interpretation....................................................... 3
ARTICLE II
AUTHORITY; DECLARATION OF TRUST................................................... 3
Section 2.1 Authority to Execute and Perform Various Documents................... 3
Section 2.2 Declaration of Trust................................................. 4
ARTICLE III
DISTRIBUTIONS AND PAYMENTS........................................................ 4
Section 3.1 Payments to the Indenture Trustee.................................... 4
Section 3.2 Payments to the Owner Trustee; Other Parties......................... 4
Section 3.3 Certain Distributions to the Owner Participant....................... 5
Section 3.4 Excepted Property.................................................... 5
Section 3.5 Method of Payment.................................................... 5
ARTICLE IV
CERTAIN DUTIES OF THE OWNER TRUSTEE............................................... 5
Section 4.1 Notice of Certain Events............................................. 5
Section 4.2 Action Upon Instructions............................................. 6
Section 4.3 Indemnification...................................................... 6
Section 4.4 No Duties Except as Specified........................................ 6
Section 4.5 No Action Except Under Specified Agreements or Instructions.......... 7
Section 4.6 Tax Returns; Records................................................. 7
Section 4.7 Absence of Certain Duties............................................ 7
Section 4.8 Furnishing of Documents.............................................. 8
ARTICLE V
THE OWNER TRUSTEE................................................................. 8
Section 5.1 Acceptance of Trusts and Duties.................................. 8
Section 5.2 No Representations or Warranties as
to Equipment or Documents........................................ 9
Section 5.3 No Segregation of Moneys; No Interest............................ 9
Section 5.4 Reliance; Advice of Counsel...................................... 9
Section 5.5 Not Acting in Individual Capacity................................ 10
ARTICLE VI
INDEMNIFICATION................................................................... 10
Section 6.1 Indemnification of Trust Company................................. 10
Section 6.2 Expenses......................................................... 11
ARTICLE VII
TERMINATION OF TRUST AGREEMENT.................................................... 12
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 7.1 Termination of Trust Agreement........................................ 12
Section 7.2 Termination at Option of the Owner Participant........................ 12
ARTICLE VIII
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES AND SEPARATE OWNER
TRUSTEES........................................................................... 13
Section 8.1 Resignation of the Owner Trustee; Appointment of Successor.......... 13
Section 8.2 Additional and Separate Trustees..................................... 14
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS......................................................... 16
Section 9.1 Supplements and Amendments........................................... 16
ARTICLE X
MISCELLANEOUS...................................................................... 16
Section 10.1 No Legal Title to Trust Estate in
the Owner Participant................................................ 16
Section 10.2 Sale of Accepted Equipment by
the Owner Trustee is Binding......................................... 16
Section 10.3 Notices.............................................................. 16
Section 10.4 Severability......................................................... 17
Section 10.5 Separate Counterparts................................................ 17
Section 10.6 Waivers, etc......................................................... 17
Section 10.7 Successors and Assigns............................................... 17
Section 10.8 Transfer of Owner Participant's Interest............................. 17
Section 10.9 Actions of the Owner Participants.................................... 17
Section 10.10 Headings; Table of Contents.......................................... 17
Section 10.11 Governing Law........................................................ 18
Section 10.12 Benefit.............................................................. 18
Section 10.13 Performance by the Owner Participant................................. 18
Section 10.14 Conflict with Operative Agreements................................... 18
Section 10.15 Limitation on Owner Participant's Liability.......................... 18
Section 10.16 Identification of Trust.............................................. 18
</TABLE>
-ii-
<PAGE>
TRUST AGREEMENT
(GATX Rail Trust No. 2000-2)
This Trust Agreement (GATX Rail Trust No. 2000-2) is entered into as of
April 3, 2000 between (the "Owner
Participant"), and WILMINGTON TRUST COMPANY, (in its individual capacity, "Trust
Company," and otherwise not in its individual capacity but solely as trustee
hereunder, the "Owner Trustee"). In consideration of the mutual agreements
herein contained, the agreements contained in the other Operative Agreements and
the acceptance by Trust Company of the trusts hereby created, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The capitalized terms used in this Trust
-----------
Agreement have the meanings given in Appendix A unless otherwise defined herein
----------
or unless the context otherwise requires. For all purposes hereof, the
following terms shall have the following meanings:
"Accepted Equipment" means all of the Accepted Units.
"Accepted Unit" means each Unit that has been purchased by the Owner
Trustee pursuant to the Participation Agreement and any Replacement Unit.
"Actual Knowledge" of Trust Company or the Owner Trustee means actual
knowledge of, including any written notices received by, a responsible officer
in the Corporate Trust Administration of Trust Company.
Section 1.2 Interpretation. Unless otherwise indicated, references in
--------------
this Trust Agreement to Sections, subsections, paragraphs and Appendices are to
Sections, subsections, paragraphs and Appendices of this Trust Agreement. The
terms "hereof," "herein," "hereby," "hereto" and "hereunder" refer to this Trust
Agreement, taken as a whole. References to a given agreement or instrument are
references to such agreement or instrument as originally entered into, as
modified, amended, supplemented and restated through the date as of which such
reference is made.
ARTICLE II
AUTHORITY; DECLARATION OF TRUST
Section 2.1 Authority to Execute and Perform Various Documents. The
--------------------------------------------------
Owner Participant hereby authorizes and directs the Owner Trustee to, and the
Owner Trustee agrees for the benefit of the Owner Participant that it will,
execute and deliver the Participation Agreement, on the Closing Date, upon
receipt of the confirmation by the Owner Participant pursuant to Section 2.4 of
the Participation Agreement, execute and deliver the Operative Agreements
contemplated by the Participation Agreement to be executed and delivered by the
Owner Trustee on the Closing Date, in the respective forms thereof in which
delivered by the Owner Participant to the Owner Trustee for execution and
delivery, and to take the other actions contemplated to be taken by the Owner
Trustee on the Closing Date in Section 2 of the Participation Agreement, execute
and deliver any other agreement, instrument or certificate contemplated by the
Operative Agreements as the Owner Participant from time to time may direct in
writing, subject to the
<PAGE>
terms of this Trust Agreement, exercise the rights (upon written instructions
received from the Owner Participant) and perform the duties of the Owner Trustee
under each of the documents, agreements, instruments and certificates referred
to in this Section 2.1 as set forth in such documents, agreements, instruments
and certificates, and subject to the terms of this Trust Agreement, take such
other action in connection with the foregoing as the Owner Participant may from
time to time direct in writing.
Section 2.2 Declaration of Trust. The Trust Company hereby declares
--------------------
that it will hold as Owner Trustee all estate, right, title and interest of the
Owner Trustee in and to the Accepted Equipment and the Owner Trustee Agreements,
and any other property contributed by the Owner Participant pursuant to the
terms of any of the Operative Agreements, including without limitation all
amounts of Rent, insurance proceeds and requisition, indemnity or other payments
of any kind, but specifically excluding Excepted Property (collectively, the
"Trust Estate"), upon the trusts set forth herein and for the use and benefit of
the Owner Participant as sole beneficiary, subject, however, to the provisions
of and the Lien created by the Indenture.
ARTICLE III
DISTRIBUTIONS AND PAYMENTS
Section 3.1 Payments to the Indenture Trustee. Until the Lien of the
---------------------------------
Indenture shall have been discharged pursuant to the terms thereof, all Basic
Rent, Supplemental Rent, insurance proceeds and requisition or other payments of
any kind (other than payments constituting Excepted Property and other than
payments received from the Indenture Trustee) for or with respect to any
Accepted Unit payable to the Owner Trustee shall be payable directly to the
Indenture Trustee for distribution in accordance with the provisions of the
Indenture, and if any such amount or payment is received by the Owner Trustee,
such amount or payment upon receipt thereof shall be paid over to the Indenture
Trustee without deduction, set-off or adjustment of any kind for distribution in
accordance with the provisions of the Indenture.
Section 3.2 Payments to the Owner Trustee; Other Parties. Any payment
--------------------------------------------
of the type referred to in Section 3.1 (other than payments constituting
Excepted Property) received by the Owner Trustee after the Indenture shall have
been discharged pursuant to the terms thereof, any payment received from the
Indenture Trustee other than as specified in Section 3.4 and any other amount
received as part of the Trust Estate and for the application or distribution of
which no provision is made herein shall be distributed forthwith upon receipt by
the Owner Trustee in the following order of priority: first, so much of such
-----
payment as shall be required to reimburse the Owner Trustee for any expenses not
otherwise reimbursed as to which the Owner Trustee is entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by the Owner
Trustee; second, so much of the remainder for which provision as to the
------
application thereof is contained in the Lease, any of the other Operative
Agreements or any of the other Owner Trustee Agreements shall be applied and
distributed in accordance with the terms of the Lease, such other Operative
Agreement or such other Owner Trustee Agreement, as the case may be; and third,
-----
the balance, if any, shall be paid to the Owner Participant.
2
<PAGE>
Section 3.3 Certain Distributions to the Owner Participant. All amounts
----------------------------------------------
from time to time distributable by the Indenture Trustee to the Owner
Participant pursuant to the terms of the Indenture shall, if paid to the Owner
Trustee, be distributed by the Owner Trustee to the Owner Participant.
Section 3.4 Excepted Property. Anything in this Trust Agreement to the
-----------------
contrary notwithstanding, any amounts or payments constituting Excepted Property
received by the Owner Trustee shall be paid promptly by the Owner Trustee to the
Person to whom such amounts or payments are payable pursuant to the terms of the
Operative Agreements.
Section 3.5 Method of Payment.
-----------------
(a) All amounts payable to the Owner Participant or to the Indenture
Trustee pursuant to this Trust Agreement shall be paid by the Owner Trustee, if
to the Owner Participant, by transferring such amount in immediately available
funds to the account of the Owner Participant specified in Schedule 2 to the
----------
Participation Agreement or, if to the Indenture Trustee, in the manner specified
in the Indenture. The Owner Trustee shall pay such amounts on the day received,
or on the next succeeding Business Day if the funds to be so paid shall not have
been received by the Owner Trustee by 1:00 p.m. New York time, provided that the
--------
Owner Trustee shall use reasonable efforts to invest overnight in Specified
Investments at the direction and for the benefit of the Owner Participant all
funds received by it at or later than 1:00 p.m. New York time.
(b) Notwithstanding the foregoing, the Owner Trustee will pay, if so
requested by the Owner Participant in writing, any or all amounts in immediately
available funds payable by the Owner Trustee hereunder to the Owner Participant
either by crediting such amount or amounts to an account or accounts maintained
by the Owner Participant with Trust Company, by payment to such account at such
financial institution as the Owner Participant may from time to time direct in
writing or by mailing an official bank check or checks in such amount or
amounts payable to the Owner Participant at such address as the Owner
Participant may from time to time designate in writing.
ARTICLE IV
CERTAIN DUTIES OF THE OWNER TRUSTEE
Section 4.1 Notice of Certain Events. In the event that the Owner
------------------------
Trustee shall have Actual Knowledge of any Lease Default, Lease Event of
Default, Indenture Default, Indenture Event of Default or Event of Loss, the
Owner Trustee shall give prompt telephonic notice thereof (promptly confirmed in
writing) to the Owner Participant, the Lessee and the Indenture Trustee unless
such Lease Default, Lease Event of Default, Indenture Default, Indenture Event
of Default or Event of Loss, as the case may be, has been remedied before the
giving of such notice and the Owner Trustee has Actual Knowledge that such Lease
Default, Lease Event of Default, Indenture Default, Indenture Event of Default
or Event of Loss has been so remedied. Subject to the terms of Section 4.3, the
Owner Trustee shall take or refrain from taking such action with respect
thereto, not inconsistent with the provisions of the Operative Agreements, as
the Owner Trustee shall be instructed in writing by the Owner Participant.
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Section 4.2 Action Upon Instructions. Subject to the terms of Sections
------------------------
4.1 and 4.3, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustee will take such of the following actions
as may be specified in such instructions: give such notice or direction or
exercise such right, remedy or power under the Owner Trustee Agreements with
respect thereto or to any Accepted Equipment, including, without limitation, the
right to transfer, assign or convey the Owner Trustee's interest in the Owner
Trustee Agreements or any Accepted Unit, or take such other action with respect
to the Owner Trustee Agreements or any Accepted Unit as shall be specified in
such instructions; and after the expiration or earlier termination of the Lease
with respect to any Accepted Unit, convey all of the Owner Trustee's right,
title and interest in and to such Accepted Unit to the Owner Participant or for
such amount, on such terms and to such purchaser or purchasers as shall be
designated in such instructions, or net lease such Accepted Unit as designated
in such instructions; provided, however, that if such instructions have not been
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delivered to the Owner Trustee prior to the expiration of one year following
such expiration or earlier termination of the Lease, the Owner Trustee shall
transfer title to such right, title and interest to the Owner Participant.
Section 4.3 Indemnification. The Owner Trustee shall not be required to
---------------
take or refrain from taking any action under Section 4.1 or 4.2 (other than the
actions specified in the first sentence of Sections 3.1 and 4.1 and the last
sentence of Section 4.4) unless the Owner Trustee shall have been indemnified,
in manner and form reasonably satisfactory to the Owner Trustee, against any
liability, fee, cost or expense (including, without limitation, reasonable
attorneys' fees and expenses) which may be incurred or charged in connection
therewith, other than any such liability, fee, cost or expense arising as a
result of any action or circumstance for which the Owner Trustee is answerable
or accountable pursuant to the third sentence of Section 5.1. The Owner Trustee
shall not be required to take any action under any Operative Agreement or any
Owner Trustee Agreement (other than the actions specified in the first sentence
of Section 4.1 or in the second sentence of Section 4.4) if the Owner Trustee
reasonably shall determine, or shall have been advised by counsel, that such
action is likely to result in unindemnified personal liability to the Owner
Trustee or is contrary to the terms hereof or of any documents contemplated
hereby to which the Owner Trustee is a party, or otherwise contrary to law, and
the Owner Trustee in such case shall deliver promptly to the Owner Participant
written notice of the basis of its refusal to act.
Section 4.4 No Duties Except as Specified. The Owner Trustee shall not
-----------------------------
have any duty or obligation to manage, control, use, make any payment in respect
of, register, record, insure, inspect, sell, dispose of or otherwise deal with
any Accepted Unit or any other part of the Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, any Owner Trustee
Agreement or any of the other Operative Agreements, except as expressly provided
by the terms of this Trust Agreement, the Indenture or the Owner Trustee
Agreements or in written instructions from the Owner Participant received
pursuant to Section 4.1 or 4.2; and no implied duties or obligations shall be
read into this Trust Agreement against the Owner Trustee. Notwithstanding and
without limiting the foregoing, Trust Company agrees that it will promptly
(without any right to indemnification hereunder) take all action necessary to
discharge any Lessor's Lien attributable to Trust Company on any part of the
Trust Estate or Indenture Estate. Trust Company agrees to indemnify, protect,
save and keep harmless the Owner Participant from and against any loss, cost or
expense (including reasonable legal fees and expenses) incurred by the Owner
Participant as a result of the imposition or enforcement of any
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such Lessor's Lien against the Accepted Units, any interest herein or on the
Trust Estate or the Indenture Estate resulting from the Lessor's Liens
attributable to Trust Company.
Section 4.5 No Action Except Under Specified Agreements or Instructions.
-----------------------------------------------------------
The Owner Trustee shall have no right, power or authority to, and the Owner
Trustee agrees that it will not, manage, control, use, sell, dispose of or
otherwise deal with any Accepted Unit or any other part of the Trust Estate
except as expressly provided by the terms of this Trust Agreement, expressly
required by the terms of any Owner Trustee Agreement or expressly directed or
authorized in written instructions from the Owner Participant pursuant to
Section 4.1 or 4.2.
Section 4.6 Tax Returns; Records. The Owner Trustee shall be
--------------------
responsible for the keeping of all appropriate books and records relating to the
receipt and disbursement of all money which it may receive or be entitled to
hereunder or under any agreement contemplated hereby. The Owner Trustee agrees
at the expense of the Lessee to file an application with the Internal Revenue
Service for a taxpayer identification number with respect to the trust created
by this Trust Agreement. The Owner Participant shall be responsible for causing
to be prepared all income tax returns required to be filed by the Owner
Participant. The Owner Trustee shall be responsible for causing to be prepared,
at the request of the Owner Participant and the expense of the Lessee, all
income tax returns required to be filed with respect to the trusts created
hereby and shall execute and file such returns. The Owner Trustee and the Owner
Participant, upon request, will furnish each other with all such information as
may be reasonably required in connection with the preparation of such tax
returns; provided that the Owner Trustee shall send a completed copy of such
return to the Owner Participant not more than 60 nor less than 30 days prior to
the due date of the return (provided that the Owner Trustee shall have timely
received all necessary information to complete and deliver to the Owner
Participant such return). The Owner Trustee shall keep copies of all returns
delivered to or filed by it.
Section 4.7 Absence of Certain Duties. Except in accordance with
-------------------------
written instructions furnished pursuant to Sections 4.1 and 4.2, and except as
expressly provided in any Owner Trustee Agreement, and without limiting the
generality of Section 4.4, the Owner Trustee shall not have any duty to file,
record or deposit any Operative Agreement or Owner Trustee Agreement, including
without limitation this Trust Agreement, or any other document, or to maintain
any such filing, recording or deposit, or to refile, re-record or redeposit any
such document, except that the Owner Trustee shall, upon written request by the
Lessee or the Owner Participant, sign and file such documents as Lessee or the
Owner Participant prepares as necessary to maintain the filing and recordation
for the Lease, any Lease Supplement, the Indenture and any Indenture Supplement
in the name of the Owner Trustee with the STB pursuant to 49 U.S.C. (S)11301 of
the Interstate Commerce Act or Registrar General of Canada pursuant to Section
90 of the Railway Act of Canada, or as otherwise required under applicable law,
and to the extent that such documents for that purpose are supplied by the
Lessee pursuant to any of the Operative Agreements, timely submit any and all
such documents and reports with respect to the Accepted Units which may from
time to time be required by the STB, the AAR, or any other authority having
jurisdiction, obtain insurance with respect to any Accepted Unit or to effect
or maintain any such insurance, other than to receive and promptly forward to
the Owner Participant any notices, policies, certificates or binders furnished
to the Owner Trustee by the Lessee or its insurance brokers, maintain or mark
any Accepted Unit, pay or discharge any tax, assessment or other governmental
charge, or any Lien or encumbrance of any kind, owing with
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respect to or assessed or levied against any part of the Trust Estate, except as
provided in Sections 4.4 or 5.1 hereof, and Section 6.3 of the Participation
Agreement confirm, verify, investigate or inquire into the failure to receive
any reports or financial statements of the Lessee, inspect the Accepted
Equipment at any time, or ascertain or inquire as to the performance or
observance of any of the covenants of the Lessee or any other Person under any
Operative Agreement or Owner Trustee Agreement with respect to any Accepted Unit
or any other part of the Trust Estate or manage, control, use, sell, dispose of
or otherwise deal with any Accepted Unit or any other part of the Trust Estate,
or any part thereof, except as provided in Sections 3.5(a) or 4.5 hereof.
Section 4.8 Furnishing of Documents. The Owner Trustee will furnish to
-----------------------
the Owner Participant, promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, opinions, certificates, financial
statements and any other instruments furnished to the Owner Trustee under any
Operative Agreement or any Owner Trustee Agreement, unless the Owner Trustee
shall have determined that the same already has been furnished to the Owner
Participant.
ARTICLE V
THE OWNER TRUSTEE
Section 5.1 Acceptance of Trusts and Duties. Trust Company accepts the
-------------------------------
trusts hereby created and agrees to perform the same on the terms of this Trust
Agreement. Trust Company also agrees to disburse all moneys actually received
by it constituting part of the Trust Estate pursuant to the terms of this Trust
Agreement. Trust Company shall not be answerable or accountable under any
circumstances except for its own willful misconduct or gross negligence
(including, without limitation, in connection with any activities of the Owner
Trustee in violation of Section 4.5), in the case of the breach or inaccuracy
of any of its representations or warranties contained in any Operative Agreement
given expressly in its individual capacity and not in its capacity as a trustee
hereunder, as arising from its failure to perform obligations expressly
undertaken by it in the penultimate and last sentence of Section 4.4 hereof or
expressly undertaken by it in its individual capacity under the Participation
Agreement, for any Taxes based on or measured by any fees, commissions or
compensation received by it for acting as Owner Trustee in connection with any
of the transactions contemplated by the Operative Agreements or for its failure
to disburse or invest funds actually received by it in accordance with the terms
hereof or the Lease or for any negligence or willful misconduct of the Owner
Trustee arising out of its obligations under Sections 4.1 or 4.4.
Section 5.2 No Representations or Warranties as to Equipment or
---------------------------------------------------
Documents.
- ---------
(a) NEITHER TRUST COMPANY NOR THE OWNER TRUSTEE MAKES ANY
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE DESIGN,
OPERATION OR CONDITION OF ANY UNIT OR ANY PART THEREOF, THE MERCHANTABILITY
THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO ANY UNIT OR
ANY PART THEREOF, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR
CONFORMITY THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, except that Trust Company hereby
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represents and warrants that on the Closing Date for such Accepted Unit, the
Owner Trustee shall have received whatever title thereto was conveyed to it by
the Lessee and (ii) while a part of the Trust Estate, such Accepted Unit shall
be free and clear of Lessor's Liens attributable to it.
(b) Neither Trust Company nor the Owner Trustee makes any
representation or warranty as to the validity or enforceability of any Operative
Agreement, or as to the correctness of any statement therein, except to the
extent that any such representation, warranty or statement is expressly made
therein or in any written certificate delivered pursuant thereto by the Owner
Trustee or Trust Company and except that Trust Company hereby represents and
warrants that this Trust Agreement has been duly executed and delivered by Trust
Company and each of the Owner Trustee Agreements has been or will be executed
and delivered by officers of the Owner Trustee who are or will be duly
authorized to execute and deliver documents on its behalf, and that each of this
Agreement and each of the other Owner Trustee Agreements constitutes (assuming
the due authorization, execution, and delivery of this Agreement and each such
other agreement by the other parties thereto) the legal, valid and binding
obligation of the Trust Company (or the Owner Trustee if expressly stated
therein) enforceable against it in accordance with its terms except as limited
by bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of creditors
rights generally from time to time in effect.
Section 5.3 No Segregation of Moneys; No Interest. Except as required
-------------------------------------
by Section 2.4 of the Participation Agreement, moneys received by the Owner
Trustee hereunder need not be segregated in any manner except to the extent
required by law, and such moneys may be deposited under such general conditions
as may be prescribed by law, and the Owner Trustee shall not be liable for any
interest thereon.
Section 5.4 Reliance; Advice of Counsel. The Owner Trustee shall not
---------------------------
incur any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper reasonably believed by it in good faith to be genuine and
reasonably believed by it in good faith to be signed by the proper party or
parties. Any request, direction, order or demand of the Owner Participant or
the Lessee mentioned herein or in any other Operative Agreement to which the
Owner Trustee is a party shall be sufficiently evidenced by an Officer's
Certificate of the Owner Participant or the Lessee, as the case may be. The
Owner Trustee may accept in good faith a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body 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 prescribed herein, the Owner Trustee
may for all purposes hereof rely on an Officer's Certificate of the relevant
party as to such fact or matter, and such Officer's Certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon. In the administration of the trusts
hereunder, the Owner 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 consult with counsel, accountants and other skilled persons to be
selected and employed by it (other than persons regularly employed by it), and
the Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written advice or opinion within the
scope of the competence of any such counsel,
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accountants or other skilled persons and not contrary to this Trust Agreement,
except for the use of due care in the appointment of counsel, accountants or
other skilled persons.
Section 5.5 Not Acting in Individual Capacity. Trust Company is
---------------------------------
entering into this Agreement and accepting the trust created hereby in its
individual capacity. Otherwise, except as provided in this Trust Agreement and
in the other Operative Agreements, Trust Company agrees to act solely as trustee
hereunder and not in its individual capacity; and all Persons having any claim
against the Owner Trustee by reason of the transactions contemplated by the
Operative Agreements or the Owner Trustee Agreements shall look only to the
Trust Estate (or a part thereof, as the case may be) for payment or satisfaction
thereof, except as specifically provided in this Trust Agreement and except to
the extent the Owner Trustee otherwise shall agree in any Owner Trustee
Agreement.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification of Trust Company. The Owner Participant
--------------------------------
agrees to assume liability for, and to indemnify and hold harmless Trust Company
against and from any and all liabilities, obligations, losses, damages, taxes
(excluding any taxes, fees or other charges payable by Trust Company or measured
by any compensation received by Trust Company for its services hereunder),
penalties, claims, actions, suits, proceedings, costs, expenses and
disbursements of any kind and nature whatsoever, including, without limitation,
the reasonable fees and expenses of counsel (collectively, "Trust Expenses")
--------------
which may be imposed on, incurred by or asserted against Trust Company whether
or not also indemnified by any other Person (provided, however, that to the
-------- -------
extent Trust Company shall have actually received any payment in the nature of
an indemnity payment from any such other Person relating to a claim hereunder,
Trust Company shall not be entitled to the amount of any such payment pursuant
to this Section 6.1) in any way relating to or arising out of the
administration of the Trust Estate or the action or inaction of Trust Company
hereunder or under the other Operative Agreements, any Accepted Equipment or any
part thereof, the Operative Agreements or any of them, or the enforcement by
Trust Company of any of its rights under the Operative Agreements, or the
design, manufacture, financing, refinancing, installation, acceptance,
rejection, ownership, delivery, nondelivery, lease, sublease, possession,
control, use, operation, condition, modification, servicing, maintenance,
repair, improvement, replacement, sale, return or other disposition of the
Accepted Equipment, any Accepted Unit or any part thereof including, without
limitation, (A) any inadequacy or deficiency or defect therein, including latent
defects, whether or not discoverable or any claim based on negligence or arising
from any violation of law or for strict liability in tort or any claim for
patent, trademark or copyright tort or any claim for patent, trademark or
copyright infringement, and (B) any loss or damage to property or the
environment or injury or death to any Person; except only that the Owner
Participant shall not be required to indemnify Trust Company for Trust Expenses
arising or resulting from any of the matters described in the last sentence of
Section 5.1; provided that the Owner Participant shall be liable under this
--------
Section 6.1 only to the extent that the Owner Trustee is indemnified by the
Lessee pursuant to Section 7 of the Participation Agreement (with the exception
of the limitations to Lessee's indemnification obligations set forth in Sections
7.1(c)(ii), 7.1(c)(iv) (to the extent relating to any such transfer by the Owner
Participant or transfer by the Owner Trustee at the direction of the Owner
Participant), 7.2(d)(i), 7.2(d)(iv) (to the extent relating to any such
8
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transfer by the Owner Participant or transfer by the Owner Trustee at the
direction of the Owner Participant) and 7.2(d)(vi) (when the Owner Trustee is
acting on instructions from the Owner Participant) of the Participation
Agreement); provided, further, that before asserting its right to
-------- -------
indemnification pursuant to this Section 6.1, the Owner Trustee shall first
demand its corresponding right to indemnification, if any, pursuant to Section 7
of the Participation Agreement (but need not exhaust any or all remedies
available thereunder), and the Owner Participant shall have the right to pursue
any such remedies against the Lessee which are not pursued by the Owner Trustee.
The indemnities contained in this Section 6.1 shall survive the termination of
this Trust Agreement. To secure the foregoing indemnities, the Owner Trustee
shall be entitled to apply any amount otherwise distributable to the Owner
Participant pursuant to Section 3.2 against any such indemnity which has not
been paid when due. The indemnities contained in this Section 6.1 extend to
Trust Company only and shall not be construed as indemnities of the Trust
Estate. The payor of any indemnity under this Section 6.1 shall be subrogated to
any right of the Person indemnified in respect of the matter as to which such
indemnity was paid.
Section 6.2 Expenses. The Owner Participant shall pay, or reimburse the
--------
Owner Trustee for, all reasonable expenses of the Owner Trustee, including,
without limitation, the reasonable expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and duties under the
Operative Agreements, unless and to the extent that the Owner Trustee otherwise
receives payment or reimbursement pursuant to any Operative Agreement, whether
or not the transactions contemplated hereby are consummated; provided that the
--------
Owner Participant shall have no obligation hereunder to the extent Lessee is not
obligated to pay such amounts pursuant to Section 2.5 of the Participation
Agreement. The Owner Trustee agrees to look first to the Lessee for such
payment pursuant to Section 2.5 of the Participation Agreement. Except as
provided herein, the Owner Trustee and Trust Company shall have no right to
compensation with respect to the transactions contemplated by the Operative
Agreements.
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
Section 7.1 Termination of Trust Agreement.
------------------------------
(a) Subject to the terms of the Participation Agreement, the Indenture
and Section 7.2, this Trust Agreement and the trusts created hereby shall
terminate and the Trust Estate shall be distributed to the Owner Participant,
and this Trust Agreement shall be of no further force or effect, upon the
earlier of the sale or other final disposition by the Owner Trustee of all
property constituting part of the Trust Estate and the final distribution by the
Owner Trustee of all moneys or other property or proceeds constituting part of
the Trust Estate in accordance with the terms of Article III and one hundred ten
(110) years after the earlier execution of this Trust Agreement by either party
hereto, but if any rights, privileges or options hereunder shall be or become
valid under applicable law for a period subsequent to one hundred ten (110)
years after the earlier execution of this Trust Agreement by either party hereto
(or, without limiting the generality of the foregoing, if legislation shall
become effective providing for the validity or permitting the effective grant of
such rights, privileges and options for a period in gross exceeding the period
for which such rights, privileges and options are hereinabove stated
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to extend and be valid), then such rights, privileges or options shall not
terminate as aforesaid but shall extend to and continue in effect, but only if
such nontermination and extension shall then be valid under applicable law,
until such time as the same shall cease to be valid under applicable law.
(b) Except as expressly provided in Section 7.2, the Owner Participant
shall not be entitled to revoke or terminate this Trust Agreement or the trust
created hereby. Except as otherwise provided herein, the Owner Participant may
not withdraw any of the Trust Estate until the Lien of the Indenture on the
Trust Estate shall have been discharged pursuant to the terms thereof.
Section 7.2 Termination at Option of the Owner Participant. The
----------------------------------------------
provisions of Section 7.1 notwithstanding, this Trust Agreement and the trusts
created hereby shall terminate and the Trust Estate shall be distributed to the
Owner Participant, and this Trust Agreement shall be of no further force and
effect, upon the election of the Owner Participant by notice to the Owner
Trustee to revoke the trusts created hereby; provided that, in addition to the
--------
giving of such notice, the Owner Participant, with the cooperation of the Owner
Trustee, shall execute and deliver such written agreements and instruments and
take such actions as shall be necessary in order to cause the succession of the
Owner Participant to all the rights, title, interests, duties and liabilities of
the Owner Trustee under the Operative Agreements (other than obligations
attributable to any gross negligence or willful misconduct of Trust Company or
any breach by the Owner Trustee of its obligations under the Operative
Agreements); provided, however, that until the Lien of the Indenture on the
-------- -------
Trust Estate shall have been discharged pursuant to the terms thereof the Owner
Participant may not revoke such trusts without the consent of the Indenture
Trustee. The written agreements and instruments referred to in the preceding
sentence shall be reasonably satisfactory in form and substance to the Owner
Trustee and shall release the Owner Trustee from all further obligations of the
Owner Trustee hereunder and under the agreements and other instruments mentioned
in the preceding sentence.
ARTICLE VII
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
Section 8.1 Resignation of the Owner Trustee; Appointment of Successor.
----------------------------------------------------------
(a) The Owner Trustee may resign as the Owner Trustee at any time
without cause by giving at least thirty (30) days' prior written notice to the
Owner Participant, the Indenture Trustee and the Lessee, such resignation to be
effective on the acceptance of appointment by a successor to the Owner Trustee
under paragraph (b) of this Section 8.1. In addition, the Owner Participant at
any time may remove the Owner Trustee without cause by an instrument in writing
delivered to the Owner Trustee, the Indenture Trustee and the Lessee, such
removal to be effective upon the acceptance of appointment by a successor to the
Owner Trustee under paragraph (b) of this Section 8.1. In case of the
resignation or removal of the Owner Trustee, the Owner Participant may appoint a
successor to the Owner Trustee by an instrument in writing, signed by the Owner
Participant. If a successor to the Owner Trustee shall not have been appointed
within thirty (30) days after the giving of written notice of such resignation
or the delivery of the written instrument with respect to such removal, the
Owner Trustee or the Owner
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Participant may apply to any court of competent jurisdiction to appoint a
successor to the Owner Trustee to act until such time, if any, as a successor
shall have been appointed as above provided in this Section 8.1. Any successor
to the Owner Trustee so appointed by such court shall immediately and without
further act be superseded by any successor to the Owner Trustee appointed as
above provided in this Section 8.1.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment and shall give the Owner Participant, the Indenture Trustee and
Lessee written notice of such acceptance. Upon the execution and delivery of
such instrument, such successor Owner Trustee, without further act, shall become
vested with all the estates, properties, rights, powers, duties and trusts of
the predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named a trustee herein; provided, however, that upon the written
-------- -------
request of such successor Owner Trustee, such predecessor Owner Trustee shall
execute and deliver an instrument transferring to such successor Owner Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers,
duties and trusts of such predecessor trustee as the Owner Trustee hereunder,
and such predecessor trustee shall duly assign, transfer, deliver and pay over
to such successor Owner Trustee all moneys or other property then held by such
predecessor trustee as the Owner Trustee upon the trusts herein expressed. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor Owner
Trustee, pursuant to written instructions of the Owner Participant, will execute
all documents and take all reasonable action within its control in order to
cause title to the Trust Estate to be transferred to the successor Owner
Trustee.
(c) Any successor Owner Trustee, however appointed, shall be a bank or
trust company incorporated and doing business within the United States of
America and 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 Owner Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Owner 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 Owner Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Owner Trustee may be transferred, shall be, subject to
compliance with the terms of paragraph (c) of this Section 8.1, the Owner
Trustee under this Trust Agreement without further act; provided, that such
--------
corporation shall in no event be the Indenture Trustee.
Section 8.2 Additional and Separate Trustees.
--------------------------------
(a) If the Owner Trustee or the Owner Participant shall conclude that
it is necessary or prudent in order to conform to the law of any jurisdiction in
which all or any part of the Trust Estate shall be situated, or to make or
defend any claim or bring or defend any suit with respect to the Trust Estate or
any Operative Agreement, or pursuant to advice of counsel satisfactory to it, or
if the Owner Trustee shall have been instructed to do so by the Owner
Participant, the Owner Trustee shall appoint another Person to act as additional
or separate trustee for all or any part of the Trust Estate with such property,
title, right, power or duty of the Owner Trustee as the Owner Trustee and the
Owner Participant may determine. In case any such
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additional trustee or separate trustee shall resign or be removed, all the
assets, property, rights, powers or duties of such additional trustee or
separate trustee, as the case may be, so far as permitted by any applicable law,
shall vest in and be exercised by a new successor to such additional trustee,
appointed in the manner otherwise provided in this Trust Agreement.
(b) In the event that either the Owner Participant or the Owner
Trustee shall determine to appoint another Person as additional or separate
trustee, the Owner Trustee and the Owner Participant shall execute and deliver
an agreement supplemental hereto, and all other instruments and agreements
necessary or proper to constitute another bank or trust company, or one or more
Persons approved by the Owner Trustee and the Owner Participant, either to act
as an additional trustee or trustees of all or any part of the Trust Estate,
jointly with the Owner Trustee, or to act as separate trustee or trustees of all
or any part of the Trust Estate, in any such case with such powers of the Owner
Trustee as may be provided in such agreement supplemental hereto, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right or power of the Owner
Trustee deemed necessary or proper by the Owner Trustee or the Owner
Participant, subject to the remaining provisions of this Section 8.2. The Owner
Trustee may execute, deliver and perform any deed, conveyance, assignment or
other instrument in writing as may be required by an additional trustee or
separate trustee for more fully and certainly vesting in and confirming to such
person any property, title, right or power which, by the terms of such agreement
supplemental hereto, are expressed to be conveyed or conferred to or upon such
additional trustee or separate trustee, and the Owner Participant shall, upon
the Owner Trustee's request, join therein and execute, acknowledge and deliver
the same.
(c) Every additional trustee and separate trustee hereunder shall, to
the extent permitted by law, be appointed to act and the Owner Trustee shall
act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred or
imposed upon the Owner Trustee in respect of the receipt, custody,
investment and payment of moneys, shall be exercised solely by the
Owner Trustee;
(ii) all other rights, powers, duties, and obligations conferred
or imposed upon the Owner Trustee shall be conferred or imposed upon
and exercised or performed by the Owner Trustee and such additional
trustee or trustees and separate trustee or trustees jointly, except
to the extent that under any law of the jurisdiction in which any
particular act or acts are to be performed by the Owner Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
holding of title to the Trust Estate in any such jurisdiction) shall
be exercised and performed by such additional trustee or trustees or
separate trustee or trustees;
(iii) no power hereby given to, or which may be exercised by, any
such additional trustee or separate trustee shall be exercised
hereunder by such additional trustee or separate trustee except
jointly with, or with the consent of, the Owner Trustee; and
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(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder.
(d) If at any time the Owner Trustee and the Owner Participant shall
deem it no longer necessary or prudent in order to conform to any applicable law
or shall be advised by its counsel that it is no longer necessary or prudent in
the interest of the Owner Trustee and the Owner Participant to maintain the
appointment of such additional or separate trustee as provided herein, the Owner
Trustee and the Owner Participant shall execute and deliver any agreement
supplemental hereto and all other instruments and agreements necessary or proper
to remove any such additional or separate trustee. The Owner Participant, at
any time, by an instrument in writing may remove any separate trustee or
additional trustee.
(e) Any additional trustee or separate trustee may at any time by an
instrument in writing constitute the Owner Trustee its agent or attorney-in-fact
with full power and authority, to the extent which may be authorized by
applicable law, to do all acts and things and exercise all discretion which it
is authorized or permitted to do or exercise, for and in its behalf and in its
name. In case any such additional trustee or separate trustee shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such additional trustee or separate
trustee, as the case may be, so far as permitted by law, shall vest in and be
exercised by the Owner Trustee without necessity of any act by any party and
without the appointment of a new successor to such additional or separate
trustee, unless and until a successor is appointed in the manner provided in
this Section 8.2.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
Section 9.1 Supplements and Amendments. Subject to Section 9.05 of the
--------------------------
Indenture, at the written request of the Owner Participant (and subject to the
provisions of Sections 6.5 and 6.6 of the Participation Agreement), this Trust
Agreement and each other Owner Trustee Agreement shall be amended by a written
instrument signed by Trust Company and the Owner Participant; provided, however,
-------- -------
if in the reasonable opinion of Trust Company any instrument required to be so
executed adversely affects any right, duty or liability of, or immunity or
indemnity in favor of, Trust Company under this Trust Agreement or any of the
documents contemplated hereby to which it is a party, or would cause or result
in any conflict with or breach of any term, condition or provision of, or
default under, its charter documents or by-laws, Trust Company in its reasonable
discretion may decline to execute such instrument, unless the Trust Company is
indemnified therefor under Section 4.3, as determined by the Trust Company in
its reasonable discretion.
ARTICLE X
MISCELLANEOUS
Section 10.1 No Legal Title to Trust Estate in the Owner Participant. The
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Owner Participant shall not have legal title to any part of the Trust Estate. No
transfer, by operation of law or otherwise, of any right, title and interest of
the Owner Participant in and to the Trust Estate or hereunder, or insolvency,
dissolution or other termination of the Owner Participant, shall operate to
terminate this Trust Agreement or the trusts created hereby or entitle any
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successor or transferee to an accounting or to the transfer to it of legal title
to any part of the Trust Estate.
Section 10.2 Sale of Accepted Equipment by the Owner Trustee is Binding.
----------------------------------------------------------
Any sale, transfer or other conveyance of any Accepted Unit or part thereof by
the Owner Trustee made pursuant to the terms of this Trust Agreement or the
Lease shall bind the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to such Accepted Unit or part thereof, as the case may be.
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
Owner Trustee.
Section 10.3 Notices. Unless otherwise expressly specified or permitted
-------
by the terms hereof, all notices hereunder shall be given as provided in Section
10.4 of the Participation Agreement.
Section 10.4 Severability. If any term or provision of this Trust
------------
Agreement is invalid or unenforceable in any jurisdiction, such term or
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 10.5 Separate Counterparts. This Trust Agreement may be
---------------------
executed by the parties hereto in any number of counterparts and by the parties
hereto on separate counterparts, each of which when so executed and delivered
shall be an original, and all of which shall together constitute but one and the
same instrument.
Section 10.6 Waivers, etc. No term or provision hereof may be changed,
-------------
waived, discharged or terminated orally, but may be changed, waived, discharged
or terminated by an instrument in writing, and any waiver of the terms hereof
shall be effective only in the specific instance and for the specific purpose
given.
Section 10.7 Successors and Assigns. This Trust Agreement, including
----------------------
the terms and provisions hereof, shall be binding upon the Owner Participant and
Trust Company or the Owner Trustee, whichever is applicable pursuant to the
terms hereof, and their respective successors and assigns, and inure to the
benefit of the Owner Participant and Trust Company or the Owner Trustee,
whichever is applicable pursuant to the terms hereof, and their respective
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by the Owner
Participant shall bind the successors and assigns of the Owner Participant.
Section 10.8 Transfer of Owner Participant's Interest. All provisions
----------------------------------------
of Section 6.1 of the Participation Agreement shall (with the same force and
effect as if set forth in full, mutatis mutandis, in this Section 10.8) be
applicable to any assignment, conveyance or other transfer by the Owner
Participant of any of its right, title or interest in and to the Trust Estate or
this Trust Agreement or any other Operative Agreement.
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Section 10.9 Actions of the Owner Participants. If at any time prior to
---------------------------------
the termination of this Trust Agreement there is more than one Owner
Participant, then during such time, if any action is required to be taken by the
Owner Participant, such action shall be taken by or on behalf of all Owner
Participants and whenever any direction, authorization, approval, consent,
instruction or other action is permitted to be given or taken by the Owner
Participant it shall be given or taken only upon such percentage agreement of
the Owner Participants as all Owner Participants may instruct the Owner Trustee.
Section 10.10 Headings; Table of Contents. The division of this Trust
---------------------------
Agreement into sections, the provision of a table of contents and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
Section 10.11 Governing Law. The terms of this Trust Agreement and the
-------------
rights and obligations of the parties hereto shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to contracts
made and to be performed entirely within such state.
Section 10.12 Benefit. Nothing herein, whether express or implied,
-------
shall be construed to give any Person other than the Owner Trustee, the
Indenture Trustee and the Owner Participant any legal or equitable right, remedy
or claim under or in respect of this Trust Agreement.
Section 10.13 Performance by the Owner Participant. Any obligation of
------------------------------------
Trust Company or the Owner Trustee hereunder or under any other Operative
Agreement or other document contemplated hereby, may be performed by the Owner
Participant and any such performance shall not be construed as a revocation of
the trusts created hereby.
Section 10.14 Conflict with Operative Agreements. If this Trust
----------------------------------
Agreement (or any instructions given by the Owner Participant pursuant hereto)
shall require that any action be taken with respect to any matter or any other
Operative Agreement (or any instruction duly given in accordance with the terms
thereof) shall require that a different action be taken with respect to such
matter, and such actions shall be mutually exclusive, the provisions of this
Trust Agreement, in respect thereof, shall control.
Section 10.15 Limitation on Owner Participant's Liability. The Owner
-------------------------------------------
Participant shall not have any liability for the performance of this Trust
Agreement, except as expressly set forth herein.
Section 10.16 Identification of Trust. The trust created hereunder may
-----------------------
be referred to for convenience as GATX Rail Trust No. 2000-2.
* * *
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In Witness Whereof, the parties hereto have each caused this Trust
Agreement to be duly executed and delivered as of the day and year first above
written.
By:____________________
Name:__________________
Title:_________________
WILMINGTON TRUST COMPANY
By:____________________
Name:__________________
Title:_________________
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Exhibit 23.4
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Consent of Vedder, Price, Kaufman & Kammholz
--------------------------------------------
We hereby consent to the use of our name in the second paragraph of the
section "Certain Tax Aspects" and in the second sentence of the first paragraph
in the section "Certain Illinois Taxes" and in the section "Legal Opinions" in
the Prospectus Supplement dated April 5, 2000, supplementing the Prospectus
dated December 7, 1995, constituting part of the Registration Statement on Form
S-3 (No. 33-64697) filed by GATX Rail Corporation (formerly known as General
American Transportation Corporation).
/s/ VEDDER, PRICE, KAUFMAN & KAMMHOLZ
April 13, 2000
