<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Date of Report: December 30, 1994
CONSOLIDATED RAIL CORPORATION
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 1-9064 23-1989084
------------ ------ ----------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
2001 Market Street, Two Commerce Square, Philadelphia, Pennsylvania 19101-1417
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 209-4000
<PAGE> 2
Item 5. Other Events
Issuance and Sale of Pass Through Trust Certificates Pursuant to $500
million Shelf Registration on Form S-3 .
----------------------
Pursuant to its Registration Statement on Form S-3 (No. 33-64670) for
the issuance of up to $500 million in securities, Consolidated Rail Corporation
("Conrail"), on December 22, 1994, issued $29,738,000 in 8.45% 1994-A Pass
Through Trust Certificates Due 2014 to finance not more than 80% of the cost of
795 new railcars and 57 rebuilt railcars, which Conrail will utilize under a
long-term operating lease.
Item 7. Exhibits
4.1 Trust Indenture and Security Agreement, dated as of December 22, 1994.
4.2 Trust Supplement No. 1 to Trust Indenture and Security Agreement,
dated as of December 22, 1994, in connection with the issuance of the
Registrant's 8.45% 1994-A Pass Through Trust Certificates Due 2014 pursuant to
the Registrant's Registration Statement on Form S-3 (No. 33-64670), including a
Form of 8.45% 1994-A Pass Through Trust Certificate Due 2014 attached as an
exhibit thereto.
4.3 Lease Agreement, dated as of December 22, 1994, in connection with the
issuance of the Registrant's 8.45% 1994-A Pass Through Trust Certificates Due
2014 pursuant to the Registrant's Registration Statement on Form S-3
(No. 33-64670).
4.4 Participation Agreement, dated as of December 22, 1994, in connection
with the issuance of the Registrant's 8.45% 1994-A Pass Through Trust
Certificates Due 2014 pursuant to the Registrant's Registration Statement on
Form S-3 (No. 33-64670).
4.5 Trust Agreement, dated as of December 22, 1994, in connection with the
issuance of the Registrant's 8.45% 1994-A Pass Through Trust Certificates Due
2014 pursuant to the Registrant's Registration Statement on Form S-3
(No. 33-64670).
2
<PAGE> 3
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 thereunto duly authorized.
CONSOLIDATED RAIL CORPORATION
By: /s/ TIMOTHY T. O'TOOLE
Vice President and Treasurer
DATED: December 30, 1994
3
<PAGE> 4
EXHIBIT INDEX
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Exhibit No.
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4.1 Trust Indenture and Security Agreement, dated as of December 22, 1994.
4.2 Supplement No. 1 to Trust Agreement and Security Agreement, dated
as of December 22, 1994.
4.3 Lease Agreement, dated as of December 22, 1994.
4.4 Participation Agreement, dated as of December 22, 1994.
4.5 Trust Agreement, dated as of December 22, 1994.
</TABLE>
4
<PAGE> 1
CONFORMED COPY
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
Dated as of December 22, 1994
between
MERIDIAN TRUST COMPANY,
not in its individual capacity
except as otherwise expressly provided,
but solely as Owner Trustee,
and
WILMINGTON TRUST COMPANY,
as Indenture Trustee
57 Rebuilt Railcars
795 New Railcars
Conrail 1994-A Pass Through Trust
================================================================================
Filed with the Interstate Commerce Commission pursuant to 49 U.S.C. Section
11303 on December __, 1994 at _____ _.M. Recordation Number ______ and
deposited in the Office of the Registrar General of Canada pursuant to Section
90 of the Railway Act of Canada on December __, 1994, at _____ _.M.
<PAGE> 2
TABLE OF CONTENTS*
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ARTICLE I
DEFINITIONS
Section 1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01. Terms of Equipment Notes; Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Section 2.02. Payment from Indenture Estate Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Section 2.03. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Section 2.04. Application of Payments to Principal Amount and Interest . . . . . . . . . . . . . . . . . . . . . I-9
Section 2.05. Termination of Interest in Indenture Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Section 2.06. Transfer of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Section 2.07. Mutilated, Destroyed, Lost or Stolen Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . I-10
Section 2.08. Payment of Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Section 2.09. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Section 2.10. Registrar and Paying Agent; Ownership of Equipment Notes. . . . . . . . . . . . . . . . . . . . . . I-11
ARTICLE III
RECEIPT, DISTRIBUTION AND
APPLICATION OF FUNDS IN THE INDENTURE ESTATE
Section 3.01. Application of Proceeds of Initial Issuance of Equipment Notes. . . . . . . . . . . . . . . . . . . I-12
Section 3.02. Payment in Case of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Section 3.03. Application of Rent When No Event of Acceleration Is
Continuing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Section 3.04. Payments During Continuance of Event of Acceleration. . . . . . . . . . . . . . . . . . . . . . . . I-13
Section 3.05. Payments for Which Application Is Provided in Other
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Section 3.06. Payments for Which No Application Is Otherwise Provided . . . . . . . . . . . . . . . . . . . . . . I-14
Section 3.07. Order of Application of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Section 3.08. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Section 3.09. Excluded Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Section 3.10. Statements to Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
</TABLE>
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* This Table of Contents is not part of the Indenture and is for
convenience of reference only.
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ARTICLE IV
REDEMPTION OF EQUIPMENT NOTES
Section 4.01. No Redemption Prior to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Section 4.02. Redemption of Equipment Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Section 4.03. Notice of Redemption to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Section 4.04. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Section 4.05. Certificates Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Section 4.06. Certificates to Be Redeemed Ratably, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
ARTICLE V
REMEDIES OF THE INDENTURE TRUSTEE
UPON AN EVENT OF ACCELERATION
Section 5.01. Events of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Section 5.02. Acceleration; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Section 5.03. Other Remedies Available to Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Section 5.04. Right to Cure; Option to Purchase; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Section 5.05. Rights of Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Section 5.06. Waiver of Existing Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Section 5.07. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Section 5.08. Waiver of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Section 5.09. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Section 5.10. Limitation on Suits by Holders of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Section 5.11. Rights of Holders of Equipment Notes to Receive Payment . . . . . . . . . . . . . . . . . . . . . . I-30
Section 5.12. Indenture Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Section 5.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
Section 6.01. Action upon Event of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Section 6.02. Action upon Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Section 6.03. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Section 6.04. No Duties Except as Specified in Indenture or Instructions . . . . . . . . . . . . . . . . . . . . I-32
Section 6.05. No Action Except Under Lease, Indenture or Instructions . . . . . . . . . . . . . . . . . . . . . . I-33
Section 6.06. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
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Section 6.07. Lessee's Right of Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
ARTICLE VII
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
Section 7.01. Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Section 7.02. Absence of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Section 7.03. No Representations or Warranties as to the Equipment or
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Section 7.04. No Segregation of Moneys; No Interest; Investments . . . . . . . . . . . . . . . . . . . . . . . . I-35
Section 7.05. Reliance; Agents; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-36
Section 7.06. Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-36
Section 7.07. No Compensation from Holders or Indenture Estate . . . . . . . . . . . . . . . . . . . . . . . . . I-37
Section 7.08. Certain Limitations on Owner Trustee's and Indenture Trustee's
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-37
ARTICLE VIII
SUCCESSOR TRUSTEES
Section 8.01. Notice of Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-37
Section 8.02. Resignation of Indenture Trustee; Appointment of Successor . . . . . . . . . . . . . . . . . . . . I-37
ARTICLE
SUPPLEMENTS AND AMENDMENTS
TO THIS INDENTURE AND OTHER DOCUMENTS
Section 9.01. Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Section 9.02. Indenture Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Section 9.03. Request of Substance, Not Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Section 9.04. Documents Mailed to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
Section 9.05. Amendments, Waivers, Etc. of Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
ARTICLE X
ASSUMPTION OF OBLIGATIONS OF OWNER TRUSTEE BY LESSEE
Section 10.01. Assumption of Obligations of Owner Trustee by Lessee . . . . . . . . . . . . . . . . . . . . . . . I-43
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ARTICLE XI
SATISFACTION AND DISCHARGE; TERMINATION OF OBLIGATIONS
Section 11.01. Satisfaction and Discharge of Indenture; Termination of
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-45
Section 11.02. Survival of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-46
Section 11.03. Monies to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-46
Section 11.04. Monies to be Returned to Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-46
ARTICLE XII
MISCELLANEOUS
Section 12.01. No Legal Title to Indenture Estate in Holders . . . . . . . . . . . . . . . . . . . . . . . . . . I-46
Section 12.02. Sale of Equipment by Indenture Trustee is Binding . . . . . . . . . . . . . . . . . . . . . . . . I-46
Section 12.03. Discontinuance of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-47
Section 12.04. Indenture and Equipment Notes for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant and Holders Only . . . . . . . . . . . . . . . . . . . . . I-47
Section 12.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-47
Section 12.06. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-48
Section 12.07. Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-49
Section 12.08. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-49
Section 12.09. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-49
Section 12.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-49
Section 12.11. Normal Commercial Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-49
EXHIBIT A FORM OF EQUIPMENT NOTE
EXHIBIT B FORM OF TRUST INDENTURE SUPPLEMENT
APPENDIX A DEFINITIONS
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TRUST INDENTURE AND SECURITY AGREEMENT
This TRUST INDENTURE AND SECURITY AGREEMENT, dated as of
December 22, 1994 (this "Indenture"), between MERIDIAN TRUST COMPANY, a
Pennsylvania trust company, not in its individual capacity, except as otherwise
expressly set forth in Section 7.03, 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 WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as Indenture Trustee hereunder and any successor appointed in
accordance with the terms hereof (herein called the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, the Owner Participant (such term and all other
capitalized terms used herein being defined as hereinafter provided; all other
terms used herein that are defined in the Trust Indenture Act, either directly
or by reference therein, have the meanings assigned to them therein, except
that the "obligor" within the meaning of the Trust Indenture Act shall be
Lessee for all purposes of this Indenture) 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 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 Items of Equipment and the Operative Agreements 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; 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.
<PAGE> 7
I-2
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 payable from time to time 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 Indenture Trustee and the Holders, 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 Holders, the Owner Trustee does hereby grant, bargain,
sell, assign, transfer, convey, mortgage, pledge, and confirm unto the
Indenture Trustee, its successors and assigns, for the security and benefit of
the Indenture Trustee and the Holders, from time to time, a security interest
in and mortgage lien on all estate, right, title and interest of the Owner
Trustee in, to and under the following described property, rights, interests
and privileges insofar as it does not constitute Excluded Payments (which
collectively, including all property hereafter specifically subjected to the
lien of this Indenture by any instrument supplemental hereto, but excluding
Excluded Payments, being herein called the "Indenture Estate"), to wit:
(1) each Item of Equipment;
(2) all right, title and interest of the Owner Trustee,
as lessor, in, to and under the Lease, including without limitation,
all amounts of Rent, Stipulated Loss Value and Termination Value
payable thereunder, insurance proceeds and requisition or other
payments of any kind for or with respect to each Item of Equipment;
(3) all right, title and interest of the Owner Trustee in
and to the Railcar Purchase Agreement and the Company's Title
Documents;
(4) all right, title and interest of the Owner Trustee in
and to the tolls, rents, issues, profits, products, revenues and other
income of the property subjected or required to be subjected to the
Lien of this Indenture, and all the estate, right, title and interest
of every nature whatsoever of the Owner Trustee in and to the same and
every part thereof;
(5) all right, title and interest of the Owner Trustee in
and to the Deposited Cash and all investment income thereon; and
(6) all right, title and interest of the Owner Trustee
in and to all proceeds of the foregoing.
<PAGE> 8
I-3
Concurrently with the delivery hereof, the Owner Trustee is
delivering to the Indenture Trustee executed counterparts of the Trust
Agreement and the original executed counterpart of the Lease and the Lease
Supplement.
Notwithstanding the foregoing provisions:
(a) there shall be excluded from the security interest
granted by this Indenture all Excluded Payments;
(b) (i) whether or not an Event of Default or Event of
Acceleration shall have occurred and be continuing, the Owner Trustee
and the Owner Participant shall at all times retain the right, to the
exclusion of the Indenture Trustee, (A) to Excluded Payments, to
declare an Event of Default resulting from nonpayment of Excluded
Payments and to commence an action at law to obtain such Excluded
Payments, (B) to adjust Basic Rent, Stipulated Loss Values, EBO Value
and Termination Values and the other amounts, all as provided in
Section 3(e) of the Lease, and (C) to exercise the right to designate
successor Owner Trustees pursuant to Section 21 of the Lease;
(ii) whether or not an Event of Default or Event of
Acceleration shall have occurred and be continuing, the Owner Trustee
and the Indenture Trustee shall each retain the right to receive from
the Company all certificates, reports, filings, opinions and other
notices, copies of all documents and all information which the Company
is permitted or required to give or furnish to "Lessor" pursuant to
the Lease or to the Owner Trustee pursuant to the Participation
Agreement, to give any notice of default under Section 14 or 15 of the
Lease, to retain the right to cause the Company to take any action and
execute and deliver such documents and assurances as "Lessor" may from
time to time reasonably request pursuant to Section 16 of the Lease
and to inspect any Item of Equipment to the extent provided in Section
12 of the Lease;
(iii) so long as no Event of Acceleration shall have
occurred and be continuing (but subject to the provisions of Section
9.05(b)(1)), the Owner Trustee shall retain the right, to the
exclusion of the Indenture Trustee, to exercise all other rights of
"Lessor" under the Lease (other than the right to receive any funds to
be delivered to "Lessor" under the Lease, including, without
limitation, under Section 3, 9, 10 or 11 of the Lease (except funds
which constitute or are delivered with respect to Excluded Payments))
and under the Railcar Purchase Agreement;
(iv) whether or not an Event of Default or Event of
Acceleration shall have occurred and be continuing, the Owner Trustee
shall at all times have the right, together with the Indenture
Trustee, (A) to retain all rights together with the Indenture Trustee
(waiver, consent or approval of both being required except in the case
of Section 24 of the Lease referred to below), including the giving of
any waiver, consent or approval, that Section 24 of the Lease confer
upon the Owner Trustee or
<PAGE> 9
I-4
the Owner Participant, as the case may be, and (B) to provide such
insurance as the Company shall have failed to maintain; and
(v) so long as no Event of Acceleration shall have
occurred and be continuing, the Owner Trustee shall have the right, to
the exclusion of the Indenture Trustee, to approve as satisfactory any
accountants, engineers or counsel to render services for or to issue
opinions to the Owner Trustee pursuant to the Operative Documents and
to execute rights under the Independent Appraisal procedure;
(c) the leasehold interest granted to 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
Lessee under the Lease so long as no Lease Event of Default has
occurred and is continuing; and
(d) as between the Owner Trustee and the Indenture
Trustee, nothing contained in this Granting Clause shall prevent the
Owner Trustee, as the "Lessor" under the Lease, from seeking specific
performance of the covenants of Lessee under the Lease relating to the
protection, insurance, maintenance, possession and use of the Items of
Equipment and from maintaining separate insurance with respect to the
Items of Equipment to the extent permitted by Section 11 of the Lease.
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 Indenture Trustee and the Holders from time to
time, without any priority of any one Equipment Note over any other Equipment
Note, and for the uses and purposes, and subject to the terms and provisions,
set forth in this Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Operative Agreements to which it is a party to perform all of the
obligations, if any, assumed by it thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and the Indenture Trustee and the
Holders 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 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.
<PAGE> 10
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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 Excluded
Payments), under or arising out of the Lease (subject to the provisions of
Section 9.05(b)(1)) 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.
The Owner Trustee has directed Lessee to make all payments of Rent (other than
Excluded Payments) payable to the Owner Trustee by Lessee and all other amounts
which are required to be paid to or deposited with the Owner Trustee pursuant
to the Lease (other than Excluded Payments) 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 Excluded Payments.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be executed and delivered any
and all such further instruments and documents as the Indenture Trustee may
reasonably deem to be necessary in obtaining 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 Excluded Payments),
except as provided in or permitted by this Indenture, accept any payment from
Lessee, enter into an agreement amending or supplementing any of the Operative
Agreements (other than the Tax Indemnity Agreement), execute any waiver or
modification of, or consent under the terms of any of the Operative Agreements,
settle or compromise any claim (other than claims in respect of Excluded
Payments) against Lessee arising under any of the Operative Agreements, 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 or enter into any business or activity other than the business of
owning and leasing the Items of Equipment.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
<PAGE> 11
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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, exhibits
and appendices in this Indenture are to articles, sections, clauses, schedules,
exhibits and appendices in and to this Indenture unless otherwise indicated.
All accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted principles as in effect on the date
hereof.
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01. Terms of Equipment Notes; Execution and
Delivery. (a) There shall be issued and delivered on the Funding Date to the
Pass Through Trustee an Equipment Note in the aggregate principal amount of
$29,738,000, maturing July 2, 2014, and bearing interest at the rate of 8.45%,
which shall evidence the loan made by the Pass Through Trustee in connection
with the purchase of the Items of Equipment by the Owner Trustee from the
Company, each such Equipment Note to be substantially in the form set forth in
Exhibit A, with deletions and insertions as appropriate, duly authenticated by
the Indenture Trustee and dated the Funding Date.
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 Exhibit A. Interest accrued on the
Equipment Notes shall be computed on the basis of a 360-day year of twelve
30-day months on the principal amount thereof remaining unpaid from time to
time from and including the date thereof to but excluding the date of payment.
The Owner Trustee shall furnish to the Indenture Trustee a copy of each
Equipment Note issued pursuant to the provisions of this Indenture.
Each Equipment Note Outstanding hereunder shall be identical
in respect of the dates on which semiannual payments shall be due. The
aggregate principal amount of the Equipment Notes which may be outstanding at
any one time shall be limited to $29,738,000.
(b) Equipment Notes shall be executed on behalf of the
Owner Trustee by the manual or facsimile signature of its President, a senior
vice president, a vice president, an assistant vice president, its treasurer,
its secretary, an assistant secretary or an assistant treasurer.
<PAGE> 12
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(c) If any officer of the Owner Trustee executing the
Equipment Notes no longer holds that office at the time an Equipment Note is
executed on behalf of the Owner Trustee, the Equipment Note shall be valid
nevertheless.
(d) At any time and from time to time after the execution
of the Equipment Notes, the Owner Trustee may deliver such Equipment Notes to
the Indenture Trustee for authentication and, subject to the provisions of
clause (e) below, the Indenture Trustee shall authenticate such Equipment Notes
by manual signature upon receipt by it of written orders of the Owner Trustee.
Equipment Notes shall be authenticated on behalf of the Indenture Trustee by
any authorized officer or signatory of the Indenture Trustee.
(e) 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 executed on behalf of the Owner Trustee as provided in clause (b)
above and authenticated by or on behalf of the Indenture Trustee as provided in
clause (d) above. Such signatures shall be conclusive evidence that such
Equipment Note has been duly executed under this Indenture.
(f) The Owner Trustee shall issue and execute, and the
Indenture Trustee shall authenticate and deliver, the Equipment Notes for
original issuance upon payment to the Indenture Trustee of an amount equal to
the aggregate original principal amount of the Equipment Notes to be issued at
such time. Each Equipment Note shall be dated the date of its issuance.
Section 2.02. 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. 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.
Section 2.03. 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 by written notice to the Owner Trustee and
<PAGE> 13
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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 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 (including, without limitation, any payment made under Section
5.04) 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.
(c) Any interest payable on any Equipment Note that is not
punctually paid or duly provided for on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
thereof on the relevant Record Date by virtue of his having been the Holder
thereof on such date; and such Defaulted Interest may be paid by the Indenture
Trustee, at its election in each case, as provided in clause (1) or (2) below:
(1) The Indenture Trustee may elect to make payment of any
Defaulted Interest to the Holders as determined at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Indenture
Trustee shall notify the Paying Agent in writing of the amount of
Defaulted Interest proposed to be paid on each Equipment Note and the
date of the proposed payment, and at the same time the Indenture
Trustee shall make arrangements to set aside an amount of money equal
to the aggregate amount proposed to be paid in respect of such
Defaulted Interest, prior to the date of the proposed payment, to be
held in trust for the benefit of the Holders entitled to such
Defaulted Interest as this clause provides and shall fix a special
record date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of
the proposed payment. The Indenture Trustee shall promptly notify the
Owner Trustee and the Registrar (with a copy to the Company) of such
special record date and shall cause notice of the proposed payment of
such Defaulted Interest and the special record date therefor to be
mailed, first class postage prepaid, to each Holder at his address as
it appears in the Register, not less than 10 days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed, as
<PAGE> 14
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aforesaid, such Defaulted Interest shall be paid to the Holders on
such special record date and shall no longer be payable pursuant to
the following clause (2).
(2) In the event that the Indenture Trustee shall not have
elected to make payment of Defaulted Interest pursuant to the
foregoing clause (1), the Indenture Trustee may make, or cause to be
made, payment of any Defaulted Interest in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
the Equipment Notes may be listed, and upon such notice as may be
required by such exchange, if such manner of payment shall be deemed
practicable by the Indenture Trustee.
Section 2.04. 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,
(A) first, to the payment of accrued but unpaid interest
on such Equipment Note then due thereunder,
(B) second, to the payment of the unpaid principal amount
of such Equipment Note then due thereunder, and
(C) third, to the payment of any Premium then due thereon.
Section 2.05. 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 other Operative
Agreements shall have been paid in full.
Section 2.06. Transfer of Equipment Notes. The Indenture
Trustee shall maintain at its corporate trust administration office in
Wilmington, Delaware, 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 intending to
transfer such Equipment Note to a new payee, or to exchange any Equipment Note
or Equipment Notes held by it for an Equipment Note or Equipment Notes of a
different denomination or denominations, may surrender such Equipment Note or
Equipment Notes to the Indenture Trustee at such principal corporate trust
administration office of the Indenture Trustee, together with a written request
from such Holder for the issuance of a new Equipment Note or Equipment Notes,
specifying the denomination or denominations (each of which shall be not less
than $1,000,000 or 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.
<PAGE> 15
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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 and of the
same Series as, with the same payment schedule, in the form set forth in
Exhibit A, 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
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 ten-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 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 pursuant to this Section 2.06.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Equipment
Notes. If any Equipment Note shall become mutilated, destroyed, lost or
stolen, the Owner Trustee shall, upon the written request of the Holder of such
Equipment Note, issue, and the Indenture Trustee shall authenticate and deliver
in replacement thereof, a new Equipment Note in the form set forth in Exhibit
A, payable to the same Holder in the same principal amount, of the same Series,
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. If the Equipment Note being replaced has become mutilated,
such Equipment Note shall be surrendered to the Indenture Trustee and forwarded
to the Owner Trustee by the Indenture Trustee. If the Equipment Note being
replaced has been destroyed, lost or stolen, the Holder of such Equipment Note
shall furnish to the Owner Trustee and the Indenture Trustee such security or
indemnity as may be required by them to save the Owner Trustee and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee and
the
<PAGE> 16
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Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof.
Section 2.08. Payment of Transfer Taxes. Upon the transfer
of any Equipment Note or Equipment Notes pursuant to Section 2.06, 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 2.09. Cancellation. The Registrar and any Paying
Agent shall forward to the Indenture Trustee for cancellation all Equipment
Notes surrendered to them for replacement, registration of transfer, exchange
or payment (including through redemption). The Indenture Trustee shall cancel
all Equipment Notes surrendered for replacement, registration of transfer,
exchange, payment or cancellation and shall destroy cancelled Equipment Notes.
Section 2.10. Registrar and Paying Agent; Ownership of
Equipment Notes. (a) The Indenture Trustee shall maintain, or cause to be
maintained, an office or agency where the Equipment Notes may be presented for
registration of transfer or for exchange (in such capacity, the "Registrar")
and an office or agency where (subject to Sections 2.03 and 2.06) the Equipment
Notes may be presented for payment (in such capacity, the "Paying Agent"). The
Registrar shall keep a register (the "Register") with respect to the Equipment
Notes and to their transfer and exchange. The Indenture Trustee may appoint
one or more co-registrars ("Co-Registrars") and one or more additional Paying
Agents for the Equipment Notes, and the Indenture Trustee may terminate the
appointment of any Co-Registrar or additional Paying Agent at any time upon
written notice to such Co-Registrar or Paying Agent. The term "Registrar"
includes any Co-Registrar. The term "Paying Agent" includes any additional
Paying Agent.
The Indenture Trustee shall initially act as Registrar and
Paying Agent for the Equipment Notes.
(b) Ownership of the Equipment Notes shall be proved solely
by the Register. Prior to due presentment for registration of transfer of any
Equipment Note, the Owner Trustee, the Indenture Trustee, the Paying Agent, the
Registrar and the Company may deem and treat the Person in whose name any
Equipment Note is registered as the absolute owner of such Equipment Note for
the purpose of receiving paying of principal of and Premium, if any, and
(subject to Section 2.03(c)) interest on such Equipment Note and for all other
purposes whatsoever, whether or not such Equipment Note shall be overdue, and
none of the Owner Trustee, the Indenture Trustee, the Paying Agent, the
Registrar, the Company nor the Owner Participant shall be affected by notice to
the contrary.
<PAGE> 17
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ARTICLE III
RECEIPT, DISTRIBUTION AND
APPLICATION OF FUNDS IN THE INDENTURE ESTATE
Section 3.01. Application of Proceeds of Initial Issuance of
Equipment Notes. Promptly upon receipt of the proceeds from the sale of the
Equipment Notes, the Indenture Trustee shall deposit such proceeds ("Deposited
Cash") in an account to be held as part of the Indenture Estate, and to be
invested as provided in Section 7.04 and applied and distributed as provided in
this Article III. On the Funding Date, subject to fulfillment to the
satisfaction of or waiver by the Indenture Trustee of all conditions specified
for the Funding Date in the Participation Agreement, the Indenture Trustee, on
behalf of the Owner Trustee, shall apply an amount equal to the Commitment of
the Indenture Trustee for such Item of Equipment, together with the Commitment
received from the Owner Participant pursuant to the Participation Agreement, to
the acquisition of title to such Item of Equipment in accordance with the
Participation Agreement.
Section 3.02. Payment in Case of Redemption. In the event
all or any part of the Equipment Notes are to be redeemed in accordance with
the provisions of Article IV, the Indenture Trustee will hold any amount
received by it in anticipation of such redemption in accordance with Section
7.04 and apply such amount, together with the Investment Proceeds, if any, on
the Redemption Date in the following order of priority:
first, so much of such aggregate amount as shall be required
to pay the Indenture Trustee all amounts then due it pursuant to the
Participation Agreement shall be applied to pay the Indenture Trustee
such amounts;
second, subject to Section 3.07, so much of such aggregate
amount remaining as shall be required to pay the principal of and
interest and Premium, if any, on the Outstanding Equipment Notes
pursuant to this Indenture on the Redemption Date shall be applied to
the redemption of the Equipment Notes on the Redemption Date; and
third, the balance, if any, of such aggregate amount remaining
shall be distributed to the Owner Trustee.
Section 3.03. Application of Rent When No Event of
Acceleration Is Continuing. Except as otherwise provided in Section 3.02 or
3.04, with respect to the Equipment Notes, each amount of Rent received by the
Indenture Trustee with respect to the Equipment Notes, together with any amount
received by the Indenture Trustee pursuant to Section 5.04 and the Investment
Proceeds, if any, with respect to the Equipment Notes shall be distributed by
the Indenture Trustee in the following order of priority:
<PAGE> 18
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first, subject to Section 3.07, so much of such aggregate
amount as shall be required to pay in full the principal of and
interest then due on all Outstanding Equipment Notes shall be applied
to pay such principal and interest; and
second, the balance, if any, of such aggregate amount
remaining thereafter shall be distributed to the Owner Trustee.
Section 3.04. Payments During Continuance of Event of
Acceleration. All payments received and amounts held or realized by the
Indenture Trustee with respect to Equipment Notes after an Event of
Acceleration shall have occurred and be continuing (including any amounts
realized by the Indenture Trustee from the exercise of any remedies pursuant to
Article V), as well as all payments or amounts then held or thereafter received
by the Indenture Trustee as part of the Indenture Estate while such Event of
Acceleration shall be continuing, shall be distributed by the Indenture Trustee
in the following order of priority:
first, so much of such payments or amounts as shall be
required to pay the Indenture Trustee all amounts then due it pursuant
to the Participation Agreement shall be applied to pay the Indenture
Trustee such amounts;
second, so much of such payments or amounts remaining as shall
be required to pay the expenses incurred, or in the reasonable
judgment of the Indenture Trustee expected to be incurred, in using,
operating, storing, leasing, controlling or managing the Indenture
Estate, and in making all maintenance, insurance, repairs,
replacements, alterations, additions and improvements thereto and in
making all payments that 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 and
make reports upon the properties, books and records of the Company and
the Owner Trustee), all in accordance with Section 5.03(c);
third, subject to Section 3.07, so much of such payments or
amounts remaining as shall be required to pay the principal of and
accrued interest and Premium, if any, on all Outstanding Equipment
Notes then due and payable, whether by redemption pursuant to Article
IV, by declaration of acceleration pursuant to Section 5.02 or
otherwise, shall be applied ratably to the payment of such principal,
interest and Premium; and in case such payments or amounts shall be
insufficient to pay in full the whole amount so due and unpaid, then
to the payment of such principal, interest and Premium, without any
preference or priority of one Equipment Note over another, ratably
according to the aggregate amount so due for principal, interest and
Premium, at the date fixed by the Indenture Trustee for the
distribution of such payments or amounts; and
<PAGE> 19
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fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be held by the Indenture Trustee as
collateral security for the obligations secured hereby until such time
as no Event of Acceleration with respect to the Equipment Notes shall
be continuing hereunder or the Equipment Notes have been accelerated
and all amounts due thereon have been paid, at which time such
payments or amounts shall be distributed to the Owner Trustee;
provided, that at such time as one or more Events of Default under the
Lease shall have occurred and any such Event of Default shall have
continued for a period of 180 days during which time the Equipment
Notes shall not have been accelerated pursuant to Section 5.02, such
amounts shall be distributed to the Owner Trustee for distribution in
accordance with the provisions of the Lease, Participation Agreement
and Trust Agreement so long as no Event of Acceleration exists other
than by virtue of such Event of Default.
Section 3.05. Payments for Which Application Is Provided in
Other Documents. Except as otherwise provided in this Indenture, any payments
received by the Indenture Trustee for which provision as to the application
thereof is made in the Lease or Participation Agreement shall be applied by the
Indenture Trustee in accordance with the provisions of such Lease or
Participation Agreement, as applicable.
Section 3.06. Payments for Which No Application Is Otherwise
Provided. Except as provided in Section 3.04:
(a) any payments received by the Indenture Trustee for which
no provision as to the application thereof is made elsewhere in this
Indenture, and
(b) any payments received and amounts realized by the
Indenture Trustee with respect to an Item of Equipment to the extent
received or realized at any time after the satisfaction of conditions
set forth in Section 11.01, as well as any other amounts remaining as
part of the Indenture Estate after such satisfaction,
shall be distributed by the Indenture Trustee in the following order of
priority:
first, so much of such aggregate amount as shall be required
to pay the Indenture Trustee all amounts then due it pursuant to the
Participation Agreement shall be applied to pay the Indenture Trustee
such amounts; and
second, the balance, if any, of such aggregate amount
remaining thereafter shall be distributed to the Owner Trustee.
Section 3.07. Order of Application of Payments. Each payment
on any Equipment Note shall be applied, first, to the payment of accrued
interest (including interest on overdue principal and, to the extent permitted
by Applicable Law, overdue interest) on such Equipment Note to the date of such
payment and, second, to the payment of the
<PAGE> 20
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principal of, and the Premium, if any, on, such Equipment Note then due
(including any overdue installments of principal) thereunder.
Section 3.08. Subrogation. To the extent that any payments
received or amounts realized are applied under this Article III to pay the
Indenture Trustee any amounts then due it pursuant to the Participation
Agreement, the Owner Trustee shall be subrogated to the extent of such payment
to the rights and remedies of the Indenture Trustee in respect thereof.
Section 3.09. Excluded Payments. The Indenture Trustee shall
deliver any Excluded Payments received by it to whosoever is lawfully entitled
to the same.
Section 3.10. Statements to Holders. (a) With respect to
the Equipment Notes, on each Interest Payment Date and on the Special
Distribution Date, the Indenture Trustee will include with each distribution to
Holders of Equipment Notes a statement, giving effect to such distribution to
be made on such date, setting forth the following information (per a $1,000
face amount Equipment Note as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal, if
any, and the amount allocable to Premium, if any; and
(ii) the amount of such distribution allocable to interest.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the
Indenture Trustee shall furnish to each Person who at any time during such
calendar year was a Holder of record a statement containing the sum of the
amounts determined pursuant to clauses (a)(i) and (a)(ii) with respect to the
Indenture Estate for such calendar year or, in the event such Person was a
Holder of record during a portion of such calendar year, for the applicable
portion of such year, and such other items as are readily available to the
Indenture Trustee and which a Holder shall reasonably request as necessary for
the purpose of such Holder's preparation of its Federal income tax returns.
ARTICLE IV
REDEMPTION OF EQUIPMENT NOTES
Section 4.01. No Redemption Prior to Maturity. Except as
provided in this Indenture, no Equipment Notes may be redeemed prior to their
stated maturity.
Section 4.02. Redemption of Equipment Notes. The Equipment
Notes shall be redeemed, in whole or in part and subject to Section 4.06, as
follows:
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(A) In the event that an Event of Loss occurs to an Item of
Equipment, Outstanding Equipment Notes related to such Item of
Equipment shall be redeemed in whole or in part for an aggregate
redemption price equal to (1) an amount equal to the product obtained
by multiplying (x) the aggregate unpaid principal amount of such
Equipment Notes as at such Redemption Date (after deducting therefrom
the principal installment, if any, due on the Redemption Date) by (y)
a fraction, the numerator of which shall be one and the denominator of
which shall be the number of Items of Equipment related to such
Equipment Notes included in the Indenture Estate immediately prior the
date of such redemption and (2) the aggregate amount of interest
accrued and unpaid to such Redemption Date on the principal amounts to
be redeemed of the Outstanding Equipment Notes to be redeemed wholly
or partially on such Redemption Date, but without payment of any
Premium.
(B) In the event that the Lease with respect to any Item of
Equipment is terminated pursuant to Section 9(a) thereof, Outstanding
Equipment Notes related to such Item of Equipment shall be redeemed in
whole or in part for an aggregate redemption price equal to (1) an
amount equal to the product obtained by multiplying (x) the aggregate
unpaid principal amount of such Equipment Notes as at such Redemption
Date (after deducting therefrom the principal installment, if any, due
on the Redemption Date) by (y) a fraction, the numerator of which
shall be one and the denominator of which shall be the number of Items
of Equipment related to such Equipment Notes included in the Indenture
Estate immediately prior the date of such redemption, (2) the
aggregate amount of interest accrued and unpaid to such Redemption
Date on the principal amounts to be redeemed of the Outstanding
Equipment Notes to be redeemed wholly or partially on such Redemption
Date and (3) if such Redemption Date occurs prior to the Premium
Termination Date, the Premium, if any, applicable thereto.
(C) In the event of a refinancing as contemplated by Section
19 of the Participation Agreement, the Outstanding Equipment Notes
shall be redeemed in whole for an aggregate redemption price equal to
the sum of (1) 100% of the aggregate unpaid principal amount of such
Equipment Notes, (2) the aggregate accrued and unpaid interest thereon
to the Redemption Date, and (3) if such Redemption Date occurs prior
to the Premium Termination Date, the Premium, if any, applicable
thereto.
(D) In the event that the Owner Trustee gives notice of
redemption to the Indenture Trustee pursuant to Section 5.04(b), the
Outstanding Equipment Notes shall be redeemed in whole for an
aggregate redemption price equal to the sum of (1) 100% of the
aggregate unpaid principal amount of such Equipment Notes, (2) the
aggregate accrued and unpaid interest thereon to the Redemption Date
and (3) (x) if the notice of redemption is given pursuant to clause
(i) of Section 5.04(b), the
<PAGE> 22
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Premium, if any, applicable thereto or (y) if the notice of redemption
is given pursuant to clause (ii) of Section 5.04(b), without payment
of any Premium.
(E) In the event that Lessee exercises its option to purchase
any Item of Equipment prior to the Basic Lease Termination Date
pursuant to the first sentence of Section 20 of the Lease (unless
Lessee shall have elected to assume the obligations of the Owner
Trustee hereunder and under the Equipment Notes pursuant to Section 20
of the Participation Agreement), Outstanding Equipment Notes related
to such Item of Equipment shall be redeemed in whole or in part for an
aggregate redemption price equal to (1) an amount equal to the product
obtained by multiplying (x) the aggregate unpaid principal amount of
such Equipment Notes as at such Redemption Date (after deducting
therefrom the principal installment, if any, due on the Redemption
Date) by (y) a fraction, the numerator of which shall be one and the
denominator of which shall be the number of Items of Equipment related
to such Equipment Notes included in the Indenture Estate immediately
prior the date of such redemption and (2) the aggregate amount of
interest accrued and unpaid to such Redemption Date on the principal
amounts to be redeemed of the Outstanding Equipment Notes to be
redeemed wholly or partially on such Redemption Date, but without
payment of any Premium.
(F) In the event that the Lease with respect to any Item of
Equipment is terminated pursuant to Section 8(a) thereof (unless
Lessee shall have elected to assume the obligations of the Owner
Trustee hereunder and under the Equipment Notes pursuant to Section 20
of the Participation Agreement), Outstanding Equipment Notes related
to such Item of Equipment shall be redeemed in whole or in part for an
aggregate redemption price equal to (1) an amount equal to the product
obtained by multiplying (x) the aggregate unpaid principal amount of
such Equipment Notes as at such Redemption Date (after deducting
therefrom the principal installment, if any, due on the Redemption
Date) by (y) a fraction, the numerator of which shall be one and the
denominator of which shall be the number of Items of Equipment related
to such Equipment Notes included in the Indenture Estate immediately
prior the date of such redemption and (2) the aggregate amount of
interest accrued and unpaid to such Redemption Date on the principal
amounts to be redeemed of the Outstanding Equipment Notes to be
redeemed wholly or partially on such Redemption Date, but without
payment of any Premium.
Section 4.03. Notice of Redemption to Holders. Notice of
redemption shall be given by the Indenture Trustee by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder affected by such redemption, at such Holder's address
appearing in the Register.
All notices of redemption shall state:
<PAGE> 23
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(1) the Redemption Date,
(2) the redemption price (other than the amount of Premium,
if any),
(3) whether the Holder is entitled to a Premium and the
manner in which such Premium is calculated,
(4) that on the Redemption Date, such redemption price will
become due and payable upon each such Equipment Note, and that
interest thereon shall cease to accrue on and after such Redemption
Date, and
(5) the place or places where such Equipment Notes are to be
surrendered for payment.
Section 4.04. Deposit of Redemption Price. On or before the
Redemption Date, the Owner Trustee shall, to the extent an amount equal to the
applicable redemption price shall not then be held in the Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee or the Paying Agent
in immediately available funds an amount equal to such redemption price.
Section 4.05. Certificates Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the principal amount to be
redeemed on a Redemption Date of each Equipment Note to be redeemed in whole or
in part on such Redemption Date shall become due and payable at the principal
corporate trust office of the Indenture Trustee or at any office or agency
maintained for such purposes pursuant to Section 2.06, and from and after such
Redemption Date (unless there shall be a default in the payment of the
applicable redemption price) such principal amount shall cease to bear
interest. Upon surrender of any such Equipment Note for redemption in whole or
in part in accordance with said notice, the unpaid principal amount of such
Equipment Note, together with interest accrued thereon and Premium, if any,
shall be paid as provided for in this Article IV.
If any Equipment Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal shall, until paid,
continue to bear interest from the Redemption Date at the interest rate
applicable to such Equipment Note.
Section 4.06. Certificates to Be Redeemed Ratably, Etc. In
the case of any redemption of less than all of the Outstanding Equipment Notes,
such redemption shall be made ratably, based on the respective unpaid principal
amounts thereof, among all Outstanding Equipment Notes. For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Equipment Notes shall relate, in the case of any Equipment
Note redeemed or to be redeemed only in part, to the portion of the principal
of such Equipment Note which has been or is to be redeemed.
<PAGE> 24
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ARTICLE V
REMEDIES OF THE INDENTURE TRUSTEE
UPON AN EVENT OF ACCELERATION
Section 5.01. Events of Acceleration. The following events
shall constitute "Events of Acceleration" under this Indenture (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):
(a) an Event of Default, other than an Event of Default
arising by reason of nonpayment of, or failure to perform with respect
to, any Excluded Payment when due (subject to the cure rights of the
Owner Participant and the Owner Trustee under Section 5.04);
(b) the Owner Trustee shall default in making any payment
when due of principal of, Premium, if any, or interest on any
Equipment Note and such default shall continue for more than 10 days
after the same shall have become due and payable;
(c) any failure by the Owner Trustee, in its individual
capacity or as Owner Trustee, to observe or perform any covenant or
obligation required of it under the Indenture, or any failure by the
Owner Trustee or the Owner Participant to observe or perform any
covenant or obligation required of either of them pursuant to Section
7(c), 7(f), 7(g), 8(b)(vii) or 8(f) of the Participation Agreement,
or, to the extent that the interest of the Indenture Trustee or any
Holder of Outstanding Equipment Notes is materially and adversely
affected by such failure, in Sections 4.01(a), 5.01 and 10.01 of the
Trust Agreement if, but only if, such failure is not remedied within a
period of 30 days after there has been given to the Owner Trustee
(with a copy to the Owner Participant) or the Owner Participant, as
the case may be, by registered or certified mail, a written notice
specifying such failure and requiring it to be remedied and stating
that such notice is a "Notice of Acceleration" hereunder, by the
Indenture Trustee or by the Holders of at least 25% in principal
amount of Equipment Notes (with a copy to the Indenture Trustee);
provided, however, that the Owner Trustee shall be given an additional
150 days to correct such failure if the Owner Trustee is diligently
proceeding to correct such failure at the end of the original 30-day
period and reasonably expects to correct such failure within such
additional period; and provided further that no Event of Acceleration
shall arise under this Section 5.01(c) solely as a result of a failure
by the Owner Trustee or the Owner Participant to observe or perform
any covenant contained in Section 7(c) or 8(f) of the Participation
Agreement if Lessee shall have taken all action necessary to
<PAGE> 25
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discharge all Lessor's Liens referred to in such Sections and shall
have held the Indenture Trustee and the Indenture Estate harmless from
all claims, losses and expenses arising from the failure of the Owner
Trustee or the Owner Participant to observe and perform any such
covenant;
(d) any failure by the Owner Trustee, in its individual
capacity or as trustee, to observe or perform any other covenant or
obligation of the Owner Trustee contained in the Participation
Agreement, or any failure by the Owner Participant to observe or
perform any other covenant or obligation of the Owner Participant
contained in the Participation Agreement which failure, in any case
and either individually or together with other then existing failures,
shall have a material adverse effect on the rights and interests of
the Indenture Trustee or the Holders and is not remedied within a
period of 30 days after there has been given to the Owner Trustee and
the Owner Participant by registered or certified mail, a written
notice specifying such failure and requiring it to be remedied and
stating that such notice is a "Notice of Acceleration" hereunder, by
the Indenture Trustee or by the Holders of at least 25% in principal
amount of Outstanding Equipment Notes; provided, however, that the
Owner Trustee shall be given an additional 150 days to correct such
failure if the Owner Trustee is diligently proceeding to correct such
failure at the end of the original 30- day period and reasonably
expects to correct such failure within such additional period;
(e) any material representation or warranty made by the
Owner Trustee, in its individual capacity or as Owner Trustee, or by
the Owner Participant under the Participation Agreement, or by the
Owner Trustee hereunder, or by the Owner Trustee, in its individual
capacity or as Owner Trustee, or by the Owner Participant in any
document or certificate furnished to the Indenture Trustee 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 continue unremedied for a
period of 30 days after there has been given, by registered or
certified mail, to the Owner Trustee and the Owner Participant by the
Indenture Trustee, or to the Owner Trustee, the Owner Participant and
the Indenture Trustee by the Holders of at least 25% in principal
amount of Outstanding Equipment Notes, a written notice specifying
such incorrectness and requiring it to be remedied and stating that
such notice is a "Notice of Acceleration" hereunder; provided,
however, that the Owner Trustee shall be given an additional 150 days
to cure such inaccuracy if the Owner Trustee is diligently pursuing
such cure at the end of the original 30-day period and reasonably
expects such cure can be effected within such additional period;
(f) either the Indenture Estate or the Owner Trustee with
respect thereto (and not in its individual capacity) or the Owner
Participant shall (i) 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
<PAGE> 26
I-21
advantage of any bankruptcy or insolvency law of any jurisdiction,
(ii) make an assignment for the benefit of its creditors or (iii)
consent to the appointment of a custodian, receiver, trustee or other
officer with similar powers of itself or any substantial part of its
property; provided that no Event of Acceleration shall arise under
this Section 5.01(f) solely in the case of the Owner Participant if
the Owner Participant provides an Opinion of Counsel, in form and
substance satisfactory to the Indenture Trustee, to the effect that
such bankruptcy or insolvency of the Owner Participant shall not
adversely affect the Indenture Trustee, the Indenture Estate or any
Holder; or
(g) a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by the
Indenture Estate or the Owner Trustee with respect thereto (and not in
its individual capacity) or the Owner Participant, as the case may be,
a custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition
for relief or reorganization or any other petition in bankruptcy or
for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Indenture Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant,
as the case may be, and any such order or petition is not dismissed or
stayed within 90 days after the earlier of the entering of any such
order or the approval of any such petition; provided that no Event of
Acceleration shall arise under this Section 5.01(g) solely in the case
of the Owner Participant if the Owner Participant provides an Opinion
of Counsel, in form and substance satisfactory to the Indenture
Trustee, to the effect that such bankruptcy or insolvency of the Owner
Participant shall not adversely affect the Indenture Trustee, the
Indenture Estate or any Holder;
provided that any such Event of Acceleration shall be deemed to exist and
continue so long as, but only as long as, it shall not have been remedied.
Notwithstanding any provision herein to the contrary, the
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment
of debt, dissolution or liquidation of the Owner Trustee, in its individual
capacity, shall not be an Event of Acceleration so long as the Owner
Participant is diligently seeking to, and does replace the then existing Owner
Trustee within sixty (60) days after the date of such Event of Acceleration,
provided, however, the Owner Participant shall not be entitled to cure such an
Event of Acceleration by replacing the then existing Owner Trustee, if the
Indenture Trustee's rights in the Indenture Estate would, in the reasonable
judgment of the Indenture Trustee, be impaired by the Owner Participant's
replacing the then existing Owner Trustee.
Section 5.02. Acceleration; Rescission and Annulment. The
Indenture Trustee shall provide notice to the Owner Participant within one
Business Day of any failure
<PAGE> 27
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by Lessee to make any payment of Basic Rent. If an Event of Acceleration
occurs and is continuing, the Indenture Trustee may, and upon the direction of
Holders of 25% aggregate principal amount of Equipment Notes Outstanding,
subject to Section 5.04, declare by notice to the Owner Trustee and the Owner
Participant the unpaid principal amount of all Equipment Notes then outstanding
and accrued interest thereon to be due and payable. At any time after the
Indenture Trustee has declared the unpaid principal amount of all Equipment
Notes then outstanding to be due and payable and prior to the sale of any of
the Indenture Estate pursuant to this Article V, a Majority in Interest, by
written notice to the Owner Trustee, Lessee and the Indenture Trustee, may
rescind and annul such declaration and thereby annul its consequences if: (1)
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 of and premium, if any, on any Equipment Notes that have
become due otherwise than by such declaration of acceleration, (2) the
rescission would not conflict with any judgment or decree, and (3) all other
Indenture Defaults and Events of Acceleration, 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 5.03. Other Remedies Available to Indenture Trustee.
(a) After an Event of Acceleration shall have occurred and so long as such
Event of Acceleration shall be continuing, then and in every such case the
Indenture Trustee, as trustee of an express trust and as assignee hereunder of
the Lease or as legal title holder hereunder of each Item of Equipment or
otherwise, may, and when required pursuant to the provisions of Article VI
shall, exercise, subject to Sections 5.04 and 5.05, any or all of the rights
and powers and pursue any and all of the remedies accorded to the Owner Trustee
pursuant to Section 15 of the Lease and this Article V, 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.
(b) Subject to Sections 5.04 and 5.05, the Indenture Trustee
may, if at the time such action may be lawful and always subject to compliance
with any mandatory legal requirements, either with or without taking
possession, and either before or after taking possession, and either with or
without instituting any legal proceedings whatsoever, and having first given
notice of such sale by registered mail to the Owner Trustee and the Owner
Participant (with a copy to Lessee) once at least 30 days prior to the date of
such 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, 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
unless a declaration of acceleration has been made pursuant to Section 5.02.
Any such sale or sales may be adjourned from time to time
<PAGE> 28
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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 and the Holder or Holders of any Equipment Notes, or any interest
therein, may bid and become the purchaser at any such 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 notice to the Holders or 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 created under 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 or other title documents,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request. The Indenture
Trustee agrees that the Owner Participant and the Owner Trustee shall each have
the rights of a "debtor" under Section 9-505(2) of the Uniform Commercial Code
and shall be entitled to receive the notice referred to therein.
(c) Subject to Sections 5.04 and 5.05, if an Event of
Acceleration has occurred and is continuing, the Owner Trustee shall, at the
request of the Indenture Trustee, promptly execute and deliver to the Indenture
Trustee such instruments of title or 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 for any
reason fail to execute and deliver such instruments and documents after such
request by the Indenture Trustee, the Indenture Trustee shall be entitled, in a
proceeding to which the Owner Trustee shall be a necessary party, to a judgment
for specific performance of the covenants contained in the foregoing sentence,
conferring upon the Indenture Trustee the right to immediate possession and
requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee. The Indenture Trustee shall also be
entitled to pursue all or any part of the Indenture Estate wherever it may be
found and may enter any of the premises of the Owner Trustee or any other
Person wherever the Indenture Estate may be or be supposed to be and search for
the Indenture Estate and take possession of any Item of Equipment pursuant to
this Section 5.03(c). The Indenture Trustee may, but shall not be obligated
to, 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 and of the Indenture Estate as it may deem
proper. In each such case, the Indenture Trustee
<PAGE> 29
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shall have the right to use, operate, store, lease, control or manage the
Indenture Estate, and to exercise all rights and powers of the Owner Trustee
relating to the Indenture Estate, as the Indenture Trustee shall deem
appropriate, including the right to enter into any and all such agreements with
respect to the use, operation, storage, leasing, control or management of the
Indenture Estate or any part thereof; and the Indenture Trustee shall be
entitled to collect and receive directly all tolls, rents (including Rent),
issues, profits, products, revenues and other income 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. In accordance with the terms of this Section 5.03(c), such tolls,
rents (including Rent), issues, profits, products, revenues and other income
shall be applied to pay the expenses of using, operating, storing, leasing,
controlling or managing the Indenture Estate, and of all maintenance,
insurance, repairs, replacements, alterations, additions and improvements
thereto, 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 Owner Trustee and, to the extent
permitted by the Lease, of Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, including this Section 5.03(c), 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.
If an Event of Acceleration occurs and is continuing and the
Indenture Trustee shall have obtained possession of an Item of Equipment, the
Indenture Trustee shall not be obligated to use or operate such Item of
Equipment or cause such Item of Equipment 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 Item of
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 Item of Equipment and for public liability and property damage resulting
from use or operation of such Item of Equipment 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 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.
(d) Subject to Sections 5.04 and 5.05, the Indenture Trustee
may proceed to protect and enforce this Indenture and the Equipment Notes by
suit or suits or proceedings in equity, at law or in bankruptcy, and whether
for the specific performance of any covenant or agreement herein contained or
in execution or aid of any power herein granted, or for
<PAGE> 30
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foreclosure hereunder, or for the appointment of a receiver or receivers for
the Indenture Estate or any part thereof, or for the recovery of judgment for
the indebtedness secured by the Lien created under this Indenture or for the
enforcement of any other legal or equitable remedy available under applicable
law.
Section 5.04. Right to Cure; Option to Purchase; Etc. (a)
Right to Cure. If Lessee shall fail to make any payment of Basic Rent under
the Lease after the same shall become due, and if such failure of Lessee to
make payment of Basic Rent shall not constitute the fourth or subsequent
consecutive such failure or the seventh or subsequent cumulative such failure,
then so long as no Event of Acceleration with respect to the Equipment Notes
which is not an Event of Default 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
(the "10-Business-Day Period") after the expiration of the 10-day grace period
provided in the Lease (prior to the expiration of which 10-Business-Day Period
the Indenture Trustee shall not declare the Lease in default or exercise any of
the rights, powers or remedies), an amount equal to the full amount of such
payment of Basic Rent (or, if less, the aggregate of all amounts then due and
payable hereunder or to be paid from such payment of Basic Rent to any Person
other than the Owner Trustee as certified by the Owner Participant to the
Indenture Trustee and agreed by the Indenture Trustee), 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 Event of Acceleration that arose from such failure of Lessee (but such cure
shall not relieve Lessee of any of its obligations). If Lessee shall fail to
perform or observe any covenant, condition or agreement to be performed or
observed by it under the Lease, and if (but only if) the performance or
observance thereof can be effected by the payment of money alone (it being
understood that actions such as the obtaining of insurance and the procurement
of maintenance services can be so effected), then as long as no other Event of
Acceleration with respect to the Equipment Notes which is not an Event of
Default shall have occurred and be continuing, the Owner Participant or the
Owner Trustee may (but need not) pay to the Indenture Trustee (or to such other
person as may be entitled to receive the same), at any time prior to the
expiration of a period of 30 days (the "30-Day Period") after the expiration of
the grace period provided with respect to such failure on the part of Lessee in
the Lease (prior to the expiration of which 30-Day Period the Indenture Trustee
shall not declare such Lease in default or exercise any of the rights, powers
or remedies pursuant to the Lease or this Indenture), all sums necessary to
effect the performance or observance of such covenant or agreement of Lessee,
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 Event of Acceleration with respect to the Equipment Notes
that arose from such failure of Lessee (but such cure shall not relieve Lessee
of any of its obligations). Upon any payment of Basic Rent by any Owner
Participant or Owner Trustee in accordance with the second sentence of this
Section 5.04, or upon any payment of any other sums by any Owner Participant or
Owner Trustee in accordance with the third sentence of this Section 5.04, such
Owner Participant or Owner Trustee shall, to the
<PAGE> 31
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extent of their respective payments, be subrogated, in the case of any such
payment in accordance with such second sentence, to the rights of the Indenture
Trustee, as assignee under this Indenture of the Owner Trustee, or, in the case
of any such payment in accordance with such third sentence, to the rights of
the Indenture Trustee or such other Person, as the case may be, which actually
received such payment, to receive such payment of Basic Rent or such other
payment, as the case may be (and any interest due thereon on account of the
delayed payment thereof), and shall be entitled to receive such payment upon
its receipt by the Indenture Trustee or such other Person, as aforesaid (but in
each case only if all amounts of principal of, and Premium, if any, and
interest at the time due and payable on, the Equipment Notes together with
interest due thereon on account of the delayed payment thereof 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
Lessee pursuant to this Section 5.04 except by demanding of Lessee payment of
such amount or by commencing an action against Lessee to require the payment of
such amount pursuant to the Lease.
The Indenture Trustee shall provide notice to the Owner
Participant and the Owner Trustee of any failure of Lessee to make any payment
of Basic Rent under the Lease and any failure by Lessee to perform or observe
any covenant, condition or agreement to be performed or observed by it under
such Lease known by it promptly after such failure; provided that neither the
10-Day Period nor the 30-Day Period shall commence until such notice has been
given. For all purposes of this Indenture, neither the Indenture Trustee nor
the Owner Trustee shall be deemed to have knowledge of any fact unless one of
its Responsible Officers shall have actual knowledge.
(b) Option to Purchase Equipment Notes. In the event
that (i) at any time one or more Events of Acceleration shall have occurred and
any such Event of Acceleration shall have continued for a period of 90 days or
more (but less than a period of one year), during which time the Equipment
Notes shall not have been accelerated pursuant to Section 5.02, or (ii) (x) the
Equipment Notes shall have been accelerated pursuant to Section 5.02 or (y) at
any time one or more Events of Acceleration shall have occurred and any such
Event of Acceleration shall have continued for a period of one year or more,
during which time the Equipment Notes shall not have been accelerated pursuant
to Section 5.02, the Owner Trustee may, at its option, give notice to the
Indenture Trustee that the Owner Trustee will redeem all Equipment Notes then
Outstanding, which redemption shall be pursuant to clause (D) of Section 4.02
and concurrently with such notice, the Owner Trustee will deposit with the
Indenture Trustee, whether or not an Event of Acceleration is then continuing,
an amount sufficient to redeem at the applicable redemption price all Equipment
Notes then Outstanding (including, in the case of a redemption pursuant to
clause (i) of this Section 5.04(b), the estimated Premium) and to pay the
Indenture Trustee all amounts then due it hereunder, which funds shall be held
by the Indenture Trustee as provided in Section 7.04(a). Upon the receipt of
such funds, the Indenture Trustee will terminate any foreclosure proceedings
then in progress. If such notice is given, the Owner Trustee further agrees
that it will deposit or
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cause to be deposited with the Indenture Trustee, on or prior to the Business
Day preceding the applicable Redemption Date, whether or not an Event of
Acceleration is then continuing, funds sufficient, when added to the funds
already held by the Indenture Trustee for such purpose, to redeem at the
applicable redemption price (including the Premium, if any, actually payable in
respect thereof) on such Redemption Date all Equipment then Outstanding and to
pay the Indenture Trustee all amounts then due it hereunder.
(c) Exercise of Remedies Under Lease. Anything in this
Indenture to the contrary notwithstanding, the Indenture Trustee shall not be
entitled to exercise any remedy hereunder as a result of an Event of
Acceleration which arises solely by reason of one or more events or
circumstances which constitute an Event of Default unless the Indenture Trustee
as security assignee of the Owner Trustee shall have exercised or concurrently
be exercising one or more of the remedies provided for in Section 15 of the
Lease, provided that the requirement to exercise such remedies under the Lease
shall not apply in circumstances where the Indenture Trustee is, and has been
for a continuous period in excess of 60 days, involuntarily stayed or
prohibited by applicable law or court order from exercising such remedies under
the Lease (provided that the foregoing proviso shall not be given effect in the
following situations: (A) Lessee's agreement with the approval of the relevant
court to perform the Lease in accordance with Section 1168(a) of the Bankruptcy
Code or an extension with the consent of the Indenture Trustee of the 60-day
period specified therein pursuant to Section 1168(b) of the Bankruptcy Code,
(B) Lessee's assumption with the approval of the relevant court of the Lease
pursuant to Section 365 of the Bankruptcy Code or (C) the Indenture Trustee's
own failure to give any requisite notice to any Person), it being understood
that references in this sentence to particular sections of the Bankruptcy Code
as in effect on the date hereof shall include any substantially similar
successor provisions.
Section 5.05. Rights of Lessee. Notwithstanding the
provisions of this Indenture, including, without limitation, Section 5.03, so
long as no Lease Event of Default shall have occurred and be continuing,
neither the Indenture Trustee nor the Owner Trustee shall take any action
contrary to, or disturb, Lessee's, sublessee's or user'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) Lessee's, sublessee's
or user's rights to possession and use of, and of quiet enjoyment of, the Items
of Equipment.
Section 5.06. Waiver of Existing Defaults. A Majority in
Interest by notice to the Indenture Trustee on behalf of all Holders 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 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 Event of Acceleration arising therefrom shall be deemed to have
been cured for every
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purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.07. Remedies Cumulative. Each and every right,
power and remedy herein given to the Indenture Trustee specifically 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 same 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 Lessee or to be an acquiescence therein.
Section 5.08. Waiver of Owner Trustee. To the extent now or
at any time hereafter enforceable under applicable law, the Owner Trustee
covenants that it will not at any time insist upon or plead, or in any manner
whatsoever claim or take any benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Indenture
Estate or any part thereof, prior to any sale or sales thereof to be made
pursuant to any provision herein contained, or prior to any applicable decree,
judgment or order of any court of competent jurisdiction; nor, after such sale
or sales, claim or exercise any right under any statute now or hereafter made
or enacted by any state or otherwise to redeem the property so sold or any part
thereof, and hereby expressly waives for itself and on behalf of each and every
Person, except decree or judgment creditors of the Owner Trustee acquiring any
interest in or title to the Indenture Estate or any part thereof subsequent to
the date of this Indenture, all benefit and advantage of any such law or laws,
and covenants that it will not invoke or use any such law or laws, but will
suffer and permit the execution of every such power as though no such law or
laws had been made or enacted. Nothing in this Section 5.08 shall be deemed to
be a waiver by the Owner Trustee of its rights under Section 5.04.
The Indenture Trustee may maintain such a pleading, or, in any
manner whatsoever, claim or take any benefit or advantage of or from any law
now or hereafter in force even if it does not possess any of the Equipment
Notes or does not produce any of them in the proceeding. A delay or omission
by the Indenture Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Acceleration under this Indenture shall not impair
the right or remedy or constitute a waiver of or acquiescence in such Event of
Acceleration.
Section 5.09. Control by Majority. (a) A Majority in
Interest may direct the time, method and place of conducting any proceeding for
any remedy available to the
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Indenture Trustee or exercising any trust or power conferred on it by this
Indenture. However, the Indenture Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that is unduly prejudicial to the
rights of the Holders so affected, or that may subject the Indenture Trustee to
personal liability.
(b) The Owner Trustee may pursuant to the direction and
instruction of the Owner Participant by delivery of written notice (in the form
of an Officer's Certificate) to the Indenture Trustee set a record date to
determine the Holders entitled to give any consent, request, demand,
authorization, direction, notice, waiver or other act. Such record date shall
be the record date specified in such notice which shall be a date not more than
30 days prior to the first solicitation of Holders in connection therewith. If
such a record date is fixed, such consent, request, demand, authorization,
direction, notice, waiver or other act may be given before or after such record
date, but only the Holders of record at the close of business on such record
date shall be deemed to be Holders for the purposes of determining whether
Holders holding the requisite proportion of certificates have authorized or
agreed or consented to such consent, request, demand, authorization, direction,
notice, waiver or other act, and for that purpose the Equipment Notes
outstanding shall be computed as of such record date; provided that no such
consent, request, demand, authorization, direction, notice, waiver or other act
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
one year after the record date.
Section 5.10. Limitation on Suits by Holders of Equipment
Notes. A Holder of an Equipment Note may pursue a remedy under this Indenture
or thereunder only if:
(1) such Holder gives to the Indenture Trustee written
notice of a continuing Event of Acceleration under this Indenture;
(2) the Holders of at least 25% in aggregate principal
amount of the Equipment Notes outstanding make a written request to
the Indenture Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Indenture Trustee
indemnity satisfactory to the Indenture Trustee against any loss,
liability or expense to be, or which may be incurred by the Indenture
Trustee in pursuing the remedy;
(4) the Indenture Trustee does not comply with the
request within 60 days after receipt of the request and the offer of
indemnity; and
(5) during such 60-day period a Majority in Interest does
not give the Indenture Trustee a direction inconsistent with the
request.
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A Holder of an Equipment Note may not use this Indenture to
prejudice the rights of another Holder thereof or to obtain a preference or
priority over another Holder.
Section 5.11. Rights of Holders of Equipment Notes to Receive
Payment. Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of, Premium, if any, and interest on
its Equipment Note on or after the respective due dates expressed in such
Equipment Note, or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 5.12. Indenture Trustee May File Proofs of Claim.
The Indenture Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee and of any Holder allowed in any judicial proceedings
relating to any obligor on the Equipment Notes, its creditors, or its property.
Section 5.13. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of an Equipment Note by its acceptance thereof
shall be deemed to have agreed, that in any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Indenture
Trustee for any action taken or omitted by it as Indenture Trustee, a court in
its discretion may require the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in such suit, having due regard to the merits and good faith of
the claims or defense made by the party litigant. This Section 5.13 does not
apply to a suit instituted by the Indenture Trustee, a suit instituted by a
Holder for the enforcement of the payment of principal of or Premium, if any,
or interest on such Equipment Note, on or after the respective due dates
expressed in such Equipment Note, or a suit by a Holder or Holders of more than
10% in aggregate principal amount of Equipment Notes.
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
Section 6.01. Action upon Event of Acceleration. If any
payments of Interim Interest or Basic Rent or payments of the principal or
interest or Premium, if any, on the Equipment Notes due and payable on any
Interest Payment Date shall not have been paid in full on such Interest 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 and Lessee specifying the amount and nature of such deficiency in
payment. In the event the Indenture Trustee shall have "actual knowledge" of
an Event of Acceleration or an Indenture Default, the Indenture Trustee shall
give prompt notice of such Event of
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Acceleration or Indenture Default or condition to Lessee, the Owner Trustee,
the Owner Participant and each Holder by telegram, telex, or telephone (to be
promptly confirmed in writing). In the event the Owner Trustee shall have
"actual knowledge" of an Event of Acceleration or an Indenture Default, the
Owner Trustee shall give notice of such Event of Acceleration or Indenture
Default in the same manner to Lessee, the Indenture Trustee, the Owner
Participant and each Holder. Subject to the terms of Section 6.03, the
Indenture Trustee shall take such action, or refrain from taking such action,
with respect to such Event of Acceleration 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 Event of Acceleration or
such Indenture Default to the Holders 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 Event of Acceleration or Indenture
Default as it shall determine to be advisable in the best interests of the
Holders. Any provision of this Section 6.01 to the contrary notwithstanding,
the Indenture Trustee shall not declare the Lease to be in default solely in
respect of (i) Lessee's failure to make any payment of Basic Rent after the
same shall have become due, unless the 10-Day Period within which, pursuant to
Section 5.04(a), the Owner Participant or the Owner Trustee are entitled to
cure such failure shall have expired, or (ii) Lessee's failure to perform or
observe any of the covenants, conditions and agreements referred to in the
second sentence of Section 5.04(a) within the grace period referred to in that
sentence, unless the 10-Day Period within which, pursuant to Section 5.04(a),
the Owner Participant or the Owner Trustee is 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 Event of Acceleration (except, in the case of
the Indenture Trustee, the failure of Lessee to pay any installment of Basic
Rent that is required to be paid directly to the Indenture Trustee within the
10 days after the same shall become due or the failure of Lessee to maintain
insurance as required under Section 11 of the Lease if the Indenture Trustee
shall receive notice thereof from an insurer or insurance broker) unless
notified in writing by Lessee, the Owner Trustee, one or more Holders 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 Division of the Indenture Trust Division of the Indenture
Trustee, as the case may be, without any duty to make any investigation with
regard thereto.
Section 6.02. Action upon Instructions. Subject to the terms
of Sections 6.01 and 6.03, upon the written instructions at any time and from
time to time of a Majority in Interest, the Indenture Trustee shall take such
of the following actions as may be specified in such instructions (subject to
the rights of the other parties thereto, except to the extent assigned
hereunder): (i) subject to and solely to the extent permitted by the terms
hereof and of the Lease, give such notice, direction or consent, or exercise
such right, remedy or power hereunder or under the Lease or in respect of any
part or all of the Indenture Estate or take such other action as shall be
specified in such instructions; and (ii) after an Event of
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Acceleration shall have occurred and so long as such Event of Acceleration
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 (i) the expiration or earlier termination of the Lease
Term with respect to any Item of Equipment under the Lease and after payment in
full of the principal of and interest and premium, if any, on all Equipment
Notes issued in respect of such Item of Equipment, or (ii) the refinancing of
the Equipment Notes pursuant to Section 19 of the Participation Agreement; the
Indenture Trustee shall in each case, upon the written request of the Owner
Trustee and receipt by the Indenture Trustee of funds necessary to prepay the
Equipment Notes required in connection with such termination or refinancing or
to consummate such purchase, 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 Lessee releasing such property from the Lien
of this Indenture.
Section 6.03. Indemnification. (a) The Indenture Trustee
shall not be required to take any action or refrain from taking any action
under Section 6.01 (other than the first two sentences thereof), Section 6.02
or Article V if it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk is not reasonably
assured to it. The Indenture Trustee shall not be required to take any action
under Section 6.01 or 6.02 or Article V, nor shall any other provision of this
Indenture be deemed to impose a duty on the Indenture Trustee to take any
action, if the Indenture Trustee shall have been advised in writing by
independent counsel that such action is contrary to the terms hereof or of the
Lease or the Participation Agreement, or is otherwise contrary to law.
(b) Each Holder may, but shall not be required to,
participate in any indemnification of the Indenture Trustee given pursuant to
paragraph (a) of this Section 6.03. Each Holder so participating shall be
entitled to reimbursement for such participation in accordance with Article
III.
Section 6.04. No Duties Except as Specified in Indenture or
Instructions. The Indenture Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Items of
Equipment or any other part of the Indenture Estate, or to otherwise take or
refrain from taking any action under, or in connection with, this Indenture,
the Lease, or the Participation Agreement, except as expressly provided by the
terms of this Indenture or as expressly provided in written instructions
received pursuant to the terms of Section 6.01 or 6.02; and no implied duties
or obligations shall be read into this Indenture against the Indenture Trustee.
Each of the Owner Trustee and the Indenture Trustee nevertheless agrees, in its
individual capacity, 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
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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 Items of Equipment (in the case of the Owner Trustee), administration of
the Indenture Estate (in the case of the Indenture Trustee) or any other
transaction under this Indenture or the Trust Agreement or any document
included in the Indenture Estate.
Section 6.05. No Action Except Under Lease, Indenture or
Instructions. The Indenture Trustee agrees that it will not manage, control,
use, sell, dispose of or otherwise deal with the Items of Equipment or other
property constituting part of the Indenture Estate except (i) as required by
the terms of the Lease and the Participation Agreement, (ii) in accordance with
the powers granted to, or the authority conferred upon, the Indenture Trustee
pursuant to this Indenture, or (iii) in accordance with the express terms
hereof or with written instructions pursuant to Section 6.01 or 6.02.
Section 6.06. 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,
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 appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such Holders may reasonably
request from time to time.
Section 6.07. 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 Event of Default has occurred and is
continuing unremedied, the Indenture Trustee will comply with Section 6 of the
Lease 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 agrees to the provisions of this Section 6.07.
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ARTICLE VII
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Indenture
Trustee accepts the trusts hereby created and applicable to it and agrees to
perform the same but only upon the terms of this Indenture and agrees to
receive and disburse all moneys received by it constituting part of the
Indenture Estate in accordance with the terms hereof. The Indenture Trustee in
its individual capacity shall not be answerable or accountable under any
circumstances, except for its own willful misconduct or gross negligence (or
simple negligence in (i) the handling of funds or (ii) providing the notice to
the Owner Participant required pursuant to Section 6.01) or breach of any of
its representations or warranties set forth herein or in the Participation
Agreement, or the performance of its obligations under the last sentence of
Section 6.04; and the Owner Trustee shall not be liable for any action or
inaction of the Indenture Trustee and the Indenture Trustee shall not be liable
for any action or inaction of the Owner Trustee. The Owner Trustee shall not
be deemed a trustee for, or agent of, the Holders for any purpose.
Section 7.02. Absence of Duties. Except in accordance with
written instructions or requests furnished pursuant to Section 6.01 or 6.02 and
except as provided in, and without limiting the generality of, Section 6.04,
the Indenture Trustee shall have no duty to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the
part of Lessee, including (i) to see to any registration of the Items of
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 Items of Equipment or
to effect or maintain any such insurance, whether or not Lessee shall be in
default with respect thereto, (iii) to confirm, verify or inquire into the
failure to receive any financial statements of Lessee or (iv) to inspect the
Items of Equipment at any time or ascertain or inquire as to the performance or
observance of any of Lessee's covenants under the Lease with respect to the
Items of Equipment. Notwithstanding the foregoing, the Indenture Trustee will
furnish to any Holder so long as such Holder 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 Holders pursuant to the Lease.
Section 7.03. No Representations or Warranties as to the
Equipment or Documents. NEITHER THE OWNER TRUSTEE NOR THE OWNER TRUSTEE IN ITS
INDIVIDUAL CAPACITY NOR THE INDENTURE TRUSTEE MAKES OR SHALL BE DEEMED TO HAVE
MADE (i) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE ITEMS
OF EQUIPMENT OR AS
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TO THEIR TITLE THERETO, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
THE ITEMS OF EQUIPMENT WHATSOEVER, except that the Owner Trustee in its
individual capacity hereby represents and warrants that on the Funding Date
with respect to any Item of Equipment the Owner Trustee received whatever title
was conveyed to it by Lessee and that the Items of Equipment shall be free of
Lessor's Liens attributable to the Owner Trustee in its individual capacity, 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, or 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 8 of the Participation Agreement), except that
(x) the Owner Trustee and the Indenture Trustee each in its individual capacity
hereby represents and warrants that each of said specified documents to which
it is a party has been or will be duly executed and delivered by one of its
officers who is and will be duly authorized to execute and deliver such
document on its behalf, and (y) the Owner Trustee hereby in its individual
capacity represents and warrants that State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, has the full
power, authority and legal right under the laws of the United States of America
to enter into and perform, in its individual capacity or as Owner Trustee, as
the case may be, the Trust Agreement and, assuming the due authorization,
execution and delivery of the Trust Agreement by the Owner Participant,
pursuant thereto, this Indenture, the Participation Agreement and the Lease,
and, assuming the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant, the execution, delivery and performance of
each of such documents have been duly authorized on the part of State Street
Bank and Trust Company of Connecticut, National Association and of the Owner
Trustee, as the case may be.
Section 7.04. No Segregation of Moneys; No Interest;
Investments. (a) Subject to Section 7.04(b), no moneys received by the
Indenture Trustee hereunder need be segregated in any manner except to the
extent required by law, and any such moneys may be deposited under such general
conditions for the holdings 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 Permitted Investments at the written
direction and at the risk and expense of 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 and the Indenture Trustee shall hold any such Indenture
Investments until maturity. Any net income
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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 Lessee. Any
such Permitted Investments or Indenture Investments may be sold or otherwise
reduced to cash (without regard to maturity date) by the Indenture Trustee
whenever necessary to make any application as required by such provisions. The
Indenture Trustee shall have no liability for any loss resulting from any such
investment or reinvestment other than by reason of the willful misconduct or
gross negligence of the Indenture Trustee.
Section 7.05. Reliance; Agents; Advice of Counsel. The
Indenture Trustee shall incur no liability to anyone acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Indenture
Trustee may accept a copy of a resolution of the Board of Directors of any
party to the Participation Agreement, certified by the Secretary or an
Assistant Secretary of such party as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted by said Board
and that the same is in full force and effect. As to any fact or matter the
manner of ascertainment of which is not specifically described herein, the
Indenture Trustee may for all purposes hereof rely on a certificate, signed by
an officer of 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. 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 shall 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
expense of the Indenture Estate, consult with independent counsel, accountants
and other skilled persons to be selected and employed by it, and the Indenture
Trustee shall not be liable for anything done, suffered, or omitted in good
faith by it in accordance with the written advice or opinion of any such
independent counsel, accountants or other skilled persons acting within such
persons' area of competence (so long as the Indenture Trustee shall have
exercised reasonable care in selecting such persons).
Section 7.06. Not Acting in Individual Capacity. The Owner
Trustee and the Indenture Trustee each acts hereunder solely as trustee
hereunder and, in the case of the Owner Trustee, under the Trust Agreement and
not in its individual capacity unless otherwise
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expressly provided; and all Persons, other than the Holders 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.
Section 7.07. No Compensation from Holders or Indenture
Estate. The Owner Trustee and the Indenture Trustee agree that they shall have
no right against the Holders or, in the case of the Indenture Trustee, except
as provided in Sections 3.03 and 5.03, the Indenture Estate, for any fee as
compensation for its services hereunder.
Section 7.08. 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 or the Indenture
Estate (except in the case of the Indenture Trustee as expressly provided in
Article III or Section 5.03) 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 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 to the 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, Lessee and the Holders of all Equipment Notes at the time
outstanding.
Section 8.02. Resignation of Indenture Trustee; Appointment
of Successor. (a) 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, Lessee and the Holders. A Majority in Interest may at any
time remove the Indenture Trustee without cause by an instrument in writing
delivered to the Owner Trustee, Lessee and the Indenture Trustee. In addition,
Lessee, on
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behalf of the Owner Trustee, may remove the Indenture Trustee if: (i) the
Indenture Trustee fails to comply with Section 8.02(c), (ii) the Indenture
Trustee is adjudged a bankrupt or an insolvent, (iii) a receiver or public
officer takes charge of the Indenture Trustee or its property or (iv) the
Indenture Trustee becomes incapable of acting.
In the case of the resignation or removal of the Indenture
Trustee, Lessee, on behalf of the Owner Trustee (or, in the case of removal, as
its designee, Lessee, to the extent provided by Section 7(h) of the
Participation Agreement) shall 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 as provided above, the retiring Indenture Trustee, 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 fifth 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 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 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
business of the Indenture Trustee may be
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transferred, 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. (a) Supplemental
Indentures Without Consent of Holders. The Owner Trustee and the Indenture
Trustee, at any time and from time to time, without notice to or the consent of
any Holders, 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
(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, 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.
(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, 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 and of the Owner Trustee under this Indenture; provided,
however, without the consent of each Holder of an Equipment Note affected
thereby, no such supplemental indenture shall:
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(1) 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 or 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 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.
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. In executing or accepting any supplemental indenture,
the Indenture Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an opinion of counsel stating that such supplemental
indenture is authorized or permitted by this Indenture.
Section 9.03. Request of Substance, Not Form. It shall not
be necessary for the consent of the Holders 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. In executing
or accepting any supplemental indenture, the Indenture Trustee that shall be
entitled shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that such supplemental indenture is
authorized or permitted by this Indenture.
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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 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) Without the consent of a Majority in Interest, the respective parties to
the Participation Agreement, the Lease and the Trust Agreement may not modify,
amend or supplement any of said agreements, or give any consent, waiver,
authorization or approval thereunder, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder;
provided, however, that the actions specified in subsection (b) of this Section
9.05 may be taken without the consent of the Holders.
(b) Subject to the provisions of subsection (c) of this
Section 9.05, the respective parties to the Participation Agreement, the Lease
and the Trust Agreement, at any time and from time to time without the consent
of the Indenture Trustee or of any Holder may:
(1) so long as no Event of Acceleration 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 compliance with subsection (a) of this
Section 9.05, 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 as originally executed: the
first sentence of Section 2, Section 3(a), the second paragraph of
Section 3(b), Section 3(c), Section 3(d) (except insofar as it relates
to address or account information), the first paragraph of Section
3(e) (other than the definition of Net Economic Return), Sections 4,
6, 8 (to the extent any provision therein refers to the Indenture
Trustee), 9, 10, 11, 12, 13, 14, 15, 16, 18 and 22 and the fourth
sentence of Section 27 (except that additional requirements may be
imposed on Lessee's ability to terminate the Lease under Section 9 and
additional insurance requirements may be imposed on Lessee under
Section 11) 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 subsection
(b); provided that in the event an Event of Acceleration 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
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changing in any manner or eliminating any of the provisions thereof or
of modifying in any manner the rights of "Lessor" thereunder; provided
further that without the prior consent of the Owner Trustee, and
whether or not an Event of Acceleration shall have occurred and be
continuing, no such action shall be taken with respect to any of the
provisions of Sections 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 (only with
respect to amendments and modifications thereof), 15 (only with
respect to amendments and modifications thereof), 16, 18, 19, 20, 24,
25 and 26 of the Lease or to the extent such action shall affect the
amount or timing of any amounts payable by Lessee under the Lease as
originally executed (or as subsequently modified with the consent of
the Owner Trustee) which absent the occurrence and continuance of an
Event of Acceleration will be distributable to the Owner Trustee under
Article 3 or any other section of the Lease or if such action would
increase any obligation of the Owner Trustee or the Owner Participant;
and provided further that the parties to the Lease may take any such
action without the consent of the Indenture Trustee or any Holder to
the extent such action relates solely to the payment of amounts
constituting, or the Owner Trustee's, the Owner Participant's or
Lessee's rights or obligations with respect to, Excluded Payments;
(2) modify, amend or supplement the Trust Agreement, or give
any consent, waiver, authorization or approval with respect thereto,
except that without compliance with subsection (a) of this Section
9.05, 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 the following provisions of the Trust Agreement as originally
executed: Sections 1.01, 2.01, 2.02, 3.01(f), 3.01(g), 4.01, 4.02,
5.01, 5.02, 5.05, 6.01, 6.03, 6.07, 6.08, 7.01, 8.01, 9.01, 9.02,
10.01, 11.01, 11.02, 11.03, 11.05 and 11.11;
(3) modify, amend or supplement the Participation Agreement,
or give any consent, waiver, authorization or approval with respect
thereto, except that without compliance with subsection (a) of this
Section 9.05, 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 as originally executed: Sections 2, 3, 6, 7,
8, 9, 11, 13, 14, 15, 16, 19, 20 and 21 (insofar as such Sections 6,
7, 8, 9, 13, 15, 16 and 21 relate to the Indenture Trustee and the
Holders) 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) in each case only to the
extent any such action shall adversely impact the interests of the
Holders; and
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(4) modify, amend or supplement any of said agreements in
order to cure any ambiguity, to correct or supplement any provisions
thereof which may be defective or inconsistent with any other
provision thereof or of any provision of this Indenture, or to make
any other provision with respect to matters or questions arising under
this Indenture which shall not be inconsistent with the provisions of
this Indenture, provided such action shall not adversely affect the
interests of the Holders.
(c) Anything in this Indenture to the contrary
notwithstanding, no modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to Section 9.05(a) or 9.05(b), shall,
without the consent of the Holder of each Outstanding Equipment Note affected
thereby:
(1) modify, amend or supplement the Lease in such a way as to
extend the time of payment of Interim Rent or Basic Rent, amounts
payable pursuant to Section 26 of the Lease, amounts payable pursuant
to the second sentence of Section 3(c) of the Lease, Stipulated Loss
Value or Termination Value payable under, or as provided in, the Lease
as originally executed, or reduce the aggregate amount of Stipulated
Loss Value or Termination Value so that the same is less than the
accrued interest on and principal of the Equipment Notes at the time
Outstanding, 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 Lessee from its
obligation in respect of payment of Interim Rent or Basic Rent,
amounts payable pursuant to Section 26 of the Lease, amounts payable
pursuant to the second sentence of Section 3(c) of the Lease,
Stipulated Loss Value or Termination Value payable under, or as
provided in, the Lease as originally executed, except for any such
assignment pursuant to Section 11(d) of the Participation Agreement,
and except as provided in the Lease as originally executed.
ARTICLE X
ASSUMPTION OF OBLIGATIONS OF OWNER TRUSTEE BY LESSEE
Section 10.01. Assumption of Obligations of Owner Trustee by
Lessee. Upon the purchase by Lessee of all of the Items of Equipment pursuant
to Section 20 of the Lease or upon the termination of the Lease with respect to
all of the Items of Equipment pursuant to Section 8(a) thereof, Lessee may, in
lieu of redemption of the Equipment Notes, assume all of the rights and
obligations of the Owner Trustee under this Indenture in respect of the
Equipment Notes in accordance with the provisions of Section 20 of the
Participation Agreement. Such assumption will take place on the date that
Lessee purchases the Items of Equipment or the Owner Participant's beneficial
interest in the Indenture Estate or on the
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Termination Date, as applicable (such date being referred to hereinafter as the
"Assumption Date"). Such assumption of the Equipment Notes shall be on the
following terms and conditions:
(a) Lessee shall have delivered to the Indenture Trustee an
Officer's Certificate, dated the Assumption Date, stating that Lessee
has paid to the Owner Trustee all amounts required to be paid to the
Owner Trustee pursuant to the Lease or all amounts to be paid to the
Owner Participant pursuant to the Participation Agreement, as the case
may be, in connection with such purchase and assumption;
(b) no Potential Default or Event of Acceleration with
respect to the Equipment Notes after giving effect to the supplement
delivered pursuant to clause (e) below shall have occurred and be
continuing immediately subsequent to such assumption and the Indenture
Trustee shall have received from Lessee an Officer's Certificate,
dated the Assumption Date, to such effect;
(c) the Indenture Trustee shall have received, on or prior to
the Assumption Date, evidence of all filings, recordings and other
action referred to in the Opinion or Opinions of Counsel referred to
below;
(d) the Indenture Trustee shall have received an Opinion or
Opinions of Counsel for Lessee, dated the Assumption Date, which
without unusual qualification shall be to the effect that, after
giving effect to the supplement referred to in clause (e) below:
(i) this Indenture constitutes the legal, valid
and binding obligation of Lessee, enforceable against Lessee
in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, and except as
limited by applicable laws which may affect the remedies
provided for in this Indenture, which laws, however, do not in
the opinion of such counsel make the remedies provided for in
this Indenture inadequate for the practical realization of the
rights and benefits provided for in this Indenture;
(ii) the Lien of this Indenture on all Items of
Equipment constitutes a fully-perfected Lien and all filing,
recording or other action (specifying the same) necessary to
perfect and protect the Lien of this Indenture with respect to
such Items of Equipment has been accomplished; and
(iv) the Indenture Trustee is entitled to the
benefits of 11 U.S.C. Section 1168 with respect to the Items
of Equipment; and
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(e) the Indenture Trustee shall have received and executed a
supplement to this Indenture giving effect to such assumption
satisfactory to the Indenture Trustee and the Owner Trustee dated the
Assumption Date and duly executed by Lessee and the Owner Trustee;
then, automatically and without the requirement of further action by any
Person, effective as of such Assumption Date, the Owner Trustee shall be
released from all of its obligations under this Indenture or otherwise (other
than any obligations or liabilities of such Owner Trustee in its individual
capacity incurred on or prior to the applicable Assumption Date or arising out
of or based upon events occurring on or prior to such Assumption Date, which
obligations and liabilities shall remain the sole responsibility of such Owner
Trustee).
ARTICLE XI
SATISFACTION AND DISCHARGE; TERMINATION OF OBLIGATIONS
Section 11.01. Satisfaction and Discharge of Indenture;
Termination of Obligations. This Indenture shall cease to be of further
effect, and the Owner Trustee and the Indenture Trustee shall be deemed to have
been discharged from their respective obligations with respect to the Equipment
Notes (and the Indenture Trustee, on demand and at the expense of the Owner
Trustee, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture in respect of the Equipment Notes), when
(a) either (i) all Equipment Notes theretofore executed and
delivered (other than Equipment Notes that have been mutilated,
destroyed, lost or stolen and that have been replaced or exchanged as
provided in Section 2.07) have been delivered to the Indenture
Trustee; or (ii) all Equipment Notes not theretofore delivered to the
Indenture Trustee for cancellation have become due and payable
(whether upon stated maturity or as a result of redemption), or will
become due and payable (including as a result of a redemption in
respect of which irrevocable notice has been given to the Indenture
Trustee on or prior to the date of the deposit mentioned below) at
maturity within one year, and there has been deposited with the
Indenture Trustee in trust for the purpose of paying and discharging
the entire indebtedness on the Equipment Notes not theretofore
cancelled by the Indenture Trustee or delivered to the Indenture
Trustee for cancellation, an amount sufficient to discharge such
indebtedness, including the principal of and interest and Premium, if
any, on such Equipment Notes to the date of such deposit (in the case
of Equipment Notes which have become due and payable), or to the
maturity thereof or Redemption Date therefor, as the case may be;
(b) all other amounts then due and payable hereunder have
been paid; and
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(c) the Owner Trustee has caused the Company to deliver to
the Indenture Trustee an Officer's Certificate and an Opinion of
Counsel, each stating that all conditions precedent relating to the
satisfaction and discharge of this Indenture with respect to the
Equipment Notes contemplated by this Section 11.01 have been complied
with.
Section 11.02. Survival of Certain Obligations.
Notwithstanding the provisions of Section 11.01, the obligations of the
Indenture Trustee contained in Sections 2.01 through 2.11 and the rights,
duties, immunities and privileges hereunder of the Indenture Trustee shall
survive.
Section 11.03. Monies to Be Held in Trust. All monies
deposited with the Indenture Trustee pursuant to Section 11.01 shall be held in
trust and applied by it, in accordance with the provisions of the Equipment
Notes and this Indenture, to the payment, either directly or through any Paying
Agent as the Indenture Trustee may determine, to the Holders of all sums due
and to become due thereon for principal, interest and Premium, if any, but such
money need not be segregated from other funds except to the extent required by
law.
Section 11.04. Monies to be Returned to Owner Trustee. The
Indenture Trustee and any Paying Agent shall promptly pay or return to the
Owner Trustee upon its written request any monies held by them at any time that
are not required for the payment of the principal of and Premium, if any, and
interest on the Equipment Notes for which such monies have been deposited
pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
Section 12.01. 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 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 12.02. Sale of Equipment by Indenture Trustee is
Binding. Any sale or other conveyance of the Items of Equipment by the
Indenture Trustee made pursuant to the terms of this Indenture or the Lease
shall bind the Holders, 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 in
and to the Items of Equipment. No purchaser or other grantee shall be required
to inquire as to the
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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 12.03. 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 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 proceeding had been undertaken (but otherwise
without prejudice).
Section 12.04. 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 any
Person other than the Owner Trustee (individually and as trustee), the
Indenture Trustee, the Owner Participant (as set forth herein), Lessee and the
Holders any legal or equitable right, remedy or claim under or in respect of
this Indenture or any Equipment Note.
Section 12.05. Notices. Unless otherwise expressly specified
or permitted by the terms hereof, all notices required or permitted under the
terms and provisions hereof shall be in writing, and shall become effective
when deposited in the United States mail, with proper postage for first class
registered or certified mail prepaid, when delivered personally, or, if
promptly confirmed by mail as provided above, when dispatched by telegram or
other written telecommunication addressed
(i) if to the Owner Trustee, to:
Meridian Trust Company
35 North Sixth Street
Reading, Pennsylvania 19601
Attn: Corporate Trust Administration
Telecopy No.: (610) 655-1349
Confirmation No.: (610) 655-1348
(ii) if to the Indenture Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Telecopy No.: (302) 651-8882
Confirmation No.: (302) 651-1000
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(iii) if to the Pass Through Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Telecopy No.: (302) 651-8882
Confirmation No.: (302) 651-1000
(iv) if to Lessee, to:
Consolidated Rail Corporation
2001 Market Street
Philadelphia, Pennsylvania 19101-1425
Attn: Director-Financing
Telecopy No.: (215) 209-5346
Confirmation No.: (215) 209-5309
(v) if to the Owner Participant, to:
J. P. Morgan Interfunding Corp.
60 Wall Street
New York, New York 10260
Attn: Document Administration
Telecopy No.: (212) 648-5101
Confirmation No.: (212) 648-6022
(vi) if to any of the foregoing Persons, at such other
address as such Person shall from time to time designate by written
notice to the other parties hereto in accordance with this Section
12.05.
Notwithstanding the foregoing provisions, for purposes of
Sections 5.01, 5.02, 6.01 and 6.02, written notice shall be deemed given when
it is in fact received (by mail or otherwise) by any addressee at the
respective addresses specified above.
Notwithstanding any other provision hereof, if an installment
of Basic Rent or any payment of principal of, Premium, if any, and interest on
the Equipment Notes is not received by the Indenture Trustee when due, the
Indenture Trustee shall on the next succeeding Business Day use its reasonable
best efforts to give immediate written notice by telephone (confirmed in
writing) to the Owner Trustee, each Holder, the Owner Participant and Lessee,
which shall be effective when given.
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Section 12.06. 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
enforceability 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 12.07. 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 12.08. 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, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by any Holder shall bind the successors and assigns of such Holder.
Section 12.09. 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 12.10. 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. THIS INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK.
Section 12.11. 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 Lessee, any Holder or the Indenture
Trustee (in its individual capacity or otherwise) or the Owner 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.
<PAGE> 55
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.
WILMINGTON TRUST COMPANY,
as Indenture Trustee
By: /s/ Carolyn C. Daniels
-----------------------------------
Title: Assistant Vice President
MERIDIAN TRUST COMPANY,
not in its individual capacity except
as set forth in Section 7.03, but
solely as Owner Trustee
By:/s/ Stephen J. Kaba
-----------------------------------
Title: Vice President
<PAGE> 56
Exhibit A
Trust Indenture and Security Agreement
FORM OF EQUIPMENT NOTE
8.45% EQUIPMENT NOTE
(Secured by, among others, Lease obligations of Consolidated Rail Corporation)
Issued in Connection with
certain Railroad Rolling Stock
No. ____________________
$___________________________ ______________, ____
MERIDIAN 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, dated as of December 22, 1994, as from time to time
supplemented and amended (herein called the "Trust Agreement"), between the
Owner Trustee in its individual capacity and the institution referred to
therein as the "Owner Participant", hereby promises to pay to
______________________________ or registered assigns, the principal sum of
$_________ in lawful currency of the United States of America, in installments
payable on the dates set forth in Exhibit A hereto, commencing July 2, 1996
and thereafter to and including July 2, 2014, each such installment to be in an
amount equal to the corresponding percentage (if any) of the remaining
principal amount hereof set forth in Exhibit A hereto, together with interest
thereon on the amount of such principal amount remaining unpaid from time to
time from and including the date hereof until such principal amount shall be
due and payable, payable on July 2, 1995, and on each January 2 and July 2
thereafter to the maturity date hereof at the rate of 8.45% per annum (computed
on the basis of a 360-day year of twelve 30-day months). Interest on any
overdue principal shall be paid from the due date thereof at the rate of
interest applicable to this Equipment Note, payable on demand. No interest
shall be payable under this Equipment Note on any overdue interest or Premium,
if any, hereon.
All payments of principal and interest and Premium, if any, to be made
hereunder and under the Trust Indenture and Security Agreement, dated as of
December 22, 1994, 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 WILMINGTON
TRUST COMPANY, 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
<PAGE> 57
A-2
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 Corporate Trust 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, except for the last payment of
principal hereof, without any presentment or surrender of this Equipment Note.
Whenever the date scheduled for any payment to be made hereunder or under the
Indenture shall not be a Business Day, then such payment need not be made on
such scheduled date but may be made on the next succeeding Business Day with
the same force and effect as if made on such scheduled date and (provided such
payment is made on such next succeeding Business Day) no interest shall accrue
on the amount of such payment from and after such scheduled date to the time of
such payment on such next succeeding Business Day.
Each Holder hereof, by its acceptance of this Equipment Note, agrees that each
payment received by it hereunder shall be applied, first, to the payment of
accrued but unpaid interest on this Equipment Note then due, second, to the
payment of the unpaid principal amount of this Equipment Note then due, and
third, to the payment of any Premium then due.
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. The Items of Equipment purchased on the date hereof is being
held as part of the Indenture Estate by the Indenture Trustee as security for
this Equipment Note. Reference is hereby made to the Indenture for a statement
of 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 2.09, 3.02, 3.03 and Article IV of the Indenture. This
Equipment Note is subject to purchase by the Owner Participant as provided in
Section 5.04(b) of the Indenture. The Holder hereof, by its acceptance of this
Equipment Note, agrees to be bound by said provisions.
This Equipment Note is a registered Equipment Note and is transferable, as
provided in the Indenture, only upon surrender of this Equipment Note for
registration of transfer duly endorsed by, or accompanied by a written
statement of transfer duly executed by, the registered Holder
<PAGE> 58
A-3
hereof or his attorney duly authorized in writing. Prior to the due
presentation for registration of transfer of this Equipment Note, the Owner
Trustee and the Indenture Trustee may deem and treat the registered Holder of
this Equipment Note as the absolute owner and Holder hereof for the purpose of
receiving payment of all amounts payable with respect hereto and for all other
purposes and shall not be affected by any notice to the contrary.
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT. THIS EQUIPMENT NOTE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Indenture Trustee by manual signature, this Equipment Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be
executed by one of its authorized officers as of the date hereof.
MERIDIAN TRUST COMPANY,
not in its individual capacity, but
solely as Owner Trustee
By:
---------------------------------
<PAGE> 59
A-4
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF
AUTHENTICATION]
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY, as
Indenture Trustee
By:
------------------------------
Authorized Signatory
<PAGE> 60
A-5
[Here insert Annex A, Amortization Schedule]
<PAGE> 61
Exhibit B
Trust Indenture and Security Agreement
TRUST INDENTURE SUPPLEMENT NO.
Dated as of December 22, 1994
of
MERIDIAN TRUST COMPANY,
as Owner Trustee
- ------------------------------------------------------------------------------
Filed with the Interstate Commerce Commission pursuant to 49 U.S.C.
Section 11303 on December ___, 1994 at _____ _.M. Recordation Number ______
and deposited in the Office of the Registrar General of Canada pursuant to
Section 90 of the Railway Act of Canada on December __, 1994, at _____ _.M.
<PAGE> 62
TRUST INDENTURE SUPPLEMENT NO. ____
This INDENTURE SUPPLEMENT No. ___, dated as of December 22,
1994 (this "Indenture Supplement") of MERIDIAN TRUST COMPANY, a Pennsylvania
trust company, not in its individual capacity but solely as trustee (the "Owner
Trustee") under the Trust Agreement, dated as of December 22, 1994 (the "Trust
Agreement"), between the Owner Trustee in its individual capacity and J.P.
Morgan Interfunding Corp., a Delaware Corporation, as Owner Participant;
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Security Agreement, dated as
of December 22, 1994 (the "Indenture"), between the Owner Trustee and
Wilmington Trust Company, a Delaware banking corporation, as Indenture Trustee
(the "Indenture Trustee"), provides for the execution and delivery of
supplements thereto (individually, an "Indenture Supplement" and, collectively,
"Indenture Supplements") substantially in the form hereof which shall
particularly describe the Items of Equipment (such term and other terms defined
in the Indenture referred to below being used herein as therein defined)
included in the property covered by the Trust Agreement, by having attached
thereto a copy of the Lease Supplement covering the Items of Equipment and
shall specifically mortgage the Items of Equipment to the Indenture Trustee;
and
WHEREAS, the Indenture relates to the Items of Equipment
described in the copy of Schedule 1 to the Lease Supplement of even date
attached hereto and made a part hereof;
NOW, THEREFORE, in order to secure the prompt payment of the
principal of, and Premium, if any, and interest on each Equipment Note issued
on the date hereof and 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 in such
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 such 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, the property comprising
the Items of Equipment described in
<PAGE> 63
B-3
the copy of the Lease Supplement attached hereto and (ii) has sold, assigned,
transferred and set over, all of the right, title and interest of the Owner
Trustee under, in and to the Lease Supplement of even date herewith (excluding,
however, any rights to Excluded Payments thereunder), referred to above, to the
Indenture Trustee, its successors and assigns, in the trust created by the
Indenture for the benefit of the Holders from time to time of the Equipment
Notes.
To have and to hold all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the
benefit and security of the Holders from time to time of the Equipment Notes
issued on the date hereof 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 to the Trust Agreement and shall form a part of each, and the
Trust Agreement and the Indenture are each hereby incorporated by reference
herein and each is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
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
Items of Equipment referred to in the aforesaid Lease Supplement attached
hereto and made a part hereof has been purchased by 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> 64
B-4
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.
MERIDIAN TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By:
-----------------------------------
Name:
Title:
<PAGE> 1
CONFORMED COPY
================================================================================
CONSOLIDATED RAIL CORPORATION
and
WILMINGTON TRUST COMPANY
as Trustee
Trust Supplement No. 1
Dated as of December 22, 1994
to
PASS THROUGH TRUST AGREEMENT,
Dated as of December 22, 1994
================================================================================
<PAGE> 2
This Trust Supplement No. 1, dated as of December 22, 1994
(the "Trust Supplement"), between Consolidated Rail Corporation, a
Pennsylvania corporation (the "Company"), and Wilmington Trust company, a
Delaware banking corporation, as Trustee, to the Pass Through Trust Agreement,
dated as of December 22, 1994, between the Company and the Trustee (the "Basic
Agreement"). Undefined capitalized terms in this Trust Supplement are defined
in the Basic Agreement.
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have entered into the
Basic Agreement, which is unlimited as to the aggregate principal amount of
Certificates which may be issued thereunder;
WHEREAS, the Owner Trustee, acting on behalf of the Owner
Participant, will issue, on a nonrecourse basis, Equipment Notes, among other
things, to finance not more than 80% of the equipment cost to the Owner
Trustee of the rolling rock purchased by the Owner Trustee and leased to the
Company pursuant to the Lease;
WHEREAS, pursuant to the terms and conditions of the Basic
Agreement as supplemented by this Trust Supplement (the "Agreement"), the
Trustee shall purchase Equipment Notes issued by the Owner Trustee of the same
tenor as the Certificates issued hereunder and shall hold such Equipment Notes
in trust for the benefit of the Certificateholders;
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 mutual agreements
contained in the Agreement and other good and valuable consideration, receipt
of which is hereby acknowledged, it is agreed between the Company and the
Trustee as follows:
<PAGE> 3
2
ARTICLE I
Section 1.01. Declaration of Trust. The Trustee hereby
declares the creation of this Trust (the "1994-A Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1994-A Trust, by their respective acceptances of the Certificates, join in the
creation of this 1994-A Trust with the Trustee.
ARTICLE II
THE CERTIFICATES
Section 2.01. The Certificates. There is hereby created a
series of Certificates to be issued under the Agreement to be distinguished
and known as "Pass Through Certificates Series 1994-A (hereinafter defined as
the "Series 1994-A Certificates"). Each Certificate represents a Fractional
Undivided Interest in the 1994-A Trust created hereby. The terms and conditions
applicable to the Series 1994-A Certificates are as follows:
(a) The aggregate principal amount of the Series 1994-A
Certificates that shall be authenticated and delivered under the
Agreement (except for Series 1994-A Certificates authenticated and
delivered pursuant to Section 3.03, 3.04 and 3.05 of the Basic
Agreement) upon their initial issuance is $29,738,000.
(b) The Regular Distribution Dates with respect to any
payment of Scheduled Payments means each January 2 and July 2,
commencing July 2, 1995 with respect to the payment of interest, and
on each January 2 or July 2, or both, commencing July 2, 1996, with
respect to the payment of principal, until payment of all of the
Scheduled Payments to be made under the Equipment Notes has been made.
(c) The Scheduled Payments of principal shall be as set
forth in Exhibit C hereto.
(d) The Special Distribution Dates are as follows:
(i) when used with respect to the redemption or purchase of any
Equipment Notes, the day (which shall be a Business Day) on which
such redemption or purchase is scheduled to occur pursuant to the
terms of the Indenture and (ii) when used with respect to any Special
Payment other than as described in clause (i), 20 days after the last
date on which the Trustee must give notice pursuant to Section
4.02(c) of the Basic Agreement (or the next Business Day after such
20th day if such date is not a Business Day).
(e) The Series 1994-A Certificates shall be Book-Entry
Certificates and shall be in the form attached hereto as Exhibit A.
The Series 1994-A Certificates
<PAGE> 4
3
shall be subject to the conditions set forth in the Letter of
Representations between the Company, the Trustee and The Depository
Trust Company, the initial Clearing Agency, attached hereto as Exhibit
B.
(f) The following amounts of the proceeds of the Series
1994-A Certificates shall be used to purchase the Equipment Notes
specified below:
<TABLE>
<CAPTION>
Original
Principal
Equipment Note Amount Maturity
-------------- ------ --------
<S> <C> <C>
No. 1 $28,564,000 July 2, 2014
No. 2 $ 1,174,000 July 2, 2010
</TABLE>
(g) The Owner Trustee, acting on behalf of the Owner
Participant, will issue on a nonrecourse basis the Equipment Notes,
the proceeds of which shall be used, among other things, to finance
the debt portion of the equipment cost of the following items of
rolling stock:
Railcars
795 New Steel Open Top Quad Hoppers
57 Rebuilt 60-foot Equipped Boxcars
(h) The related Note Documents and related Note Purchase
Agreements are as follows:
(i) the Indenture, dated as of December 22, 1994,
between Meridian Trust Company, as Ownere Trustee (the "Owner
Trustee"), and Wilmington Trust Company, as Indenture Trustee
(the "Indenture Trustee");
(ii) the Lease, dated as of December 22, 1994, between
the Owner Trustee and the Company;
(iii) the Participation Agreement, dated as of December
22, 1994, among the Owner Trustee, the Company, the Indenture
Trustee, the Trustee, and J.P. Morgan Interfunding Corp. (the
"Owner Participant"); and
(iv) the Trust Agreement, dated as of December 22, 1994,
between the Owner Trustee and the Owner Participant.
<PAGE> 5
4
ARTICLE III
THE TRUSTEE
Section 3.01. The Trustee. 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.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Final Termination Date. The respective
obligations and responsibilities of the Company and the Trustee created hereby
and the Trust created hereby shall terminate upon the distribution to all
Certificateholders and the Trustee 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; provided,
however, that in no event shall the Trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
of George Bush, former President of the United States of America, living on
the date of this Trust Supplement.
Section 4.02. 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 4.03. Governing Law. THIS TRUST SUPPLEMENT AND THE
SERIES 1994-A CERTIFICATES HAVE BEEN DELIVERED IN THE STATE OF NEW YORK AND
THE CERTIFICATES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 4.04 Counterparts. For the purpose of facilitating
the execution of this Trust Supplement and for other purposes, this Trust
Supplement may be executed simultaneously in any number of counterparts, each
of which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
<PAGE> 6
5
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.
CONSOLIDATED RAIL CORPORATION
By: /s/ Thomas J. McGraw
-----------------------------------------
Title: Vice President
WILMINGTON TRUST COMPANY, as trustee
By: /s/ Emmett R Harmon
-----------------------------------------
Title: Vice President
<PAGE> 7
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
CONSOLIDATED RAIL CORPORATION 1994-A PASS THROUGH TRUST
Pass Through
Certificate, Series 1994-A
Final Distribution Date: July 2, 2014
evidencing a fractional undivided interest in a trust, the property of
which includes certain equipment notes each secured by rolling stock
leased to Consolidated Rail Corporation
<TABLE>
<S> <C>
Certificate
No. ______ $_________ Fractional Undivided Interest representing ______ of the Trust
per $1,000 face amount
</TABLE>
THIS CERTIFIES THAT ______________________, for value
received, is the registered owner of a $___________ (___________ dollars)
Fractional Undivided Interest in the Consolidated Rail Corporation 1994-A Pass
Through Trust (the "Trust") created by Wilmington Trust Company, as trustee
(the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of
December 22, 1994 (the "Basic Agreement"), as supplemented by Trust Supplement
No. 1 thereto, dated as of December 22, 1994 (the "Trust Supplement," and
together with the Basic Agreement, the "Agreement"), between the Trustee and
Consolidated Rail Corporation, a corporation incorporated under the laws of the
Commonwealth of Pennsylvania (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 "Pass Through Certificates, Series 1994-A" (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
Certificateholder of this Certificate by virtue of the acceptance hereof
assents
<PAGE> 8
2
and by which such Certificateholder is bound. The property of the Trust (the
"Trust Property") includes certain Equipment Notes (the "Equipment Notes").
Each issue of Equipment Notes is secured by a security interest in 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
Basic 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 2 and July 2 (a "Regular Distribution Date"), commencing July 2, 1995
with respect to the payment of interest, and on each January 2 or July 2, or
both, commencing July 2, 1996, with respect to the payment of principal, to the
Person in whose name this Certificate is registered at the close of business on
the 15th day preceding the Regular Distribution Date, an amount in respect of
the Scheduled Payments on the Equipment Notes due on such Regular Distribution
Date, the receipt of which has been confirmed by the 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 15th day preceding the Special Distribution
Date, an amount in respect of such Special Payments on the Equipment Notes, the
receipt of which has been confirmed by the 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 is not a Business Day, distribution shall be made on the
immediately following Business Day with the same force and effect as if made on
such Regular Distribution Date and no interest shall accrue during the
intervening period. The Special Distribution Date shall be the Business Day as
provided in the Trust Supplement. The Trustee shall mail notice of each
Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee
by check mailed to the Person entitled thereto, 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.
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE> 9
3
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.
CONSOLIDATED RAIL CORPORATION
1994-A PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY, as
Trustee
By:
--------------------------------------
Title:
<PAGE> 10
4
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
WILMINGTON TRUST COMPANY, as Trustee
By:
---------------------------------------
Authorized Officer
<PAGE> 11
5
[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 Certificateholder
of this Certificate, by its acceptance hereof, agrees that it will look solely
to the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the 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
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust. Any
such consent by the Certificateholder of this Certificate shall be conclusive
and binding on such Certificateholder and upon all future Certificateholders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Certificateholders
of any of the Certificates.
As provided in the 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
Certificateholder hereof or such Certificateholder'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 minimum denominations of $1,000 Fractional Undivided
Interest and integral multiples
<PAGE> 12
6
thereof. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of
transfer or exchange, but the 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.
<PAGE> 13
EXHIBIT B
FORM OF LETTER OF REPRESENTATIONS
(Intentionally Omitted)
<PAGE> 14
EXHIBIT C
<TABLE>
<CAPTION>
Original Final
Principal Distribution
Series Amount Date Interest Rate
- ------ ------ ------------- -------------
<S> <C> <C> <C>
1994-A $29,738,000 July 2, 2014 8.45%
</TABLE>
<TABLE>
<CAPTION>
Scheduled
---------
Payments of
-----------
Regular Distribution Date Principal Pool Factor
------------------------- --------- -----------
<S> <C> <C>
July 2, 1996 $ 604,919.00 0.9796584
July 2, 1997 656,033.00 0.9575980
July 2, 1998 711,467.00 0.9336734
July 2, 1999 771,586.00 0.9077273
July 2, 2000 836,785.00 0.8795887
July 2, 2001 907,493.00 0.8490725
July 2, 2002 974,024.00 0.8163190
July 2, 2003 649,159.00 0.7944897
July 2, 2004 678,183.00 0.7716844
January 2, 2005 1,235,456.00 0.7301397
July 2, 2005 67,312.00 0.7278762
January 2, 2006 1,150,463.00 0.6891896
July 2, 2006 74,926.00 0.6866701
January 2, 2007 1,209,307.00 0.6460047
July 2, 2007 116,166.00 0.6420984
January 2, 2008 1,883,873.00 0.5787493
July 2, 2008 144,523.00 0.5738895
January 2, 2009 1,798,861.00 0.5133992
July 2, 2009 157,273.00 0.5081105
January 2, 2010 2,474,526.00 0.4248996
</TABLE>
<PAGE> 15
9
<TABLE>
<S> <C> <C>
July 2, 2010 49,859.00 0.4232230
January 2, 2011 2,692,847.00 0.3326706
January 2, 2012 2,930,431.00 0.2341290
January 2, 2013 3,348,508.00 0.1215287
January 2, 2014 3,337,191.00 0.0093089
July 2, 2014 276,829.00 0.0000000
</TABLE>
<PAGE> 16
Appendix A
Consolidated Rail Corporation
Conrail 1994-A Pass Through Trust
Appendix A to
Participation Agreement, Lease Agreement,
Indenture and Trust Agreement
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"After-Tax Basis", when referring to any amount, means an amount
which, after deduction of all Federal, state, local and foreign income taxes
that are required to be paid by the recipient in respect of the receipt or
accrual of such amount, is equal to the payment required to be made under any
Operative Document on an After-Tax Basis, calculated using the assumption that
the recipient is fully taxable for Federal income tax purposes at the maximum
rate of Federal income taxation applicable to corporations at the time such
amount is received or properly accrued and, in the case of the Owner
Participant, is fully taxable for state and local tax purposes at a rate equal
to the maximum marginal effective rate of state and local tax applicable to the
Owner Participant's business during the respective year.
"Agent" means any Paying Agent or Registrar.
"Applicable Law" means all applicable laws (foreign or domestic),
treaties, judgments, decrees, injunctions, writs and orders of any court,
governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any governmental body, instrumentality, agency or
authority, including, without limitation, all rules and regulations of the
United States Department of Transportation, the ICC, the Federal Railway
Administration and the Association of American Railroads and successor
entities.
"Appraisal" means the appraisal set forth in Section 4(a)(ii)(E) of
the Participation Agreement.
"Appraiser" means a Person engaged in the business of making
appraisals.
<PAGE> 17
2
"Assumption Date" has the meaning set forth in Article X of the
Indenture.
"Average Life Date" means, with respect to the redemption of any
Equipment Note, the date that follows the applicable Redemption Date by a
period equal to the Remaining Weighted Average Life Date of such Equipment
Note.
"Babcock" means Babcock & Brown, Inc.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended.
"Basic Lease Commencement Date" means, with respect to any Item of
Equipment, July 2, 1995.
"Basic Lease Term" means the period from the Basic Lease Commencement
Date to the Basic Lease Termination Date.
"Basic Lease Termination Date" means (i) with respect to Category I
Equipment, July 2, 2017 and (ii) with respect to Category II Equipment, July 2,
2013.
"Basic Rent" for any Item of Equipment means the rent payable for such
Item of Equipment pursuant to the second sentence of Section 3(b) of the Lease,
as the same may be adjusted pursuant to Section 3(e) of the Lease, or, during
any Renewal Term, the rent payable for such Item of Equipment pursuant to
Section 19 of the Lease.
"Bill of Sale" means a warranty bill of sale for any Item of Equipment.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banking institutions in New York City or Wilmington,
Delaware, or Philadelphia or Reading, Pennsylvania, are authorized or required
by law, regulation or executive order to be closed.
"Category of Equipment" means the following: Category I comprises 795
new steel open top quad hopper cars and Category II comprises 57 rebuilt
60-foot equipped boxcars.
"Certificate of Acceptance" means a Certificate of Acceptance,
substantially in the form of Exhibit A to the Lease, to be entered into between
Lessor and Lessee for the purpose of evidencing the lease of an Item of
Equipment under and pursuant to the terms of the Lease and to be dated the
Delivery Date of such Item of Equipment.
"Certificate Rate" means 8.45%.
<PAGE> 18
3
"Certificates" has the meaning set forth in Section 1.01 of the Pass
Through Trust Agreement.
"Claims" means any and all costs, liabilities (including strict or
absolute liability without fault in tort, by contract or otherwise),
obligations, losses, damages, penalties, actions, suits or claims of any kind
or character which may be imposed on, incurred by, suffered by, or asserted
against a Person and shall include all reasonable out-of-pocket costs,
disbursements and expenses (including reasonable legal fees and expenses) paid
or incurred by such Person in connection therewith.
"Class I Railroad" means a Class I carrier within the meaning of 49
C.F.R. Part 1201 or any successor provision, and which in any case shall be a
"railroad" as defined in 11 U.S.C. Section 1101.
"Closing Date" means the date of the original issuance and sale of the
Equipment Notes.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute.
"Commitment", with respect to any Item of Equipment, means (a) with
respect to Category I, (i) 71.147643% of the Cost of such Item of Equipment, in
the case of the Owner Participant, and (ii) 28.852357% of the Cost of such Item
of Equipment, in the case of the Indenture Trustee, and (b) with respect to
Category II, (i) 71.022384% of the Cost of such Item of Equipment, in the case
of the Owner Participant, and (ii) 28.977616% of the Cost of such Item of
Equipment, in the case of the Indenture Trustee.
"Company" means Consolidated Rail Corporation, a Pennsylvania
corporation, and its permitted successors and assigns, or any other obligor
with respect to the Equipment Notes.
"Co-Registrar" has the meaning set forth in Section 2.10 of the
Indenture.
"Cost", with respect to any Railcar or Item of Equipment, as the case
may be, means the amount hereinafter set forth for the Category in which such
Railcar or Item of Equipment is included in Schedule I to Exhibit A to the
Lease.
"Defaulted Interest" has the meaning set forth in Section 2.03(c) of
the Indenture.
"Deficiency Amount" means the aggregate amount of interest due and
payable on the Equipment Notes on July 2, 1995 minus the Interim Rent.
<PAGE> 19
4
"Delivery Date" for any Item of Equipment means the Business Day on
which such Item of Equipment is delivered to Lessor and leased to Lessee under
the Lease, all as evidenced by the execution and delivery of a Certificate of
Acceptance.
"Deposited Cash" means the aggregate of (i) cash deposited with the
Indenture Trustee as provided by Section 3.01 of the Indenture and (ii) when
required or indicated by the context, any Permitted Investment purchased by the
use of such cash pursuant to Section 7.04(b) of the Indenture; but solely with
respect to the Equipment Notes.
"EBO Date" means the dates set forth on Exhibit E to the Lease.
"EBO Option" means Lessee's purchase option set forth in the first
sentence of Section 20 of the Lease.
"EBO Payment Amounts" means the amounts payable on each EBO Payment
Date.
"EBO Payment Dates" means the dates set forth on Exhibit E to the
Lease on which the Lessee will make installment payments on the EBO Value.
"EBO Value" means the total amount payable by Lessee in connection
with its exercise of the EBO Option specified in Exhibit E of the Lease.
"Economic Default" means an event which but for the giving of notice
or the lapse of time or both would constitute an Economic Event of Default.
"Economic Event of Default" means an Event of Default pursuant to
paragraph (a) of Section 14 of the Lease.
"Equipment Notes" has the meaning set forth in Section 2.01 of the
Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means, with respect to Lessee, the Owner Participant
or the Owner Trustee, as the case may be, any (i) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as such Person or (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Code) with such Person.
<PAGE> 20
5
"ERISA Plan" means any employee benefit plan (within the meaning of
Section 3(3) of ERISA and including any multiemployer plan within the meaning
of Section 3(37)(A) of ERISA) which has been established or maintained, or to
which contributions are or have been made, by Lessee or an ERISA Affiliate.
"Event of Acceleration" has the meaning set forth in Section 5.01 of
the Indenture.
"Event of Default" has the meaning set forth in Section 14 of the
Lease.
"Event of Loss", with respect to any Item of Equipment, means any of
the following events with respect to such Item of Equipment: (i) such Item of
Equipment becomes worn out or is destroyed, irreparably damaged or
contaminated, as determined by Lessee, (ii) such Item of Equipment is taken,
condemned or requisitioned for title or use by any governmental authority,
(iii) such Item of Equipment is lost, stolen or permanently returned to the
builder or (iv) solely with respect to any rebuilt Item of Equipment, such Item
of Equipment has not been certified as to rebuilt status prior to the end of
the Term with respect to such Item of Equipment or such Item of Equipment is
required to be taken out of service as a result of a lack of certification as
to rebuilt status. The date of such Event of Loss shall be the date of such
wearing out, destruction, damage, taking, condemnation, requisition, loss,
theft or return.
"Excluded Payments" means (i) any right, title or interest of the
Owner Trustee in its individual capacity or trust capacity or the Owner
Participant and their respective Affiliates, directors, officers, employees,
agents, servants, successors and permitted assigns (collectively, the "Related
Indemnified Parties") to any payment which by the terms of Section 15 or 16 of
the Participation Agreement, Section 5.03 or 7.01 of the Trust Agreement or any
section of the Tax Indemnity Agreement or any corresponding payment under
Section 3(c) of the Lease shall be payable to the Owner Trustee in its
individual capacity or trust capacity or to the Owner Participant (or to the
relevant Related Indemnified Party), as the case may be, (ii) any insurance
proceeds payable under insurance maintained by the Owner Trustee in its
individual capacity or trust capacity or the Owner Participant pursuant to the
penultimate sentence of Section 11 of the Lease, (iii) any insurance proceeds
payable to the Owner Trustee in its individual capacity or trust capacity or to
the Owner Participant or to any related affiliated additional insureds or loss
payees (collectively, the "Related Insured Parties"), under any liability
insurance maintained by Lessee pursuant to Section 11 of the Lease or by any
other Person, (iv) any rights of the Owner Participant or the Owner Trustee in
its individual or trust capacity (or of the Related Indemnified Parties or
Related Insured Parties) to demand, collect, sue for, or otherwise receive and
enforce payment of the foregoing amounts, (v) fees payable to the Owner Trustee
pursuant to Section 13 of the Participation Agreement, (vi) any amounts payable
to the Owner Participant upon the transfer of any of its right, title or
interest in the Items of Equipment, the Trust Agreement, the Owner Trust Estate
or the Tax Indemnity Agreement and (vii) the respective
<PAGE> 21
6
rights of the Owner Trustee in its individual capacity or the Owner Participant
(or of the Related Indemnified Parties or Related Insured Parties) to the
proceeds of the foregoing.
The "fair market rental value" of an Item of Equipment means an amount
equal to the rental for such Item of Equipment, which would be obtained in an
arm's length transaction between an informed and willing lessee and an informed
and willing lessor, neither being under any compulsion to lease. Except as
otherwise expressly provided in the Lease, the fair market rental value of any
Item of Equipment shall be determined on the assumption that such Item is in
the condition required by the Lease and Lien free.
The "fair market sales value" of an Item of Equipment means an amount
equal to the value which would be obtained in an arm's length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller under no compulsion to sell such Item of Equipment.
Except as otherwise expressly provided in the Lease, the fair market sales
value of any Item of Equipment shall be determined on the assumption that such
Item is in the condition required by the Lease and Lien free.
"Free Storage Period" has the meaning set forth in Section 5(c) of the
Lease.
"Funding Date" for any Item of Equipment means the Business Day which
is the Delivery Date for such Item of Equipment.
"Holder" means a Person in whose name a Equipment Note is registered
on the Register including, so long as the Trust holds any Equipment Notes, the
Pass Through Trustee.
"ICC" means the Interstate Commerce Commission and any agency or
instrumentality of the United States government succeeding to its functions.
"Indemnified Person" has the meaning set forth in Section 16(a) of the
Participation Agreement.
"Indemnitee" has the meaning set forth in Section 15(a) of the
Participation Agreement.
"Indenture" means the Indenture dated as of December 22, 1994 between
the Indenture Trustee and the Company, as the same may be supplemented, amended
or otherwise modified from time to time in accordance with the applicable
provisions thereof and of the Participation Agreement.
"Indenture Default" means any event which is or after notice or
passage of time, or both, would be an Event of Acceleration.
<PAGE> 22
7
"Indenture Estate" has the meaning set forth in the Granting Clause of
the Indenture.
"Indenture Supplement" shall mean each Trust Indenture Supplement,
substantially in the form of Exhibit B to the Indenture, as such Indenture
Supplement may be amended or otherwise modified from time to time.
"Indenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee under the
Indenture, and each other Person which may from time to time be acting as
Indenture Trustee in accordance with the provisions of the Indenture.
"Independent Appraisal" means an appraisal by a single appraiser
mutually agreed to by Lessor and Lessee, or if the Lessor and Lessee cannot
agree on such appraisal, an appraisal mutually agreed to by two nationally
recognized independent appraisers, one of which appraisers shall be chosen by
Lessor and one by Lessee, or, if such two appraisers cannot agree, an appraisal
arrived at by a third nationally recognized independent appraiser chosen by the
mutual consent of such two appraisers; provided that, if either party shall
fail to appoint an appraiser within 15 days after a written request to do so by
the other party, or if such two appraisers cannot agree and fail to appoint a
third appraiser within 20 days after the date of the appointment of the second
of such appraisers, then either party may apply to the American Arbitration
Association to make such appointment. In the event such third independent
appraiser shall be chosen to provide such appraisal, unless the parties agree
otherwise, such appraisal shall be required to be made within 20 days of such
appointment. Fees and expenses relating to an Independent Appraisal shall be
payable as follows:
(i) if the Independent Appraisal is to be used in
connection with the exercise of remedies upon the occurrence of an
Event of Default under the Lease or in connection with Section 5(f) of
the Lease, all such fees and expenses shall be paid by Lessee;
(ii) if the Independent Appraisal is to be used in
connection with the possible exercise of a renewal option pursuant to
Section 19 of the Lease or a purchase option pursuant to Section 20 of
the Lease, then each party shall bear its respective fees and
expenses; provided (A) if an appraisal shall, by agreement of the
parties, be conducted by one appraiser only, Lessee shall bear the
fees and expenses of such appraiser, or (B) if an appraisal under the
Independent Appraisal shall be conducted by more than one appraiser,
Lessee shall bear the fees and expenses of the appraiser appointed by
Lessee and of the appraiser appointed jointly by the appraiser of
Lessee and the appraiser of Lessor; and
(iii) in all other instances, each party shall bear (A) its
respective expenses with respect to any Independent Appraisal
(including the fees and expenses of any
<PAGE> 23
8
appraiser appointed by such party) and (B) one-half of the fees and
expenses of the appraisers participating in any Independent Appraisal.
"Independent Investment Banker" means an independent investment
banking institution of national standing appointed by Lessee (who shall be
reasonably acceptable to the Owner Participant) on behalf of the Owner Trustee;
provided that if the Indenture Trustee shall not have received written notice
of such an appointment at least 10 days prior to the applicable Redemption Date
or if an Event of Default shall have occurred and be continuing, "Independent
Investment Banker" shall mean such an institution appointed by the Indenture
Trustee. The fees and expenses of such Independent Investment Banker shall be
paid by Lessee.
"Interest Payment Date" means each January 2 and July 2, commencing
July 2, 1995, so long as any Equipment Note remains Outstanding.
"Interim Lease Term", with respect to any Item of Equipment, means the
period from the Delivery Date of such Item of Equipment to the Basic Lease
Commencement Date.
"Interim Rent" means the amount shown due and payable on July 2, 1995
in Part I of Exhibit C to the Lease.
"Investment Proceeds" means the net profit, income, interest, dividend
or gain actually realized from the making of Permitted Investments of any
Deposited Cash.
"Item of Equipment" means each Railcar, the title to which is
transferred to the Indenture Trustee, and which is leased to Lessee under the
Lease (as evidenced by a Certificate of Acceptance), in accordance with Section
3 of the Participation Agreement.
"Lease" means the Lease Agreement, dated as of December 22, 1994,
between Lessor and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the applicable
provisions thereof and of the Trust Agreement and the Indenture; and each
reference to such Lease Agreement shall, unless the context otherwise requires,
include a reference to each Lease Supplement then in effect.
"Lease Intermediary Firm" means a firm nationally recognized as having
expertise in the structuring and analysis of the leveraged lease financing of
transportation equipment who shall be mutually acceptable to the Owner
Participant and Lessee and who shall have executed a confidentiality agreement
in form and substance satisfactory to the Owner Participant and Lessee.
<PAGE> 24
9
"Lease Supplement" shall mean each Lease Supplement, substantially in
the form of Exhibit B to the Lease, entered into or to be entered into between
Lessor and Lessee for the purposes of leasing one or more Items of Equipment,
as such Lease Supplement may be amended or otherwise modified from time to
time. Each Lease Supplement shall be deemed to incorporate all of the terms
and conditions of the Lease.
"Lessee" means Consolidated Rail Corporation, a Pennsylvania
corporation, and its permitted successors and assigns.
"Lessor" means the Owner Trustee and its permitted successors and
assigns.
"Lessor's Lien" means any Lien arising as a result of (a) claims
against or affecting Lessor (in its individual capacity or as Owner Trustee) or
the Owner Participant, in either case not related to the transactions
contemplated by the Lease or the Participation Agreement, or (b) acts or
omissions of Lessor (in its individual capacity or as Owner Trustee) or the
Owner Participant, in either case not related to the transactions contemplated
by the Lease or the Participation Agreement or not permitted under the Lease or
the Participation Agreement.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
exercise of rights, security interest or claim.
"Loss Payment Date" has the meaning set forth in Section 10(a) of the
Lease.
"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 principal unpaid 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 an
Affiliate of the Owner Participant.
"Maximum Renewal Period" means the period of not less than one (1)
year determined by Independent Appraisal performed not less than 360 days prior
to the Basic Lease Termination Date such that (a) the total of the Interim
Lease Term, the Basic Lease Term and such period does not exceed eighty percent
(80%) of the then re-estimated useful life of the applicable Items of Equipment
and (b) the re-estimated value of the applicable Items of Equipment as at the
end of such period, determined without regard to inflation or deflation, shall
not be less than twenty percent (20%) of the aggregate Cost of such Items of
Equipment.
"Net Economic Return" means in respect of any Item of Equipment the
Owner Participant's anticipated nominal after-tax yield utilizing the multiple
investment sinking fund method of analysis and aggregate after-tax cash flow,
each computed on the basis of the same methodology and assumptions as were
utilized by the Owner Participant in determining the
<PAGE> 25
10
amounts payable as Basic Rent, Stipulated Loss Value, EBO Value, Termination
Value, leverage and debt amortization schedule pursuant to Schedule I of the
Participation Agreement.
"Notice of Acceleration" means a notice described in Section 5.02 of
Indenture.
"Notice Period" has the meaning set forth in Section 14(a)(iii) of the
Participation Agreement.
"Officer's Certificate", with respect to any company, means a
certificate signed by the Chairman, the Vice Chairman, the President, any Vice
President, any Assistant Vice President or the Treasurer of such company.
"Operative Document" means each of the Lease, the Lease Supplement,
any Certificate of Acceptance, the Participation Agreement, the Trust
Agreement, the Indenture, the Indenture Supplement, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, the Railcar Purchase Agreement,
the Equipment Notes, the Certificates, the Tax Indemnity Agreement and the
Title Documents.
"Opinion of Counsel" means a written opinion of legal counsel who, in
the case of counsel for Lessee, may be the senior attorney employed by Lessee
or other in-house or outside legal counsel designated by Lessee and who shall
be satisfactory to the Indenture Trustee and the Owner Participant, or, in the
case of legal counsel for the Owner Trustee, may be Prokop & Prokop, or other
legal counsel designated by the Owner Trustee and satisfactory to the Indenture
Trustee and the Owner Participant.
"Outstanding", when used with respect to Equipment Notes, means, as of
the date of determination, all Equipment Notes theretofore authenticated and
delivered under the Indenture, other than:
(a) Equipment Notes theretofore cancelled by the
Indenture Trustee or delivered to the Indenture Trustee for
cancellation pursuant to Section 2.08 of the Indenture or otherwise;
(b) Equipment Notes for the payment or redemption of
which money in the necessary amount has been theretofore deposited
with the Indenture Trustee in trust for the Holders of such Equipment
Notes; provided that, if such Equipment Notes are to be redeemed,
notice of such redemption has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(c) Equipment Notes in exchange for or in lieu of which
other Equipment Notes have been authenticated and delivered pursuant
to the Indenture;
<PAGE> 26
11
provided, however, that in determining whether the Holders of the requisite
principal amount of Equipment Notes Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver under any Operative
Document, Equipment Notes owned by Lessee or any Affiliate of Lessee shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Equipment Notes which the Indenture Trustee knows to be so owned shall be
disregarded. Equipment Notes so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Indenture Trustee that the pledgee has the right so to act with respect
to such Equipment Notes and that the pledgee is not Lessee or any obligor upon
the Equipment Notes or any Affiliate of Lessee or such obligor.
"Owner Participant" means J.P. Morgan Interfunding Corp., a Delaware
corporation, and its permitted successors and assigns.
"Owner Trust Estate" means all estate, right, title and interest of
the Owner Trustee in and to the Items of Equipment, the Lease, including,
without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent,
insurance proceeds (other than any insurance proceeds payable under liability
policies to or for the benefit of the Owner Trustee, for its own account or in
its individual capacity, the Owner Participant, or the Indenture Trustee) and
requisition, condemnation, indemnity or other payments of any kind for or with
respect to the Items of Equipment, including, without limitation, any and all
payments and proceeds received by the Owner Trustee after the termination of
the Lease with respect to any Item of Equipment resulting from the sale, lease
or other disposition thereof, subject, however, to the provisions of and the
lien created under the Indenture. Notwithstanding the foregoing, "Owner Trust
Estate" shall not include any Excluded Payments.
"Owner Trustee" means Meridian Trust Company, a Pennsylvania trust
company, not in its individual capacity, but solely as trustee under the Trust
Agreement, and each other Person which may from time to time be acting as Owner
Trustee in accordance with the provisions of the Trust Agreement.
"Owner Trustee Request" means a request by the Owner Trustee setting
forth the subject matter of the request.
"Participation Agreement" means the Participation Agreement, dated as
of December 22, 1994, among Lessee, the Indenture Trustee (in its individual
capacity as expressly provided therein and as trustee), the Pass Through
Trustee (in its individual capacity as expressly provided therein and as
trustee), the Owner Participant and the Owner Trustee (in its individual
capacity as expressly provided therein and as trustee), as such Participation
Agreement may from time to time be supplemented, amended or otherwise modified
in accordance with the applicable terms thereof and of the Indenture.
<PAGE> 27
12
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature, which may from
time to time be incorporated or installed in or attached to an Item of
Equipment.
"Pass Through Trust Agreement" means the Pass Through Trust Agreement,
dated as of December 22, 1994, between Lessee and the Pass Through Trustee, as
the same may be supplemented, amended or otherwise modified from time to time
in accordance with the applicable provisions thereof and of the Participation
Agreement.
"Pass Through Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as trustee under
the Pass Through Trust Agreement, and each other Person which may from time to
time be acting as Pass Through Trustee in accordance with the provisions of the
Indenture.
"Pass Through Trust Supplement" means Pass Through Trust Agreement
Supplement No. 1, dated as of December 22, 1994, between Lessee and the Pass
Through Trustee, as the same may be supplemented, amended or otherwise modified
from time to time in accordance with the applicable provisions thereof and of
the Participation Agreement.
"Paying Agent" has the meaning set forth in Section 2.11 of the
Indenture.
"Permitted Investment" means (a) direct obligations of the United
States of America and agencies thereof for which the full faith and credit of
the United States of America is pledged, (b) obligations fully guaranteed by
the United States of America, (c) 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
Lessor in its individual capacity or the Indenture Trustee in its individual
capacity if such conditions are met), (d) commercial paper of companies having
a rating assigned to such commercial paper by Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's") (or, if neither such
organization shall rate such commercial paper at any time, by any nationally
recognized rating organization in the United States of America) equal to the
highest rating assigned by such organization, and (e) repurchase agreements
with any financial institutions having combined capital and surplus and
retained earnings of at least $750,000,000 which specify any of the obligations
described in clauses (a) through (d) above as collateral acceptable thereunder
(including Lessor in its individual capacity and the Indenture Trustee in its
individual capacity if such conditions are met); provided that no investment
shall be eligible as and included within the definition of the term "Permitted
Investment" unless the final maturity or date of return of such investment is
equal to or less than one year from the date of purchase thereof.
<PAGE> 28
13
"Permitted Liens" means Liens referred to in clauses (i) through (vi)
of Section 6 of the Lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Plan" means any employee benefit plan (within the meaning of Section
3(3) of ERISA and including any multiemployer plan within the meaning of
Section 3(37)(A) of ERISA) which has been established or maintained, or to
which contributions are or have been made, by Lessee or an ERISA Affiliate.
"Potential Default" means an event which but for the giving of notice
or the lapse of time or both would constitute an Event of Default.
"Premium" means, with respect to any Equipment Note to be redeemed in
whole or in part on a particular Redemption Date, the amount, if any, by which
the sum of the principal amount or portion thereof being redeemed plus the
accrued but unpaid interest thereon to such Redemption Date shall be exceeded
by the sum of the present values of all remaining scheduled payments of such
principal amount or portion thereof and interest thereon (excluding interest
accrued from the immediately preceding Interest Payment Date to such Redemption
Date) to the stated maturity of such Equipment Note computed on a semiannual
basis by discounting such payments in accordance with generally accepted
financial practices assuming a 360-day year consisting of twelve 30-day months
at a discount rate equal to Treasury Rate, all as determined by the Independent
Investment Banker.
"Premium Termination Date" means April 8, 2008.
"Prime Rate" shall mean the rate of interest publicly announced from
time to time by Morgan Guaranty Trust of New York as its "prime rate".
"Proposed Equipment Cost" means $41,800,500, being the aggregate of
the Cost of the 852 Items of Equipment proposed to be leased by Lessee pursuant
to the Lease as provided for in the Participation Agreement.
"Prospectus" means the final Prospectus, dated December 15, 1994,
pursuant to which the Pass Through Certificates were offered to the public,
together with all documents incorporated by reference therein.
"Railcar" means each railcar built or rebuilt by Lessee and described
on Schedule A to the Railcar Purchase Agreement.
<PAGE> 29
14
"Railcar Purchase Agreement" means the Railcar Purchase Agreement,
dated as of December 22, 1994, between Lessee and the Owner Trustee relating to
the Railcars.
"Record Date" for the interest payable on any Interest Payment Date,
means (a) in the case of an Interest Payment Date which is January 2, the
preceding December 15, (b) in the case of an Interest Payment Date which is
July 2, the preceding June 15 and (c) in the case of the Special Distribution
Date, the 15th day (whether or not a Business Day) preceding such Special
Distribution Date.
"Redelivery Location" has the meaning set forth in Section 5(b) of the
Lease.
"Redemption Date" means (a) in the case of a redemption of Equipment
Notes pursuant to Section 4.02(A) of the Indenture upon an Event of Loss, the
Loss Payment Date; (b) in the case of a redemption of Equipment Notes pursuant
to Section 4.02(B) of the Indenture upon termination of the Lease with respect
to any Item of Equipment pursuant to Section 9(a) thereof, the Termination
Date; (c) in the case of a redemption of Equipment Notes pursuant to Section
4.02(C) of the Indenture, any Rent Payment Date which Lessee shall specify by
not less than 30 days' prior written notice to the Indenture Trustee and the
Owner Participant; (d) in the case of a redemption of Equipment Notes pursuant
to Section 4.02(D) of the Indenture, the 30th day after the Indenture Trustee
shall have received from or on behalf of the Owner Trustee a notice of
redemption pursuant to Section 5.04(b) of the Indenture; (e) in the case of a
redemption of Equipment Notes pursuant to Section 4.02(E) of the Indenture upon
purchase of an Item of Equipment pursuant to the first sentence of Section 20
of the Lease, the Rent Payment Date on which such purchase occurs; and (f) in
the case of a redemption of Equipment Notes pursuant to Section 4.02(F) of the
Indenture, the Rent Payment Date specified in the notice to redeem given by
Lessee under Section 8(a) of the Lease.
"Refinancing Date" has the meaning set forth in Section 19 of the
Participation Agreement.
"Register" has the meaning set forth in Section 2.11 of the Indenture.
"Registrar" has the meaning set forth in Section 2.11 of the Indenture.
"Reimbursement Amount" has the meaning set forth in Section 26 of the
Lease.
"Remaining Weighted Average Life" means with respect to the redemption
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 required principal payment, including payment at final
maturity, in respect thereof by (ii) the number of days from and including the
applicable Redemption Date to but excluding the scheduled
<PAGE> 30
15
payment date of such principal payment by (B) the unpaid principal amount of
such Equipment Note.
"Renewal Term", with respect to any Item of Equipment, means any
period for which the Lease of such Item of Equipment is extended pursuant to
Section 19 of the Lease.
"Rent" means Interim Rent, Basic Rent and Supplemental Rent.
"Rent Payment Date" means each January 2 and July 2 during the Term,
commencing on the Basic Lease Commencement Date.
"Responsible Officer" means (a) with respect to the Owner Trustee, any
officer in the Corporate Trust Administration Department of the Owner Trustee,
(b) with respect to the Indenture Trustee, any officer in the Corporate Trust
Administration Department of the Indenture Trustee, and (c) with respect to
Lessee, the Chief Financial Officer or Treasurer of Lessee or any other
delegate of the Chairman and Chief Executive Officer of Lessee working under
the direct supervision of such Chief Financial Officer or Treasurer whose
responsibilities include the administration of the transactions and agreements
contemplated by the Participation Agreement.
"Return Date" has the meaning set forth in Section 5(b) of the Lease.
"Return Notice" has the meaning set forth in Section 5(b) of the Lease.
"SEC" means the Securities and Exchange Commission.
"Special Distribution Date" means, with respect to any redemption
pursuant to Section 4.02(D) of the Indenture, the Redemption Date for such
redemption.
"Stipulated Loss Value", with respect to any Item of Equipment, means
the amount determined by multiplying the Cost of such Item of Equipment by the
percentage set forth in Exhibit D to the Lease opposite the Loss Payment Date
on which Stipulated Loss Value for such Item of Equipment is to be paid;
provided, however, that during any Renewal Term applicable to such Item of
Equipment, "Stipulated Loss Value" shall be determined as provided in Section
19 of the Lease. Anything contained in the Lease, the Participation Agreement
or the Tax Indemnity Agreement to the contrary notwithstanding, Stipulated Loss
Value for any Item of Equipment (both before and after any adjustment pursuant
to Section 3(e) of the Lease) will, under any circumstances and in any event,
be an amount which, together with all other amounts required to be paid by
Lessee under the Lease on the relevant Loss Payment Date, will be at least
sufficient to pay in full the aggregate redemption price payable with respect
to such Item of Equipment pursuant to Section 4.02(A) of the Indenture.
<PAGE> 31
16
"Supplemental Rent" means all amounts, liabilities and obligations
(other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay
under the Lease, the Participation Agreement or any other Operative Document
(other than the Tax Indemnity Agreement) to Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value,
Termination Value and amounts calculated with reference thereto, indemnity
payments pursuant to Sections 15 and 16 of the Participation Agreement,
Premium, if any, and amounts payable pursuant to Sections 24 and 26 of the
Lease. Supplemental Rent includes, but is not limited to, taxes or charges to
be collected from Lessee under the fifth paragraph of Section 2.05 of the
Indenture.
"Tangible Net Worth" shall mean stockholders' equity of any
corporation, determined in accordance with generally accepted accounting
principles as in effect from time to time, less the aggregate net amount of the
following items to the extent, if any, that they were included in assets or
deducted from liabilities in computing stockholders' equity: all goodwill,
licenses, patents, copyrights, trade names, trade marks and other assets which
in accordance with generally accepted accounting principles are deemed
intangible.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement, dated as
of December 22, 1994, between Lessee and the Owner Participant, as the same may
be amended, supplemented or otherwise modified from time to time.
"Tax Law Changes" means one or more amendments, modifications,
additions or changes in or to the provisions of (a) the Code (including for
this purpose any noncodified provisions of legislation affecting the Code such
as transition rules or effective date provisions), (b) federal tax regulations
(including temporary and proposed regulations), (c) Internal Revenue Service
revenue rulings or procedures, (d) published Internal Revenue Service or United
States Treasury Department administrative interpretations or informational
releases, (e) applicable judicial precedents or (f) executive orders of the
President of the United States, as in effect on the date hereof (including,
without limitation, any investment tax credit and/or change in corporate tax
rates), which amendments, modifications, additions or changes shall become
effective with respect to the Equipment on or before the Funding Date.
"Taxes" means any and all license, registration and documentation fees
and all taxes, assessments, levies, imposts, duties, charges, fees or
withholdings of any nature whatsoever, together with any penalties, fines or
interest thereon or other additions thereto, imposed by any Federal, state or
local government, political subdivision, or taxing authority in the United
States, by any government or taxing authority of or in a foreign country or of
or in a territory or possession of the United States, or by any international
authority.
"Temporary Certificates" means Equipment Notes issued to Holders
pursuant to Section 2.03 of the Indenture.
<PAGE> 32
17
"Term", with respect to any Item of Equipment, means the period
comprised by (a) the Interim Lease Term, (b) the Basic Lease Term and (c) if
applicable, any Renewal Term for such Item of Equipment.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value", with respect to any Item of Equipment, means the
amount determined by multiplying the Cost of such Item of Equipment by the
percentage set forth in Exhibit D to the Lease opposite the Rent Payment Date
on which Termination Value is to be paid. Anything contained in the Lease, the
Participation Agreement or the Tax Indemnity Agreement to the contrary
notwithstanding, Termination Value for any Item of Equipment (both before and
after any adjustment pursuant to Section 3(e) of the Lease) will, under any
circumstances and in any event, be an amount which, together with all other
amounts required to be paid by Lessee under the Lease on such Rent Payment
Date, will be at least sufficient to pay in full the aggregate redemption price
payable with respect to such Item of Equipment pursuant to Section 4.02(C) of
the Indenture.
"Title Documents", with respect to any Item of Equipment, means the
Bill of Sale covering such Item of Equipment and, in the case of Title
Documents furnished by Lessee, an opinion of counsel of Lessee in the customary
form.
"Trainsets" means a specific group of Items of Equipment designated to
operate in conjunction with one another.
"Transaction Costs" means the following out-of-pocket costs, fees and
expenses incurred by the Owner Participant, the Owner Trustee, the Pass Through
Trustee and the Indenture Trustee in connection with the negotiation,
preparation, execution, delivery, filing and recording of the Operative
Documents and the transactions contemplated thereby, including but not limited
to:
(i) the reasonable fees, expenses and disbursements of
(A) Davis Polk & Wardwell, special counsel for the Owner Participant,
(B) Potter Anderson & Corroon, special counsel for the Indenture
Trustee and the Pass Through Trustee, (C) Prokop & Prokop, special
counsel for the Owner Trustee, (D) McCarthy Tetrault, special Canadian
counsel, and (E) Shearman & Sterling, special counsel for the
Underwriter;
(ii) the cost of filing and recording documents with the
ICC and the Registrar General of Canada;
(iii) the initial fees and expenses of the Indenture
Trustee and the Pass Through Trustee, but not the continuing fees and
expenses thereof;
<PAGE> 33
18
(iv) the initial fees and expenses of the Owner Trustee,
but not the continuing fees and expenses thereof;
(v) the cost of the appraisal of the Items of Equipment
performed by R.L. Banks & Associates;
(vi) the fees, commission or discounts of the Underwriter;
(vii) other expenses of the underwriting of the
Certificates to the extent not paid by the Underwriter; and
(viii) the fees and out-of-pocket expenses of Babcock.
"Transferee" has the meaning set forth in Section 14(a) of the
Participation Agreement.
"Transferee Guaranty" means any guaranty executed by an Affiliate of a
Transferee in accordance with Section 14 of the Participation Agreement.
"Treasury Rate", with respect to any Equipment Note to be redeemed
pursuant to Section 4.02 of the Indenture on a particular Redemption Date,
means 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 yield to
maturity of United States Treasury securities maturing on the Average Life Date
of such Equipment Note, as determined by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
securities (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) (or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported in the most recent H.15(519), as
published in H.15(519)). H.15 (519) means "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System. The most recent H.15(519) means
the latest H.15(519) which is published prior to the close of business on the
third Business Day prior to the applicable Redemption Date.
"Trust" means the trust created pursuant to the Pass Through Trust
Supplement.
"Trust Agreement" means the Trust Agreement, dated as of December 22,
1994, between the Owner Participant and the Owner Trustee in its individual
capacity, as such Trust Agreement may from time to time be supplemented,
amended or otherwise modified in accordance with the terms thereof and of the
Indenture.
<PAGE> 34
19
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee's Lien" means any Lien arising as a result of (i) claims
against or affecting the Indenture Trustee (in its individual capacity or as
Indenture Trustee) not related to the transactions contemplated by the
Indenture, the Lease or the Participation Agreement, or (ii) acts or omissions
of the Indenture Trustee (in its individual or trust capacity) not related to
the transactions contemplated by the Indenture, the Lease or the Participation
Agreement or not permitted under the Lease, the Participation Agreement or the
Indenture.
"Underwriter" means Morgan Stanley & Co. Incorporated.
"Underwriting Agreement" means the Underwriting Agreement, dated
December 15, 1994, between Morgan Stanley & Co. Incorporated and Consolidated
Rail Corporation.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of
the State of New York.
<PAGE> 1
CONFORMED COPY
================================================================================
LEASE AGREEMENT
Dated as of December 22, 1994
between
MERIDIAN TRUST COMPANY,
not in its individual capacity
except as otherwise expressly provided,
but solely as Owner Trustee,
and
CONSOLIDATED RAIL CORPORATION,
as Lessee
57 Rebuilt Railcars
795 New Railcars
Conrail 1994-A Pass Through Trust
================================================================================
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE AGREEMENT OF
MERIDIAN TRUST COMPANY, AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, DATED AS OF
THE DATE HEREOF, BETWEEN MERIDIAN TRUST COMPANY AND THE OWNER PARTICIPANT NAMED
THEREIN, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF
WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
INDENTURE TRUSTEE, UNDER THE INDENTURE, DATED AS OF THE DATE HEREOF, FOR THE
BENEFIT OF THE HOLDERS OF THE EQUIPMENT NOTES REFERRED TO IN THE INDENTURE.
THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE
ORIGINAL COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY WILMINGTON TRUST
COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS INDENTURE TRUSTEE, ON THE
SIGNATURE PAGES THEREOF. SEE SECTION 22 FOR INFORMATION CONCERNING THE RIGHTS
OF THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.
Filed with the Interstate Commerce Commission pursuant to 49 U.S.C. Section
11303 on December __, 1994 at _____ _.M. Recordation Number ______ and
deposited in the Office of the Registrar General of Canada pursuant to Section
90 of the Railway Act of Canada on December __, 1994, at _____ _.M.
<PAGE> 2
TABLE OF CONTENTS TO LEASE AGREEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Acceptance and Leasing of Items of Equipment . . . . . . . . . . . . . . . . . . . . 2
Section 3. Term and Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Interim Lease Term and Basic Lease Term . . . . . . . . . . . . . . . . 2
(b) Interim Rent and Basic Rent . . . . . . . . . . . . . . . . . . . . . . 2
(c) Supplemental Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Payment to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . 3
(e) Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value, Etc. . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Lessor's Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . 5
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . 5
(b) Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Return of Items of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Return Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Redelivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Per Diem Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Event of Loss During Storage . . . . . . . . . . . . . . . . . . . . . 7
(f) Event of Loss Generally . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Maintenance; Operation; Possession; Identification Marks . . . . . . . . . . . . . . 9
(a) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Identification Marks . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8. Replacement of Parts; Alterations, Modifications and Additions . . . . . . . . . . . 10
(a) Required Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Voluntary Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 9. Voluntary Termination for Obsolescence or Surplus . . . . . . . . . . . . . . . . . . 11
(a) Right of Termination . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(b) Sale of Items of Equipment . . . . . . . . . . . . . . . . . . . . . . 11
(c) Certain Obligations Upon Sale of Items of Equipment . . . . . . . . . . 12
(d) Retention of Items of Equipment by Lessor . . . . . . . . . . . . . . . 13
Section 10. Loss, Destruction, Requisition, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Event of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Application of Payments from Governmental Authorities for
Requisition of Title or Use . . . . . . . . . . . . . . . . . . . . . 14
(c) Application of Payments During Existence of Event of
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 11. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 12. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 13. Assignment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 14. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 16. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 18. Net Lease, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 19. Renewal Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Renewal Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Exercise of Option . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Stipulated Loss Value . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Evidence of Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) New Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 20. Purchase Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) EBO Purchase Option . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) FMV Purchase Option . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Exercise of Option . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Evidence of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 21. Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 22. Security for Lessor's Obligation to Equipment Note Holders . . . . . . . . . . . . . 25
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 23. Investment of Security Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 24. Lessor's Right to Perform for Lessee . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 25. Concerning Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 26. Repayment of Deficiency Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 27. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
Exhibit A - Form of Certificate of Acceptance
Exhibit B - Form of Lease Supplement
Exhibit C - Basic Rent
Exhibit D-1 - Stipulated Loss Values
Exhibit D-2 - Termination Values
Exhibit E - EBO Information
Schedule I - Total Quantity of Items of Equipment and Equipment Cost
Appendix A - Definitions
iii
<PAGE> 5
LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of December 22, 1994, between
MERIDIAN TRUST COMPANY, a Pennsylvania trust company, with its principal place
of business at 35 North Sixth Street, Reading, Pennsylvania 19603, not in its
individual capacity, except as otherwise expressly provided herein, but solely
as Owner Trustee under the Trust Agreement, and CONSOLIDATED RAIL CORPORATION,
a Pennsylvania corporation with its principal place of business at 2001 Market
Street, Two Commerce Square, Philadelphia, Pennsylvania 19101-1417, whereby the
parties hereto agree as follows:
W I T N E S S E T H T H A T:
WHEREAS, Lessee has built or caused to be built certain of the
Railcars and rebuilt the remainder of the Railcars (such term and other
capitalized terms used herein being defined as hereinafter provided) and
contracted to sell to the Owner Trustee, pursuant to the Railcar Purchase
Agreement, the Railcars described therein;
WHEREAS, the Owner Participant has entered into the Trust
Agreement with the Owner Trustee whereby the Owner Trustee is to acquire and
hold the Owner Trust Estate for the benefit of the Owner Participant;
WHEREAS, the Owner Participant, the Owner Trustee, the Lessee
and the Indenture Trustee have entered into the Participation Agreement,
subject to the terms and conditions of which the Owner Trustee agrees to assign
and pledge to the Indenture Trustee its rights under the Railcar Purchase
Agreement;
WHEREAS, the Company, the Owner Trustee and the Indenture
Trustee, for the benefit of the Holders, are concurrently entering into the
Indenture Agreement, whereby the Owner Trustee agrees, among other things, (a)
to convey legal title to the Items of Equipment to the Indenture Trustee for
the sole purpose of providing the Indenture Trustee with a security interest in
the Items of Equipment, subject to the rights of Lessee under this Lease, (b)
to assign and pledge to the Indenture Trustee the Owner Trustee's rights under
the Railcar Purchase Agreement and this Lease, and (c) to lease the Items of
Equipment from the Indenture Trustee, and the Indenture Trustee agrees, among
other things, to issue Equipment Notes as evidence of the participation of the
Holders in the payment of the Cost of the Items of Equipment and to lease the
Items of Equipment to the Owner Trustee; and
WHEREAS, concurrently the Owner Trustee desires to undertake
herein to lease to Lessee, and Lessee desires to undertake herein to lease from
the Owner Trustee, the Items of Equipment, as more fully hereinafter set forth.
<PAGE> 6
2
NOW, THEREFORE, 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. All capitalized terms used herein
shall have the respective meanings set forth in Appendix A hereto for all
purposes of this Lease. All references in this Lease to Sections and Exhibits
refer, unless otherwise specified, to Sections of and Exhibits to this Lease.
Section 2. Acceptance and Leasing of Items of Equipment.
Lessor hereby agrees (subject to satisfaction or waiver of all of the
conditions set forth in Section 4 of the Participation Agreement),
simultaneously with the delivery of legal title to each Item of Equipment from
Lessor to the Indenture Trustee and acceptance thereof by the Indenture
Trustee, to accept delivery of such Item of Equipment from the Indenture
Trustee and concurrently to lease such Item of Equipment to Lessee hereunder,
and Lessee hereby agrees (subject to satisfaction or waiver of all of the
conditions set forth in Section 5 of the Participation Agreement) to lease from
Lessor hereunder such Item of Equipment, as evidenced by the execution and
delivery by Lessor and Lessee, respectively, of a Certificate of Acceptance and
a Lease Supplement covering such Item of Equipment. Lessor hereby authorizes
one or more employees of Lessee, designated by Lessee, to act on behalf of
Lessor as its authorized representative or representatives to accept delivery
of such Item of Equipment in accordance with Sections 2 and 3 of the
Participation Agreement. Lessee hereby agrees that such acceptance of delivery
by such authorized representative or representatives on behalf of Lessor shall,
without further act, irrevocably constitute acceptance by Lessee of such Item
of Equipment for all purposes of this Lease.
Section 3. Term and Rent. (a) Interim Lease Term and Basic
Lease Term. The Interim Lease Term for each Item of Equipment shall commence
on the Delivery Date of such Item of Equipment and shall terminate at midnight
on the day preceding the Basic Lease Commencement Date. The Basic Lease Term
for each Item of Equipment shall commence at 12:01 a.m. on the Basic Lease
Commencement Date and shall terminate on the Basic Lease Termination Date for
such Item of Equipment.
(b) Interim Rent and Basic Rent. Lessee hereby agrees to
pay Lessor Interim Rent on July 2, 1995. Lessee also agrees to pay Lessor
Basic Rent for each Item of Equipment throughout the Basic Lease Term in
consecutive semi-annual installments payable on each Rent Payment Date, in an
amount equal to the product obtained by multiplying the Cost of such Item of
Equipment by the percentage set forth opposite such Rent Payment Date under the
caption "Basic Rent" (and under the sub-caption "Advance Rent" or "Arrears
Rent", as applicable) on Exhibit C.
Anything contained herein or in the Participation Agreement to
the contrary notwithstanding, each installment of Basic Rent (both before and
after any adjustment
<PAGE> 7
3
pursuant to Section 3(e)) shall be, under any circumstances and in any event,
in an amount at least sufficient for Lessor to pay in full as of its due date
each payment of principal of and interest on the Equipment Notes, in addition
to any other amounts required to be paid by Lessor pursuant to the Indenture
or the Equipment Notes on such due date. In addition, the EBO Payment Amount
payable on the initial EBO Payment Date shall be, under any circumstances and
in any event, not less than the amount required to be paid pursuant to Section
4.02(E) of the Indenture in connection with a redemption of the Equipment Notes
to be redeemed pursuant to such Section 4.02(E).
(c) 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, 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, by law, in equity or
otherwise as in the case of nonpayment of Basic Rent. In addition, Lessee will
pay, as Supplemental Rent (i) on demand, an amount equal to interest at the
Overdue Rate on any part of any installment of Interim Rent or Basic Rent not
paid when due for the 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 until the same shall be paid in full, (ii) on July 2, 1995, an
amount equal to the Deficiency Amount for such date if and to the extent not
paid by Lessor on either such date pursuant to Section 26, (iii) on demand, on
an After-Tax Basis, an amount equal to any and all losses in respect of the
principal of any Permitted Investment, (iv) any payments then due and owing
under Section 15 or 16 of the Participation Agreement and (v) all Premium
payable with respect to the Equipment Notes. Anything contained herein or in
the Participation Agreement to the contrary notwithstanding, each installment
of Supplemental Rent described in clause (ii) of the second sentence of this
Section 3(c) shall be, under any circumstances and in any event, in an amount
at least sufficient, when added to the Interim Rent payable on such date, for
Lessor to pay in full as of July 2, 1995 each payment of principal and interest
on the Equipment Notes required to be paid by Lessor pursuant to the Indenture
on such date.
(d) Payment to Indenture Trustee. All Rent (whether
Interim Rent, Basic Rent or Supplemental Rent) shall be paid in funds
consisting of lawful currency of the United States of America, which shall be
immediately available funds not later than 11:00 A.M., New York City time, on
the date of payment. All Rent payable to Lessor hereunder (other than Excluded
Payments) shall be paid by Lessee to Lessor at its office at 35 North Sixth
Street, Reading, Pennsylvania 19603 Attention: Corporate Trust Department
(Conrail 1994 Pass Through Trust); provided that, so long as the Indenture
shall not have terminated pursuant to the terms thereof, Lessor hereby directs,
and Lessee agrees, that all Rent (other than Excluded Payments) payable to
Lessor and assigned to the Indenture Trustee pursuant to the Indenture shall be
paid by wire transfer directly to the Indenture Trustee for credit to such
account as the Indenture Trustee shall specify at the offices of the Indenture
Trustee at Rodney Square North, Wilmington, Delaware 19890, relating to Conrail
1994-A Pass Through Trust, Attention: Corporate Trust Department or at such
other location in the
<PAGE> 8
4
United States as the Indenture Trustee may otherwise direct upon not less than
thirty (30) days prior written notice to Lessee.
(e) Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value, Etc. In the event that:
(i) the Funding Date is other than as was assumed by the
Owner Participant, as such assumptions are specified in Schedule I;
(ii) the Equipment Notes are redeemed upon a refinancing
as contemplated by Section 19 of the Participation Agreement; and/or
(iii) the Transaction Costs payable pursuant to Section 13
of the Participation Agreement are less than or greater than the
amount set forth on Schedule I,
then all amounts of Basic Rent, Stipulated Loss Value, EBO Value, amount of
leverage and Termination Value shall be adjusted (upwards or downwards, as the
case may be) to preserve the Net Economic Return which the Owner Participant
would have realized had such assumptions been correct; provided that (A) all
adjustments of Basic Rent, Stipulated Loss Value, EBO Value, amount of leverage
and Termination Value pursuant to Section 3(e)(ii) shall be made in accordance
with any applicable temporary or final regulations under Section 467 of the
Code; (B) consistent with the preservation of Owner Participant's Net Economic
Return, all adjustments shall minimize the net present value of the amounts
payable as Basic Rent through the EBO Date plus EBO Value discounted at the
Certificate Rate; (C) all such adjustments shall be subject to the second
paragraph of Section 3(b); and (D) EBO Value cannot be less than the estimated
fair market value of the Items of Equipment as set forth in the Appraisal.
Except to the extent permitted in the next sentence of this
paragraph, any such adjustment in respect of clause (i) or (iii) of the first
paragraph of this Section 3(e) shall be made prior to any calculation of any
amount payable as Stipulated Loss Value, and all adjustments referred to in
this sentence shall be made prior to or on the Basic Lease Commencement Date,
and shall be effective as promptly thereafter as practicable. Any such
adjustment in respect of a refinancing shall be made and shall be effective
with such refinancing.
Any adjustment pursuant to this Section 3(e) shall initially
be computed by the Owner Participant. The results of such computation by the
Owner Participant shall promptly be delivered to Lessee and Babcock. Within 10
Business Days after the receipt of the results of any such adjustment, Lessee
may request that a Lease Intermediary Firm verify, after consultation with the
Owner Participant and Lessee, the accuracy of such adjustment in accordance
with this Section 3(e), and the Owner Participant and Lessee hereby agree to
<PAGE> 9
5
provide the Lease Intermediary Firm with all information and materials as shall
be necessary in connection therewith. Any information provided to the Lease
Intermediary Firm by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the Lease
Intermediary Firm will confirm in writing that it will treat such information
as) the private, proprietary and confidential property of such Person, and no
Person other than such Person and the Lease Intermediary Firm shall be entitled
thereto, and all such materials shall be returned to such Person. If the Lease
Intermediary Firm confirms that such adjustment is in accordance with this
Section 3(e), it shall so certify to Lessee and the Owner Participant, and such
certification shall be final, binding and conclusive on Lessee, the Owner
Participant and Lessor. If the Lease Intermediary Firm concludes that such
adjustment is not in accordance with this Section 3(e), it shall so certify to
Lessee and the Owner Participant, and the Owner Participant shall again compute
the required adjustment. Such further adjustment shall again be subject to the
provisions of this Section 3(e). The final determination of any adjustment
hereunder shall be set forth in an amendment to this Lease, executed and
delivered by Lessor and Lessee and consented to by the Owner Participant;
provided, however, that failure to execute and deliver such amendment shall not
affect the validity and effectiveness of any such adjustment. The reasonable
fees, costs and expenses of the Lease Intermediary Firm in verifying an
adjustment pursuant to this Section 3(e) shall be paid by Lessee within 30 days
after demand, except that the Owner Participant shall pay such reasonable fees,
costs and expenses if such adjustment is required to be computed because of an
error of the Owner Participant resulting in a net present value (calculated at
a discount rate equal to the Certificate Rate) of the adjusted Basic Rent that
is five or more basis points higher than the net present value (discounted at
such rate) of the Basic Rent as determined by the Lease Intermediary Firm.
Section 4. Lessor's Representations, Warranties and
Covenants. (a) Representations and Warranties. LESSOR, IN ITS INDIVIDUAL
CAPACITY OR AS TRUSTEE, (i) HAS NOT SELECTED ANY ITEM OF EQUIPMENT, (ii) IS NOT
A MANUFACTURER OF OR DEALER IN ANY ITEM OF EQUIPMENT AND HAS NOT INSPECTED THE
ITEMS OF EQUIPMENT PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE AND (iii) HAS
NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED (AND LESSEE WAIVES, AS BETWEEN ITSELF AND LESSOR, AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS, ANY AND ALL RIGHTS OR CLAIMS), AS TO THE
TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OF ANY ITEM OF
EQUIPMENT OR ANY PART THEREOF OR AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT OR AS TO THE ABSENCE OF OBLIGATIONS BASED ON
LIABILITY IN TORT, STRICT OR OTHERWISE, OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF ANY ITEM OF EQUIPMENT OR ANY PART THEREOF OR ANY OTHER
<PAGE> 10
6
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
ITEM OF EQUIPMENT OR ANY PART THEREOF. THE PROVISIONS OF THIS SECTION 4(a)
HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION OF WARRANTY,
EXPRESS OR IMPLIED (OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY
MADE IN THE OPERATIVE DOCUMENTS), BY LESSOR IN ANY CAPACITY WITH RESPECT TO ANY
ITEM OF EQUIPMENT, OR ANY PART THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW HEREAFTER IN EFFECT OR OTHERWISE.
Notwithstanding the foregoing, Lessor warrants that, on the Delivery Date of
each Item of Equipment, Lessor shall have received such title to such Item of
Equipment as was conveyed to it and such Item of Equipment will be free of
Lessor's Liens attributable to it in its individual capacity. Lessor shall not
have any responsibility or liability to Lessee (except as specifically provided
in the Operative Documents) or any other Person with respect to (i) any
liability, loss or damage caused or alleged to be caused directly or indirectly
by the delivery, operation, servicing, maintenance, repair, improvement or
replacement of any Item of Equipment or by an inadequacy thereof or deficiency
or defect therein or by any other circumstances in connection therewith, (ii)
the use, operation or performance of any Item of Equipment 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 Item of
Equipment.
(b) Covenants. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing, it shall not take or
cause to be taken any action contrary to Lessee's or any permitted sublessee's
or user's rights under this Lease, including, without limitation, the right to
possession, use and quiet enjoyment of each Item of Equipment.
Section 5. Return of Items of Equipment. (a) Return
Condition. At the time of return of any Item of Equipment, whether at the
expiration of the Term applicable to such Item of Equipment or at the end of
any storage period pursuant to subsection (c) of this Section 5 or otherwise
(the "Return Date"), such Item of Equipment shall be free and clear of all
Liens (except Permitted Liens adequately bonded by Lessee and Lessor's Liens),
shall be in the condition required by Section 7(a).
(b) Redelivery. On or before the Return Date, Lessee
shall use its best efforts to assemble and transport all Items of Equipment
then subject to this Lease (other than Items of Equipment as to which Section
10 or 20 shall then be applicable), at Lessee's sole cost and expense, to
either (i) one location on Lessee's lines of railroad or to any one connecting
carrier for shipment at an interconnection point on Lessee's lines of railroad
(such location being hereinafter called the "Redelivery Location") as Lessor
may designate in the Return Notice (as defined below) or (ii) into storage in
accordance with subsection (c) of this Section 5. With respect to each Return
Date, Lessor shall, by written notice to Lessee given no less than 90 days
prior to such Return Date (the "Return Notice"), select either clause (i)
<PAGE> 11
7
or (ii) of the preceding sentence; provided, however, that if such selection
involves a combination of clauses (i) and (ii), Lessor shall designate no fewer
than 33% of the total Items of Equipment scheduled for return on such Return
Date for each such clause. Any Item of Equipment delivered to the Redelivery
Location or into storage pursuant to subsection (c) of this Section 5 shall be
deemed redelivered hereunder.
(c) Storage. Lessee shall store, at Lessee's sole cost
and expense, such Items of Equipment as Lessor shall designate pursuant to a
Return Notice on storage tracks owned or leased by Lessee and selected by
Lessee for a period of 60 days (the "Free Storage Period") commencing, as to
each such Item of Equipment, on the date on which such Item of Equipment shall
be placed in storage. During the Free Storage Period, such storage shall be at
Lessee's expense and risk of loss.
Upon not less than 30 days' prior written notice, Lessee shall
transport the stored Items of Equipment to the Redelivery Location designated
by Lessor, the movement of such Items of Equipment during any storage period to
be at the expense and risk of Lessee; provided, however, that Lessee shall not
be obligated, at its expense, to move such Items of Equipment at the request of
Lessor more than once. Upon the commencement of the transport of any stored
Items of Equipment pursuant to the preceding sentence, the storage period with
respect to such Items of Equipment shall for all purposes be deemed to have
terminated.
During any such storage period, Lessee will permit Lessor or
any person designated by it, including the authorized representative or
representatives of any prospective purchaser or lessee of the stored Items of
Equipment, to inspect the same during normal business hours upon reasonable
notice by Lessor; provided, however, that Lessee shall not be liable, except in
the case of negligence of Lessee or of any of its employees or agents, (i) for
any injury to, or the death of, any person exercising, whether on behalf of
Lessor or any prospective purchaser or lessee, the right of inspection granted
by this sentence, or (ii) for any damage to property caused by such inspection.
(d) Per Diem Rental. In the event that any Item of
Equipment shall not be redelivered pursuant to Section 5(b)(i) or stored in the
manner provided by Section 5(b)(ii), the Term of this Lease shall be extended
with respect to such Item of Equipment for any period necessary to effect such
redelivery or storage; and Lessee shall pay to Lessor, for each day that such
redelivery shall not be effected after the applicable Return Date or for each
day that such storage shall not be effected within 60 days after the applicable
Return Date, an amount equal to the daily equivalent of 50% of the arithmetic
average of the Basic Rent payable with respect to such Item of Equipment during
the Basic Lease Term.
(e) Event of Loss During Storage. In the event that any
Item of Equipment shall suffer an Event of Loss during the Free Storage Period
applicable to such Item of Equipment or prior to redelivery of such Item of
Equipment after expiration of the
<PAGE> 12
8
Free Storage Period, Lessee shall pay Lessor the Stipulated Loss Value thereof
as provided in Section 10; provided, however, that Lessee shall have no
obligation to pay Lessor the Stipulated Loss Value for an Item of Equipment
which suffers an Event of Loss while being inspected by Lessor or a prospective
purchaser or lessee to the extent such Event of Loss shall be the proximate
result of the negligence of Lessor or such prospective purchaser or lessee.
(f) Event of Loss Generally. If, despite its best
efforts, Lessee has not delivered any Item of Equipment into Lessor's
possession or into storage within 270 days after the applicable Return Date, at
its option, Lessee may declare an Event of Loss with respect to such Item of
Equipment and pay to Lessor either (i) if such Item of Equipment was to have
been returned at the Basic Lease Termination Date, the then fair market sales
value (determined by Independent Appraisal) (but in no event less than the
Stipulated Loss Value for such Item of Equipment as of the Basic Lease
Termination Date) or (ii) if the Item of Equipment was to have been returned at
the end of a Renewal Term, the then fair market sales value for such Item of
Equipment. Upon payment of such amount, Lessor's right, title and interest in
such Item of Equipment will be transferred to Lessee in accordance with Section
10(a).
Section 6. Liens. Lessee will not directly or indirectly
create, incur, assume, permit or suffer to exist any Lien on or with respect to
any Item of Equipment, title thereto or any interest therein or in this Lease
except (i) the respective rights of Lessor and Lessee as herein provided, the
Lien created under the Indenture and the rights of the Owner Participant, the
Owner Trustee and the Indenture Trustee under the Trust Agreement, the
Indenture and the Participation Agreement, (ii) the rights of others under
agreements or arrangements to the extent expressly permitted by the terms of
Section 7(c), (iii) Lessor's Liens and Trustee's Liens, (iv) Liens for Taxes
either not yet due or being contested in good faith by appropriate proceedings,
(v) materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of business for amounts the payment of
which is either not yet delinquent or is being contested in good faith by
appropriate proceedings and (vi) Liens arising out of judgments or awards
against Lessee with respect to which an appeal or proceeding for review is
being prosecuted in good faith. Lessee shall notify Lessor promptly of the
imposition of any such Lien not excepted above, shall pay promptly, if there
exists a material risk of the sale, forfeiture or loss of any Item of Equipment
or any interest therein as a result of the imposition of such Lien, or shall
pay or adequately bond against, such Lien within 45 days and shall at Lessee's
own cost and expense cause the same to be discharged, dismissed or removed
promptly, and in any event within 90 days after Lessee first obtains knowledge
of the existence of any such Lien; provided, however, that, notwithstanding the
foregoing, Lessee shall have the right to contest any such Lien described in
clause (iv), (v) or (vi) above in good faith by appropriate proceedings,
diligently prosecuted or appealed provided such contest shall not result in any
risk of criminal liability to the Indenture Trustee, Lessor or the Owner
Participant or any material risk of the sale, forfeiture or loss of any Item of
Equipment or any interest therein.
<PAGE> 13
9
Lessee shall protect, save and keep harmless the Owner Participant, Lessor, the
Owner Trust Estate, the Owner Trustee, the Indenture Estate, the Indenture
Trustee and the Holders from time to time of the Equipment Notes and their
respective successors and assigns from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements (including reasonable legal fees and disbursements)
of whatsoever kind and nature that may be imposed on, incurred by or asserted
at any time (whether before, during or after the Term applicable to any Item of
Equipment) against the Owner Participant, Lessor, the Indenture Estate, the
Owner Trust Estate, the Indenture Trustee, the Owner Trustee or any Holder in
any way relating to or arising out of any such Liens that are not Permitted
Liens.
Section 7. Maintenance; Operation; Possession; Identification
Marks. (a) Maintenance. Lessee, at its own expense and in a manner
comparable to that of other Class I line haul railroads, will maintain, repair
and service each Item of Equipment in the same manner as employed by Lessee for
similar items of equipment owned or leased by it at such time so that such Item
of Equipment will remain (i) in good operating condition (ordinary wear and
tear excepted), (ii) in compliance with any and all Applicable Law and (iii) in
a condition suitable for interchange.
(b) Operation. Each Item of Equipment will be used in
the general operation of Lessee's (or, if permitted under Section 7(c), any
sublessee's) freight rail business, on Lessee's railroad system, on railroad
lines over which Lessee (or any sublessee) has trackage rights and on railroad
lines of other railroads, predominantly in the United States and Canada in the
usual interchange of traffic or in through or run-through service; provided,
however, that Lessee (or any sublessee) (i) will use each Item of Equipment
only in the manner for which it was designed and intended and (ii) will not use
or operate any such Item of Equipment in any manner contrary to Applicable Law.
(c) Possession. Except as otherwise permitted by Section
7(b) or herein in this Section 7(c), Lessee will not, without the prior written
consent of Lessor, sublease or otherwise in any manner deliver, transfer or
relinquish possession of any Item of Equipment; provided that, so long as no
Event of Default shall have occurred and be continuing, Lessee may, without the
prior written consent of Lessor, sublease any Item of Equipment to any entity
which is incorporated in the United States of America (or any State thereof or
the District of Columbia) or Canada, for use upon lines of railroad owned or
operated by Lessee or such entity or by a railroad company incorporated in the
United States or Canada or over which Lessee, such entity or such railroad
company has trackage rights or rights for operation of its trains, and upon the
lines of railroad of connecting and other carriers in the usual interchange of
traffic or in through or run-through service, but any such sublease shall be
subject and subordinate to all the terms and conditions of this Lease and the
Lien of the Indenture and only for a term which shall not extend beyond the
Term applicable to such Item of Equipment; provided, however, that any such
sublease shall by its terms require that the sublessee comply with Section
7(b). Lessee will notify Lessor, and furnish copies, of
<PAGE> 14
10
any sublease having a term in excess of one year. No such sublease shall
relieve Lessee of its obligations under any Operative Document, which shall be
and remain those of a principal and not a surety.
(d) Identification Marks. Lessee will cause each Item of
Equipment to be numbered with the identification number set forth in Schedule
II. Lessee will not change the identification number of any Item of Equipment
unless and until (i) a statement of new number or numbers to be substituted
therefor shall have been filed with the Indenture Trustee and Lessor and duly
filed and deposited by Lessee in all public offices where this Lease and the
Indenture shall have been filed and deposited and (ii) Lessee shall have
furnished the Indenture Trustee and Lessor an Opinion of Counsel to the effect
that such statement has been so filed and deposited, and that no other filing,
deposit or giving of notice with or to any Federal, Canadian, District of
Columbia, State, provincial or local government or agency of any thereof is
necessary to protect the rights of the Indenture Trustee and Lessor in such
Item of Equipment.
Except as provided in the immediately preceding paragraph,
Lessee will not allow the name of any person, association or corporation to be
placed on any Item of Equipment as a designation that might be interpreted as a
claim of ownership; provided, however, that an Item of Equipment may be
lettered with the names or initials or other insignia customarily used by
Lessee or its Affiliates.
Section 8. Replacement of Parts; Alterations, Modifications
and Additions. (a) Required Changes. In the event that, during the Term
applicable to any Item of Equipment and prior to the redelivery of such Item of
Equipment pursuant to Section 5, Applicable Law requires any alteration,
replacement, addition or modification of or to any Part or any Item of
Equipment, Lessee will comply therewith at its own expense; provided, however,
that if Lessee determines that any such alteration, addition, replacement or
modification is economically impractical, Lessee shall have the right, at its
option, on at least 30 days' irrevocable notice to Lessor and the Indenture
Trustee, to terminate this Lease with respect to such Item of Equipment, and to
purchase such Item of Equipment on the next succeeding Rent Payment Date at an
amount equal to the greater of (i) the then applicable Termination Value or
(ii) the then fair market sales value (determined without regard to such
alteration, addition, replacement or modification), plus (x) all other
Supplemental Rent due and owning on such Rent Payment Date and (y) the Basic
Rent due and payable on such Rent Payment Date (other than Basic Rent for such
Items of Equipment specified in Exhibit C to be payable on such Rent Payment
Date in advance for the period commencing on such Rent Payment Date); provided
further, however, that Lessee agrees, on behalf of Lessor, to give an
irrevocable written notice of redemption to the Indenture Trustee with respect
to that portion of the Equipment Notes Outstanding to be redeemed pursuant to
Section 4.02(F) of the Indenture in connection with such termination. Any such
alteration, replacement, addition or modification, or any alteration,
replacement, addition or modification made by Lessee which is not readily
removable shall constitute accessions to the relevant Item of
<PAGE> 15
11
Equipment and full ownership thereof, free from any Lien, shall immediately
vest in Lessor, and shall become subject to the Lien of the Indenture.
(b) Voluntary Changes. Lessee shall be entitled from
time to time to install, at its expense, additions or improvements to any Item
of Equipment which do not impair the value, utility, or remaining useful life
of such Item of Equipment. If the additions and improvements are readily
removable without causing damage and not otherwise required by Applicable Law,
they may be removed and retained by Lessee before such Item of Equipment is
returned to Lessor. Lessee will repair all damage resulting from the
installation or removal of any such additions or improvements, and will not be
required to remove any addition or improvement if its retention will not impair
the value, utility or remaining useful life of the affected Item of Equipment
in the possession of Lessor. If the additions and improvements are not readily
removable without causing damage, such additions and improvements shall become
the property of Lessor, and subject to the Lien of the Indenture, at the time
such additions or improvements are made.
Section 9. Voluntary Termination for Obsolescence or Surplus.
(a) Right of Termination. In the event that Lessee shall determine that any
Items of Equipment shall have become obsolete or surplus to Lessee's
requirements and shall have delivered to Lessor and the Indenture Trustee an
Officer's Certificate to such effect, Lessee shall have the right, at its
option, on at least 90 days' prior revocable written notice to Lessor and the
Indenture Trustee (which notice shall become irrevocable on the 30th day
following the date of such notice to terminate this Lease) (provided, that if
less than all Items of Equipment are selected by Lessee, then Lessee's
selection of boxcars shall be on a random basis and Lessee's selection of
hoppers shall be on a random basis as among Trainsets (with no selective
remixing of Trainsets by Lessee with the intention of improving its position or
biasing its selection of Items of Equipment in contemplation of an option under
this Lease)), on any Rent Payment Date (a "Termination Date") specified in such
notice; provided, however, that Lessee agrees, on behalf of Lessor, to give an
irrevocable written notice of redemption to the Indenture Trustee with respect
to that portion of the Equipment Notes Outstanding to be redeemed pursuant to
Section 4.02(B) of the Indenture in connection with such termination; and
provided further that (a) the Termination Date shall occur during the Basic
Lease Term on or after the fifth anniversary of the Basic Lease Commencement
Date and (b) such Termination Date shall occur on a Rent Payment Date at least
60 days after Lessee, on behalf of Lessor, gives the notice to the Indenture
Trustee referred to in the second proviso of this sentence to redeem Equipment
Notes Outstanding in the manner specified in Section 4.02(B) of the Indenture.
(b) Sale of Items of Equipment. Lessee, as exclusive
agent for Lessor, shall, from the date of Lessee's notice given pursuant to
Section 9(a) until the relevant Termination Date, use reasonable efforts in a
commercially reasonable manner to obtain cash bids for the purchase on such
Termination Date of the Items of Equipment as to which this Lease is to be so
terminated. No later than five Business Days prior to such Termination
<PAGE> 16
12
Date, Lessee shall provide to Lessor in writing the amount and terms of each
bid received by Lessee and the name and address of the Person submitting each
such bid. In the event Lessor receives any bid, Lessor shall promptly, and in
any event at least five Business Days prior to such Termination Date, provide
to Lessee in writing the amount and terms of such bid and the name and address
of the Person submitting such bid. Unless such Items of Equipment are to be
retained by Lessor in accordance with Section 9(d), on such Termination Date,
(A) Lessee shall (subject to receipt by Lessor and the
other Persons entitled thereto of the amount specified in the
immediately succeeding paragraph of this Section 9(b)) deliver such
Items of Equipment to the highest net cash bidder (or such other
purchaser acceptable to Lessor and Lessee); and
(B) Lessor shall simultaneously therewith (i) if the
Indenture shall then not be in effect, sell such Items of Equipment
for cash to such bidder on an "as is, where is and with all faults"
basis and without recourse or warranty (except as to the absence of
Lessor's Liens), or (ii) if the Indenture shall then be in effect,
request the Indenture Trustee to transfer legal title to such Items of
Equipment for cash to such bidder (or such other purchaser) on an "as
is, where is and with all faults" basis and without recourse or
warranty (except as to the absence of Trustee's Liens).
The total cash sales price realized at such sale shall be paid
to Lessor or to the Persons entitled to receive the same and, in addition, on
the Termination Date, Lessee shall pay to Lessor or to the Persons entitled
thereto an amount equal to the sum of:
(x) the excess, if any, of (A) the Termination Value for
such Items of Equipment over (B) the cash sales proceeds paid to
Lessor, plus
(y) all other Supplemental Rent (including any Premium)
due and owing on the Termination Date, plus
(z) the Basic Rent due and payable on the relevant
Termination Date (other than Basic Rent for such Items of Equipment
specified in Exhibit C to be payable on such Termination Date in
advance for the period commencing on such Termination Date).
(c) Certain Obligations Upon Sale of Items of Equipment.
Lessee, in acting as Lessor's agent in selling the Items of Equipment with
respect to a termination described in Section 9(a), 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 sell such Items
of Equipment at a price that reduces or eliminates Lessee's obligation to pay
the items set forth in the second paragraph of Section 9(b).
<PAGE> 17
13
(d) Retention of Items of Equipment by Lessor.
Notwithstanding the provisions of Section 9(b) to the contrary, Lessor may, by
irrevocable written notice to Lessee and the Indenture Trustee at any time
within 45 days after receipt of Lessee's notice of termination elect to retain
any Item of Equipment designated by Lessee pursuant to Section 9(a) as being
obsolete or surplus, in which event Lessor shall on such Termination Date (i)
pay to the Indenture Trustee an amount equal to the aggregate redemption price
specified in Section 4.02(B) of the Indenture and (ii) deliver to Lessee with
respect to any such Item of Equipment an unconditional release of all
obligations of Lessee to pay (1) the Termination Value (other than Premium) in
respect thereof, (2) all Basic Rent payable in advance on Rent Payment Dates
occurring on or after such Termination Date and (3) all Basic Rent payable in
arrears on Rent Payment Dates occurring after such Termination Date. Subject
to receipt by the Indenture Trustee on the Termination Date of the amount
specified in clause (i) of this subsection (d) and receipt by Lessee on the
Termination Date of the release specified in clause (ii) of this subsection
(d), (1) Lessee (x) shall deliver such Item of Equipment to Lessor in the same
manner and condition as if delivery were being made to Lessor at the end of the
Term applicable thereto pursuant to Section 5, and (y) shall pay to Lessor or
to the Persons entitled thereto (including the Holders) all Supplemental Rent
(other than the Termination Value of such Item of Equipment) due and owing on
such Termination Date, the amount of Premium, if any, on the Equipment Notes to
be redeemed on such Termination Date and any Basic Rent due and payable (other
than Basic Rent for such Items of Equipment specified in Exhibit C to be
payable on such Termination Date in advance for the period commencing on such
Termination Date) on or prior to such Termination Date and (2) Lessor shall
request the Indenture Trustee to execute and deliver to Lessor an appropriate
instrument conveying legal title to such Item of Equipment to Lessor and
releasing such Item of Equipment from the Lien of the Indenture and Trustee's
Liens.
Section 10. Loss, Destruction, Requisition, Etc. (a) Event
of Loss. Upon the occurrence of an Event of Loss with respect to any Item of
Equipment, Lessee shall promptly (and, in any event, within 60 days after such
determination) give Lessor and the Indenture Trustee written notice of such
Event of Loss and on the Rent Payment Date next succeeding the 30th day
following the giving of such notice (the "Loss Payment Date"), Lessee shall pay
to Lessor or to the Persons entitled thereto,
(A) the Stipulated Loss Value for such Item of Equipment
on such Loss Payment Date, plus
(B) all other Supplemental Rent due and owing on such
Loss Payment Date, plus
(C) the Basic Rent due and payable on such Loss Payment
Date (other than Basic Rent for such Items of Equipment specified in
Exhibit C to be payable on such Loss Payment Date in advance for the
period commencing on such Loss Payment Date).
<PAGE> 18
14
In the event of payment in full of the Stipulated Loss Value
for such Item of Equipment and all other amounts payable pursuant to the
foregoing paragraph, (1) the obligation of Lessee to pay any Basic Rent for
such Item of Equipment on any Rent Payment Date occurring subsequent to the
Loss Payment Date for that Item of Equipment shall terminate, (2) the Term for
such Item of Equipment shall end and (3) Lessor shall transfer such Item of
Equipment to Lessee, on an "as is, where is and with all faults" basis and
without recourse or warranty (except as to Lessor's Liens), and if the
Indenture shall then be in effect, request the Indenture Trustee to transfer to
Lessee legal title to such Item of Equipment without recourse or warranty
(except as to Trustee's Liens).
(b) Application of Payments from Governmental Authorities
for Requisition of Title or Use. Any payments (including insurance proceeds
the application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with
respect to an Event of Loss shall, after reimbursement of Lessor for costs and
expenses, be applied in reduction of Lessee's obligation to pay the Stipulated
Loss Value required to be paid by Lessee pursuant to Section 10(a), if not
already paid by Lessee, or, if already paid by Lessee, shall be applied to
reimburse Lessee for its payment of such Stipulated Loss Value, and the
balance, if any, of such payments remaining thereafter shall be paid over to,
and retained by Lessee and Lessor, as their interests may appear.
(c) Application of Payments During Existence of Event of
Default. Any amount referred to in this Section 10 that 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 an
Event of Default of the Lease shall have occurred and be continuing, but shall
be paid to and held by Lessor as security for the obligations of Lessee under
this Lease, and at such time as there shall not be continuing any such Event of
Default, such amount shall be paid to Lessee.
Section 11. Insurance. Lessee will at all times prior to the
redelivery of all Items of Equipment to Lessor in accordance with the
provisions of Section 5, as part of an insurance program including appropriate
risk retention and self-insurance, and at its own expense, cause to be carried
and maintained casualty insurance and public liability insurance in respect of
the Items of Equipment in amounts and against such risks as are customarily
insured against by Lessee in respect of similar equipment owned or leased by
it. All insurance policies required hereunder shall name Lessor (both in its
individual and trust capacities), the Owner Participant, the Indenture Trustee
(both in its individual and trust capacities) and the Pass Through Trustee
(both in its individual and trust capacities) as additional insureds, or loss
payees, as their interests may appear.
Any of Lessor, the Owner Participant, the Indenture Trustee
and the Pass Through Trustee shall have the right to carry insurance on the
Items of Equipment for its own benefit and, unless required to be maintained by
Lessee hereunder, at their respective
<PAGE> 19
15
expense; provided, however, that any insurance maintained by Lessor, the Owner
Participant or the Indenture Trustee shall not adversely affect Lessee's rights
to maintain insurance as to the Items of Equipment. Lessee agrees to abide by
the terms and conditions of each policy of insurance obtained in compliance
with this Section 11.
Section 12. Inspection. At all reasonable times during the
Term applicable to any Item of Equipment, including any applicable storage
period provided in Section 5, upon reasonable notice, Lessor, the Owner
Participant and the Indenture Trustee or their authorized representatives may,
at their own expense and risk and at no cost to Lessee, inspect all Items of
Equipment and the books and records of Lessee relating thereto at the locations
thereof on Lessee's premises where such Items of Equipment or such books and
records are then located. No inspection pursuant to Section 5 or this Section
12 shall interfere with the use, operation or maintenance of any Item of
Equipment or the normal conduct of Lessee's business, and Lessee shall not be
required to undertake or incur any additional liabilities in connection
therewith. Lessor, the Owner Participant and the Indenture Trustee shall have
no duty to make any such inspection and shall not incur any liability or
obligation by reason of not making any such inspection.
Section 13. Assignment, Etc. Except as otherwise provided in
Section 11(d) of the Participation Agreement or Section 7(c), Lessee will not,
without prior written consent of Lessor, assign any of its rights hereunder or
any Item of Equipment. Except as elsewhere herein provided or as expressly
permitted by the provisions of the Trust Agreement, the Indenture or the
Participation Agreement, Lessor agrees that it will not assign or convey its
right, title and interest in and to this Lease or any Item of Equipment. The
terms and provisions of this Lease shall be binding upon and inure to the
benefit of Lessor and Lessee and their respective successors and assigns.
Section 14. Events of Default. The following events shall
constitute "Events of Default":
(a) Lessee shall fail to make any payment of Basic Rent,
Termination Value, Stipulated Loss Value or Premium or any other
amount of Supplemental Rent contemplated pursuant to the provisions of
any Operative Document to constitute the source of any payment of
principal of, or interest or Premium on, any Equipment Note on the
date such payment by Lessee shall become due and such failure shall be
continuing at the end of the 10th calendar day after such payment
shall become due;
(b) Lessee shall fail to perform or observe any other
material covenant, condition or agreement to be performed or observed
by it hereunder (other than those referred to in paragraph (a) of this
Section 14) or under any other Operative Document (other than the Tax
Indemnity Agreement) or any document or certificate furnished by it to
Lessor or the Owner Participant and Lessee shall not have cured such
failure on or prior to the 30th day after Lessee shall have received
notice of such
<PAGE> 20
16
failure from Lessor; provided, however, that Lessee shall be given an
additional 150 days to correct such failure if Lessee is diligently
proceeding to correct such failure at the end of the original 30-day
period and reasonably expects to correct such failure within such
additional period;
(c) any material representation or warranty made by
Lessee herein or in any other Operative Document (other than in the
Tax Indemnity Agreement) shall prove at any time to be incorrect as of
the date made in any material respect, and such inaccuracy shall
continue to be material and unremedied for a period of 30 days after
receipt by Lessee of written notice from Lessor of such inaccuracy;
provided that Lessee shall be given an additional 30 days to cure such
inaccuracy if Lessee is diligently pursuing such cure at the end of
the original 30-day period and reasonably expects such cure can be
effected within such additional period;
(d) Lessee shall file a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization in a case
or proceeding under any applicable bankruptcy or insolvency law (as
now or hereafter in effect) or an answer admitting the material
allegations of a petition filed against Lessee in any such case or
proceeding; or Lessee shall by voluntary petition, answer or consent
seek relief under the provisions of any now existing or future
bankruptcy, insolvency or other similar law providing for the
liquidation, reorganization or winding-up of corporations, or
providing for an agreement, composition, extension or adjustment with
its creditors; or
(e) a receiver, trustee, liquidator or custodian of
Lessee or of a substantial part of its property shall be appointed by
court order and such order shall remain in effect for more than 60
days; or Lessee shall be adjudicated bankrupt or insolvent and such
order shall remain in effect for more than 60 days; or a petition
shall be filed against Lessee under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, and shall not be dismissed within 60 days after such filing;
or an order for relief shall be entered against Lessee; or Lessee
shall make a general assignment for the benefit of its creditors; or
Lessee shall admit in writing its inability to pay its debts generally
as they become due, or shall be unable to pay or shall be generally
not paying its debts as they become due.
Section 15. Remedies. Upon the occurrence of any 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 no such declaration shall be required in the case
of an Event of Default pursuant to Paragraph (d) or (e) of Section 14); and at
any time thereafter and so long as such Event of Default is continuing, Lessor
may do and Lessee will comply with one or more of the following with respect to
all or any Items of Equipment as Lessor in its sole discretion shall elect, to
the
<PAGE> 21
17
extent permitted by, and subject to compliance with any requirements of,
Applicable Laws then in effect:
(a) cause Lessee, upon the written demand of Lessor and
at Lessee's expense, to return promptly, and Lessee shall return
promptly, all or such part of such Items of Equipment as Lessor may so
demand to Lessor or its order in the manner and condition required by,
and otherwise in accordance with all the provisions of, Section 5, as
if such Items of Equipment were being returned at the end of the Term
applicable thereto, and Lessee shall have complied with all the
obligations therein stated; or Lessor, at its option, may remove the
same from possession and use of Lessee, wherever found, subject to all
requirements of due process of law;
(b) sell all or any Items of Equipment at public or
private sale, as Lessor may determine, or otherwise dispose of, hold,
use, operate, lease to others (whether for a period greater or less
than the balance of what would have been the Term applicable to such
Item of Equipment in the absence of the termination of Lessee's rights
to such Item of Equipment) or keep idle all or any part of such Items
of Equipment all on such terms and conditions and at such place or
places as Lessor, in its sole discretion, may determine (provided,
however, that Lessor may store Items of Equipment on Lessee's premises
only to the date to which Lessor would have been entitled had such
Items of Equipment remained subject to the Lease at the end of the
Term), all free and clear of any rights of Lessee and of any claim of
Lessee in equity, at law or by statute, whether for loss or damage
under the Operative Documents except as hereinafter set forth in this
Section 15 and without any duty to account to Lessee with respect to
such action or inaction or for any proceeds with respect thereto,
except to the extent required by paragraph (d) below if Lessor elects
to exercise its rights under such paragraph in lieu of its rights
under paragraph (c) below;
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its options, rights or
remedies under paragraph (a) or paragraph (b) above with respect to
all or any Items of Equipment, Lessor, by written notice to Lessee
specifying a payment date which shall be a Rent Payment Date occurring
not earlier than 30 days from the date of such notice, may demand that
Lessee pay to Lessor, and Lessee shall pay 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 payable after such
Rent Payment Date), all unpaid Basic Rent due on or prior to such Rent
Payment Date, plus the Basic Rent due and payable on such Rent Payment
Date (other than Basic Rent for such Items of Equipment specified in
Exhibit C to be payable on such date in advance for the period
commencing on such date), plus all other amounts owing, including
Supplemental Rent, plus whichever of the following amounts Lessor, in
its sole discretion, shall specify in such notice: (i) an amount
equal to the excess, if any, by which the aggregate Basic Rent for
such Items of
<PAGE> 22
18
Equipment for the remainder of the Term applicable thereto, after
discounting such aggregate Basic Rent to present worth as of such Rent
Payment Date at the original Certificate Rate, over the fair market
rental value of such Items of Equipment (taking into account the
actual condition of the Equipment) for the remainder of the Term
applicable thereto, after discounting such fair market rental value
semi-annually (effective on the Rent Payment Dates) to present worth
as of such Rent Payment Date at the original Certificate Rate; or (ii)
an amount equal to the excess, if any, of the Stipulated Loss Value
for such Items of Equipment computed as of such Rent Payment Date,
over the fair market sales value of such Items of Equipment (taking
into account the actual condition of such Items of Equipment) as of
such Rent Payment Date;
(d) in the event Lessor, pursuant to paragraph (b) above,
shall have sold all or any part of any Items of Equipment, Lessor, in
lieu of exercising its rights under paragraph (c) above with respect
to such Items of Equipment, may, if it shall so elect, demand that
Lessee pay to Lessor, and Lessee shall pay to Lessor, on the date of
such sale, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Basic Rent payable after the date of such
sale), the sum of (i) any unpaid Basic Rent due on or prior to the
date of sale, plus, if the date of sale is not a Rent Payment Date,
the daily equivalent of Basic Rent for each day from and including the
Rent Payment Date immediately preceding the date of such sale to but
excluding the date of such sale, plus (ii) if the date of such sale is
a Rent Payment Date, the Basic Rent due and payable on that date
(other than Basic Rent for such Items of Equipment specified in
Exhibit C to be payable on such Date in advance for the period
commencing on such Date) plus all other amounts owing, including
Supplemental Rent, plus (iii) the excess of the Stipulated Loss Value
for such Items of Equipment, computed as of the Rent Payment Date
immediately preceding the date of such sale, over the amount of any
net cash sales proceeds (net of the fair market value of any non-cash
proceeds) to Lessor (after deducting the reasonable out-of-pocket
expenses incurred by Lessor), together with interest on such amount at
the Overdue Rate for the period, if any, from such Rent Payment Date
to and including the date of actual payment of Stipulated Loss Value
to Lessor; and
(e) Lessor may demand of Lessee, and Lessee shall pay to
Lessor, the sum of (i) Stipulated Loss Value, plus (ii) Supplemental
Rent, plus (iii) any unpaid Basic Rent due on or prior to the date of
payment, plus, if the date of such payment is not a Rent Payment Date,
the daily equivalent of Basic Rent for each day from and including the
Rent Payment Date immediately preceding the date of such sale but
excluding the date of such sale, plus (iv) if the date of such payment
is a Rent Payment Date, the Basic Rent due and payable on that Date
(other than Basic Rent for such Items of Equipment specified in
Exhibit C to be payable on such Date in advance for the period
commencing on such Date), in exchange for which Lessor shall convey to
Lessee title to such Items of Equipment; and
<PAGE> 23
19
(f) Lessor may rescind this Lease as to all Items of
Equipment, or may exercise any other right or remedy which may be
available to it under Applicable Law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the
breach hereof.
In addition, Lessee shall be liable for any and all
Supplemental Rent payable hereunder before, during or after the exercise of any
of the foregoing remedies and, on an After-Tax Basis, except as otherwise
provided above, for all reasonable legal fees and other reasonable costs and
expenses incurred by reason of the occurrence of any Event of Default or the
exercise of Lessor's remedies with respect thereto, including all reasonable
costs and expenses incurred in connection with the return of any Items of
Equipment in accordance with the terms of Section 5, including, without
limitation, any costs and expenses incurred by the Owner Participant, Lessor or
the Indenture Trustee in connection with any retaking of such Items of
Equipment in accordance with Section 15(a) or in placing such Items of
Equipment in the condition required by such Section. For the purpose of
paragraph (c) above, the "fair market rental value" or the "fair market sales
value" of any Items of Equipment shall be determined by an Independent
Appraisal. At any sale of any Items of Equipment pursuant to this Section 15,
Lessor, the Indenture Trustee or the Owner Participant may bid for and purchase
such property. Except as otherwise expressly provided above, no remedy
referred to in this Section 15 is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity; and the exercise or beginning of
exercise by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all of such other remedies.
No express or implied waiver by Lessor of any Event of Default shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
Section 16. Further Assurances. Lessee at its own expense
will promptly and 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 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 hereunder.
Section 17. Notices. All notices required or permitted by
the terms of this Lease shall be in writing. Any written notice shall become
effective when delivered. Any written notice shall be mailed, certified or
registered mail, return receipt requested, with proper first class postage
prepaid, sent by telex, telegram or telecopy (with such telex, telegram or
telecopy to be confirmed in writing), by overnight delivery service or
delivered by hand. Any written notice shall be addressed (i) if to Lessee, at
2001 Market Street, Two Commerce Square, Philadelphia, Pennsylvania 19101-1425,
Attention: Director-Financing, or at such other address as Lessee shall from
time to time designate in writing to Lessor and to the Indenture Trustee, (ii)
if to Lessor, at 35 North Sixth Street, Reading, Pennsylvania 19603, Attention:
Corporate Trust Department, or at such other address as Lessor shall
<PAGE> 24
20
from time to time designate in writing to Lessee and to the Indenture Trustee,
with a copy to the Owner Participant, (iii) if to the Owner Participant,
addressed to the Owner Participant at 60 Wall Street, New York, New York 10260,
Attention: Document Administration, or at such other address as the Owner
Participant shall from time to time designate in writing to Lessor and to
Lessee, and (iv) if to the Indenture Trustee, at Rodney Square North,
Wilmington, DE 19890, Attention: Corporate Trust Department, or at such other
address as the Indenture Trustee shall from time to time designate in writing
to Lessor and Lessee, with a copy to the Owner Participant.
Section 18. Net Lease, Etc. Except as otherwise provided in
this Section 18 and in Section 26, this is a net lease, and Lessee's obligation
to pay all Rent payable hereunder and to perform its other obligations under
the Operative Documents shall be absolute and unconditional under any and all
circumstances and shall not be affected by any circumstance of any character
including, without limitation, (i) an unconditional obligation to pay Rent
until this Lease terminates in accordance with its terms except that, and
provided that no Event of Default under Section 14(a) of this Lease exists, in
the case of an interference with Lessee's right of quiet enjoyment by Lessor or
someone claiming through or against Lessor (other than the Indenture Trustee,
any Holder, any trustee or holder of indebtedness from any refinancing or any
Person claiming through or against any of the foregoing) (which interference
results in Lessee's inability to use any Items of Equipment in accordance with
the terms of this Lease), then upon the expiration of ten Business Days after
Lessor and the Owner Participant have received from any authorized employee or
agent of Lessee telephonic notice (which shall be promptly confirmed in writing
by Lessee) of such interference describing such interference in such detail as
is reasonably available to Lessee, Lessee shall have the right to abate that
portion of the Rent allocable to the Items of Equipment the use of which was so
interfered with in excess of the amount necessary to make all payments with
respect to the Equipment Notes Outstanding until the interference is
eliminated; provided, however, that exercise of any rights, including
inspection rights, by Lessor or the Owner Participant under the Operative
Documents shall not constitute such an interference; (ii) any unavailability of
any Item of Equipment, after its delivery and acceptance by Lessee hereunder,
for any reason, including, without limitation, any lack or invalidity of title
or any other defect in the title, condition, design, operation, merchantability
or fitness for use of any Item of Equipment; or (iii) except as provided in
clause (i) above, any loss or destruction of, or damage to, any Item of
Equipment or interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever and of whatever duration.
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 pay to Lessor or to the Indenture
Trustee, as the case may be, an amount equal to each Rent payment under Section
3 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.
Lessee hereby waives, to the extent permitted by Applicable Law, any and all
rights
<PAGE> 25
21
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 or
to abate Rent except in accordance with the express terms hereof. Except to
the extent of any payment in excess of that required to be made hereunder, each
payment of Rent made by Lessee shall be final, and Lessee will not seek to
recover all or any part of such payment from the Indenture Trustee, and any
Holder, Lessor or the Owner Participant for any reason whatsoever.
Notwithstanding any other provision of this Section 18 to the contrary, Lessee
shall not be impaired in the exercise of any right it may have to assert and
sue upon any claim it may have against Lessor or the Owner Participant in a
separate action.
Section 19. Renewal Options. (a) Renewal Options. So long
as no Event of Default pursuant to Section 14(a), 14(d) or 14(e) of this Lease
shall have occurred and be continuing at the time of the 90-day notice
described in Section 19(b)(i) and subject to receipt by Lessor of an
Independent Appraisal at least 180 days prior to the Basic Lease Termination
Date, Lessee shall have the option to extend the lease hereunder with respect
to any or all Items of Equipment for up to four (4) successive periods of at
least one year each selected by Lessee, with the first such period commencing
at the end of the Basic Lease Term and the remaining such periods running
consecutively from the end of the first such (or, as the case may be,
preceding) Fixed Rate Renewal Term (any such renewal term, a "Fixed Rate
Renewal Term"). The rental rate during any Fixed Rate Renewal Term shall equal
(i) the lesser of the then fair market value or fifty percent (50%) of the
average annual Basic Rent during the Basic Lease Term (or over any shorter
averaging period used to satisfy the "initial period" requirement of Section
4.08(2) of Rev. Proc. 75-28) if Lessee elects to extend the Lease for all or a
portion of the Equipment for the full Maximum Renewal Period or (ii) fifty
percent (50%) of such average Basic Rent over such Basic Lease Term if Lessee
elects to extend the Lease for all or a portion of the Equipment for less than
the full Maximum Renewal Period. Notwithstanding the foregoing, the aggregate
term of all Fixed Rate Renewal Terms shall not exceed the Maximum Renewal
Period.
In addition, and so long as no Event of Default pursuant to
Section 14(a), 14(d) or 14(e) of this Lease shall have occurred and be
continuing at the time of the 90-day notice described in Section 19(b)(ii),
Lessee shall have the option to extend the lease hereunder with respect to any
or all Items of Equipment for one or more additional periods of at least one
year each, with the first such period commencing at the end of the final Fixed
Rate Renewal Term and the remaining such periods running consecutively from the
end of the first such (or, as the case may be, preceding) FMV Renewal Term, at
the then fair market rental value (any such renewal term, a "FMV Renewal
Term").
(b) Exercise of Option. (i) Not less than 120 days
prior to the end of the Basic Lease Term or any Fixed Rate Renewal Term, as the
case may be, Lessee shall give Lessor irrevocable written notice as to whether
Lessee intends to return all or a portion of the Equipment or to exercise a
purchase or renewal option. Lessee may exercise its option to extend this
Lease as provided in the first paragraph of Section 19(a) by irrevocable
written
<PAGE> 26
22
notice delivered to Lessor not less than 90 days prior to the Basic Lease
Termination Date or Fixed Rate Renewal Term, as the case may be.
(ii) Not less than 120 days prior to the end of the final
Fixed Rate Renewal Term or any FMV Renewal Term, as the case may be, Lessee
shall give Lessor irrevocable written notice as to whether Lessee intends to
return all or a portion of the Equipment or to exercise a purchase or renewal
option. Lessee may exercise its option to extend this Lease as provided in the
second paragraph of Section 19(a) by irrevocable written notice delivered to
Lessor not less than 90 days prior to the end of the final Fixed Rate Renewal
Term or FMV Renewal Term, as the case may be.
(iii) If Lessor and Lessee shall be unable to agree upon
the fair market rental value of the relevant Items of Equipment 365 days prior
to the date on which this Lease would otherwise expire, then such fair market
rental shall be determined by Independent Appraisal; provided, however, that
such Independent Appraisal shall be provided not later than 180 days before the
date on which the Lease with respect to the related Items of Equipment would
otherwise expire.
(c) Stipulated Loss Value. (i) The amounts payable as
Stipulated Loss Value during any Fixed Rate Renewal Term upon an Event of Loss
of any Item of Equipment shall equal an amount derived on a straight-line basis
from (x) the greater of (A) Stipulated Loss Value in effect on the last day of
the Basic Lease Term or of the first such (or, as the case may be, preceding)
Fixed Rate Renewal Term or (B) the fair market sales value of such Item of
Equipment on the last day of the Basic Lease Term or of the first such (or, as
the case may be, preceding) Fixed Rate Renewal Term and (y) the fair market
sales value at the end of such Fixed Rate Renewal Term.
(ii) The amounts payable as Stipulated Loss Value during
any FMV Renewal Term upon an Event of Loss of any Item of Equipment shall equal
an amount derived on a straight-line basis from (x) the greater of (A)
Stipulated Loss Value in effect on the last day of the final Fixed Rate Renewal
Term or of the first such (or, as the case may be, preceding) FMV Renewal Term,
as the case may be, or (B) the fair market sales value of such item of
Equipment on the last day of the final Fixed Rate Renewal Term or of the first
such (or, as the case may be, preceding) such FMV Renewal Term, as the case may
be, and (y) the fair market sales value at the end of such FMV Renewal Term.
(d) Evidence of Renewal. In the event this Lease is
extended pursuant to this Section 19, such extension shall be evidenced by a
separate lease extension agreement executed and delivered by Lessor and Lessee.
(e) New Leases. Upon the Final Payment Date with respect
to any Item of Equipment, so long as no Event of Acceleration has occurred and
is continuing, the Lease shall terminate with respect to such Item of Equipment
and Lessee and Lessor shall be
<PAGE> 27
23
deemed to have entered into a new lease arrangement with respect to such Items
of Equipment upon terms and conditions identical to the terms of this Lease
(provided that no provisions relating to the Indenture Trustee and the
Indenture shall be deemed to have been included); provided, however, that if
either Lessee or Lessor requests that a new lease be entered into with respect
to such Items of Equipment then Lessee and Lessor shall promptly execute and
deliver a new lease with respect to such Items of Equipment upon terms and
conditions identical to the terms of this Lease (provided that no provisions
relating to the Indenture Trustee and the Indenture shall be included).
Section 20. Purchase Options. (a) EBO Purchase Option.
Lessee shall have the option, on 30 days' irrevocable notice, to purchase on
the applicable EBO Date any or all Items of Equipment then subject to this
Lease (provided, that if less than all Items of Equipment are selected by
Lessee, then Lessee's selection of boxcars shall be on a random basis and
Lessee's selection of hoppers shall be on a random basis as among Trainsets
(with no selective remixing of Trainsets by Lessee with the intention of
improving its position or biasing its selection of Items of Equipment in
contemplation of an option under this Lease)) at the percentage of the purchase
price specified in Exhibit E (with payment of such purchase price being made in
installments on the EBO Payment Dates and in the EBO Payment Amounts), but in
no event less than the Termination Value for such Items of Equipment on such
EBO Date, provided that, if Lessee shall so purchase all Items of Equipment
then subject to the Lease and shall have assumed all obligations of Lessor
under the Indenture in form and substance satisfactory to Lessor and pursuant
to Section 20 of the Participation Agreement and Article 10 of the Indenture,
the purchase price payable shall be reduced by the principal amount of the
Equipment Notes Outstanding after giving effect to the application of the Basic
Rent payable on such date.
(b) FMV Purchase Option. Lessee shall have the option to
purchase any or all Items of Equipment then subject to this Lease (provided,
that if less than all Items of Equipment are selected by Lessee, then Lessee's
selection of boxcars shall be on a random basis and Lessee's selection of
hoppers shall be on a random basis as among Trainsets (with no selective
remixing of Trainsets by Lessee with the intention of improving its position or
biasing its selection of Items of Equipment in contemplation of an option under
this Lease)) (i) on the applicable Basic Lease Termination Date, at a purchase
price equal to the then fair market sales value of such Items of Equipment and
(ii) at the expiration of any Renewal Term applicable to such Items of
Equipment, at a purchase price equal to the fair market sales value on such
date of such Items of Equipment (the "FMV Purchase Option"). In addition,
Lessee shall pay in any case all Basic Rent unpaid on the date of purchase
other than, in the case of the first sentence of this paragraph, Basic Rent for
any Items of Equipment being purchased which is stated to be payable in advance
on such date in Exhibit C, together with all Supplemental Rent due and payable
on such date plus any other Supplemental Rent then owing with respect to such
Items of Equipment, plus sales tax payable in connection with the purchase of
such Items of Equipment.
<PAGE> 28
24
Anything contained in this Lease, the Participation Agreement
or the Tax Indemnity Agreement to the contrary notwithstanding, any amount
payable under this Section 20 will, under any circumstances and in any event,
be an amount which, together with all other amounts required to be paid by
Lessee under this Lease on each EBO Date, will be at least sufficient to pay in
full the aggregate redemption price payable with respect to such Items of
Equipment pursuant to Section 4.02(E) of the Indenture.
(c) Exercise of Option. (i) Assuming the 120-day notice
described in the first paragraph of Section 19(b) shall have been given, Lessee
may exercise its option to purchase all or a portion of the Equipment as
provided in clause (i) of Section 20(b) by irrevocable written notice delivered
to Lessor not less than 90 days prior to the Basic Lease Termination Date.
(ii) Assuming the 120-day notice described in the first or
second paragraph, as the case may be, of Section 19(b) shall have been given,
Lessee may exercise its option to purchase all or a portion of the Equipment as
provided in clause (ii) of Section 20(b) by irrevocable written notice
delivered to Lessor not less than 90 days prior to the end of any Renewal Term.
If Lessor and Lessee shall be unable to agree upon the fair
market sales value of the relevant Items of Equipment at least 365 days prior
to the date on which such option is exercisable, then such fair market sales
value shall be determined by Independent Appraisal; provided, however, that
such Independent Appraisal shall be provided not later than 180 days before the
date on which the Lease with respect to the related Items of Equipment would
otherwise expire.
(d) Evidence of Transfer. If Lessee shall have so
elected to purchase any Items of Equipment, Lessor shall transfer, without
recourse or warranty (except as to Lessor's Liens), such Items of Equipment to
Lessee or its assignee or nominee against payment by Lessee of the purchase
price (or, with respect to the EBO Option, the portion thereof payable on the
applicable EBO Date in accordance with Exhibit E) therefor in immediately
available funds, provided that, if the Indenture shall then be in effect,
Lessor shall request the Indenture Trustee to transfer, without recourse or
warranty (except as to Trustee's Liens), legal title to such Items of Equipment
to Lessee or its assignee or nominee, unless Lessee shall have assumed all
obligations of Lessor under the Indenture and the Guaranties in form and
substance satisfactory to Lessor and pursuant to Section 20 of the
Participation Agreement and Article 10 of the Indenture, in which event Lessor
shall convey to Lessee all of Lessor's right, title and interest in and to all
Items of Equipment subject to the Lien created under the Indenture and the
rights of the Indenture Trustee under the Indenture.
Section 21. Successor Owner Trustee. Lessee agrees that, in
the case of the appointment of any successor Owner Trustee pursuant to the
terms of the Trust Agreement,
<PAGE> 29
25
such successor Owner Trustee shall, upon written notice by such successor Owner
Trustee to Lessee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the beneficial owner of Items of
Equipment for all purposes without the necessity of any consent or approval by
Lessee and without in any way altering the terms of this Lease or Lessee's
obligations hereunder. Lessee further agrees that in the case of the
appointment of any additional trustee to act as co-trustee or as a separate
trustee pursuant to the terms of the Trust Agreement, such additional trustee
shall, upon written notice by Lessor to Lessee, acquire such rights, power and
title of Lessor hereunder as are specified in the instruments appointing such
additional trustee, without in any way altering the terms of this Lease or
Lessee's obligations hereunder. One such appointment and designation of a
successor or additional Owner Trustee shall not exhaust the right to appoint
and designate further successor or additional Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
Section 22. Security for Lessor's Obligation to Equipment
Note Holders. In order to secure all amounts payable by and all obligations to
be performed by Lessor under the Indenture, Lessor has agreed in the Indenture,
among other things, to assign to the Indenture Trustee certain rights under
this Lease and to grant a security interest in favor of the Indenture Trustee
in all Items of Equipment, subject to the reservations and conditions therein
set forth. To the extent, if any, that this Lease constitutes chattel paper
(as such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Lease may be created
through the transfer or possession of any counterpart hereof other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
thereof.
Section 23. Investment of Security Funds. So long as the
Indenture is in effect, any monies required to be paid to or retained by Lessor
which are not required to be paid to Lessee pursuant to Section 10 solely
because an Event of Default shall have occurred and be continuing, shall, until
paid to Lessee as provided in Section 10 or applied as provided herein or in
the Trust Agreement and the Indenture, be invested in Permitted Investments by
Lessor (unless the Indenture shall not have terminated pursuant to its terms,
in which case, by the Indenture Trustee as provided in Section 7.04 of the
Indenture) from time to time as directed in writing by Lessee. There shall be
promptly remitted to Lessee 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) unless an Event
of Default shall have occurred and be continuing.
Section 24. Lessor's Right to Perform for Lessee. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any of its agreements contained herein, Lessor may
after expiration of any applicable cure period, on behalf of Lessee and upon 10
days' prior written notice to Lessee, itself make such payment or perform or
comply with such agreement in a commercially reasonable
<PAGE> 30
26
manner. Lessee's obligation to reimburse Lessor for any such cure shall be
limited to the amount of any such payment and the amount of Lessor's reasonable
costs and expenses incurred in connection with such cure, together with
interest thereon, to the extent permitted by Applicable Law, at the Overdue
Rate, all of which shall be deemed Supplemental Rent, due and payable by Lessee
upon demand. This Section 24 is not intended in any way as between the Owner
Participant and Lessor, on the one hand, and the Indenture Trustee and the
Holders on the other hand, to expand or otherwise vary the cure rights of the
Owner Participant and Lessor in the Indenture. Lessor shall be under no
obligation to Lessee or any other Person to perform any such act or make any
such payment.
Section 25. Concerning Lessor. Meridian Trust Company is
entering into this Lease solely in its capacity as Owner Trustee under the
Trust Agreement and not in its individual capacity (except as expressly
provided in Section 4(a)) and in no case shall Meridian Trust Company (or any
entity acting as successor or additional Owner Trustee under the Trust
Agreement) be personally liable for or on account of any of the statements,
representations, warranties, covenants or obligations of Lessor hereunder;
provided, however, that Meridian Trust Company (or any successor or additional
Owner Trustee) shall be personally liable hereunder for its own gross
negligence or willful misconduct or for its breach of any representation or
warranty made in its individual capacity in Section 4. If a successor Owner
Trustee is appointed in accordance with the terms of the Trust Agreement, such
successor Owner Trustee shall, without any further act, succeed to all the
rights, duties, immunities and obligations of Lessor hereunder and the
predecessor Owner Trustee shall be released from all further duties and
obligations hereunder.
Section 26. Repayment of Deficiency Amount. Lessor shall
give Lessee at least two Business Days' prior written notice if Lessor has
elected to pay the Deficiency Amount on July 2, 1995; provided, however, that
no delivery by Lessor of any such notice shall limit or relieve Lessee's
absolute and unconditional obligation to pay Rent under this Lease. If and to
the extent that Lessor shall not remit funds to the Indenture Trustee in an
amount equal to the Deficiency Amount on July 2, 1995, Lessee shall, to such
extent, pay as Supplemental Rent to Lessor any unpaid portion of the Deficiency
Amount payable on such date. For all purposes under this Lease and the other
Operative Documents, the sum of (x) any Deficiency Amount paid by Lessee
pursuant to this Section 26 plus (y) accrued interest on the unreimbursed
portion thereof at a rate equal to the Certificate Rate (compounded
semi-annually) from, but excluding, the date any such amount is paid by Lessee
to and including the date it is reimbursed by Lessor or pursuant to the
following sentence, shall be referred to as the "Reimbursement Amount." So
long as no Event of Default shall have occurred and be continuing, upon written
demand by Lessee delivered to Lessor (with a copy to the Owner Participant)
Lessor shall have the option to promptly pay to Lessee the Reimbursement
Amount. If for any reason Lessor shall elect not so to pay to Lessee such
Reimbursement Amount, upon at least five days' prior written notice to the
Owner Participant and the Indenture Trustee, Lessee shall be entitled to offset
(without duplication) against each succeeding payment (other than as limited by
the proviso to this sentence) due
<PAGE> 31
27
from Lessee to Persons other than the Indenture Trustee and Lessor in its
individual capacity (including, without limitation, Basic Rent, Supplemental
Rent payable under Sections 9, 10, 15 and 20, payments due under the Tax
Indemnity Agreement and payments due to Persons other than the Indenture
Trustee and Lessor in its individual capacity under Section 15 of the
Participation Agreement), until Lessee has been fully reimbursed for the
Reimbursement Amount; provided, however, that, in the case of any payment due
from Lessee which is distributable under the terms of the Indenture, Lessee's
right of offset shall be limited to amounts distributable to Lessor or the
Owner Participant thereunder. No such offset or aggregate combined effect of
separate offsets shall reduce the amount of any installment of Basic Rent to an
amount insufficient, together with all other amounts payable simultaneously by
Lessee, to pay in full the payments then required to be made on account of the
principal amount (and Premium, if any) of and interest on the Equipment Notes
Outstanding.
Section 27. Miscellaneous. Any provision of this Lease 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. This Lease
may be executed by the parties hereto in separate counterparts, each of which,
subject to Section 22, when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the same
instrument. No term or provision of this Lease may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which the enforcement of the change, waiver, discharge or
termination is sought. This Lease shall constitute an agreement of lease, and
nothing herein shall be construed as conveying to Lessee any right, title or
interest in any Item of Equipment except as a lessee only. The section and
paragraph headings in this Lease and the Table of Contents are for convenience
of reference only and shall not modify, define, expand or limit any of the
terms or provisions hereof and all references herein to numbered sections,
unless otherwise indicated, are to sections of this Lease. This Lease has been
delivered in the State of New York and 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. This Lease shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns (including, but not limited to, the
Indenture Trustee) and shall also inure to the benefit of the Owner Participant
and its respective successors and assigns. Lessee shall enter into the Letter
of Representations and shall perform all of its obligations thereunder.
<PAGE> 32
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Agreement to be duly executed as of the day and year first above written.
LESSOR
MERIDIAN TRUST COMPANY,
not in its individual capacity, except as
otherwise expressly provided herein, but
solely as Owner Trustee
By /s/ Stephen J. Kaba
--------------------------------
Vice President
LESSEE
CONSOLIDATED RAIL CORPORATION
By /s/ Thomas J. McGraw
--------------------------------
Director - Financing
<PAGE> 33
Exhibit A to
Lease Agreement
CERTIFICATE OF ACCEPTANCE NO.__, dated __________, 1994, by
MERIDIAN TRUST COMPANY, a Pennsylvania trust company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, dated as of
December 22, 1994, with J. P. Morgan Interfunding Corp., and such Owner Trustee
(such Owner Trustee, in its capacity as such Owner Trustee, being herein called
"Lessor"), and by CONSOLIDATED RAIL CORPORATION, a Pennsylvania corporation
(herein called "Lessee"),
W I T N E S S E T H :
WHEREAS, Lessor and Lessee have heretofore entered into the
Railcar Purchase Agreement, dated as of December 22, 1994 (the "Purchase
Agreement"), and the Lease Agreement, dated as of December 22, 1994 (herein
called the "Lease", the defined terms therein being hereinafter used with the
same meanings). The Purchase Agreement and the Lease provide for, inter alia,
the execution and delivery from time to time of Certificates of Acceptance,
each substantially in the form hereof, for the purpose of acknowledging
delivery of specific Items of Equipment under the Purchase Agreement and the
Lease and leasing such Items of Equipment under the Lease as and when delivered
in accordance with the terms thereof.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessee hereby delivers to Lessor under the Purchase
Agreement, Lessor hereby delivers and leases to Lessee under the Lease, and
Lessee hereby accepts and leases from Lessor under the Lease, the Items of
Equipment specified in Schedule I hereto.
2. The date of delivery and acceptance of such Items of
Equipment under the Purchase Agreement and the Lease is the date of this
Certificate of Acceptance as set forth in the opening paragraph hereof, on
which date the Term for such Items of Equipment shall commence.
3. Lessee hereby confirms to Lessor that such Items of
Equipment have been duly marked in accordance with the terms of Section 7(d) of
the Lease and that Lessee has accepted such Items of Equipment for all purposes
of the Lease.
<PAGE> 34
4. Lessee hereby confirms its agreement to pay Lessor
Rent for such Items of Equipment throughout the Term therefor in accordance
with Section 3 of the Lease.
IN WITNESS WHEREOF, Lessor and Lessee have caused this
Certificate of Acceptance to be duly executed on the day and year first above
written.
LESSOR
MERIDIAN TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee
By CONSOLIDATED RAIL CORPORATION,
Agent
By
-----------------------------------
Title:
LESSEE
CONSOLIDATED RAIL CORPORATION
By
-----------------------------------
Title:
<PAGE> 35
SCHEDULE I
TO
CERTIFICATE OF ACCEPTANCE NO.___
DESCRIPTION OF ITEMS OF EQUIPMENT
Unit Cost Per Type of Equipment
Equipment Identification
Description Numbers
- ----------- -------------
<PAGE> 36
Exhibit C to
Lease Agreement
PART I: Aggregate for All Categories of Equipment
INTERIM RENT AND BASIC RENT
<TABLE>
<S> <C> <C>
Arrears Rent Advance Rent
Rent (as a percentage (as a percentage
Payment Date of Cost) of Cost)
------------ ------------------- -------------------
</TABLE>
INTENTIONALLY OMITTED
PART II: Interim Rent and Basic Rent by Category
CATEGORY I
<TABLE>
<S> <C> <C>
Arrears Rent Advance Rent
Rent (as a percentage (as a percentage
Payment Date of Cost) of Cost)
------------ ------------------- -------------------
</TABLE>
INTENTIONALLY OMITTED
CATEGORY II
<TABLE>
<S> <C> <C>
Arrears Rent Advance Rent
Rent (as a percentage (as a percentage
Payment Date of Cost) of Cost)
------------ ------------------- -------------------
</TABLE>
INTENTIONALLY OMITTED
<PAGE> 37
Exhibit D-1 to
Lease Agreement
STIPULATED LOSS VALUES
CATEGORY I
<TABLE>
<S> <C>
Stipulated Loss
Value (as a percentage
Loss Payment Date of Lessor's Cost)
----------------- -------------------------
</TABLE>
INTENTIONALLY OMITTED
CATEGORY II
<TABLE>
<S> <C>
Stipulated Loss
Value (as a percentage
Loss Payment Date of Lessor's Cost)
----------------- -------------------------
</TABLE>
INTENTIONALLY OMITTED
<PAGE> 38
Exhibit D-2 to
Lease Agreement
TERMINATION VALUES
CATEGORY I
<TABLE>
<S> <C>
Termination Value
(as a percentage
Loss Payment Date of Lessor's Cost)
----------------- -------------------------
</TABLE>
INTENTIONALLY OMITTED
CATEGORY II
<TABLE>
<S> <C>
Termination Value
(as a percentage
Loss Payment Date of Lessor's Cost)
----------------- -------------------------
</TABLE>
INTENTIONALLY OMITTED
<PAGE> 39
Exhibit E to
Lease Agreement
EBO INFORMATION
CATEGORY I
<TABLE>
<S> <C> <C> <C>
EBO Value EBO Date EBO Payment Dates EBO Payment Amounts
- --------- -------- ----------------- -------------------
</TABLE>
INTENTIONALLY OMITTED
CATEGORY II
<TABLE>
<S> <C> <C> <C>
EBO Value EBO Date EBO Payment Dates EBO Payment Amounts
- --------- -------- ----------------- -------------------
</TABLE>
INTENTIONALLY OMITTED
<PAGE> 40
Schedule I
TOTAL QUANTITY OF ITEMS OF EQUIPMENT
Class Quantity
- ----- --------
Category I - New Steel Open Top Quad Hoppers 795
Category II - 60-foot Equipped Boxcars 57
Funding Date: December 22, 1994
Transaction Costs: 2.29% of Category I Equipment
<PAGE> 1
CONFORMED COPY
==============================================================================
PARTICIPATION AGREEMENT
Dated as of December 22, 1994
among
CONSOLIDATED RAIL CORPORATION,
Lessee,
J.P. MORGAN INTERFUNDING CORP.,
Owner Participant,
WILMINGTON TRUST COMPANY,
Indenture Trustee,
WILMINGTON TRUST COMPANY,
Pass Through Trustee
and
MERIDIAN TRUST COMPANY,
not in its individual capacity
except as otherwise expressly provided,
but solely as Owner Trustee,
57 Rebuilt Railcars
795 New Railcars
Conrail 1994-A Pass Through Trust
=============================================================================
<PAGE> 2
TABLE OF CONTENTS TO PARTICIPATION AGREEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Participations in Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Agreements to Participate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Notice of Funding Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) Postponement of Funding Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Sale, Purchase and Lease of Items of Equipment . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Conditions Precedent to Participation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Conditions Precedent Applicable to Participations . . . . . . . . . . . . . . . . . 6
(b) Conditions Precedent Applicable to the Funding Date. . . . . . . . . . . . . . . . . 8
(c) Additional Conditions Precedent to Investment by the Pass Through Trustee . . . . . 11
Section 5. Conditions Precedent to Obligations of Lessee. . . . . . . . . . . . . . . . . . . . . . . 11
Section 6. Representations and Warranties of Lessee. . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Organization; Good Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Authority; Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Legal and Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(g) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(h) Perfection of Title and Security Interest . . . . . . . . . . . . . . . . . . . . . 14
(i) ICC and Canadian Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(j) Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(k) Securities Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(l) Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Tax Returns, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(n) No Default or Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(o) Section 1168 of the Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . 16
(p) No Event of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(q) Condition of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(r) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(s) Selection of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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Section 7. Representations, Warranties and Agreements of Owner
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Organization; Authority; Legal and Binding Obligations . . . . . . . . . . . . . . . 16
(b) Securities Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) Redemption of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(g) Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) Removal of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) Items of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) Payments in Respect of Interim Lease Term . . . . . . . . . . . . . . . . . . . . . 19
Section 8. Representations, Warranties and Agreements of Owner Trustee . . . . . . . . . . . . . . . 19
(a) Securities Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Organization; Authority; Legal and Binding Obligations, Etc. . . . . . . . . . . . . 19
(c) Valid and Binding Obligations, as Trustee . . . . . . . . . . . . . . . . . . . . . 21
(d) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Valid and Binding Obligations, in Individual Capacity . . . . . . . . . . . . . . . 22
(f) Liens; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(g) Removal of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9. Representations, Warranties and Agreements of Indenture Trustee and Pass Through Trustee . 23
(a) The Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) The Pass Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10. Purchase of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 11. Certain Agreements of Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) Merger Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Section 12. Ownership of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 13. Transaction Costs; Continuing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Continuing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Late Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 14. Transfer of Owner Participant's Interest . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Permitted Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Indemnification by the Owner Participant . . . . . . . . . . . . . . . . . . . . . . 31
Section 15. General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Indemnitee Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Taxes Indemnified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Taxes Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) All Tax Obligations in This Section, Etc. . . . . . . . . . . . . . . . . . . . . . 35
(e) Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(f) Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(g) Refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(h) Reports and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(i) Nature of Lessee's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 16. General Indemnification and Waiver of Certain Claims . . . . . . . . . . . . . . . . . . . 40
(a) Indemnified Person Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Claims Indemnified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Claims Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(d) Insured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(e) Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(f) Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(g) No Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 17. Lessee's Right of Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 18. Limitation of Liability of Owner Trustee, Owner Participant and Indenture Trustee . . . . 44
(a) Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(b) Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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(c) Owner Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(d) Pass Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(e) Certain Limitations on Reorganization . . . . . . . . . . . . . . . . . . . . . . . 46
Section 19. Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 20. Assumption of Owner Trustee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(a) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(c) Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(d) Headings; References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(e) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(f) Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(g) Survival of Certain Obligations Under This Agreement . . . . . . . . . . . . . . . . 50
</TABLE>
<PAGE> 6
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of December 22, 1994
(the "Agreement"), among CONSOLIDATED RAIL CORPORATION, a Pennsylvania
corporation ("Lessee"); J.P. MORGAN INTERFUNDING CORP., a Delaware corporation
(the "Owner Participant"); MERIDIAN TRUST COMPANY, a Pennsylvania trust
company, not in its individual capacity, but solely as Owner Trustee, except as
otherwise expressly provided herein; WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity, but solely as Indenture
Trustee, except as otherwise expressly provided herein; and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual capacity, but
solely as Pass Through Trustee, except as otherwise expressly provided herein.
W I T N E S S E T H :
WHEREAS, the Owner Participant is entering into the Trust
Agreement (such term and other capitalized terms used herein being defined as
hereinafter provided) with the Owner Trustee, whereby the Owner Trustee is to
acquire and hold the Owner Trust Estate for the benefit of the Owner
Participant;
WHEREAS, Lessee has built or caused to be built certain of
the Railcars and rebuilt the remainder of the Railcars and contracted to sell
to the Owner Trustee, pursuant to the Railcar Purchase Agreement, the Railcars
described therein;
WHEREAS, subject to the terms and conditions of this
Agreement, the Owner Trustee agrees to assign certain of its rights in the
Railcar Purchase Agreement to the Indenture Trustee;
WHEREAS, concurrently with the execution and delivery of
this Agreement, Lessee and the Pass Through Trustee will enter into the Pass
Through Trust Supplement, pursuant to which a grantor trust will be created to
facilitate the financing contemplated hereby;
WHEREAS, the Company, the Owner Trustee and the Indenture
Trustee, for the benefit of the Holders from time to time of the Equipment
Notes, are entering into the
<PAGE> 7
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Indenture, whereby the Owner Trustee agrees, among other things, to convey
legal title to the Items of Equipment to the Indenture Trustee for the sole
purpose of providing the Indenture Trustee with a security interest in the
Items of Equipment, subject to the rights of Lessee under the Lease, and to
lease the Items of Equipment back from the Indenture Trustee, and the Indenture
Trustee agrees, among other things, to issue Equipment Notes as evidence of the
participation of the Holders thereof in the payment of the Cost of the Items of
Equipment and to lease the Items of Equipment to the Owner Trustee; and
WHEREAS, the Owner Trustee is entering into the Lease with
Lessee whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee, the Items of Equipment;
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.
All capitalized terms used herein shall have the respective
meanings set forth in Appendix A hereto for all purposes of this Agreement.
All references in this Agreement to Sections and Exhibits, unless otherwise
specified, refer to Sections of and Exhibits to this Agreement.
Section 2. Participations in Cost.
(a) Sale and Purchase. (i) 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 Trustee and the Indenture Trustee,
on behalf of the Holders, shall take the following actions concurrently:
(A) the Owner Trustee shall purchase the Items of
Equipment from Lessee pursuant to the Railcar Purchase Agreement;
(B) the Owner Trustee shall, pursuant to the terms of the
Indenture, issue and deliver to the Pass Through Trustee Equipment
Notes with respect to the Items of Equipment so purchased;
(C) the Owner Trustee and Indenture Trustee shall,
pursuant to the terms of the Indenture, execute and deliver an
Indenture Supplement covering the Items of Equipment; and
<PAGE> 8
3
(D) pursuant to the terms of the Lease, the Owner Trustee
shall lease such purchased Items of Equipment to Lessee and execute
and deliver a Lease Supplement covering such Items of Equipment.
(ii) Notwithstanding the foregoing, the Owner Trustee
shall not be obligated to purchase on the Closing Date any Item of Equipment
with respect to which an Event of Loss has occurred.
(b) Agreements to Participate. Subject to the terms and
conditions of this Agreement, and in reliance on the agreements,
representations and warranties contained herein and made pursuant hereto on the
Funding Date, but in no event later than December 31, 1994:
(i) the Indenture Trustee agrees to participate in
financing the Cost of each Item of Equipment to be paid for on the
Funding Date, on behalf of the Holders of Equipment Notes, in an
amount equal to the Indenture Trustee's Commitment for such Item of
Equipment; provided that the aggregate participation of the Indenture
Trustee in financing the Cost of all Items of Equipment hereunder
shall in no event exceed an amount equal to the aggregate principal
amount of the Equipment Notes; and
(ii) the Owner Participant agrees to participate in
financing the Cost of each Item of Equipment to be paid for on the
Funding Date, by sending by wire transfer of immediately available
funds to the account of the Owner Trustee held by the Indenture
Trustee prior to 12:00 Noon, New York City time, as an investment in
the beneficial ownership of such Item of Equipment, an amount equal to
the Owner Participant's Commitment for such Item of Equipment, to be
held and applied by the Indenture Trustee to the payment of the Cost
of such Item of Equipment as provided herein (or in the event of
non-delivery of such Item of Equipment, to be returned to the Owner
Participant as provided in Section 2(e)); provided, however, that the
aggregate participation of the Owner Participant in financing the Cost
of all Items of Equipment hereunder shall in no event exceed
$15,000,000 exclusive of the Owner Participant's payments, if any, of
the Deficiency Amount. The Indenture Trustee will not apply the Owner
Participant's Commitment unless it shall have received directions from
the Owner Participant or its counsel to apply such Commitment.
(c) Notice of Funding Date. Lessee agrees to give the
Owner Participant, the Owner Trustee and the Indenture Trustee at least five
Business Days' telecopy notice of the Funding Date, which notice shall specify
(i) the Items of Equipment (including identification numbers) to be paid for on
the Funding Date and (ii) the aggregate amounts of the respective Commitments
of the Owner Participant and the Indenture Trustee with respect to such Items
of Equipment. The making available by the Indenture Trustee or the Owner
<PAGE> 9
4
Participant of its Commitment as required by Section 2(a) shall be deemed a
waiver of such notice.
(d) Closing. The closing hereunder in connection with
the making available of the Commitments of the Owner Participant and the
Indenture Trustee with respect to each Item of Equipment and the purchase by
the Pass Through Trustee of the Equipment Notes shall take place at 10:00 a.m.
New York City time on the Funding Date at the offices of Shearman & Sterling,
599 Lexington Avenue, New York, New York 10022 or such other place as the
parties shall mutually agree.
(e) Postponement of Funding Date. The Funding Date may
be postponed from time to time for any reason if Lessee gives the Owner
Participant, the Owner Trustee, the Indenture Trustee and the Pass Through
Trustee telecopy notice (or telephonic notice confirmed in writing) of such
postponement and notice of the date to which the Funding Date has been
postponed (which shall in no event be later than December 31, 1994), such
notice of postponement to be received by each party not later than 12:00 Noon,
New York City time, on the originally scheduled Funding Date, in which case the
term "Funding Date" as used in this Agreement shall mean the postponed "Funding
Date." If the originally scheduled Funding Date is postponed for any reason,
any funds wired by the Owner Participant to the Indenture Trustee on the
originally scheduled Funding Date must be returned to the Owner Participant by
2:00 p.m., New York City time, on such date. If the Owner Participant's
Commitment is not returned to the Owner Participant by 2:00 p.m., New York City
time, Lessee shall promptly reimburse the Owner Participant for the loss of use
of its funds occasioned by failure to close, by paying to the Owner Participant
a sum equal to interest at the Certificate Rate for the period from and
including the originally scheduled Funding Date to but excluding the earlier of
(A) the day on which such funds are returned to the Owner Participant at or
before 2:00 p.m., New York City time, and (B) the postponed Funding Date if the
transaction closes on such postponed Funding Date. The Indenture Trustee shall
invest such funds in Permitted Investments, if any, as directed by Lessee.
Such funds and any investments made by the Indenture Trustee pursuant to this
Section 2(d) shall be held in trust by the Indenture Trustee, solely on behalf
of the Owner Participant and not as part of the Indenture Estate. Lessee shall
be liable for any loss upon the liquidation of such investments, and shall
immediately reimburse the Owner Participant for such loss if the transaction
does not close on the postponed Funding Date, or if the transaction does close,
shall immediately apply an amount equal to such loss to the payment of the
Owner Participant's Commitment.
Section 3. Sale, Purchase and Lease of Items of Equipment.
(a) Subject to the terms and conditions of this Agreement
and the Indenture, on the Delivery Date, which shall be the Funding Date, the
Owner Trustee and the Indenture Trustee, on behalf of the Holders, shall take
the following actions concurrently:
<PAGE> 10
5
(i) the Owner Trustee shall purchase the Items of
Equipment from Lessee pursuant to the Railcar Purchase Agreement;
(ii) the Owner Trustee shall, pursuant to the terms of the
Indenture, issue and deliver to the Pass Through Trustee the Equipment
Notes with respect to the Items of Equipment so purchased;
(iii) the Owner Trustee and Indenture Trustee shall,
pursuant to the terms of the Indenture, execute and deliver an
Indenture Supplement covering the Items of Equipment; and
(iv) pursuant to the terms of the Lease, the Owner Trustee
shall lease such purchased Items of Equipment to Lessee and execute
and deliver a Lease Supplement covering such Items of Equipment.
(b) To accomplish such transactions, on the Delivery Date
of the Items of Equipment, which shall be the Funding Date, the Owner Trustee,
to the extent it has not already done so, shall take the following actions:
(i) authorize its representative or representatives (who
shall be an employee or employees of Lessee designated by Lessee) to
accept delivery of the Items of Equipment on such Delivery Date
pursuant to the Railcar Purchase Agreement, this Agreement, the
Indenture and the Lease;
(ii) execute and deliver a Certificate of Acceptance
covering the Items of Equipment; and
(iii) execute and deliver a Lease Supplement covering the
Items of Equipment.
(c) To accomplish such transactions, on the Delivery Date
of the Items of Equipment, which shall be the Funding Date, Lessee, to the
extent that it has not already done so, shall take the following actions:
(i) accept delivery of the Items of Equipment on such
Delivery Date for purposes of the Lease in accordance with the terms
thereof (such acceptance to be made by the employee or employees of
Lessee who are accepting delivery of the Items of Equipment for the
Owner Trustee pursuant to Section 3(b)(i));
(ii) execute and deliver a Certificate of Acceptance
covering the Items of Equipment; and
<PAGE> 11
6
(iii) execute and deliver a Lease Supplement covering the
Items of Equipment.
Section 4. Conditions Precedent to Participation.
(a) Conditions Precedent Applicable to Participations.
The obligation of the Pass Through Trustee to purchase the Equipment Notes is
subject to fulfillment of the following conditions precedent, and the
obligations of the Owner Participant and the Indenture Trustee to participate
in the payment of the Cost of any Item of Equipment are subject to the
fulfillment, to the satisfaction of the Owner Participant and the Indenture
Trustee (unless waived in writing by each), on or prior to the Closing Date, of
the following conditions precedent (provided, however, that any party
responsible therefor may not waive the satisfaction of any such condition):
(i) Each of this Agreement, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, the Railcar Purchase
Agreement, the Lease, the Trust Agreement, the Indenture and the Tax
Indemnity Agreement shall have been duly authorized, executed and
delivered by the respective parties thereto, and an executed original
of each such Operative Document (except the Tax Indemnity Agreement)
shall have been delivered to the Owner Participant, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee.
(ii) The Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee shall have received the
following, each dated as of the Funding Date, in each case in form and
substance satisfactory to each of them:
(A) an incumbency certificate of each of Lessee,
the Owner Trustee, the Owner Participant, the Indenture
Trustee and the Pass Through Trustee regarding the officers
(or employees in the case of Lessee) authorized to execute and
deliver the Operative Documents to which it is a party and any
other documents and agreements delivered in connection
therewith;
(B) an insurance certificate evidencing compliance
with the terms of Section 11 of the Lease;
(C) in the case of Lessee, certified copies of
all documents evidencing the corporate actions of Lessee,
including resolutions of the Board of Directors of Lessee duly
authorizing the transactions contemplated hereby and the
execution, delivery and performance by Lessee of each of the
Operative Documents to which it is a party and, in the case of
the Owner Participant, a certified copy of the by-laws of the
Owner Participant; and certificates of authorization of the
Owner Trustee, the Indenture Trustee and the Pass Through
Trustee;
<PAGE> 12
7
(D) certified copies of the by-laws and
certificate or articles of incorporation of Lessee, the Owner
Trustee, the Owner Participant, the Indenture Trustee and the
Pass Through Trustee; and
(E) an opinion (the "Appraisal") of R.L. Banks
and Associates, satisfactory in form and substance to the
Owner Participant, concluding that: (1) the fair market value
of the Items of Equipment to be delivered on the Funding Date
is at least equal to the Proposed Equipment Cost with respect
to such Items of Equipment; (2) at the expiration of the Basic
Lease Term, (x) the remaining economic life of such Items of
Equipment will be at least equal to 20% of the economic life
of such Items of Equipment as estimated in the Appraisal and
(y) without taking into account inflation or deflation from
and after the Funding Date or the existence of any purchase
option, it is reasonable to expect that the Items of Equipment
will have a fair market value of at least 20% of the Proposed
Equipment Cost with respect to such Items of Equipment; (3) as
of the EBO Date, the estimated fair market value of the Items
of Equipment being delivered on the Funding Date, taking into
account inflation or deflation from the Funding Date, will be
less than or equal to the EBO Value; and (4) the Items of
Equipment being delivered on the Funding Date are not "limited
use property" within the meaning of Rev. Proc. 76-30, 1976-2
C.B. 647. The Appraisal shall further set forth the estimated
fair market value of the Items of Equipment at the end of the
Basic Lease Term taking into account inflation or deflation.
(iii) The Indenture Trustee shall have received the
"original" counterpart of the Lease, with the receipt therefor
executed by the Indenture Trustee.
(iv) The Indenture and the Lease shall have been duly
filed with the ICC pursuant to 49 U.S.C. Section 11303 and the
Indenture and the Lease shall have been provided to McCarthy Tetraut
for prompt deposit thereafter with the Registrar General of Canada
pursuant to Section 90 of the Railway Act of Canada, with a notice of
such deposit to be published in the Canada Gazette.
(v) The Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee shall have received a
favorable opinion from Bruce B. Wilson, Senior Vice President- Law of
Lessee, in substantially the form of Exhibit A-1.
(vi) The Owner Trustee, Lessee, the Indenture Trustee and
the Pass Through Trustee shall have received a favorable opinion from
Davis Polk & Wardwell, special counsel for the Owner Participant, in
substantially the form of Exhibit A-2.
<PAGE> 13
8
(vii) The Owner Participant, Lessee, the Indenture Trustee
and the Pass Through Trustee shall have received a favorable opinion
from Prokop & Prokop, special counsel for the Owner Trustee, in
substantially the form of Exhibit A-3.
(viii) The Owner Participant, the Owner Trustee and the Pass
Through Trustee shall have received a favorable opinion from Potter
Anderson & Corroon, special counsel for the Indenture Trustee, in
substantially the form of Exhibit A-4.
(ix) The Owner Participant, the Owner Trustee and the
Indenture Trustee shall have received a favorable opinion from Potter
Anderson & Corroon, special counsel for the Pass Through Trustee, in
substantially the form of Exhibit A-5.
(x) The Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee shall have received a
favorable opinion from McCarthy Tetrault, special Canadian counsel, in
substantially the form of Exhibit A-6.
(xi) The Owner Participant shall have received a favorable
opinion from Davis Polk & Wardwell, special counsel for the Owner
Participant, in form and substance satisfactory to the Owner
Participant, with respect to certain Federal income tax aspects of the
transactions contemplated by the Operative Documents.
(xii) All governmental and regulatory approvals, licenses
and authorizations required under Applicable Law to be received or
obtained on or before the Closing Date in connection with the
transactions contemplated by this Agreement shall have been duly
received or obtained.
(xiii) The Owner Participant and Lessee shall have received
a letter from Babcock, in form and substance satisfactory to the Owner
Participant, with respect to the number of offerees of the beneficial
interest in the Owner Trust Estate and the manner of offering thereof,
and the waiver of any brokers' Liens.
(b) Conditions Precedent Applicable to the Funding Date.
The obligation of the Pass Through Trustee to purchase the Equipment Notes is
subject to fulfillment of the following conditions precedent, and the
obligations of the Owner Participant and the Indenture Trustee to participate
in the payment of the Cost of any Item of Equipment on the Funding Date are
subject to the fulfillment, to the satisfaction of the Owner Participant and
the Indenture Trustee (unless waived in writing by each), on or prior to the
Funding Date, of the following conditions precedent (provided, however, that
the party responsible therefor may not waive the satisfaction of any such
condition):
(i) Equipment Notes in an aggregate principal amount of
$29,738,000 shall have been issued and sold pursuant to the terms of
the Indenture and the proceeds of
<PAGE> 14
9
such sale shall have been deposited with the Indenture Trustee
pursuant to Section 3.01 of the Indenture.
(ii) The Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee shall have received due
notice of the Funding Date pursuant to Section 2(b).
(iii) Each of the Certificate of Acceptance covering such
Item of Equipment, Lessee's Title Documents covering such Item of
Equipment (which shall be in form and substance reasonably
satisfactory to the Owner Participant and the Indenture Trustee), the
Lease Supplement covering such Item of Equipment and the Owner
Trustee's Bill of Sale covering such Item of Equipment (which shall be
in form and substance reasonably satisfactory to the Owner Participant
and the Indenture Trustee) shall have been duly authorized, executed
and delivered by the respective party or parties thereto, and an
executed original or conformed copy, as appropriate, of each such
Operative Document shall have been delivered to the Owner Participant,
the Owner Trustee and the Indenture Trustee.
(iv) The Indenture Trustee shall have received the
"original" counterpart of the Lease Supplement covering such Item of
Equipment, with the receipt therefor executed by the Indenture
Trustee, and such Lease Supplement shall have been duly filed with the
ICC pursuant to 49 U.S.C. Section 11303 and deposited with the
Registrar General of Canada pursuant to Section 90 of the Railway Act
of Canada, with a notice of such deposit to be published in the Canada
Gazette.
(v) The Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee shall have received the
following, in each case in form and substance satisfactory to it: an
incumbency certificate dated the Funding Date of each of Lessee, the
Owner Trustee, the Owner Participant, the Indenture Trustee and the
Pass Through Trustee regarding the officers (or employees in the case
of Lessee) authorized to execute and deliver the Operative Documents
to which it is a party being delivered on the Funding Date and other
documents and agreements delivered in connection therewith.
(vi) The statements set forth below shall be true, and the
Owner Participant, the Owner Trustee, the Indenture Trustee and the
Pass Through Trustee shall have received:
(A) an Officer's Certificate of Lessee, dated the
Funding Date, stating that (1) the representations and
warranties of Lessee contained herein or in any Bill of Sale
delivered by Lessee are true and accurate on and as of the
Funding Date; (2) no event or condition has occurred and is
continuing, or would result from the consummation of any
transaction contemplated by the
<PAGE> 15
10
Operative Documents to which it is a party, that constitutes
an Event of Default or Potential Default; (3) all covenants
and conditions required to be performed or fulfilled by Lessee
prior to or on the Funding Date have been performed and
fulfilled; (4) each Operative Document to which it is a party
remains in full force and effect with respect to it; and (5)
nothing has occurred that has materially and adversely affected
the ability of Lessee to perform its obligations under the
Operative Documents to which it is a party; and
(B) an Officer's Certificate of the Owner
Participant, dated the Funding Date, stating that (1) the
representations and warranties of the Owner Participant
contained in Section 7 are true and accurate on and as of the
Funding Date; (2) all covenants and conditions required to be
performed or fulfilled by the Owner Participant prior to or on
the Funding Date have been performed and fulfilled; (3) no
event or condition has occurred with respect to the Owner
Participant that would constitute an Indenture Default or
Event of Acceleration; and (4) each Operative Document to
which it is a party remains in full force and effect with
respect to it.
(vii) No Event of Loss or Potential Default as to the Items
of Equipment shall have occurred.
(viii) (A) The Owner Trustee shall have received good and
marketable title to the Items of Equipment from Lessee, (B) the
Indenture Trustee shall have received legal title to the Items of
Equipment solely for security purposes from the Owner Trustee, in each
case free and clear of all Liens other than Permitted Liens other than
those described in clause (vi) of Section 6 of the Lease, and (C) the
Indenture Trustee and the Owner Trustee shall have interests in the
Items of Equipment which together comprise good and marketable title
to the Items of Equipment free and clear of all Liens other than
Permitted Liens other than those described in clause (vi) of Section 6
of the Lease.
(ix) The Owner Participant shall have made available its
Commitment for the Items of Equipment.
(x) The Indenture Trustee shall have made available its
Commitment for the Items of Equipment.
(xi) Lessee shall not have consolidated or merged with any
other corporation or conveyed, transferred or leased all or
substantially all of its assets as an entirety to any Person, whether
in a single transaction or a series of related transactions.
<PAGE> 16
11
(xii) No change shall have occurred after the date hereof
in Applicable Law that would make it illegal for the Owner Participant
to acquire a beneficial interest in the Owner Trust Estate or would
cause any transaction contemplated by the Operative Documents to be in
violation of such Applicable Law.
(xiii) The Delivery Date for the Items of Equipment shall
occur on the Funding Date.
(c) Additional Conditions Precedent to Investment by the
Pass Through Trustee. The obligation of the Pass Through Trustee to purchase
the Equipment Notes shall be subject to the following additional conditions:
(i) Equipment Notes. The Equipment Notes to be delivered
on the Funding 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.
(ii) Certificates. Prior to the Funding Date, the Pass
Through Trustee shall have received at least $29,738,000 of proceeds
from the sale of the Certificates.
(iii) Incumbency Certificates. On the Funding Date, the
Pass Through Trustee shall have received an incumbency certificate
dated the Funding Date of each of Lessee, the Owner Trustee and the
Indenture Trustee referred to in Section 4(a)(ii)(A).
Section 5. Conditions Precedent to Obligations of Lessee.
Lessee's obligation to lease any Item of Equipment is subject
to fulfillment to the satisfaction of Lessee (unless waived in writing by
Lessee) of the following conditions precedent (provided, however, that Lessee
may not waive the satisfaction of any such condition for which it is
responsible):
(i) on or before the Closing Date, each of this
Agreement, the Pass Through Trust Agreement, the Pass Through Trust
Supplement, the Railcar Purchase Agreement, the Lease, the Trust
Agreement, the Indenture, the Tax Indemnity Agreement and the other
Operative Documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto (other than
Lessee), and an executed original or conformed copy, as appropriate,
of each such Operative Document shall have been delivered to Lessee;
(ii) on or before the Closing Date, Lessee shall have
received the opinions, referred to in Sections 4(a)(vi), (vii), (viii)
and (ix), each dated the Closing Date, except that such opinions shall
be addressed to it; and
<PAGE> 17
12
(iii) on or before the Closing Date, the ICC filings and
the preparation for Canadian deposit referred to in Section 4(a)(iv)
shall have been made.
Section 6. Representations and Warranties of Lessee.
Lessee represents and warrants that:
(a) Organization; Good Standing. Lessee is a corporation
duly organized, validly existing and in good standing under the laws
of Pennsylvania; is a "Class I Railroad" within the meaning of 49
C.F.R. Part 1201, operating under the jurisdiction of the ICC pursuant
to Title 49 of the U.S. Code, and has the corporate power and
authority under Applicable Law to own or hold under lease its
properties, to carry on its businesses as presently conducted and to
execute, deliver and perform its obligations under each of the
Operative Documents to which it is or will be a party; and is duly
qualified to do business as a foreign corporation in good standing in
each state of the United States in which failure to so qualify would
have a material adverse effect on the ability of Lessee to perform its
obligations under any of the Operative Documents to which it is a
party. Lessee's chief executive office (as such term is used in
Sections 9-103 and 9-401 of the Uniform Commercial Code) is located at
2001 Market Street, Two Commerce Square, Philadelphia, Pennsylvania
19101-1417.
(b) Authority; Consent. The execution, delivery and
performance of each of the Operative Documents to which Lessee is or
will be a party has been duly authorized by all necessary corporate
action on the part of Lessee and does not require any stockholder
approval or the approval or consent of, or notice to, any trustee or
holders of any indebtedness or obligations of Lessee.
(c) Compliance with Other Instruments. Neither the
execution, delivery or performance by Lessee of the Operative
Documents to which Lessee is or will be a party nor the consummation
or performance by Lessee of the transactions contemplated thereby will
conflict with or result in any violation of, or constitute a default
under or create any Lien under, any term of the amended and restated
articles of incorporation or by-laws of Lessee or any agreement,
mortgage, indenture, lease or other instrument, or any Applicable Law
by which Lessee or its properties or assets are bound.
(d) Governmental Consents. Assuming the accuracy of the
representations and warranties of the Owner Participant, the Owner
Trustee and the Indenture Trustee contained in Sections 7, 8 and 9,
respectively, neither the execution, delivery or performance of any of
the Operative Documents nor the consummation of any of the
transactions contemplated thereby requires the consent or approval of,
the giving of notice to, the registration with, or the taking of any
other action under Applicable Law in respect of, any Federal, state or
foreign governmental authority or agency,
<PAGE> 18
13
including, without limitation, any judicial body, the ICC and the
Securities and Exchange Commission, except for (i) the filings with
the ICC and the Registrar General of Canada referred to in Sections
4(a)(iv) and 4(b)(iv), (ii) the registration of the Certificates with
the Securities and Exchange Commission and (iii) the registration of
the issuance and sale of the Certificates under any securities law of
any state in which the Certificates may be offered for sale if the
laws of such state require such action, which registration has been
duly accomplished or will be duly accomplished prior to such offer.
(e) Legal and Binding Obligations. This Agreement, the
Lease, the Tax Indemnity Agreement and the Railcar Purchase Agreement
have been duly executed and delivered by Lessee and constitute, and
the other Operative Documents to which Lessee is or will be a party
when executed and delivered, will (assuming due authorization,
execution and delivery by each other party thereto) each constitute,
legal, valid and binding obligations of Lessee enforceable in
accordance with their respective terms.
(f) Litigation. Except as disclosed in the Prospectus,
there are no pending or, to the knowledge of Lessee, threatened
actions, law suits or proceedings by or before any court or
administrative agency or arbitrator that are reasonably likely to,
either individually or in the aggregate, materially and adversely
affect the ability of Lessee to perform its obligations under any of
the Operative Documents.
(g) Financial Statements. The audited consolidated
balance sheet of Lessee and its subsidiaries as of the end of each of
its last two fiscal years (up to and including December 31, 1993), and
the related consolidated statements of income and consolidated
statements of cash flows of Lessee and its subsidiaries as of the end
of each of its last three fiscal years (up to and including December
31, 1993), each prepared in accordance with generally accepted
accounting principles consistently applied, fairly present the
consolidated financial position of Lessee and its subsidiaries as of
the dates thereof and the consolidated results of operations and
consolidated cash flows for the periods covered thereby. Except to
the extent disclosed in the Prospectus, there has been no material
adverse change in the consolidated financial condition, business or
operations of Lessee and its subsidiaries or the ability of Lessee to
perform its obligations under any of the Operative Documents.
(h) Perfection of Title and Security Interest. The
Indenture creates the security interest in the Indenture Estate it
purports to create. Except for:
(i) the filings with the ICC and the Registrar
General of Canada referred to in Sections 4(a)(iv) and
4(b)(iv), and
<PAGE> 19
14
(ii) the taking of possession by the Indenture
Trustee of the "original" counterpart of the Lease and of each
Lease Supplement,
no further action, including any filing, registration or recording of
any documents or instruments, was or is necessary in order to
establish, preserve and perfect the Owner Trustee's rights and
interest in, and the legal title to and security interest of the
Indenture Trustee in, each Item of Equipment, the Lease, the Railcar
Purchase Agreement, Lessee's Title Documents covering each Item of
Equipment and the Owner Trustee's Bill of Sale covering each Item of
Equipment as against the Owner Trustee, Lessee and any third parties.
(i) ICC and Canadian Filings. Prior to or on the Closing
Date, the Indenture and the Lease (or memorandum thereof) shall have
been duly executed and filed with the ICC pursuant to 49 U.S.C.
Section 11303 and provided to McCarthy Tetrault for prompt deposit
thereafter with the Registrar General of Canada pursuant to Section 90
of the Railway Act of Canada with a notice of such deposit to be
published in the Canada Gazette. Prior to the Funding Date, a Lease
Supplement and an Indenture Supplement with respect to the Items of
Equipment being delivered on the Funding Date shall have been duly
executed, filed and deposited as described in the previous sentence.
(j) Title. On or before the Funding Date, Lessee shall
have transferred to the Owner Trustee good and marketable title to
each Item of Equipment, and the Owner Trustee shall have transferred
to the Indenture Trustee legal title to each Item of Equipment solely
for security purposes from the Owner Trustee, in each case free and
clear of all Liens other than Permitted Liens, and the Indenture
Trustee and the Owner Trustee shall have interests in each Item of
Equipment which together comprise good and marketable title to each
Item of Equipment free and clear of all Liens other than Permitted
Liens other than those described in clause (vi) of Section 6 of the
Lease.
(k) Securities Representation. Neither Lessee nor anyone
acting on behalf of Lessee has directly or indirectly offered any
interest in the Owner Trust Estate or the Trust Agreement for sale to
anyone other than the Owner Participant and not more than 49 other
financial institutions. The acquisition by the Owner Participant of
its interest in the Owner Trust Estate and the Trust Agreement, and
the acquisition by the Pass Through Trustee of the Equipment Notes,
are exempt from the registration and prospectus- delivery requirements
of the Securities Act of 1933, as amended, by virtue of Section 4(2)
thereof. Neither the execution and delivery by Lessee of this
Agreement, the Indenture or any other Operative Document to which it
is or will be a party, nor the performance of its obligations
hereunder or thereunder, nor the consummation of any of the
transactions by Lessee contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, or the registration
with,
<PAGE> 20
15
or the taking of any other action in respect of, any federal, state or
foreign governmental authority or agency, other than (i) the
registration of the issuance and sale of the Certificates, to be
issued pursuant to the provisions of the Indenture, under the
Securities Act of 1933, as amended, and under the securities laws of
any state in which the Certificates may be offered for sale if the
laws of such state require such action, which registrations have been
duly accomplished, (ii) the qualification of the Pass Through Trust
Agreement under the Trust Indenture Act, which qualification has been
duly obtained pursuant to an order of the Securities and Exchange
Commission, and (iii) the registrations and filings referred to in
Section 6(i). Lessee is not an investment company or a company
controlled by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
(l) Representations and Warranties. LESSEE HAS NOT MADE
AND SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE VALUE OR ECONOMIC LIFE OF ANY ITEM OF
EQUIPMENT OR ANY PART THEREOF.
(m) Tax Returns, Etc. Lessee and its subsidiaries have
filed or caused to be filed all Federal and state tax returns of
Lessee and its subsidiaries and all other material returns in other
jurisdictions which, to the knowledge of Lessee, are required to be
filed and have paid or caused to be paid all taxes which have become
due pursuant to such returns or pursuant to any assessment received
(other than assessments the payment of which is being contested in
good faith and adequate reserves for the payment of which have been
set aside by Lessee and its subsidiaries), and Lessee has no knowledge
of any actual or proposed deficiency or additional deficiency or
assessment in conjunction therewith which in any case or in the
aggregate would be materially adverse to Lessee; and the charges,
accruals and reserves on the books of Lessee and its subsidiaries in
respect of Federal, state and local taxes for all open years, and for
the current fiscal year, make adequate provisions for all unpaid tax
liabilities for such periods.
(n) No Default or Violations. Lessee is not in default
under any mortgage, deed of trust, indenture or other instrument or
agreement to which Lessee is a party or by which it or any of its
properties or assets may be bound, or in violation of any Applicable
Law, which default or violation would have a material adverse effect
on the financial condition, business or operations of Lessee or the
ability of Lessee to perform any of its obligations under the
Operative Documents.
(o) Section 1168 of the Bankruptcy Code. The Owner
Trustee, as Lessor under the Lease, and the Indenture Trustee, as
assignee of certain of the Owner Trustee's rights under the Lease
pursuant to the Indenture, are entitled to the benefits of 11 U.S.C.
Section 1168 with respect to the Items of Equipment.
<PAGE> 21
16
(p) No Event of Loss. Each Item of Equipment on the
Funding Date will be in the condition and state of repair required
under the Lease.
(q) Condition of Equipment. The design, quality and
component parts of each Item of Equipment will conform to the
specifications attached to the Railcar Purchase Agreement and to
Applicable Law reasonably interpreted as being applicable to such Item
of Equipment as of its respective Delivery Date.
(r) Fees. Except for the fees of Babcock and the fees,
commission or discounts of the Underwriter referred to in Section 13,
there are no broker's or underwriter's fees payable in connection with
the transactions contemplated in the Operative Documents.
(s) Selection of Equipment. Lessee has selected each
Item of Equipment to be subjected to the Lease.
Section 7. Representations, Warranties and
Agreements of Owner Participant.
The Owner Participant represents, warrants and agrees that:
(a) Organization; Authority; Legal and Binding
Obligations. The Owner Participant is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has the requisite power and authority to execute, deliver
and perform each of the Operative Documents to which it is a party.
The Owner Participant has duly authorized the execution, delivery and
performance by it of each such Operative Document, and such execution,
delivery and performance do not require any corporate action on its
part which has not been taken, or any approval or consent of, or
notice to, any trustee or holder of any indebtedness or obligation of
the Owner Participant which has not been obtained. The Owner
Participant has duly executed and delivered, as of the date hereof,
this Agreement and the Trust Agreement, and, in addition as of the
initial Funding Date, the Tax Indemnity Agreement, and, assuming due
authorization, execution and delivery by each other party thereto,
each such Operative Document constitutes or will constitute its legal,
valid and binding obligation, enforceable in accordance with its
terms, and the execution, delivery and performance by the Owner
Participant of each such Operative Document do not violate its
certificate of incorporation or any material indenture, mortgage,
contract or other agreement to which the Owner Participant is a party
or by which it is bound or any Applicable Law by which it or its
assets or properties are bound.
(b) Securities Representation. The Owner Participant is
acquiring its interest in the Owner Trust Estate for investment and
not with a view to any resale or
<PAGE> 22
17
distribution thereof; provided, however, that the disposition of its
property shall remain within its control at all times, and that
neither it nor anyone authorized by it to act on its behalf has
directly or indirectly offered any Equipment Note or interest in the
Items of Equipment or any similar security for sale to, or solicited
any offer to acquire any of the same from, anyone.
(c) Liens. Upon the acquisition by the Owner Trustee of
title to each Item of Equipment, there will be no Lessor's Lien
attributable to the Owner Participant on such Item of Equipment or any
interest therein or on the Owner Trust Estate or the Indenture Estate.
The Owner Participant shall not directly or indirectly create, incur,
assume or suffer to exist any Lessor's Lien attributable to the Owner
Participant on any Item of Equipment, any interest therein, the Owner
Trust Estate or the Indenture Estate, and if it shall do so, it will
promptly at its own expense cause the same to be duly discharged and
removed; 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 risk of the sale, forfeiture
or loss of any Item of Equipment or any interest therein and do not
interfere with the use, operation, quiet enjoyment or possession of
such Item of Equipment by Lessee under the Lease or materially and
adversely affect the rights of the Indenture Trustee or any Holder.
(d) ERISA. No part of the funds to be used by the Owner
Participant to acquire the interests to be acquired by it pursuant to
Section 2 constitutes assets of an ERISA Plan.
(e) Governmental Consents. Neither the execution,
delivery or performance of any of the Operative Documents to which the
Owner Participant is a party nor the consummation or performance of
any of the transactions contemplated thereby by the Owner Participant
requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action in respect of,
any Federal, state or foreign governmental authority or agency having
jurisdiction over the conduct of its leasing business, including any
judicial body, or the taking of any other action under any Applicable
Law relating to such business, except such as have been made or
obtained.
(f) Redemption of Equipment Notes. If, as permitted by
Section 9(d) of the Lease, the Owner Trustee shall elect (and such
election has not been revoked) to retain any Item of Equipment as
provided therein, the Owner Participant will deposit with the
Indenture Trustee, in immediately available funds, on the Termination
Date applicable to such Item of Equipment, concurrently with the
acceptance of delivery of possession of such Item of Equipment to the
Owner Trustee pursuant to Section 9(d) of the Lease, the redemption
price payable upon redemption of the Equipment Notes relating to such
Item of Equipment pursuant to Section 4.02(B) of the Indenture.
<PAGE> 23
18
(g) Trust Agreement. The Owner Participant and the Owner
Trustee shall not amend or supplement the Trust Agreement except to
the extent permitted by, and in accordance with, the terms thereof and
Section 9.05(b)(2) of the Indenture, and unless a signed copy of such
amendment or supplement has been delivered to the Indenture Trustee.
The Owner Participant agrees and confirms for the benefit of the
Holders that it will not elect to revoke or otherwise terminate the
trust(s) created by the Trust Agreement as long as the Indenture is in
effect.
(h) Removal of Indenture Trustee. So long as no Event of
Default shall have occurred and be continuing, the Owner Participant
shall not direct the Owner Trustee to remove the Indenture Trustee
pursuant to Section 8.02 of the Indenture without the consent of
Lessee.
(i) Items of Equipment. THE OWNER PARTICIPANT (i) HAS
NOT SELECTED THE ITEMS OF EQUIPMENT, (ii) IS NOT A MANUFACTURER OF OR
DEALER IN ANY ITEM OF EQUIPMENT AND HAS NOT INSPECTED THE ITEMS OF
EQUIPMENT PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE AND (iii) HAS
NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED (AND LESSEE WAIVES, AS BETWEEN ITSELF AND
THE OWNER PARTICIPANT, AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS,
ANY AND ALL RIGHTS OR CLAIMS), AS TO THE TITLE, CONDITION, VALUE,
WORKMANSHIP, DESIGN, OPERATION, MERCHANTABILITY, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OF ANY
ITEM OF EQUIPMENT OR ANY PART THEREOF, OR AS TO THE ABSENCE OF LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF
ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP OF ANY ITEM OF EQUIPMENT OR ANY
PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY ITEM OF EQUIPMENT OR ANY PART
THEREOF, EXCEPT TO THE EXTENT EXPRESSLY SET FORTH ELSEWHERE IN THIS
SECTION 7(c). THE PROVISIONS OF THIS SECTION 7(i) HAVE BEEN
NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION OF WARRANTY,
EXPRESS OR IMPLIED (OTHER THAN THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY MADE IN THIS SECTION 7), BY THE OWNER PARTICIPANT WITH
RESPECT TO ANY ITEM OF EQUIPMENT, OR ANY PART THEREOF, WHETHER ARISING
PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW HEREAFTER IN
EFFECT OR OTHERWISE; PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS
SENTENCE SHALL IMPAIR THE OBLIGATIONS OF
<PAGE> 24
19
THE OWNER PARTICIPANT CONTAINED ELSEWHERE IN THE OPERATIVE DOCUMENTS.
(j) Payments in Respect of Interim Lease Term. The Owner
Participant acknowledges Lessee's rights (without limitation of any
other right Lessee may have against the Owner Participant, the Owner
Trustee or any other Person) as set forth in Section 26 of the Lease.
Section 8. Representations, Warranties and Agreements of
Owner Trustee.
(a) Securities Representation. The Owner Trustee
represents and warrants, both in its individual capacity and as trustee, that
it has not directly or indirectly offered any Equipment Note or any interest in
and to the Owner Trust Estate or the Trust Agreement or any similar interest
for sale to, or solicited any offer to acquire any of the same from, anyone,
and has not authorized anyone to act on its behalf to directly or indirectly
offer any Equipment Note or any interest in and to the Owner Trust Estate or
the Trust Agreement or any similar interest for sale to, or solicited any offer
to acquire any of the same from, anyone.
(b) Organization; Authority; Legal and Binding
Obligations, Etc. The Owner Trustee, in its individual capacity, represents
and warrants that:
(i) it is a trust company duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has full corporate power and authority to enter into
and perform its obligations under the agreements referred to in
clauses (ii) and (iii) of this Section 8(b);
(ii) the Trust Agreement and this Agreement have been duly
authorized, executed and delivered by the Owner Trustee, in its
individual capacity, and constitute the legal, valid and binding
obligation of the Owner Trustee, in its individual capacity,
enforceable against it in accordance with the terms thereof, and the
trust created by the Trust Agreement constitutes a valid trust under
the laws of the Commonwealth of Pennsylvania;
(iii) it has the full power, authority and legal right to
execute, deliver and perform the Trust Agreement and each of the other
Operative Documents to which the Owner Trustee is or will be a party
in its individual capacity or as trustee; such other Operative
Documents have been duly authorized by all necessary action, do not
require any stockholder approval, or any approval or consent of, or
notice to, any trustee or holder of any indebtedness or obligation of
it and have been or will be duly executed and delivered by the Owner
Trustee, in its individual capacity or as trustee, as the case may be,
by one of its officers authorized to execute and deliver such other
Operative Documents on its behalf; and the execution, delivery and
performance by
<PAGE> 25
20
the Owner Trustee (in its individual capacity and/or as trustee) of
the Operative Documents to which the Owner Trustee is or will be a
party (in either or both such capacities) do not violate the articles
of incorporation or by-laws of the Owner Trustee in its individual
capacity or any indenture, mortgage, contract or other agreement to
which the Owner Trustee in its individual capacity is a party or by
which it is bound or any order or judgment applicable to it or any
law, government rule or regulation of the United States or the
Commonwealth of Pennsylvania applicable to the Owner Trustee's trust
powers in its individual capacity;
(iv) the execution, delivery and performance by the Owner
Trustee in its individual capacity of the Trust Agreement and this
Agreement do not (A) require the consent or approval of, the giving of
notice to, or the registration with, or the taking of any other action
with respect to, any governmental authority or agency in respect of or
under Federal or Commonwealth of Pennsylvania law governing the Owner
Trustee's trust powers in its individual capacity, or (B) violate the
articles of incorporation or by-laws of the Owner Trustee in its
individual capacity, or contravene any provision of, or constitute a
default under, or result in the creation of any Lien (other than as
permitted under the Lease) upon the Owner Trustee's property in its
individual capacity under, any indenture, mortgage, credit agreement
or other agreement or instrument to which the Owner Trustee in its
individual capacity is a party or by which it is bound, or contravene
any Federal or any Commonwealth of Pennsylvania law applicable to the
Owner Trustee in its individual capacity governing its trust powers or
any judgment or order binding on it;
(v) there are no pending or, to the knowledge of the
Owner Trustee, in its individual capacity, threatened actions or
proceedings against the Owner Trustee, in its individual capacity,
before any court or administrative agency which, if determined
adversely to the Owner Trustee, in its individual capacity, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as trustee, to perform its obligations under
each of the Operative Documents to which it is or will be a party in
either such capacity;
(vi) on the Delivery Date, (x) the Owner Trustee, as
trustee, will have such title to the Items of Equipment delivered to
it on the Delivery Date as was conveyed to it by Lessee, and (y) such
Items of Equipment shall be free of Lessor's Liens attributable to the
Owner Trustee in its individual capacity;
(vii) the chief executive office (as such term is used in
Sections 9-103 and 9-401 of the Uniform Commercial Code) of the Owner
Trustee and the place where its records concerning the Items of
Equipment and all its interests in, to and under all documents
relating to the Indenture Estate to which it is a party are and will
be kept, are both located at 35 North Sixth Street, Reading,
Pennsylvania 19601, and the
<PAGE> 26
21
Owner Trustee agrees to give the Owner Participant, the Indenture
Trustee and Lessee written notice of any relocation of said chief
executive office or said place where said records are kept from the
aforesaid locations and of any change in its name; and
(viii) the Owner Trustee, as trustee, has not by affirmative
act conveyed title to any Item of Equipment to any Person or subjected
any Item of Equipment to any Lien other than as contemplated hereby.
(c) Valid and Binding Obligations, as Trustee. Assuming
due authorization, execution and delivery by each other party thereto, the
Owner Trustee (as trustee, and not in its individual capacity) represents and
warrants that the Operative Documents to which the Owner Trustee is or will be
a party constitute or will constitute the legal, valid and binding obligations
of the Owner Trustee enforceable against it as trustee in accordance with the
respective terms of such Operative Documents.
(d) Representations and Warranties. THE OWNER TRUSTEE,
NEITHER IN ITS INDIVIDUAL CAPACITY NOR AS TRUSTEE, (i) HAS NOT SELECTED THE
ITEMS OF EQUIPMENT, (ii) IS NOT A MANUFACTURER OF OR DEALER IN ANY ITEM OF
EQUIPMENT AND HAS NOT INSPECTED THE ITEMS OF EQUIPMENT PRIOR TO DELIVERY TO AND
ACCEPTANCE BY LESSEE AND (iii) HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE
MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED (AND LESSEE WAIVES, AS
BETWEEN ITSELF AND THE OWNER TRUSTEE, AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, ANY AND ALL RIGHTS OR CLAIMS), AS TO THE TITLE, VALUE, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS,
CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OF ANY ITEM OF EQUIPMENT OR ANY
PART THEREOF OR AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO THE ABSENCE OF OBLIGATIONS BASED ON LIABILITY IN TORT,
STRICT OR OTHERWISE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF ANY
ITEM OF EQUIPMENT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY ITEM OF EQUIPMENT OR ANY
PART THEREOF, EXCEPT TO THE EXTENT EXPRESSLY SET FORTH ELSEWHERE IN THIS
SECTION 8(f). THE PROVISIONS OF THIS SECTION 8(d) HAVE BEEN NEGOTIATED AND ARE
INTENDED TO BE A COMPLETE EXCLUSION OF WARRANTY, EXPRESS OR IMPLIED (OTHER THAN
THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE IN THE OPERATIVE
DOCUMENTS), BY THE OWNER TRUSTEE IN ANY CAPACITY WITH RESPECT TO ANY ITEM OF
EQUIPMENT, OR ANY PART THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW HEREAFTER IN EFFECT OR OTHERWISE.
<PAGE> 27
22
(e) Valid and Binding Obligations, in Individual
Capacity. Assuming due authorization, execution and delivery by each other
party thereto, the Owner Trustee in its individual capacity represents and
warrants that the Operative Documents to which the Owner Trustee, in its
individual capacity, is or will be a party according to the express terms
thereof, constitute the legal, valid and binding obligations of the Owner
Trustee, in its individual capacity in accordance with the express terms
thereof.
(f) Liens; Indemnity. On the Delivery Date the Owner
Trustee shall have received such title to the Items of Equipment being
delivered to it on the Delivery Date as was conveyed to it by Lessee and there
will be no Lessor's Lien attributable to the Owner Trustee in either capacity
on such Items of Equipment or any interest therein or on the Owner Trust Estate
or the Indenture Estate. The Owner Trustee in either capacity agrees that it
will not directly or indirectly create, incur, assume or suffer to exist any
Lessor's Lien attributable to the Owner Trustee in either capacity on any Item
of Equipment, any interest therein, the Owner Trust Estate or the Indenture
Estate. The Owner Trustee in its individual capacity agrees that it will
promptly cause any such Lessor's Lien attributable to the Owner Trustee in
either capacity to be duly discharged and removed at its own cost and expense
and not out of the Owner Trust Estate or the Indenture Estate; provided that
the Owner Trustee in its individual capacity may contest any such Lessor's Lien
in good faith (having provided adequate reserves for the payment of such
Lessor's Lien) by appropriate proceedings so long as such proceedings do not
involve any danger of the sale, forfeiture or loss of any Item of Equipment or
any interest therein and do not interfere with the use, operation, quiet
enjoyment or possession of such Item of Equipment by Lessee under the Lease or
adversely affect the rights of the Indenture Trustee or any Holder. The Owner
Trustee, in its individual capacity, at its own expense and not out of the
Owner Trust Estate or Indenture Estate, shall indemnify, protect, save and hold
harmless each Holder, Lessee, the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Owner Trust Estate, the Indenture Estate, the Pass
Through Trustee, the Trust, and their respective assigns, successors, servants
and agents, from and against any reduction in the amount payable out of the
Owner Trust Estate or the Indenture Estate to such Holder, or any other loss,
liability, obligation, damage, penalty, claim, action, suit, disbursement, cost
or expense of whatsoever kind and nature (including legal fees and expenses)
imposed on, asserted against or incurred by such Holder, the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Owner Trust Estate, the Indenture
Estate or Lessee, as a result of the imposition or enforcement of any such
Lessor's Lien.
(g) Removal of Indenture Trustee. So long as no Event of
Default has occurred and is continuing, the Owner Trustee agrees that it will
not exercise its right to remove the Indenture Trustee under Section 8.02 of
the Indenture without the consent of Lessee, which consent will not be
unreasonably withheld.
<PAGE> 28
23
(h) ERISA. Based on the representations, warranties and
agreements set forth in Section 7(d), no part of the funds used or to be used
by the Owner Trustee in connection with this transaction constitutes assets of
an ERISA Plan.
Section 9. Representations, Warranties and Agreements of
Indenture Trustee and Pass Through Trustee.
(a) The Indenture Trustee. The Indenture Trustee in its
individual capacity (except insofar as the third sentence of Section 9(a)(i)
applies to any Operative Document other than the Indenture and this Agreement,
in which case as trustee) represents, warrants and agrees that:
(i) Organization; Authority; Legal and Binding
Obligations. The Indenture Trustee in its individual capacity is a
banking corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the full
power and authority and legal right to execute, deliver and perform
each of the Operative Documents to which it is or will be a party.
The Indenture Trustee has duly authorized each of such Operative
Documents and has duly executed and delivered, or will duly execute
and deliver, each of such Operative Documents. Such Operative
Documents, assuming due authorization, execution and delivery by each
other party thereto, constitute the legal, valid and binding
obligations of the Indenture Trustee, enforceable against it (in its
individual capacity or as trustee, as the case may be) in accordance
with their respective terms. The execution, delivery and performance
by the Indenture Trustee of each of the Operative Documents to which
the Indenture Trustee is or will be a party are not in violation of
its articles of incorporation or by-laws or of any indenture,
mortgage, contract or other agreement to which the Indenture Trustee
is a party or by which it is bound or of any order or judgment
applicable to the Indenture Trustee or any Applicable Law of the
United States or the State of Delaware governing the banking or trust
powers of the Indenture Trustee and by which it or its assets or
property are bound.
(ii) Lien; Indemnity. The Indenture Trustee agrees that
it will not directly or indirectly create, incur, assume or suffer to
exist any Trustee's Liens with respect to any Item of Equipment, any
interest therein, or any other portion of the Indenture Estate, and it
will promptly cause any such Trustee's Lien attributable to the
Indenture Trustee in its individual capacity to be duly discharged and
removed at its own cost and expense and not out of the Indenture
Estate; provided that the Indenture Trustee may contest any such
Trustee's Lien in good faith (having provided adequate reserves for
the payment of such Trustee's Lien) by appropriate proceedings so long
as such proceedings do not involve any danger of the sale, forfeiture
or loss of any Item of Equipment or any interest therein and do not
interfere with the use, operation, quiet enjoyment or possession of
such Item of Equipment by Lessee under the Lease or adversely affect
the rights of any Holder. The Indenture Trustee, at its own cost
<PAGE> 29
24
and expense and not out of the Indenture Estate, shall indemnify,
protect, save and hold harmless the Owner Participant, the Owner
Trustee, Lessee, the Owner Trust Estate, the Indenture Estate and each
Holder, and their respective assigns, successors, servants and agents,
from and against any reduction in the amount payable out of the
Indenture Estate to such Holder, or any other loss, liability,
obligation, damage, penalty, claim, action, suit, disbursement, cost
or expense of whatsoever kind and nature (including legal fees and
expenses) imposed on, asserted against or incurred by such Holder, the
Owner Participant, the Owner Trustee, the Owner Trust Estate, the
Indenture Estate or Lessee as a result of the imposition or
enforcement of any such Trustee's Lien.
(b) The Pass Through Trustee. The Pass Through Trustee
in its individual capacity (except with respect to clause (iv) below, in which
case as trustee) represents, warrants and agrees that:
(i) Organization; Authority; Legal and Binding
Obligations. The Pass Through Trustee in its individual capacity is a
banking corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the full
power and authority and legal right to execute the, deliver and
perform each of the Operative Documents to which it is or will be a
party. The Pass Through Trustee has duly authorized each of such
Operative Documents and has duly executed and delivered, or will duly
execute and deliver, each of such Operative Documents. Such Operative
Documents, assuming due authorization, execution and delivery by each
other party thereto, constitute the legal, valid and binding
obligations of the Pass Through Trustee, enforceable against it (in
its individual capacity or as trustee, as the case may be) in
accordance with their respective terms. The execution, delivery and
performance by the Pass Through Trustee of each of the Operative
Documents to which the Pass Through Trustee is or will be a party are
not in violation of its articles of incorporation or by-laws or of any
indenture, mortgage, contract or other agreement to which the Pass
Through Trustee is a party or by which it is bound or of any order or
judgment applicable to the Pass Through Trustee or any Applicable Law
of the United States or the State of Delaware governing the banking or
trust powers of the Pass Through Trustee and by which it or its assets
or property are bound.
(ii) Consent; Banking Law. Neither the execution,
delivery and performance by the Pass Through Trustee, in its
individual capacity or as Pass Through Trustee, as the case may be, of
any of the Operative Documents to which it is a party or the purchase
by the Pass Through Trustee of the Equipment Notes to be delivered on
the Funding Date or the issuance of the Certificates pursuant to the
Pass Through Trust Agreement, nor the consummation by the Pass Through
Trustee, in its individual capacity or as Pass Through Trustee, as the
case may be, of any of the transactions contemplated hereby or
thereby, nor the compliance by the Pass Through Trustee, in its
individual capacity or as Pass Through Trustee, as the case may be,
<PAGE> 30
25
with any of the terms and provisions hereof and thereof, (i) requires
or will require any approval of its stockholders, or any approval or
consent of or notice to any trustees or holders of any indebtedness or
obligations of it, or (ii) contravenes or will contravene any
Applicable Law of the State of Delaware 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.
(iii) Governmental Consents. Neither the execution and
delivery by the Pass Through Trustee of any of the Operative Documents
to which it is a party 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 federal or State of Delaware governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary
powers;
(iv) Tax Liability. There are no Taxes payable by the
Pass Through Trustee imposed by the State of Delaware or any political
subdivision or taxing authority thereof or by the United States of
America in connection with the execution, delivery and performance by
the Pass Through Trustee of this Agreement or any other Operative
Document to which it is a party, and there are no Taxes payable by the
Pass Through Trustee imposed by the State of Delaware or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Pass Through Trustee of any of the Equipment Notes
(other than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by the Pass
Through Trust Agreement) and, prior to default and under currently
applicable law, assuming that the trust created by the Pass Through
Trust Agreement will not be taxable as a corporation, but, rather,
will be characterized as an investment trust treated as a grantor
trust under subpart E, Part I of Subchapter J of the Code, the Pass
Through Trust will not be subject to any Taxes imposed by the State of
Delaware or any political subdivision thereof;
(v) Litigation. There are no pending or, to the
knowledge of the Pass Through Trustee, threatened, actions or
proceedings against the Pass Through Trustee, either in its individual
capacity or as Pass Through Trustee, as the case may be, before any
federal, state or foreign governmental authority or agency which
individually or in the aggregate, if determined adversely to it, would
materially adversely affect the ability of the Pass Through Trustee,
in its individual capacity or as Pass Through Trustee, as the case may
be, to perform its obligations under the Operative Documents to which
it is a party.
<PAGE> 31
26
(vi) Control. The Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control with the
Owner Participant, the Owner Trustee, the Underwriter or Lessee.
(vii) No Defaults. The Pass Through Trustee is not in
default under any of the Operative Documents to which it is a party.
Section 10. Purchase of Equipment Notes.
Lessee shall not directly or indirectly purchase any
outstanding Equipment Note, except Lessee may, after the first anniversary of
the Closing Date, purchase Equipment Notes that shall not have been previously
called for redemption at the time of such purchase, so long as Lessee shall not
hold at any one time Equipment Notes representing more than 5% of the original
aggregate principal amount of all Equipment Notes.
Section 11. Certain Agreements of Lessee.
Lessee agrees as follows:
(a) Filings. Lessee will take, or cause to be taken, at
Lessee's cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of the Lease, the Indenture and any
financing statements or other instruments as are necessary, or
reasonably requested by the Owner Trustee, the Owner Participant or
the Indenture Trustee, to maintain, so long as the Indenture or the
Lease is in effect, the perfection of the security interest created by
the Indenture (including title solely for security purposes) and any
security interest that may be claimed to have been created by the
Lease and the ownership interest of the Owner Trustee in each Item of
Equipment, or will furnish to the Owner Trustee, the Indenture Trustee
and the Owner Participant timely notice of the necessity of such
action, together with such instruments, in execution form, and such
other information as may be required to enable them to take such
action.
(b) Certain Obligations. Lessee will furnish the
Officer's Certificate and Opinion of Counsel referred to in Section
11.01(c) of the Indenture.
(c) Corporate Existence. Lessee shall at all times
maintain its corporate existence except as permitted by Section 11(d);
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 determines, in its reasonable, good
faith business judgment, is no longer necessary or desirable in the
conduct of its business.
<PAGE> 32
27
(d) Merger Covenant. Lessee shall not consolidate with
or merge into any other Person or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless
(i) the successor corporation shall be a Class I Railroad within the
meaning of 49 C.F.R. Part 1201, (ii) the successor corporation shall
execute and deliver to the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Pass Through Trustee an agreement containing
the assumption by such successor corporation of the due and punctual
performance and observance of each covenant and condition of this
Agreement and each of the other Operative Documents to be performed or
observed by Lessee, (iii) immediately after giving effect to such
transaction no Event of Default shall have occurred as a result of
such consolidation or merger or such conveyance, transfer or lease,
(iv) in the case of a conveyance, transfer or lease of substantially
all of the assets of Lessee in accordance with this Section 11(d),
such conveyance, transfer or lease shall include the interests of
Lessee's leasehold interest in the Lease, (v) Lessee shall have made
all filings necessary in order to preserve and protect the rights of
the Lessor under the Lease and of the Indenture Trustee under the
Indenture and (vi) there shall have been delivered to the Owner
Participant, the Owner Trustee, the Indenture Trustee and the Pass
Through Trustee an Officer's Certificate of the successor to 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 (ii) above comply with this
Section 11(d). Upon such consolidation or merger, or any conveyance,
transfer or lease of substantially all of the assets of Lessee as an
entirety in accordance with this Section 11(d), the successor
corporation formed by such consolidation or into which 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, Lessee under this Agreement and the other Operative
Agreements with the same effect as if such successor corporation had
been named as Lessee herein.
(e) Financial Information. Lessee shall furnish to the
Owner Participant and the Owner Trustee, so long as any Item of
Equipment is leased under the Lease, and to the Indenture Trustee, so
long as any Equipment Notes are Outstanding:
(A) within 60 days after the end of each of the
first three quarters in each fiscal year of Lessee, unaudited
balance sheets (on a consolidated basis, if applicable) of
Lessee as of the end of such quarter and related statements of
income, shareholders' equity and cash flows of Lessee for the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter, provided that so long as
Lessee is subject to the reporting provisions of the
Securities Exchange Act of 1934, as amended, a copy of
Lessee's quarterly report on Form 10-Q will satisfy this
requirement;
<PAGE> 33
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(B) within 120 days after the end of each fiscal
year of Lessee, a copy of the annual report for such year for
Lessee (on a consolidated basis, if applicable) and a balance
sheet (consolidated, if applicable) of Lessee as of the end of
such fiscal year and related statements of income,
shareholder's equity and cash flows of Lessee for such fiscal
year, in comparative form with the preceding fiscal year, in
each case certified by independent accountants of national
standing as having been prepared in accordance with generally
accepted accounting principles and on a consistent basis with
the preceding fiscal year except as noted therein; provided
that such accountants have concurred with any changes in
accounting principles or practices; and provided further that
so long as Lessee is subject to the reporting provisions of
the Securities Exchange Act of 1934, as amended, a copy of
Lessee's annual report on Form 10-K will satisfy this
requirement;
(C) promptly upon the occurrence thereof,
information as to the nature and status of any Event of
Default or Potential Default;
(D) an annual certificate stating that there has
been no Event of Default; and
(E) from time to time, such other information as
the Owner Participant, the Owner Trustee or the Indenture
Trustee may reasonably request.
Section 12. Ownership of Equipment.
It is the intent of the parties hereto (i) that the sale of
the Items of Equipment by Lessee to the Owner Trustee is intended as a true
sale of all right, title and interest in and to the Items of Equipment for all
purposes; (ii) that the sale of the Items of Equipment by the Owner Trustee to
the Indenture Trustee is intended to convey legal title to the Items of
Equipment to the Indenture Trustee for the sole purpose of providing the
Indenture Trustee with a security interest in the Items of Equipment, subject
to the rights of Lessee under the Lease; (iii) that the lease back of the Items
of Equipment by the Owner Trustee from the Indenture Trustee is a lease in
legal form only which is intended to convey to the Owner Trustee all beneficial
ownership rights in the Items of Equipment, subject only to the rights of the
Indenture Trustee as holder of legal title for security purposes; (iv) that the
lease of the Items of Equipment by Lessee from the Owner Trustee pursuant to
the Lease is intended as a true lease, conveying to Lessee rights as a lessee
only; and (v) that for all other purposes (including tax purposes) the Owner
Trustee shall be the full and beneficial owner of the Items of Equipment.
<PAGE> 34
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Section 13. Transaction Costs; Continuing Expenses.
(a) Transaction Costs. In the event that the Owner
Participant participates in financing the Cost of any Item of Equipment on the
initial Funding Date, the Owner Participant agrees to pay directly or
contribute promptly to the Owner Trustee funds sufficient to pay, and the Owner
Trustee agrees to pay promptly, all Transaction Costs as they become due (or,
if previously paid by Lessee, to reimburse Lessee therefor).
(b) Continuing Expenses. Except as otherwise provided
herein or in another Operative Document or as may be otherwise agreed, Lessee
will pay promptly upon written demand the following:
(i) the fees of its counsel;
(ii) the annual fees of the Indenture Trustee (and each
Agent) under the Indenture and all reasonable out-of-pocket costs and
expenses, including reasonable legal fees and expenses, of the
Indenture Trustee (and each Agent) in the performance of its ongoing
responsibilities thereunder;
(iii) the annual fees of the Pass Through Trustee under the
Pass Through Trust Agreement and the Pass Through Trust Supplement and
all reasonable out-of-pocket costs and expenses, including reasonable
legal fees and expenses, of the Pass Through Trustee in the
performance of its ongoing responsibilities thereunder;
(iv) the annual fees of the Owner Trustee under the Trust
Agreement and all reasonable out-of-pocket costs and expenses,
including reasonable legal fees and expenses, of the Owner Trustee in
the performance of its ongoing responsibilities thereunder; and
(v) all reasonable out-of-pocket costs and expenses,
including reasonable legal fees and expenses and any related recording
costs, of each party in connection with all supplements, amendments,
modifications or alterations to or waivers or consents relating to
this Agreement or any other Operative Document; provided that Lessee
shall have no liability under this clause (iv) for any costs or
expenses arising out of or relating to the transfer of the Owner
Participant's interest in this Agreement or the Owner Trust Estate;
provided, however, that the foregoing proviso shall not apply to any
such transfer by the Owner Participant as a result of an Event of
Default.
(c) Late Transaction Costs. Notwithstanding the
provisions of paragraphs (a) and (b) of this Section 13, all Transaction Costs
(other than the fees and expenses of Davis Polk & Wardwell, Shearman &
Sterling, Babcock and McCarthy Tetrault) incurred or submitted for payment
after June 1, 1995 shall be paid by Lessee.
<PAGE> 35
30
Section 14. Transfer of Owner Participant's Interest.
(a) Permitted Transfers. The Owner Participant shall not
assign, convey or otherwise transfer any of its right, title or interest in the
Items of Equipment, the Trust Agreement, the Owner Trust Estate, the Tax
Indemnity Agreement or other properties of the Owner Participant pledged or
mortgaged pursuant to the Indenture (whether by transfer or other conveyance of
stock, partnership interests or otherwise), except that the Owner Participant
may, after December 31, 1995, transfer to another Person (a "Transferee") any
or all of such right, title and interest (including its obligations thereunder)
in compliance with the following conditions:
(i) the Transferee shall have the requisite power and
authority to enter into and carry out the transactions contemplated
hereby;
(ii) the Transferee will enter into an agreement or
agreements, in form and substance reasonably satisfactory to Lessee,
the Owner Trustee and the Indenture Trustee, whereby the Transferee
(A) confirms that it shall be deemed a party to this Agreement, the
Trust Agreement and the Tax Indemnity Agreement, (B) provides all of
the representations, warranties and agreements of the Owner
Participant under Section 7 and (C) agrees that it is bound by all the
terms of, and undertakes all the obligations of the Owner Participant
contained in, this Agreement, the Trust Agreement and the Tax
Indemnity Agreement;
(iii) such transfer shall not (A) require registration of
such right, title and interest under any provision of the Securities
Act of 1933, as amended, (B) increase Lessee's obligations or decrease
Lessee's rights as Lessee under the Operative Documents or (C) be
effected prior to the last day of a period (the "Notice Period")
commencing on the day notice (in reasonable detail) in writing of such
transfer is given by the Owner Participant to Lessee and ending on the
30th day subsequent to Lessee's receipt of such notice;
(iv) if such transfer would cause Lessee to be in
violation of any Applicable Law, Lessee shall give written notice of
such prospective violation to the Owner Participant during the Notice
Period, and such transfer shall not be effected;
(v) the Transferee (A) shall not be a competitor or an
Affiliate thereof of Lessee or any of its Affiliates; (B) shall not be
a party attempting a hostile takeover of Lessee or any of its
Affiliates; (C) shall not be a party to any litigation or third- party
arbitration (whether as a plaintiff or defendant) involving Lessee or
any of its Affiliates in an amount of $10,000,000 or more per claim;
(D) shall be (x) a bank, trust company or insurance company, pension
trust, credit or finance corporation or other financial institution
with capital and surplus of at least $75,000,000, (y) a corporation
with (or a partnership, the partners of which are corporations or
mutual
<PAGE> 36
31
benefit companies and the number of general and limited partners of
which does not exceed ten in total, each of the general partners of
which has) a Tangible Net Worth of at least $75,000,000 or (z) a
corporation with (or a partnership, the partners of which are
corporations or mutual benefit companies and the number of general and
limited partners of which does not exceed ten in total, each of the
general partners of which has) a Tangible Net Worth of less than
$75,000,000, if all of the obligations of such corporation (or such
partnership) shall be unconditionally guaranteed by an instrument, in
form and substance satisfactory to Lessee and the Owner Trustee, by a
Person which meets the requirements of either subclause (x) or
subclause (y) of this clause (D); (E) is a sophisticated institutional
or corporate investor, or any Subsidiary or Affiliate thereof, if such
institutional or corporate investor guarantees the obligations of such
Subsidiary or Affiliate pursuant to an unconditional guarantee in form
and substance satisfactory to Lessee and the Owner Trustee; and (F) is
not a manufacturer of railroad equipment;
(vii) there shall be at any time no more than three Owner
Participants;
(viii) no more than three such transfers may be made; and
(ix) the Owner Participant shall bear all transaction
costs of the transfer, including the reasonable attorneys' fees of
Lessee and the Indenture Trustee.
(b) Indemnification by the Owner Participant. If the
Owner Participant shall make any transfer pursuant to Section 14(a) and the
Transferee shall not be organized under the laws of the United States or any
State thereof, the Owner Participant shall, on an After- Tax Basis, indemnify,
defend and hold harmless Lessee against (1) all Taxes imposed upon Lessee as a
proximate result of such foreign transfer and (2) any diminution of the rights
or increase in the liabilities of Lessee under the Operative Documents as a
proximate result of such foreign transfer.
Section 15. General Tax Indemnity.
(a) Indemnitee Defined. For purposes of this Section 15,
"Indemnitee" means the Owner Participant, the Owner Trustee both in its
individual capacity and as trustee, the Owner Trust Estate, the Indenture
Estate, the Indenture Trustee, both in its individual capacity and as trustee,
the Pass Through Trustee, both in its individual capacity and as trustee, the
Holders of Equipment Notes and each of their respective partners and Affiliates
of all of the foregoing, and each of such Person's respective successors,
transferees or assigns permitted or not prohibited under the terms of the
Operative Documents, and each member of a consolidated, combined or similar
group with which any of the foregoing files tax returns.
<PAGE> 37
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(b) Taxes Indemnified. Subject to the exclusions stated
in subsection (c) below, Lessee agrees to indemnify, defend and hold harmless
each Indemnitee against all Taxes, howsoever imposed (whether imposed upon any
Indemnitee, Lessee, each Item of Equipment, any Part or otherwise), upon or
with respect to or in connection with, based upon or measured by, in whole or
in part:
(i) each Item of Equipment or any Part;
(ii) the manufacture, construction, improvement,
modification, rebuilding of, purchase, acquisition, financing,
refinancing, ownership, delivery, transport, leasing, re-leasing,
subleasing, possession, repossession, use, operation, control,
insuring, location, maintenance, repair, condition, return,
replacement, substitution, registration, reregistration, storage,
redelivery, transfer of title to, transfer of registration of,
exportation of, or the imposition of any Lien, other than a Lessor's
Lien (or the incurrence of any liability to refund or pay over any
amount as the result of any Lien, other than a Lessor's Lien) on,
sale, acceptance, abandonment, rejection or other disposition of or
action or event with respect to each Item of Equipment, any Part or
any interest therein;
(iii) the rentals, receipts, income or earnings arising
from the purchase, financing, refinancing, ownership, delivery,
redelivery, leasing, re-leasing, subleasing, possession, use,
operation, control, location, maintenance, repair, improvement,
modification, rebuilding of, condition, return, replacement,
substitution, storage, transfer of title to, sale or other disposition
of each Item of Equipment, any Part or any interest therein;
(iv) the Equipment Notes, their issuance, acquisition,
refinancing, holding or any subsequent transfer thereof, or the
payment of any amounts thereon or with respect thereto;
(v) the property, or the income or other proceeds
received with respect to the property, held by the Indenture Trustee
under the Indenture or by the Owner Trustee under the Trust Agreement;
or
(vi) the Operative Documents or amendments or supplements
thereto and any other documents contemplated thereby, their execution
or delivery, the transactions contemplated thereby.
(c) Taxes Excluded. The indemnity provided for in
Section 15(b) above shall not extend to any of the following:
<PAGE> 38
33
(i) Subject to clause (vi) below, United States Federal
income taxes imposed on an Indemnitee (other than the Indenture
Estate, the Indenture Trustee and the trust created by the Indenture
and the Holders of Equipment Notes);
(ii) Taxes imposed on an Indemnitee that are on, based on,
or measured by the net or gross income, capital or net worth,
franchise, excess profits or conduct of business of such Indemnitee
(other than the Indenture Estate, the Indenture Trustee and the trust
created by the Indenture, the Pass Through Trustee and the Pass
Through Trust and the Holders of Equipment Notes) imposed by any state
or local government, political subdivision or taxing authority in the
United States, other than any such Taxes which are imposed as a result
of a nexus between any Item of Equipment and any such taxing
jurisdiction in which such Indemnitee is not at the time otherwise
subject to such Taxes and to the extent attributable to such Item(s)
of Equipment;
(iii) Taxes imposed on an Indemnitee that are on, based on,
or measured by the net or gross income, capital or net worth,
franchises, excess profits or conduct of business of such Indemnitee
(other than the Indenture Estate, the Indenture Trustee and the trust
created by the Indenture and the Holders of Equipment Notes) imposed
by any government or political subdivision or taxing authority of or
in a foreign country or of or in a territory or possession of the
United States, or by any international authority other than any such
Taxes imposed as the result of or with respect to the presence of any
Item of Equipment in the taxing jurisdiction;
(iv) Gross receipt taxes imposed on an Indemnitee in lieu
of any taxes described in Sections 15(c)(ii) and (iii) excluding any
such taxes which are in the nature of sales, property or value added
use taxes;
(v) Taxes relating to each Item of Equipment (whether or
not indemnified by Lessee hereunder or under the Tax Indemnity
Agreement) and imposed with respect to events occurring during any
period following the expiration or early termination of the Lease Term
and the redelivery of such Item of Equipment by Lessee under Section
5(b) of the Lease, except that Taxes incurred in connection with the
exercise of any remedies pursuant to Section 15 of the Lease or under
Article V of the Indenture following the occurrence of an Event of
Default or Event of Acceleration shall not be excluded from the
indemnity provided for in Section 15(b);
(vi) Taxes imposed on the Indenture Trustee, the Owner
Trustee or the Pass Through Trustee with respect to any fees received
by such Indemnitee for services rendered in their respective
capacities as trustee;
(vii) Taxes imposed on an Indemnitee which arise out of or
are caused by (a) the gross negligence, fraud or willful misconduct of
such Indemnitee, (b) any act
<PAGE> 39
34
or omission of such Indemnitee where such act of omission is not
contemplated by the Operative Documents, or (c) the falsity,
inaccuracy or breach by such Indemnitee of any representation,
warranty or covenant in any of the Operative Documents;
(viii) Taxes imposed on an Indemnitee which become payable
by reason of any transfer by such Indemnitee, other than (A) a
transfer from the Indenture Estate or by the Indenture Trustee or by
the trust created by the Indenture, (B) any transfer of the situs of
the trust created by the Indenture, of all or any portion of its
interest in each Item of Equipment, the Lease or the Indenture Estate,
(C) a transfer occurring in connection with an Event of Loss, an early
termination of the Lease or the exercise by Lessee of any purchase
option set forth in Section 20 of the Lease, or (D) any transfer
(including shares of stock in an Indemnitee) which occurs or results
from the exercise of any rights under Section 15 of the Lease or any
remedies under Article 5 of the Indenture;
(ix) Taxes imposed on the Owner Participant for which
Lessee is obligated to indemnify, and has indemnified, the Owner
Participant under the Tax Indemnity Agreement;
(x) Taxes which have been included (to the extent
included) in Lessor's Cost;
(xi) Taxes imposed on a transferee of an Indemnitee (other
than a transferee of the Indenture Estate, the Indenture Trustee or
the trust created by the Indenture) to the extent of the excess of
such Taxes over the amount of Taxes which would have been imposed had
there not been a transfer by such original Indemnitee of any interest
of such Indemnitee in any Item of Equipment, the Equipment Notes or
the Owner Trust Estate (other than a transfer which occurs or results
from the exercise of any rights under Section 15 of the Lease or any
remedies under Article 5 of the Indenture or any rights under Section
5.04 of the Indenture);
(xii) Taxes imposed on the Owner Trustee, the Owner Trust
Estate or the Owner Participant in the nature of interest, penalties,
fines and additions to taxes payable by the Owner Trustee, the Owner
Trust Estate or the Owner Participant as a result of such Indemnitee's
failure to file timely and proper returns pursuant to Section 15(h),
provided that Lessee has complied with all of its obligations under
Section 15(h);
(xiii) Any tax imposed under Section 502(i) of ERISA or
Section 4975 of the Code as a result of any prohibited transaction
(within the meaning of Section 4975(c)(1) of the Code) on the Owner
Participant if and to the extent that such tax or penalty first arises
or otherwise accrues more than 80 days after the date of notice from
the Internal Revenue Service or the Department of Labor to the Owner
<PAGE> 40
35
Participant that a prohibited transaction resulted from the
acquisition of any of the Certificates by or on behalf of an ERISA
Plan as to which (1) an Affiliate of the Owner Participant acts as
trustee or in any other capacity causing the Owner Participant to be a
party in interest with respect to such ERISA Plan and (2) such
Affiliate exercises control over such ERISA Plan's investment in such
Certificates.
(d) All Tax Obligations in This Section, Etc.
Notwithstanding any other provision anywhere contained in the Operative
Documents, it is understood that all of Lessee's obligations with respect to
taxes are set forth in this Section 15 (other than taxes taken into account in
computing the amount of any payment to be made on an After-Tax Basis) and in
the Tax Indemnity Agreement, and if Lessee shall be required under any
provision of the Operative Documents to pay any tax for which it is not
responsible under this Section 15, or any provision of the Operative Documents
that requires any payment to be made on an After-Tax Basis, or the Tax
Indemnity Agreement, it shall be entitled to prompt reimbursement of such
amount from the party whose tax liability was paid.
The amount Lessee shall be required to pay with respect to any
Tax indemnified against under this Section 15 (or under Section 16(b)) shall be
an amount sufficient to restore the Indemnitee to the same position such party
would have been in had such Tax not been incurred and shall be on an After-Tax
Basis. If, as a result of the inclusion of any payment to be made by Lessee
under this Section 15 or Section 16(b) in the taxable income of the Indemnitee
in one year and the deduction or crediting of the Tax with respect to which
such payment is made from the taxable income of such Indemnitee in the same or
a different year, or the nondeductibility of such Tax from the taxable income
of such Indemnitee, or the anticipated realization by such Indemnitee in a
different year of tax benefits resulting from the transaction giving rise to
such Tax, the payment by Lessee hereunder of an amount equal to such Tax would
be more or less than the amount which would be required to make the Indemnitee
whole, the amount of the indemnity to be paid by Lessee hereunder shall be
adjusted to an amount which (after taking into account all Federal, State,
local and foreign income tax effects on the Indemnitee, any loss of use of
money resulting from differences in timing between the inclusion of such
indemnity in the taxable income of such Indemnitee and the anticipated
realization by such Indemnitee of tax benefits resulting from the transaction
to which such indemnity is related, and the present value of any such
anticipated future tax benefits to be realized by such Indemnitee as a result
of deducting or crediting such Tax or as a result of the matters immediately
giving rise thereto) will be sufficient to place the Indemnitee in the same
position as such Indemnitee would have been in had such Tax not been imposed.
(e) Procedures. All computations for the purposes hereof
shall be based on the actual statutory rates of Tax in effect for the period or
periods affected, to the extent not inconsistent with the definition of
After-Tax Basis. Computations involving the loss of use of money or
calculations of present value shall be based on the Certificate Rate per annum,
as adjusted for applicable income tax effects and compounded semiannually on
each Rent
<PAGE> 41
36
Payment Date. All computations of amounts due an Indemnitee shall be made
reasonably by such Indemnitee, which Indemnitee shall deliver to Lessee a
written statement containing the results of such computations and a reasonably
detailed explanation of the manner in which such computations were made. Any
amount payable to an Indemnitee pursuant to this Section 15 shall be paid in
immediately available funds and in any event within 30 days after receipt of a
written demand therefor from such 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 the earlier of (i) 5 days prior to the time such Taxes are due to
be paid (provided, however, that an Indemnitee shall not make payment of any
claim for Taxes until at least 30 days (so long as such non-payment is legally
permitted) following the date Lessee receives notification of such claim) or
(ii) in the case of amounts which are being contested by Lessee in good faith
or by the Indemnitee pursuant to Section 15(f), the time such contest is
finally resolved (except as otherwise provided in Section 15(f)). Within 15
days following Lessee's receipt of the computation of the amount of the
indemnity, Lessee may request that a Lease Intermediary Firm to be jointly
selected by Lessee and such Indemnitee (but not including the accounting firm
or any Affiliate thereof that regularly prepares the certified financial
statements of Lessee or such Indemnitee) determine whether such computations of
the Indemnitee are correct. The Lease Intermediary Firm shall be requested to
make its determination within 30 days. Any information provided to the Lease
Intermediary Firm by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the Lease
Intermediary Firm will confirm in writing that it will treat such information
as) the private, proprietary and confidential property of such Person, and no
Person other than such Person and the Lease Intermediary Firm shall be entitled
thereto, and all such materials shall be returned to such Person. The
computations of such Lease Intermediary Firm shall be final, binding and
conclusive upon the parties, and Lessee shall have no right to inspect the
books, records or tax returns or other documents of the Indemnitee to verify
such computation or for any other purpose. All fees and expenses payable under
this Section 15 shall be borne by Lessee. As soon as practicable after each
payment by Lessee of any Tax indemnified against pursuant to this Section 15,
Lessee shall furnish the appropriate Indemnitee the original or a certified
copy of a receipt for Lessee's payment of such Tax, if any, or such other
evidence of payment of such Tax as is reasonably acceptable to such Indemnitee.
(f) Contest. If any proceeding (including a written
claim or written threat of such proceedings) is commenced against an Indemnitee
for any Taxes, such Indemnitee shall notify Lessee of such proceeding promptly
after obtaining knowledge thereof and within the statutory time necessary to
contest such claim; provided that (x) in any event such notice shall be given
to Lessee no later than 30 days after receipt by the Indemnitee of a written
notice of such claim and (y) such Indemnitee will not make payment in respect
of such claim for at least 30 days after giving such notice to Lessee. The
Indemnitee shall, in good faith, with due diligence and at Lessee's expense, if
timely requested in writing by Lessee no later than 30 days after receipt by
Lessee of such Indemnitee's notice to Lessee of such claim,
<PAGE> 42
37
contest in the name of such Indemnitee (or, if requested by Lessee and
permissible as a matter of law (except where such Indemnitee is contesting the
same tax based on substantially the same facts to the extent the matters are
not distinguishable) permit Lessee to contest) 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; and/or
(iv) subject to the Indemnitee's overall control of any
contest which it conducts hereunder, taking such other reasonable
action as Lessee may reasonably request.
Subject to the Indemnitee's overall control of any contest
which it conducts hereunder, each Indemnitee shall take such reasonable
actions, including the execution of appropriate documents (other than an
amendment to the Operative Documents) as Lessee reasonably requests in writing
to aid Lessee in minimizing the amount of any Tax subject to indemnification
under this Section 15 in the event of an audit of Lessee's tax returns by any
taxing authority, the assertion or proposal of any adjustment to any such
return, or any related litigation.
Notwithstanding the foregoing provisions of this Section 15,
such Indemnitee shall not be required to take any action unless (A) Lessee
shall have within 30 days after notice by such Indemnitee to Lessee of such
claim, requested that such claim be contested; (B) Lessee shall have first
furnished such Indemnitee with a written opinion, reasonably satisfactory to
such Indemnitee, of independent tax counsel selected by Lessee and approved by
such Indemnitee, which approval shall not be unreasonably withheld, to the
effect that a reasonable basis exists to contest such claim (and, if such claim
is being appealed, that it is more likely than not that the prior decision will
be reversed or modified); (C) Lessee shall have first agreed to pay such
Indemnitee on demand all out-of-pocket costs and expenses which such Indemnitee
may incur in connection with contesting such claim; (D) the amount of the
indemnity payment, together with the amount of all similar and related claims
on which such claim could have a significant precedential impact, could exceed
$50,000; and (E) no Event of Default shall have occurred and be continuing,
unless either (1) Lessee shall have pre-paid the indemnity and expenses or made
other arrangements satisfactory to such Indemnitee or (2) in the case of a
bankruptcy Event of Default, Lessee's indemnity obligations shall have been
assumed or affirmed in the bankruptcy proceedings. The parties further agree
that an Indemnitee may at any time decline to take further action with respect
to the contest of any claim for a Tax, provided, however, that if Lessee has
properly
<PAGE> 43
38
requested such contest pursuant to this Section 15(f), such Indemnitee cannot
decline to initiate or continue such contest unless it waives its rights to any
indemnity payment by Lessee which would otherwise be payable by Lessee pursuant
to this Section 15(f) in respect of such claim. Notwithstanding the foregoing,
no contest shall be permitted hereunder unless such contest will not result in
any material danger of sale, forfeiture or loss of, or the creation of any Lien
other than a Permitted Lien on, any Item of Equipment (unless Lessee shall have
adequately bonded such lien or otherwise made reasonable provision to protect
the interests of such Indemnitee).
(g) Refund. So long as no Indenture Default or Event of
Default or Event of Acceleration shall have occurred and be continuing, upon
receipt by an Indemnitee of a refund or credit of all or part of any Taxes
which Lessee shall have paid for or advanced to such Indemnitee or for which
Lessee shall have reimbursed or indemnified such Indemnitee, such Indemnitee
shall pay to Lessee an amount which, after consideration of the further net tax
effect, if any, on such Indemnitee as a result of the receipt of the refund or
credit (and any interest thereon) and the payment under this paragraph, is
equal to the amount of such refund or credit and any interest received or
credited by such Indemnitee on such refund; provided, however, that in no event
shall the amount paid to Lessee (exclusive of any interest received or credited
by such Indemnitee on such refund) be greater than the amount paid by Lessee to
such Indemnitee with respect to Taxes arising out of the same claim. Should an
Indenture Default or Event of Default or Event of Acceleration have occurred
and be continuing at the time an Indemnitee receives a refund or credit, such
Indemnitee shall pay the amount set forth in the preceding sentence when such
Indenture Default or Event of Default or Event of Acceleration shall have been
cured by Lessee.
(h) Reports and Returns. If any report, return or
statement is required to be filed by any Indemnitee with respect to any Tax
subject to indemnification under this Section 15, Lessee shall timely file the
same (except for any such report, return or statement which such Indemnitee
intends or is required to file), provided that such Indemnitee shall have
furnished Lessee with such information (not within the knowledge or control of
Lessee, reasonably available to such Indemnitee and reasonably necessary for
the filing of such report, return or statement) as Lessee requests in writing.
Lessee shall either (i) file such report, return or statement so as to show the
ownership of the Items of Equipment by the Owner Trustee (if such report,
return or statement requires that the owner of the Items of Equipment be
identified) and send a copy of such report, return or statement to such
Indemnitee (and, if such Indemnitee is not the Owner Trustee, to the Owner
Trustee, provided that such Indemnitee has consented in writing to Lessee's
providing a copy of such report, return or statement to the Owner Trustee) or,
if Lessee is not permitted to make such filing, (ii) notify such Indemnitee of
such prohibition and prepare and deliver such report, return or statement (or
if such report, return or statement contains information in addition to
information concerning the transactions contemplated by the Operative
Documents, the portion of such report, return or statement that relates to the
transactions contemplated by the Operative Documents) to such Indemnitee, in a
manner satisfactory to such Indemnitee,
<PAGE> 44
39
within a reasonable time prior to the time such report, return or statement is
required to be filed. Each Indemnitee shall timely file any report, return or
statement described in clause (ii) of the preceding sentence in the manner
requested by Lessee and in accordance with Applicable Law. Any expenses
incurred by any Indemnitee with respect to the preparation, execution or
submission of any report, return or statement (or, where appropriate, that
portion of such report, return or statement which relates to the transactions
contemplated by the Operative Documents) described in clause (ii) of the second
sentence of this Section 15(h), or the filing or recording thereof, shall be
reimbursed to such Indemnitee on an After-Tax Basis by Lessee. Lessee shall
also furnish promptly, upon written request, such information in its possession
or otherwise reasonably available to it (and not in the possession of or
otherwise reasonably available to such Indemnitee) as any Indemnitee may
reasonably request to enable such Indemnitee to comply with the requirements of
any taxing authority, whether or not relating to a Tax subject to
indemnification under this Section 15. Lessee shall indemnify, defend and hold
each Indemnitee harmless from and against all interest, penalties, additions to
tax and fines arising from the insufficiency or inaccuracy of any such report,
return or statement or portion thereof prepared by Lessee or, notwithstanding
Section 15(c), directly attributable to the inaccuracy of any information
supplied to such Indemnitee by Lessee pursuant to the preceding sentence. If
any report, return or statement (other than a report, return, or statement
currently being filed, or required to be filed, by such Indemnitee without
regard to the transactions contemplated by the Operative Documents) is required
to be filed with respect to any Tax, whether or not subject to indemnification
under this Section 15, other than a report, return or statement described in
the first or second sentence of this Section 15(h), Lessee will promptly notify
the appropriate Indemnitee upon Lessee's obtaining actual knowledge of such
requirement. If Lessee receives written notice from a taxing authority of any
Tax that is imposed upon an Indemnitee, whether or not indemnified against by
Lessee hereunder, Lessee will forward a copy of such notice to such Indemnitee.
If any report, return or statement (other than a report, return, or statement
currently being filed, or required to be filed, by Lessee without regard to the
transactions contemplated by the Operative Documents) described in the first or
second sentence of this Section 15(h) is required to be filed with respect to
any Tax subject to indemnification under this Section 15, the Indemnitee will
promptly notify Lessee upon the Indemnitee's obtaining actual knowledge of such
requirement.
(i) Nature of Lessee's Obligations. The foregoing
indemnities by Lessee shall not constitute a guarantee by Lessee or any
subsidiary or Affiliate of Lessee of the payment of any installments of
principal or interest payable under the Equipment Notes, or a guarantee of any
residual value of any Item of Equipment following the expiration of the Term.
<PAGE> 45
40
Section 16. General Indemnification and Waiver of Certain
Claims.
(a) Indemnified Person Defined. For the purposes of this
Section 16, "Indemnified Person" means the Owner Participant, the Owner Trustee
both in its individual capacity and as trustee, the Indenture Trustee, both in
its individual capacity and as trustee, the Pass Through Trustee, both in its
individual capacity and as trustee, the Registrar, the Paying Agent, the
Holders of Equipment Notes, the Owner Trust Estate, the Indenture Estate, each
of their partners, directors, officers, employees, servants and agents, and
each of the successors, transferees or assigns of any of them permitted under
the terms of the Operative Documents.
(b) Claims Indemnified. Subject to the exclusions stated
in subsection (c) below, Lessee agrees to indemnify, defend and hold harmless
on an After-Tax Basis each Indemnified Person against all Claims to the extent
arising out of:
(i) the Equipment, or the ownership, lease, modification,
improvement, non-use, control, substitution, repair, storage, transfer
or other application or disposition, return, servicing, replacement,
operation, possession, use, maintenance, overhaul, testing,
registration, delivery, non-delivery, sublease, non-use, modification,
alteration, sale or return of any Item of Equipment, or any Part of
any of the foregoing, by Lessee, any sublessee or any other Person
whatsoever, whether or not such operation, possession, use,
maintenance, overhaul, testing, registration, delivery, non-delivery,
sublease, non-use, modification, alteration, sale or return is in
compliance with the terms of the Lease, including, without limitation,
Claims for death, personal injury or property damage or other loss or
harm to any Person whatsoever and Claims relating to any laws, rules
or regulations pertaining to such operation, possession, use,
maintenance, overhaul, testing, registration, delivery, non-delivery,
sublease, non-use, modification, alteration, sale or return, including
environmental control, noise and pollution laws, rules or regulations;
(ii) the construction, manufacture, design, rebuilding,
purchase, sale (including all costs incurred in making any Item of
Equipment ready for sale in connection with the exercise of remedies
under the Lease and/or the Indenture), acceptance, rejection,
delivery, non-delivery or condition of any Item of Equipment, or any
Part of any of the foregoing, including, without limitation, latent
and other defects, whether or not discoverable, or arising from strict
tort liability, patent, trademark or copyright infringement;
(iii) the Operative Documents, the proceeds thereunder and
the transactions contemplated thereby and any breach of or failure to
perform or observe, or any other noncompliance with, any covenant or
agreement to be performed, or other obligation of Lessee under any of
the Operative Documents, or any enforcement of any of the terms of any
of the Operative Documents, or the offering, issuance or sale of the
<PAGE> 46
41
Equipment Notes, the offering and sale of the beneficial interest in
the Owner Trust Estate or any transfer of an Equipment Note, or the
falsity of any representation or warranty of Lessee in any of the
Operative Documents, other than representations and warranties in the
Tax Indemnity Agreement;
(iv) any Claim relating to or arising out of the offer,
sale or delivery of the Equipment Notes or the Certificates, or in any
way relating to or arising out of the offer or sale of any interest in
the Owner Trust Estate, the Trust Agreement or any similar interest or
in any way relating to or arising out of the Trust Agreement and the
Owner Trust Estate, the Indenture and the Indenture Estate or the
action or inaction of the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee as trustees (including, without limitation, any
Claim arising out of the Owner Participant's obligation under Article
7 of the Trust Agreement); or
(v) in the case of the Indenture Trustee, the Pass
Through Trustee, the Owner Participant and the Owner Trustee,
liability under Federal and state securities laws arising out of the
Prospectus.
(c) Claims Excluded. The following are excluded from
Lessee's agreement to indemnify under this Section 16:
(i) Claims relating to each Item of Equipment and imposed
with respect to events occurring during any period following the
expiration or early termination of the Lease Term and the redelivery
of such Item of Equipment by Lessee under Section 5(b) of the Lease,
except that Claims incurred in connection with the exercise of any
remedies pursuant to Section 15 of the Lease or under Article 5 of the
Indenture following the occurrence of an Event of Default or Event of
Acceleration shall not be excluded from the indemnity provided for in
Section 16(b);
(ii) Claims which are Taxes, whether or not Lessee is
required to indemnify therefor under Section 15 hereof or under the
Tax Indemnity Agreement;
(iii) Any tax imposed under Section 502(i) of ERISA or
Section 4975 of the Code as a result of any prohibited transaction
(within the meaning of Section 4975(c)(1) of the Code) under Section
502(i) of ERISA or Section 4975 of the Code as a result of any
prohibited transaction (within the meaning of Section 4975(c)(1) of
the Code) on the Owner Participant if and to the extent that such tax
or penalty first arises or otherwise accrues more than 80 days after
the date of notice from the Internal Revenue Service or the Department
of Labor to the Owner Participant that a prohibited transaction
resulted from the acquisition of any of the Certificates by or on
behalf of an ERISA Plan as to which (1) an Affiliate of the Owner
Participant acts as trustee or in any other capacity causing the Owner
Participant to be a party in interest
<PAGE> 47
42
with respect to such ERISA Plan and (2) such Affiliate exercises
control over such ERISA Plan's investment in such Certificates.
(iv) with respect to any particular Indemnified Person,
Claims to the extent attributable to (A) the actual negligence (but
not for negligence attributable to the Owner Trustee's ownership of
the Equipment) or willful misconduct of, (B) the breach of any
contractual obligation by, or (C) the falsity or inaccuracy or breach
of any representation or warranty of, such Indemnified Person;
(v) with respect to any particular Indemnified Person,
Claims to the extent attributable to the negligence of such
Indemnified Person in connection with the inspection of the Equipment
pursuant to Sections 5(c), 5(e) and 12 of the Lease; and
(vi) Claims imposed on an Indemnitee which become payable
by reason of any transfer by such Indemnitee, other than (A) a
transfer from the Indenture Estate or by the Indenture Trustee or by
the trust created by the Indenture, (B) any transfer of the situs of
the trust created by the Indenture, of all or any portion of its
interest in each Item of Equipment, the Lease or the Indenture Estate,
(C) a transfer occurring in connection with an Event of Loss, an early
termination of the Lease or the exercise by Lessee of any purchase
option set forth in Section 20 of the Lease, or (D) any transfer
(including shares of stock in an Indemnitee) which occurs or results
from the exercise of any rights under Section 15 of the Lease or any
remedies under Article 5 of the Indenture.
(d) Insured Claims. In the case of any Claim indemnified
by Lessee hereunder which is covered by a policy of insurance maintained by
Lessee pursuant to Section 11 of the Lease or otherwise, each Indemnified
Person agrees to cooperate with 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.
(e) Claims Procedure. An Indemnified Person shall
promptly notify Lessee of any Claim as to which indemnification is sought.
Subject to the rights of insurers under policies of insurance maintained by
Lessee, Lessee shall have the right to investigate, and the right in its sole
discretion to defend or compromise any Claim for which indemnification is
sought under this Section 16, and the Indemnified Person shall cooperate with
all reasonable requests of Lessee in connection therewith; provided, however,
Lessee shall not be entitled to contest any such Claim if (1) an Event of
Default shall have occurred and be continuing or (2) such contest would involve
(i) any material danger of the sale, forfeiture or loss of, or the creation of
any Lien (other than a Permitted Lien) on, any Item of Equipment, the Owner
Trust Estate or any part thereof, (ii) any criminal liability against such
Indemnified Person or (iii) any material risk to such Indemnified Person of
civil liability (including, without limitation, any contractual liability, not
contemplated by the Operative Documents or the transactions contemplated
thereby).
<PAGE> 48
43
In the event Lessee assumes the defense of any such contest,
any Indemnified Person shall have the right to employ separate counsel in such
contest and participate therein, and the reasonable fees and expenses of such
counsel shall be at the expense of such Indemnified Person, except that such
fees and expenses shall be for the account of Lessee if (1) an Event of Default
shall have occurred and be continuing or (2) the defense of such contest would
involve (i) any material danger of the sale, forfeiture or loss of, or the
creation of any Lien (other than a Permitted Lien) on, any Item of Equipment,
the Owner Trust Estate or any part thereof, (ii) any criminal liability against
such Indemnified Person or (iii) any material risk to such Indemnified Person
of civil liability (including, without limitation, any contractual liability)
not contemplated by the Operative Documents or the transactions contemplated
thereby. Such Indemnified Person shall supply Lessee with such information
requested by Lessee as in the reasonable opinion of counsel to such Indemnified
Person is necessary or advisable for Lessee to control or participate in any
proceeding to the extent permitted by this Section 16. Unless Lessee is
excluded from control of a judicial proceeding involving an Indemnified Person,
such Indemnified Person shall not enter into a settlement or other compromise
with respect to any Claim without the prior written consent of Lessee, unless
such Indemnified Person waives its right to be indemnified with respect to such
Claim under this Section 16.
(f) Subrogation. When and to the extent that a Claim
indemnified by Lessee under this Section 16 is in fact completely and fully
paid by Lessee and/or an insurer under a policy of insurance maintained by
Lessee, and so long as no Event of Default shall have occurred and be
continuing, 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 on whose behalf such Claim was paid with respect to the transaction or
event giving rise to such Claim; provided, however, that such subrogation
rights shall not permit Lessee to avail itself as against any other Indemnified
Person of any exclusion to Lessee's general indemnity obligations set forth in
this Section 16 other than such exclusions as are expressly stated herein.
Should an Indemnified Person receive any refund, in whole or in part, with
respect to any Claim paid by Lessee hereunder, it shall promptly pay over the
amount refunded, together with any interest actually received with respect to
such amount for the period between the indemnification payment and the receipt
of such refund, to Lessee. In no event shall as Indemnified Party be obligated
to pay to Lessee more than the amount received (including any such interest) by
such Indemnified Party.
(g) No Guaranty. The general indemnification provisions
of this Section 16 do not constitute a guaranty by Lessee that the principal or
interest on the Equipment Notes will be paid.
<PAGE> 49
44
Section 17. 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 and
severally as to its own actions only, agrees that, notwithstanding any other
provision of any of the Operative Documents, so long as no Event of Default has
occurred and is continuing, it shall not take, cause to be taken or authorize
any action contrary to Lessee's, any sublessee's or any user's right of quiet
enjoyment under the Lease, including, without limitation, the right to
possession and use of each Item of Equipment.
Section 18. Limitation of Liability of Owner Trustee, Owner
Participant, Indenture Trustee and Pass Through Trustee.
(a) Owner Trustee. It is expressly understood and agreed
by and among the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Owner Participant and Lessee that except as otherwise expressly
provided herein, (i) the Operative Documents to which the Owner Trustee is a
party (except for the Trust Agreement) are executed and delivered by the Owner
Trustee not in its individual capacity but solely as trustee under the Trust
Agreement in the exercise of the power and authority conferred and vested in it
as such Owner Trustee, (ii) each of the representations, undertakings and
agreements made therein by the Owner Trustee are not personal representations,
undertakings and agreements, but are binding only on the Owner Trust Estate and
the Owner Trustee, as trustee, (iii) actions to be taken by the Owner Trustee
pursuant to its obligations thereunder may, in certain instances, be taken by
the Owner Trustee only upon specific authority of the Owner Participant, (iv)
nothing therein contained shall be construed as creating any liability of the
Owner Trustee, in its individual capacity, or any incorporator or any past,
present or future subscriber to the capital stock of, or stockholder, officer
or director of, the Owner Trustee in its individual capacity to perform any
covenant either express or implied contained therein, all such liability, if
any, being expressly waived by the Owner Participant, the Indenture Trustee and
Lessee and by any Person claiming by, through or under them, and (v) so far as
the Owner Trustee in its individual capacity is concerned, the Indenture
Trustee, the Pass Through Trustee, the Owner Participant, Lessee, and any
Person claiming by, through or under them shall look solely to the Owner Trust
Estate and the Indenture Estate for the performance of any obligation under any
of the instruments referred to therein; provided, however, that nothing in this
Section 18 shall be construed to limit in scope or substance the liability of
the Owner Trustee (A) in its individual capacity to the Owner Participant as
expressly set forth in the Trust Agreement, (B) in respect of the
representations, warranties and agreements of the Owner Trustee in its
individual capacity, as expressly set forth therein (including, without
limitation, Section 8) or in any other Operative Document to which it is a
party, and (C) in its individual capacity and as Owner Trustee for the
consequences of its own gross negligence or willful misconduct.
<PAGE> 50
45
(b) Indenture Trustee. It is expressly understood and
agreed by and among the Owner Trustee, the Indenture Trustee, the Owner
Participant and Lessee that except as otherwise expressly provided therein, (i)
the Operative Documents to which the Indenture Trustee is a party are executed
and delivered by the Indenture Trustee not in its individual capacity but
solely as trustee under the Indenture in the exercise of the power and
authority conferred and vested in it as such Indenture Trustee, (ii) each of
the representations, undertakings and agreements made therein by the Indenture
Trustee are not personal representations, undertakings and agreements, but are
binding only on the Indenture Estate and the Indenture Trustee, as trustee,
(iii) nothing therein contained shall be construed as creating any liability of
the Indenture Trustee, in its individual capacity, or any incorporator or any
past, present or future subscriber to the capital stock of, or stockholder,
officer or director of, the Indenture Trustee in its individual capacity to
perform any covenant either express or implied contained herein, all such
liability, if any, being expressly waived by the Owner Participant, the Owner
Trustee and Lessee and by any Person claiming by, through or under them, and
(iv) so far as the Indenture Trustee in its individual capacity is concerned,
the Owner Trustee, the Owner Participant, Lessee, and any Person claiming by,
through or under them shall look solely to the Indenture Estate and the Owner
Trust Estate for the performance of any obligation under any of the instruments
referred to therein; provided, however, that nothing in this Section 18 shall
be construed to limit in scope or substance the liability of the Indenture
Trustee (A) in its individual capacity to the Owner Trustee or any Holder as
expressly set forth in the Indenture, (B) in respect of the representations,
warranties and agreements of the Indenture Trustee in its individual capacity,
as expressly set forth therein (including, without limitation, Section 9) or in
any other Operative Document to which it is a party, and (C) in its individual
capacity and as Indenture Trustee for the consequences of its own gross
negligence or willful misconduct.
(c) Owner Participant. It is expressly understood and
agreed by and among the Owner Trustee, the Indenture Trustee, the Owner
Participant and Lessee that the Owner Participant shall not have any
contractual obligations or duty to Lessee, the Indenture Trustee or to any
other Person under the Operative Documents with respect to the transactions
contemplated hereby except those obligations or duties specifically set forth
in the respective Operative Documents to which the Owner Participant is a
party. Without limiting the generality of the foregoing, under no
circumstances whatsoever shall the Owner Participant as such be liable to
Lessee, the Indenture Trustee or any other Person for any action or inaction on
the part of the Owner Trustee or the Indenture Trustee in connection with the
Trust Agreement, this Agreement, the Indenture, the Lease or the administration
of the Owner Trust Estate or the Indenture Estate or otherwise, whether or not
such action or inaction is caused by the willful misconduct or gross negligence
of the Owner Trustee or the Indenture Trustee unless, in the case of the Owner
Trustee, such action or inaction constituting such willful misconduct or gross
negligence was at the express direction of the Owner Participant.
<PAGE> 51
46
(d) Pass Through Trustee. It is expressly understood and
agreed by and among the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Owner Participant and Lessee that except as otherwise expressly
provided therein, (i) the Operative Documents to which the Pass Through Trustee
is a party are executed and delivered by the Pass Through Trustee not in its
individual capacity but solely as trustee under the Pass Through Trust
Agreement and the Pass Through Trust Supplement in the exercise of the power
and authority conferred and vested in it as such Pass Through Trustee, (ii)
each of the representations, undertakings and agreements made therein by the
Pass Through Trustee are not personal representations, undertakings and
agreements, but are binding only on the Pass Through Trustee, as trustee, and
(iii) nothing therein contained shall be construed as creating any liability of
the Pass Through Trustee, in its individual capacity, or any incorporator or
any past, present or future subscriber to the capital stock of, or stockholder,
officer or director of, the Pass Through Trustee in its individual capacity to
perform any covenant either express or implied contained herein, all such
liability, if any, being expressly waived by the Owner Participant, the Owner
Trustee, the Indenture Trustee and Lessee and by any Person claiming by,
through or under them; provided, however, that nothing in this Section 18 shall
be construed to limit in scope or substance the liability of the Pass Through
Trustee (A) in respect of the representations, warranties and agreements of the
Pass Through Trustee in its individual capacity, as expressly set forth in any
Operative Document to which it is a party, and (B) in its individual capacity
and as Pass Through Trustee for the consequences of its own gross negligence or
willful misconduct.
(e) Certain Limitations on Reorganization. The Indenture
Trustee agrees that, if (i) the Owner Participant or the Owner Trustee becomes,
or all or any of the Owner Trust Estate or the Owner Trust becomes the property
of a debtor subject to the reorganization provisions of the Bankruptcy Code or
any other applicable bankruptcy or insolvency statutes, (ii) pursuant to such
reorganization provision, the Owner Participant is held to have recourse
liability to the Indenture Trustee or the Holder of any Equipment Note directly
or indirectly on account of any amount payable as principal, interest, Premium
or any other amount payable on any Equipment Note that is provided in the
Operative Documents to be nonrecourse to the Owner Participant, and (iii) the
Indenture Trustee actually receives any Recourse Amount which reflects any
payment by the Owner Participant on account of (ii) above, then the Indenture
Trustee shall promptly refund to the Owner Participant such Recourse Amount.
For purposes of this Section 18(d), "Recourse Amount" means the amount by which
the portion of such payment by the Owner Participant on account of clause (ii)
above received by the Indenture Trustee exceeds the amount which would have
been received by the Indenture Trustee if the Owner Participant had not become
subject to the recourse liability referred to in (ii) above. Nothing contained
in this Section 18(d) shall prevent the Indenture Trustee from enforcing any
individual obligation (and retaining the proceeds thereof) of the Owner
Participant under this Agreement or any other Operative Agreement to the extent
herein or therein provided, for which the Owner Participant has expressly
agreed by the terms of this Agreement to accept individual responsibility.
<PAGE> 52
47
Section 19. Refinancing. The parties hereto recognize that,
provided that the Lease shall then be in full force and effect and that no
Event of Default shall have occurred and be continuing, Lessee may, on any Rent
Payment Date subject to the terms and conditions of Section 4.02(C) of the
Indenture, arrange for refinancing of all, and not less than all, of the then
Outstanding Equipment Notes by the Owner Trustee on a non-recourse basis
(including the payment in full of accrued interest and Premium, if any) with
funds made available for such purpose solely through the issue and sale of U.S.
Dollar denominated, fixed rate debt securities by the Owner Trustee in a
private or public offering placed with U.S. or foreign lenders, as specified
by Lessee pursuant to which the Owner Trustee will deposit with the Indenture
Trustee from the proceeds of such refinancing sufficient funds to redeem in
full on the applicable Redemption Date all of the Equipment Notes Outstanding.
No refinancing of the Equipment Notes may be initiated, other than as provided
in this Section 19. In the event of any such refinancing, adjustments shall be
made to Basic Rent, the Termination Values, the Stipulated Loss Values, and the
debt amortization schedule shall be established, so that, subject to the
maintenance of the Net Economic Return of the Owner Participant, the net
present value of amounts payable as Basic Rent plus EBO Value shall be
minimized. No such refinancing shall cause the aggregate principal amount of
the indebtedness substituted for the Equipment Notes to exceed the aggregate
principal amount of the Outstanding Equipment Notes without the prior written
consent of the Owner Participant and the latest date of maturity of such
indebtedness shall be not later than the date of maturity of the Equipment
Notes being refinanced. The parties hereto agree that they will cooperate in
good faith in effectuating such refinancing (which, it is understood, may
result in changes in the Operative Documents and which may, in connection with
a public offering, involve an underwriting agreement); provided, however, that:
(i) such refinancing shall not, without the Owner Participant's consent, occur
on more than three (the first two of which shall be without a fee paid by
Lessee to Lessor, and the third of which shall include a fee of $20,000 paid by
Lessee to Lessor) occasions in the aggregate; (ii) each party hereto shall have
received such opinions of counsel, certificates, indemnities and other
documents in connection with each such refinancing as it may reasonably
request, each in form and substance satisfactory to such party; (iii) all
necessary authorizations, approvals and consents shall have been obtained and
be in full force and effect; (iv) such refinancing shall not create any
unindemnified tax or other risk to the Owner Participant; and (v) all such
documentation, taken as a whole, shall not result in greater obligations on or
lesser rights to the Owner Participant than existed prior to such refinancing;
and provided further that Lessee shall pay on the date of each such refinancing
all costs and expenses (on an After-Tax Basis) of each party hereto (including
the reasonable fees, expenses and disbursements of their respective counsel) in
connection therewith. If Lessee elects to cause the Owner Trustee to refinance
the Equipment Notes, it shall, on behalf of Lessor, give the Indenture Trustee
an irrevocable written notice of redemption with respect to the Equipment Notes
Outstanding not less than 30 days prior to the date upon which the refinancing
is to take place (the "Refinancing Date"), which notice shall specify the
Refinancing Date.
<PAGE> 53
48
Section 20. Assumption of Owner Trustee Obligations. Subject
to compliance by Lessee with all of its obligations under each Operative
Document to which it is a party and so long as no Potential Default or Event of
Default shall have occurred and be continuing, each of the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and Lessee
covenants and agrees that Lessee may assume all obligations of the Owner
Participant under the Operative Documents if Lessee elects to do so pursuant to
Section 8(a) of the Lease or if Lessee elects to purchase on an EBO Date all
Items of Equipment pursuant to Section 20 of the Lease, provided that:
(A) Lessee shall have elected to assume such obligations
by giving irrevocable notice to that effect to the Owner Participant,
the Owner Trustee, the Indenture Trustee and the Pass Through Trustee
pursuant to Section 8(a) of the Lease or concurrently with Lessee's
notice of election to purchase on an EBO Date all Items of Equipment
pursuant to Section 20 of the Lease;
(B) Lessee shall have by an agreement in writing, in form
and substance reasonably satisfactory to the Owner Participant, the
Owner Trustee, the Indenture Trustee and the Pass Through Trustee,
assumed the due and punctual payment of all amounts payable from time
to time under the Guaranties (but with full recourse to Lessee and
including, without limitation, all unpaid principal of, and Premium,
if any, and interest on, the Equipment Notes) in accordance with the
respective terms and provisions thereof, and the punctual performance
and observance of all the covenants and provisions of this Agreement
and the other Operative Documents to be observed or performed by the
Owner Trustee to the extent such covenants and provisions are
applicable to such assumption;
(C) concurrently with the assumption referred to in
clause (B) above, the Operative Documents shall be amended so that
Lessee shall have such obligations thereunder as are applicable to the
Owner Trustee (to the extent such obligations are applicable to such
assumption) and contained in any of the Operative Documents to which
the Owner Trustee is a party immediately prior to such amendment, and,
in the case of the Indenture, an amendment incorporating therein the
covenants under the Lease with respect to the Items of Equipment to be
performed or observed by Lessee, all such amendments to be in form and
substance reasonably satisfactory to the Indenture Trustee;
(D) the Indenture Trustee shall have received the
favorable written opinions of counsel to Lessee and the Indenture
Trustee, in form and substance reasonably satisfactory to the
Indenture Trustee, comparable to the respective opinions delivered on
the Funding Date, but with respect to the Operative Documents as
amended in connection with such assumption, and covering such
additional matters as the Indenture Trustee shall reasonably request;
<PAGE> 54
49
(E) the Indenture Trustee's security interest in the
Items of Equipment shall not be adversely affected by purchase of the
Items of Equipment or assumption of the Owner Trustee's obligations by
Lessee; and
(F) upon compliance with the provisions of Article X of
the Indenture, the Owner Participant shall be released and discharged
from any further obligations hereunder and the Owner Trustee shall be
released and discharged from any further obligations under the
Operative Documents to the extent set forth in such Article X.
Whether or not the assumption referred to above is
accomplished, Lessee shall pay all reasonable costs and expenses of the Owner
Trustee, the Owner Participant and the Indenture Trustee (including, without
limitation, the reasonable fees and expenses of their respective counsel)
relating to the matters contemplated herein.
Section 21. Miscellaneous.
(a) Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms hereof shall be in
writing. Any written notice shall become effective when delivered. Any
written notice shall be mailed, certified or registered mail, return receipt
requested with proper first class postage prepaid, or sent in the form of a
telecopy (with such telecopy to be confirmed in writing), or by overnight
delivery service or delivered by hand. Any written notice shall be directed to
Lessee, the Owner Participant, the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee to the respective addresses set forth below the signatures
of such parties at the end of this Agreement, or to such other address or telex
or telecopy number as any such party may designate by notice given to the other
parties to this Agreement.
(b) Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
(c) Amendments. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought.
(d) Headings; References. The table of contents and
headings of the various sections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof.
(e) Governing Law. This Agreement shall in all respects
be governed by, and construed in accordance with, the laws of New York,
including all matters of
<PAGE> 55
50
construction, validity and performance, excluding any conflict of laws rules
that would subject the matter to another jurisdiction. This Agreement is being
delivered in New York.
(f) Benefit and Binding Effect. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, Lessee and
its permitted successors and assigns, the Owner Participant and its successors
and permitted assigns, the Holders of Equipment Notes, the Owner Trustee and
its successors and permitted assigns as Owner Trustee under the Trust
Agreement, the Indenture Trustee and its successors as Indenture Trustee under
the Indenture.
(g) Survival of Certain Obligations Under This Agreement.
The agreements and indemnities contained in Sections 13, 15 and 16 shall
survive the termination of this Agreement and the Lease.
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
CONSOLIDATED RAIL CORPORATION,
Lessee
By /s/ Thomas J. McGraw
---------------------------------------
Director - Financing
Address: 2001 Market Street
Two Commerce Square
Philadelphia, Pennsylvania
19101-1425
J.P. MORGAN INTERFUNDING CORP.
Owner Participant
By /s/Albert B. Gordon, Jr.
---------------------------------------
Chairman
Address: 60 Wall Street
New York, New York 10260
WILMINGTON TRUST COMPANY,
Indenture Trustee, not in Its Individual
Capacity, except as Otherwise Expressly
Provided Herein but Solely as Indenture
Trustee
By /s/ Norma P. Closs
----------------------------------------
Vice President
Address: Rodney Square North
1100 N. Market Street
Wilmington, Delaware 19890-0001
Attn.: Corporate Trust Administration
<PAGE> 57
52
WILMINGTON TRUST COMPANY,
Pass Through Trustee, not in its Individual
Capacity, except as Otherwise Expressly
Provided Herein, but Solely as Pass
Through Trustee
By /s/ Norma P. Closs
----------------------------------------
Vice President
Address: Rodney Square North
1100 N. Market Street
Wilmington, Delaware 19890-
0001
Attn.: Corporate Trust Administration
MERIDIAN TRUST COMPANY,
Owner Trustee, not in Its Individual Capacity,
except as Otherwise Expressly Provided
Herein but Solely as Owner Trustee
By /s/ Stephen J. Kaba
----------------------------------------
Vice President
Address: 35 North Sixth Street
Reading, Pennsylvania 19601
Attn.:
<PAGE> 58
EXHIBIT A-1 to
Participation Agreement
FORM OF OPINION
OF SENIOR VICE PRESIDENT - LAW
OF LESSEE
December 22, 1994
To Each of the Persons Listed
on Schedule I Attached Hereto
CONSOLIDATED RAIL CORPORATION
Leveraged Lease Financing of Railcars
Conrail 1994-A Pass Through Trust
Ladies and Gentlemen:
I am Senior Vice President - Law of Consolidated Rail
Corporation ("Lessee") and in that capacity I have acted as counsel to Lessee
in connection with the transactions contemplated by the Participation Agreement
dated as of December 22, 1994 (the "Participation Agreement") among Lessee,
Meridian Trust Company ("Meridian"), as Owner Trustee, J.P. Morgan Interfunding
Corp., as Owner Participant, Wilmington Trust Company ("Wilmington"), as
Indenture Trustee, and Wilmington, as Pass Through Trustee, relating to the
above-referenced pass through trust. This opinion is delivered in satisfaction
of Section 4(a)(v) of the Participation Agreement. Capitalized terms not
defined herein are used as defined in Appendix A to the Participation
Agreement.
In this regard, I have examined originals, or copies the
authenticity of which has been established to my satisfaction, of the Lease
Agreement, Lease Supplement No. 1 dated December 22, 1994 (the "Lease
Supplement"), the form of a Certificate of Acceptance, the Railcar Purchase
Agreement, the Participation Agreement, the Indenture, Indenture
<PAGE> 59
2
Supplement No. 1 (the "Indenture Supplement"), the Trust Agreement, the Bill of
Sale, the Pass Through Trust Agreement, the Pass Through Trust Supplement and
the Tax Indemnity Agreement (the "Relevant Operative Documents") and such other
agreements, corporate records, statements and records of government officials
and agencies and other instruments as were deemed necessary or advisable as a
basis for the opinions hereinafter expressed. As to questions of fact material
to such opinions, I have relied upon certifications by officers of Lessee, and
the delegates thereof, when relevant facts were not independently established.
In arriving at the opinions expressed below, I have assumed (except as to
Lessee) the genuineness of all signatures and the due authorization, execution
and delivery by the parties thereto of the Lease Agreement, the Lease
Supplement, the Railcar Purchase Agreement, the Participation Agreement, the
Indenture, the Indenture Supplement, the Trust Agreement, the Pass Through
Trust Agreement and the Pass Through Trust Supplement and that each such party
has full power, authority and legal right to enter into and perform its
obligations thereunder. I have examined and relied without independent
verification on the representations and warranties by parties other than Lessee
as to factual matters contained in or made pursuant to the Relevant Operative
Documents.
Based upon the foregoing, I am of the opinion that:
1. Lessee is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of
Pennsylvania, is a "Class I Railroad" within the meaning of 49 C.F.R.
Part 1201, operating under the jurisdiction of the Interstate Commerce
Commission ("ICC") pursuant to Title 49 of the U.S. Code and has the
corporate power and authority under Applicable Law to carry on its
business as currently conducted and to execute and deliver the Lease
Agreement, the Lease Supplement, the Railcar Purchase Agreement, the
Participation Agreement, the Pass Through Trust Agreement, the Pass
Through Trust Supplement and the Tax Indemnity Agreement and to
perform its obligations under the Lease Agreement, the Lease
Supplement, the Railcar Purchase Agreement, the Participation
Agreement, the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the Tax Indemnity Agreement. Lessee is duly qualified
to do business as a foreign corporation in good standing in each
jurisdiction where the activities of Lessee require such qualification
except where the failure to so qualify would not have a material
adverse effect on Lessee or on its ability to perform each of its
obligations under each of the Operative Documents to which it is a
party.
2. The execution and delivery by Lessee of the Lease
Agreement, the Lease Supplement, the Railcar Purchase Agreement, the
Participation Agreement, the Pass Through Trust Agreement and the Pass
Through Trust Supplement and the Tax Indemnity Agreement, and the
performance by Lessee of its obligations under the Lease Agreement,
the Lease Supplement, the Railcar Purchase Agreement, the
Participation Agreement, the Pass Through Trust Agreement, the Pass
Through Trust Supplement and the Tax Indemnity Agreement do not
require the approval or consent
<PAGE> 60
3
of any trustee, stockholder or holders of any indebtedness or
obligations of Lessee, and neither the execution and delivery by
Lessee thereof, nor the consummation by Lessee of the transactions
contemplated thereby, nor compliance by Lessee with any of the terms
and provisions thereof will contravene any law or, any judgment,
governmental rule, regulation, license, permit or order of any
governmental authority of the Commonwealth of Pennsylvania or the
United States of America applicable to or binding upon Lessee or any
of its properties, or contravene or result in any breach of, or
constitute any default under, or result in the creation of any Lien
(other than as permitted under the Operative Documents) upon any
property of Lessee under any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit
agreement, corporate charter, by-laws or other agreement or instrument
to which Lessee is a party or by which Lessee or any of its properties
may be bound or affected.
3. The execution and delivery by Lessee of the Lease
Agreement, the Lease Supplement, the Railcar Purchase Agreement, the
Participation Agreement, the Pass Through Trust Agreement, the Pass
Through Trust Supplement and the Tax Indemnity Agreement, the issue
and sale of the Certificates, and the consummation by Lessee of any of
the transactions contemplated thereby and the operation by Lessee of
all Items of Equipment leased to Lessee under the Lease Agreement, do
not require the consent or approval of, or the giving of notice to, or
the registration with, or the taking of any other actions under
Applicable Law (except that no opinion is expressed as to approval,
notice, registration or other action required for the conduct of the
business of Lessee generally and which does not require any specific
action by Lessee in connection with the execution, delivery or
performance by it of the Lease Agreement, the Lease Supplement, the
Railcar Purchase Agreement, the Participation Agreement, the Pass
Through Trust Agreement, the Pass Through Trust Supplement or
the Tax Indemnity Agreement), other than (i) the registration of the
issuance and sale of the Series Certificates, to be issued pursuant to
the provisions of the Pass Through Trust Agreement, as supplemented,
under the Securities Act of 1933, as amended, and under the securities
laws of any state in which the Certificates may be offered for sale if
the laws of such state require such action, which registrations have
been duly accomplished, (ii) the qualification of the Pass Through
Trust Agreement, as supplemented, under the Trust Indenture Act, which
qualifications have been duly obtained pursuant to an order of the
Securities and Exchange Commission, and (iii) the registrations and
filings referred to in paragraph 5 below, as to which I express
no opinion, except as expressly set forth therein.
4. The Lease Agreement, the Lease Supplement, the Railcar
Purchase Agreement, the Participation Agreement, the Pass Through
Trust Agreement, the Pass Through Trust Supplement, the Bill of Sale
and the Tax Indemnity Agreement have been duly authorized by all
necessary corporate action on the part of Lessee, have been duly
executed and delivered by Lessee, and constitute the legal, valid and
binding obligations of Lessee enforceable against Lessee in
accordance with their respective terms.
5. Each of the Indenture, the Indenture Supplement, the Lease
Agreement and the Lease Supplement has been duly filed with the ICC
pursuant to 49 U.S.C. Section 11303 and provided to McCarthy Tetrault
for prompt deposit thereafter with the Registrar General of Canada
pursuant to Section 90 of the Railway Act of Canada. Except for such
filings which filings have been duly made or provided for
continuation
<PAGE> 61
4
no recording or filing in the United States of America or
Canada of any of the Relevant Operative Documents, or of any financing
statement with respect thereto, is necessary or advisable in order to
establish and perfect in the United States of America and Canada the
Owner Trustee's rights and interest in, and the Indenture Trustee's
legal title for security purposes in, the Items of Equipment as
against Lessee and any third parties, or the mortgage and security
interests under the Indenture and the Indenture Supplement on the
Items of Equipment or other property in the Indenture Estate in favor
of the Indenture Trustee or the assignment of the Lease Agreement, and
the Railcar Purchase Agreement and Bill of Sale under the Indenture to
the Indenture Trustee as against Lessee, the Owner Trustee, the Owner
Participant or any third party.
6. Neither Lessee nor anyone acting on behalf of Lessee has
directly or indirectly offered by interest in the Owner Trust Estate
or the Trust Agreement for sale to anyone other than the Owner
Participant and not more than 49 other financial institutions. The
acquisition by the Owner Participant of its interest in the Owner
Trust Estate and the Trust Agreement and the acquisition by the Pass
Through Trustee of the Equipment Notes is exempt from the registration
and prospectus-delivery requirements of the Securities Act of 1933, as
amended, by virtue of Section 4(2) thereof.
7. The Owner Trustee, as Lessor under the Lease Agreement,
and the Indenture and the Indenture Supplement Trustee, as assignee of
the Owner Trustee's rights under the Lease Agreement pursuant to the
Indenture and the Indenture Supplement on behalf of the Holders of
Equipment Notes, are entitled to the benefits of 11 U.S.C. Section
1168 with respect to all Items of Equipment to be subjected to the
Lease Agreement.
8. Except as disclosed in Lessee's annual report on Form 10-K
for Lessee's fiscal year ended December 31, 1993, quarterly reports on
Form 10-Q for the quarters ended March 31, 1994, June 30, 1994 and
September 30, 1994, and reports on Form 8-K referenced in the
Prospectus, there are no pending or, to the best of my knowledge,
threatened actions, lawsuits or proceedings by or before any court or
administrative agency or arbitrator that are reasonably likely to,
either individually or in the aggregate, materially and adversely
affect the right, power and authority of Lessee to enter into or
perform its obligations under the Relevant Operative Documents.
9. Based upon the foregoing, and on the examination and
review of the Commission's Recordation Files, and assuming the
accuracy and completeness of such Recordation Files, it is my opinion
that Lessee's Bill of Sale is valid and effective to vest in the Owner
Trustee good and marketable title to the Items of Equipment covered
thereby, free and clear of any claim, lien, security interest, charge
or other
<PAGE> 62
5
encumbrance other than rights arising under the Indenture, the
Indenture Supplement, Lease Agreement or the Lease Supplement.
Insofar as the foregoing opinion relates to the enforceability
of the Lease Agreement, the Lease Supplement, the Participation Agreement, the
Railcar Purchase Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the Tax Indemnity Agreement, such opinion is subject to
(a) applicable bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). The enforceability of the Lease
Agreement may also be limited by applicable laws which may affect the remedies
provided therein, but which do not in my opinion make such remedies inadequate
for the substantial realization of the rights and benefits intended to be
provided thereby.
In giving the foregoing opinions, I have relied, subject to
the assumptions and qualifications contained therein, upon the opinion of
McCarthy Tetrault delivered to you today as to the matters set forth therein
relating to certain matters of Canadian law.
No opinion is expressed herein as to any state securities laws
or any laws other than the laws of the Commonwealth of Pennsylvania and the
Federal laws of the United States.
I note that the "governing law" provisions of the Lease
Agreement, the Lease Supplement, the Certificate of Acceptance, the
Participation Agreement, the Indenture, the Indenture Supplement, the
Pass Through Trust Agreement, the Pass Through Trust Supplement, the Tax
Indemnity Agreement, the Certificates and the Equipment Notes provide that the
laws of the State of New York are to govern them. In my opinion, a court
applying Pennsylvania conflict of laws rules would give effect to such choice
of New York law; however, I express no opinion as to what law a court applying
any other state's conflict of laws rules would apply.
For purposes of my opinion in paragraphs 2, 3 and 4 above, I
have with your consent (i) assumed that a court would apply the substantive
laws of either Pennsylvania or New York and (ii) assumed (without examining the
laws of New York) that the substantive laws of New York governing the
interpretation and enforcement of each provision of the Lease Agreement, the
Lease Supplement, the Certificate of Acceptance, the Participation Agreement,
the Indenture, the Indenture Supplement, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, the Tax Indemnity Agreement, the
Certificates and the Equipment Notes do not differ in any material respect from
the substantive laws of Pennsylvania.
<PAGE> 63
6
This opinion is furnished by me as Senior Vice President - Law of
Lessee to you as parties to the Participation Agreement and to Morgan Stanley &
Co. Incorporated as party to the Underwriting Agreement and is solely for your
benefit.
Very truly yours,
<PAGE> 64
SCHEDULE I
Wilmington Trust Company,
as Indenture Trustee
Rodney Square North
Wilmington, Delaware 19899
Wilmington Trust Company,
as Pass Through Trustee
Rodney Square North
Wilmington, Delaware 19899
Meridian Trust Company,
as Owner Trustee
35 North Sixth Street
Reading, Pennsylvania 19601
Consolidated Rail Corporation,
as Lessee
2001 Market Street
Two Commerce Square
P.O. Box 41417
Philadelphia, PA 19101-1417
J.P. Morgan Interfunding Corp.,
as Owner Participant
60 Wall Street
18th Floor
New York, NY 10260
Morgan Stanley & Co. Incorporated,
as Underwriter
1251 Avenue of the Americas
New York, New York 10020
<PAGE> 65
EXHIBIT A-2 to
Participation Agreement
FORM OF OPINION OF SPECIAL COUNSEL TO OWNER PARTICIPANT
December 22, 1994
To Each of the Persons Listed on
Schedule I Attached Hereto
CONSOLIDATED RAIL CORPORATION
Leveraged Lease Financing of Railcars
Conrail 1994-A Pass Through Trust
Dear Ladies and Gentlemen:
We have acted as special counsel for J.P. Morgan Interfunding
Corp., a Delaware corporation (the "Owner Participant"), in connection with the
execution and delivery by the Owner Participant of (i) the Participation
Agreement dated as of December 22, 1994 (the "Participation Agreement") among
the Owner Participant, Consolidated Rail Corporation, a Pennsylvania
corporation ("Lessee"), Wilmington Trust Company, a Delaware banking
corporation ("Wilmington"), as Indenture Trustee, Wilmington, as Pass Through
Trustee, and Meridian Trust Company, a Pennsylvania trust Company ("Meridian"),
as Owner Trustee, (ii) the Trust Agreement dated as of December 22, 1994 (the
"Trust Agreement") between the Owner Participant and Meridian and (iii) the Tax
Indemnity Agreement dated as of December 22, 1994 (the "Tax Indemnity
Agreement") between the Owner Participant and Lessee. Capitalized terms not
defined herein have the meanings set forth in Appendix A to the Participation
Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary or advisable for the purpose of rendering this opinion, including
those relating to the to the authorization, execution and delivery by the Owner
Participant of the Participation Agreement, the Trust Agreement and the Tax
Indemnity Agreement. We have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures, the legal
capacity of all natural persons and the conformity with the original documents
of any copies thereof submitted to us for our examination.
<PAGE> 66
A-2-2
Pursuant to the requirements of Section 4(a)(vi) of the
Participation Agreement, this will advise you that, in the opinion of the
undersigned:
1. The Owner Participant has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the State of Delaware and has the corporate power and authority to
execute, deliver and perform its obligations under the Participation
Agreement, the Trust Agreement and the Tax Indemnity Agreement and is
duly qualified to do business as a foreign corporation in good
standing in each jurisdiction where the activities of the Owner
Participant require such qualification, except where the failure to so
qualify would not have a material adverse effect on the Owner
Participant.
2. Assuming the due authorization, execution and
delivery by all of the parties thereto, each of the Participation
Agreement, the Trust Agreement and the Tax Indemnity Agreement is a
legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant in accordance with its
terms, except to the extent enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law).
3. The execution and delivery by the Owner Participant
of, and the performance by the Owner Participant of its obligations
under, the Participation Agreement, the Trust Agreement and the Tax
Indemnity Agreement will not contravene (i) any provision of
applicable law, (ii) the certificate of incorporation or by-laws of
the Owner Participant, (iii) to the best of our knowledge, any
agreement or other instrument to which it is a party or to which its
properties may be bound, or (iv) to the best of our knowledge, any
judgment order or decree of any governmental body, agency or court
having jurisdiction over the Owner Participant; and no consent,
approval, authorization or order of, or qualification or filing with,
any governmental body or agency is required for the performance by the
Owner Participant of its obligations under the Participation
Agreement, the Trust Agreement and the Tax Indemnity Agreement.
4. The execution and delivery by the Owner Participant
of, and the performance by the Owner Participant of its obligations
under, the Participation Agreement, the Trust Agreement and the Tax
Indemnity Agreement will not require the consent or approval of the
stockholders or the holders or trustee for any holders of any
indebtedness of the Owner Participant.
5. No consent, approval, authorization or order of, or
qualification or filing with, any governmental body or agency is
required for the performance by the
<PAGE> 67
A-2-3
Owner Participant of its obligations under the Participation
Agreement, the Trust Agreement and the Tax Indemnity Agreement.
6. To the best of our knowledge after due inquiry, there are
no proceedings pending or threatened against or affecting the Owner
Participant in any court action or before any governmental authority
or arbitration board or tribunal that, if adversely determined,
individually or in the aggregate, would have a material adverse effect
on the Owner Participant or on the power or ability of the Owner
Participant to perform its obligations under the Participation
Agreement, the Trust Agreement and the Tax Indemnity Agreement.
We are members of the Bar of the State of New York and the
foregoing opinions are limited to the laws of the State of New York, the
federal laws of the United States of America and the General Corporation law of
the State of Delaware.
This opinion is being delivered solely for the benefit of the
persons to whom it is addressed; accordingly, it may not be quoted, filed with
any governmental authority or other regulatory agency or otherwise circulated
or utilized for any other purpose without our prior written consent. The
foregoing opinions are limited to the matters stated therein, and no other
opinions are implied or may be inferred beyond such matters.
Very truly yours,
<PAGE> 68
SCHEDULE I
Wilmington Trust Company,
as Indenture Trustee
Rodney Square North
Wilmington, Delaware 19899
Wilmington Trust Company,
as Pass Through Trustee
Rodney Square North
Wilmington, Delaware 19899
Meridian Trust Company,
as Owner Trustee
35 North Sixth Street
Reading, Pennsylvania 19601
Consolidated Rail Corporation,
as Lessee
4001 Market Street
Two Commerce Square
P.O. Box 41417
Philadelphia, PA 19101-1417
J.P. Morgan Interfunding Corp.,
as Owner Participant
60 Wall Street
18th Floor
New York, NY 10260
Morgan Stanley & Co. Incorporated,
as Underwriter
1251 Avenue of the Americas
New York, New York 10020
<PAGE> 69
EXHIBIT A-3 to
Participation Agreement
FORM OF OPINION OF SPECIAL COUNSEL
TO OWNER TRUSTEE
December 22, 1994
To Each of the Parties Listed
on Schedule I Attached Hereto
CONSOLIDATED RAIL CORPORATION
Leveraged Lease Financing of Railcars
Conrail 1994-A Pass Through Trust
Ladies and Gentlemen:
We have acted as special counsel to Meridian Trust Company, a
Pennsylvania trust company ("Meridian"), in connection with the transactions
contemplated by the Participation Agreement dated as of December 22, 1994 (the
"Participation Agreement"), by and among Consolidated Rail Corporation, as
Lessee (the "Lessee"), J.P. Morgan Interfunding Corp., a Delaware corporation,
as Owner Participant, Meridian, not in its individual capacity except as
specifically set forth therein, but solely as Owner Trustee (the "Owner
Trustee"), Wilmington Trust Company ("Wilmington"), as Indenture Trustee (the
"Indenture Trustee"), and Wilmington, as Pass Through Trustee (the "Pass
Through Trustee").
This opinion is delivered to you pursuant to Section 4(a)(vii)
of the Participation Agreement.
Except as otherwise defined herein, terms used herein shall
have the meanings set forth in Appendix A to the Participation Agreement.
In our capacity described above, we have examined the
Participation Agreement, the Lease, Lease Supplement No. 1 dated December 22,
1994 (the "Lease Supplement"), the Railcar Purchase Agreement, the Trust
Agreement, the Indenture, Indenture Supplement No. 1 dated December 22, 1994
(the "Indenture Supplement"), the Pass Through Trust Agreement, the Pass
Through Trust Supplement, the Certificate of
<PAGE> 70
A-3-2
Acceptance, and the Bill of Sale (collectively, the "Financing Documents"). We
have also examined Meridian's articles of incorporation and bylaws.
Based on the foregoing and upon an examination of such
questions of law and the review of such factual matters as we have considered
necessary or appropriate, and subject to the assumptions, exceptions, and
qualifications set forth below, we are of the opinion that:
1. Meridian is a Pennsylvania trust company duly organized
and validly existing in good standing under the laws of the
Commonwealth of Pennsylvania, and has full power, authority, and legal
right to execute, deliver and perform the Participation Agreement and
the Trust Agreement and, in its capacity as Owner Trustee, each
Financing Document to which the Owner Trustee is a party.
2. Meridian has duly authorized, executed, and delivered the
Participation Agreement and the Trust Agreement, and each of the
Participation Agreement and Trust Agreement constitutes a legal,
valid, and binding obligation of Meridian, enforceable against
Meridian in accordance with its terms.
3. The Owner Trustee is duly authorized under the Trust
Agreement to execute, deliver and perform each Financing Document and
the Owner Trustee has duly executed and delivered each such Financing
Document and each such Financing Document constitutes a legal, valid,
and binding obligation of the Owner Trustee enforceable against the
Owner Trustee in accordance with its terms.
4. Insofar as the Uniform Commercial Code of Pennsylvania and
New York are applicable, the Indenture creates a security interest in
the rights of the Owner Trustee in the properties which are part of
the Indenture Estate (including all right, title, and interest of the
Owner Trustee in monies, instruments, and securities that are pledged
and delivered to the Indenture Trustee pursuant to the Indenture, but
excluding Excluded Payments), and the beneficial interest of the Owner
Participant under the Trust Agreement in and to such properties is
subject, to the extent provided in the Indenture, to the Lien of the
Indenture for the benefit of the Holders from time to time of the
Equipment Notes. Except for the Indenture Trustee's taking possession
of the original counterpart of the Lease (insofar as the Lease may
constitute chattel paper (as such term is defined in the Uniform
Commercial Code of New York and Pennsylvania)) and all monies,
instruments, and securities which are part of the Owner Trust Estate,
no further action, including the filing or recording of any document,
is necessary to perfect the security interest of the Indenture Trustee
in the Indenture Estate.
5. The Trust Agreement duly creates a legal and valid trust
under Pennsylvania law; the trust created by the Trust Agreement has
been duly created and
<PAGE> 71
A-3-3
exists for the benefit of the Owner Participant as provided therein;
and the Trust Agreement creates for the benefit of the Owner
Participant the interest in the Owner Trust Estate which the Trust
Agreement by its terms purports to create, subject however to the
provisions of, and the Liens created by, the Indenture and the Lease.
6. Neither the execution or delivery by Meridian or the Owner
Trustee, as the case may be, of the Financing Documents nor the
consummation of any of the transactions contemplated thereby by
Meridian or the Owner Trustee, as the case may be, requires the
consent or approval of, the giving of notice to, or the registration
with, or the taking of any other action with respect to, any
governmental authority or agency under any existing federal,
Pennsylvania or New York law except for the filing pursuant to Section
131.3 of the New York Banking Law, which filing has been duly
effected.
7. The execution, delivery and performance by Meridian of
each of the Financing Documents are not in violation of Meridian's
articles of incorporation or bylaws, or of any indenture, mortgage,
credit agreement, license, or other agreement or instrument known to
us without independent inquiry except as documented by the Meridian
officer's certificate attached hereto as Schedule II, to which
Meridian or the Owner Trustee, as the case may be, is a party or by
which either is bound, or of any law, governmental rule, or regulation
of the United States, the Commonwealth of Pennsylvania, or the State
of New York governing the trust powers of Meridian, or any order or
judgment known to us without any independent inquiry except as
documented by the Meridian officer's certificate attached hereto as
Schedule II, to be applicable to Meridian or the Owner Trustee, as the
case may be, or subjects either the Owner Trust Estate or the
Indenture Estate to any Lien (other than Permitted Liens) under any of
the foregoing.
8. To the best of our knowledge without any independent
inquiry except as documented by the Meridian officer's certificate
attached hereto as Schedule II, there are no proceedings pending or
threatened against or affecting Meridian or the Owner Trustee in any
court or before any governmental authority, agency, or arbitration
board or tribunal which, if adversely determined, individually or in
the aggregate, would materially and adversely affect the right, power
and authority of Meridian or the Owner Trustee, as the case may be, to
enter into or perform the Financing Documents.
9. There are no taxes, fees or other charges ("Taxes")
(except Taxes imposed on Meridian on fees payable to the Owner
Trustee) payable under the laws of the Commonwealth of Pennsylvania or
any political subdivision thereof in connection with the execution,
delivery or performance by the Owner Trustee, Lessee, the Indenture
Trustee, the Pass Through Trustee or the Owner Participant of the
Financing Documents or in connection with the making by the Owner
Participant of
<PAGE> 72
A-3-4
its investment in the Items of Equipment or its acquisition of the
beneficial interest in the Owner Trust Estate, which would not have
been imposed if Meridian had not (a) been incorporated under the laws
of, (b) had its principal place of business in, (c) performed (in its
individual capacity or as Owner Trustee) any or all of its duties
under the Operative Documents in, and (d) engaged in any activities
unrelated to the transactions contemplated by the Operative Documents
in, the Commonwealth of Pennsylvania; and none of the Owner Trustee,
the Lessee, the Indenture Trustee, the Pass Through Trustee, the Owner
Participant, the Owner Trust Estate or the trust created by the Trust
Agreement will be subject to any Taxes (except Taxes imposed on
Meridian on fees payable to the Owner Trustee) under the laws of the
Commonwealth of Pennsylvania or any political subdivision thereof
based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Owner Trust Estate, in any case, which
would not have been imposed if Meridian had not (w) been incorporated
under the laws of, (x) had its principal place of business in, (y)
performed (in its individual capacity or as Owner Trustee) any or all
of its duties under the Operative Documents in, and (z) engaged in any
activities unrelated to the transactions contemplated by the Operative
Documents in, the Commonwealth of Pennsylvania.
10. The Owner Trustee has received from Lessee such title to
the Items of Equipment as was conveyed to it by Lessee, subject to the
rights of the Owner Trustee and Lessee under the Lease and the
security interest created pursuant to the Indenture, the Indenture
Supplement and the Lease Supplement; and, to our knowledge, there
exist no Lessor's Liens or other Liens (other than Permitted Liens)
affecting the Owner Trust Estate or the Indenture Estate, including
the interest of the Owner Trustee in the Items of Equipment resulting
from acts of the Owner Trustee or Meridian, as the case may be.
11. Neither a Pennsylvania court nor a Federal court applying
Pennsylvania law would permit the Owner Participant to terminate the
Trust Agreement, except as otherwise provided therein, until the Lien
of the Indenture on the Indenture Estate has been released and until
payment in full of the principal of, and premium, if any, and interest
on, the Equipment Notes.
12. Under the laws of the Commonwealth of Pennsylvania, as
long as the Trust Agreement has not been terminated in accordance with
its terms, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency
proceeding has been commenced) (collectively the "Creditors") may
acquire legal, valid and enforceable claims and liens, as to the Trust
Estate, only against the beneficial interest of such person in the
Trust Estate, and do not have, and may not through the enforcement of
such Creditors' rights acquire, and other legal, valid, and
enforceable claim or lien against the Trust Estate.
<PAGE> 73
A-3-5
The foregoing opinions are subject to the following
assumptions, exceptions and qualifications:
A. No opinion is expressed herein as to the laws of any
jurisdiction except for the laws of the United States of America, the
Commonwealth of Pennsylvania and the State of New York; provided,
however, that (i) no opinion is expressed herein as to any federal
securities laws, including but not limited to the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, and
the Investment Company Act of 1940, as amended, or any state
securities law; (ii) no opinion is expressed herein as to any law
related to the nature of the Items of Equipment; and (iii) no opinion
is expressed herein as to the accuracy or correctness of any number or
financial computation included in any Financing Document.
B. The foregoing opinions regarding enforceability of
any document or instrument are subject to (i) except for paragraphs 11
and 12 hereinabove, applicable bankruptcy, insolvency, moratorium,
reorganization, receivership, and similar laws affecting the rights
and remedies of creditors generally, (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (iii) certain of the remedial
provisions in the Indenture being limited or rendered unenforceable by
applicable laws, which laws, however, do not in our opinion make the
remedies (taken as a whole) provided in the Indenture inadequate for
the practical realization of the benefits provided thereby.
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than Meridian or the
Owner Trustee, of the Financing Documents to which each is a party,
and that each of such parties has the full power, authority and legal
right to execute, deliver and perform each of such Financing
Documents.
D. We have assumed that all signatures (other than those
of Meridian and the Owner Trustee) on documents and instruments
examined by us are genuine, that all documents and instruments
submitted to us as originals are authentic, and that all documents and
instruments submitted to us as copies conform with the originals,
which facts we have not independently verified.
E. No opinion is expressed herein as to the priority of
any security interest or pledge.
F. We have assumed that any securities deposited or
required to be deposited with the Indenture Trustee are or will be in
certificated form.
Very truly yours,
<PAGE> 74
SCHEDULE I
Meridian Trust Company,
as Owner Trustee
35 North Sixth Street
Reading, Pennsylvania 19601
Wilmington Trust Company,
as Indenture Trustee
Rodney Square North
Wilmington, Delaware 19890
Wilmington Trust Company,
as Pass Through Trustee
Rodney Square North
Wilmington, Delaware 19899
J.P. Morgan Interfunding Corp.,
as Owner Participant
60 Wall Street
18th Floor
New York, NY 10260
Consolidated Rail Corporation,
as Lessee
2001 Market Street
Two Commerce Square
P.O. Box 41417
Philadelphia, Pennsylvania 19101-1417
Morgan Stanley & Co. Incorporated,
as Underwriter
1251 Avenue of the Americas
New York, New York 10020
<PAGE> 75
SCHEDULE II
OFFICER'S CERTIFICATE
MERIDIAN TRUST COMPANY
With respect to the Trust Agreement by and between Meridian
Trust Company, a Pennsylvania trust company ("Meridian") and J.P. Morgan
Interfunding Corp., a Delaware corporation, as Owner Participant, dated as of
December 22, 1994 (the "Trust Agreement"), in connection with the transactions
contemplated by the Participation Agreement dated as of December 22, 1993, by
and among Wilmington Trust Company ("Wilmington"), as Indenture Trustee,
Wilmington, as Pass Through Trustee, Consolidated Rail Corporation, as Lessee,
Meridian, not in its individual capacity except as specifically set forth
therein, but solely as Owner Trustee, and the Owner Participant (the
"Participation Agreement"), the undersigned officer of Meridian does hereby
represent and warrant:
1. Meridian is a Pennsylvania trust company duly organized
and validly existing in good standing under the laws of the
Commonwealth of Pennsylvania, has the corporate power and authority to
enter into, execute, deliver, and carry out the terms of the
Participation Agreement and the Trust Agreement, and in its capacity
as Owner Trustee the Operative Documents to which it is a party.
2. Meridian or the Owner Trustee, as the case may be, has
duly authorized, executed, and delivered the Operative Documents and
assuming their due execution and delivery by all parties thereto other
than Meridian or the Owner Trustee, as the case may be, such documents
constitute the legal, valid, and binding obligations of Meridian or
the Owner Trustee, as the case may be, enforceable against Meridian or
the Owner Trustee, as the case may be, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, or other similar laws affecting the
enforcement of creditor rights generally and subject to the
qualification that the availability of specific performance and other
equitable remedies is subject to the discretion of the enforcing court
(regardless of whether such remedy is pursued in an action at law or
in equity).
3. The execution, delivery and performance by Meridian of the
Operative Documents do not require shareholder approval and are not in
violation of Meridian's articles of incorporation or bylaws, or of any
indenture, mortgage, credit agreement, license, or other agreement or
instrument to which Meridian is a party or by which it of any of its
property is bound.
4. There are no proceedings pending or threatened against or
affecting Meridian in any court or before any governmental authority,
agency, or arbitration
<PAGE> 76
II-2
board or tribunal which, if adversely determined, individually or in
the aggregate, would materially and adversely affect the Owner Trust
Estate or the right, power, and authority of Meridian or the Owner
Trustee, as the case may be, to enter into or perform the obligations
of Meridian or the Owner Trustee, as the case may be, under the
Operative Documents.
In witness whereof, the undersigned has affixed his or her
signature this ____ day of December 1994.
MERIDIAN TRUST COMPANY
-----------------------
Title:
Name:
<PAGE> 77
EXHIBIT A-4 to
Participation Agreement
FORM OF OPINION OF SPECIAL COUNSEL
TO INDENTURE TRUSTEE
December 22, 1994
To Each of the Persons Listed on
Schedule I Attached Hereto
CONSOLIDATED RAIL CORPORATION
Leveraged Lease Financing of Railcars
Conrail 1994-A Pass Through Trust
Ladies and Gentlemen:
We have acted as special counsel to Wilmington Trust Company
("Wilmington"), a Delaware banking corporation, in connection with the
Indenture, dated as of December 22, 1994 (the "Indenture"), by and between
Wilmington and Consolidated Rail Corporation ("Conrail"). Pursuant to the
transactions contemplated by the Participation Agreement, dated as of December
22, 1994 (the "Participation Agreement"), by and among Wilmington, not in its
individual capacity except as expressly set forth therein but solely as
Indenture Trustee (the "Indenture Trustee") under the Indenture, Wilmington,
not in its individual capacity except as expressly set forth therein but solely
as Pass Through Trustee under the Pass Through Agreement, Conrail, as Lessee,
J.P. Morgan Intefunding Corp., as Owner Participant, and the Owner Trustee,
financing is being provided for rebuilt and new railcars. This opinion is
provided pursuant to Section 4(a)(viii) of the Participation Agreement.
Capitalized terms used but not defined herein are used as defined in or by
reference in Appendix A to the Participation Agreement.
We have examined executed or conformed counterparts, or copies
otherwise identified to our satisfaction, of the Indenture and the
Participation Agreement (the Indenture and the Participation Agreement being
collectively referred to herein as the "Operative Documents"), Indenture
Supplement No. 1 dated December 22, 1994 (the "Indenture Supplement") and the
Equipment Notes.
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental and corporate officials
<PAGE> 78
A-4-2
and other representatives of the corporation or entities referred to herein and
such other instruments as we have deemed necessary or appropriate for purposes
of this opinion. As to certain facts material to the opinions expressed
herein, we have relied upon the representations and warranties contained in the
Operative Documents.
Based on the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject to
the assumptions, exceptions and qualifications set forth herein, we advise you
that in our opinion:
1. Wilmington is a Delaware banking corporation duly
organized and validly existing in good standing under the laws of the
State of Delaware, has the corporate power and authority, individually
or as Indenture Trustee, as the case may be, to enter into its
obligations under the Operative Documents, to perform its obligations
under the Indenture and the Participation Agreement and to issue,
execute, deliver and perform the obligations under the Equipment
Notes.
2. Each of Wilmington and the Indenture Trustee, as the case
may be, has duly authorized, executed and delivered the Operative
Documents, and such documents constitute the legal, valid, and binding
obligations of Wilmington or the Indenture Trustee, as the case may
be, enforceable against Wilmington or the Indenture Trustee, as the
case may be, in accordance with their respective terms.
3. The Equipment Notes have been duly authorized, issued,
executed and delivered by the Indenture Trustee, pursuant to
authorization contained in the Indenture and such Equipment Notes
constitute the legal, valid and binding obligations of the Indenture
Trustee enforceable against the Indenture Trustee in accordance with
their terms and the terms of the Indenture.
4. The execution and delivery of the Operative Documents, the
performance of the Indenture and the Participation Agreement and the
authorization, issuance, execution, delivery and performance of the
Equipment Notes by Wilmington or the Indenture Trustee, as the case
may be, are not in violation of Wilmington's articles of incorporation
or by-laws, or of any indenture, mortgage, credit agreement, license
or other agreement or instrument known to us to which Wilmington or
the Indenture Trustee, as the case may be, is a party or by which
either is bound, or of any law, governmental rule or regulation of the
State of Delaware, or of any order or judgment known to us to be
applicable to Wilmington or the Indenture Trustee, as the case may be.
5. To our knowledge, there exist no Liens affecting the
interest of the Indenture Trustee in the Items of Equipment resulting
from acts of Wilmington or the Indenture Trustee, as the case may be,
except Liens permitted by the Operative Documents.
<PAGE> 79
A-4-3
6. Neither the authorization, execution, or delivery by
Wilmington or the Indenture Trustee, as the case may be, of the
Operative Documents nor the issuance, execution, and delivery of the
Equipment Notes by the Indenture Trustee, nor the consummation of any
transactions, or performance of any of the obligations, by Wilmington
or the Indenture Trustee, as the case may be, contemplated thereby
requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action with respect to,
any Delaware governmental authority, agency, or regulatory body
governing the banking and trust powers of Wilmington under any
existing Delaware law.
7. There are no taxes, fees, or other governmental charges
payable under the laws of the State of Delaware in respect to the
execution and delivery by Wilmington or the Indenture Trustee, as the
case may be, of the Participation Agreement, the Indenture or the
issuance, execution, and delivery of the Equipment Notes by the
Indenture Trustee pursuant to the Indenture except for taxes on any
fees received by the Indenture Trustee, which would not have been
imposed if the Indenture Trustee did not have its principal place of
business in Delaware or did not perform its administrative duties
under the Indenture in Delaware. Neither Wilmington, the Indenture
Trustee, the Owner Participant, the Owner Trustee, the trust created
by the Trust Agreement, the Equipment Notes, a Holder of a Equipment
Note, nor the trust created by the Indenture Supplement will, as a
result of the transactions contemplated thereby, be subject to any
tax, fee, or other governmental charge under the laws of the State of
Delaware or any political subdivision thereof (except for taxes on any
fees received by the Indenture Trustee) which would not have been
imposed if the Indenture Trustee did not have its principal place of
business in Delaware or did not perform its administrative duties
under the Indenture in Delaware, and there are no applicable taxes,
fees, or other governmental charges under the laws of the State of
Delaware or any political subdivision thereof (except for taxes on any
fees received by the Indenture Trustee) upon or with respect to the
Items of Equipment or any part of any interest therein, or the
purchase, ownership, delivery, lease, sublease, possession, presence,
use, operation, condition, storage, maintenance, modification,
alteration, repair, sale, return, transfer or other disposition of the
Items of Equipment or any part which would not have been imposed if
the Indenture Trustee did not have its principal place of business in
Delaware or did not perform its administrative duties under the
Indenture in the State of Delaware.
8. To the best of our knowledge, there are no proceedings
pending or threatened against or affecting Wilmington or the Indenture
Trustee, as the case may be, in any court or before any governmental
authority, agency or arbitration board or tribunal which, if adversely
determined, individually or in the aggregate, would materially and
adversely affect the right, power, and authority of Wilmington or the
Indenture Trustee, as the case may be, to enter into or perform the
respective
<PAGE> 80
A-4-4
obligations of Wilmington or the Indenture Trustee, as the case may
be, under the instruments referred to in paragraph 1 above.
9. Under Delaware law, no filing or recording in Delaware of
any document or instrument is necessary to establish and perfect the
security interest created by the Indenture in all estate, right,
title, and interest of the Owner Trustee in and to the Lease (other
than Excepted Property) and to establish and perfect the Indenture
Trustee's legal title to the Items of Equipment purchased by the Owner
Trustee on the Delivery Date of such Items of Equipment.
The foregoing opinions are subject to the following
assumptions, exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the
State of Delaware and the federal laws of the United States of America
governing the banking and trust powers of Wilmington. In addition, we
express no opinion with respect to (i) federal securities laws,
including the Securities Act of 1933, as amended, and the Trust
Indenture Act of 1939, as amended, or (ii) state securities or blue
sky laws. Insofar as the foregoing opinions relate to the validity
and enforceability in Delaware of the Equipment Notes and the
Operative Documents expressed to be governed by the laws of the State
of New York, we have assumed that the Equipment Notes and such
Operative Documents constitute legal, valid, binding and enforceable
documents or instruments under such laws (as to which we express no
opinion).
B. The foregoing opinions regarding the enforceability of any
document or instrument are subject to (i) applicable bankruptcy,
insolvency, moratorium, reorganization, receivership, fraudulent
conveyance and similar laws affecting the rights and remedies of
creditors generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law).
C. With respect to the opinion expressed in paragraph 9
above, we have, with your permission and without any independent
investigation, assumed that (i) neither the Owner Trustee nor the
Lessee has its chief executive office in Delaware and (ii) under the
laws of the jurisdictions in which the Owner Trustee and the Lessee
are located, no filing or recording in Delaware of any document or
instrument is necessary to establish and perfect the security interest
created by the Indenture in all estate, right, title, and interest of
the Owner Trustee in and to the Lease (other than Expected Property)
and to establish and perfect the Indenture Trustee's legal title to
the Items of Equipment purchased by the Owner Trustee on the Delivery
Date of the Items of Equipment.
<PAGE> 81
A-4-5
D. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than Wilmington or the
Indenture Trustee, of the Operative Documents to which each is a party
and that each of such parties has the full power, authority and legal
right to execute and deliver each such document.
E. We have assumed that all signatures (other than those of
Wilmington or the Indenture Trustee) on documents and instruments
submitted to us as originals are authentic, and that all documents and
instruments submitted to us as copies conform with the originals,
which facts we have not independently verified.
F. We do not purport to be experts in respect of, or express
any opinion concerning, any laws, rules or regulations applicable to
the particular nature of the equipment to be acquired by the Owner
Trustee or the Indenture Trustee.
G. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of
Section 406 of the Employee Retirement Income Security Act of 1974.
H. No opinion is expressed as to the nature of the title to
any part of the Indenture Estate or as to the establishment,
perfection or priority of any mortgage or security interest.
Very truly yours,
<PAGE> 82
Schedule I
Consolidated Rail Corporation,
as Lessee
4001 Market Street
Two Commerce Square
P.O. Box 41417
Philadelphia, PA 19101-1417
J.P. Morgan Interfunding Corp.,
as Owner Participant
60 Wall Street
18th Floor
New York, NY 10260
Meridian Trust Company,
as Owner Trustee
35 North Sixth Street
Reading, PA 19601
Morgan Stanley & Co. Incorporated,
as Underwriter
1251 Avenue of the Americas
New York, New York 10020
Wilmington Trust Company,
as Indenture Trustee
Rodney Square North
Wilmington, DE 19899
Wilmington Trust Company,
as Pass Through Trustee
Rodney Square North
Wilmington, Delaware 19899
<PAGE> 83
EXHIBIT A-5 to
Participation Agreement
FORM OF OPINION OF SPECIAL COUNSEL
TO PASS THROUGH TRUSTEE
December 22, 1994
To Each of the Persons Listed on
Schedule I Attached Hereto
CONSOLIDATED RAIL CORPORATION
Leveraged Lease Financing of Railcars
Conrail 1994-A Pass Through Trust
Ladies and Gentlemen:
We have acted as special counsel to Wilmington Trust Company
("Wilmington"), a Delaware banking corporation, in connection with the Pass
Through Trust Agreement, dated as of December 22, 1994 (the "Pass Through
Agreement"), by and between Wilmington and Consolidated Rail Corporation
("Conrail") and Pass Through Trust Agreement Supplement No. 1 (the "Pass
Through Trust Supplement"), by and between Wilmington and Conrail. Pursuant to
the transactions contemplated by the Participation Agreement, dated as of
December 22, 1994 (the "Participation Agreement"), by and among Wilmington, not
in its individual capacity except as expressly set forth therein but solely as
Indenture Trustee (the "Indenture Trustee") under the Indenture, Wilmington,
not in its individual capacity except as expressly set forth therein but solely
as Pass Through Trustee under the Pass Through Agreement, Conrail, as Lessee,
J.P. Morgan Intefunding Corp., as Owner Participant, and the Owner Trustee,
financing is being provided for rebuilt and new railcars. This opinion is
provided pursuant to Section 4(a)(ix) of the Participation Agreement.
Capitalized terms used but not defined herein are used as defined in or by
reference in Appendix A to the Participation Agreement.
We have examined executed or conformed counterparts, or copies
otherwise identified to our satisfaction, of the Pass Through Trust Agreement,
the Pass Through Trust Supplement, the Participation Agreement (the Pass
Through Trust Agreement, the Pass Through Trust Supplement and the
Participation Agreement being collectively referred to herein as the "Operative
Documents") and the 8.45% Pass Through Certificates, Series 1994-A being issued
on the date hereof (the "Certificates").
<PAGE> 84
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental and corporate officials and other representatives of the
corporation or entities referred to herein and such other instruments as we
have deemed necessary or appropriate for purposes of this opinion. As to
certain facts material to the opinions expressed herein, we have relied upon
the representations and warranties contained in the Operative Documents.
Based on the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject to
the assumptions, exceptions and qualifications set forth herein, we advise you
that in our opinion:
1. Wilmington is a Delaware banking corporation duly
organized and validly existing in good standing under the laws of the
State of Delaware, has the corporate power and authority, individually
or as Pass Through Trustee, as the case may be, to enter into and
perform its obligations under the Operative Documents, and to issue,
execute, deliver and perform the obligations under the Certificates.
2. Each of Wilmington and the Pass Through Trustee, as the
case may be, has duly authorized, executed and delivered the Operative
Documents, and such documents constitute the legal, valid, and binding
obligations of Wilmington or the Pass Through Trustee, as the case may
be, enforceable against Wilmington or the Pass Through Trustee, as the
case may be, in accordance with their respective terms.
3. The Certificates have been duly authorized, issued,
executed and delivered by the Pass Through Trustee, pursuant to
authorization contained in the Pass Through Trust Agreement and such
Certificates constitute the legal, valid and binding obligations of
the Pass Through Trustee enforceable against the Pass Through Trustee
in accordance with their terms and the terms of the Pass Through Trust
Agreement and the holders of the Certificates are entitled to the
benefits of the Pass Through Trust Agreement.
4. The execution and delivery of the Operative Documents, the
performance of the Pass Through Trust Agreement and the Participation
Agreement and the authorization, issuance, execution, delivery and
performance of the Certificates by Wilmington or the Pass Through
Trustee, as the case may be, are not in violation of Wilmington's
articles of incorporation or by-laws, or of any indenture, mortgage,
credit agreement, license or other agreement or instrument known to us
to which Wilmington or the Pass Through Trustee, as the case may be,
is a party or by which either is bound, or of any law, governmental
rule or regulation of the State of Delaware, or of any order or
judgment known to us to be applicable to Wilmington or the Pass
Through Trustee, as the case may be.
5. Neither the authorization, execution, or delivery by
Wilmington or the Pass Through Trustee, as the case may be, of the
Operative Documents nor the issuance,
<PAGE> 85
A-5-3
execution, and delivery of the Certificates by the Pass Through
Trustee, nor the consummation of any transactions, or performance of
any of the obligations, by Wilmington or the Pass Through Trustee, as
the case may be, contemplated thereby requires the consent or approval
of, the giving of notice to, or the registration with, or the taking
of any other action with respect to, any Delaware governmental
authority, agency, or regulatory body governing the banking and trust
powers of Wilmington under any existing Delaware law.
6. There are no taxes, fees, or other governmental charges
payable under the laws of the State of Delaware or any political
subdivision thereof in respect to the execution and delivery by
Wilmington or the Pass Through Trustee, as the case may be, of the
Participation Agreement, the Pass Through Trust Agreement or the Pass
Through Trust Supplement or the issuance, execution, and delivery of
the Certificates by the Pass Through Trustee pursuant to the Pass
Through Trust Agreement except for taxes on any fees received by the
Pass Through Trustee, which would not have been imposed if the Pass
Through Trustee did not have its principal place of business in
Delaware or did not perform its administrative duties under the Pass
Through Trust Agreement in Delaware. There no taxes, fees, or other
governmental charges payable under the laws of the State of Delaware
or any political subdivision thereof by the Pass Through Trustee in
connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Equipment Notes except for taxes on any
fees received by the Pass Through Trustee, which would not have been
imposed if the Pass Through Trustee did not have its principal place
of business in Delaware or did not perform its administrative duties
under the Pass Through Trust Agreement in Delaware.
7. Assuming that the trust created by the Pass Through Trust
Agreement will not be taxable as a corporation, but, rather will be
characterized as a grantor trust under Subpart R, Part I of Subchapter
J of the Code, such trust and the Trust Property (as defined in the
Pass Through Trust Agreement) will not be subject to any taxes imposed
by the State of Delaware or any political subdivision thereof.
Holders of Certificates who are not residents of the State of Delaware
and who are not otherwise subject to tax in the State of Delaware on
account of business or investment activities transacted or consummated
therein, will not be subject to any tax (including, but not limited
to, net or gross income, tangible or intangible property, net worth,
capital, franchise or doing business tax), governmental fees or other
governmental charges under the laws of the State of Delaware or any
political subdivision thereof as a result of purchasing, holding
(including receiving payments with respect to) or selling a
Certificate.
8. To the best of our knowledge, there are no proceedings
pending or threatened against or affecting Wilmington or the Pass
Through Trustee, as the case may be, in any court or before any
governmental authority, agency or arbitration
<PAGE> 86
A-5-4
board or tribunal which, if adversely determined, individually or in
the aggregate, would materially and adversely affect the right, power,
and authority of Wilmington or the Pass Through Trustee, as the case
may be, to enter into or perform the respective obligations of
Wilmington or the Pass Through Trustee, as the case may be, under the
instruments referred to in paragraph 1 above.
The foregoing opinions are subject to the following
assumptions, exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the
State of Delaware and the federal laws of the United States of America
governing the banking and trust powers of Wilmington. In addition, we
express no opinion with respect to (i) federal securities laws,
including the Securities Act of 1933, as amended, and the Trust
Indenture Act of 1939, as amended, or (ii) state securities or blue
sky laws. Insofar as the foregoing opinions relate to the validity
and enforceability in Delaware of the Certificates and the Operative
Documents expressed to be governed by the laws of the State of New
York, we have assumed that the Certificates and such Operative
Documents constitute legal, valid, binding and enforceable documents
or instruments under such laws (as to which we express no opinion).
B. The foregoing opinions regarding the enforceability of any
document or instrument are subject to (i) applicable bankruptcy,
insolvency, moratorium, reorganization, receivership, fraudulent
conveyance and similar laws affecting the rights and remedies of
creditors generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law).
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than Wilmington or the
Pass Through Trustee, of the Operative Documents to which each is a
party and that each of such parties has the full power, authority and
legal right to execute and deliver each such document.
D. We have assumed that all signatures (other than those of
Wilmington or the Pass Through Trustee) on documents and instruments
submitted to us as originals are authentic, and that all documents and
instruments submitted to us as copies conform with the originals,
which facts we have not independently verified.
E. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of
Section 406 of the Employee Retirement Income Security Act of 1974.
Very truly yours,
<PAGE> 87
Schedule I
Consolidated Rail Corporation,
as Lessee
4001 Market Street
Two Commerce Square
P.O. Box 41417
Philadelphia, PA 19101-1417
J.P. Morgan Interfunding Corp.,
as Owner Participant
60 Wall Street
18th Floor
New York, NY 10260
Meridian Trust Company,
as Owner Trustee
35 North Sixth Street
Reading, PA 19601
Morgan Stanley & Co. Incorporated,
as Underwriter
1251 Avenue of the Americas
New York, New York 10020
Wilmington Trust Company,
as Indenture Trustee
Rodney Square North
Wilmington, DE 19899
Wilmington Trust Company,
as Pass Through Trustee
Rodney Square North
Wilmington, Delaware 19899
<PAGE> 88
EXHIBIT A-6 to
Participation Agreement
FORM OF OPINION OF SPECIAL
CANADIAN COUNSEL
December 22, 1993
To each of the persons listed
on the Schedule attached hereto
CONSOLIDATED RAIL CORPORATION
Leveraged Lease Financing of Railcars
Conrail 1994-A Pass Through Trust
Ladies and Gentlemen:
We have acted as special Canadian Counsel in connection with
the transactions contemplated by the Participation Agreement, dated as of
December 22, 1994 (the "Participation Agreement"), pertaining to the
above-referenced Pass Through Trust, among Consolidated Rail Corporation (the
"Lessee"), J.P. Morgan Interfunding Corp., (the "Owner Participant"), Meridian
Trust Company, not in its individual capacity except as specifically set forth
therein but solely as owner trustee (the "Owner Trustee"), Wilmington Trust
Company ("Wilmington"), as Indenture Trustee (the "Indenture Trustee") and
Wilmington, as Pass Through Trustee. This opinion is delivered to you pursuant
to Section 4(a)(x) of the Participation Agreement and Section ____ of the
Underwriting Agreement between Lessee and Morgan Stanley & Co. Incorporated.
Capitalized terms used herein and not otherwise defined are used as defined in
Appendix A to the Participation Agreement.
We have examined executed copies of each of the Indenture,
Indenture Supplement No. 1 dated December 22, 1994 (the "Indenture
Supplement"), the Lease and Lease Supplement No. 1 dated December 22, 1994 (the
"Lease Supplement") and execution copies of the Participation Agreement.
In giving the opinion hereinafter expressed, we considered
such questions of law as we have deemed necessary.
<PAGE> 89
A-6-2
Based on the foregoing, we are of the opinion that:
1. The Indenture, the Indenture Supplement, the Lease and the
Lease Supplement have been duly deposited with the office of the
Registrar General of Canada pursuant to Section 90 of the Railway Act
(Canada).
2. The aforementioned deposit of the Indenture, the Indenture
Supplement, the Lease and the Lease Supplement with the Registrar
General of Canada will preserve and protect the Indenture Trustee's
rights under the Indenture and to all Items of Equipment against any
other person in Canada and no other filing, recordation, deposit,
re-filing, re-recordation or re-deposit (or giving of notice) with any
federal, provincial or local government or agency thereof is necessary
in order to fully protect the Indenture Trustee's rights under the
Indenture and to all Items of Equipment described in the Lease
Supplement in Canada or any province or territory thereof.
3. The aforementioned deposit of the Lease and the Lease
Supplement with the Registrar General of Canada will preserve and
protect the Owner Trustee's rights under the Lease and to all Items of
Equipment delivered under the Lease Supplement against any other
person in Canada and no other filing, recordation, deposit, re-filing,
re-recordation or re-deposit (or giving of notice) with any federal,
provincial or local government or agency thereof is necessary in order
to protect the Owner Trustee's rights under the Lease and to all Items
of Equipment described in the Lease Supplement in Canada or any
province or territory thereof.
The opinions expressed herein are subject to the following
qualifications:
(i) enforcement of the rights of the Owner Trustee or
Indenture Trustee may be limited by applicable bankruptcy, insolvency,
liquidation, reorganization or other similar laws affecting the
enforcement of creditors' rights generally from time to time in
effect;
(ii) equitable remedies are subject to the discretion of
the court before which they are brought; and
(iii) a monetary judgment by a court in Canada will only be
awarded in Canadian dollars; however, in Ontario, a court will award
that amount of Canadian dollars on the day before payment.
Yours very truly,
<PAGE> 90
SCHEDULE I
Wilmington Trust Company,
as Indenture Trustee
Rodney Square North
Wilmington, Delaware 19899
Wilmington Trust Company,
as Pass Through Trustee
Rodney Square North
Wilmington, Delaware 19899
Meridian Trust Company,
as Owner Trustee
35 North Sixth Street
Reading, Pennsylvania 19601
Consolidated Rail Corporation,
as Lessee
4001 Market Street
Two Commerce Square, P.O. Box 41417
Philadelphia, PA 19101-1417
J.P. Morgan Interfunding Corp.,
as Owner Participant
60 Wall Street
18th Floor
New York, NY 10260
Morgan Stanley & Co. Incorporated,
as Underwriter
1251 Avenue of the Americas
New York, New York 10020
<PAGE> 1
CONFORMED COPY
================================================================================
TRUST AGREEMENT
Dated as of December 22, 1994
between
J.P. MORGAN INTERFUNDING CORP.
Owner Participant
and
MERIDIAN TRUST COMPANY
Owner Trustee
-------------------------
57 Rebuilt Railcars
795 New Railcars
-------------------------
Conrail 1994-A Pass Through Trust
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II AUTHORITY TO EXECUTE DOCUMENTS;
DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.01. Authority to Execute Documents . . . . . . . . . . . . . . . . . . . . 1
2.02. Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III ACCEPTANCE AND DELIVERY OF ITEMS OF
EQUIPMENT; LEASE OF ITEMS OF EQUIPMENT . . . . . . . . . . . . . . . . . . . . 2
3.01. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.02. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE OWNER TRUST ESTATE . . . . . . . . . . . . . . . . . . . . . . 3
4.01. Distribution of Payments . . . . . . . . . . . . . . . . . . . . . . . 3
4.02. Method of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE V DUTIES OF THE OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.01. Notice of Event of Default; Furnishing of Documents . . . . . . . . . . 5
5.02. Action Upon Instructions . . . . . . . . . . . . . . . . . . . . . . . 5
5.03. Right to Indemnity Before Acting . . . . . . . . . . . . . . . . . . . 6
5.04. No Duties Except as Specified . . . . . . . . . . . . . . . . . . . . . 6
5.05. No Action Except Under Specified Document or
Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI THE OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.01. Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . 7
6.02. Absence of Certain Duties . . . . . . . . . . . . . . . . . . . . . . . 8
6.03. No Representations or Warranties as to Certain
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.04. No Segregation of Monies Required; Investment
Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
Page
<S> <C> <C>
6.05. Reliance Upon Certificates and Counsel . . . . . . . . . . . . . . . . . . . . 9
6.06. Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . 10
6.07. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.08. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE BY
THE OWNER PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.01. Indemnification of the Owner Trustee . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S
INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.01. Transfer of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IX SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.01. Resignation or Removal of the Owner Trustee;
Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.02. Co-Trustees and Separate Trustees . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST
AGREEMENT AND OTHER DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.01. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.02. Discretion as to Execution of Documents . . . . . . . . . . . . . . . . . . . 15
10.03. Absence of Requirements as to Form . . . . . . . . . . . . . . . . . . . . . . 15
10.04. Distribution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.05. No Request Needed As to Lease and Indenture Supplements . . . . . . . . . . . 15
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.02. The Owner Participant Has No Legal Title . . . . . . . . . . . . . . . . . . . 16
11.03. Assignment, Sale, etc. of Items of Equipment . . . . . . . . . . . . . . . . . 17
11.04. Trust Agreement for Benefit of Parties Only . . . . . . . . . . . . . . . . . 17
11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.06. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.07. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.08. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11.09. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 4
TRUST AGREEMENT
This TRUST AGREEMENT dated as of December 22, 1994 between
J.P. MORGAN INTERFUNDING CORP., a Delaware corporation (together with its
successors and permitted assigns, the "Owner Participant"), and MERIDIAN TRUST
COMPANY, a Pennsylvania trust company (in its individual capacity, "Meridian"),
in its individual capacity only as expressly stated herein and otherwise not in
its individual capacity but solely as trustee hereunder (in such capacity,
together with its successors and permitted assigns, called the "Owner
Trustee").
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.01. Certain Definitions. Unless the context shall
otherwise require, capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned thereto in Appendix A to the
Participation Agreement dated as of December 22, 1994 among Consolidated Rail
Corporation, the Owner Participant, Wilmington Trust Company ("Wilmington"), as
Indenture Trustee, Wilmington, as Pass Through Trustee, Meridian and the Owner
Trustee for all purposes of this Agreement. All such definitions shall be
equally applicable to the singular and plural forms of the terms defined. All
references in this Agreement to Articles and Sections, unless otherwise
specified, refer to Articles and Sections of this Agreement.
ARTICLE II
AUTHORITY TO EXECUTE DOCUMENTS;
DECLARATION OF TRUST
Section 2.01. Authority to Execute Documents. The Owner
Participant hereby authorizes and directs the Owner Trustee (i) to execute and
deliver the Participation Agreement, the Railcar Purchase Agreement, the
Indenture, any Indenture Supplement, the Lease, any Lease Supplement and any
other agreements, instruments or documents to which the Owner Trustee is to be
a party in the respective forms thereof delivered from time to time by the
Owner Participant to the Owner Trustee for execution and delivery; (ii) to
execute and deliver all other agreements, instruments and certificates
contemplated by any Operative Document; and (iii) subject to the express terms
hereof and of the other Operative Documents to which it is a party, to exercise
its rights (upon instructions received from the Owner Participant) and perform
its duties under the documents referred to in clauses (i) and (ii) above in
accordance with the respective terms thereof.
<PAGE> 5
2
Section 2.02. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate upon the trusts hereinafter
set forth for the use and benefit of the Owner Participant, subject, however,
to the provisions of, and the Lien created by, the Indenture.
ARTICLE III
ACCEPTANCE AND DELIVERY OF ITEMS OF EQUIPMENT; LEASE OF ITEMS OF EQUIPMENT
Section 3.01. Authorization. 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, promptly execute and deliver
the Participation Agreement, the Railcar Purchase Agreement, the Indenture and
the Lease and, subject to due compliance with the terms of Section 3.02, on the
Closing Date.
(A) authorize a representative or representatives of the
Owner Trustee (who shall be a person or persons designated by Lessee)
to accept delivery of the Railcars to be purchased on the Closing Date
pursuant to the Participation Agreement;
(B) purchase such Railcars pursuant to the Participation
Agreement and the Railcar Purchase Agreement;
(C) pay an amount equal to the Owner Participant's
Commitment for such Railcars pursuant to the Participation Agreement
in consideration of the sale of such Railcars by Lessee to the Owner
Trustee pursuant to the Railcar Purchase Agreement;
(D) lease such Items of Equipment to Lessee under the
Lease;
(E) execute and deliver each other Operative Document to
which the Owner Trustee is to be a party and the financing statements
contemplated by Section 4(a)(iii) of the Participation Agreement on
the Closing Date;
(F) take such other action as may be required of the
Owner Trustee hereunder or under the Participation Agreement, the
Indenture, the Lease or any other Operative Document to effectuate the
transactions then contemplated thereby including, without limitation,
whatever action is necessary to register the Railcars in the name of
the Owner Trustee; and
(G) execute and deliver all such other instruments,
documents or certificates and take all such other action, in
accordance with the directions of the Owner
<PAGE> 6
3
Participant, as the Owner Participant may deem necessary or advisable
in connection with the transactions then contemplated hereby.
Section 3.02. Conditions Precedent. The right and obligation
of the Owner Trustee to take the actions required by Section 3.01 on the
Closing Date shall be subject to the following conditions precedent:
(A) on the Closing Date, the Owner Participant shall have
made available, in immediately available funds, to the Owner Trustee
the full amount of its Commitment with respect to the Items of
Equipment to be purchased on the Closing Date in accordance with
Section 2 of the Participation Agreement; and
(B) each of the then applicable terms and conditions of
Section 4 of the Participation Agreement shall have been waived or
complied with in a manner satisfactory to the Owner Participant.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE OWNER TRUST ESTATE
Section 4.01. Distribution of Payments. (a) Payments to the
Indenture Trustee. Until the Indenture shall have been discharged pursuant to
Section 9.01 thereof, all Rent, insurance, condemnation and requisition
proceeds (other than any insurance, condemnation and requisition proceeds
specified in Section 4.01(e)) and indemnity or other like payments of any kind
included in the Indenture Estate (other than Excluded Payments) shall be
payable directly to the Indenture Trustee (and if any of the same are received
by the Owner Trustee, shall upon receipt be paid over to the Indenture Trustee
without deduction, setoff or adjustment of any kind) for distribution in
accordance with the provisions of Article 3 of the Indenture; provided,
however, that any payments received by the Owner Trustee from (i) Lessee with
respect to the Owner Trustee's fees and disbursements or (ii) the Owner
Participant pursuant to Article VII shall not be paid over to the Indenture
Trustee but shall be retained by the Owner Trustee and applied toward the
purpose for which such payments were made.
(b) Payments to the Owner Trustee; Other Parties. Any
payment of the types referred to in paragraph (a) of this Section 4.01 (other
than Excluded Payments and payments specified in the proviso to such paragraph
(a)) received by the Owner Trustee, any other payment so received except as
specified in Section 4.01(d) or 4.01(e) and any other amount received as part
of the Owner Trust Estate and for the application or distribution of which no
provision is made herein, whether for or with respect to any Item of Equipment
or otherwise (i) from the Indenture Trustee or (ii) from any other Person after
the Indenture
<PAGE> 7
4
shall have been discharged pursuant to Section 9.01 thereof, shall be
distributed forthwith upon receipt by the Owner Trustee in the following order
of priority: first, so much of such payment or amount as shall be required to
pay or reimburse the Owner Trustee for any fees or expenses not otherwise paid
or reimbursed as to which the Owner Trustee is entitled to be paid or
reimbursed pursuant to the provisions hereof or for the Indenture, shall be
retained by the Owner Trustee; second, so much of the remainder of such payment
or amount for which provision as to the application thereof is contained in the
Lease or any other Operative Document, shall b applied and distributed in
accordance with the terms of the Lease or such other Operative Document; and
third, the balance, if any, shall be paid to the Owner Participant.
(c) Intentionally Omitted.
(d) Excluded Payments. Any Excluded Payments received by
the Owner Trustee shall be paid to the Owner Participant or to the Person to
whom such Excluded Payments is payable under the terms of the Participation
Agreement, the Tax Indemnity Agreement or the Lease.
(e) Proceeds. Any insurance, condemnation or requisition
proceeds received by the Owner Trustee shall be applied as provided in Sections
10 and 11 of the Lease.
Section 4.02. Method of Payments. The Owner Trustee shall
make distributions or cause distributions to be made to (i) the Owner
Participant pursuant to this Article IV by transferring by wire transfer in
immediately available funds the amount to be distributed to such account or
accounts of the Owner Participant as it may designate from time to time by
written notice to the Owner Trustee (and the Owner Trustee shall use reasonable
and diligent efforts to cause such funds to be transferred by wire transfer on
the same day as received, but in any case not later than the next succeeding
Business Day) and (ii) the Indenture Trustee pursuant to this Article IV by
paying the amount to be distributed to the Indenture Trustee in the manner
specified in the Indenture; provided, however, that the Owner Trustee shall use
its best efforts to invest overnight, for the benefit of the Owner Participant,
in Permitted Investments (or if no Permitted Investments shall then be
available, in such other investments then available to the Owner Trustee as the
Owner Participant shall direct) all funds not transferred by wire transfer on
the day received. Notwithstanding the preceding sentence, but subject always
to the provisions of, and the Lien created by, the Indenture, the Owner Trustee
will, if so requested in writing by the Owner Participant, pay any and all
amounts payable by the Owner Trustee hereunder to the Owner Participant either
(i) by crediting, or causing the Indenture Trustee to credit such amounts to an
account or accounts maintained by the Owner Participant with Meridian or with
the Indenture Trustee, as the case may be in immediately available funds or
(ii) by mailing, or causing the Indenture Trustee to mail, an official bank
check or checks in such amounts payable to the Owner Participant to such
address as the Owner Participant shall have designated in writing to the
<PAGE> 8
5
Owner Trustee. If at any time the Owner Trustee shall receive any funds
properly distributable to Lessee, the Owner Trustee shall, subject always to
the terms of the Indenture, the Lease and all other Operative Documents, cause
the same to be promptly distributed to Lessee by wire transfer of immediately
available funds to such account or accounts it may designate from time to time
by written notice to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
Section 5.01. Notice of Event of Default; Furnishing of
Documents. If the Owner Trustee shall have knowledge of any Potential Default,
Event of Default, ETA Default or Event of Acceleration, the Owner Trustee shall
give to the Owner Participant, Lessee and the Indenture Trustee prompt
telephonic or telex notice thereof, followed by prompt confirmation thereof by
certified mail, postage prepaid, with return receipt requested. Subject to
Section 5.03, the Owner Trustee shall take such action or shall refrain from
taking such action, not inconsistent with the terms of the Operative Documents,
with respect to such Potential Default, Event of Default, ETA Default or Event
of Acceleration as the Owner Trustee shall be directed in writing by the Owner
Participant. If the Owner Trustee shall not have received instructions as
above provided within 20 days after mailing notice of such Potential Default,
Event of Default, ETA Default or Event of Acceleration to the Owner
Participant, the Owner Trustee may, subject to instructions received pursuant
to the preceding sentence, take such action, or refrain from taking such
action, but shall be under no duty to take or refrain from taking any action,
with respect to such Potential Default, Event of Default, ETA Default or Event
of Acceleration not inconsistent with the provisions of the Indenture, as it
shall deem in its sole and absolute discretion to be in the best interests of
the Owner Participant. For all purposes of this Agreement and the Lease, the
Owner Trustee shall not be deemed to have knowledge of a Potential Default,
Event of Default, ETA Default or an Event of Acceleration unless notified in
writing thereof in the manner and at the address set forth in Section 11.05 or
unless an officer in the Corporate Trust Administration of the Owner Trustee
has actual knowledge thereof. The Owner Trustee will furnish to the Owner
Participant and the Indenture Trustee, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instrument furnished to the Owner Trustee
hereunder or under the Operative Documents, unless by the express terms of any
Operative Document a copy of the same is required to be furnished by some other
Person directly to the Owner Participant and the Indenture Trustee or the Owner
Trustee shall have determined that the same has already been furnished to the
Owner Participant and the Indenture Trustee.
Section 5.02. Action Upon Instructions. Subject to Sections
5.01 and 5.03 and to the terms of any other applicable Operative Document, upon
the written instructions at any time and from time to time of the Owner
Participant, the Owner Trustee shall take such of the following actions as may
be specified in such instructions: (i) give such notice or
<PAGE> 9
6
direction or exercise such right, remedy or power hereunder or under any
Operative Document to which the Owner Trustee is a party, or in respect of all
or any part of the Owner Trust Estate, as shall be specified in such
instructions; (ii) take such action to preserve or protect the Owner Trust
Estate (including the discharge of any Liens) as shall be specified in such
instructions; (iii) approve as satisfactory to the Owner Trustee all matters
required by the terms of the Lease or any other Operative Document to be
satisfactory to the Owner Trustee, it being understood that, without written
instructions of the Owner Participant, the Owner Trustee shall not approve any
such matter as satisfactory to it; and (iv) subject to the rights of Lessee
under the Operative Documents, after the expiration or earlier termination of
the Lease with respect to such Items of Equipment, convey all of the Owner
Trustee's right, title and interest in and to the Item of Equipment for such
amount, on such terms and to such purchaser or purchasers as shall be
designated in such instructions, or retain, lease or otherwise dispose of the
Items of Equipment on such terms as shall be set forth in such instructions or
deliver the Items of Equipment to the Owner Participant in accordance with such
instructions; provided, however, that if such instructions have not been
delivered to the Owner Trustee prior to the expiration of one year following
expiration or earlier termination of the Lease with respect to such Item of
Equipment, the Owner Trustee shall transfer title to all such interests to the
Owner Participant. In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or of any other agreement
relating to the transactions contemplated hereby, the Owner Trustee may request
and rely upon instructions of the Owner Participant.
Section 5.03. Right to Indemnity Before Acting. The Owner
Trustee shall not be required to take or refrain from taking action under
Section 5.01 or 5.02 (other than to give the notices required of the Owner
Trustee therein) unless the Owner Trustee shall have been indemnified by the
Owner Participant, in manner and form reasonably satisfactory to the Owner
Trustee, against any liability, cost or expense (including reasonable counsel
fees and disbursements) which may be incurred in connection therewith; and if
the Owner Participant shall have directed the Owner Trustee to take or refrain
from taking any such action, the Owner Participant agrees to furnish such
indemnity as shall be required and, in addition (to the extent not otherwise
paid pursuant to the Participation Agreement, the Lease or the Indenture) to
pay the reasonable fees and charges of the Owner Trustee for the services
performed or to be performed by it pursuant to such direction. The Owner
Trustee shall not be required to take any action under Section 5.01 or 5.02 if
the Owner Trustee shall reasonable determine, or shall have been advised by
counsel, that such action is contrary to the terms of any Operative Document to
which the Owner Trustee is a party or is contrary to law.
Section 5.04. No Duties Except as Specified. The Owner
Trustee shall not have any duty or obligation to manage, control, use, sell,
dispose of or otherwise deal with any Item of Equipment or any other part of
the Owner Trust Estate, or otherwise to take or refrain from taking any action
under, or in connection with, any Operative Document to which the Owner Trustee
is a party, except as expressly required by the terms of any
<PAGE> 10
7
Operative Document to which the Owner Trustee is a party, or (to the extent not
inconsistent with the terms of the Indenture) as expressly required by the
terms hereof or in written instructions received pursuant to Section 5.01 or
5.02 from the Owner Participant; and no implied duties or obligations shall be
read into this Agreement or any other Operative Document to which the Owner
Trustee is a party against the Owner Trustee. Meridian nevertheless agrees
that it will, at its own cost and expense (without any right of indemnity in
respect of any such cost or expense under Section 7.01), promptly take such
action as may be necessary duly to discharge and satisfy in full: (i) all
Lessor's Liens attributable to Meridian or the Owner Trustee; (ii) any Liens
(other than Lessor's Liens attributable to Meridian or the Owner Trustee)
created as a result of Meridian's or the Owner Trustee's breach of any of its
obligations under this Agreement (subject to the limitations on liability set
forth in Section 6.01) on any part of the Owner Trust Estate, or on any
properties of the Owner Trustee assigned, pledged or mortgaged as part of the
Owner Trust Estate, which arise from acts of Meridian or the Owner Trustee,
except the Lien created by the Indenture, the rights of Lessee under the Lease
and the rights of the Owner Participant hereunder, and (iii) any other Liens
attributable to Meridian or the Owner Trustee on any part of the Owner Trust
Estate which result from claims against Meridian or the Owner Trustee unrelated
to the ownership of the Items of Equipment, the administration of the Owner
Trust Estate or the transactions contemplated by the Operative Documents.
Section 5.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall have no power or authority to, and the
Owner Trustee agrees that it will not, manage, control, use, sell, dispose of
or otherwise deal with the Items of Equipment or any other part of the Owner
Trust Estate except (i) as expressly required by the terms of any Operative
Document to which the Owner Trustee is a party, (ii) as expressly required by
the terms hereof or (iii) as expressly provided in written instructions from
the Owner participant pursuant to Section 5.01 or 5.02, but subject always to
the provisions of, and the Lien created by, the Indenture.
ARTICLE VI
THE OWNER TRUSTEE
Section 6.01. Acceptance of Trusts and Duties. Meridian
accepts the trusts hereby created and agrees to perform the same upon the terms
hereof. Meridian also agrees to receive and disburse all monies paid to it
constituting part of the Owner Trust Estate upon the terms hereof. Meridian
shall not be answerable or accountable under any circumstances, except for (i)
its own or the Owner Trustee's willful misconduct or gross negligence; (ii) its
performance of the terms of the last sentence of Section 5.04; (iii) its or the
Owner Trustee's failure to use ordinary care in receiving or disbursing funds;
(iv) any liability that may result from the inaccuracy of any of its or the
Owner Trustee's representations or warranties (or from its failure to perform
any covenant made) in Section 6.03 or in any other Operative Document to which
the Owner Trustee is a party; and (v) all taxes, fees or other charges on,
<PAGE> 11
8
based on or measured by any fees, commissions or other compensation received by
Meridian on account of its services as Owner Trustee; provided, however, that
its or the Owner Trustee's failure to act or perform in the absence of
instructions, after the Owner Trustee shall have requested instructions from
the Owner Participant pursuant to the last sentence of Section 5.02, shall not
constitute willful misconduct or gross negligence for purposes of clause (i) of
this Section 6.01. Meridian further agrees to perform all of its
administrative functions and duties as Owner Trustee within the Commonwealth of
Pennsylvania.
Section 6.02. Absence of Certain Duties. Except in
accordance with written instructions furnished pursuant to Section 5.01 or 5.02
and except as provided in, and without limiting the generality of, Section
5.04, the Owner Trustee shall have no duty (i) to see to any recording or
filing of the Lease, any Lease Supplement, this Agreement, the Indenture or any
Indenture Supplement or to see to the maintenance of any such recordation or
filing or to any necessary rerecording or refiling thereof; (ii) to see to any
insurance on the Items of Equipment or to effect or maintain any such
insurance, whether or not Lessee shall be in default with respect thereto
(other than to forward to the Owner Participant copies of all reports and other
information which the Owner Trustee shall receive from Lessee pursuant to
Section 11 of the Lease); (iii) to see to the payment or discharge of any tax,
assessment or other governmental charge on, or any Lien of any kind owing with
respect to, or assessed or levied against, any part of the Owner Trust Estate
except as provided by Section 8(f) of the Participation Agreement; (iv) to
confirm or verify any financial statements of Lessee; or (v) to inspect the
Items of Equipment or Lessee's books and records with respect thereto.
Section 6.03. No Representations or Warranties as to Certain
Matters. NEITHER MERIDIAN NOR THE OWNER TRUSTEE (i) IS A MANUFACTURER OF OR
DEALER IN ANY ITEM OF EQUIPMENT AND NEITHER WILL MAKE AN INSPECTION OF THE
ITEMS OF EQUIPMENT PRIOR TO DELIVERY TO AND ACCEPTANCE BY LESSEE, (ii) MAKES OR
SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY,
COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OF
ANY ITEM OF EQUIPMENT OR ANY PART THEREOF OR AS TO THE ABSENCE OF LATENT OR
OTHER EFFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO THE ABSENCE OF
OBLIGATIONS BASED ON LIABILITY IN TORT, STRICT OR OTHERWISE, OR AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP OF ANY ITEM OF EQUIPMENT OR ANY PART
THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO ANY ITEM OF EQUIPMENT OR ANY PART THEREOF except that Meridian
warrants that on each Delivery Date the Owner Trustee shall receive whatever
title to the Items of Equipment was conveyed to the Owner Trustee by Lessee on
such Delivery Date and Meridian shall be
<PAGE> 12
9
in compliance with the last sentence of Section 5.04 and that the Items of
Equipment so conveyed shall during the Term be free of Lessor's Liens
attributable to Meridian or the Owner Trustee, or (iii) any representation or
warranty as to the validity, legality or enforceability of this Agreement or
any other Operative Document to which the Owner Trustee is a party, or any
other document or instrument delivered pursuant hereto or thereto, or as to the
correctness of any statement contained in any thereof, except to the extent
that any such representation, warranty or statement is expressly made herein or
therein as a representation, warranty or statement by Meridian or the Owner
Trustee and except that Meridian hereby represents and warrants that this
Agreement has been, and (assuming the due authorization, execution and delivery
of this Agreement by the Owner Participant) the other Operative Documents to
which the Owner Trustee is a party have been, or at the time of execution and
delivery thereof by the Owner Trustee pursuant hereto or to the Participation
Agreement will be, duly executed and delivered by one of Meridian's officers
who is or will be, as the case may be, duly authorized to execute and deliver
the same on behalf of the Owner Trustee and that this Agreement has been duly
authorized, executed and delivered by Meridian and constitutes the legal, valid
and binding obligation of Meridian enforceable against Meridian in accordance
with its terms, except as such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.
Section 6.04. No Segregation of Monies Required; Investment
Thereof. Monies received by the Owner Trustee hereunder need not be segregated
in any manner except to the extent required by law, and may be deposited under
such general conditions as may be prescribed by law, and shall be invested as
provided in Section 4.02.
Section 6.05. Reliance Upon Certificates and Counsel. The
Owner Trustee shall not incur any liability to any Person by reason of acting
in reliance upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and reasonably believed by it to be
signed by the proper party or parties. Unless other evidence in respect
thereof is specifically prescribed herein, any request, direction, order or
demand of the Owner Participant, Lessee or the Indenture Trustee mentioned
herein or in any other Operative Document to which the Owner Trustee is a party
shall be sufficiently evidenced by a written instrument signed by a person
purporting to be an officer of the Owner Participant, Lessee or the Indenture
Trustee, as the case may be. The Owner Trustee may accept a copy of a
resolution of the Board of Directors of the Owner Participant or Lessee, as the
case may be, certified by the Secretary or an Assistant Secretary of the Owner
Participant or Lessee as the case may be, as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been duly adopted by
such Board of Directors 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
provided herein, the Owner Trustee may for all purposes hereof rely on a
certificate signed by an officer of the Owner Participant, Lessee or the
Indenture Trustee, as the case may be, as to such fact or matter, and such
certificate shall constitute full protection
<PAGE> 13
10
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
Section 6.06. Not Acting in Individual Capacity. Meridian is
acting hereunder solely as trustee and not in its individual capacity except as
otherwise expressly provided herein; and, except as may be otherwise expressly
provided in this Agreement, the Lease, the Participation Agreement or the
Indenture, all Persons, other than the Owner Participant, having any claim
against the Owner Trustee by reason of the transactions contemplated hereby
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
Section 6.07. Compensation. Except as otherwise provided in
Section 5.03, 6.08 or 7.01, neither Meridian nor the Owner Trustee shall have
any right against the Owner Participant or (subject to the terms of the
Indenture) the Owner Trust Estate for any fee, compensation or reimbursement
for its services hereunder.
Section 6.08. Tax Returns. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to
the receipt and disbursement by it of all monies under this Agreement and each
other agreement (including the Operative Documents to which it is a party)
contemplated hereby. The Owner Participant shall be responsible for causing to
be prepared and filed, at its expense, all income tax returns required to be
filed by the Owner Participant and for causing to be prepared all income tax
returns required to be filed with respect to the trust created hereby. The
Owner Trustee, upon request and upon adequate assurance of reimbursement by the
Owner Participant for the costs and expenses associated therewith, shall
furnish to the Owner Participant all such information as may be reasonably
required from the Owner Trustee in connection with the preparation of such
income tax returns. Upon request of Owner Participant, the Owner Trustee shall
sign and file the trust's tax returns prepared by the Owner Participant.
ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
BY THE OWNER PARTICIPANT
Section 7.01. Indemnification of the Owner Trustee. The
Owner participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and does
hereby indemnify, protect, save and keep harmless Meridian, and its successors,
permitted assigns, agents and servants, from and against, any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any
taxes payable by Meridian on or measured by any fees or other compensation
received by Meridian for its services hereunder), claims, actions, suits,
costs, expenses or disbursements (including, without limitation, reasonable
legal fees and expenses) of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against Meridian in any way
<PAGE> 14
11
relating to or arising out of this Agreement or any other Operative Document or
the enforcement of the terms of any thereof, or in any way relating to or
arising out of the manufacture, purchase, acceptance, non-acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Item of Equipment (including, without
limitation, latent and other defects, whether or not discoverable, and any
claim for patent, trademark or copyright infringement), or in any way relating
to or arising out of the administration of the Owner Trust Estate or the action
or inaction of the Owner Trustee hereunder, except: (i) in the case of willful
misconduct or gross negligence on the part of the Owner Trustee or Meridian as
trustee or in its individual capacity, respectively, in the performance or
nonperformance of its obligations and duties hereunder, (ii) those resulting
from the inaccuracy of any representation or warranty of Meridian or the Owner
Trustee (or from its failure to perform any covenant) in Section 6.03 or in any
other Operative Document; (iii) those arising or resulting from any of the
matters described in the last sentence of Section 6.01; or (iv) those resulting
from its failure to perform the terms of the last sentence of Section 5.04 or
from the failure to use ordinary care in the receipt and disbursement of funds;
provided that the Owner Participant shall be liable under this Section 7.01
only to the extent that the Owner Trustee is indemnified by the Lessee pursuant
to Section 16 of the Participation Agreement; provided further that before
asserting its right to indemnification pursuant to this Section 7.01, the Owner
Trustee shall first demand its corresponding right to indemnification, if any,
pursuant to Section 16 of the Participation Agreement (but need not exhaust any
or all remedies available thereunder), provided the Owner Participant has the
right to pursue any such remedies against the Lessee which are not pursued by
the Owner Trustee. The indemnities contained in this Section 7.01 extend to
Meridian only and shall not be construed as indemnities of the Indenture Estate
or the Owner Trust Estate. The indemnities contained in this Section 7.01
shall survive the termination of this Agreement. In addition, if necessary,
the Owner Trustee shall be entitled to indemnification from the Owner Trust
Estate, subject, however, to the provisions of Section 4.01 and the Lien
created by the Indenture, for any liability, obligation, loss, damage, penalty,
tax, claim, action, suit, cost, expense or disbursement indemnified against
pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner
Participant or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Owner Trustee shall
have a Lien on the Owner Trust Estate, subject, however, to the provisions of
Section 4.01 and the Lien created by the Indenture, which Lien of the Owner
Trustee shall be prior to any interest herein of the Owner Participant.
ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
Section 8.01. Transfer of Interest. All provisions of
Section 14 of the Participation Agreement shall (with the same force and effect
as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable
to any assignment, conveyance or other transfer
<PAGE> 15
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by the Owner Participant of its right, title or interest in and to this
Agreement or any other Operative Document to which the Owner Trustee is a
party.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES
Section 9.01. Resignation or Removal of the Owner Trustee;
Appointment of Successor. (a) Resignation or Removal. The Owner Trustee or
any successor Owner Trustee may resign at any time without cause by giving at
least 60 days' prior written notice to the Owner Participant, the Indenture
Trustee and Lessee, such resignation to be effective upon the acceptance of
appointment by the successor Owner Trustee under Section 9.01(b). In addition,
the Owner Participant may at any time remove the Owner Trustee without cause by
a notice in writing delivered to the Owner Trustee, the Indenture Trustee and
Lessee, such removal to be effective upon the acceptance of appointment by the
successor Owner Trustee under Section 9.01(b). In the case of the resignation
or removal of the Owner Trustee, the Owner Participant may appoint a successor
Owner Trustee by an instrument in writing signed by the Owner Participant. If
a successor Owner Trustee shall not have been appointed within 30 days after
such notice of resignation or removal, the Owner Trustee, the Indenture Trustee
or Lessee may apply to any court of competent jurisdiction to appoint a
successor Owner Trustee to act until such time, if any, as a successor shall
have been appointed by the Owner Participant as above provided. Any successor
Owner Trustee so appointed by such court shall immediately, and without further
act, be superseded by any successor Owner Trustee appointed by the Owner
Participant as above provided within one year from the date of the appointment
by such court.
(b) Execution and Delivery of Certain Documents. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee an instrument accepting such appointment, and
thereupon 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 the Owner Trustee herein; but nevertheless, 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
and trusts of such predecessor Owner Trustee, and such predecessor Owner
Trustee shall duly assign, transfer, deliver and pay over to such successor
Owner Trustee all monies or other property then held by such predecessor Owner
Trustee upon the trusts herein expressed.
(c) Qualification. Any successor Owner Trustee, however
appointed, 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 by such an
<PAGE> 16
13
institution willing, able and legally qualified to perform the duties of Owner
Trustee hereunder upon reasonable and customary terms.
(d) Merger, etc. 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,
subject to Section 9.01(c), be the Owner Trustee hereunder without further act.
Section 9.02. Co-Trustees and Separate Trustees. If at any
time or times it shall be necessary or prudent in order to conform to any
applicable law of any jurisdiction in which all or any part of the Owner Trust
Estate is located, or the Owner Trustee shall be advised by counsel that it is
so necessary or prudent in the interest of the Owner Participant or the Owner
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, the Owner Participant and Lessee, either
to act as co-trustee or co-trustees, jointly with the Owner Trustee, or to act
as separate trustee or trustees hereunder (any such co-trustee or separate
trustee being herein sometimes referred to as an "additional trustee"). In the
event the Owner Participant shall not have joined in the execution of any such
agreement or instrument within 10 days after the receipt of a written request
from the Owner Trustee to do so, or in the event an Event of Default shall have
occurred and be continuing, the Owner Trustee may act under the foregoing
provisions of this Section 9.02 without the concurrence of the Owner
Participant; and the Owner Participant hereby appoints the Owner Trustee its
agent and attorney-in-fact to act for it under the foregoing provisions of this
Section 9.02 in either of such contingencies.
Every additional trustee hereunder shall, to the extent
permitted by law, be appointed and act, and the Owner Trustee and its
successors shall act, subject to the following provisions and conditions:
(A) all rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee in respect of the custody, control
and management of monies, the Items of Equipment or documents
authorized to be delivered hereunder shall be exercised solely by the
corporation designated as the Owner Trustee in the first paragraph of
this Agreement, or its successor as Owner Trustee.
(B) 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 corporation designated
as the Owner Trustee in the first paragraph of this Agreement, or its
successor as Owner Trustee, and such additional trustee or trustees
jointly, except to the extent that under any law of any jurisdiction
in which
<PAGE> 17
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any particular act or acts are to be performed (including the holding
of title to the Owner Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee or trustees;
(C) no power given to, or which it is provided hereby may
be exercised by, any such additional trustee or trustees shall be
exercised hereunder by such additional trustee or trustees except
jointly with, or with the consent in writing of, the corporation
designated as the Owner Trustee in the first paragraph of this
Agreement, or its successor as Owner Trustee, anything herein
contained to the contrary notwithstanding;
(D) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
(E) the Owner Trustee, at any time by an instrument in
writing, may remove any such additional trustee; in the event that the
Owner Participant shall not have joined in the execution of any such
instrument within 10 days after the receipt of a written request from
the Owner Trustee to do so, the Owner Trustee shall have the power to
remove any such additional trustee without the concurrence of the
Owner Participant; and the Owner Participant hereby appoints the Owner
Trustee its agent and attorney-in-fact to act for it in such removal
in such contingency; and
(F) no appointment of, or action by, any additional
trustee shall relieve the Owner Trustee of any of its obligations
under, or otherwise affect any of the terms of, the Indenture or shall
affect the interests of the Indenture Trustee or the Holders of the
Equipment Notes in the Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT
AND OTHER DOCUMENTS
Section 10.01. Supplements and Amendments. (a) Execution.
At any time and from time to time upon the written request of the Owner
Participant, subject to compliance with the applicable provisions of Section
10.06 of the Indenture: (i) the Owner Trustee, together with the Owner
Participant, shall execute a supplement to this Agreement for the purpose of
adding provisions to, or changing or eliminating provisions of, this Agreement
(except Section 11.11) as specified in such request; and (ii) the Owner Trustee
shall enter into such written amendment of or supplement to any other Operative
Document to which the Owner Trustee is a party as the Indenture Trustee and
Lessee may agree to and as may be specified in such request, or execute and
deliver such written waiver or modification of or consent under the terms of
any such Operative Document as Lessee and
<PAGE> 18
15
the Indenture Trustee may agree to and as may be specified in such request.
Notwithstanding the foregoing, except to the extent permitted by Section 7(g)
of the Participation Agreement, no amendment of or supplement to or waiver or
modification to the terms hereof shall modify the provisions of Section 1.01,
Section 2.01, Section 2.02, Section 3.01(F) and (G), Section 4.01, Section
5.01, Section 5.02, Section 5.05, Section 6.01, Section 6.03, Section 6.07,
Section 6.08, Section 7.01, Section 8.01, Section 9.01, Section 9.02, this
Section 10.01, Section 11.01, Section 11.02, Section 11.03, Section 11.05 or
Section 11.11, and the Owner Trustee shall not be required to execute any
amendment of or supplement to this Agreement, or waiver or modification to the
terms hereof which might result in the trusts created hereunder being
terminated prior to the release of the Lien of the Indenture on the Indenture
Estate or prior to the payment in full of the principal of, Premium (if any)
and interest on the Equipment Notes.
(b) Delivery of Amendments and Supplements to Certain
Parties. Until the Indenture shall have been discharged pursuant to Section
9.01 thereof, a signed copy of each amendment or supplement referred to in
Section 10.01(a)(i) shall be delivered by the Owner Trustee to the Indenture
Trustee and shall not in any way affect the Indenture, the Equipment Notes and
shall not impose any duty on the Indenture Trustee with respect to such
amendment or supplement.
Section 10.02. Discretion as to Execution of Documents. If
in the reasonable opinion of the Owner Trustee any document required to be
executed pursuant to the terms of Section 10.01 materially and adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such
document.
Section 10.03. Absence of Requirements as to Form. It shall
not be necessary for any written request furnished pursuant to Section 10.01 to
specify the particular form of the proposed document to be executed pursuant to
such request, but it shall be sufficient if such request shall indicate the
substance thereof.
Section 10.04. Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01, the Owner Trustee shall mail, by certified mail, postage prepaid, return
receipt requested, a conformed copy thereof to the Owner Participant, but the
failure of the Owner Trustee to mail such conformed copy shall not impair or
affect the validity of such document.
Section 10.05. No Request Needed As to Lease and Indenture
Supplements. No written request pursuant to Section 10.01 shall be required to
enable the Owner Trustee to enter into any Lease Supplement with Lessee
pursuant to Section 3.01 or any Indenture Supplement.
<PAGE> 19
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Termination. This Agreement and the trusts,
rights, privileges and options created hereby shall terminate and this Trust
Agreement shall be of no further force or effect upon the earliest of (i) the
later of (x) the final discharge of the Indenture pursuant to Section 11.01
thereof and the sale or other final disposition by the Owner Trustee of all
property constituting part of the Owner Trust Estate and the final distribution
by the Owner Trustee of all monies or other property or proceeds constituting
part of the Owner Trust Estate in accordance with Article IV, provided that at
such time Lessee shall have fully complied with all of the terms of the
Participation Agreement and the Lease, and (y) the expiration or termination of
the Lease in accordance with its terms, (ii) twenty-one years less one day
after the death of the last survivor of the descendants living on the date of
this Agreement of Joseph P. Kennedy, father of President John F. Kennedy, but
if any trusts, rights, privileges or options shall be or become valid under
applicable law for a period subsequent to the twenty- first anniversary of the
death of the last such survivor (or, without limiting the generality of the
foregoing, if legislation shall become effective providing for the validity or
permitting the effective grant of such trusts, rights, privileges and options
for a period in gross exceeding the period for which such trusts, rights,
privileges and options are hereinabove stated to extend and be valid), then
such trusts, rights, privileges and options shall not terminate as aforesaid
but shall extend to and continue in effect, but only if such non-termination
and extension shall then be valid under applicable law, until such time as the
same shall under applicable law cease to be valid, or (iii) the election of the
Owner Participant by notice to the Owner Trustee to revoke the trusts created
hereby, if such notice shall be accompanied by the written agreement of the
Owner Participant assuming all the obligations of the Owner Trustee under or
contemplated by the Operative Documents and all other obligations of the Owner
Trustee incurred by it as trustee hereunder. Notwithstanding the foregoing, no
such election shall be effective (A) if made in contravention of Section 7(g)
of the Participation Agreement or (B) until payment in full of all the
obligations of the Owner Trustee and the Lessee under the Indenture and the
Equipment Notes; otherwise this Agreement and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof. Upon
such termination, all monies or other property or proceeds constituting part of
the Owner Trust Estate shall be distributed in accordance with the terms of
Article IV.
Section 11.02. The Owner Participant Has No Legal Title. The
Owner Participant shall not have legal title to any part of the Owner Trust
Estate. No transfer, by operation of law or otherwise, of any right, title or
interest of the Owner Participant in and to the Owner Trust Estate shall
operate to terminate this Agreement or the trusts created hereunder or entitle
any successors or transferees of the Owner Participant to an accounting or to
the transfer of legal title to any part of the Owner Trust Estate.
<PAGE> 20
17
Section 11.03. Assignment, Sale, etc. of Items of Equipment.
Any assignment, sale, transfer or other conveyance of any Item of Equipment by
the Owner Trustee pursuant to the terms hereof or of the Lease or the
Participation Agreement 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 Item of Equipment. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such assignment, sale, transfer or conveyance or as
to the application of any sale or other proceeds with respect thereto by the
Owner Trustee.
Section 11.04. Trust Agreement for Benefit of Parties Only.
Except as may be otherwise provided in Sections 4.01, 4.02 and 5.01, Article
IX, Section 10.01 and Sections 11.01 and 11.05 nothing herein, whether express
or implied, shall be construed to give any Person other than the Owner Trustee
and the Owner Participant any legal or equitable right, remedy or claim under
or in respect of this Agreement; but this Agreement shall be held to be for the
sole and exclusive benefit of the Owner Trustee and the Owner Participant.
Section 11.05. Notices. Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and delivered
by hand or mailed by certified mail, postage prepaid, return receipt requested,
and (i) if to the Owner Trustee, addressed to it at its office at 35 North
Sixth Street, Reading, Pennsylvania 19603, Attention: Corporate Trust
Department; (ii) if to the Indenture Trustee, addressed to it at its office at
Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust
Department; (iii) if to the Owner Participant, addressed to it at such address
as it shall have furnished by notice to the Owner Trustee, or, until an address
is so furnished, addressed to it at its address set forth in the Participation
Agreement; or (iv) if to Lessee, addressed to it at its address set forth in
the Lease, or to any of the above Persons at any other address subsequently
specified in writing by it to each of the other such Persons. Whenever any
notice in writing is required to be given hereunder by the Owner Trustee or the
Owner Participant, such notice shall be deemed given and such requirements
satisfied if such notice is delivered by hand or mailed by certified mail,
postage prepaid, return receipt requested, or is sent by telex (confirmed
promptly by certified mail, postage prepaid, return receipt requested), in each
case addressed as provided above.
Section 11.06. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceabiltiy 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.
Section 11.07. Waivers. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in
<PAGE> 21
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compliance with the terms of Article X; and any waiver of the terms hereof
shall be effective only in the specified instance and for the specific purpose
given.
Section 11.08. Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.09. Binding Effect. 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 and the Owner Participant,
and its successors and its permitted assigns. Any request, notice, direction,
consent, waiver or other instrument or action by the Owner Participant shall
bind its successors and permitted assigns.
Section 11.10. Headings. The headings of the various
Articles, Sections and paragraphs herein are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
Section 11.11. Governing Law. This Agreement shall in all
respects be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, including all matters of construction, validity
and performance.
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunder duly
authorized as of the day and year first above written.
MERIDIAN TRUST COMPANY
By:/s/ Stephen J. Kaba
-----------------------------------
Title: Vice President
J.P. MORGAN INTERFUNDING CORP.
By:/s/Albert B. Gordon, Jr.
-----------------------------------
Title: Chairman
