1
Exhibit 4(b)(1)
Participation Agreement
(UTC Trust No. 1995-A)
(L-13__)
Dated September __, 1995
among
Union Tank Car Company,
as Lessee
________________________________,
as Owner Trustee
_______________________________,
as Owner Participant
_______________________________,
as Indenture Trustee
and
_________________________________,
as Pass Through Trustee
Covered Hoppers and Tank Cars
2
Table of Contents
Page
----
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSING; TRANSACTION COSTS . . . . . . . . . . 2
Section 2.1. Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2. Participation in Equipment Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3. Closing Dates; Procedure for Participation . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4. Owner Participant's Instructions to the Owner Trustee; Satisfaction of Conditions . . 6
Section 2.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6. Calculation of Adjustments to Basic Rent, Stipulated Loss Value and Termination
Value; Confirmation and Verification . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.7. Postponement of Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.1. Representations and Warranties of the Owner Trustee . . . . . . . . . . . . . . . . . 12
Section 3.2. Representations and Warranties of the Lessee . . . . . . . . . . . . . . . . . . . . . 15
Section 3.3. Representations and Warranties of the Indenture Trustee . . . . . . . . . . . . . . . 19
Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.5. Representations and Warranties of the Pass Through Truste 20
Section 3.6. Representations and Warranties of the Owner Participant . . . . . . . . . . . . . . . 22
Section 3.7. Opinion Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.1. Conditions Precedent to Investment by Each Participant . . . . . . . . . . . . . . . . 23
Section 4.2. Additional Conditions Precedent to Investment by Pass Through Trustee . . . . . . . . 28
Section 4.3. Additional Conditions Precedent to Investment by Owner Participant . . . . . . . . . . 28
Section 4.4. Conditions Precedent to the Obligation of the Lessee . . . . . . . . . . . . . . . . . 29
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE LESSEE . . . . . . . . . . . . . . . . 31
Section 6.1. Restrictions on Transfer of Beneficial Interest . . . . . . . . . . . . . . . . . . . 31
Section 6.2. Lessor's Liens Attributable to the Owner Participant . . . . . . . . . . . . . . . . . 34
Section 6.3. Lessor's Liens Attributable to the Owner Trustee . . . . . . . . . . . . . . . . . . . 34
Section 6.4. Liens Created by the Indenture Trustee and the Loan Participant . . . . . . . . . . . 34
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Section 6.5. Covenants of the Owner Trustee, the Owner Participant and the Indenture Trustee . . . 35
Section 6.6. Amendments to Operative Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.7. Covenant of the Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.8. Merger Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.9. Lessee's Purchase in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.10. Owner Participant an Affiliate of Lessee . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.11. Corporate Existence; Place of Business . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.12. No Impairment of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7. LESSEE'S INDEMNITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.1. General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.2. General Indemnification and Waiver of Certain Claims . . . . . . . . . . . . . . . . . 45
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9. SUCCESSOR INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.1. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.2. Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.3. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.6. No Guarantee of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.8. Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.12. Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.13. Limitations of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.14. Maintenance of Non-Recourse Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.15. Ownership of and Rights in Units . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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EXHIBITS
Exhibit A - Insurance
Exhibit B - Form of Guaranty
SCHEDULES
Schedule 1 - Description of Equipment and Equipment Cost
Schedule 2 - Payment Information for Participants
Schedule 3 - Schedule of Basic Rent Payments
Schedule 4 - Schedule of Stipulated Loss Value
Schedule 5 - Schedule of Termination Value
Schedule 6 - Terms of Equipment Notes
Schedule 7 - Early Purchase Information
Schedule 8 - Basic Term Purchase Information
Schedule 9 - Outside Date Purchase Information
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PARTICIPATION AGREEMENT (UTC TRUST NO. 1995-A) (L-13__)
This Participation Agreement (UTC Trust No. 1995-A) (L-13__), dated
September __, 1995 (this "Agreement"), among (i) Union Tank Car Company, a
Delaware corporation (herein, together with its successors and assigns, called
the "Lessee"), (ii) __________________________________________________________
__, a _______________________________________ , not in its individual capacity
except as expressly stated herein, but solely as trustee under the Trust
Agreement (as hereinafter defined) (herein in such capacity, together with its
successors and assigns, called the "Owner Trustee"), (iii) ____________________
___________, a ____________ corporation (herein, together with its successors
and assigns, called the "Owner Participant"), (iv) ___________________________
_______________, a ________________________________, as trustee under the
Indenture (as defined below) (herein in such capacity, together with its
successors and assigns, called the "Indenture Trustee"), and (v) ______________
_____________________________________, a ______________________________, not
in its individual capacity except as expressly provided herein but solely as
Pass Through Trustee under the Pass Through Trust Agreement (as hereinafter
defined) (herein in such capacity, together with its successors and assigns,
called the "Pass Through Trustee" or the "Loan Participant"). The Owner
Participant and the Loan Participant are herein sometimes referred to together
as the "Participants".
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant has entered into the Trust Agreement (UTC
Trust No. 1995-A) (L-13__) pursuant to which the Owner Trustee agrees, among
other things, to hold the Trust Estate for the benefit of the Owner Participant
thereunder on the terms specified in the Trust Agreement, subject, however, to
the Lien created under the Indenture and, subject to the terms and conditions
hereof, to purchase the Units of Equipment described in Schedules 1A and 1B
hereto from the Lessee and concurrently with such purchases to lease such Units
of Equipment to the Lessee;
WHEREAS, pursuant to the Pass Through Trust Agreement, on the Initial
Closing Date, a grantor trust will be created to facilitate the financing
contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee has entered into the Indenture with the Indenture
Trustee pursuant to which Indenture the Owner Trustee agrees, among other
things, for the benefit of the holder or holders of the Equipment Notes, to
issue to the Pass Through Trustee as Loan Participant, the Equipment Notes as
evidence of the loan made by the Loan Participant in connection with the
financing of the Equipment Cost for the Equipment;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee is authorized and directed by the Owner Participant (i) to accept
delivery of a Bill of Sale evidencing the purchase and transfer of title of
each Unit of Equipment to the Owner Trustee and (ii) to execute and deliver the
Lease pursuant to which, subject to the terms and conditions set forth therein,
the Owner Trustee agrees to lease to the Lessee, and the Lessee agrees to lease
from the Owner Trustee, each Unit of Equipment to be delivered on the Initial
Closing Date and
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the Subsequent Closing Date, such lease to be evidenced by the execution and
delivery of Lease Supplements covering such Units;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Lessee and the Owner Participant have entered into the Tax
Indemnity Agreement relating to the Equipment; and
WHEREAS, the proceeds from the sale of the Equipment Notes to the Loan
Participant will be applied, together with the equity contribution made by the
Owner Participant pursuant to this Agreement, to effect the purchase of the
Equipment by the Owner Trustee contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS AGREEMENT.
The capitalized terms used in this Agreement (including the foregoing
recitals) and not otherwise defined herein shall have the respective meanings
specified in Appendix A hereto, unless the context hereof shall otherwise
require. All references to Sections, Schedules and Exhibits herein are to
Sections, Schedules and Exhibits of this Agreement unless otherwise indicated.
All accounting terms not otherwise defined herein or in Appendix A hereto have
the meanings assigned to them in accordance with generally accepted accounting
principles. The words herein, hereof and hereunder and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
SECTION 2. SALE AND PURCHASE; PARTICIPATION IN EQUIPMENT COST; CLOSINGS;
TRANSACTION COSTS.
Section 2.1. Sale and Purchase. Subject to the terms and
conditions hereof and on the basis of the representations and warranties set
forth herein, the Lessee agrees to sell to the Owner Trustee and the Owner
Trustee agrees to purchase from the Lessee, (i) on the Initial Closing Date,
the Units described in Schedule 1A as hereinafter provided, and (ii) on the
Subsequent Closing Date, the Units described in Schedule 1B as hereinafter
provided, and in connection therewith, the Owner Trustee agrees to pay to the
Lessee the cost for each of the various Units as specified in Schedules 1A and
1B; provided, however, that the Owner Trustee shall not be obligated to
purchase on the Initial Closing Date or the Subsequent Closing Date any Unit
that is destroyed, damaged, defective, in unsuitable condition or otherwise
unacceptable to the Lessee for lease pursuant to the Lease. The Lessee shall
deliver said Units of Equipment to the Owner Trustee and the Owner Trustee
shall accept such delivery on delivery dates as more fully provided herein (the
first such delivery date being referred to herein as the "Initial Closing Date"
and the second such delivery date being referred to herein as the "Subsequent
Closing Date"); provided that the Initial Closing Date shall occur on or prior
to September __, 1995 and the Subsequent Closing Date shall occur on or prior
to December __, 1995. Each of
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the Initial Closing Date and the Subsequent Closing Date are herein sometimes
referred to individually as a "Closing Date" and together as the "Closing
Dates".
Section 2.2. Participation in Equipment Cost.
(a) Equity Participation. Subject to the terms and conditions
hereof and on the basis of the representations and warranties set forth herein,
on the Initial Closing Date and on the Subsequent Closing Date the Owner
Participant agrees to participate in the payment of the Equipment Cost for the
Units delivered on the Initial Closing Date and the Subsequent Closing Date, as
the case may be, by making an equity investment in the beneficial ownership of
such Units in the amount equal to the product of the aggregate Equipment Cost
for the Units delivered on the Initial Closing Date and the Subsequent Closing
Date, as the case may be, and the percentage set forth opposite the Owner
Participant's name in Schedule 2 (the respective amounts payable by the Owner
Participant on the Initial Closing Date and the Subsequent Closing Date being
referred to herein as the Owner Participant's "Commitment"). The aggregate
amount of the Owner Participant's Commitment shall not exceed $______________.
The Owner Participant's Commitment shall be paid to the Indenture Trustee to
be held (but not as part of the Indenture Estate) and applied on behalf of the
Owner Trustee toward the payment of the Equipment Cost for the Units as
provided in Section 2.3.
(b) Debt Participation. Subject to the terms and conditions
hereof and on the basis of the representations and warranties set forth herein,
on the Initial Closing Date and on the Subsequent Closing Date the Loan
Participant agrees to participate in the payment of the Equipment Cost for the
Units delivered on the Initial Closing Date and the Subsequent Closing Date, as
the case may be, by making a secured loan, to be evidenced by the Equipment
Notes, to the Owner Trustee in the amount equal to the product of the aggregate
Equipment Cost for the Units delivered on the Initial Closing Date and the
Subsequent Closing Date, as the case may be, and the percentage set forth
opposite such Loan Participant's name in Schedule 2 (the respective amounts
payable by the Loan Participant on the Initial Closing Date and the Subsequent
Closing Date being referred to herein as the Loan Participant's "Commitment").
The aggregate amount of the Loan Participant's Commitment shall not exceed
$_____________. The Equipment Notes shall bear interest at the rates set forth
on Schedule 6.
(c) Interim Interest Payment. On the Basic Term Commencement
Date, the Owner Trustee covenants and agrees that it will pay, using funds that
are to be advanced by the Owner Participant on such date, to the Indenture
Trustee the interest (the "Interim Interest") due and payable to the Loan
Participant on such date under the Equipment Notes. The Owner Participant
shall have no personal liability to advance any such funds and shall notify the
Owner Trustee and the Lessee at least five Business Days prior to the Basic
Term Commencement Date if the Owner Participant will not advance Interim
Interest to the Owner Trustee. The Owner Trustee shall promptly notify the
Lessee if the Owner Participant fails to advance Interim Interest pursuant to
this Section 2.2(c). The Owner Participant hereby agrees to the terms and
conditions set forth in Section 3.5 of the Lease.
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Section 2.3. Closing Dates; Procedure for Participation.
(a) Notice of Initial Closing Date. Not later than the Pricing Date,
the Lessee shall give the Owner Participant, the Indenture Trustee, the Owner
Trustee and the Loan Participant notice (a "Notice of Delivery") by telex,
telegraph, facsimile or other form of telecommunication or telephone (to be
promptly confirmed in writing) of the Initial Closing Date, which Notice of
Delivery shall specify in reasonable detail the number and type of Units to be
delivered on such date, the aggregate Equipment Cost of such Units, and the
respective amounts of the Owner Participant's Commitment and the Loan
Participant's Commitment required to be paid with respect to such Units. Prior
to 12:00 noon, New York time, on the Initial Closing Date, the Owner
Participant shall make the amount of the Owner Participant's Commitment
required to be paid on the Initial Closing Date available to the Indenture
Trustee, and immediately prior to the delivery and acceptance of the Units
specified in Section 2.3(b), the Loan Participant shall make the amount of the
Loan Participant's Commitment for the Equipment Cost required to be paid on the
Initial Closing Date available to the Indenture Trustee, in either case, by
transferring or delivering such amounts, in funds immediately available on the
Initial Closing Date, to the Indenture Trustee, either directly to, or for
deposit in, the Indenture Trustee's account at ________________________________
________________________________________________, ABA No. _____________,
Corporate Trust Clearing Account No. __________________, for credit to trust
number _________________, Attention: ____________________ - UTC Trust No.
1995-A (L-13__). The making available by the Owner Participant of the amount
of its Commitment for the Equipment Cost required to be paid on the Initial
Closing Date shall be deemed a waiver of the Notice of Delivery by the Owner
Participant and the Owner Trustee and the making available by the Loan
Participant of the amount of its Commitment for the Equipment Cost required to
be paid on the Initial Closing Date shall be deemed a waiver of the Notice of
Delivery by the Loan Participant and the Indenture Trustee.
(b) Initial Closing. The initial closing of the transactions
contemplated hereby (the "Initial Closing") shall take place beginning at 10:00
a.m., Chicago time, on the Initial Closing Date at the offices of Neal Gerber &
Eisenberg, Two North LaSalle Street, Chicago, Illinois 60602 or at such other
place or time as the parties hereto shall agree. Upon receipt by the Indenture
Trustee on the Initial Closing Date of the full amount of the Owner
Participant's Commitment in respect of the Units delivered on the Initial
Closing Date and the Loan Participant's Commitment in respect of the Units
delivered on the Initial Closing Date, the Indenture Trustee on behalf of the
Owner Trustee shall, subject to the conditions set forth in Sections 4.1 and
4.3 having been fulfilled to the satisfaction of the Owner Participant or
waived by the Owner Participant, pay to the Lessee from the funds then held by
it, in immediately available funds, an amount equal to the Equipment Cost for
the Units delivered on the Initial Closing Date, and simultaneously therewith,
(i) the Lessee shall deliver such Units to the Owner Trustee, (ii) the Owner
Trustee shall, pursuant to the Lease, lease and deliver the Equipment delivered
on the Initial Closing Date to the Lessee, and the Lessee, pursuant to the
Lease, shall accept delivery of such Units under the Lease, such lease,
delivery and acceptance of the Units under the Lease shall be conclusively
evidenced by the execution and delivery by the Lessee and Owner Trustee of
separate Lease Supplements covering each Equipment Group so delivered as
described in Schedule 1A, (iii) the Owner Trustee shall execute and deliver to
the Loan
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Participant an Equipment Note relating to each such Lease Supplement. Each of
the Lessee, the Owner Participant, the Owner Trustee, the Loan Participant and
the Indenture Trustee hereby agree to take all actions required to be taken by
it in connection therewith and pursuant to this Section 2.3(b).
(c) Notice of Subsequent Closing Date. Not later than the [second
Business Day prior to the Subsequent Closing Date], the Lessee shall give the
Owner Participant, the Indenture Trustee, the Owner Trustee and the Loan
Participant notice (a "Notice of Delivery") by telex, telegraph, facsimile or
other form of telecommunication or telephone (to be promptly confirmed in
writing) of the Subsequent Closing Date, which Notice of Delivery shall specify
in reasonable detail the number and type of Units to be delivered on such date,
the aggregate Equipment Cost of such Units, and the respective amounts of the
Owner Participant's Commitment and the Loan Participant's Commitment required
to be paid with respect to such Units. Prior to 12:00 noon, New York time, on
the Subsequent Closing Date, the Owner Participant shall make the amount of the
Owner Participant's Commitment required to be paid on the Subsequent Closing
Date available to the Indenture Trustee, and immediately prior to the delivery
and acceptance of the Units specified in Section 2.3(d), the Loan Participant
shall make the amount of the Loan Participant's Commitment for the Equipment
Cost required to be paid on the Subsequent Closing Date available to the
Indenture Trustee, in either case, by transferring or delivering such amounts,
in funds immediately available on the Subsequent Closing Date, to the Indenture
Trustee, either directly to, or for deposit in, the Indenture Trustee's account
described in Section 2.3(a). The making available by the Owner Participant of
the amount of its Commitment for the Equipment Cost required to be paid on the
Subsequent Closing Date shall be deemed a waiver of the Notice of Delivery by
the Owner Participant and the Owner Trustee and the making available by the
Loan Participant of the amount of its Commitment for the Equipment Cost
required to be paid on the Subsequent Closing Date shall be deemed a waiver of
the Notice of Delivery by the Loan Participant and the Indenture Trustee.
(d) Subsequent Closing. The subsequent closing of the
transactions contemplated hereby (the "Subsequent Closing") shall take place
beginning at 10:00 a.m., Chicago time, on the Subsequent Closing Date at the
offices of Neal Gerber & Eisenberg, Two North LaSalle Street, Chicago, Illinois
60602 or at such other place or time as the parties hereto shall agree. Upon
receipt by the Indenture Trustee on the Subsequent Closing Date of the full
amount of the Owner Participant's Commitment in respect of the Units delivered
on the Subsequent Closing Date and the Loan Participant's Commitment in respect
of the Units delivered on the Subsequent Closing Date, the Indenture Trustee on
behalf of the Owner Trustee shall, subject to the conditions set forth in
Sections 4.1 and 4.3 having been fulfilled to the satisfaction of the Owner
Participant or waived by the Owner Participant, pay to the Lessee from the
funds then held by it, in immediately available funds, an amount equal to the
Equipment Cost for the Units delivered on the Subsequent Closing Date, and
simultaneously therewith, (i) the Lessee shall deliver such Units to the Owner
Trustee, (ii) the Owner Trustee shall, pursuant to the Lease, lease and deliver
the Equipment delivered on the Subsequent Closing Date to the Lessee, and the
Lessee, pursuant to the Lease, shall accept delivery of such Units under the
Lease, such lease, delivery and acceptance of the Units under the Lease shall
be conclusively evidenced by the execution and delivery by the Lessee and Owner
Trustee of separate Lease Supplements covering each Equipment Group so
delivered as described in Schedule 1B, (iii) the Owner
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Trustee shall execute and deliver to the Loan Participant an Equipment Note
relating to each such Lease Supplement. Each of the Lessee, the Owner
Participant, the Owner Trustee, the Loan Participant and the Indenture Trustee
hereby agree to take all actions required to be taken by it in connection
therewith and pursuant to this Section 2.3(d).
Section 2.4. Owner Participant's Instructions to the Owner
Trustee; Satisfaction of Conditions.
(a) The Owner Participant agrees that the making available to the
Indenture Trustee of the amount of its Commitment for the Units delivered on
the Closing Dates in accordance with the terms of this Section 2 shall
constitute, without further act, authorization and direction by the Owner
Participant to the Owner Trustee, subject, on the Closing Dates, to the
conditions set forth in Sections 4.1 and 4.3 having been fulfilled to the
satisfaction of the Owner Participant or waived by the Owner Participant, to
take the actions specified in Section 2.1 of the Trust Agreement with respect
to the Units on the Closing Dates.
(b) The Owner Participant agrees that the authorization by the
Owner Participant or its counsel to the Indenture Trustee to release to the
Lessee the Owner Participant's Commitment with respect to the Units delivered
on the Closing Dates shall constitute, without further act, notice and
confirmation that all conditions to closing set forth in Sections 4.1 and 4.3
were either met to the satisfaction of the Owner Participant or, if not so met,
were waived by it with respect to such Units.
Section 2.5. Expenses.
(a) If the Owner Participant shall have made its investments provided
for in Section 2.2 and the transactions contemplated by this Agreement are
consummated, either the Owner Participant will promptly pay, or the Owner
Trustee will promptly pay, with funds the Owner Participant hereby agrees to
pay to the Owner Trustee, the following (the "Transaction Costs") if evidenced
by an invoice delivered to the Owner Participant and approved by the Lessee
prior to the Basic Term Commencement Date:
(i) the cost of reproducing, printing and filing the
Operative Agreements, the Equipment Notes, the Pass Through
Certificates, the Registration Statement, the preliminary prospectus,
the final prospectus and the Underwriting Agreement and all amendments
and supplements to the foregoing, including all costs and fees in
connection with filing the Registration Statement and the initial
filing and recording of the Lease, the Indenture and any other
document required to be filed or recorded pursuant to the provisions
hereof or of any other Operative Agreement and the fees and expenses
of the rating agencies in connection with rating the Pass Through
Certificates;
(ii) the reasonable fees of ________________________________,
special counsel for the Owner Participant, in the amount of (or if
Section 2.5(c) applies, not to exceed) $_________, plus disbursements
(not to exceed $________), for their services rendered in connection
with the negotiation, execution and delivery of this Participation
Agreement and the Operative Agreements related hereto;
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(iii) all costs and fees in connection with the qualification
of the Pass Through Certificates under securities or Blue Sky laws in
accordance with the provisions of Section 5(e) of the Underwriting
Agreement, including filing fees and the fees and disbursements of
Mayer, Brown & Platt in connection therewith and in connection with
the preparation of any Blue Sky memorandum;
(iv) the reasonable fees and expenses of Ernst & Young LLP,
the Lessee's independent auditors, for their services rendered in
connection with issuing "comfort letters" to the Underwriters;
(v) the reasonable fees and expenses of Mayer, Brown & Platt,
special counsel for the Underwriters, in an amount not to exceed
$_________, for their services rendered in connection with the
preparation of documentation, negotiation, execution and delivery of
the preliminary prospectus, the final prospectus, the Underwriting
Agreement, this Agreement and the Operative Agreements related hereto;
(vi) the reasonable fees and expenses of Hogan & Hartson,
special ICC counsel, and Osler Hoskin & Harcourt, special Canadian
counsel, for the Owner Participant and the Indenture Trustee;
(vii) the reasonable fees and expenses of __________________
________________, special counsel for the Owner Trustee, for their
services rendered in connection with the negotiation, execution and
delivery of this Agreement and the Operative Agreements related hereto;
(viii) the commissions payable to the Underwriters in
connection with the sale of the Pass Through Certificates;
(ix) the initial fees and expenses of the Owner Trustee;
(x) the initial fees and expenses of the Indenture Trustee;
(xi) the reasonable fees and expenses of R.L. Banks &
Associates, Inc. for their services rendered in connection with
delivering the Appraisal required by Section 4.3(a); and
(xii) the costs incurred in connection with any adjustment
pursuant to Section 2.6(a).
Notwithstanding the foregoing, Transaction Costs shall not include
internal costs and expenses such as salaries and overhead of whatsoever kind or
nature of, nor costs incurred by, parties to this Participation Agreement
pursuant to arrangements with third parties for services (other than those
expressly referred to above), such as travel expenses, computer time
procurement, financial analysis and consulting, advisory services and costs of
a similar nature.
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(b) Upon the consummation of the transactions contemplated by this
Agreement, the Lessee agrees to pay when due: (i) the reasonable expenses
(including reasonable legal fees and expenses) of the Owner Trustee, the
Indenture Trustee and the Participants incurred subsequent to the delivery of
the Equipment on the Initial Closing Date and the Subsequent Closing Date, in
connection with any supplements, amendments, modifications, alterations,
waivers or consents of or with respect to any of the Operative Agreements which
are (1) requested by, or necessitated by action or inaction on the part of, the
Lessee or by any applicable law or regulation (other than laws or regulations
solely relating to the business of the Lessor or the Owner Participant) or
entered into in connection with, or as a result of, a Lease Default or (2)
necessary or required to effectuate the purpose or intent of any Operative
Agreement (including costs incurred in connection with any adjustment pursuant
to Section 2.6); (ii) the ongoing reasonable fees and expenses (including
reasonable legal fees and expenses) of the Owner Trustee under the Trust
Agreement; (iii) the ongoing reasonable fees and expenses of the Indenture
Trustee under the Operative Agreements; and (iv) the ongoing reasonable fees
and expenses of the Pass Through Trustee under the Pass Through Trust
Agreement.
(c) If the transactions contemplated hereby are not consummated as
a result of (i) the Lessee's default in its obligations to consummate the
transactions contemplated hereby, (ii) the Lessee's failure to consummate the
transactions contemplated hereby after the satisfaction or waiver of the
conditions set forth in Section 4 (other than conditions the satisfaction of
which are solely in the control of the Lessee), or (iii) subject to the next
sentence, in any other circumstance, the Lessee shall pay all Transaction
Costs; provided, however, that if the Initial Closing occurs but the Subsequent
Closing does not occur as the result of a circumstance described in clause (i),
(ii) or (iii) above, the Lessee only shall be required to pay an amount equal
to the product of (A) the Transaction Costs and (B) a fraction, the numerator
of which is the amount of the Owner Participant's Commitment with respect to
the Units which were to have been delivered at the Subsequent Closing and the
denominator of which is the aggregate amount of the Owner Participant's
Commitment. Notwithstanding anything contained herein to the contrary, if the
transactions contemplated hereby are not consummated as a result of (x) the
Owner Participant's default in its obligations to consummate the transactions
hereunder, or (y) the Owner Participant's failure to make its equity
investments as required by Section 2.2(a) after the conditions specified in
Section 4 have been satisfied or waived by it in writing (other than conditions
the satisfaction of which are solely in the control of the Owner Participant),
the Owner Participant shall pay its expenses and the expenses of its counsel in
connection with the transactions contemplated hereby; provided, however, that
if the Initial Closing occurs but the Subsequent Closing does not occur as a
result of a circumstance described in clause (x) or (y) above, the Owner
Participant only shall be required to pay an amount equal to the product of (A)
the sum of its expenses and the expenses of its counsel in connection with the
transactions contemplated hereby and (B) a fraction, the numerator of which is
the amount of the Owner Participant's Commitment with respect to the Units
which were to have been delivered at the Subsequent Closing and the denominator
of which is the aggregate amount of the Owner Participant's Commitment.
(d) Notwithstanding the foregoing provisions of this Section 2.5,
except as specifically provided in Section 7.2 or in any other Operative
Agreement, the Lessee shall have no liability for any costs or expenses
relating to any voluntary transfer of the Owner Participant's interest
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in the Equipment including any transfer prior to the Initial Closing Date or
the Subsequent Closing Date of the Owner Participant's obligation to fund its
participation pursuant to Section 2 (other than in connection with any transfer
pursuant to Section 6.9 of this Agreement, Sections 8.3, 10.2, 11.4, 22.1 or
22.3 of the Lease or a Lease Event of Default) and no such costs or expenses
shall constitute Transaction Costs and the Lessee will not have any obligation
with respect to the costs and expenses resulting from any voluntary transfer of
any equity interest by any transferee of the Owner Participant, whenever
occurring (other than in connection with a Lease Event of Default).
Section 2.6. Calculation of Adjustments to Basic Rent, Stipulated
Loss Value and Termination Value; Confirmation and Verification.
(a) Calculation of Adjustments. In the event that (A) the Initial
Closing Date is other than September __, 1995 or the Subsequent Closing Date is
other than December __, 1995 or (B) the Transaction Costs paid by the Owner
Participant pursuant to Section 2.5 prior to the Basic Term Commencement Date
are less or more than 1.3% of the Total Equipment Cost or (C) a refinancing
contemplated [or required] by Section 10.2 occurs, then, in each such case, the
Owner Participant shall recalculate the payments or amounts, as the case may
be, of Basic Rent, Stipulated Loss Values, Termination Values, Early Purchase
Price and Basic Term Purchase Price, (i) to preserve the Net Economic Return
that the Owner Participant would have realized had the Initial Closing Date
been September __, 1995 or the Subsequent Closing Date been December __, 1995,
had the Transaction Costs equaled 1.3% of the Total Equipment Cost or had such
refinancing not occurred and (ii) to minimize to the greatest extent possible,
consistent with the foregoing clause (i), the present value (discounted
semiannually at an interest rate per annum equal to the Debt Rate) of the
payments of Basic Rent. Any such recalculation performed due to the occurrence
of an event described in clause (A) or (B) above shall be made prior to the
Basic Term Commencement Date. In performing any such recalculation and in
determining the Owner Participant's Net Economic Return, the Owner Participant
shall utilize the same methods and assumptions originally used in making the
computations of Basic Rent, Stipulated Loss Values, Termination Values, Early
Purchase Price and Basic Term Purchase Price with respect to the Basic Term
initially set forth in Schedules 3, 4, 5, 7 and 8 to this Participation
Agreement (other than those assumptions changed as a result of any of the
events described in clauses (A) through (C) of the preceding sentence
necessitating such recalculation; it being agreed that such recalculation shall
reflect solely any changes of assumptions or facts resulting directly from the
event or events necessitating such recalculation). Such adjustments shall
comply (to the extent the original structure complied) with section 467 of the
Code and the requirements of Sections 4.02(5), 4.07(1) and (2) and 4.08(1) of
Revenue Procedure 75-28, as amended, calculated, except in the case of a
refinancing pursuant to Section 10.2 or any rent adjustment pursuant to Section
5(a)(3)(B) of the Tax Indemnity Agreement, without taking into account any
change after the Closing Date in or to Section 467 of the Code (and any
regulations thereunder) and such requirements of Revenue Procedure 75-28.
(b) Confirmation and Verification. Upon completion of any
recalculation described above in this Section 2.6, a duly authorized officer of
the Owner Participant shall provide a certificate to the Lessee either (x)
stating that the payments of Basic Rent, Stipulated Loss Values, Termination
Values, Early Purchase Price and Basic Term Purchase Price with respect
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to the Basic Term as are then set forth in Schedules 3, 4, 5, 7 and 8 of this
Participation Agreement do not require change, or (y) setting forth such
adjustments to the payments of Basic Rent, Stipulated Loss Values, Termination
Values, Early Purchase Price or Basic Term Purchase Price with respect to the
Basic Term as have been calculated by the Owner Participant in accordance with
Section 2.6(a) above. Such certificate shall describe in reasonable detail the
basis for any such adjustments. Any such adjustment shall become effective on
the thirty-first (31st) day following delivery by the Owner Participant of such
certificate to the Lessee unless Lessee, prior to such day, requests
verification pursuant to the following sentence. Any such adjustment and
corresponding adjustments to the Stipulated Loss Values, Termination Values,
Early Purchase Price and Basic Term Purchase Price will be computed on a basis
consistent with that used by the Owner Participant in the original calculation
of Basic Rent. If the Lessee shall so request, the recalculation of any such
adjustments described in this Section 2.6 shall be verified by a nationally
recognized firm of independent accountants selected by the Owner Participant
and reasonably acceptable to the Lessee and any such recalculation of such
adjustment as so verified shall be binding on the Lessee and the Owner
Participant. Such accounting firm shall be requested to make its determination
within 30 days. The Owner Participant shall provide to a representative of
such accounting firm, on a confidential basis, such information as it may
reasonably require, including the original assumptions used by the Owner
Participant and the methods used by the Owner Participant in the original
calculation of, and any recalculation of, Basic Rent, Stipulated Loss Values,
Termination Values, Early Purchase Price and Basic Term Purchase Price and such
other information as is necessary to determine whether the computation is
accurate and in conformity with the provisions of this Agreement, provided that
in no event shall the Owner Participant have any obligation to provide the
Lessee with any such information; and provided, further, that the Owner
Participant shall have no obligation to disclose to the Lessee, such accounting
firm or any other Person, or to permit the Lessee, such accounting firm or any
other Person, to examine any federal, state or local income tax returns of the
Owner Participant, or books or accounting records related thereto, for any
taxable year. The costs of such verification shall be borne by the Lessee;
provided, however, if such accounting firm's verification shall result in a
decrease in the net present value (expressed as a percentage of Total Equipment
Cost) of the Basic Rent (discounted semiannually at a rate per annum equal to
the Debt Rate) under the Lease calculated as of the Initial Closing Date in the
case of Units delivered at the Initial Closing or as of the Subsequent Closing
Date in the case of Units delivered at the Subsequent Closing Date, as compared
to the net present value of Basic Rent proposed by the Owner Participant, by
more than the greater of (x) 10 basis points or (y) 10% of the proposed
adjustment, then the Owner Participant agrees to reimburse the Lessee for any
amounts paid for such verification. Any revised adjustment resulting from such
verification shall become effective on the next Rent Payment Date after such
verification has been concluded, and shall take into account any underpayment
or overpayment, together with interest thereon at the Debt Rate, resulting from
an earlier effectiveness of the original adjustment.
(c) Compliance. Notwithstanding the foregoing, any adjustment
made to the payments of Basic Rent, Stipulated Loss Values, Termination Values
or Early Purchase Price with respect to the Basic Term, pursuant to the
foregoing, shall comply with the following requirements: (i) each installment
of Basic Rent (together with any Advance payable under Section 3.5 of the
Lease), as so adjusted, under any circumstances and in any event, will be in
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an amount at least sufficient for the Owner Trustee to pay in full as of the
due date of such installment any payment of principal of and interest on the
Equipment Notes required to be paid on the due date of such installment of
Basic Rent except for the payment of principal required to be made on the
Mandatory Refinancing Date and (ii) Stipulated Loss Value, Termination Value
and Early Purchase Price, as so adjusted, under any circumstances and in any
event, will be an amount which, together with any other amounts required to be
paid by the Lessee under the Lease in connection with an Event of Loss or a
termination of the Lease, as the case may be, will be at least sufficient to
pay in full, as of the date of payment thereof, the aggregate unpaid principal
of, Make-Whole Amount, if any, and all unpaid interest on the Equipment Notes,
accrued to the date on which Stipulated Loss Value, Termination Value or Early
Purchase Price, as the case may be, is paid in accordance with the terms of the
Lease.
(d) Invoices. All invoices in respect of Transaction Costs to the
extent not delivered on or before the Subsequent Closing Date shall be directed
to the Owner Participant at the address set forth in Section 10.4, with a copy
to the Lessee.
Section 2.7. Postponement of Closing Dates.
(a) The scheduled Closing Dates may be postponed from time to time
with respect to all of the Units for any reason (but to no later than September
__, 1995 in the case of the Initial Closing Date and December __, 1995 in the
case of the Subsequent Closing Date) if the Lessee gives the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee telex,
telegraphic, facsimile or telephonic (confirmed in writing) notice of the
postponement and notice of the date to which such Closing Date has been
postponed, the notice of postponement to be received by each party no later
than 5:30 P.M., New York City time, on the originally scheduled Closing Date,
and the term "Initial Closing Date", "Subsequent Closing Date" and "Closing
Dates" as used in this Agreement shall mean the postponed "Initial Closing
Date", "Subsequent Closing Date" and "Closing Dates", as the case may be.
(b) In the event of any postponement of the originally scheduled
Initial Closing Date or Subsequent Closing Date pursuant to this Section 2.7
(such originally scheduled Initial Closing Date or Subsequent Closing Date
being referred to as a "Scheduled Closing Date" for the purposes of this
Section 2.7): (i) the Lessee will reimburse the Owner Participant for the loss
of the use of its funds with respect to each such Unit occasioned by such
postponement or failure to deliver or accept (unless such failure to accept is
caused by a default by the Owner Participant hereunder or by the Owner Trustee
(acting pursuant to instructions from the Owner Participant) under the Trust
Agreement, the Lease or the Indenture) by paying to the Owner Participant on
demand interest at the Debt Rate, for the period from and including the
Scheduled Closing Date to but excluding the earlier of the date upon which such
funds are returned to the Owner Participant (unless such funds are returned
after 1:00 p.m. (New York City time) in which case such date of return shall be
included) or the actual Initial Closing Date or Subsequent Closing Date, as the
case may be; provided that the Lessee shall in any event pay to the Owner
Participant at least one day's interest at the Debt Rate on the amount of such
funds, unless the Owner Participant shall have received, prior to 1:00 p.m.
(New York City time) on the Business Day preceding the Scheduled Closing Date,
a notice of postponement of the Scheduled Closing
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Date pursuant to Section 2.7(a) and (ii) the Indenture Trustee will return not
later than 10:00 A.M. New York City time, on the first Business Day following
the Scheduled Closing Date, any funds which it shall have received from the
Owner Participant as its Commitment for such Units, absent joint instructions
from the Lessee and the Owner Participant to retain such funds until the
specified date of postponement established under Section 2.7(a).
(c) The Indenture Trustee agrees that, in the event it has
received telephonic notice (to be confirmed promptly in writing) from the
Lessee on the Scheduled Closing Date that such Scheduled Closing Date is to be
postponed, it will if instructed in the aforementioned notice from the Lessee
(which notice shall specify the securities to be purchased) use reasonable best
efforts to invest, at the risk of the Lessee (except as provided below with
respect to the Indenture Trustee's gross negligence or willful misconduct), the
funds received by it from the Owner Participant with respect to its Commitment
in Specified Investments in accordance with the Lessee's instructions. Any
such Specified Investments purchased by the Indenture Trustee upon instructions
from the Lessee shall be held in trust by the Indenture Trustee (but not as
part of the Indenture Estate under the Indenture) for the benefit of the Owner
Participant whose funds are invested in Specified Investments upon instructions
from the Lessee and any net profits on the investment of such funds (including
interest), if any, shall be for the account of and shall on the Initial Closing
Date or Subsequent Closing Date, as the case may be, or on the date such funds
are returned to the Owner Participant, be paid over to, the Lessee. The Lessee
shall pay to the Indenture Trustee on the Initial Closing Date or Subsequent
Closing Date, as the case may be (if such Unit or Units are delivered and
accepted pursuant hereto) the amount of any net loss on the investment of such
funds invested at the instruction of the Lessee. If the funds furnished by the
Owner Participant with respect to such Unit or Units are required to be
returned to the Owner Participant, the Lessee shall, on the date on which such
funds are so required to be returned, reimburse the Indenture Trustee, for the
benefit of the Owner Participant, for any net losses incurred on such
investments. The Indenture Trustee shall not be liable for failure to invest
such funds or for any losses incurred on such investments except for its own
willful misconduct or gross negligence. In order to obtain funds for the
payment of the Equipment Cost for such Unit or Units or to return funds
furnished by the Owner Participant to the Indenture Trustee for the benefit of
the Owner Participant with respect to such Unit or Units, the Indenture Trustee
is authorized to sell any Specified Investments purchased as aforesaid with the
funds received by it from the Owner Participant in connection with such Unit or
Units.
(d) Notwithstanding the provisions of Section 2.7(a), the Owner
Participant shall not be under any obligation to make its Commitment available
beyond 2:00 P.M. (New York City time) on September __, 1995 in respect of the
Units to be delivered on the Initial Closing Date or December __, 1995 in
respect of the Units to be delivered on the Subsequent Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Section 3.1. Representations and Warranties of the Owner Trustee.
The Owner Trustee, both in its individual capacity and as Owner Trustee (except
that (x) the representations and warranties in Sections 3.1(a)(i), 3.1(a)(ii),
3.1(b)(i) and 3.1(b)(iii) are made by the Owner Trustee solely in its
individual capacity and (y) the representations and warranties in Sections
3.1(c) and 3.1(k) are made by the Owner Trustee solely in its capacity as
such), represents and
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warrants to the Owner Participant, each of the other Trustees and the Lessee,
notwithstanding the provisions of Section 10.13 or any similar provision in any
other Operative Agreement, that, as of the date hereof:
(a) the Owner Trustee (i) is a ______________ duly organized and
validly existing in good standing under the laws of _______________, (ii) has
full corporate power and authority to carry on its business as now conducted
and to enter into and perform its obligations hereunder and under the Trust
Agreement and (iii) (assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant) has full power and authority, as
Owner Trustee and/or, to the extent expressly provided herein or therein, in
its individual capacity, to enter into and perform its obligations under each
of the Owner Trustee Agreements;
(b) (i) the Owner Trustee, in its individual capacity, has duly
authorized, executed and delivered the Trust Agreement, (ii) (assuming the due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant) the Owner Trustee in its trust capacity and, to the extent
expressly provided therein, in its individual capacity, has duly authorized,
executed and delivered each of the other Owner Trustee Agreements and, as of
the Initial Closing Date and the Subsequent Closing Date, each of the Owner
Trustee Agreements to be delivered on such Closing Date and (iii) the Trust
Agreement constitutes a legal, valid and binding obligation of the Owner
Trustee, in its individual capacity, enforceable against it in its individual
capacity in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of equity;
(c) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, each of the other Owner Trustee
Agreements to which it is a party constitutes, or when entered into will
constitute, a legal, valid and binding obligation of the Owner Trustee,
enforceable against it in accordance with its terms except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by general principles of
equity;
(d) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of the Owner
Trustee Agreements or the Equipment Notes, nor the consummation by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may be, of
any of the transactions contemplated hereby or thereby, nor the compliance by
the Owner Trustee, in its individual capacity or as Owner Trustee, as the case
may be, with any of the terms and provisions hereof and thereof, (i) requires
or will require any approval of its stockholders, or approval or consent of any
trustees or holders of any indebtedness or obligations of it in its individual
capacity, or (ii) violates or will violate its certificate of incorporation or
by-laws, or contravenes or will contravene any provision of, or constitutes or
will constitute a default under, or results or will result in any breach of,
any indenture, mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other agreement or
instrument to which the Owner Trustee in its individual capacity is a party or
by which it is bound, or result in the creation of any Lien (except for
Permitted Liens upon the Units) upon the Trust Estate, or contravenes or will
contravene any law, governmental rule or regulation of the United States of
America or
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_____________________ governing the banking or trust powers of the Owner
Trustee, or any judgment or order applicable to or binding on it;
(e) there are no Taxes payable by the Owner Trustee, either in its
individual capacity or as Owner Trustee, imposed by _______________ or any
political subdivision thereof or by the United States of America in connection
with the execution and delivery by the Owner Trustee in its individual capacity
of the Trust Agreement, and, in its individual capacity or as Owner Trustee, as
the case may be, of this Agreement, the other Owner Trustee Agreements or the
Equipment Notes solely because the Owner Trustee in its individual capacity is
a _________________ with its principal place of business in ________________
and performs certain of its duties as Owner Trustee in __________________; and
there are no Taxes payable by the Owner Trustee, in its individual capacity or
as Owner Trustee, as the case may be, imposed by ________________ or any
political subdivision thereof in connection with the acquisition of its
interest in the Equipment (other than franchise or other taxes based on or
measured by any fees or compensation received by the Owner Trustee for services
rendered in connection with the transactions contemplated hereby) solely
because the Owner Trustee in its individual capacity is a ______________ with
its principal place of business in _______________ and performs certain of its
duties as Owner Trustee in _______________;
(f) there are no pending or, to its knowledge, threatened actions
or proceedings against the Owner Trustee, either in its individual capacity or
as Owner Trustee, before any court or administrative agency which individually
or in the aggregate, if determined adversely to it, would materially adversely
affect the ability of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under the Trust
Agreement, the other Owner Trustee Agreements or the Equipment Notes or which
question the validity of any Owner Trustee Agreement or any action taken or to
be taken pursuant thereto. The Owner Trustee, in its individual capacity and
as Owner Trustee, is not in default with respect to any order of any court or
governmental authority or arbitration board or tribunal, the default under
which would affect adversely the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, to perform its obligations under the
Owner Trustee Agreements;
(g) both its chief executive office and the place where its
records concerning the Equipment and all its interest in, to and under all
documents relating to the Trust Estate, are located at
__________________________________________, and the Owner Trustee, in its
individual capacity, agrees to give the Owner Participant, the Indenture
Trustee and the Lessee written notice within 30 days following any relocation
of said chief executive office or said place from its present location;
(h) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect of,
any _______________ or local governmental authority or agency or any United
States federal governmental authority or agency regulating the banking or trust
powers of the Owner Trustee, in its individual capacity, is required for the
execution and delivery of, or the carrying out by, the Owner Trustee in its
individual capacity or as Owner Trustee, as the case may be, of any of the
transactions contemplated hereby or by the Trust Agreement or of any of the
transactions contemplated by any of the other Owner
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Trustee Agreements, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly obtained, given
or taken;
(i) on the Initial Closing Date and the Subsequent Closing Date,
the Owner Trustee's right, title and interest in and to the Equipment delivered
on such Closing Date shall be free of any Liens attributable to the Owner
Trustee in its individual capacity except Liens created by the terms of the
Operative Agreements;
(j) the proceeds received by the Owner Trustee from the Owner
Participant pursuant to the Trust Agreement will be administered by it in
accordance with Article IV of the Trust Agreement;
(k) the Owner Trustee shall receive from the Lessee such title as
was conveyed to it by the Lessee, subject to the rights of the Owner Trustee
and the Lessee under the Lease and the security interest created pursuant to
the Indenture and the Indenture Supplements in respect of the Units delivered
on the Initial Closing Date and the Subsequent Closing Date; and
(l) the Owner Trustee is not in default under any of the Owner
Trustee Agreements and, to its knowledge, no Indenture Default or Indenture
Event of Default has occurred and is continuing.
Section 3.2. Representations and Warranties of the Lessee. The
Lessee represents and warrants to the Trustees and the Owner Participant that,
as of the date hereof:
(a) the Lessee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is duly licensed
or qualified and in good standing in each jurisdiction in which the failure to
so qualify would have a material adverse effect on its ability to carry on its
business as now conducted or to enter into and perform its obligations under
the Lessee Agreements, has the corporate power and authority to carry on its
business as now conducted and has the requisite power and authority to execute,
deliver and perform its obligations under the Lessee Agreements;
(b) the Lessee Agreements have been duly authorized by all
necessary corporate action (no stockholder approval being required), and will
on the Initial Closing Date or the Subsequent Closing Date, as the case may be,
have been duly executed and delivered by the Lessee and, assuming the due
authorization, execution and delivery by each other party thereto, will on such
Closing Date constitute the legal, valid and binding obligations of the Lessee,
enforceable against the Lessee in accordance with their respective terms except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by
general principles of equity;
(c) the execution, delivery and performance by the Lessee of each
Lessee Agreement and compliance by the Lessee with all of the provisions
thereof do not and will not contravene any law or regulation, or any order of
any court or governmental authority or agency applicable to or binding on the
Lessee or any of its properties, or contravene the provisions of, or constitute
a default by the Lessee under, or result in the creation of any Lien (except
for
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Permitted Liens) upon the property of the Lessee under its certificate of
incorporation or by-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Lessee is a party or by which the Lessee
or any of its property is bound or affected;
(d) except for those matters discussed in the financial statements
provided to the Participants under Section 3.2(e), there are no proceedings
pending or, to the knowledge of the Lessee, threatened against the Lessee or
any Subsidiary in any court or before any governmental authority or arbitration
board or tribunal which individually or in the aggregate would, if determined
adversely to it, materially and adversely affect the financial condition or
business of the Lessee and its consolidated Subsidiaries, taken as a whole, or
impair the ability of the Lessee to perform its obligations under the Lessee
Agreements or which questions the validity of any Lessee Agreement or any
action taken or to be taken pursuant thereto. Neither the Lessee nor any
Subsidiary is in default with respect to any order of any court or governmental
authority or arbitration board or tribunal, the default under which would
affect adversely the ability of the Lessee to perform its obligations under the
Lessee Agreements;
(e) the audited consolidated balance sheets and consolidated
statements of income and retained earnings and cash flows of the Lessee as of
and for the fiscal year ended December 31, 1994, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Lessee and its Subsidiaries as of such date and the results of
their operations for the period then ended. The unaudited consolidated balance
sheets and consolidated statements of income and retained earnings and cash
flows of the Lessee as of and for the six-month period ended June 30, 1995,
fairly present, in conformity with generally accepted accounting principles
consistently applied (except for the absence of footnotes in the June 30, 1995
financial statements), the consolidated financial position of the Lessee and
its Subsidiaries as of such date and the results of their operations for the
period then ended, subject to normal year-end adjustments. Since June 30,
1995, there has been no material adverse change in the condition, financial or
otherwise, of the Lessee and its consolidated Subsidiaries, taken as a whole,
as shown on the financial statements of Lessee as of such date;
(f) no consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice to, any trustee or
any holder of indebtedness of Lessee or any governmental authority on the part
of the Lessee is required in connection with the execution and delivery by the
Lessee of the Lessee Agreements, other than (i) the filing with the Securities
and Exchange Commission of the Registration Statement under which the Pass
Through Certificates will be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and each amendment thereto; (ii) the
qualification of the Pass Through Trust Agreement under the Trust Indenture Act
of 1939, as amended, and (iii) the filings and registrations contemplated by
Section 16 of the Lease and such other filings and registrations as are
expressly contemplated by the other Operative Agreements;
(g) the Lease, the Indenture, the Lease Supplements in respect of
the Units delivered on the Initial Closing Date and the Subsequent Closing Date
and the Indenture Supplements in respect of the Units delivered on the Initial
Closing Date and the Subsequent Closing Date will on or before each such
Closing Date be duly filed with the ICC pursuant to 48 U.S.C. Section 11303 and
deposited with the Registrar General of Canada pursuant to Section 90 of the
Railway Act
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of Canada and such filing with the ICC pursuant to 49 U.S.C. Section 11303 and
such deposit with the Registrar General of Canada, along with the other filings
contemplated by Section 16 of the Lease, will perfect the Owner Trustee's and
the Indenture Trustee's rights in such Operative Agreements and in the Units as
required by Section 16 of the Lease and, except as otherwise expressly
contemplated by Section 16 of the Lease or by any other Operative Documents, no
other filing, recording or deposit with, or giving of notice to any other
federal, state, provincial or local government or agency thereof is necessary
in order to protect the rights of the Owner Trustee and the Indenture Trustee
in such Operative Agreements or in such Units in the United States, any state
thereof, the District of Columbia or to protect the rights of the Owner Trustee
and the Indenture Trustee in such Operative Agreements or in such Units in
Canada or any province thereof;
(h) the Units to be delivered on the Initial Closing Date are, and
the Units to be delivered on the Subsequent Closing Date will be, covered by
the insurance required by Section 12 of the Lease and all premiums due prior to
each such Closing Date in respect of such insurance shall have been paid in
full;
(i) the Lessee has timely filed all United States Federal income
tax returns and all other material tax returns which are required to be filed
by it and has paid all taxes due pursuant to such returns or pursuant to any
assessment made against the Lessee or any of its assets (other than
assessments, the payment of which is being contested in good faith by
appropriate proceedings by the Lessee and none of which are material), and no
tax liens have been filed and no claims are being asserted with respect to any
such taxes, fees or other charges which could reasonably be expected to have a
materially adverse effect on its ability to perform its obligations under the
Lessee Agreements. The provision for taxes on the books of the Lessee is
adequate for all open years and for its current fiscal period;
(j) no Lease Default or Lease Event of Default has occurred and is
continuing and to the knowledge of Lessee, no Event of Loss, or event with
which the giving of notice and/or the passage of time would constitute an Event
of Loss, has occurred;
(k) the Lessee is not an "investment company" or an "affiliated
person" of an "investment company" within the meaning of the Investment Company
Act of 1940;
(l) the acquisition by the Owner Participant of the Beneficial
Interest for its own account will not constitute a prohibited transaction
within the meaning of Section 4975(c)(1)(A) through (D) of the Code or a
"Prohibited Transaction" under ERISA. The representation made by the Lessee in
the preceding clause is made in reliance upon and subject to the accuracy of
the representation of the Owner Participant in Section 3.6(h) of this
Agreement;
(m) on the Initial Closing Date and the Subsequent Closing Date,
Lessee shall have, and the Bill of Sale to be delivered on each such Closing
Date shall convey, to the Owner Trustee all legal and beneficial title to the
Units being delivered on such Closing Date, free and clear of all Liens (other
than Permitted Liens of the type described in clause (ii) with respect to
sublessees, and in clauses (iii), (iv), (vi) and (vii) of the definition
thereof), and such conveyance is not void or voidable under any applicable law;
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(n) the financial statements referred to in Section 3.2(e) do not,
nor does the Registration Statement relating to the Pass Through Certificates
or any written statement furnished by the Lessee or on behalf of the Lessee in
connection with the negotiation of the Lease or any other Operative Agreement,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which the Lessee has not disclosed in writing which materially
affects adversely or, so far as the Lessee can now reasonably foresee, will
materially affect adversely the properties, business, prospects, results of
operations or condition (financial or otherwise) of the Lessee and its
Subsidiaries, taken as a whole;
(o) none of the transactions contemplated by the Operative
Agreements (including, without limitation, the use of the proceeds from the
sale of the Equipment Notes) will result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System, 12 C.F.R., Chapter II;
(p) the Lessee is not in violation of any term of any charter
instrument, by-law or in any material respect of any other material agreement
or instrument to which it is a party or by which it may be bound. The Lessee
is in compliance with all laws, ordinances, governmental rules and regulations
to which it is subject, the failure to comply with which would have a material
and adverse effect on its operations or condition, financial or otherwise, or
would impair the ability of the Lessee to perform its obligations under the
Operative Agreements to which it is a party, and has obtained all licenses,
permits, franchises and other governmental authorizations material to the
conduct of its business;
(q) on the Initial Closing Date and the Subsequent Closing Date
all sales, use or transfer taxes due and payable upon the purchase of Units on
such Closing Date by the Lessor and on the lease thereof to the Lessee will
have been paid or such transactions will then be exempt from any such taxes,
and the Lessee will cause any required forms or reports in connection with such
taxes to be filed in accordance with applicable laws and regulations. No
taxes, fees or other charges are payable in connection with the execution and
delivery of the Operative Agreements or the issuance and sale of the Equipment
Notes to be delivered on the Initial Closing Date;
(r) no broker's or finder's or placement fee or commission will be
payable with respect to the transactions contemplated by the Operative
Agreements as a result of any action by Lessee, except for the fees of Salomon
Brothers Inc and commissions payable to the Underwriters, which shall be
included in Transaction Costs, and Lessee agrees that it will hold the Owner
Participant, the Owner Trustee and the Indenture Trustee harmless from any
claim, demand or liability for any other broker's or finder's or placement fees
or commission alleged to have been incurred as a result of any action by Lessee
in connection with such transactions;
(s) each Unit of Equipment, taken as a whole, and each major
component thereof, complies in all material respects with all applicable laws
and regulations, conforms with the specifications for such Unit contained in
the Appraisal[S] referred to in Section 4.3(a) hereof and
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is substantially complete such that it is ready and available to operate in
commercial service and otherwise perform the function for which it was
designed; and
(t) the Lessee is not subject to regulation as a "holding
company," an "affiliate" of a "holding company," or a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
Section 3.3. Representations and Warranties of the Indenture
Trustee. The Indenture Trustee represents and warrants to the Owner
Participant, the Owner Trustee and the Lessee that, as of the date hereof:
(a) the Indenture Trustee is a ______________________________ duly
organized and validly existing and in good standing under the laws of
___________________ and has the full corporate power, authority and legal right
under the laws of ____________________ pertaining to its banking, trust and
fiduciary powers to execute, deliver and carry out the terms of each of the
Indenture Trustee Agreements;
(b) the execution, delivery and performance by the Indenture
Trustee of each of the Indenture Trustee Agreements have been duly authorized
by the Indenture Trustee and will not violate any applicable law or its
________________________ or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or by which it is
bound;
(c) this Agreement has been duly executed and delivered and
constitutes, and the other Indenture Trustee Agreements, when executed and
delivered, will constitute its legal, valid and binding obligation enforceable
against it in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of equity;
(d) there are no proceedings pending or, to the knowledge of the
Indenture Trustee, threatened, and to the knowledge of the Indenture Trustee
there is no existing basis for any such proceedings, against or affecting the
Indenture Trustee in or before any court or before any governmental authority
or arbitration board or tribunal which, individually or in the aggregate, if
adversely determined, might impair the ability of the Indenture Trustee to
perform its obligations under the Indenture Trustee Agreements;
(e) no authorization or approval or other action by, and no notice
to or filing with, any stockholder, trustee or holder of indebtedness or any
governmental authority or regulatory body of ___________________________
governing the Indenture Trustee in its trust capacity, is required for the due
execution, delivery and performance by the Indenture Trustee of the Indenture
Trustee Agreements, except as have been previously obtained, given or taken;
(f) the Indenture Trustee is not in default under any of the
Indenture Trustee Agreements; and
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(g) neither the Indenture Trustee, nor any Person authorized to
act on behalf of the Indenture Trustee, has directly or indirectly offered any
interest in the Trust Estate or the Equipment Notes or any security similar to
either thereof related to this transaction for sale to, or solicited offers to
buy any of the same from, or otherwise approached or negotiated with respect to
any of the same with, any Person other than the Pass Through Trustee, the
Underwriters and the initial purchasers of the Pass Through Certificates.
Section 3.4. Representations, Warranties and Covenants Regarding
Beneficial Interest and Equipment Notes.
(a) The Owner Trustee represents and warrants to the Lessee, each
of the other Trustees and the Owner Participant that, as of the date hereof and
as of the Closing Date, neither the Owner Trustee nor any Person authorized or
employed by the Owner Trustee as agent or otherwise in connection with the
placement of the Beneficial Interest or the Equipment Notes or any similar
interest has offered any of the Beneficial Interest or the Equipment Notes or
any similar interest for sale to, or solicited offers to buy any thereof from,
or otherwise approached or negotiated with respect thereto with, any
prospective purchaser, except for the Owner Participant with respect to the
Beneficial Interest and the Pass Through Trustee with respect to the Equipment
Notes.
(b) The Lessee represents and warrants to the Trustees and the
Owner Participant that, as of the date hereof and as of each Closing Date,
neither the Lessee nor any Person authorized or employed by the Lessee as agent
or otherwise in connection with the placement of the Beneficial Interest or the
Equipment Notes or any similar interest has offered any of the Beneficial
Interest or the Equipment Notes or similar interest for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any Person other than the Owner Participant and not more
than 35 other institutional investors with respect to the Beneficial Interest,
and, except for the issue and sale of the Pass Through Certificates as
contemplated by the Registration Statement, the Pass Through Trustee with
respect to the Equipment Notes.
(c) Each of the Owner Trustee, the Owner Participant and the
Lessee agree, as to its own actions only, severally but not jointly, that
neither the Owner Trustee, the Owner Participant nor the Lessee nor anyone
acting on behalf of the Owner Trustee, the Owner Participant or the Lessee will
offer the Beneficial Interest, the Equipment Notes, or any part thereof or any
similar interest for issue or sale to any prospective purchaser, or solicit any
offer to acquire any of the Beneficial Interest, the Equipment Notes, or any
part thereof so as to bring the issuance and sale of the Beneficial Interest,
the Equipment Notes, or any part thereof within the provisions of Section 5 of
the Securities Act, except as provided for in the Registration Statement.
Section 3.5. Representations and Warranties of the Pass Through
Trustee. The Pass Through Trustee represents and warrants to the Owner
Participant, the other Trustees, and the Lessee that, as of the date hereof:
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(a) the Pass Through Trustee is a _____________________________
duly organized and validly existing in good standing under the laws of
_______________________, and has the full corporate power, authority and legal
right under the laws of ________________________ pertaining to its banking,
trust and fiduciary powers to execute, deliver and carry out the terms of the
Pass Through Trust Agreement and this Agreement;
(b) the Pass Through Trust Agreement and this Agreement have been
duly authorized, executed and delivered by the Pass Through Trustee; this
Agreement and the Pass Through Trust Agreement constitute the legal, valid and
binding obligation of the Pass Through Trustee enforceable against it in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of equity;
(c) the execution, delivery and performance by the Pass Through
Trustee of the Pass Through Trust Agreement and this Agreement, the purchase by
the Pass Through Trustee of the Equipment Notes pursuant to this Agreement, and
the issuance of the Pass Through Certificates pursuant to the Pass Through
Trust Agreement, do not contravene any law, rule or regulation of any
__________________________ governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Pass Through Trustee and do not contravene or
result in any breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any agreement or instrument to
which the Pass Through Trustee is a party or by which it or any of its
properties may be bound;
(d) neither the execution and delivery by the Pass Through Trustee
of the Pass Through Trust Agreement or this Agreement nor the consummation by
the Pass Through Trustee of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action with respect to, any
_______________________ governmental authority or agency or any governmental
authority or agency regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(e) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative agency
which individually or in the aggregate, if determined adversely to it, would
materially adversely effect the ability of the Pass Through Trustee to perform
its obligations under this Agreement or the Pass Through Trust Agreement;
(f) the Pass Through Trustee is not in default under the Pass
Through Trust Agreement;
(g) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner Participant,
the Owner Trustee, the Underwriters or the Lessee;
(h) the Pass Through Trustee is purchasing the Equipment Notes for
the purposes contemplated by the Operative Agreements and not with a view to
the transfer or distribution
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of any Equipment Note to any other Person, except as contemplated by the
Operative Agreements; and
(i) except for the issue and sale of the Pass Through Certificates
contemplated hereby, the Pass Through Trustee has not directly or indirectly
offered any Equipment Note or Pass Through Certificate or any interest in or to
the Trust Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Trustee and the Owner Participant, and the Pass Through Trustee has not
authorized anyone to act on its behalf to offer directly or indirectly any
Equipment Note, any Pass Through Certificate or any interest in and to the
Trust Estate, the Trust Agreement or any similar interest related to this
transaction for sale to, or to solicit any offer to acquire any of the same
from, any person other than each Owner Trustee and the Owner Participant, and
the Pass Through Trustee is not in default under the Pass Through Trust
Agreement.
Section 3.6. Representations and Warranties of the Owner
Participant. The Owner Participant represents and warrants to the Trustees and
the Lessee that, as of the date hereof:
(a) the Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of ________________ and has full
corporate power and authority to carry on its business as now conducted;
(b) the Owner Participant has the requisite power and authority to
enter into the Owner Participant Agreements and to perform its obligations
thereunder, and the execution, delivery and performance thereof do not and will
not contravene any law or regulation, or any order of any court or governmental
authority or agency applicable to or binding on the Owner Participant or any of
its properties, or contravene the provisions of, or constitute a default under,
or result in the creation of any Lien (other than such as are created by the
Operative Agreements) upon the Equipment under, its certificate of
incorporation or by-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Owner Participant is a party or by which
it or any of its property is bound or affected;
(c) the Owner Participant Agreements have been duly authorized by
all necessary corporate action on the part of the Owner Participant, do not
require any approval not already obtained of the stockholders of the Owner
Participant or any approval or consent not already obtained of any trustee or
holders of indebtedness or obligations of the Owner Participant, have been duly
executed and delivered by the Owner Participant and (assuming the due
authorization, execution and delivery by each other party thereto) constitute
the legal, valid and binding obligations of the Owner Participant, enforceable
against the Owner Participant in accordance with their respective terms except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by
general principles of equity;
(d) no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
for the due execution, delivery or performance by the Owner Participant of the
Owner Participant Agreements;
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(e) the Trust Estate is free of any Lessor's Liens attributable to
the Owner Participant;
(f) there are no pending or, to the Owner Participant's knowledge,
threatened actions or proceedings against the Owner Participant before any
court or administrative agency which would materially adversely affect the
Owner Participant's financial condition or its ability to perform its
obligations under the Trust Agreement, the Tax Indemnity Agreement or this
Agreement;
(g) as of the Initial Closing Date the Owner Participant is
purchasing the Beneficial Interest to be acquired by it for its account with no
present intention of distributing such Beneficial Interest or any part thereof
in any manner which would violate the Securities Act, but without prejudice,
however, to the right of the Owner Participant at all times to sell or
otherwise dispose of all or any part of such Beneficial Interest in compliance
with the Securities Act; provided, however, that subject to the provisions of
Section 6.1, the disposition of the Beneficial Interest shall at all times be
within the Owner Participant's control. The Owner Participant acknowledges
that its Beneficial Interest has not been registered under the Securities Act,
and that neither the Owner Trustee nor the Lessee contemplates filing, or is
legally required to file, any registration statement with respect thereto;
(h) with respect to the source of the amount to be advanced by the
Owner Participant pursuant to Section 2.2, no part of such amount constitutes
assets of any employee benefit plan subject to Title I of ERISA or Section 4975
of the Code;
(i) no broker's or finder's or placement fee or commission will be
payable with respect to the transactions contemplated by the Operative
Agreements as a result of any action by the Owner Participant;
(j) the Owner Participant's net worth exceeds US$75,000,000
determined in accordance with generally accepted accounting principles.
Section 3.7. Opinion Acknowledgment. Each of the parties hereto,
with respect to such party, expressly consents to the rendering by its counsel
of the opinion referred to in Section 4.1(e) and acknowledges that such opinion
shall be deemed to be rendered at the request and upon the instructions of such
party.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions Precedent to Investment by Each
Participant. The obligation of each Participant to make its investment
specified with respect to such Participant in Section 2 on the Initial Closing
Date and the Subsequent Closing Date shall be subject to the following
conditions (except that paragraph (k) and clause (i) of paragraph (p) shall not
be conditions precedent to the Owner Participant's obligations hereunder and
paragraph (n) and (s) and clause (ii) of paragraph (p) shall not be conditions
precedent to the Loan Participant's obligations hereunder):
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(a) Execution of Operative Agreements. On or before the Initial
Closing Date, this Agreement, the Trust Agreement, the Lease, the Lease
Supplements in respect of the Units delivered on the Initial Closing Date, the
Indenture, the Indenture Supplements in respect of the Units delivered on the
Initial Closing Date, the Equipment Notes in respect of the Units delivered on
the Initial Closing Date and the Pass Through Trust Agreement, and on or before
the Subsequent Closing Date, the Lease Supplements, the Indenture Supplements
and the Equipment Notes in respect of the Units delivered on the Subsequent
Closing Date, shall each be satisfactory in form and substance to such
Participant, shall have been duly executed and delivered by the parties thereto
(except that the execution and delivery of the documents referred to above
(other than this Agreement) by a party hereto or thereto shall not be a
condition precedent to such party's obligations hereunder), shall each be in
full force and effect and executed counterparts of each shall have been
delivered to such Participant or its counsel on or before such Closing Date;
and no event shall have occurred and be continuing that constitutes a Lease
Default or an Indenture Default.
(b) Recordation and Filing. On or before the Initial Closing Date
the Lessee shall have caused the Lease, the Lease Supplements in respect of the
Units delivered on the Initial Closing Date, the Indenture and the Indenture
Supplements in respect of the Units delivered on the Initial Closing Date, and
on or before the Subsequent Closing Date the Lessee shall have caused the Lease
Supplements and the Indenture Supplements in respect of Units delivered on the
Subsequent Closing Date to be duly filed, recorded and deposited with the ICC
in conformity with 49 U.S.C. Section 11303 and with the Registrar General of
Canada pursuant to Section 90 of the Railway Act of Canada and all necessary
actions shall have been taken to cause publication of notice of such deposit in
The Canada Gazette in accordance with said Section 90 within 21 days of such
Closing Date, and the Lessee shall furnish the Indenture Trustee, the Owner
Trustee and each Participant proof thereof. In addition, on or before the
Initial Closing Date or as soon thereafter as is reasonably practicable (but in
no event more than 30 days after such Closing Date), the Lessee shall cause the
Lease, the Lease Supplements in respect of the Units delivered on the Initial
Closing Date, the Indenture and the Indenture Supplements in respect of the
Units delivered on the Initial Closing Date, and on or before the Subsequent
Closing Date or as soon thereafter as is reasonably practicable (but in no
event more than 30 days after such Closing Date) the Lessee shall have caused
the Lease Supplements and the Indenture Supplements in respect of the Units
delivered on the Subsequent Closing Date, to be deposited in the appropriate
offices in the Canadian provinces of Ontario, Manitoba, Saskatchewan, Alberta,
British Columbia, Quebec and New Brunswick.
(c) Representations and Warranties of Lessee. On the Initial
Closing Date and the Subsequent Closing Date, the representations and
warranties of the Lessee contained in Section 3.2 and Section 3.4(b) hereof
shall be true and correct in all material respects as of such Closing Date as
though then made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct on and as of such
earlier date), and the Owner Trustee, the Indenture Trustee and each
Participant shall have received an Officer's Certificate dated such Closing
Date from the Lessee certifying to the foregoing matters, and the Lessee shall
have performed and complied with all agreements and conditions herein contained
which are required to be performed or complied with by the Lessee on or before
said date.
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(d) Representations and Warranties of Owner Trustee. On the
Initial Closing Date and the Subsequent Closing Date, the representations and
warranties of the Owner Trustee contained in Section 3.1 and Section 3.4(a)
shall be true and correct in all material respects as of such Closing Date as
though then made on and as of such date except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct on and as of such
earlier date), and the Lessee, the Indenture Trustee, the Pass Through Trustee
and each Participant shall have received an Officer's Certificate dated such
Closing Date from the Owner Trustee and the Owner Trustee shall have performed
and complied with all agreements and conditions herein contained which are
required to be performed or complied with by the Owner Trustee on or before
said date.
(e) Opinions of Counsel. On the Initial Closing Date and the
Subsequent Closing Date, the Owner Trustee, the Indenture Trustee and each
Participant shall have received the favorable written opinion of each of (i)
the Lessee's special counsel and General Counsel, (ii) counsel to the Owner
Trustee, (iii) special counsel to the Owner Participant, (iv) counsel to the
Pass Through Trustee, (v) counsel to the Indenture Trustee, (vi) special ICC
counsel and (vii) special Canadian counsel, in form and substance satisfactory
to each Participant; provided that, except as otherwise provided herein,
receipt by a party hereto of a favorable written opinion from counsel to such
party shall not be a condition precedent to such party's obligations hereunder.
(f) Title. On the Initial Closing Date and the Subsequent Closing
Date, after giving effect to the transactions contemplated hereby, the Owner
Trustee shall have all legal and beneficial title to each Unit to be delivered
on such Closing Date, free and clear of all Liens (other than Permitted Liens
of the type described in clause (ii) with respect to sublessees, and in clauses
(iii), (iv), (vi) and (vii) of the definition thereof).
(g) Bills of Sale. On the Initial Closing Date and the Subsequent
Closing Date the Lessee shall have delivered to the Owner Trustee (with copies
to the Indenture Trustee and each Participant) the Bill of Sale, in form and
substance reasonably satisfactory to the Owner Trustee, dated such date
covering the Units to be settled for on such Closing Date, transferring to the
Owner Trustee legal and beneficial title to such Units free of all claims,
liens and encumbrances of any nature (other than Permitted Liens of the type
described in clause (ii) with respect to sublessees and in clauses (iii), (iv),
(vi) and (vii) of the definition thereof) and warranting to the Owner Trustee
that at the time of delivery of each such Unit, the Lessee had legal and
beneficial title thereto and good and lawful right to sell the same, and title
thereto was free and clear of all Liens (other than Permitted Liens of the type
described in clause (ii) with respect to sublessees, and in clauses (iii),
(iv), (vi) and (vii) of the definition thereof).
(h) Insurance Certificates. On or before the Initial Closing Date
and the Subsequent Closing Date, the Indenture Trustee and each Participant
shall have received (x) any certificate relating to insurance that is required
pursuant to Section 12 of the Lease and (y) a certificate from a nationally
recognized insurance broker in the form attached hereto as Exhibit A.
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(i) Corporate Documents. Each of the Participants shall have
received such documents and evidence with respect to the Lessee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee as the Participants may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement, the taking of
all corporate and other proceedings in connection therewith and compliance with
the conditions herein or therein set forth.
(j) No Threatened Proceedings. No action or proceeding shall have
been instituted nor shall governmental action be threatened before any court or
governmental agency, nor shall any order, judgment or decree have been issued
or proposed to be issued by any court or governmental agency as of the Initial
Closing Date or the Subsequent Closing Date, to set aside, restrain, enjoin or
prevent the completion and consummation of this Agreement or the transactions
contemplated hereby.
(k) Closing Certificates of Owner Participant. On the Initial
Closing Date and the Subsequent Closing Date, the Lessee, the Indenture Trustee
and the Pass Through Trustee shall have received an Officer's Certificate dated
such Closing Date from the Owner Participant, to the effect that the
representations and warranties of the Owner Participant contained in Section
3.6 are true and correct in all respects on such Closing Date with the same
effect as though made on and as of said date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct on and as of such
earlier date), and that the Owner Participant has performed and complied with
all agreements and conditions herein contained which are required to be
performed or complied with by the Owner Participant on or before said date.
(l) Closing Notice. The Indenture Trustee and the Participants
shall have received the Notices of Delivery required pursuant to Section 2.3.
(m) Closing Certificates of Indenture Trustee. On the Initial
Closing Date and the Subsequent Closing Date, the Lessee, the Owner Trustee and
each Participant shall have received an Officer's Certificate dated such
Closing Date from the Indenture Trustee, to the effect that the representations
and warranties of the Indenture Trustee contained in Section 3.3 are true and
correct in all respects on such Closing Date with the same effect as though
made on and as of said date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties were true and correct on and as of such earlier date), and that
the Indenture Trustee has performed and complied with all agreements and
conditions herein contained which are required to be performed or complied with
by the Indenture Trustee on or before said date.
(n) Closing Certificates of the Pass Through Trustee. On the
Initial Closing Date and the Subsequent Closing Date, the Lessee, the Owner
Trustee and the Owner Participant shall have received an Officer's Certificate
dated such Closing Date from the Pass Through Trustee, to the effect that the
representations and warranties of the Pass Through Trustee contained in Section
3.5 are true and correct in all respects on such Closing Date with the same
effect as though made on and as of said date, except to the extent that such
representations and warranties
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relate solely to an earlier date (in which case such representations and
warranties were true and correct on and as of such earlier date), and that the
Pass Through Trustee has performed and complied with all agreements and
conditions herein contained which are required to be performed or complied with
by the Pass Through Trustee on or before said date.
(o) No Illegality. No change shall have occurred after the date
of the execution and delivery of this Agreement in applicable law or
regulations thereunder or interpretations thereof by regulatory authorities
that, in the opinion of such Participant or its counsel, would make it illegal
for such Participant to enter into any transaction contemplated by the
Operative Agreements.
(p) Participants' Investments. (i) The Owner Participant shall
have made available its Commitment in the respective amounts specified in, and
otherwise in accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan
Participant shall have made available its Commitment in the respective amounts
specified in, and otherwise in accordance with, Sections 2.2(b) and 2.3.
(q) Consents. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee which are required in
connection with the transactions contemplated by this Agreement, shall have
been duly obtained and be in full force and effect.
(r) Governmental Actions. All actions, if any, required to have
been taken on or prior to the Initial Closing Date and the Subsequent Closing
Date in connection with the transactions contemplated by this Agreement on such
Closing Date shall have been taken by any governmental or political agency,
subdivision or instrumentality of the United States and all orders, permits,
waivers, exemptions, authorizations and approvals of such entities required to
be in effect on the Initial Closing Date and the Subsequent Closing Date in
connection with the transactions contemplated by this Agreement on such Closing
Date shall have been issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect, on such Closing
Date.
(s) Tax Indemnity Agreement. On or before the Initial Closing
Date, the Tax Indemnity Agreement shall be satisfactory in form and substance
to the Owner Participant, shall have been duly executed and delivered by the
Lessee and, assuming due authorization, execution and delivery by the Owner
Participant, shall be in full force and effect.
(t) Securities Act Compliance. On or before the Initial Closing
Date, the Registration Statement shall have become effective under the
Securities Act; if filing of the final prospectus, or any supplement thereto is
required pursuant to Rule 424(b) as promulgated pursuant to the Securities Act,
the final prospectus and any such supplement shall have been filed in the
manner and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
(u) Appointment of Representative. The Owner Trustee shall have
authorized its representative, who shall be an individual designated by the
Lessee and acceptable to the Owner
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Trustee, to accept the Units being delivered on the Initial Closing Date and
the Subsequent Closing Date from the Lessee and to deliver such Units to the
Lessee. The Lessee shall have authorized its representative (who shall be the
same individual designated by the Lessee under this paragraph) to accept
delivery of the Units from the Owner Trustee as the Lessor pursuant to the
Lease.
Section 4.2. Additional Conditions Precedent to Investment by
Pass Through Trustee. The obligation of the Pass Through Trustee to purchase
and pay for the Equipment Notes to be purchased by it pursuant to Sections
2.2(b) and 2.3 on the Closing Date shall be subject to the additional
conditions that the Equipment Notes to be delivered on the Closing Date shall
have been duly authorized, executed and delivered to the Pass Through Trustee
by a duly authorized officer of the Owner Trustee and duly authenticated by the
Indenture Trustee and that on the Closing Date the Pass Through Trustee shall
have received the proceeds from the sale of the Pass Through Certificates.
Section 4.3. Additional Conditions Precedent to Investment by
Owner Participant. The obligation of the Owner Participant to make available
its Commitment pursuant to Sections 2.2(a) and 2.3 on the Initial Closing Date
and the Subsequent Closing Date with respect to any Unit to be delivered on
such Closing Date shall be subject to the following additional conditions:
(a) Appraisals. On or before the Initial Closing Date and the
Subsequent Closing Date, the Owner Participant shall have received an opinion
(each, an "Appraisal") of R.L. Banks & Associates, Inc., satisfactory in form
and substance to the Owner Participant, concluding that: (i) the fair market
value of the Equipment being delivered on the Initial Closing Date or the
Subsequent Closing Date, as the case may be, is equal to the Total Equipment
Cost with respect to such Equipment; (ii) the Basic Rents for the Basic Term
are fair market rents; (iii) at the expiration of the Basic Term, (A) the
remaining economic life of such Equipment will be at least equal to 20% of the
economic life of such Equipment as estimated in the Appraisal and (B) without
taking into account inflation or deflation from and after the Initial Closing
Date or the Subsequent Closing Date, as the case may be, or the existence of
any purchase option, it is reasonable to expect that such Equipment will have a
fair market value of at least 20% of the Total Equipment Cost with respect to
such Equipment; (iv) as of the Early Purchase Date, the estimated fair market
value of such Equipment, taking into account inflation or deflation from and
after the Initial Closing Date or the Subsequent Closing Date, as the case may
be, will be less than the Early Purchase Price; (v) as of the end of the Basic
Term, the estimated fair market value of such Equipment, taking into account
inflation or deflation from and after the Initial Closing Date or the
Subsequent Closing Date, as the case may be, will be less than the Basic Term
Purchase Price; (vi) as of the Outside Date, the estimated fair market value of
such Equipment, taking into account inflation or deflation from and after the
Initial Closing Date or the Subsequent Closing Date, as the case may be, will
be less than the Outside Date Purchase Price, (vii) such Equipment is not
Limited Use Property and (viii) Basic Rents from the Early Purchase Date to the
end of the Basic Term are fair market rents; provided that the Lessee makes no
representation as to the fair market value, useful life or estimated residual
value of the Equipment, and the Lessee shall not be responsible for, or incur
any liabilities as a result of, the
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contents of either Appraisal or report to which it relates or, except to the
extent provided in the Tax Indemnity Agreement, any information supplied by
Lessee in connection therewith.
(b) Opinion with Respect to Certain Tax Aspects. On the Initial
Closing Date and the Subsequent Closing Date, the Owner Participant shall have
received the opinion of __________________________________________ addressed to
the Owner Participant, in form and substance satisfactory to the Owner
Participant, containing such counsel's favorable opinion with respect to such
tax matters as the Owner Participant may reasonably request.
Section 4.4. Conditions Precedent to the Obligation of the
Lessee. The obligation of the Lessee with respect to the sale of the Units to
the Owner Trustee and acceptance of the Units under the Lease is subject to the
following conditions as of the Initial Closing Date and the Subsequent Closing
Date:
(a) Corporate Documents. On or before the Initial Closing Date
and the Subsequent Closing Date, the Lessee shall have received such documents
and evidence with respect to the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee as the Lessee may reasonably
request in order to establish the consummation on such Closing Date of the
transactions contemplated by this Agreement, the taking of all corporate and
other proceedings in connection therewith and compliance with the conditions
herein or therein set forth.
(b) Operative Agreements. On or before the Initial Closing Date
and the Subsequent Closing Date, the Operative Agreements shall have been duly
authorized, executed and delivered by the respective party or parties thereto
(other than the Lessee), and an executed counterpart of each thereof shall have
been delivered to the Lessee or its special counsel.
(c) Representations and Warranties True. On the Initial Closing
Date and the Subsequent Closing Date, the representations and warranties of the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner
Participant contained in Section 3 hereof shall be true and correct in all
material respects as of such Closing Date as though made on and as of such
Closing Date, and the Lessee shall have received an Officer's Certificate dated
such date from each of the Owner Trustee as described in Section 4.1(d), the
Owner Participant as described in Section 4.1(k), the Indenture Trustee as
described in Section 4.1(m) and the Pass Through Trustee as described in
Section 4.1(n), addressed to the Lessee and certifying as to the foregoing
matters insofar as they relate to the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Pass Through Trustee, as the case may be.
(d) Opinions of Counsel. On the Initial Closing Date and the
Subsequent Closing Date, the Lessee shall have received the opinions of counsel
referred to in Section 4.1(e) (other than that set forth in clause (i)
therein), addressed to the Lessee.
(e) No Threatened Proceedings. No action or proceeding shall have
been instituted nor shall governmental action be threatened before any court or
governmental agency, nor shall any order, judgment or decree have been issued
or proposed to be issued by any court or
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governmental agency as of the Initial Closing Date or the Subsequent Closing
Date, to set aside, restrain, enjoin or prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(f) Participants' Investments. (i) The Owner Participant shall
have made available its Commitment in the amount specified in, and otherwise in
accordance with, Sections 2.2(a) and 2.3 and (ii) the Loan Participant shall
have made available its Commitment in the amount specified in, and otherwise in
accordance with, Sections 2.2(b) and 2.3.
SECTION 5. FINANCIAL AND OTHER REPORTS OF THE LESSEE.
The Lessee agrees that it will furnish directly to each Participant
the following:
(a) unless included in a Form 10-Q delivered under clause (c)
below within the 60-day period specified in this clause (a), as soon as
available and in any event within 60 days after the end of each quarterly
period, except the last, of each fiscal year, the consolidated balance sheet of
the Lessee and its consolidated Subsidiaries as at the end of such period,
together with the related consolidated statements of income and cash flows of
the Lessee and its consolidated Subsidiaries for the period beginning on the
first day of such fiscal year and ending on the last day of such quarterly
period, setting forth in each case (except for the consolidated balance sheet)
in comparative form the figures for the corresponding periods of the previous
fiscal year, all in reasonable detail and prepared in accordance with generally
accepted accounting principles;
(b) unless included in a Form 10-K delivered under clause (c)
below within the 120-day period specified in this clause (b), as soon as
available and in any event within 120 days after the last day of each fiscal
year, a copy of the Lessee's audited financial statements covering the
operations of the Lessee and its consolidated Subsidiaries, including a
consolidated balance sheet, and related consolidated statements of income and
retained earnings and consolidated statement of cash flows of the Lessee and
its consolidated Subsidiaries for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with generally accepted accounting principles
applied on a consistent basis, which statements will have been certified by a
firm of independent public accountants of recognized national standing selected
by the Lessee;
(c) as soon as available, one copy of each Annual Report on Form
10-K (or any successor form) and Quarterly Report on Form 10-Q (or any
successor form) filed by the Lessee with the Securities and Exchange Commission
or any successor agency;
(d) within the time period prescribed in subparagraph (b) above, a
certificate, signed by the Treasurer or principal financial officer of the
Lessee, to the effect that the signer has reviewed the activities of the Lessee
during the immediately preceding fiscal year and that he is not aware of any
default in compliance by the Lessee with any of the covenants, terms and
provisions of the Participation Agreement or the Lease (except as specified),
and if a Lease Default or Lease Event of Default shall exist, specifying such
Lease Default or Lease Event of Default and the nature and status thereof;
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(e) promptly, all material reports or statements which the Lessee
may make to, or file with, the Securities and Exchange Commission or any
successor thereto (excluding such reports or statements which are treated as
confidential and not available to the public, in accordance with applicable
law, by the Securities and Exchange Commission, for so long as such
confidentiality shall be maintained); and
(f) promptly, such additional information with respect to the
financial condition or business of the Lessee as any Participant may from time
to time reasonably request.
SECTION 6. CERTAIN COVENANTS OF THE PARTICIPANTS, THE TRUSTEES AND THE
LESSEE.
Section 6.1. Restrictions on Transfer of Beneficial Interest.
The Owner Participant agrees that it shall not sell, convey, assign, pledge,
mortgage or otherwise transfer any of its Beneficial Interest prior to the
expiration or earlier termination of the Lease Term without the Lessee's and,
so long as any Equipment Notes are outstanding, the Indenture Trustee's consent
(which consent shall not be unreasonably withheld) and absent indemnifying the
Lessee to its reasonable satisfaction unless:
(a) the Person to whom such transfer is to be made (a
"Transferee") is (i) an institutional or corporate investor with net worth or,
in the case of a bank or lending institution, combined capital and surplus at
the time of such transfer of at least US$75,000,000 determined in accordance
with generally accepted accounting principles or (ii) any Affiliate of any such
institutional or corporate investor if such investor guarantees the obligations
so assumed by such Affiliate pursuant to an instrument or instruments identical
to Exhibit B hereto in all material respects or otherwise reasonably
satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee or
(iii) an Affiliate of the Owner Participant; provided that in the event of a
transfer pursuant to clause (iii) which does not qualify under clauses (i) or
(ii), the Owner Participant shall remain liable for all of its obligations
under this Agreement and the other Operative Agreements and any guarantee given
pursuant to clause (ii) shall remain in full force and effect;
(b) the Owner Participant is not in default under the Lease;
(c) neither the Transferee nor any of its Affiliates shall be a
direct competitor (other than as a passive investor or loan participant in the
financing of equipment or facilities used in full service railcar leasing) of
the Lessee in the business of leasing rail cars under full service operating
leases; provided, that no Transferee or Affiliate thereof shall be deemed to
(i) be engaged in full service railcar leasing or (ii) hold (directly or
indirectly) any material interest in any business that is competitive with the
Lessee's full service railcar leasing business, solely by reason of any sale,
lease or other disposition (or any actions in furtherance of any of the
foregoing) of any of such Person's interest in any equipment or facilities
directly or indirectly owned, leased or otherwise controlled pursuant to any
such Person's passive investment or loan participation in the financing of any
such equipment or facilities used in full service railcar leasing or any
re-leasing or sale of any rail equipment which is returned to or repossessed by
or on behalf of the Owner Participant or any Affiliate of the Owner Participant
from a lessee
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or borrower in connection with a lease financing or lender transaction entered
into by the Owner Participant or such Affiliate as a passive lessor, investor
or lender;
(d) the Indenture Trustee and the Lessee shall have received 10
days prior written notice of such transfer specifying the name and address of
any proposed transferee and such additional information as shall be necessary
to determine whether the proposed transfer satisfies the requirements of this
Section 6.1; provided, however, that such 10 days prior written notice need not
be given to the Indenture Trustee and the Lessee if such sale, conveyance,
assignment, pledge, mortgage or other transfer is to an Affiliate of the Owner
Participant;
(e) so long as any Interim Interest has become due and payable but
has not been paid by, or reimbursed by, the Owner Participant, the Lessee shall
have consented in writing to such transfer;
(f) such Transferee enters into an agreement or agreements in form
and substance reasonably satisfactory to the Lessee, the Owner Trustee and the
Indenture Trustee whereby such Transferee confirms that it shall be deemed a
party to this Agreement and each other Operative Agreement to which the
transferring Owner Participant is a party, and agrees to be bound by all the
terms of, and to undertake all of the obligations and liabilities of the
transferring Owner Participant contained in, this Agreement and such other
Operative Agreements and in which the Transferee shall make representations and
warranties comparable to those of the Owner Participant contained herein and
therein;
(g) such transfer complies in all respects with and does not
violate any applicable federal securities law and the securities law of any
applicable state;
(h) an opinion of counsel of the Transferee (which counsel shall
be reasonably acceptable to the Lessee and the Indenture Trustee and which may
be internal counsel of the Transferee), confirming (i) the existence, power and
authority of, and due authorization, execution and delivery of all relevant
documentation by, the Transferee (with appropriate reliance on certificates of
corporate officers or public officials as to matters of fact), (ii) that each
agreement referred to in subparagraph (f) above is the legal, valid, binding
and enforceable obligation of the Transferee (subject to customary
qualifications as to bankruptcy and equitable principles) and (iii) compliance
of the transfer with applicable federal securities laws and material laws of
the Transferee's domicile and other material laws applicable to the Transferee,
shall be provided, prior to such transfer, to the Lessee and the Indenture
Trustee, which opinion shall be in form and substance reasonably satisfactory
to each of them;
(i) except as specifically consented to in writing by the Lessee
and the Indenture Trustee, the terms of the Operative Agreements shall not be
altered;
(j) such transfer shall not result in an increase in the Lessee's
obligations under Section 7.1 or 7.2 or under the Tax Indemnity Agreement;
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(k) no Owner Participant shall hold less than [20]% of the
Beneficial Interest after giving effect to such transfer and the Beneficial
Interest shall be held by not more than [four] Owner Participants;
(l) all reasonable expenses of the parties hereto (including,
without limitation, legal fees and expenses of special counsel) incurred in
connection with each transfer of such Beneficial Interest shall be paid by the
transferring Owner Participant or the Transferee;
(m) such transfer (i) does not involve the use of an amount which
constitutes assets of an employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code or (ii) will not constitute a prohibited transaction
under ERISA;
(n) as a result of such transfer, no Indenture Default
attributable to the Owner Participant or the Owner Trustee shall have occurred
and be continuing;
(o) as long as no Lease Event of Default has occurred and is
continuing, the transfer does not involve the sale of the stock of any Owner
Participant the sole asset of which is all or a portion of the Beneficial
Interest to, or the merger of any such Owner Participant with or into, any
Person described in paragraph (c) of this Section 6.1;
(p) the Transferee (i) is a "United States Person" within the
meaning of Section 7701(a)(30) of the Code or (ii) is engaged in a United
States trade or business for purposes of Subtitle A, Chapter 1, Subchapter N of
the Code and is acquiring such Beneficial Interest in connection with such
trade or business;
(q) the Owner Participant shall have made available its Commitment
in respect of Units to be delivered on the Subsequent Closing Date; and
(r) the Owner Participant shall deliver an Officer's Certificate
certifying as to compliance with the transfer requirements contained herein.
Upon any such transfer, (i) except as the context otherwise requires, such
Transferee shall be deemed the "Owner Participant" for all purposes, and shall
enjoy the rights and privileges and perform the obligations of the Owner
Participant to the extent of the interest transferred hereunder and under each
other Operative Agreement to which the Owner Participant is a party, and,
except as the context otherwise requires, each reference in this Agreement and
each other Operative Agreement to the "Owner Participant" shall thereafter be
deemed to include such Transferee for all purposes to the extent of the
interest transferred, and (ii) the transferor, except as provided in Section
6.1(l) hereof and except in the case of a transfer to a Transferee described in
Section 6.1(a)(iii) hereof, shall be released from all obligations hereunder
and under each other Operative Agreement to which such transferor is a party or
by which such transferor is bound to the extent such obligations are expressly
assumed by a Transferee; and provided, further, that in no event shall any such
transfer or assignment waive or release the transferor from any liability on
account of any breach existing immediately prior to such transfer of any of its
representations, warranties, covenants or obligations set forth in the
Operative Agreements or for any fraudulent or willful misconduct. Any transfer
or assignment of the Beneficial
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Interest in violation of this Section 6.1 shall be of no effect as between the
parties to this Agreement. Subject to the rights of the Lessee pursuant to
subsection 6.1(o), the provisions of this Section 6.1 shall not be construed to
restrict the Owner Participant from consolidating with or merging into any
other corporation or restricting another corporation from merging into or
consolidating with the Owner Participant. No consent of the Lessee otherwise
required hereunder shall be required if any Lease Event of Default shall have
occurred and be continuing. Notwithstanding any transfer, the transferor Owner
Participant shall be entitled to all benefits accrued and all rights vested
prior to such transfer, including, without limitation, rights to
indemnification under any Operative Agreements.
Section 6.2. Lessor's Liens Attributable to the Owner
Participant. The Owner Participant hereby unconditionally agrees with and for
the benefit of the other parties to this Agreement that the Owner Participant
will not directly or indirectly create, incur, assume or suffer to exist any
Lessor's Liens on or against any part of the Trust Estate or the Equipment
attributable to the Owner Participant, and the Owner Participant agrees that it
will, at its own cost and expense, take such action as may be necessary to duly
discharge and satisfy in full any such Lessor's Lien (by bonding or otherwise,
so long as Lessee's operation and use of the Equipment and the interest of the
Indenture Trustee in the Indenture Estate is not impaired); provided that the
Owner Participant may contest any such Lessor's Lien in good faith by
appropriate proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of the Equipment or any interest therein
or interference with the use, operation, or possession of the Equipment by the
Lessee under the Lease or the rights of the Indenture Trustee under the
Indenture.
Section 6.3. Lessor's Liens Attributable to the Owner Trustee.
The Owner Trustee, in its individual capacity, hereby unconditionally agrees
with and for the benefit of the other parties to this Agreement that the Owner
Trustee in its individual capacity will not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Liens on or against any part of
the Trust Estate or the Equipment attributable to the Owner Trustee in its
individual capacity, and the Owner Trustee in its individual capacity agrees
that it will, at its own cost and expense, take such action as may be necessary
to duly discharge and satisfy in full any such Lessor's Lien attributable to
the Owner Trustee in its individual capacity (by bonding or otherwise, so long
as Lessee's operation and use of the Equipment and the interest of the
Indenture Trustee in the Indenture Estate is not impaired); provided that the
Owner Trustee may contest any such Lessor's Lien in good faith by appropriate
proceedings so long as such proceedings do not involve any material danger of
the sale, forfeiture or loss of the Equipment or any interest therein or
interference with the use, operation, or possession of the Equipment by the
Lessee under the Lease or the right of the Indenture Trustee under the
Indenture.
Section 6.4. Liens Created by the Indenture Trustee and the Loan
Participant.
(a) The Indenture Trustee, in its individual capacity, covenants and
agrees with the Lessee, the Owner Trustee, the Owner Participant and the Loan
Participant that it shall not cause or permit to exist any Lien on the
Equipment or all or any portion of any Trust Estate or the Indenture Estate
arising as a result of (i) claims against the Indenture Trustee in its
individual
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capacity not related to its interest in the Equipment and any Trust Estate, or
to the administration of the Indenture Estate pursuant to the Indenture, (ii)
acts of the Indenture Trustee in its individual capacity not contemplated by,
or failure of the Indenture Trustee to take any action it is expressly required
to perform by, the Operative Agreements, (iii) claims against the Indenture
Trustee in its individual capacity relating to Taxes or expenses that are not
indemnified against by the Lessee pursuant to Section 7 attributable to the
actions of the Indenture Trustee, solely in its individual capacity, or (iv)
claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Equipment, the
Indenture Estate or the Operative Agreements, other than a transfer permitted
by the Operative Agreements and that the Indenture Trustee will, at its own
cost and expense (and without any right of reimbursement from any other party
hereto), promptly take such action as may be necessary duly to discharge any
such Lien.
(b) The Loan Participant covenants and agrees with the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee that it shall
not cause or permit to exist any Lien on the Equipment or all or any portion of
any Trust Estate or the Indenture Estate arising as a result of (i) claims
against such Loan Participant not related to its interest in the Equipment and
any Trust Estate, (ii) acts of such Loan Participant not contemplated by, or
failure of such Loan Participant to take any action it is expressly required to
perform by, the Operative Agreements, (iii) claims against such Loan
Participant relating to Taxes or expenses that are not indemnified against by
the Lessee pursuant to Section 7, or (iv) claims against such Loan Participant
arising out of the transfer by such Loan Participant of all or any portion of
its interest in the Equipment, the Indenture Estate or the Operative
Agreements, other than a transfer permitted by the Operative Agreements and
that such Loan Participant will, at its own cost and expense (and without any
right of reimbursement from the Lessee), promptly take such action as may be
necessary duly to discharge any such Lien.
Section 6.5. Covenants of Owner Trustee, Owner Participant and
Indenture Trustee. The Owner Participant, and the Owner Trustee in its
individual and trust capacity, hereby agree, as to their own actions only,
severally and not jointly, with the Lessee, the Loan Participant and the
Indenture Trustee (a) not to amend, supplement, or otherwise modify any
provision of the Trust Agreement in such a manner as to adversely affect the
rights of the Lessee, the Loan Participant or the Indenture Trustee without the
prior written consent of such party and (b) not to terminate or revoke the
Trust Agreement or the trusts created by the Trust Agreement prior to the
payment in full and discharge of the Equipment Notes and all other indebtedness
secured by the Indenture and the final discharge thereof pursuant to Section
7.1 thereof or prior to the expiration or early termination of the Lease. Each
of the Owner Trustee and the Indenture Trustee agrees, for the benefit of the
Lessee and the Owner Participant, to comply with the provisions of the
Indenture and not to amend, supplement, or otherwise modify any provision of
the Indenture except in the manner provided in Article IX thereof.
Notwithstanding any provision herein or in any of the Operative Agreements to
the contrary, the Indenture Trustee's obligation to take or refrain from taking
any actions, or to use its discretion (including, but not limited to, the
giving or withholding of consent or approval and the exercise of any rights or
remedies under such Operative Agreements), and any liability therefor, shall,
in addition to any other limitations provided herein or in the other Operative
Agreements, be limited by the provisions of the Indenture.
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Section 6.6. Amendments to Operative Agreements. The Trustees
and Participants will not terminate the Operative Agreements to which the
Lessee is not or will not be a party, or amend, supplement, waive or modify
such Operative Agreements in any manner that increases the obligations or
liabilities, or decreases the rights, of the Lessee under such Operative
Agreements, except in accordance with such Operative Agreements in effect on
the date hereof (as amended, modified or supplemented from time to time in
accordance with the terms hereof and of such Operative Agreements). The Owner
Participant and the Trustees (as applicable) agree that, in any event, they
will not amend Section 2.10 or Article IX of the Indenture or Article IX of the
Trust Agreement without the prior written consent of the Lessee.
Section 6.7. Covenant of the Lessee. The Lessee hereby agrees
with the Owner Trustee, each Participant and the Indenture Trustee to deliver
to the Owner Trustee on the Initial Closing Date and the Subsequent Closing
Date a Bill of Sale evidencing the purchase and transfer of title of each Unit
to be settled for on such Closing Date.
Section 6.8. Merger Covenant. The Lessee shall not consolidate
with or merge into any other Person, or permit any other Person to merge into
it, or convey, transfer or lease substantially all of its assets as an entirety
to any Person unless (i) the Person formed by such consolidation or surviving
such merger (if other than the Lessee) or the Person which acquires by
conveyance, transfer or lease substantially all of the assets of the Lessee as
an entirety is a corporation organized and existing under the laws of the
United States or any state thereof or the District of Columbia and shall
execute and deliver to the Owner Trustee, the Owner Participant and the
Indenture Trustee an agreement containing the assumption by such successor
corporation of the due and punctual performance and observance of each covenant
and condition of this Agreement and each of the other Lessee Agreements to be
performed or observed by the Lessee, (ii) immediately prior to and immediately
after giving effect to such transaction, no Lease Default or Lease Event of
Default shall have occurred, whether as a result of such consolidation or
merger or such conveyance, transfer or lease or otherwise, (iii) the Lessee
shall have made all filings necessary or appropriate in the reasonable opinion
of the Owner Trustee and the Indenture Trustee in order to preserve and protect
the rights of the Lessor under the Lease and of the Indenture Trustee under the
Indenture and (iv) there shall have been delivered to the Owner Participant,
the Owner Trustee and the Indenture Trustee an Officer's Certificate of the
successor to the Lessee (or such Person as is the surviving corporation) and an
opinion of counsel (which may be such Person's in-house counsel) in form and
substance reasonably satisfactory to the Owner Participant, the Owner Trustee
and the Indenture Trustee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned in clause
(i) above comply with this Section 6.8. Upon such consolidation or merger, or
any conveyance, transfer or lease of substantially all of the assets of the
Lessee as an entirety in accordance with this Section 6.8, the successor
corporation formed by such consolidation or into which the Lessee is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Lessee under
this Agreement and the other Operative Agreements with the same effect as if
such successor corporation had been named as the Lessee herein.
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Section 6.9. Lessee's Purchase in Certain Circumstances. If an
Owner Participant, any subsequent transferee or any Affiliate thereof is
engaged, or acquires, is acquired by, merges or otherwise consolidates with any
company or Affiliate thereof engaged, in full service railcar leasing, whether
or not a direct competitor to the Lessee or any Affiliate thereof, or by or
with any Person that has a material interest (whether held directly or
indirectly) in an enterprise that engages in a business that is competitive
with the Lessee's full service railcar leasing business, the Lessee may, on a
Determination Date which is designated by the Lessee by written notice to the
Owner Trustee, the Indenture Trustee and the Pass Through Trustee not less than
25 days prior to such Determination Date, purchase the Equipment for a purchase
price equal to the greater of Termination Value or the Fair Market Sales Value,
each calculated as of such Determination Date, plus in either case all accrued
and unpaid Rent for the Equipment as of the date of purchase and any Make-Whole
Amount then payable on the Equipment Notes pursuant to Section 2.10(c) of the
Indenture; provided, that the Lessee's rights to purchase the Equipment
pursuant to this Section 6.9 shall terminate 90 days after receipt by the
Lessee of written notice from the Owner Participant or any subsequent
transferee or any Affiliate thereof, that it is engaged in full service railcar
leasing or of any such acquisition, merger or consolidation; provided further,
that an institutional investor which is a passive investor in the financing of
equipment or facilities used in full service railcar leasing shall not, solely
by reason of such investment, be deemed to be engaged in such business;
provided, further, that none of any Owner Participant or any subsequent
transferee or Affiliate thereof shall be deemed to (i) be engaged in full
service railcar leasing or (ii) hold (directly or indirectly) any material
interest in any business that is competitive with the Lessee's full service
railcar leasing business, solely by reason of any sale, lease or other
disposition (or any actions in furtherance of any of the foregoing), of any of
such Person's interest in any equipment or facilities directly or indirectly
owned, leased or otherwise controlled pursuant to any such Person's passive
investment or loan participation in the financing of any such equipment or
facilities used in full service railcar leasing or any re-leasing or sale of
any rail equipment which is returned to or repossessed by or on behalf of the
Owner Participant or any Affiliate from a lessee or borrower in connection with
a lease financing or lender transaction entered into by the Owner Participant
or such Affiliate as a passive lessor, investor or lender.
If the Lessee elects to exercise the purchase option provided for in
this Section 6.9, Lessee shall, as the purchase price therefor, in the sole
discretion of the Lessee, either (i) pay the Termination Value or the Fair
Market Sales Value, as specified in the paragraph above, together with all
other amounts due and owing by Lessee under the Operative Agreements, or (ii)
pay the difference between the Termination Value or the Fair Market Sales
Value, as applicable, and the outstanding principal amount of the Equipment
Notes as of the Determination Date, together with all other amounts due and
owing by the Lessee under the Operative Agreements, and assume on a full
recourse basis, and agree to indemnify the Lessor against, all of the Owner
Trustee's obligations in respect of the related Equipment Notes; provided,
that, following such assumption, the purchased Units shall remain subject to
the lien of the related Indenture. The Lessee will make the payments required
by foregoing clause (i) or assume the Equipment Notes as provided in foregoing
clause (ii) on the Determination Date against delivery of a bill of sale
transferring and assigning to the Lessee all right, title and interest of the
Lessor in and to such Units on an "as-is" "where-is" basis and containing a
warranty against the
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Lessor's Liens. The Lessor shall not be required to make any other
representation or warranty as to the condition of such Units or any other
matters, and may specifically disclaim any such representations or warranties.
Section 6.10. Owner Participant an Affiliate of Lessee. If at
any time the original or any successor Owner Participant shall be an Affiliate
of the Lessee, such Owner Participant and the Lessee agree that notwithstanding
Section 9.05 of the Indenture such Owner Participant will not vote its
Beneficial Interest to modify, amend or supplement any provision of the Lease
or this Agreement or give, or permit the Owner Trustee to give, any consent,
waiver, authorization or approval thereunder if any such action would adversely
affect in a material manner the Indenture Trustee or any holder of an Equipment
Note unless such action shall have been consented to by a Majority in Interest.
Section 6.11. Corporate Existence; Place of Business. The Lessee
shall at all times maintain its corporate existence except as permitted by
Section 6.8; and it shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate rights, powers,
privileges and franchises except for any corporate right, power, privilege or
franchise that it in good faith determines is no longer necessary or desirable
in the conduct of its business.
Section 6.12. No Impairment of Warranties. From and after the
Closing Date and throughout the Lease Term, the Lessee shall not take any
action (or fail to take any action) if the result of such action (or failure to
act) would abrogate or invalidate or otherwise materially adversely affect the
validity of any warranties applicable to the Units which would otherwise be
available with respect to the Units.
SECTION 7. LESSEE'S INDEMNITIES.
Section 7.1. General Tax Indemnity.
(a) Tax Indemnitee Defined. For purposes of this Section 7.1,
"Tax Indemnitee" means the Owner Participant, its Affiliates, the Pass Through
Trustee, both in its individual capacity and as trustee, the Owner Trustee both
in its individual capacity and as trustee, the Indenture Trustee both in its
individual capacity and as trustee, each of their respective successors or
assigns permitted under the terms of the Operative Agreements, any officer,
director, employee or agent of any of the foregoing, the Trust Estate and the
Indenture Estate.
(b) Taxes Indemnified. All payments by the Lessee to any Tax
Indemnitee in connection with the transactions contemplated by the Operative
Agreements shall be free of withholdings of any nature whatsoever (and at the
time that the Lessee is required to make any payment upon which any withholding
is required the Lessee shall pay an additional amount such that the net amount
actually received will, after such withholding and on an After-Tax Basis, equal
the full amount of the payment then due) and shall be free of expense to each
Tax Indemnitee for collection or other charges, provided, however, that no such
additional amounts shall be paid by the Lessee and the Lessee assumes no
responsibility regarding any withholdings imposed by reason of any transfer of
the Equipment or any interest in the Operative Agreements
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by the Lessor or the Owner Participant other than any Transfer which occurs
during the continuance of a Lease Default or Lease Event of Default. If, for
any reason, the Lessee is required to make any payment to a taxing authority
with respect to, or as a result of, any withholding tax imposed on any Tax
Indemnitee in respect of the transactions contemplated by the Operative
Agreements which withholding tax is not the responsibility of the Lessee under
this Section 7.1 then such Tax Indemnitee shall pay to the Lessee within 30
days of a demand an amount which equals the amount paid by the Lessee with
respect to, or as a result of, such withholding tax, plus interest computed at
such Tax Indemnitee's cost of funds rate during the period commencing on the
date the Lessee shall have paid an additional amount pursuant to the first
sentence of this paragraph and ending on the date the Lessee actually receives
such payment. Subject to the exclusions stated in subsection (c) below, the
Lessee agrees to indemnify and hold harmless each Tax Indemnitee, on an
After-Tax Basis, taking into account the income tax consequences to the Tax
Indemnitee of the accrual or receipt of an indemnity payment, against all fees
(including, without limitation, license, documentation or other fees and
registration fees), taxes (including, without limitation, income, gross
receipts, franchise, sales, use, rental, turnover, business, occupation,
excise, value-added, tangible and intangible personal property and stamp
taxes), levies, assessments, imposts, duties, charges or withholdings of any
nature, together with any and all penalties, additions to tax, fines or
interest thereon ("Taxes") imposed upon any Tax Indemnitee, the Lessee or any
Person in possession of the Equipment or all or any part of the Equipment by
any federal, state or local government, political subdivision, or taxing
authority in the United States or its possessions, by any government or taxing
authority of or in a foreign country or by any international authority, upon,
with respect to or in connection with:
(i) the Equipment or any part of any of the Equipment or
interest therein;
(ii) the acquisition, financing, ownership, leasing,
possession, purchase, acceptance, rejection, condition, registration,
return, use, storage, operation, return, transfer of title,
maintenance, repair, improvement, replacement, substitution, delivery,
redelivery, non-delivery, transport, preparation, assembly, insurance,
construction, manufacture, insuring, modification, transfer, control,
occupancy, servicing, mortgaging, location, refinancing, disposition,
subleasing, repossession, abandonment, sale or other application or
disposition of or with respect to the Equipment or any part of any of
the Equipment or interest therein;
(iii) the rental payments, receipts of earnings arising
from any Unit of Equipment or payable pursuant to the Lease;
(iv) the Equipment Notes, their issuance, acquisition,
transfer or refinancing or (as between the Lessee and any Tax
Indemnitee other than the Indenture Estate) the payment of principal,
interest or Make-Whole Amount or other amounts with respect thereto;
and
(v) the Operative Agreements or otherwise in connection
with the transactions contemplated thereby.
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(c) Taxes Excluded. The indemnity provided for in paragraph (b)
above shall not extend to any of the following:
(i) In the case of the Owner Participant, the Owner
Trustee or the Trust Estate, Income Taxes (as defined in Section
7.1(l), below) imposed by (A) the United States federal government,
other than any United States federal Income Taxes imposed by way of
deduction or withholding upon or with respect to payments on any
Equipment Notes, together with any penalties, fines, additions to Tax
or interest related thereto (provided that this subclause (A) shall
not be construed as preventing Lessee from recouping any such
deduction or withholding from the Indenture Trustee, the Pass Through
Trustee or any Certificateholder or as giving to the Indenture Trustee
a right to indemnification by the Lessee for Taxes payable pursuant to
Section 6.09 of the Indenture), (B) any state or local tax
jurisdiction in the United States (unless such Tax Indemnitee would
not have been subject to tax in such jurisdiction but for this
transaction (including the operation or presence of any Unit (or part
thereof) and other leasing transactions between the Lessee (or its
Affiliates) and the Owner Participant (or its Affiliates) or the
Lessee making payment from or performing other actions in such
jurisdiction)), provided, however, that for purposes of this clause
(B), the determination of (y) whether any Tax Indemnitee is treated as
being incorporated or having its principal place of business in any
state or local tax jurisdiction under this clause (B), or (z) whether
any such Tax Indemnitee is deemed to be subject to tax in any state or
local tax jurisdiction but for this transaction under this clause (B),
shall be made by treating each corporation which is a Tax Indemnitee
on a stand-alone basis and without regard to any Affiliates, related
Tax Indemnitees or other entities, except to the extent that such Tax
Indemnitee files combined or consolidated tax returns in such state or
local jurisdiction, respectively, with one or more Affiliates which
are also Tax Indemnitees, (C) any foreign government or any political
subdivision or taxing authority thereof or any territory or possession
of the United States or by any international authority except to the
extent such Income Taxes would not have been imposed by such
jurisdiction but for the use, location, operation, presence or
registration of any Unit or part thereof in such jurisdiction or the
activities of the Lessee or any of its Affiliates in such jurisdiction
or the making of any payments from such jurisdiction by or on behalf
of the Lessee pursuant to the Operative Agreements or (D) any
government or jurisdiction described in (A), (B) or (C) of this clause
(i) because the applicable Tax Indemnitee is not a resident of the
United States for tax purposes.
(ii) Taxes imposed with respect to any period after the
earliest of (x) the return of possession of the Equipment to the Owner
Participant or the placement of the Equipment in storage at the
request of the Owner Participant, in either case pursuant to Section 6
of the Lease, (y) the termination of the Lease Term pursuant to
Section 22.1 or Section 22.3 of the Lease, or (z) the discharge in
full of the Lessee's obligation to pay the Termination Value or the
Stipulated Loss Value and all other amounts due, if any, under Section
10 or 11.2 of the Lease, as the case may be, with respect to the
Equipment; provided that the exclusion set forth in this clause (ii)
shall not apply to Taxes to the extent such Taxes relate to events
occurring or matters arising prior to or simultaneously with such
time;
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(iii) As to any Tax Indemnitee, Taxes to the extent caused
by any misrepresentation or breach of warranty or covenant under the
Operative Agreements or by the gross negligence or willful misconduct
of such Tax Indemnitee;
(iv) As to any Tax Indemnitee, Taxes which become payable
as a result of a sale, assignment, transfer or other disposition
(whether voluntary or involuntary) by such Tax Indemnitee of all or
any portion of its interest in the Equipment or any part thereof, the
Trust Estate or any of the Operative Agreements or rights created
thereunder other than as a result of the substitution, modification or
improvement of the Equipment or any part thereof or a disposition
which occurs as the result of the exercise of remedies for a Lease
Event of Default, any disposition which occurs during the continuance
of a Lease Event of Default or a purchase of any Unit pursuant to the
Lease; provided, that, notwithstanding the foregoing, Lessee shall not
be obligated to indemnify any Tax Indemnitee with respect to net
income taxes imposed within the United States as the result of a sale,
assignment, transfer or other disposition by such Tax Indemnitee or
any Taxes imposed as a result of the status of the Tax Indemnitee as
other than a resident of the United States for tax purposes;
(v) Taxes which result from the Owner Trustee's engaging
on behalf of the Trust Estate in transactions unrelated to those
permitted or contemplated by the Operative Agreements;
(vi) As to any Tax Indemnitee, Taxes to the extent they
exceed the Taxes that would have been imposed had the initial Tax
Indemnitee not transferred, sold or otherwise disposed of any interest
held by such Tax Indemnitee pursuant to any of the Operative
Agreements; and
(vii) Taxes imposed on the Owner Trustee based on the
Owner Trustee's fee for services under the Trust Agreement.
(d) Other Obligations. Notwithstanding any other provision
anywhere contained in the Operative Agreements, it is understood that except as
provided in Section 6.2, with respect to the Owner Participant, and Section
6.3, with respect to the Owner Trustee, the Owner Participant and the Owner
Trustee shall have no obligations with respect to Taxes or other charges to the
Indenture Trustee or the Loan Participant imposed under Section 7.16 of the
Pass Through Trust Agreement or Section 6.09 of the Indenture, or otherwise.
(e) Payments to Lessee.
(i) If any Tax Indemnitee shall realize a Tax benefit (net of
any Tax detriment not otherwise paid or indemnified against by the
Lessee hereunder) as a result of any Taxes paid or indemnified against
by the Lessee under this Section 7.1 (whether by way of deduction,
credit, allocation or apportionment or otherwise), such Tax Indemnitee
shall pay to the Lessee an amount equal to the amount of such Tax
benefit, increased by the Tax Indemnitee's additional saved Taxes
attributable to the payment being made to the Lessee hereunder;
provided, however, that in no event shall the aggregate amount paid
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by any Tax Indemnitee to the Lessee with respect to any realized Tax
benefit exceed the aggregate amount previously advanced by the Lessee
with respect to such Taxes but provided, further, that such excess
shall be carried forward to reduce or offset any future obligations of
the Lessee to such Tax Indemnitee under this Section 7.1.
(ii) Upon receipt by a Tax Indemnitee of a refund or
credit of all or part of any Taxes paid or indemnified against by the
Lessee, such Tax Indemnitee shall pay to the Lessee an amount equal to
the amount of such refund plus any interest received by or credited to
such Tax Indemnitee with respect to such refund increased or
decreased, as the case may be, by the Tax Indemnitee's net additional
or saved taxes attributable to the receipt of such amounts from the
taxing authority and the payment being made to the Lessee hereunder.
(iii) The Tax Indemnitee shall in good faith file its Tax
returns and deal with taxing authorities to seek and claim any such
tax benefits or refunds.
(f) Procedures. Any amount payable to a Tax Indemnitee pursuant
to paragraph (b) shall be paid within 30 days after receipt of a written demand
therefor from such Tax Indemnitee accompanied by a written statement describing
in reasonable detail the basis for such indemnity and the computation of the
amount so payable, provided that such amount need not be paid prior to (i) the
date on which such Taxes are due, or (ii) in the case of amounts which are
being contested pursuant to paragraph (g) hereof, the time such Taxes are due
and payable pursuant to the resolution of such contest (including all appeals).
Any amount payable to the Lessee pursuant to paragraph (e) shall be paid within
30 days after the Tax Indemnitee realizes a net tax benefit or receives a
refund giving rise to a payment under paragraph (e), and shall be accompanied
by a written statement by the Tax Indemnitee setting forth in reasonable detail
the basis for computing the amount of such payment. Within 15 days following
the Lessee's receipt of any computation from the Tax Indemnitee, the Lessee may
request that the accounting firm that regularly prepares the certified
financial statements of the Tax Indemnitee determine whether such computations
of the Tax Indemnitee are correct. Such accounting firm shall be requested to
make the determination contemplated by this paragraph (f) within 30 days of its
selection. In the event such accounting firm shall determine that such
computations are incorrect, then such firm shall determine what it believes to
be the correct computations. The Tax Indemnitee shall cooperate with such
accounting firm and supply it with all information necessary to permit it to
accomplish such determination on a confidential basis. The computations of
such accounting firm shall be final, binding and conclusive upon the parties
and the Lessee shall have no right to inspect the books, records or tax returns
of the Tax Indemnitee to verify such computation or for any other purpose. All
fees and expenses of the accounting firm payable under this Section 7.1(f)
shall be borne by the Lessee except that if such accounting firm determines
that the Tax Indemnitee's computations were incorrect and understated the
payments owing to the Lessee or overstated the payments owing to such Tax
Indemnitee by 10% or more of the correct amount as determined by such
accounting firm, then the Tax Indemnitee shall bear the fees and expenses of
such accounting firm.
(g) Contest. If a written claim is made against a Tax Indemnitee
for Taxes with respect to which the Lessee may be liable for indemnity
hereunder, the Tax Indemnitee shall
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give the Lessee prompt notice in writing of such claim (and in any event within
30 days after its receipt) and shall promptly furnish the Lessee with copies of
the claim and all other writings received from the taxing authority relating to
the claim; provided however, that the failure of such Tax Indemnitee to timely
provide such written notice shall not affect the Lessee's obligations under
this Section 7.1(g) except to the extent that the same materially adversely
affects the ability of the Lessee to contest such Taxes. The Tax Indemnitee
shall not pay such claim prior to the 30 days after providing the Lessee with
such written notice, unless required to do so by law or unless deferral of
payment would cause material adverse consequences to the Tax Indemnitee. The
Tax Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if requested in writing by the Lessee, contest (including pursuing all
appeals permitted hereby) in the name of the Tax Indemnitee (or, if requested
by the Lessee and permissible as a matter of law, in the name of the Lessee),
or shall permit the Lessee to contest in either the name of the Lessee or with
the Tax Indemnitee's consent, in the name of the Tax Indemnitee the validity,
applicability or amount of such Taxes by,
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if protest
is necessary and proper;
(iii) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial
proceedings; or
(iv) taking such other reasonable action as is reasonably
requested by the Lessee from time to time.
provided, however, that to the extent the contest is carried on in the name of
the Lessee or an Affiliate, or is brought in the name of a Tax Indemnitee and
involves only Taxes for which the Lessee is or will be liable hereunder, such
contest shall be undertaken by the Lessee at the Lessee's expense (unless at
any time the Tax Indemnitee determines in its reasonable good faith judgment
that based upon the Lessee's conduct of such contest the Lessee's continued
control of such contest is reasonably likely to have a material adverse impact
on the Tax Indemnitee) and at no-after-tax cost to any Tax Indemnitee, but if
such contest would involve any other Taxes or any Taxes in the nature of a tax
on net income then such Tax Indemnitee may in its sole discretion control such
contest (including selecting the forum for such contest). In no event shall
any Tax Indemnitee be required or the Lessee be permitted to contest any Taxes
for which the Lessee is obligated to indemnify pursuant to this Section unless:
(i) such Lessee shall have acknowledged its liability to such Tax Indemnitee
for an indemnity payment pursuant to this Section as a result of such claim if
and to the extent such Indemnitee or the Lessee, as the case may be, shall not
prevail in the contest of such claim; (ii) such Tax Indemnitee shall have
received the opinion of tax counsel (which may, in the case of Taxes imposed by
a taxing authority located in the United States, include in-house counsel of
the Lessee) selected by the Lessee and satisfactory to the Tax Indemnitee
furnished at Lessee's sole expense, to the effect that a reasonable basis
consistent with ABA Opinion 85-352 exists for contesting such claim or, in the
event of an appeal, that it is more likely than not that an appellate court
will reverse or substantially modify the adverse determination (and provided
that no appeal shall be required to
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the United States Supreme Court); (iii) the Lessee shall have agreed to pay
such Tax Indemnitee on demand (and at no after-tax cost to any Tax Indemnitee)
all reasonable costs and expenses that such Tax Indemnitee actually incurs in
connection with contesting such claim (including, without limitation, all
costs, expenses, reasonable legal and accounting fees, disbursements,
penalties, interest and additions to the Taxes); (iv) no Lease Event of Default
shall have occurred and shall have been continuing; (v) such Tax Indemnitee
shall have determined that the action to be taken will not result in any risk
of imposition of criminal penalties or substantial danger of sale, forfeiture
or loss of, or the creation of any Lien (except if such Lessee shall have
adequately bonded such Lien or otherwise made provision to protect the
interests of such Tax Indemnitee in a manner reasonably satisfactory to such
Tax Indemnitee) on the Equipment or any portion thereof or any interest
therein; and (vi) if such contest shall be conducted in a manner requiring the
payment of the claim, the Lessee shall have paid the amount required (at no
after-tax cost to such Tax Indemnitee). The Lessee shall cooperate with the
Tax Indemnitee with respect to any contest controlled and conducted by the Tax
Indemnitee and the Tax Indemnitee shall consult with the Lessee regarding the
conduct of such contest. The Tax Indemnitee shall cooperate with the Lessee
with respect to any contest controlled and conducted by the Lessee and the
Lessee shall consult with the Tax Indemnitee regarding the conduct of such
contest.
In no event will a Tax Indemnitee be required to contest any Taxes if
such Tax Indemnitee shall waive its right to an indemnity under this Section
7.1. Unless a Tax Indemnitee obtains the consent of the Lessee, which consent
shall not be unreasonably withheld (provided, however, the Lessee shall not be
considered to have unreasonably withheld such consent because of (i) any
failure by the Lessee to consider any issue or dispute of the Tax Indemnitee
not directly related to the claim giving rise to the contest rights in issue or
(ii) the Lessee's consideration of the effects of such settlement on issues of
the Lessee which are not the subject of such claim), the settlement of any
contest required under Section 7.1 by a Tax Indemnitee shall constitute a
waiver by such Tax Indemnitee of its rights to indemnification hereunder as to
such contest and as to any future claims for which the Lessee's right to
contest shall have been precluded by such Tax Indemnitees' failure to contest.
(h) For purposes of this Section 7.1 and Section 7.2, in
determining the order in which any Tax Indemnitee utilizes withholding or other
foreign taxes as a credit against such Tax Indemnitee's United States income
taxes, such Tax Indemnitee shall be deemed to utilize (i) first, all foreign
taxes other than those described in clause (ii) below; provided, however, that
such other foreign taxes which are carried back to the taxable year for which a
determination is being made (other than any carrybacks which are known to be
available at the time such determination is made) pursuant to such clause (i)
shall be deemed utilized after the foreign taxes described in clause (ii)
below, and (ii) then, on a pro rata basis, all foreign taxes (including fees,
taxes and other charges hereunder) with respect to which such Tax Indemnitee is
entitled to obtain indemnification pursuant to an indemnification provision
contained in any lease, loan agreement, financing document or participation
agreement (including the Lease).
(i) In the event any reports with respect to Taxes are required to
be made, the Lessee will either prepare and file such reports (and in the case
of reports which are required to be filed on the basis of individual items of
Equipment, such reports shall be prepared and filed in such
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manner as to show as required the interests of each Tax Indemnitee in such item
of Equipment) or, if it shall not be permitted to file the same, it will notify
each Tax Indemnitee of such reporting requirements, prepare such reports in
such manner as shall be reasonably satisfactory to each Tax Indemnitee and
deliver the same to each Tax Indemnitee within a reasonable period prior to the
date the same is to be filed. The Lessee shall provide such information as the
Owner Participant or the Lessor may reasonably require from the Lessee to
enable the Owner Participant and the Lessor to fulfill their respective tax
filing, tax audit, and tax litigation obligations.
(j) The provisions of this Section 7.1 shall continue in full
force and effect, notwithstanding the expiration or termination of any
Operative Agreement, until all obligations hereunder have been met and all
liabilities hereunder paid in full.
(k) Any amount payable to the Lessee pursuant to the terms of this
Section 7.1 shall not be paid or retained by the Lessee if at the time of such
payment or retention a Lease Default relating to Sections 14(a), 14(b), 14(g)
or 14(h) or a Lease Event of Default shall have occurred and be continuing.
Such otherwise paid or retained amounts may be applied by the related Tax
Indemnitee to satisfy the obligations of the Lessee under the Operative
Agreements. At such time as there shall not be continuing any such Lease
Default or Lease Event of Default, such amount shall be paid to the Lessee
without interest to the extent not previously applied in accordance with the
preceding sentence.
(l) For purposes of this Section 7.1, the term "Income Tax" means
any Tax based on or measured by or with respect to gross, adjusted gross or net
income (including without limitation, capital gains taxes, minimum taxes and
tax preferences) or gross or net receipts and Taxes which are capital, net
worth, conduct of business, franchise or excess profits taxes and interest,
additions to tax, penalties, or other charges in respect thereof (provided,
however, that sales, use, rental, value-added (other than a value-added tax
which is a tax or is in the nature of a tax on net or adjusted gross income),
excise, or property taxes shall not constitute an Income Tax).
Section 7.2. General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this Section 7.2,
"Claims" shall mean any and all costs, expenses, liabilities, obligations,
losses, damages, penalties, actions or suits or claims of whatsoever kind or
nature (whether or not on the basis of negligence, strict or absolute liability
or liability in tort) which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, as defined herein, or any Unit and,
except as otherwise expressly provided in this Section 7.2, shall include, but
not be limited to, all reasonable out-of-pocket costs, disbursements and
expenses (including legal fees and expenses) paid or incurred by an Indemnified
Person in connection therewith or related thereto.
(b) Indemnified Person Defined. For the purposes of this Section
7.2, "Indemnified Person" means the Owner Participant, the Owner Trustee (both
in its individual capacity and as Owner Trustee), the Indenture Trustee and the
Pass Through Trustee, and each of their
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respective directors, officers, employees, successors and permitted assigns,
agents and servants, the Trust Estate and the Indenture Estate (the respective
directors, officers, employees, successors and permitted assigns, agents and
servants of the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee, as applicable, together with the Owner Participant,
the Owner Trustee, the Indenture Trustee and the Pass Through Trustee, as the
case may be, being referred to herein collectively as the "Related Indemnitee
Group" of the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Pass Through Trustee, respectively).
(c) Claims Indemnified. Whether or not any Unit is accepted under
the Lease, or a closing occurs with respect thereto, and subject to the
exclusions stated in subsection (d) below, Lessee agrees to indemnify, protect,
defend and hold harmless each Indemnified Person on an After-Tax Basis against
Claims directly or indirectly resulting from or arising out of or alleged to
result from or arise out of (whether or not such Indemnified Person shall be
indemnified as to such Claim by any other Person):
(i) this Agreement or any other Operative Agreement or
any of the transactions contemplated hereby and thereby or any Unit or
the ownership, lease, operation, possession, modification,
improvement, abandonment, use, non-use, maintenance, sublease,
substitution, control, repair, storage, alteration, transfer or other
application or disposition, return, overhaul, testing, servicing,
replacement or registration of any Unit (including, without
limitation, injury, death or property damage of passengers, shippers
or others, and environmental control, noise and pollution regulations,
or the discharge, spillage, release or escape of Hazardous Substances
or damage to the environment (including, without limitation, clean-up
costs, response costs, costs of corrective actions and natural
resource damages)) whether or not in compliance with the terms of the
Lease, or by any of the commodities, items or materials from time to
time contained in any Unit, whether or not in compliance with the
terms of the Lease, or by the inadequacy of any Unit or deficiency or
defect in any Unit or by any other circumstances in connection with
any Unit, or by the performance of any Unit or any risks relating
thereto, or by any interruption of service, loss of business or
anticipated profits or consequential damages;
(ii) the construction, manufacture, financing,
refinancing, design, purchase, acceptance, rejection, delivery,
non-delivery or condition of any Unit (including, without limitation,
latent and other defects, whether or not discoverable, and any claim
for patent, trademark or copyright infringement);
(iii) any act or omission (whether negligent or otherwise)
or any breach of or failure to perform or observe, or any other
non-compliance with, any covenant, condition or agreement to be
performed by, or other obligation of, Lessee under any of the
Operative Agreements, or the falsity of any representation or warranty
of the Lessee in any of the Operative Agreements or in any document or
certificate delivered in connection therewith other than
representations and warranties in the Tax Indemnity Agreement;
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(iv) the offer, sale or delivery of any Equipment Notes
or Pass Through Certificates or any interest in the Trust Estate;
(v) any violation of law, rule, regulation or order by
the Lessee or any sublessee or their respective directors, officers,
employees, agents or servants; and
(vi) any transfer of Equipment Notes or Pass Through
Certificates being deemed to result in a "prohibited transaction"
under ERISA or the Code.
(d) Lessee's Claims Excluded. The following are excluded from the
agreement to indemnify under this Section 7.2:
(i) Claims with respect to any Unit to the extent
attributable to acts or events occurring after (A) in the case of the
exercise by the Lessee of a purchase option with respect to such Unit
under Section 22.1 or 22.3 of the Lease, the exercise by the Lessee of
an early termination option with respect to such Unit under Section 10
of the Lease, the exercise by the Lessee of its right to purchase the
Equipment under Section 6.9 of this Agreement, the occurrence of an
Event of Loss with respect to such Unit under Section 11 of the Lease,
or the election to replace such Unit under Section 8.1(b), 8.3 or 9.1
of the Lease, the last to occur of (x) the payment of all amounts due
from the Lessee in connection with any such event, (y) the release of
the Lien of the Indenture on such Unit, and (z) legal transfer of
title to such Unit to any Person other than Lessor, except in the case
of a retention of any Unit by Lessor pursuant to the terms and
provisions of Section 10.3 of the Lease, and in the case of any such
retention, upon the effective date of the termination of the Lease
Term with respect to such Unit retained by Lessor pursuant to Section
10.3 or (B) in all other cases (except in any case where remedies are
being exercised under Section 15 of the Lease), the last to occur of
(x) with respect to such Unit, the earlier to occur of the termination
of the Lease or the expiration of the Lease Term, (y) with respect to
each Unit, the return of such Unit to the Lessor in accordance with
the terms of the Lease (it being understood that, so long as any Unit
is in storage as provided in Section 6.3(c) of the Lease, the date of
return thereof for the purpose of this clause (B) shall be the last
day of the Storage Period), and (z) the release of the Lien of the
Indenture on such Unit, except, in any instance referenced in the
foregoing subsection (i), to the extent such Claim is fairly
attributable to acts or events occurring prior to any such date or
occurrence;
(ii) Claims which are Taxes, whether or not the Lessee is
required to indemnify therefor under Section 7.1 hereof or the Tax
Indemnity Agreement;
(iii) with respect to any particular Indemnified Person,
Claims to the extent resulting from (x) the gross negligence or
willful misconduct of such Indemnified Person, or (y) any breach of
any covenant to be performed by such Indemnified Person under any of
the Operative Agreements, or the falsity of any representation or
warranty of such Indemnified Person in any of the Operative Agreements
or in a document or certificate delivered in connection therewith;
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52
(iv) any Claim to the extent attributable to any transfer
by the Lessor of the Equipment or any portion thereof or any transfer
by the Owner Participant of all or any portion of its interest in the
Trust Estate other than (A) any transfer after a Lease Default or
Lease Event of Default, (B) the transfer of the Equipment or any Owner
Participant's interest in the Equipment to the Lessee, (C) the
transfer of the Equipment to a third party pursuant to Lessee's
election to terminate the Lease or (D) any transfer of the Equipment
pursuant to Section 6.9;
(v) with respect to any particular Indemnified Person,
any Claim resulting from the imposition of any Lessor's Lien
attributable to such Indemnified Person; or
(vi) with respect to any particular Indemnified Person,
any Claim, to the extent the risk thereof has been assumed by such
Indemnified Person in connection with the exercise by such Indemnified
Person of the right of inspection granted under Section 6.2,
inspection or restenciling under Section 6.3 or inspection under
Section 13.2 of the Lease.
(e) Insured Claims. In the case of any Claim indemnified by the
Lessee hereunder which is covered by a policy of insurance maintained by the
Lessee pursuant to Section 12 of the Lease or otherwise, each Indemnified
Person agrees to provide reasonable cooperation to the insurers in the exercise
of their rights to investigate, defend or compromise such Claim as may be
required to retain the benefits of such insurance with respect to such Claim.
(f) Claims Procedure. An Indemnified Person shall, after
obtaining knowledge thereof, promptly notify the Lessee of any Claim as to
which indemnification is sought; provided, however, that the failure to give
such notice shall not release the Lessee from any of its obligations under this
Section 7.2, except to the extent that failure to give notice of any action,
suit or proceeding against such Indemnified Person shall have a material
adverse affect on Lessee's ability to defend such Claim or recover proceeds
under any insurance policies maintained by Lessee hereunder. The Lessee shall,
after obtaining knowledge thereof, promptly notify each Indemnified Person of
any indemnified Claim affecting such Person. Subject to the provisions of the
following paragraph, the Lessee shall at its sole cost and expense be entitled
to control, and shall assume full responsibility for, the defense of such claim
or liability; provided that the Lessee shall keep the Indemnified Person which
is the subject of such proceeding fully apprised of the status of such
proceeding and shall provide such Indemnified Person with all information with
respect to such proceeding as such Indemnified Person shall reasonably request.
Upon the request of the Lessee, the Indemnified Person which is the subject of
any Claim will cooperate in all reasonable respects, at the expense of the
Lessee, in the defense thereof.
Notwithstanding any of the foregoing to the contrary, the Lessee shall
not be entitled to control and assume responsibility for the defense of such
claim or liability if (1) a Lease Event of Default shall have occurred and be
continuing, (2) such proceeding will involve any material danger of the sale,
forfeiture or loss of, or the creation of any Lien (other than any Permitted
Lien or a Lien which is adequately bonded to the satisfaction of such
Indemnified Person) on, any Unit, (3) the amounts involved, in the good faith
opinion of such Indemnified Person, are
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likely to have a materially adverse effect on the business of such Indemnified
Person other than the ownership, leasing and financing of the Equipment, (4) in
the good faith opinion of such Indemnified Person, there exists an actual or
potential conflict of interest such that it is advisable for such Indemnified
Person to retain control of such proceeding or (5) such claim or liability
involves the possibility of criminal sanctions or liability to such Indemnified
Person. In the circumstances described in clauses (1) - (5), the Indemnified
Person shall be entitled to control and assume responsibility for the defense
of such claim or liability at the expense of the Lessee. In addition, any
Indemnified Person may participate in any proceeding controlled by the Lessee
pursuant to this Section 7.2, at its own expense, in respect of any such
proceeding as to which the Lessee shall have acknowledged in writing its
obligation to indemnify the Indemnified Person pursuant to this Section 7.2,
and at the expense of Lessee in respect of any such proceeding as to which the
Lessee shall not have so acknowledged its obligation to the Indemnified Person
pursuant to this Section 7.2. The Lessee may in any event participate in all
such proceedings at its own cost. Nothing contained in this Section 7.2(f)
shall be deemed to require an Indemnified Person to contest any Claim or to
assume responsibility for or control of any judicial proceeding with respect
thereto.
(g) Subrogation. If a Claim indemnified by the Lessee under this
Section 7.2 is paid in full by the Lessee and/or an insurer under a policy of
insurance maintained by the Lessee, the Lessee and/or such insurer, as the case
may be, shall be subrogated to the extent of such payment to the rights and
remedies of the Indemnified Person (other than under insurance policies
maintained by such Indemnified Person) on whose behalf such Claim was paid with
respect to the transaction or event giving rise to such Claim. So long as no
Lease Event of Default shall have occurred and be continuing, should an
Indemnified Person receive any refund, in whole or in part, with respect to any
Claim paid by the Lessee hereunder, it shall promptly pay over the amount
refunded (but not in excess of the amount the Lessee or any of its insurers has
paid) to the Lessee.
(h) Waiver of Certain Claims. The Lessee hereby waives and
releases any Claim now or hereafter existing against any Indemnified Person
arising out of death or personal injury to personnel of the Lessee, pollution
incidents, loss or damage to property of the Lessee, or the loss of profits or
use of any property of the Lessee, which may result from or arise out of the
condition, use or operation of the Equipment during the Lease Term, including,
without limitation, any latent or patent defect whether or not discoverable.
(i) No Guaranty. The general indemnification provisions of this
Section 7.2 do not constitute a guaranty by the Lessee that the principal of,
interest on or any amounts payable with respect to the Equipment Notes will be
paid.
SECTION 8. LESSEE'S RIGHT OF QUIET ENJOYMENT.
Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Lease, and expressly, severally and as to its
own actions only, agrees that, so long as no Lease Event of Default has
occurred and is continuing, it shall not take or cause to be taken any action
contrary to the Lessee's rights under the Lease, including, without limitation,
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the right to possession, use and quiet enjoyment by the Lessee or any permitted
sublessee of the Equipment.
SECTION 9. SUCCESSOR INDENTURE TRUSTEE.
In the event that the Indenture Trustee gives notice of its
resignation pursuant to Section 8.02 of the Trust Indenture, the Owner Trustee
shall promptly appoint a successor Indenture Trustee reasonably acceptable to
the Lessee and the Pass Through Trustee.
SECTION 10. MISCELLANEOUS.
Section 10.1. Consents. Each Participant covenants and agrees
(subject, in the case of the Loan Participant, to all of the terms and
provisions of the Trust Indenture) that it shall not unreasonably withhold its
consent to any consent requested of the Owner Trustee or the Indenture Trustee,
as the case may be, under the terms of the Operative Agreements that by its
terms is not to be unreasonably withheld by the Owner Trustee or the Indenture
Trustee.
Section 10.2. Refinancing. So long as no Lease Default or Lease
Event of Default shall be in existence, the Lessee shall have the right not
more than twice during the Lease Term to request the Owner Participant and the
Owner Trustee to effect an optional prepayment of all, and not less than all,
of the Equipment Notes pursuant to Section 2.10(d) of the Indenture as part of
a refunding or refinancing. To the extent that an optional prepayment of all
of the Equipment Notes has not theretofore been effected, the Lessee shall
request the Owner Participant and the Owner Trustee to effect a prepayment of
all then outstanding Equipment Notes on the Mandatory Refinancing Date. The
Owner Participant agrees to cooperate in good faith with the Lessee in
effecting any such refunding or refinancing and, as soon as practicable after
receipt of such request, the Owner Participant and the Lessee will enter into
good faith negotiations in order to document the terms of such refunding or
refinancing as follows:
(a) the Lessee, the Owner Participant, the Indenture Trustee, the
Owner Trustee, and any other appropriate parties will enter into a financing or
loan agreement (which may involve an underwriting agreement in connection with
a public offering), in form and substance reasonably satisfactory to the
parties thereto, providing for (i) the issuance and sale by the Owner Trustee
or such other party as may be appropriate on the date specified in such
agreement (for the purposes of this Section 10.2, the "Refunding Date") of debt
securities in an aggregate principal amount (in the lawful currency of the
United States) equal to the principal amount of the Equipment Notes outstanding
on the Refunding Date, having the same maturity date as said Equipment Notes
and having a weighted average life which is not less than or greater than the
Remaining Weighted Average Life of said Equipment Notes by more than three
months, (ii) the application of the proceeds of the sale of such debt
securities to the prepayment of all such Equipment Notes on the Refunding Date,
and (iii) payment by the Lessee to the Person or Persons entitled thereto of
all other amounts, in respect of accrued interest, any Make-Whole-Amount or
other premium, if any, payable on such Refunding Date;
(b) the Lessee and the Owner Trustee will amend the Lease in a
manner in form and substance reasonably satisfactory to the Owner Participant
such that (i) if the Refunding Date
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is not a Rent Payment Date and the accrued and unpaid interest on the Equipment
Notes is not otherwise paid pursuant to Section 10.2(a), the Lessee shall on
the Refunding Date prepay that portion of the next succeeding installment of
Basic Rent as shall equal the aggregate interest accrued on the Equipment Notes
outstanding to the Refunding Date, (ii) Basic Rent payable in respect of the
period from and after the Refunding Date shall be recalculated to preserve the
Net Economic Return which the Owner Participant would have realized had such
refunding not occurred, provided that the net present value of Basic Rent shall
be minimized to the extent consistent therewith, and (iii) amounts payable in
respect of Stipulated Loss Value, Early Purchase Price, Basic Term Purchase
Price and Termination Value from and after the Refunding Date shall be
appropriately recalculated to preserve the Net Economic Return which the Owner
Participant would have realized had such refunding not occurred (it being
agreed that any recalculations pursuant to subclauses (ii) and (iii) of this
clause (b) shall be performed in accordance with the requirements of Section
2.6 hereof);
(c) the Owner Trustee will enter into an agreement to provide for
the securing thereunder of the debt securities issued by the Owner Trustee
pursuant to clause (a) of this Section 10.2 in like manner as the Equipment
Notes and/or will enter into such amendments and supplements to the Indenture
as may be necessary to effect such refunding or refinancing, which agreements,
amendments and/or supplements shall be reasonably satisfactory in form and
substance to the Owner Participant; provided that, no such agreement or
amendment shall provide for any increase in the security for the new debt
securities; and provided further that, notwithstanding the foregoing (but
subject to the provisions of clause (a) above), the Lessee reserves the right
to set the economic terms and other terms not customarily negotiated between an
owner participant and a lender of the refunding or refinancing transaction to
be so offered to the extent that they are passed through to the Lessee in, or
define rights or obligations of the Lessee under, the Operative Agreements;
provided, further, that no such amendment or supplement will increase the
obligations or impair the rights of the Owner Participant under the Operative
Agreements without the consent of the Owner Participant;
(d) in the case of a refunding or refinancing involving a public
offering of debt securities, neither the Owner Trustee nor the Owner
Participant shall be an "issuer" for securities law purposes or an "obligor"
within the meaning of the Trust Indenture Act of 1939, as amended, the offering
materials (including any registration statement) for the refunding or
refinancing transaction shall be reasonably satisfactory to the Owner
Participant and the Lessee shall provide satisfactory indemnity to the Owner
Trustee and Owner Participant with respect thereto;
(e) unless otherwise agreed by the Owner Participant, the Lessee
shall pay to the Owner Trustee as Supplemental Rent an amount equal to the
Make-Whole Amount or other premium, if any, payable in respect of Equipment
Notes outstanding on the Refunding Date, and all reasonable fees, costs,
expenses of such refunding or refinancing;
(f) the Lessee shall give the Indenture Trustee and the Pass
Through Trustee not less than 25 days prior written notice of the Refunding
Date;
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(g) the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee shall have received (i) such opinions of
counsel as they may reasonably request concerning compliance with the
Securities Act and any other applicable law relating to the sale of securities
and (ii) such other opinions of counsel and such certificates and other
documents, each in form and substance satisfactory to them, as they may
reasonably request in connection with compliance with the terms and conditions
of this Section 10.2; and
(h) all necessary authorizations, approvals and consents shall
have been obtained;
provided, however, that the Lessee will, to the extent then known, promptly
provide to the Owner Participant, the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee substantially final terms and conditions of any such
refunding or refinancing within 20 days prior to the execution and delivery of
the documents contemplated hereunder in connection therewith; and provided,
further, that (v) no refunding or refinancing of the Equipment Notes will be
permitted unless within 20 days after receipt by the Owner Participant of a
request from the Lessee to effect a refunding or refinancing pursuant to this
Section 10.2 and of information regarding the terms of such refunding or
refinancing necessary to render the opinion referred to below, the Lessee has
provided the Owner Participant with (a) a tax opinion from Neal Gerber &
Eisenberg or other independent tax counsel reasonably acceptable to the Owner
Participant to the effect that the Owner Participant would have a reasonable
basis within the meaning of Section 6662(d)(2)(B)(ii) of the Code not to report
any adverse federal income tax consequences as a result of such refunding or
refinancing and (b) an agreement to indemnify the Owner Participant against any
adverse federal income tax consequence suffered as a result of such refinancing
or refunding; alternatively, in the event such reasonable basis tax opinion
cannot be provided and the Lessee wishes to effect such refunding or
refinancing, the Lessee will, at such time as the Lessee receives written
notice from the Owner Participant that the Owner Participant has filed any
income tax return wherein such adverse income tax consequences are recognized,
make an indemnity payment to the Owner Participant in the incremental amount of
such adverse tax consequence (on an After-Tax Basis) attributable to such
refunding or refinancing; (w) the Lessee shall pay to or reimburse the
Participants, the Owner Trustee and the Indenture Trustee for all costs and
expenses (including reasonable attorneys' and accountants' fees) paid or
incurred by them in connection with such refunding or refinancing; (x) no
refunding or refinancing of the Equipment Notes will be permitted if it shall
cause the Owner Participant to account for the transaction contemplated hereby
as other than a "leveraged lease" under the Financial Accounting Standards
Board ("FASB") Statement No. 13, as amended (including any amendment effected
by means of the adoption by FASB of a new statement in lieu of FASB Statement
No. 13); (y) no refunding or refinancing of the Equipment Notes may, without
the consent of the Owner Participant, constitute assets of any "employee
benefit plan" (as defined in Section 3(3) of ERISA) or any other entity subject
to Section 4975 of the Code other than a "governmental plan" or "church plan"
(as defined in Section 3(32) of ERISA) organized in a jurisdiction not having
prohibitions on transactions with such governmental plan or church plan
substantially similar to those contained in Section 406 of ERISA or Section
4975 of the Code, unless such refunding or refinancing is effected in
connection with a public offering in reliance on the underwriter's exemption;
and (z) in no event, in connection with or after giving effect to such
refunding or refinancing shall the Owner Participant be exposed to any
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unindemnified non-de minimis risk (including tax risk) to which it is not
exposed prior to such refunding or refinancing.
Section 10.3. Amendments and Waivers. Except as otherwise
provided in the Indenture, no term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except
by an instrument or instruments in writing executed by each party against which
enforcement of the termination, amendment or waiver is sought.
Section 10.4. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices provided for
herein shall be in writing or by facsimile, and any such notice shall become
effective (i) upon personal delivery thereof, including, without limitation, by
overnight mail or courier service, (ii) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (iii) in the case of notice by facsimile, upon confirmation
of receipt thereof, provided such transmission is promptly further confirmed by
any of the methods set forth in clauses (i) or (ii) above, in each case
addressed to each party hereto at its address set forth below or, in the case
of any such party hereto, at such other address as such party may from time to
time designate by written notice to the other parties hereto:
If to the Lessee:
Union Tank Car Company
225 West Washington Street, 19th Floor
Chicago, Illinois 60606
Attention: Treasurer
(UTC Trust No. 1995-A)
Facsimile: (312) 845-5305
Confirmation No.: (312) 372-9500
If to the Owner Trustee:
-----------------------------------
-----------------------------------
Attention:
-----------------------
Facsimile: ( )
--- -----------------
Confirmation No.: ( )
--- -----------
with a copy to:
the Owner Participant at the
address set forth below
If to the Owner Participant:
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-----------------------------------
-----------------------------------
Attention:
-----------------------
Facsimile: ( )
--- ----------------
Confirmation No.: ( )
--- ----------
If to the Indenture Trustee or the Pass Through Trustee:
-----------------------------------
-----------------------------------
Attention:
-----------------------
Facsimile: ( )
--- -----------------
Confirmation No.: ( )
--- -----------
Section 10.5. Survival. All warranties, representations,
indemnities and covenants made by any party hereto, herein or in any
certificate or other instrument delivered by any such party or on the behalf of
any such party under this Agreement, shall be considered to have been relied
upon by each other party hereto and shall survive the consummation of the
transactions contemplated hereby on the Closing Date regardless of any
investigation made by any such party or on behalf of any such party.
Section 10.6. No Guarantee of Debt. Nothing contained herein or
in the Lease, the Trust Indenture, the Trust Agreement, the Pass Through Trust
Agreement or the Tax Indemnity Agreement or in any certificate or other
statement delivered by the Lessee in connection with the transactions
contemplated hereby shall be deemed to be (i) a guarantee by the Lessee to the
Owner Trustee, the Owner Participant, the Indenture Trustee or the Loan
Participant that the Equipment will have any residual value or useful life, or
(ii) a guarantee by the Indenture Trustee or the Lessee of payment of the
principal of, Make-Whole Amount, if any, or interest on the Equipment Notes.
Section 10.7. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by,
the parties hereto and their respective successors and assigns as permitted by
and in accordance with the terms hereof, including each successive holder of
the Beneficial Interest permitted under Section 6.1 hereof and each successive
holder of any Equipment Note issued and delivered pursuant to this Agreement or
the Indenture. Except as expressly provided herein or in the other Operative
Agreements, no party hereto may assign their interests herein without the
consent of the parties hereto.
Section 10.8. Business Day. Notwithstanding anything herein or in
any other Operative Agreement to the contrary, if the date on which any payment
is to be made pursuant to this Agreement or any other Operative Agreement is
not a Business Day, the payment otherwise
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payable on such date shall be payable on the next succeeding Business Day with
the same force and effect as if made on such succeeding Business Day and
(provided such payment is made on such succeeding Business Day) no interest
shall accrue on the amount of such payment from and after such scheduled date
to the time of such payment on such next succeeding Business Day.
Section 10.9. Governing Law. This agreement shall be in all
respects governed by and construed in accordance with the laws of the State of
____________ including all matters of construction, validity and performance;
provided, however, that the parties hereto shall be entitled to all rights
conferred by any applicable federal statute, rule or regulation.
Section 10.10. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
Section 10.11. Counterparts. This Agreement may be executed in any
number of counterparts, each executed counterpart constituting an original but
all together only one Agreement.
Section 10.12. Headings and Table of Contents. The headings of the
Sections of this Agreement and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
Section 10.13. Limitations of Liability.
(a) Liabilities of Participants. Neither the Indenture Trustee,
the Owner Trustee nor any Participant shall have any obligation or duty to the
Lessee, to any other Participant or to others with respect to the transactions
contemplated hereby, except those obligations or duties of such Participant
expressly set forth in this Agreement and the other Operative Agreements, and
neither the Indenture Trustee nor any Participant shall be liable for
performance by any other party hereto of such other party, obligations or
duties hereunder. Without limitation of the generality of the foregoing, under
no circumstances whatsoever shall the Indenture Trustee or any Participant be
liable to the Lessee for any action or inaction on the part of the Owner
Trustee in connection with the transactions contemplated herein, whether or not
such action or inaction is caused by willful misconduct or gross negligence of
the Owner Trustee unless such action or inaction is at the direction of the
Indenture Trustee or any Participant, as the case may be, and such direction is
expressly permitted hereby.
(b) No Recourse to the Owner Trustee. It is expressly understood
and agreed by and between the Owner Trustee, the Lessee, the Owner Participant,
the Indenture Trustee, and the Loan Participant, and their respective
successors and permitted assigns that, subject to the proviso contained in this
Section 10.13(b), all representations, warranties and undertakings of the Owner
Trustee hereunder shall be binding upon the Owner Trustee, only in its capacity
as Owner Trustee under the Trust Agreement, and (except as expressly provided
herein) the Owner Trustee shall not be liable in its individual capacity for
any breach thereof, except for its gross negligence or willful misconduct, or
for breach of its covenants, representations and warranties
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contained herein, except to the extent covenanted or made in its individual
capacity; provided, however, that nothing in this Section 10.13(b) shall be
construed to limit in scope or substance those representations and warranties
of the Owner Trustee made expressly in its individual capacity set forth
herein. The term "Owner Trustee" as used in this Agreement shall include any
successor trustee under the Trust Agreement, or the Owner Participant if the
trust created thereby is revoked.
Section 10.14. Maintenance of Non-Recourse Debt. The parties hereto
agree that if the Owner Trustee becomes a debtor subject to the reorganization
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code") or any successor provision, the parties hereto will make an
election under 1111(b)(1)(A)(i) of the Bankruptcy Code. If (a) the Owner
Trustee becomes a debtor subject to the reorganization provisions of the
Bankruptcy Code or any successor provision, (b) pursuant to such reorganization
provisions the Owner Trustee is required, by reason of the Owner Trustee being
held to have recourse liability to the Pass Through Trustee or the Indenture
Trustee, directly or indirectly, to make payment on account of any amount
payable under the Equipment Notes or any of the other Operative Agreements and
(c) the Pass Through Trustee and/or the Indenture Trustee actually receives any
Excess Amount (as hereinafter defined) which reflects any payment by the Owner
Trustee on account of (b) above, then the Pass Through Trustee and/or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee such Excess Amount. For purposes of this Section 10.14 "Excess Amount"
means the amount by which such payment exceeds the amount which would have been
received by the Pass Through Trustee or the Indenture Trustee if the Owner
Trustee had not become subject to the recourse liability referred to in (b)
above.
Section 10.15. Ownership of and Rights in Units. The sale of the
Units contemplated hereby is intended for all purposes to be a true sale of all
of the Lessee's right, title and interest in and to the Units to the Owner
Trustee, which shall be the legal owner thereof. Upon consummation of the sale
and leaseback transactions contemplated hereby, the Lessee's interest in the
Units is intended to be that of a lessee only. It is intended that for federal
and state income tax purposes the Owner Participant will be the owner of the
Units. The rights of the Indenture Trustee in and to the Units pursuant to the
Indenture is intended to be that of a secured party holding a security
interest, subject to the Lease and the rights of the Lessee thereunder. No
holder of an Equipment Note is intended to have any right, title or interest in
or to the Units except as a beneficiary of the security interest granted by the
Owner Trustee to the Indenture Trustee pursuant to the Indenture in trust for
the equal and ratable benefit of the holders from time to time of the Equipment
Notes.
* * * * *
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61
In Witness Whereof, the parties hereto have caused this Participation
Agreement to be executed and delivered, all as of the date first above
written.;
Lessee:
UNION TANK CAR COMPANY
By:
-------------------------------
Name:
Title:
Owner Trustee:
-----------------------------------,
not in its individual capacity except
as expressly provided herein but
solely as Owner Trustee
By:
-------------------------------
Name:
Title:
Owner Participant:
-----------------------------------
By:
-------------------------------
Name:
Title:
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62
Indenture Trustee:
,
----------------------------------
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
By:
--------------------------------
Name:
Title:
Pass Through Trustee:
,
----------------------------------
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee
By:
Name:
Title:
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