<PAGE>
Exhibit 10.15.2
________________________________
EQUIPMENT LEASE AGREEMENT
(TRLI 2001-1B)
Dated as of July 12, 2001
between
TRLI 2001-1B RAILCAR STATUTORY TRUST,
By: State Street Bank
and Trust Company of Connecticut, National Association,
not in its
individual capacity except as
expressly provided herein but solely as Owner Trustee,
Lessor
and
TRINITY RAIL LEASING I L.P.,
Lessee
Tank Cars and Covered Hopper Cars
________________________________
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO THIS
LEASE,
THE EQUIPMENT COVERED HEREBY AND THE RENT DUE AND TO BECOME DUE
HEREUNDER HAVE
BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE SUBJECT TO A
SECURITY INTEREST
IN FAVOR OF, LASALLE BANK NATIONAL ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY
BUT SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND
SECURITY AGREEMENT
(TRLI 2001-1B), DATED AS OF JULY 12, 2001 BETWEEN SAID INDENTURE
TRUSTEE, AS
SECURED PARTY, AND LESSOR, AS DEBTOR. INFORMATION CONCERNING SUCH
SECURITY
INTEREST MAY BE OBTAINED FROM THE INDENTURE TRUSTEE AT ITS ADDRESS
SET FORTH IN
SECTION 20 OF THIS LEASE. SEE SECTION 25.2 FOR INFORMATION
CONCERNING THE RIGHTS
OF THE ORIGINAL HOLDER AND HOLDERS OF, THE VARIOUS COUNTERPARTS
HEREOF.
________________________________
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1.
Definitions........................................................1
SECTION 2. Acceptance
and Leasing of Equipment................................1
SECTION 3. Term and
Rent......................................................2
Section 3.1 Lease
Term.................................................2
Section 3.2 Basic
Rent.................................................2
Section 3.3 Supplemental
Rent..........................................3
Section 3.4 Adjustment of
Rent.........................................4
Section 3.5
Manner of
Payments.........................................4
SECTION 4. Ownership
and Marking of Equipment.................................4
Section 4.1 Retention of
Title.........................................4
Section 4.2 Duty to Number and
Mark Equipment..........................5
Section 4.3 Prohibition Against
Certain Designations...................5
SECTION 5. Disclaimer
of Warranties...........................................6
Section 5.1 Disclaimer of
Warranties...................................6
Section 5.2 Rights Under Existing
Equipment Subleases..................7
SECTION 6. Return of
Equipment; Storage.......................................7
Section 6.1 Return; Holdover
Rent......................................7
Section 6.2 Condition of
Equipment....................................10
SECTION 7.
Liens.............................................................11
SECTION 8.
Maintenance; Possession; Compliance with
Laws.....................11
Section 8.1 Maintenance and
Operation.................................11
Section 8.2 Possession and
Use........................................13
Section 8.3
Sublease..................................................13
SECTION 9.
Modifications.....................................................16
Section 9.1 Required
Modifications....................................16
Section 9.2 Optional
Modifications....................................17
Section 9.3 Removal of Property;
Replacements.........................18
<PAGE>
Page
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SECTION 10. Voluntary
Termination.............................................18
Section 10.1
Right of Termination......................................18
Section 10.2
Sale of Equipment.........................................19
Section 10.3
Retention of Equipment by Lessor..........................21
Section 10.4
Termination of Lease......................................22
Section 10.5
Funding of Accounts on Termination........................22
SECTION 11. Loss, Destruction Requisition,
Etc................................23
Section 11.1
Event of Loss.............................................23
Section 11.2
Replacement or Payment upon Event of Loss.................23
Section 11.3
Rent Termination..........................................25
Section 11.4
Disposition of Equipment; Replacement of Unit.............26
Section 11.5
Eminent Domain............................................28
SECTION 12.
Insurance.........................................................28
Section 12.1
Insurance.................................................28
Section 12.2
Physical Damage Insurance.................................30
Section 12.3
Public Liability Insurance................................31
Section 12.4
Certificate of Insurance..................................32
Section 12.5
Additional Insurance......................................33
Section 12.6
Post-Lease Term Insurance.................................34
SECTION 13. Reports;
Inspection...............................................34
Section 13.1
Duty of Lessee to Furnish.................................34
Section 13.2
Lessor's Inspection Rights................................35
SECTION 14. Lease Events of
Default...........................................36
SECTION 15.
Remedies..........................................................39
Section 15.1
Remedies..................................................39
Section 15.2
Cumulative Remedies.......................................43
Section 15.3 No
Waiver.................................................43
Section 15.4
Notice of Lease Default...................................43
Section 15.5
Lessee's Duty to Return Equipment Upon Default............43
Section 15.6
Specific Performance; Lessor Appointed Lessee's Agent.....44
SECTION 16. Filings; Further
Assurances.......................................45
Section 16.1
Filings...................................................45
ii
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Page
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Section 16.2
Further Assurances........................................45
Section 16.3
Other Filings.............................................46
Section 16.4
Expenses..................................................46
SECTION 17. Lessor's Right to
Perform.........................................46
SECTION 18.
Assignment........................................................47
Section 18.1
Assignment by Lessor......................................47
Section 18.2
Assignment by
Lessee......................................47
Section 18.3
Sublessee's or Others Performance and Rights..............47
SECTION 19. Net Lease,
Etc....................................................48
SECTION 20.
Notices...........................................................49
SECTION 21. Concerning the Indenture
Trustee..................................51
Section 21.1
Limitation of the Indenture Trustee's Liabilities.........51
Section 21.2
Right, Title and Interest of the Indenture Trustee
Under Lease............................................51
SECTION 22. Purchase Options; Renewal
Options.................................51
Section 22.1
Early Purchase Option.....................................51
Section 22.2
Election to Retain or Return Equipment at End
of Basic or Renewal Term...............................54
Section 22.3
Purchase Option...........................................54
Section 22.4
Renewal Option............................................55
Section 22.5
Rent Appraisal; Outside Renewal Date......................56
Section 22.6
Stipulated Loss Amount and Termination Amount
During Renewal Term....................................57
Section 22.7
Deemed Renewals...........................................57
Section 22.8
Funding of Accounts on Purchase...........................58
SECTION 23. Limitation of Lessor's
Liability..................................58
SECTION 24. Investment of Security
Funds......................................58
SECTION 25.
Miscellaneous.....................................................58
Section 25.1
Governing Law; Severability...............................58
iii
<PAGE>
Page
----
Section 25.2
Execution in
Counterparts.................................59
Section 25.3
Headings and Table of Contents; Section References........59
Section 25.4
Successors and Assigns....................................59
Section 25.5
True Lease................................................59
Section 25.6
Amendments and Waivers....................................60
Section 25.7
Survival..................................................60
Section 25.8
Business Days.............................................60
Section 25.9
Directly or Indirectly; Performance by Managers...........60
Section 25.10
Incorporation by Reference................................61
iv
<PAGE>
APPENDICES AND EXHIBITS
Exhibit A
-- Form of Lease
Supplement
Exhibit B-1 --
Form of Net
Sublease
Exhibit B-2 --
Form of Full Service
Sublease
v
<PAGE>
EQUIPMENT
LEASE AGREEMENT
(TRLI 2001-1B)
This
Equipment Lease Agreement (TRLI 2001-1B), dated as of July 12,
2001
(this "Lease"), is by and between TRLI 2001-1B Railcar Statutory
Trust by State
Street Bank and Trust Company of Connecticut, National Association,
not in its
individual capacity except as expressly provided herein, but solely
as trustee
under the Trust Agreement, as Lessor, and Trinity Rail Leasing I
L.P., a Texas
limited partnership, as Lessee.
In consideration of
the mutual agreements herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions.
Unless otherwise defined herein or required by the context, all
capitalized
terms used herein shall have the respective meanings assigned to
such terms in
Appendix A to the Participation Agreement (TRLI 2001-1B), dated as
of May 17,
2001 (the "Participation Agreement"), by and among (i) Trinity Rail
Leasing I
L.P., a Texas limited partnership (together with its permitted
successors and
assigns, the "Lessee"), (ii) Trinity Rail Management, Inc., a
Delaware
corporation, (iii) Trinity Industries Leasing Company, a Delaware
corporation,
(iv) TRLI 2001-1B Railcar Statutory Trust, a Connecticut statutory
trust, by
State Street Bank and Trust Company of Connecticut, National
Association, a
national banking association, ("Trust Company"), not in its
individual capacity
except as expressly provided herein but solely as trustee (together
with its
permitted successors and assigns, the "Owner Trustee"), (v)
Trimaran Leasing,
L.P., a Delaware limited partnership (together with its permitted
successors and
assigns, the "Owner Participant") and (vi) LaSalle Bank National
Association, a
national banking association, not in its individual capacity except
as expressly
provided herein but solely as pass through trustee and indenture
trustee, for
all purposes of this Lease.
SECTION 2. Acceptance and Leasing of Equipment.
Subject to Section 4 of the Participation Agreement, Lessor hereby
agrees
to accept delivery of each Unit from Lessee and to lease such Unit
to Lessee
hereunder, and Lessee hereby agrees, immediately following such
acceptance by
Lessor, to lease from Lessor hereunder such Unit, such acceptance
by Lessor and
lease by Lessee to be evidenced by the execution and delivery by
Lessee and
Lessor of a Lease Supplement covering such Unit, all in accordance
with Section
2.3(b) of the Participation Agreement. Lessee hereby agrees that
its execution
and delivery of a Lease Supplement covering any Unit shall, without
further
act, irrevocably constitute acceptance by Lessee of such Unit for
all purposes
of this Lease.
<PAGE>
Lease Agreement (TRLI 2001-1B)
Supplement covering such Unit, all in accordance with Section
2.3(b) of the
Participation Agreement. Lessee hereby agrees that its execution
and delivery
of a Lease Supplement covering any Unit shall, without further act,
irrevocably
constitute acceptance by Lessee of such Unit for all purposes of
this Lease.
SECTION 3. Term and Rent.
Section 3.1 Lease Term. The basic term of this Lease (the "Basic
Term")
shall commence on the Basic Term Commencement Date and, subject to
earlier
termination pursuant to Section 10, 11, 15 or 22.1, shall expire at
11:59 p.m.
(Chicago, Illinois time) on the Basic Term Expiration Date. Subject
and pursuant
to Section 22.4, Lessee may elect one or more Renewal Terms and, as
provided in
Section 22.7 hereof, in certain circumstances a Renewal Term shall
be deemed to
have occurred with respect to some or all of the Units.
Section 3.2 Basic Rent. Lessee hereby agrees to pay Lessor Basic
Rent for
each Unit throughout the Basic Term applicable thereto in
consecutive monthly
installments payable on each Rent Payment Date. Each such monthly
payment of
Basic Rent shall be in an amount equal to the product of the
Equipment Cost for
such Unit multiplied by the Basic Rent percentage set forth
opposite such Rent
Payment Date on Schedule 3-A to the Participation Agreement (as
such Schedule
3-A shall be adjusted pursuant to Section 2.6 of the Participation
Agreement).
Schedule 3-B to the Participation Agreement sets forth the Basic
Rent allocated
for Federal income tax purposes to each lease period and calendar
year
throughout the Basic Term and in addition, sets forth that for
certain months,
amounts of Basic Rent shall be allocated to the following and/or
preceding
calendar year. Schedule 3-B to the Participation Agreement also
sets forth the
application of Basic Rent payments to the calendar year to which
such payments
relate. It is the intention of Lessor and Lessee that the
allocations of Basic
Rent set forth on Schedule 3-B to the Participation Agreement
constitute
specific allocations of fixed rent within the meaning of Treas.
Reg. Section
1.467-1(c)(2)(ii). Stipulated Loss Amounts and Termination Amounts
have been
calculated on the basis that (i) any Basic Rents actually due on
the date of
such calculation shall not be paid and (ii) any Basic Rents
scheduled to have
been paid prior to the date of such calculation are assumed to have
been paid
and have been appropriately reflected in such calculations. Lessor
and Lessee
agree to include in income and deduct the Basic Rents allocated to
each lease
period and calendar year according to Schedule 3-B of the
Participation
Agreement. In addition, Lessor and Lessee intend that under no
circumstances are
any Basic
2
<PAGE>
Lease Agreement (TRLI 2001-1B)
Rents to be considered related to (i) any period after the calendar
year
succeeding the calendar year in which such Basic Rents are payable
or any period
before the calendar year preceding the calendar year in which such
Basic Rents
are payable or (ii) the period beginning on the Closing Date and
ending on (but
not including) September 29, 2001 (the "Basic Rent Holiday").
Notwithstanding anything to the contrary contained herein or in
the
Participation Agreement, each installment of Basic Rent (both
before and after
any adjustment pursuant to Section 2.6 of the Participation
Agreement) shall be,
under any circumstances and in any event, in an amount at least
sufficient for
Lessor to pay in full as of the due date of such installment, any
payment of
principal of and interest on the Equipment Notes required to be
paid by Lessor
pursuant to the Indenture on such due date in accordance with the
Scheduled
Amortization.
Section 3.3 Supplemental Rent. Lessee also agrees to pay to Lessor,
or to
whosoever shall be entitled thereto, any and all Supplemental Rent,
promptly as
the same shall become due and owing, or where no due date is
specified, promptly
after demand by the Person entitled thereto, and in the event of
any failure on
the part of Lessee to pay any Supplemental Rent, Lessor shall have
all rights,
powers and remedies provided for herein or by law or equity or
otherwise as in
the case of nonpayment of Basic Rent. Lessee will also pay, as
Supplemental
Rent, (i) on demand, to the extent permitted by applicable law, an
amount equal
to Late Payment Interest on any part of any installment of Basic
Rent not paid
when due for any period for which the same shall be overdue and on
any payment
of Supplemental Rent not paid when due or promptly after demanded
for the period
from such due date or demand date, as applicable, until the same
shall be paid
and (ii) as and when due in accordance with the Trust Indenture or
the
Participation Agreement, any Make-Whole Amount payable with respect
to any
Equipment Note, including, without limitation, amounts of
Make-Whole Amount due
in the case of the termination of this Lease with respect to any
Unit pursuant
to Section 10, in the case of the purchase of any Unit (but not in
the case of a
purchase of the Beneficial Interest or if the Equipment Notes are
assumed in
accordance with the Operative Agreements) pursuant to Section 22.1
or Section
6.9 of the Participation Agreement, and in the case of any
refinancing of the
Equipment Notes pursuant to Section 10.2 of the Participation
Agreement. All
Supplemental Rent to be paid pursuant to this Section 3.3 shall be
payable in
the type of funds and in the manner set forth in Section 3.5.
3
<PAGE>
Lease Agreement (TRLI 2001-1B)
Section 3.4 Adjustment of Rent. Lessee and Lessor agree that the
Basic
Rent, Stipulated Loss Values, Stipulated Loss Amounts, Termination
Values and
Termination Amount percentages and the Early Purchase Price shall
be adjusted to
the extent provided in Section 2.6 of the Participation
Agreement.
Section 3.5 Manner of Payments. All Rent (other than Supplemental
Rent
payable to Persons other than Lessor, which shall be payable to
such other
Persons in accordance with written instructions furnished to Lessee
by such
Persons, as otherwise provided in any of the Operative Agreements
or as required
by law) shall be paid by Lessee to Lessor at its office at 225
Asylum Street,
Goodwin Square, Hartford, CT, 06103, Attention: Corporate Trust
Administration,
provided, that so long as the Indenture shall not have been
discharged pursuant
to the terms thereof, Lessor hereby directs, and Lessee hereby
agrees, that all
Rent (excluding Excepted Property) payable to Lessor shall be paid
into the
Payment Account directly to the Indenture Trustee at the times and
in funds of
the type specified in this Section 3.5 at the office of the
Indenture Trustee at
135 S. LaSalle Street, Suite 1960, Chicago, IL 60603, ABA No.
071000505, Account
608775318, Attn: Kristine Schossow, Corporate Trust Services
Division, Trust
TRLI 2001-1B, or at such other location in the United States of
America as the
Indenture Trustee may otherwise direct. All Rent shall be paid by
Lessee to the
recipient not later than 11:00 a.m. Chicago, Illinois time on the
date of such
payment in funds consisting of lawful currency of the United States
of America,
which shall be immediately available. Notwithstanding anything
contained in this
Lease to the contrary, any amounts received pursuant to
distribution from any of
the Accounts (as such term is defined in the Collateral Agency
Agreement) shall
for all purposes hereof be deemed payment in satisfaction of the
related
obligation hereunder to which such distribution relates and any
failure by
Lessor, the Indenture Trustee or any Indemnified Party to receive
from the
Collateral Agent the full amount of any such distribution measured
by reference
to Basic Rent, Supplemental Rent or any component thereof shall be
deemed a
failure by Lessee to pay such Basic Rent or Supplemental Rent
hereunder, as the
case may be.
SECTION 4. Ownership and Marking of Equipment.
Section 4.1 Retention of Title. Lessor shall and hereby does retain
full
legal title to and beneficial ownership of each Unit
notwithstanding the
delivery to and possession and use of such Unit by Lessee hereunder
or any
Sublessee under any sublease permitted hereby.
4
<PAGE>
Lease Agreement (TRLI 2001-1B)
Section 4.2 Duty to Number and Mark Equipment. With respect to the
Units to
be delivered on the Closing Date, Lessee represents that Manager
has caused, and
as soon as practicable after the date on which a Lease Supplement
is executed
and delivered in respect of a Replacement Unit pursuant to Section
11.4(b),
Lessee will cause, each Unit to be numbered with its reporting mark
shown on the
Lease Supplement dated the date on which such Unit was delivered
and covering
such Unit, and will from and after such date keep and maintain,
plainly,
distinctly, permanently and conspicuously marked by a plate or
stencil printed
in contrasting colors upon each side of each Unit, in letters not
less than one
inch in height, a legend substantially as follows:
"OWNERSHIP SUBJECT TO A SECURITY AGREEMENT
FILED WITH THE SURFACE TRANSPORTATION BOARD"
with appropriate changes thereof and additions thereto as from time
to time may
be required by law in order to protect Lessor's right, title and
interest in and
to such Unit, its rights under this Lease and the rights of the
Indenture
Trustee. Except as provided hereinabove, Lessee will not place any
such Units in
operation or exercise any control or dominion over the same until
the required
legend shall have been so marked on both sides thereof, and will
replace
promptly any such word or words in such legend which may be
removed, defaced,
obliterated or destroyed. In the event of a change in the reporting
mark of any
Unit, within 60 days after a Responsible Officer of the Manager has
received
notice of any such changed mark, a statement of the new reporting
mark to be
substituted therefor shall be delivered by Lessee to Lessor and, so
long as the
Indenture shall not have been discharged pursuant to its terms, to
the Indenture
Trustee. As soon as practicable after the delivery of such
statement a
supplement to this Lease and, if not so discharged, the Indenture,
with respect
to such new reporting marks, shall be filed or recorded in all
public offices
where this Lease and the Indenture shall have been filed or
recorded and in such
other places, if any, where Lessor and, so long as the Indenture
shall not have
been discharged pursuant to its terms, the Indenture Trustee may
reasonably
request in order to protect, preserve and maintain its right, title
and interest
in the Units. The costs and expenses of all such supplements,
filings and
recordings shall be borne by Lessee.
Section 4.3 Prohibition Against Certain Designations. Except as
above
provided, Lessee will not allow the name of any Person to be placed
on any Unit
as a designation that might reasonably be interpreted as a claim of
ownership;
5
<PAGE>
Lease Agreement (TRLI 2001-1B)
provided, however, that, subject to the delivery of the statement
of new
reporting marks specified in Section 4.2, Lessee may cause any Unit
to be
lettered with the names or initials or other insignia customarily
used by Lessee
or any Sublessee or any of their respective Affiliates on railroad
equipment
used by it of the same or a similar type for convenience of
identification of
the right of Lessee to use such Unit hereunder or any Sublessee to
use such Unit
pursuant to a Permitted Sublease.
SECTION 5. Disclaimer of Warranties.
Section 5.1 Disclaimer of Warranties. Without waiving any claim
Lessee may
have against any seller, supplier or manufacturer, LESSEE
ACKNOWLEDGES AND
AGREES THAT (i) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE
SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT
EACH UNIT IS
SUITABLE FOR ITS PURPOSES AND LESSEE HAS ACCEPTED EACH UNIT, (iii)
NEITHER
LESSOR NOR OWNER PARTICIPANT IS A MANUFACTURER OR A DEALER IN
PROPERTY OF SUCH
KIND OR HAS INSPECTED THE UNITS PRIOR TO DELIVERY TO AND ACCEPTANCE
BY LESSEE,
(iv) EACH UNIT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS
AND
GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND (v)
LESSOR
LEASES AND LESSEE TAKES EACH UNIT "AS-IS", "WHERE-IS" AND "WITH ALL
FAULTS", IN
WHATEVER CONDITION IT MAY BE, AND LESSEE ACKNOWLEDGES THAT NEITHER
LESSOR, AS
LESSOR OR IN ITS INDIVIDUAL CAPACITY, NOR OWNER PARTICIPANT MAKES
NOR SHALL BE
DEEMED TO HAVE MADE, AND EACH EXPRESSLY DISCLAIMS, ANY AND ALL
RIGHTS, CLAIMS,
WARRANTIES OR REPRESENTATIONS EITHER EXPRESS OR IMPLIED, AS TO THE
VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN,
OPERATION,
MERCHANTABILITY THEREOF OR AS TO THE TITLE OF ANY UNIT, THE QUALITY
OF THE
MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO
SPECIFICATIONS, FREEDOM
FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF
ANY LATENT OR
OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF
ANY
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS
OR IMPLIED
REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO AND EACH
OF LESSOR
AND OWNER PARTICIPANT EXPRESSLY DISCLAIMS SELECTION
6
<PAGE>
Lease Agreement (TRLI 2001-1B)
OF THE UNITS, except that Lessor, in its individual capacity,
represents and
warrants that on the Closing Date, Lessor shall have received
whatever title to
each Unit as was conveyed to Lessor by Lessee and each Unit will be
free of
Lessor's Liens attributable to Lessor and provided that the
foregoing
disclaimer in clause (v) shall not extend to Owner Participant's
representation
and warranty contained in Section 3.5(e) of the Participation
Agreement. Lessor
hereby appoints and constitutes Lessee its agent and
attorney-in-fact during the
Lease Term to assert and enforce, from time to time, in the name
and for the
account of Lessor and Lessee, as their interests may appear, but in
all cases at
the sole cost and expense of Lessee, whatever claims and rights
Lessor may have
as owner of each Unit against the manufacturers or any prior owner
thereof;
provided, however, that if at any time a Lease Event of Default
shall have
occurred and be continuing, at Lessor's option, such power of
attorney shall
terminate, and Lessor may assert and enforce, at Lessee's sole cost
and expense,
such claims and rights. Lessee's delivery of a Lease Supplement
shall be
conclusive evidence as between Lessee and Lessor that all Units
described
therein are in all the foregoing respects satisfactory to Lessee,
and Lessee
will not assert any claim of any nature whatsoever against Lessor
based on any
of the foregoing matters.
Section 5.2 Rights Under Existing Equipment Subleases. Unless a
Lease Event
of Default shall have occurred and be continuing under Section 14
and Lessor
shall have given written notice to Lessee, Lessor agrees to make
available to
Lessee such rights as Lessor may have, and Lessee shall be entitled
to exercise
all rights of Lessor under, each Sublease.
SECTION 6. Return of Equipment; Storage.
Section 6.1 Return;
Holdover Rent. (a) Not less than 180 days prior to the
end of the Basic Term or the end of any Renewal Term, if Lessee has
elected to
return the Units under Section 22.2, Lessee will provide Lessor
with a list of
not less than ten (10) alternative storage locations ("Storage
Locations") used
for the storage of rolling stock within the Contiguous United
States sufficient
to store the Units and the available storage capacities of such
locations.
Unless Lessee shall have purchased the Units pursuant to Section 22
of this
Lease or pursuant to Section 6.9 of the Participation Agreement,
not less than
90 days prior to the end of the Lease Term, Lessor will give Lessee
irrevocable
notice of its decision either to take possession of or store the
Units. If
Lessor shall have decided to take possession of the Units, the
terms of Section
6.1(b) will apply. If Lessor shall have decided to store the Units,
the terms of
Section 6.1(c) will apply.
7
<PAGE>
Lease Agreement (TRLI 2001-1B)
(b)
Unless Lessee shall
have purchased the Units pursuant to Section 22 of
this Lease or pursuant to Section 6.9 of the Participation
Agreement, if Lessor
shall have decided to take possession of the Units, Lessee will, at
its sole
risk and expense, deliver possession of the Units at any storage
location,
f.o.b. such location, (i) as may be agreed upon by Lessor and
Lessee in writing
or (ii) in the absence of such agreement as Lessor may reasonably
select by
written notice to Lessee on or before the 90th day before the end
of the Lease
Term; provided, that (x) with respect to all Units being so
delivered, there
shall be no more than ten (10) locations (each of which shall be
located within
the Contiguous United States and shall have adequate storage
capacities) and (y)
Lessor's notice shall specify the total number and type of Units to
be delivered
to each location.
(c)
(i) Unless Lessee
shall have purchased the Units pursuant to Section
22 of this Lease or pursuant to Section 6.9 of the Participation
Agreement, if
Lessor shall have elected to store the Units upon the expiration of
the Lease
Term with respect thereto, Lessee shall store the Units free of
charge and at
the risk and expense of Lessee for a period (the "Storage Period")
beginning,
for any particular Storage Location, on the expiration of the Lease
Term for
such Units (the "Storage Period Commencement Date") and ending not
more than 60
days thereafter. On or before the 90th day before the end of the
Lease Term,
Lessor shall provide Lessee with written notice designating its
choices from
among the Storage Locations provided by Lessee pursuant to Section
6.1(a). Any
storage provided by Lessee during the Storage Period shall be at
the sole risk
and expense of Lessee, and Lessee shall maintain the insurance
required by
Section 12.1 with respect to all stored Units. During the Storage
Period, Lessee
will permit Lessor or any Persons designated by it, including the
authorized
representative or representatives of any prospective purchaser or
user of such
Units, to restencil the marks on such Units and to inspect the same
during
Lessee's normal business hours upon at least three Business Days'
prior written
or telephonic notice; provided, however, that such inspection and
restenciling
shall not interfere with the normal conduct of Lessee's business;
and provided,
further, that (x) such inspection and restenciling shall be at such
Person's own
risk and expense, (y) Lessee shall be indemnified by Lessor against
any loss or
damage incurred by it in connection with any such inspection or
restenciling by
such Person and (z) Lessee (except in the case of Lessee's gross
negligence or
wilful misconduct) shall not be liable for any injury to, or the
death of, any
person exercising, either on behalf of Lessor or any prospective
purchaser or
user, the rights of inspection and restenciling granted pursuant
hereto. Lessee
shall not be required
8
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Lease Agreement (TRLI 2001-1B)
to store any Unit after the Storage Period. If Lessee does store
any Unit after
the expiration of the Storage Period, such storage shall be at the
sole risk and
expense of Lessor.
(ii)
Upon the request and direction of Lessor (and at Lessor's sole
risk
and expense), on not more than one occasion with respect to each
stored Unit and
upon not less than 15 days' prior written notice from Lessor to
Lessee, Lessee
will, on or before the expiration of the Storage Period, transport
such Unit to
any railroad interchange point or points within the Contiguous
United States on
any railroad lines or to any connecting carrier for shipment (with
appropriate
instructions to cause such Unit to be transported to such locations
in the
Contiguous United States as Lessor shall direct), whereupon Lessee
shall have no
further liability or obligation with respect to such Unit.
(iii) Upon receipt of Lessor's written notice designating its
choices from
among the alternative Storage Locations provided by Lessee under
Section 6.1(a),
Lessee shall have the option to store such Units at such Storage
Locations as it
shall choose in which case the Storage Period shall be at the sole
risk and
expense of Lessee for a period of 60 days, during which period
Lessee shall be
obligated to insure such Units as provided in Section 12. Upon
receipt of such
notice, Lessee will promptly give notice to Lessor of the locations
at which
Lessee will store such Units. If Lessee shall exercise such option,
Lessee shall
on or before the expiration of the Storage Period transport the
Units to any
railroad interchange point or points within the Contiguous United
States on any
railroad lines or to any connecting carrier for shipment (with
appropriate
instructions to cause such Units to be transported to such
locations (provided
that such Units shall be transported to no more than ten (10)
locations, each
having adequate storage capacity) designated by Lessor upon not
less than 15
days' prior written notice). The movement of any Unit from such
Unit's location
as designated by Lessee pursuant to this Section 6.1(c)(iii) to an
interchange
point thereafter designated by Lessor in accordance with the
foregoing sentence
will be at the risk and expense of Lessor; provided, however, that
any
incremental costs associated with movement from the storage
facility designated
by Lessee pursuant to this clause (iii) over the costs that would
be incurred in
movement from the storage facility designated by Lessor pursuant to
Section 6.1
(a) shall be for the account of Lessee. During any Storage Period,
Lessee shall
store the Units in such manner as the Manager normally stores
similar units of
railroad equipment owned or managed by it.
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Lease Agreement (TRLI 2001-1B)
(d)
Upon the latest of (i)
expiration of the Lease Term with respect to a
Unit, (ii) tender of such Unit at the location determined in
accordance with
Section 6.1(b) or, as applicable, the tender of such Unit for
storage in
accordance with Section 6.1(c) and (iii) compliance by such Unit
with Section
6.2, this Lease and the obligation to pay Basic Rent for such Unit
accruing
subsequent to the expiration of the Lease Term with respect to such
Unit shall
terminate.
(e)
In the event any Unit
is not (i) returned to Lessor in accordance with
the provisions of Section 6.1(b) on the last day of the Lease Term
with respect
thereto, or, if requested by Lessor pursuant to Section 6.1(c),
delivered and
stored on such last day of the Lease Term, and, in either case, in
the condition
specified in Section 6.2 or (ii) deemed automatically renewed in
accordance with
the provisions of Section 22.7, the Lease with respect to such Unit
shall
continue in effect and Lessee shall pay to Lessor for each such day
from the
scheduled expiration of the Lease Term with respect to such Unit
until the date
on which such Unit is returned to Lessor in accordance with the
provisions of
Section 6.1(b) and in the condition specified in Section 6.2, an
amount equal to
the daily equivalent of the average Basic Rent for the Basic Term
or the Renewal
Term, as applicable, to such Unit. Notwithstanding the foregoing,
nothing in
this Section 6.1(e) shall be construed as permitting or authorizing
Lessee to
fail to meet, or be construed as Lessor consenting to or waiving
any failure by
Lessee to perform, Lessee's obligation to return the Units in
accordance with
the requirements of this Lease. Nothing herein shall be in
abrogation of
Lessor's right to terminate this Lease under Section 15 as a result
of such
failure or to have such Unit returned to it for possession or
storage.
Section 6.2 Condition of Equipment. Each Unit when returned to
Lessor
pursuant to Section 6.1 shall be (i) capable of performing the
functions for
which it was designed, with all loading and unloading components
operating in
good working order with allowance for normal wear and tear, (ii)
suitable for
continued commercial use in the commodity last carried immediately
prior to such
return, (iii) suitable for use in interchange in accordance with
then applicable
Federal regulations, the Field Manual of the AAR, the Interchange
Rules and FRA
rules and regulations, (iv) in all material respects in the
condition required
by Section 8.1, (v) in conformance with any requirement pertaining
to warranties
of the manufacturer of the Units during the warranty period, (vi)
empty, (vii)
unless industry custom or practice indicates to the contrary, steam
cleaned or
otherwise cleaned in a comparable commercially acceptable manner
and (viii) free
and clear of all Liens except Lessor's Liens. All logs, records,
books and other
materials, or appropriate
10
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Lease Agreement (TRLI 2001-1B)
copies of any thereof, relating to the maintenance of such Unit
shall, upon
Lessor's request, be delivered to Lessor or its designee upon the
return of such
Unit. Lessor shall have the right to inspect any Unit that is
returned pursuant
to Section 6.1 to ensure that such Unit is in compliance with the
conditions set
forth in this Section 6.2, at Lessor's sole cost, expense and risk
(including,
without limitation, the risk of personal injury or death), by its
authorized
representatives, during Lessee's normal business hours and upon
reasonable prior
notice to Lessee; provided, however, that Lessee shall not be
liable for any
injury to, or the death of, any Person exercising, on behalf of
Lessor, the
rights of inspection granted under this Section 6.2 unless caused
by Lessee's
gross negligence or wilful misconduct; and further provided, that
if such Unit
is not in compliance with the conditions set forth in this Section
6.2, then
Lessee will (i) promptly take such steps as are necessary to bring
such Unit in
compliance with the conditions set forth in this Section 6.2 and
(ii) pay the
reason able cost and expense of the original inspection of such
Unit and any
reinspection of such Unit conducted by Lessor required because of
such
non-compliance with Section 6.2. No inspection pursuant to this
Section 6.2
shall interfere with the normal conduct of Lessee's business or the
normal
conduct of any Sublessee's business, and Lessee shall not be
required to
undertake or incur any additional liabilities in connection
therewith. A Unit
shall not be deemed to have been returned to Lessor for purposes of
this Lease
unless and until it is in compliance with the conditions set forth
in this
Section 6.2.
SECTION 7. Liens.
Lessee will not directly or indirectly create, incur, assume,
permit or
suffer to exist any Lien on or with respect to any Unit or Lessee's
leasehold
interest therein under this Lease, except Permitted Liens, Lessor's
Liens and
Liens described in Section 6.4(a) and 6.4(b) of the Participation
Agreement.
Lessee shall promptly, at its own expense, take such action or
cause such action
to be taken as may be necessary to duly discharge (or bond to the
reasonable
satisfaction of Lessor and Indenture Trustee) any such Lien not
excepted above
if the same shall arise at any time.
SECTION 8. Maintenance; Possession; Compliance with Laws.
Section 8.1 Maintenance and Operation. (a) Lessee, at its own cost
and
expense, shall maintain, repair and keep each Unit, or cause the
Manager under
the Management Agreement to maintain, repair and keep each Unit,
(i) according
to
11
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Lease Agreement (TRLI 2001-1B)
prudent industry practice and in all material respects, in good
working order,
and in good physical condition for railcars of a similar age and
usage, normal
wear and tear excepted, (ii) in a manner in all material respects
consistent
with maintenance practices used by the Manager or, with respect to
any Equipment
subject to an Existing Equipment Sublease that is a Net Sublease,
the applicable
Sublessee, as applicable, in respect of railcars owned or managed
by the Manager
or, with respect to any Equipment subject to an Existing Equipment
Sublease that
is a Net Sublease, the applicable Sublessee, as applicable, similar
in type to
such Unit, (iii) in accordance in all material respects with all
manufacturer's
warranties in effect and in accordance with all applicable
provisions, if any,
of insurance policies required to be maintained pursuant to Section
12 and (iv)
in compliance in all material respects with any applicable laws and
regulations
from time to time in effect, including, without limitation, the
Field Manual of
the AAR, FRA rules and regulations and Interchange Rules as they
apply to the
maintenance and operation of the Units in interchange regardless of
upon whom
such applicable laws and regulations are nominally imposed;
provided, however,
that, so long as the Manager or, with respect to any Equipment
subject to an
Existing Equipment Sublease, the applicable Sublessee, as
applicable, is
similarly contesting such law or regulation with respect to all
other similar
equipment owned or operated by Manager or, with respect to any
Equipment subject
to an Existing Equipment Sublease, the applicable Sublessee, as
applicable,
Lessee may, in good faith and by appropriate proceedings diligently
conducted,
contest the validity or application of any such standard, rule or
regulation in
any reasonable manner which does not materially interfere with the
use,
possession, operation or return of any of the Units or materially
adversely
affect the rights or interests of Lessor and the Indenture Trustee
in the Units
or hereunder or other wise expose Lessor, the Indenture Trustee or
any
Participant to criminal sanctions or release Lessee from the
obligation to
return the Units in compliance with the provisions of Section 6.2;
provided
further, that Lessee shall promptly notify Lessor and Indenture
Trustee in
reasonable detail of any such contest. In no event shall Lessee
discriminate in
any material respect as to the use or maintenance of any Unit
(including the
periodicity of maintenance or recordkeeping in respect of such
Unit) as compared
to equipment of a similar nature which the Manager owns or manages.
Lessee will
maintain in all material respects all records, logs and other
materials required
by relevant industry standards or any governmental authority having
jurisdiction
over the Units required to be maintained in respect of any Unit,
all as if
Lessee were the owner of such Units, regardless of whether any
such
requirements, by their terms, are nominally imposed on Lessee,
Lessor or Owner
Participant.
12
<PAGE>
Lease Agreement (TRLI 2001-1B)
(b)
Without the written
waiver or consent of Lessor (which waiver or
consent will not be unreasonably withheld), Lessee shall not
change, or permit
any Sublessee to change, a DOT/AAR classification (as provided for
in 49 C.F.R.
Part 179 or any successor thereto), or permit any Sublessee to
operate any Unit
under a different DOT/AAR classification, from that classification
in effect for
such Unit on the Closing Date, except for any change in tank test
pressure
rating provided such change does not increase the pressure rating
of the Unit
above the tank test pressure to which the Unit was manufactured;
provided
however, that in the event Lessor shall not have provided Lessee
with a written
waiver or consent to such a reclassification or operation of any
Unit within 10
Business Days after receipt of Lessee's written request therefor
(or Lessor
expressly rejects such a request by Lessee), Lessee may elect to
replace such
Unit in accordance with and subject to the provisions of Sections
11.2(i), 11.3
and 11.4.
Section 8.2 Possession and Use. Lessee shall be entitled to the
possession
of the Units and to the use of the Units by it or any Affiliate in
the United
States and, subject to the remaining provisions of this Section 8.2
and Section
8.3, Canada and Mexico, only in the manner for which it was
designed and
intended and so as to subject it only to ordinary wear and tear. In
no event
shall Lessee use, store or permit the use or storage of any Unit in
any
jurisdiction not included in the insurance coverage required by
Section 12. The
Units shall be used primarily on domestic routes in the United
States, and in no
event shall more than forty percent (40%) of the Units and the
Other Units (as
determined by mileage records and measured annually on a calendar
year basis) be
used outside the Contiguous United States at the same time. Nothing
in this
Section 8.2 shall be deemed to constitute permission by Lessor to
any Person
that acquires possession of any Unit to take any action
inconsistent with the
terms and provisions of this Lease or any of the other Operative
Agreements.
Section 8.3 Sublease. Lessee shall be entitled, without the prior
approval
of Lessor, to enter into a sublease, car contract or other contract
granting
permission for the use of a Unit to:
(i)
a railroad company or
companies (that is not a Credit Bankrupt,
Trinity or any Affiliate of Trinity) organized under the laws of
the United
States of America or any state thereof or the District of Columbia,
Canada or
any province thereof, or Mexico or any state thereof, upon lines of
railroad
owned or operated by
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Lease Agreement (TRLI 2001-1B)
such railroad company or companies or over which such railroad
company or
companies have trackage rights or rights for operation of their
trains, and upon
connecting and other carriers in the usual interchange of
traffic;
(ii)
responsible companies (i.e., a company with which the Manager would
do
business in the ordinary course of its business with respect to
railcars which
it owns or manages) (other than railroad companies, Trinity,
Affiliates of
Trinity or Credit Bankrupts) for use in their business; or
(iii) wholly-owned Subsidiaries of Trinity organized under the laws
of (x)
Canada or any political subdivision thereof (each a "Canadian
Affiliate") or (y)
Mexico or any political subdivision thereof (each a "Mexican
Affiliate")
(subleases to any of such sublessees referred to in clauses (i),
(ii) or (iii)
of this Section 8.3 being herein referred to as "Permitted
Subleases");
provided, however, that Lessee shall not (A) sublease to a
sublessee organized
under the laws of Mexico or any state thereof (a "Mexican
Sublessee") if, after
giving effect to such sublease, the percentage of Units, Other
Units and Pledged
Units in the aggregate (as measured by number of Units, Other Units
and Pledged
Units and not mileage records) subleased to Mexican Sublessees
exceeds the
lesser of (I) 7% (or, with Rating Agency Confirmation, 20%) of the
Units, Other
Units and the Pledged Units in the aggregate, or (II) the
percentage of railcars
leased or subleased to Mexican Sublessees in the Total Managed
Fleet, and (B)
sublease more than 50 Units and Other Units to any single Mexican
Sublessee
(other than (x) with Rating Agency Confirmation, to a Mexican
Affiliate or (y) a
Mexican Sublessee (I) with a credit rating of at least BBB and Baa2
as
determined by S&P and Moody's, respectively (or, in the event
that either S&P
or Moody's shall not or cease to provide a credit rating for such
entity, a
credit rating of at least BBB or Baa2 by S&P or Moody's, as the
case may be) or
(II) with a full, unconditional irrevocable guaranty from such
Mexican
Sublessee's parent with a credit rating at least BBB and Baa2 as
determined by
S&P and Moody's, respectively, or (III) with a letter of credit
from a provider
with a credit rating at least A+ or A1 as determined by S&P and
Moody's,
respectively), provided, further, that Lessee shall not at any time
sublease
more than 20% (or, with Rating Agency Confirmation, 30%) of the
Units and the
Other Units (as measured by number of Units and Other Units and not
mileage
records) in the aggregate to Canadian Affiliates, provided,
further, that any
Unit subleased to a Canadian Affiliate or a Mexican Affiliate shall
be
sub-subleased to Persons of the type described in clause (i) or
(ii) above
pursuant to a sub-sublease containing terms
14
<PAGE>
Lease Agreement (TRLI 2001-1B)
and conditions similar in all material respects to the applicable
sublease
between Lessee and the applicable Canadian Affiliate or Mexican
Affiliate and,
provided, further, that no sub-sublease may provide greater rights
to the
sub-sublessee than those provided to the sublessee in the related
sublease.
Each
Sublease (and to the extent permitted, sub-sublease) other than
Existing Equipment Subleases shall include appropriate provisions
so that such
sublease (i) shall require the payment of rent (x) in dollars (y)
at Fair Market
Rental Value and (z) not disproportionately in the earlier term of
the sublease
compared to in the later term of the sublease; (ii) shall not
permit any
sub-subleasing (or in the case of any sub-sublease, any
subleasing), other than
(A) sub-subleases by Canadian Affiliates or Mexican Affiliates to
Persons of the
type described in clauses (i) or (ii) of the immediately preceding
paragraph
containing terms and conditions similar in all material respects to
the
applicable sublease between Lessee and the applicable Canadian
Affiliate or
Mexican Affiliate, (B) "single trip" subleases or (C) sub-subleases
by
Permitted Sublessees so long as such sub-sublease is (X) of a term
of not more
than one year, (Y) subject and subordinate to the Sublease and (Z)
to a
sub-sublessee and on terms such that it would be a Permitted
Sublease if it were
entered into directly by the Partnership and shall not permit any
sub-sub-sub
leasing, (iii) provide that the rights of the Sublessee to offset
or otherwise
set-off against amounts due to Lessee from any such Sublessee under
the
applicable Sublease be limited to matters arising under the
Sublease (except
that the Sublessee may offset or otherwise set off amounts due to
the Marks
Company Trustee under the Sublease), (iv) without regard to the
payment of Basic
Rent or the Lease Term, shall not include any term or provision
which is
inconsistent with the terms and conditions of this Lease or which
could
reasonably be expected to result in material adverse consequences
to Lessor, any
Participant or the Indenture Trustee (it being agreed that a
sublease
substantially in the form attached as Exhibit B-1 or Exhibit B-2
satisfies the
provisions of this sentence) and (v) does not have a term which
extends three
years beyond the later of (i) the Basic Term Expiration Date or
(ii) if
applicable, the end of any Renewal Term then in effect.
Lessee will use commercially reasonable efforts to have each
Sublease other
than Existing Equipment Subleases (i) provide that such Sublease
and all rights
of the Sublessee (and of any other person claiming or who may
hereafter claim
under or through the Sublessee) under such Sublease, including any
purchase
options of the Sublessee thereunder, be made subject and
subordinate to the
terms of this Lease and (ii) be substantially in the form attached
as Exhibit
B-1 or Exhibit B-2.
15
<PAGE>
Lease Agreement (TRLI 2001-1B)
Notwithstanding the foregoing, in no event shall Lessee or any of
its
Affiliates be required to take any action to perfect any security
interest which
any Person may have in any Sublease, other than the filing of a
UCC-1 Financing
Statement against the Partnership in the jurisdiction in which the
Partnership's
chief executive office is located and in the Partnership's
jurisdiction of
formation covering all Subleases generally.
No
sublease entered into by Lessee hereunder shall relieve Lessee of
any
liability or obligation hereunder, which shall be and remain those
of a
principal and not a surety. Nothing in this Section 8.3 shall be
deemed to
constitute permission to any Person in possession of any Unit
pursuant to any
such sublease to take any action inconsistent with the terms and
provisions of
this Lease or any of the other Operative Agreements. As used in
this Section
8.3, "sublease" as a noun means a sublease, car contract or other
contract
granting permission for the use of a Unit and "sublease" as a verb
means to
enter into any of the foregoing.
SECTION 9. Modifications.
Section 9.1 Required Modifications. In the event a Required
Modification to
a Unit is required, Lessee agrees to make such Required
Modification at its own
expense; provided, however, that Lessee may, in good faith and by
appropriate
proceedings diligently conducted, contest the validity or
application of any
such law, regulation, requirement or rule in any reasonable manner
which does
not materially interfere with the use, possession, operation or
return of any
Unit or materially adversely affect the rights or interests of
Lessor or the
Indenture Trustee in the Units or hereunder or otherwise expose
Lessor, the
Indenture Trustee or any Participant to criminal sanctions or
relieve Lessee of
the obligation to return the Units in compliance with the
provisions of Section
6.2; provided, further, that, with respect to a Unit subject to a
Full Service
Sublease, the Manager, and with respect to a Unit subject to a Net
Sublease, the
Sublessee, as applicable, is similarly contesting such law,
regulation,
requirement or rule with respect to all other similar equipment
owned or
operated by the Manager or the Sublessee, as applicable. Title to
any Required
Modification shall immediately vest in Lessor. Notwithstanding
anything herein
to the contrary, if Lessee, on a non-discriminatory basis,
determines in its
reasonable judgment (as evidenced by an Officer's Certificate of
Lessee to such
effect, confirmed by an Officer's Certificate of the Manager) that
any Required
Modification to a Unit would be economically impractical and the
Manager
certifies that it has made a similar determination with respect to
similar
railcars in similar
16
<PAGE>
Lease Agreement (TRLI 2001-1B)
circumstances which are part of the Manager's Fleet, in lieu of
making the
Required Modification as provided above, Lessee may provide written
notice of
such determination to Lessor in such Officer's Certificate and
treat such Unit
as if an Event of Loss had occurred as of the date of such written
notice with
respect to such Unit and in such event the provisions of Sections
11.2(ii), 11.3
and 11.4 shall apply with respect to such Unit except that the
amount payable
under Section 11.2(ii)(a) as a result of such determination shall
be an amount
equal to the greater of the Fair Market Sales Value or Stipulated
Loss Amount of
such Unit; provided that there shall also be included in such
Officer's
Certificate a statement of how Lessee intends to meet the financial
obligations
imposed under said Sections 11.2, 11.3 and 11.4 with respect to
such Units.
Section 9.2 Optional Modifications. Lessee at any time may or may
permit a
Sublessee to, in its discretion and at its own or such Sublessee's
cost and
expense, modify, alter or improve any Unit in a manner which is not
required by
Section 9.1 (a "Modification"); provided that no Modification shall
diminish the
fair market value, utility, capacity, residual value or remaining
economic
useful life of such Unit below the fair market value, utility,
capacity,
residual value or remaining economic useful life thereof
immediately prior to
such Modification, in more than a de minimis respect, assuming such
Unit was
then at least in the condition required to be maintained by the
terms of this
Lease. Title to any Non-Severable Modification shall be immediately
vested in
Lessor. Title to any Severable Modification (other than Required
Modifications)
shall remain with Lessee or the Sublessee as applicable. If Lessee
shall at its
cost cause such Severable Modifications (other than Required
Modifications) to
be made to any Unit, Lessor shall have the right, upon 90 days
prior written
notice in the case of the return of such Unit pursuant to Section
6.1, to
purchase any such Severable Modifications (other than Severable
Modifications
consisting of proprietary or communications equipment) title to
which is held by
Lessee at their then Fair Market Sales Value (taking into account
their actual
condition). If Lessor does not so elect to purchase such
Severable
Modifications, Lessee may remove such Severable Modifications at
Lessee's cost
and expense, and if requested (which request shall be made by not
less than 90
days prior written notice in the case of a return other than
pursuant to Section
15.6) by Lessor will so remove such Severable Modifications at
Lessee's cost and
expense, and Lessee shall, at its expense, repair any damage
resulting from the
removal of any such Severable Modifications in a manner consistent
with Section
8.1. If Lessee has not removed any Severable Modification prior to
the return of
the related Unit as
17
<PAGE>
Lease Agreement (TRLI 2001-1B)
provided herein, title to such Severable Modification shall pass to
Lessor as of
the date of such return.
Section 9.3 Removal of Property; Replacements. Lessee may, in the
ordinary
course of maintenance or repair of any Unit, remove any item of
property
constituting a part of such Unit, and unless the removal of such
item is
required by Section 9.1 hereof, Lessee shall replace such item as
promptly as
practicable by an item of property that is free and clear of all
Liens (other
than Permitted Liens) and in as good operating condition as, and
with a fair
market value, utility, capacity, residual value and remaining
economic useful
life at least equal to, the item of property being replaced,
assuming that such
replaced item was in the condition required to be maintained by the
terms of
this Lease. Any item of property removed from such Unit in the
ordinary course
of maintenance and repair as provided in the preceding sentence
shall remain the
property of Lessor until replaced in accordance with the terms of
such sentence,
but shall then, without further act, become the property of Lessee.
Any
replacement property which is incorporated into a Unit in the
ordinary course of
maintenance and repair shall, without further act, become the
property of Lessor
and be deemed part of such Unit for all purposes hereof.
SECTION 10. Voluntary Termination.
Section 10.1 Right of Termination. Lessee shall have the right, at
its
option at any time or from time to time during the Basic Term on or
after the
seventh anniversary of the Basic Term Commencement Date to
terminate the Lease
with respect to any or all of the Units (provided that, if such
termination is
for less than all Units in a Functional Group across the
Partnership Fleet,
Lessee shall exercise such termination hereunder and under the
comparable
provisions contained in the Other Lease (i) with respect to at
least 50 railcars
in the aggregate of the type included in such Functional Group,
(ii) no fewer
than 25 railcars of the type included in such Functional Group
shall in the
aggregate remain subject to this Lease and the Other Lease, (iii)
such
termination shall be made hereunder and under the Other Lease pro
rata in
accordance with the number of units in such Functional Group
subject to each
such lease and (iv) the determination as to which Units are subject
to
termination shall otherwise be made by Lessee on a random basis
without
discrimination based on maintenance status, operating condition of
the Units in
question or otherwise) (the "Terminated Units") if (x) Lessee
determines in good
faith (as evidenced by a certified copy of a resolution adopted by
the General
Partner's Managers and a certificate executed by the Chief
Financial Officer of
the General Partner and the
18
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Lease Agreement (TRLI 2001-1B)
Chief Financial Officer of the Manager) that such Units have become
obsolete or
surplus to Lessee's requirements, (y) Lessor has received an
Officer's
Certificate from Lessee and the Manager to the effect that there
has been no
discrimination in the selection of the Terminated Units when
measured against
the other Units and the Manager's Fleet, and that, following the
termination of
this Lease with respect to the Terminated Units, the Units
remaining subject to
this Lease will constitute a pool of Units which is of a sufficient
quantity and
quality to sustain over the remaining Basic Term the Coverage
Ratios applicable
at the time of such termination and (z) Lessee delivers at least
120 days' prior
notice to Lessor and the Indenture Trustee (i) specifying a
proposed date of
termination for such Units (the "Termination Date"), which date
shall be a Rent
Payment Date, any such termination to be effective on the
Termination Date upon
Lessee's compliance with this Section 10, and (ii) if some but less
than all of
the Units in a Functional Group are designated as Terminated Units,
describing
in such Officer's Certificate the nondiscriminatory manner in which
Lessee
proposes to determine which Units in that Functional Group are to
be Terminated
Units. Notwithstanding anything herein contained to the contrary,
there shall be
no determination that a Unit is surplus or obsolete for purposes of
this Lease
if, on the Termination Date, such Unit is subject to a Sublease.
Except as
expressly provided otherwise herein, there will be no conditions to
Lessee's
right to terminate this Lease with respect to the Terminated Units
pursuant to
this Section 10.1. So long as (a) Lessor shall not have given
Lessee a notice of
election to retain the Terminated Units in accordance with Section
10.3 or (b)
notice of prepayment of the Equipment Notes shall not have been
given pursuant
to Section 2.10 of the Indenture, Lessee may withdraw the
termination notice
referred to above at any time prior to the 60th day prior to the
scheduled
Termination Date, whereupon this Lease shall continue in full force
and effect;
provided that Lessee may not exercise its right to withdraw a
termination notice
more than once annually or more than four times during the Basic
Term
(irrespective of which Units are covered thereby). Lessee agrees
that whether or
not it withdraws a termination notice it will reimburse Lessor,
each Participant
and the Indenture Trustee on an After Tax Basis for all reasonable
out-of-pocket
costs and expenses (including reasonable legal fees and expenses)
incurred by
any thereof in connection with such termination or proposed
termination.
Section 10.2 Sale of Equipment. During the period from the date of
such
notice given pursuant to Section 10.1 to the Termination Date,
Lessee, as
non-exclusive agent for Lessor and, except as provided in Section
10.3, at
Lessee's sole cost and expense, shall use reasonable best efforts
to obtain bids
from Persons other than Lessee or Affiliates thereof for the cash
purchase of
the Terminated Units,
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Lease Agreement (TRLI 2001-1B)
and Lessee shall promptly, and in any event at least five Business
Days prior to
the proposed date of sale, certify to Lessor in writing the amount
and terms of
each such bid, the proposed date of such sale and the name and
address of the
party submitting such bid. Unless Lessor shall have elected to
retain the
Terminated Units in accordance with Section 10.3, on the
Termination Date: (i)
Lessee shall deliver the Terminated Units (excluding any optional
Severable
Modifications removed by Lessee pursuant to Section 9.2) to the
bidder (which
shall not be Lessee or an Affiliate of Lessee (for the avoidance of
doubt the
bidder may be a Customer, or a customer of the Manager, and neither
the Manager
nor any Affiliate shall be prohibited from managing the Units for
such bidder
after the purchase by such bidder)), which shall have submitted the
highest cash
bid prior to such date (or to such other bidder as Lessee and
Lessor shall
agree) and (ii) subject to the prior or concurrent receipt (x) by
Lessor of all
amounts owing to Lessor pursuant to the next sentence and (y) by
the Persons
entitled thereto of all unpaid Supplemental Rent due on or before
the
Termination Date, Lessor shall, without recourse or warranty
(except as to the
absence of any Lessor's Lien) simultaneously therewith transfer all
of its
right, title and interest in and to the Terminated Units to such
bidder. The net
proceeds of sale realized at such sale shall be paid to and
retained by Lessor
and, in addition, on the Termination Date, Lessee shall pay to
Lessor (A) all
Basic Rent with respect to such Terminated Units due and payable
prior to the
Termination Date (exclusive of any Basic Rent due on such date),
(B) the excess,
if any, of (1) the Termination Amount for the Terminated Units
computed as of
the Termination Date over (2) the net cash sales proceeds (after
the deduction
of all reasonable costs and expenses (including any applicable
sales, transfer
or similar taxes) of Lessor and Owner Participant in connection
with such sale)
of the Terminated Units, (C) an amount equal to the Make-Whole
Amount and any
unpaid Late Payment Premium in respect of the principal amount of
the Equipment
Notes to be prepaid in accordance with Section 2.10(a) of the
Indenture and (D)
all other Rent (exclusive of any Basic Rent due on such date) then
due and
payable hereunder (which shall include, without limitation, the
Accumulated
Equity Deficiency Amount (without duplication of amounts calculated
above) and
Late Payment Interest related thereto), so that, after receipt and
application
of all such payments, but without withdrawal from any Reserve
Account, Owner
Participant shall be entitled under the terms of the Collateral
Agency
Agreement to receive, and does receive, taking into account all
payments of
Basic Rent, in respect of all such Units, the sum of the
Accumulated Equity
Deficiency Amount and Late Payment Interest related thereto and any
other
amounts then due to Owner Participant. If no sale shall have
occurred, whether
as a result of Lessee's failure to pay all of the amounts
hereinabove required
or otherwise,
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Lease Agreement (TRLI 2001-1B)
this Lease shall continue in full force and effect with respect to
such Units
and Lessee agrees to reimburse Lessor, each Participant and the
Indenture
Trustee for all reasonable costs and expenses (including reasonable
legal fees
and expenses) incurred by any thereof in connection therewith;
provided that if
such sale shall not have occurred solely because of Lessee's
failure to pay the
amounts hereinabove required, Lessee shall have no further right to
terminate
this Lease with respect to such Units. Lessee, in acting as agent
for Lessor,
shall have no liability to Lessor for failure to obtain the best
price, shall
act in its sole discretion and shall be under no duty to solicit
bids publicly
or in any particular market. Lessee's sole interest in acting as
agent shall be
to use its reasonable best efforts to sell the Units at the highest
price then
obtainable consistent with the terms of this Lease. Owner
Participant shall
have the right, but not the obligation, to obtain bids either
directly or
through agents other than Lessee.
Section 10.3 Retention of Equipment by Lessor. Notwithstanding
the
provisions of Sections 10.1 and 10.2, Lessor may irrevocably elect
by written
notice to Lessee, not later than 60 days after receipt of Lessee's
notice of
termination, not to sell the Terminated Units on the Termination
Date, whereupon
Lessee shall (i) deliver the Terminated Units to Lessor in the same
manner and
condition as if delivery were made to Lessor pursuant to Section
6.1(b) and
Section 6.2, and shall extend storage rights to the same extent as
provided in
Section 6.1(c), treating the Termination Date as the termination
date of the
Lease Term with respect to the Terminated Units and (ii) pay to
Lessor, or to
the Persons entitled thereto, all Basic Rent and all Supplemental
Rent due and
owing on the Termination Date and unpaid (exclusive of any Basic
Rent due on
such date in respect of the Terminated Units, but inclusive of any
Supplemental
Rent measured by the Make-Whole Amount and any unpaid Late Payment
Interest in
respect of the Terminated Units), so that, after receipt and
application of all
such payments, but without withdrawal from any Reserve Account,
Owner
Participant shall be entitled under the terms of the Collateral
Agency
Agreement to receive, and does receive, taking into account all
payments of
Basic Rent, in respect of all such Units, the sum of the
Accumulated Equity
Deficiency Amount and Late Payment Interest related thereto and any
other
amounts then due to Owner Participant. On any Termination Date
where Lessee is
required to make payments pursuant to the preceding sentence,
Lessee shall pay
as additional Basic Rent (or Lessor shall pay as a refund of Basic
Rent) an
amount equal to the Basic Rent Adjustment (or the absolute value of
the negative
Basic Rent Adjustment) set forth on Schedule 4-B to the
Participation Agreement
for the relevant Rent Payment Date. If Lessor elects not to sell
the Terminated
Units as
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Lease Agreement (TRLI 2001-1B)
provided in this Section 10.3, then Lessor shall pay, or cause to
be paid, to
the Indenture Trustee an amount equal to the product obtained by
multiplying the
unpaid principal amount of the Equipment Notes outstanding on such
date (after
deducting therefrom the principal installment, if any, to be paid
on such date)
by a fraction, the numerator of which shall be the Equipment Cost
of the
Terminated Units and the denominator of which shall be the
aggregate Equipment
Costs of all Units then subject to this Lease. Upon payment by
Lessor of the
foregoing, Lessee shall pay to Lessor an amount of rent equal to
the Make-Whole
Amount and any unpaid Late Payment Interest in respect of the
principal amount
of the Equipment Notes to be prepaid together with all Basic Rent
(including
Basic Rent due on the Termination Date) and Supplemental Rent due
and owing;
provided that unless all such amounts shall have been paid to the
Indenture
Trustee on the Termination Date, this Lease shall continue in full
force and
effect. If after giving the notice referred to above Lessor shall
fail to pay
the amounts required pursuant to the third sentence of this Section
10.3 and as
a result thereof this Lease shall not be terminated with respect to
the
Terminated Units on a proposed Termination Date, Lessor shall (x)
thereafter no
longer be entitled to exercise its election to retain such
Terminated Units and
(y) reimburse Lessee for any reasonable out-of-pocket expenses
(including
reasonable legal fees and expenses) incurred by it in attempting to
sell the
Terminated Units pursuant to Section 10.2 immediately prior to
Lessor's exercise
of such preemptive election, and Lessee may at its option at any
time thereafter
prior to the immediately following Rent Payment Date submit a new
termination
notice pursuant to Section 10.1 with respect to such Terminated
Units specifying
a proposed Termination Date occurring on a Determination Date
occurring not
earlier than 25 days from the date of such notice.
Section 10.4 Termination of Lease. In the event of either (x) any
such sale
and receipt by Lessor and the Indenture Trustee of all of the
amounts provided
in Section 10.2 in respect of the Terminated Units or (y) retention
of the
Terminated Units and full performance by Lessor and Lessee of their
respective
payment obligations in compliance with Section 10.3, and upon
compliance by
Lessee with the other provisions of this Section 10, the obligation
of Lessee to
pay Basic Rent hereunder for such Terminated Units shall cease and
the Lease
Term for the Terminated Units shall end.
Section 10.5 Funding of Accounts on Termination. Lessee will not
exercise a
termination option under this Section 10 with respect to all of the
Units unless
either (a) the full amount required to fund the Post Lease Term
Reserve
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Lease Agreement (TRLI 2001-1B)
Account is (upon consummation of such purchase and distribution of
all amounts
required to be distributed by the Collateral Agent under the
Collateral Agency
Agreement) and will be then available to the Collateral Agent to
fund such Post
Lease Term Reserve Account or (b) an indemnity pursuant to Section
3.13 of the
Collateral Agency Agreement has been provided.
SECTION 11. Loss, Destruction Requisition, Etc.
Section 11.1 Event of Loss. In the event that any Unit (i) shall
suffer
damage or contamination which, in Lessee's reasonable judgment (as
evidenced by
an Officer's Certificate of Lessee to such effect, confirmed by an
Officer's
Certificate of the Manager), makes repair uneconomic or renders
such Unit unfit
for commercial use, (ii) shall suffer destruction which constitutes
a total
loss, or shall suffer theft or disappearance (after reasonable
efforts by Lessee
to locate the same) for a period exceeding 6 months (or, if
earlier, the end of
the Basic Term or Renewal Term then in effect), (iii) shall be
permanently
returned to the manufacturer pursuant to any patent indemnity
provisions, (iv)
shall have title thereto taken or appropriated by any governmental
authority,
agency or instrumentality under the power of eminent domain or
otherwise or (v)
shall be taken or requisitioned for use by any governmental
authority or any
