EQUIPMENT LEASE AGREEMENTEquipment Lease Agreement |
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<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
----
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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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
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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
<PAGE>
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
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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
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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.
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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
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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.
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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
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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
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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
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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
